BITI Biotie Therapies Corp. (MM)

ITEM 3. KEY INFORMATION

Recent Developments – Acorda Acquisition

On March 11, 2016, Acorda Therapeutics, Inc. (“Acorda”) launched a public tender offer in Finland and in the United States to purchase all of our issued and outstanding shares, ADSs, stock options, share units and warrants (the “Acorda Acquisition” or the “Acquisition”). The Tender Offer is being conducted upon the terms and subject to the conditions set forth in the Offer to Purchase, filed with the Securities and Exchange Commission by Acorda on March 11, 2016 (as amended or supplemented from time to time, the “Offer to Purchase”), the related Letter of Transmittal for ADSs (the “Letter of Transmittal”), as well as the Acceptance Form for Shares (including any instruction letter attached thereto, the “Acceptance Form for Shares”), the Acceptance Form for uncertificated Outstanding Equity Instruments (including any instruction letter attached thereto, the “Acceptance Form for Uncertificated Outstanding Equity Instruments”) and the Acceptance Form for certificated Outstanding Equity Instruments (including any instruction letter attached thereto, the “Acceptance Form for Certificated Outstanding Equity Instruments” which, together with the Offer to Purchase, the Letter of Transmittal, the Acceptance Form for Shares and the Acceptance Form for Uncertificated Outstanding Equity Instruments, constitute the “Tender Offer”).

The Tender Offer is being made pursuant to the Combination Agreement (the “Combination Agreement”), dated as of January 19, 2016, between the Company and Acorda. The Combination Agreement includes certain representations, warranties and undertakings by both parties customary in transactions of a similar nature, including an obligation of the Company to conduct its business and operations in the ordinary course and consistent with past practices until the completion of the Tender Offer and cooperation by the parties in necessary regulatory filings and in completing the Tender Offer in the most expeditious way possible. The Company has agreed not to solicit or encourage any competing offers or proposals for such offers or other transactions competing with the Tender Offer, nor to facilitate or promote any such competing proposals, unless the Company’s board of directors has determined that, with respect to an unsolicited competing proposal, failure to take such measures would be inconsistent with the board of directors’ fiduciary duties. The Company has agreed to inform Acorda of any competing proposals and to provide Acorda with an opportunity to negotiate with the Company’s board of directors on matters arising from such competing proposals. The acceptance period under the Tender Offer will preliminarily expire on April 8, 2016.

A copy of the Combination Agreement is incorporated by reference as Exhibit 4.40 to this Annual Report on Form 20-F and is incorporated herein by reference, The foregoing descriptions of the Combination Agreement and the Tender Offer are qualified in their entirety by reference to the Combination Agreement, the Offer to Purchase, the Letter of Transmittal, the Acceptance Form for Shares, the Acceptance Form for Uncertificated Outstanding Equity Instruments and the Acceptance Form for Certificated Outstanding Equity Instruments.

The consolidated statements of comprehensive income data for each of the years ended December 2015, 2014 and 2013 and the summary consolidated statements of financial position data as of December 31, 2015 and 2014 have been derived from our audited consolidated financial statements included elsewhere in this annual report on Form 20-F. The summary consolidated statement of financial position data as of December 31, 2013 has been derived from our audited financial statements which are not included in this document, but are available at www.sec.gov. The summary consolidated financial information below should be read in conjunction with our consolidated financial statements, including the notes thereto, included elsewhere in this annual report on Form 20-F as well as the “Presentation of Financial and Other Information” and “Item 5. Operating and Financial Review and Prospects” sections of this annual report on Form 20-F.

Our audited consolidated financial statements for the years ended December 31, 2015, 2014 and 2013 have been prepared in accordance with IFRS as issued by the IASB.

Our historical results are not necessarily indicative of our future results. The summary financial information below does not contain all the information included in our financial statements.

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Exchange Rates and Exchange Controls

The following table sets forth, for the periods indicated, the high, low, average and period-end exchange rates for U.S. dollars expressed in euros. As of December 31, 2015, the exchange rate as reported by the European Central Bank was $1.00 = €0.919. The rates set forth below are provided solely for your convenience and may differ from the actual rates used in the preparation of our consolidated financial statements and other financial data included in this annual report on Form 20-F.

Not applicable.

Not applicable.

You should carefully consider the risks and uncertainties described below and the other information in this annual report on Form 20-F before making an investment decision regarding our securities. Our business, financial condition or results of operations could be materially and adversely affected if any of these risks occurs, and as a result, the market price of our securities could decline and you could lose all or part of your investment. This annual report on Form 20-F also contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors.

Risks Related to Acorda Acquisition

There is no assurance that the completion of the Tender Offer will occur. The failure of the closing of the Acorda Acquisition to occur could have an adverse effect on our business.

Completion of the Acorda Acquisition is subject to various conditions that, if not satisfied or waived, could give rise to termination of the Combination Agreement. Conditions to the closing of the Acquisition include (i) the valid tender of more than 90% of the issued and outstanding shares, ADSs, stock options, shares units and warrants of the Company in the Tender Offer; (ii) no “Material Adverse Effect” since the execution of and as defined in the Combination Agreement; (iii) the absence of any orders or regulatory actions preventing or enjoining the completion of the Tender Offer; (iv) the board of directors of the Company having issued a recommendation that the holders of the issued and outstanding shares, ADSs, stock options share units and warrants of the Company tender their securities in the Tender Offer and the recommendation remaining in force and not being modified or changed in a manner detrimental to the Tender Offer; (v) subject to the relevant standards set forth in the Combination Agreement, the accuracy of the representations and warranties made by the Company; and (vi) material compliance by the Company with its covenants in the Combination Agreement. To the extent that the current market price of our shares and ADSs reflects an assumption that the Acquisition will be completed, the market price of our shares and ADSs may decline significantly if the Acquisition does not occur or if investors perceive that the Acquisition may not occur. Any failure of the Acquisition to occur could have a material adverse effect on our business and operations.

The Combination Agreement contains provisions that limit our ability to pursue alternative transactions to the Acorda Acquisition, which could discourage a potential acquirer of us from making an alternative transaction proposal and, in certain circumstances, could require us to pay a termination fee to Acorda.

Under the Combination Agreement, we are restricted from responding to third parties making takeover proposals except under certain circumstances, including (i) our right, under certain circumstances and subject to certain conditions, to furnish non-public information to, and to participate in discussions with, third parties in response to certain written proposals relating to alternative acquisition transactions; and (ii) the right of our board of directors, under certain circumstances and subject to certain conditions, to withdraw or change its recommendation in favor of the Tender Offer if the failure to do so would be inconsistent with its fiduciary duties and to terminate the Combination Agreement in order to enter into a written definitive agreement providing for an alternative acquisition transaction. These provisions could discourage a third party that may have an interest in acquiring us from considering or proposing such an acquisition, even if such a third party proposal were superior to the Acorda Acquisition.

While the Acorda Acquisition is pending, we are subject to restrictions on the conduct of our business that could prevent us from pursuing business opportunities that we would otherwise pursue.

The Combination Agreement includes restrictions on the conduct of our business prior to the completion of the Tender Offer, generally requiring us to conduct our business in the ordinary course and subjecting us to a variety of specific limitations absent Acorda’s prior written consent. We may find that these and other contractual restrictions in the Combination Agreement may delay or prevent us from responding, or limit our ability to respond, effectively to competitive pressures, industry developments and future business opportunities that may arise during such period, even if our management believes they may be advisable, The pendency of the proposed Acquisition may also divert management’s attention and our resources from the ongoing business and operations.

Our employees, vendors and other parties with whom we have a business relationship may experience uncertainties about the effects of the Acquisition. In connection with the pending Acquisition, it is possible that some employees, vendors and other parties with whom we have a business relationship may delay or defer certain business decisions or may seek to terminate, change or renegotiate their relationship with us as a result of the Acquisition. Similarly, current and prospective employees may experience uncertainty about their future roles with us following completion of the Acquisition, which may adversely affect our ability to attract and retain key employees. If any of these effects were to occur, it could materially and adversely impact our business and operations.

The cash amount that shareholders and ADS holders will receive on completion of the Tender Offer is based on a fixed amount per share and per ADS, as applicable, and is subject to foreign currency exchange fluctuations. Therefore, the premium relating to our shares and ADSs may decrease at the moment of their being tendered in connection with the Tender Offer.

According to the terms of the Tender Offer, the Company’s shareholders will receive €0.2946 in cash per share validly tendered and not withdrawn. ADS holders will receive €23.5680 per ADS validly tendered and not withdrawn, payable in the equivalent amount of U.S. dollars for each ADS determined as near to the payment date as reasonably practicable based on the U.S. dollar spot rate against the euro exchange rate on the nearest practicable day to the closing of the Tender Offer. Given that the price per share is fixed, the amount per share that the Company’s shareholders will receive will not change, even if our share price does change. There will not be an adjustment of the price per share, nor a right to withdraw the Tender Offer, solely because of fluctuations in the Company’s share price. Furthermore, ADS holders are subject to the risk of a decrease in the dollar/euro exchange rate before the closing of the Tender Offer. In that case, the value offered in U.S. dollars for each ADS would decrease. Therefore, the price of the Company’s shares and ADSs during and following the closing of the Tender Offer could be higher than the price at the moment of the closing of the Tender Offer, their current price or their price at the time of their being tendered in connection with the Tender Offer.

Risks Related to Our Financial Position and Capital Requirements

We have incurred net losses since our inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future.

We are a developmental stage company with a history of operating losses. With the exception of the year ended December 31, 2013, we have never been profitable and have incurred losses in each year since our inception. Although we made a profit in 2013, this was primarily due to a nonrefundable development milestone payment received from UCB Pharma S.A., or UCB, for tozadenant, which cannot be expected to recur in the future. Our net results were a €28.3 million loss, a €35.2 million loss and a €5.8 million profit for the years ended December 31, 2015, 2014 and 2013, respectively. As of December 31, 2015, we had retained earnings, which were an accumulated deficit, of €182.5 million. Substantially all of our losses have resulted from funding our research and development programs and general and administrative costs associated with our operations. Our marketed product, Selincro, received European marketing authorization in 2013, but it is still in the early stages of commercialization and a reliable revenue stream will depend on the ability of our partner, H. Lundbeck A/S, or Lundbeck, to successfully grow sales of Selincro. The remainder of our pipeline products, including our lead product candidate, tozadenant, are still in the clinical development phase and we have commenced a pivotal Phase 3 trial of tozadenant.

We have devoted most of our financial resources to research and development, including our clinical and preclinical development activities, and will continue to do so for the foreseeable future. To date, we have mainly funded our operations through public offerings, private placements of equity securities, nonconvertible and convertible capital loans, long-term research and development loans, development milestone payments, milestone payments under our license and commercialization agreement with Lundbeck, or the Lundbeck License Agreement,

and, most recently, royalties under the Lundbeck License Agreement, and a number of trials of product candidates have been partially or wholly funded through non-dilutive funding. The amount of our future net losses will depend, in part, on the rate of our future expenditures, our ability to obtain additional funding and the relative levels of milestone payments and royalties on sales of Selincro from Lundbeck. We expect to continue to incur significant expenses and net losses for at least the next several years. Our research and development expenses may vary from period to period based on the timing of our research and development activities, including due to timing of initiation of clinical trials and enrollment of patients in clinical trials. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development expenses to increase for the foreseeable future as our product candidates progress in clinical trials. In particular, research and development expenses are expected to increase as we advance the clinical development of tozadenant. The successful development of our product candidates is highly uncertain. At this time we cannot reasonably estimate the nature, timing or costs of the efforts that will be necessary to complete the development of, or the period, if any, in which material net cash inflows may commence from, any of our product candidates. Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability.

We may never achieve or sustain profitability.

Our ability to achieve net profits in the future will depend on, among other factors, whether or not we can successfully develop our product candidates into marketable drugs and obtain necessary regulatory approvals, and on the ability of our partner Lundbeck to successfully grow sales of Selincro. Even if one or more of the product candidates that we develop is approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate. Our operations and financial condition have been, and will likely continue to be, dependent on our ability to find suitable partners that have the capacity to participate in, or take over, any or all late stage clinical trials, manufacturing and marketing of our product candidates. Assuming the successful product development and regulatory approval of our product candidates by the relevant authorities, our ability to generate revenue depends on the acceptance of the products by physicians and patients. The market acceptance of any product depends on a number of factors, including the continued demonstration of efficacy and safety in commercial use, cost-effectiveness, convenience and ease of administration, ability to supply sufficient quantities of product to the market, competition, adverse or favorable publicity, governmental efforts to reduce health care costs or reform government health care programs and marketing and distribution support. Our future results may vary significantly due to the potential, or the absence of, forthcoming upfront and development and commercial milestone payments related to the commercialization of our development products.

We may not succeed in these activities, and we may never generate revenue from product sales that is significant enough to achieve profitability. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our failure to become or remain profitable could impair our ability to raise capital, expand our business, discover or develop other product candidates or otherwise adversely affect our business and operations. A decline in the value of our company could cause you to lose all or part of your investment.

We cannot assure you of the adequacy of our capital resources to successfully complete the development and commercialization of our product candidates, and a failure to obtain additional capital, if needed, could force us to delay, limit, reduce or terminate our product development or commercialization efforts.

As of December 31, 2015, we had liquid assets amounting to €79.0 million. We define “liquid assets” as cash and cash equivalents together with our financial assets at fair value through profit or loss, which consist of money market and investment funds. We believe that we will continue to expend substantial resources for the foreseeable future developing tozadenant and our other product candidates. These expenditures will include costs associated with research and development, conducting preclinical studies and clinical trials, seeking regulatory approvals, as well as launching and commercializing products approved for sale, if any, and potentially acquiring new products. In addition, other unanticipated costs may arise. Because the outcome of our anticipated clinical trials is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidates. Based on our current operating plan, we believe that our current liquid assets and the milestone and royalty revenues that we expect to receive from Lundbeck for Selincro will enable us to fund our Phase 3 double-blind clinical trial (and extension) of tozadenant in Parkinson’s through completion, as well as our portion of the costs of the SYN120 Phase 2a clinical trial in Parkinson’s dementia and the

BTT1023 Phase 2 clinical trial in PSC. We intend to fund the remaining portion of these trials from already identified non-dilutive sources. We have based this estimate on assumptions that may prove to be incorrect, and we could expend our capital resources sooner than we currently expect.

Our future funding requirements will depend on many factors, including but not limited to:

In addition, our operating plan may change as a result of many factors currently unknown to us. As a result of these factors, we may need additional funds sooner than planned. We expect to finance future cash needs primarily through a combination of public or private equity offerings, debt financings, strategic collaborations and non-dilutive funding. If sufficient funds on acceptable terms are not available when needed, or at all, we could be forced to significantly reduce operating expenses and delay, scale back or eliminate one or more of our development programs.

The adequacy of our capital resources is particularly dependent on cash generation from milestones and royalties in connection with sales of Selincro and other sources of non-dilutive funding.

Under the terms of our November 2006 option agreement with Lundbeck and the Lundbeck License Agreement, to date we have received €22.5 million in upfront and milestone payments and are eligible to receive an additional potential €71.5 million in milestone payments upon achievement of specified regulatory and commercial milestones. In addition to milestone payments, we are eligible to receive royalties on sales of Selincro. The payment of milestone payments and royalties under the Lundbeck License Agreement is dependent on a combination of factors, including the successful registration of Selincro for alcohol dependence in non-European countries, the successful registrations of Selincro in indications other than alcohol dependence and the level of sales of Selincro, which is partly dependent on the first two factors. We expect to use the milestone payments and royalty revenues that we receive from Selincro to partially fund our Phase 3 clinical program for tozadenant and clinical trials of our other product candidates. Lundbeck’s commercialization of Selincro is entirely outside of our control and we cannot

assure you that we will receive further milestone payments and/or royalties. If we do not receive the levels of milestone payments and royalties that we expect to receive, we cannot assure you that we will be able to fully fund our Phase 3 program for tozadenant or clinical activity of our other product candidates, and we may have to raise additional capital.

In July 2014, we announced that we received a grant of up to $2.0 million (€1.8 million) from the Michael J. Fox Foundation for Parkinson’s Research, or the Michael J. Fox Foundation, to investigate SYN120 in Parkinson’s dementia, of which we had received $0.9 million (€0.8 million) through December 31, 2015. Under the terms of the Michael J. Fox Foundation grant, we are subject to a repayment obligation and must pay the Michael J. Fox Foundation royalties on sales of SYN120-related products after such products reach a specified threshold of net sales, until we reach the royalty cap of the amount of award payments actually received, adjusted for inflation at the time of payment. The Michael J. Fox Foundation will largely fund an 80-patient, Phase 2a, randomized, double-blind, placebo-controlled trial of 16 weeks, duration in patients with Parkinson’s dementia, which will be conducted by the Parkinson Study Group. We are working in collaboration with the University of Birmingham to conduct a Phase 2 proof of concept clinical trial with BTT1023 in PSC. The investigator-sponsored clinical trial has been awarded partial funding from the U.K. National Institute of Health Research. As such, we have gained access to non-dilutive sources of funding to support our two Phase 2 clinical programs. We intend to continue to pursue additional sources of non-dilutive funding through our relationships with government, not-for-profit organizations and other partners, but cannot assure you that we will be able to maintain this funding or obtain similar funding in future. Further, an inability to meet conditions required for receiving grants, possible obligations to pay back certain or entire amounts of such grants or the unavailability of grants in the future may have a material adverse effect on our business results or operations and financial condition.

Raising additional capital may cause dilution to our existing shareholders, restrict our operations or require us to relinquish, or license on unfavorable terms, our rights to our product candidates and may impact any future potential revenue streams.

If our current liquid assets are insufficient to meet our operating requirements, we may seek additional capital through a variety of means, including through private and public equity offerings and debt financings. Although Finnish law provides existing shareholders with preemptive rights to subscribe for shares offered in proportion to the amount of shares in their possession in connection with any new offering of shares, this right is subject to waiver resolved upon by a majority which represents at least two-thirds of the votes cast and two-thirds of the shares represented at a shareholders’ meeting, provided that, from the company’s perspective, there is a weighty financial reason for the waiver. In addition, certain non-Finnish shareholders may not be able to exercise their preemptive subscription rights in any future offerings due to the legislation and regulations of their home country, including U.S. shareholders. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our shareholders’ interest may be diluted, and the terms of such equity or convertible debt securities may include liquidation or other preferences that are senior to or otherwise adversely affect shareholder rights. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring additional debt, making capital expenditures, declaring dividends or encumbering our assets to secure future indebtedness. If we are unable to raise additional capital when required or on acceptable terms, we may be required to:

Any such consequence may have a material adverse effect on our business, operating results and prospects and on our ability to develop our product candidates.

In connection with the Convertible Notes Financings we have indemnification obligations to certain investors pursuant to the subscription agreement with such investors. These obligations could subject us to substantial liabilities.

On April 23, 2015 and May 7, 2015, we and certain new and existing investors entered into agreements pursuant to which such investors subscribed for €27.5 million and €5.6 million, respectively, of our non-interest-bearing, convertible promissory notes and received warrants exercisable for our shares (the “Convertible Notes Financings”). In connection with the Convertible Notes Financings in May 2015, we entered into a subscription agreement with certain investors pursuant to which we are obligated to indemnify such investors against damages arising from, among other things, our breach or alleged breach of any of our representations or warranties contained in the subscription agreement and any of our obligations under the subscription agreement. If we are required to indemnify the investors under the circumstances set forth in the subscription agreement, we may be subject to substantial liabilities. The maximum potential amount of such liabilities is the aggregate consideration paid by the investors party to the subscription agreement, or €27.5 million.

Impairment charges or write-downs on our assets could have a significant adverse effect on our results of operations and financial results.

Substantial value is allocated to our intangible assets and goodwill resulting from business combinations, which could be substantially impaired upon indications of impairment. Indications of impairment may primarily arise when the clinical program for an asset does not proceed as expected, a different clinical development pathway is pursued than initially intended, the asset is partnered or out-licensed utilizing a transaction structure that changes the timing or amount of our future economic rights to the asset, or some of the economic value from the asset is realized. As a result, impairment testing could lead to additional material impairment charges in the future that could have an adverse effect on our financial condition and the value of our assets.

We regularly review our long-lived intangible and tangible assets, including identifiable intangible assets and goodwill, for impairment. Goodwill, acquired research and development, and acquired development projects not yet ready for use are subject to impairment review at least annually. Impairment testing may lead to impairment charges in the future. Any significant impairment charges could have a material adverse effect on our results of operations and financial condition. In 2014, for example, we recognized impairment charges totaling €27.6 million in relation to nepicastat, which was fully written down as a result of the receipt of top-line data that did not meet its primary efficacy endpoint in respect of the Phase 2a trial, and SYN120, which was written down to its recoverable amount, as a result of a revision to our plans to develop SYN120 for Parkinson’s dementia, which has smaller commercial potential than Alzheimer’s. For a detailed discussion of how we determine whether an impairment has occurred, what factors could result in an impairment and the increasing impact of impairment charges on our results of operations, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Critical Accounting Estimates and Judgments—Impairment of Intangible Assets” and note 2.11 to our consolidated financial statements included elsewhere in this annual report on Form 20-F.

We are exposed to risks related to currency exchange rates.

We conduct a significant portion of our operations outside Finland and other eurozone countries, principally in the United States. Because our financial statements are presented in euros, changes in currency exchange rates have had and could have a significant effect on our operating results. Exchange rate fluctuations between local currencies and the euro create risk in several ways, including the following: weakening of the euro may increase the euro cost of our research and development expenses, which are principally in United States dollars; strengthening of the euro may decrease the value of our revenues denominated in other currencies; and the exchange rates on non-euro transactions and cash deposits can distort our financial results. In addition, in the next few years we expect to receive the majority of revenues (royalties from sales of Selincro) in euros and that the majority of our expenditure (continuing research and development expenses) will be incurred in United States dollars, which may cause an impact on our financial results to the extent those revenues are used to fund those expenses.

Risks Related to the Development and Clinical Testing of Our Product Candidates

We depend significantly on the success of tozadenant and our other product candidates. Tozadenant and our other product candidates are still in clinical development. If our clinical trials are not successful, we do not obtain regulatory approval or we are unable, or unable to find a partner, to commercialize tozadenant or our

other product candidates, or we experience significant delays in doing so, our business, financial condition and results of operations will be materially adversely affected.

We have invested a significant portion of our efforts and financial resources in the development of tozadenant, SYN120 and BTT1023, all of which are still in clinical development. Our ability to generate revenues from these product candidates, which we do not expect will occur for at least the next several years, if ever, will depend heavily on successful clinical development, obtaining regulatory approval and eventual commercialization of them. We cannot assure you that we will be able to successfully develop or commercialize our product candidates or any future product candidates. The potential success of tozadenant, particularly in the United States, is initially dependent on the success of our pivotal Phase 3 clinical trial.

More generally, the success of tozadenant, SYN120 and BTT1023 will depend on several factors, including the following:

If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to obtain approval for and/or to successfully commercialize tozadenant, SYN120 or BTT1023, which would materially adversely affect our business, financial condition and results of operations.

Clinical drug development involves a lengthy and expensive process with uncertain timelines and uncertain outcomes.

To obtain the requisite regulatory approvals to market and sell any of our product candidates, we must demonstrate through extensive preclinical studies and clinical trials that our products are safe and effective in humans. To date, we have not completed all preclinical studies or clinical trials required for the approval of our product candidates (other than our approved product Selincro). We have commenced a pivotal Phase 3 trial of tozadenant. We would not expect to have data for our Phase 3 double-blind clinical trial (and extension) of tozadenant until the second half of 2017 and would not be able to submit a new drug application, or NDA, until adequate safety data has been obtained from the open-label trial of the Phase 3 program. In addition to tozadenant, together with the Parkinson Study Group, we are currently conducting a Phase 2a trial of SYN120 in Parkinson’s dementia and expect to announce top-line data by the end of 2016. A potential Phase 2 clinical trial of SYN120 in Alzheimer’s is dependent on obtaining additional funding. Enrollment for the Phase 2 clinical trial of BTT1023 in PSC opened at the end of the first quarter of 2015, and interim data is expected by the end of 2016.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. This is due to numerous risks and uncertainties associated with developing drugs, including the uncertainty of:

A change in the outcome of any of these variables with respect to the development of tozadenant or our other product candidates could mean a significant change in the costs and timing associated with the development of such product candidate. Failure can occur at any time during the clinical trial process. Clinical trials must be conducted in accordance with U.S. Food and Drug Administration, or the FDA, European Medicines Agency, or the EMA, and comparable foreign regulatory authorities’ legal requirements, regulations or guidelines, and are subject to oversight by these governmental agencies and Institutional Review Boards, or IRBs, at the medical institutions where the clinical trials are conducted. In addition, clinical trials must be conducted with supplies of our product candidates produced under current good manufacturing practices, or cGMP, and other requirements. We depend on medical institutions and clinical research organizations, or CROs, as well as on investigators and sponsors with which we collaborate on investigator-sponsored trials, such as the investigators and sponsors conducting the Phase 2a clinical trial of SYN120 in Parkinson’s dementia and the Phase 2 clinical trial of BTT1023 in PSC, to conduct our clinical trials in compliance with current good clinical practice, or cGCP, standards. To the extent these medical institutions or CROs fail to enroll participants for our clinical trials or conduct the trial to cGCP standards or are delayed for a significant time in the execution of trials, including achieving full enrollment, we may be affected by increased costs, program delays or both, which may harm our business.

The results of previous clinical trials may not be predictive of future results and clinical trials of product candidates may not be successful.

Clinical failure can occur at any stage of clinical development. Clinical trials may produce negative or inconclusive results, and we or any of our current and future collaborators may decide, or regulators may require us, to conduct additional clinical or preclinical testing. We will be required to demonstrate with substantial evidence through well-controlled clinical trials that our product candidates are safe and effective for use in the intended treatment population before we can seek regulatory approvals for their commercial sale. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials and future preclinical studies and the positive results generated to date in clinical trials for our product candidates do not ensure that later clinical trials will demonstrate similar results. For example, our prior product candidate under development for cocaine addiction, nepicastat, showed positive results in preclinical studies and an earlier clinical trial, but failed to distinguish from placebo in a Phase 2a clinical trial where it did not meet the primary efficacy endpoint of an increased proportion of subjects remaining abstinent from cocaine during the last two weeks of the treatment period. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. For example, preladenant, another adenosine A _2a antagonist developed by Merck & Co., or Merck, demonstrated efficacy in a Phase 2b trial in Parkinson’s patients experiencing OFF episodes on levodopa. However, in May 2013, Merck announced that it was discontinuing preladenant development due to a lack of efficacy demonstrated in three different Phase 3 trials, including two in Parkinson’s patients with motor fluctuations. Product candidates that have shown promising results in early clinical trials may still suffer significant setbacks in subsequent clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials

due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Further, progress in trials of one product candidate does not indicate that we will make similar progress in additional trials for that product candidate or in trials for our other product candidates. Furthermore, our Phase 2b trial evaluated the efficacy of tozadenant during a 12-week trial while our Phase 3 trial will evaluate efficacy over a 24-week period. In addition, patients will be taking tozadenant for nearly 18 months, considerably longer than in our previous trials. We cannot assure you that the efficacy and safety seen in previous trials will continue to be observed in trials of longer duration or with other trial design differences. Our future clinical trials may not be successful.

The success of tozadenant and our other product candidates initially depends on our ability to complete clinical trials that demonstrate the efficacy and safety of our product candidates. We cannot assure you that any Phase 2, Phase 3 or other clinical trials that we may conduct will demonstrate consistent or adequate efficacy and safety to obtain regulatory approval to market our product candidates.

If we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are unfavorable or are only modestly favorable or if there are safety concerns associated with tozadenant, SYN120, BTT1023 or any other product candidates we may decide to develop in the future, or if we are required to conduct additional clinical trials or other testing of tozadenant, SYN120, BTT1023 or any other product candidate that we may develop in the future beyond the trials and testing that we contemplate, we may:

The design and conduct of a clinical trial can determine whether its results will support approval of a product, and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced or completed.

In some instances, there can be significant variability in safety and/or efficacy results between different trials of the same product candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, patient adherence to the dosing regimen and other trial protocols and the rate of dropout among clinical trial participants. In the case of any Phase 3 trials we conduct, results may differ from earlier trials due to the larger number of clinical trial sites and additional countries and languages involved in such trials. For example, in the recent Merck trials of preladenant in a similar Parkinson’s population to that which we are evaluating in our Phase 3 trial of tozadenant, rasagiline, an approved drug that has consistently demonstrated efficacy in a number of trials in this population, was used as a positive control and also failed to demonstrate efficacy, suggesting the trials were flawed. A published post-hoc analysis identified a number of factors that potentially contributed to the trial failure. Based on our review of those factors, we decided to limit trial conduct for tozadenant to North America and selected European countries, limit the number of trial sites, institute measures to monitor how patients will be identified and selected for enrollment and how both the investigators and patients are trained. While we believe that these factors are critical in ensuring good trial design and conduct, we cannot assure you that our Phase 3 trial design or conduct will yield results that demonstrate the efficacy or safety of tozadenant or that any such results will be sufficient to support approval.

In addition, in the case of tozadenant, our Phase 2b clinical trial included, and our Phase 3 clinical trial will include, certain endpoints based on patient reported outcomes, some of which are captured daily from trial participants with diaries. Low compliance by patients in maintaining an accurate diary may impact the trials’ validity or statistical power.

The FDA has agreed to a Special Protocol Assessment, or SPA, with respect to the design of our Phase 3 trial of tozadenant. We have also requested scientific advice from the EMA with respect to the design of our Phase 3 trial.

Based on their response, we expect EMA approval of tozadenant to be contingent on conducting studies in addition to the Phase 3 program. We plan to engage in further discussions with the EMA with respect to their requirements for the approval of tozadenant.

If clinical trials of our product candidates are prolonged or delayed, we may be unable to obtain required regulatory approvals, and therefore be unable to commercialize our product candidates on a timely basis or at all.

We cannot assure you that our clinical trials will begin as planned or be completed on schedule, if at all, or that we will not need to restructure our trials after they have begun. Significant clinical trial delays could also shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do or shorten any periods during which we have the exclusive right to commercialize our product candidates, which may harm our business and results of operations. In addition, some of the factors that cause, or lead to, clinical trial delays may ultimately lead to the denial of regulatory approval of tozadenant, SYN120, BTT1023 or any other product candidate that we may decide to develop in the future. The completion of clinical trials for our clinical product candidates may be delayed, suspended or terminated as a result of many factors, including but not limited to:

If serious adverse, undesirable or unacceptable side effects or preclinical findings are identified during the development of our product candidates or following approval, we may need to abandon our development of such product candidates, the commercial profile of any approved label may be limited or we may be subject to other significant negative consequences following marketing approval.

If our product candidates are associated with serious adverse, undesirable or unacceptable side effects or preclinical findings, we may need to abandon their development or limit development to certain uses or sub-populations in which such side effects are less prevalent, less severe or more acceptable from a risk-benefit perspective. Many compounds that initially showed promise in preclinical or early stage testing have later been found to cause side effects that restricted their use and prevented further development of the compound for larger indications.

In our Phase 2b clinical trial of tozadenant, the majority of patients in each treatment group experienced at least one treatment emergent adverse event, or TEAE, during the trial. The most frequently reported TEAEs (occurring in more than 5% of patients in any treatment group, with incidence greater than placebo) were dyskinesia, nausea, dizziness, constipation, insomnia and fall. The majority of TEAEs were mild or moderate in maximum intensity. As expected with most central nervous system drugs, there was a dose-related increase in the reporting of adverse events and in the proportion of patients who discontinued early due to TEAEs, with a higher proportion (approximately 20%) of patients in the 240 mg twice/day tozadenant group discontinuing early due to TEAEs compared to the lower dose groups (approximately 8% to 12%). A total of 24 severe adverse events, or SAEs, were reported in 13 patients. The incidence of SAEs was 1.2%, 3.7%, 2.4%, and 4.8% in the 60 mg, 120 mg, 180 mg, and 240 mg groups, and 3.6% in the placebo group. Of the 24 SAEs reported, 11 occurred in two of the 13 patients. Nonfatal SAEs were reported for seven patients. All nonfatal SAEs resolved except for an event of atrial fibrillation in a placebo-group patient who also had an ischemic stroke. One nonfatal SAE of acute psychosis with paranoia was assessed by the investigator as being probably related to tozadenant, and we do not intend to take any further actions based on this isolated report. Fatal SAEs were reported for six patients, all of whom received tozadenant. An independent blinded data monitoring committee reviewed all TEAEs and SAEs during the trial and an independent expert panel reviewed these data after the trial was complete and unblinded. Both panels concluded that there was no relationship between tozadenant treatment and the fatal SAEs. Nevertheless, a data safety monitoring board will oversee the safety of the Phase 3 clinical trial. Occurrence of serious procedure- or treatment-related side effects could lead the safety monitoring board to recommend discontinuation of the trial or modification of the protocol, and could impede clinical trial enrollment and receipt of marketing approval from the FDA, the EMA and comparable foreign regulatory authorities. They could also adversely affect physician or patient acceptance of our product candidates.

Additionally if one or more of our product candidates receives regulatory approval, and we or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including:

Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, results of operations and prospects.

We depend on enrollment of patients in our clinical trials for our product candidates. If we are unable to enroll patients in our clinical trials, our research and development efforts could be materially adversely affected.

Successful and timely completion of clinical trials will require that we enroll a sufficient number of patient candidates. Trials may be subject to delays as a result of patient enrollment taking longer than anticipated or patient withdrawal and/or drop outs. Patient enrollment depends on many factors, including the size and nature of the patient population, eligibility criteria for the trial, the proximity of patients to clinical sites, the design of the clinical protocol, the availability of competing clinical trials, the availability of drugs approved for the indication the clinical trial is investigating, and clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies.

The specific target population of patients specified in a trial protocol may make it difficult for us to enroll enough patients to complete our clinical trials in a timely and cost-effective manner. In our Phase 3 clinical trial of tozadenant, we are seeking to enroll Parkinson’s patients receiving treatment with levodopa and who experience OFF episodes and meet other inclusion criteria, and are not otherwise excluded by meeting any of the exclusion criteria, defined in the trial protocol. We seek to identify, recruit, enroll and dose patients meeting these entry criteria. We opened enrollment to patients in a Phase 2 clinical trial of BTT1023 in PSC in the first quarter of 2015. PSC is an orphan indication, which means that the potential pool of appropriate patients for the trial is more limited than the potential pool of patients for trials in non-orphan indications. Delays in the completion of any clinical trial of our product candidates will increase our costs, slow down our product candidate development and approval process, delay or potentially jeopardize our ability to commence product sales and generate revenue and materially affect the competitive environment in which we may commercialize our product candidates. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.

Due to our limited resources and access to capital, we must and have in the past decided to prioritize development of certain product candidates; these decisions may prove to have been wrong and may adversely affect our revenues.

Because we have limited resources and access to capital to fund our operations, we must decide which product candidates to pursue and the amount of resources to allocate to each. We are currently primarily focused on the development of tozadenant as an adjunctive treatment to levodopa in Parkinson’s. Our decisions concerning the allocation of research, collaboration, management and financial resources toward particular compounds, product candidates or therapeutic areas may not lead to the development of viable commercial products and may divert resources away from better opportunities. Similarly, our potential decisions to delay, terminate or collaborate with third parties in respect of certain product development programs may also prove not to be optimal and could cause us to miss valuable opportunities. If we make incorrect determinations regarding the market potential of our product candidates or misread trends in the biopharmaceutical industry, our business, financial condition and results of operations could be materially adversely affected.

Risks Related to Regulatory Approval of Our Product Candidates

Clinical development, regulatory review and approval by the FDA, the EMA and comparable foreign regulatory authorities are lengthy, time-consuming, expensive and inherently unpredictable activities. If we are ultimately unable to obtain regulatory approval for our product candidates, our business will be substantially harmed.

The process of obtaining regulatory approvals from the FDA, the EMA and comparable foreign regulatory authorities requires the expenditure of substantial time and financial resources and is inherently unpredictable. Approval policies, regulations, and the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions, which may cause delays in the approval or the decision not to approve an application, or cause a change to the decision to seek approval in some jurisdictions. It is possible that none of our existing product candidates or any product candidates we may seek to develop in the future will ever obtain regulatory approval. In addition, we may gain regulatory approval for tozadenant or other product candidates in some but not all of the territories available or some but not all of the target indications, resulting in limited commercial opportunity for the approved products.

Events that may prevent successful or timely commencement, enrollment, completion or regulatory authority acceptance of clinical development plans include:

This lengthy approval process, as well as the unpredictability of the results of clinical trials, may result in our failing to obtain regulatory approval to market any of our product candidates, which would significantly harm our business, results of operations, and prospects. Even if we believe that the data collected from clinical trials of our product candidates are promising, such data may not be sufficient to support approval by the FDA, the EMA or comparable foreign regulatory authorities.

The FDA’s agreement to our SPA for our Phase 3 trial of tozadenant does not guarantee any particular outcome from regulatory review, including ultimate approval and may not lead to a faster development or regulatory review or approval process.

We consulted with the FDA regarding the design and adequacy of our proposed Phase 3 clinical program to support marketing approval of tozadenant through an SPA. The FDA has agreed to our SPA with respect to the design of our Phase 3 trial of tozadenant.

The FDA’s SPA process is designed to facilitate the FDA’s review and approval of drugs by allowing the FDA to evaluate the proposed design and size of Phase 3 clinical trials that are intended to form the primary basis for determining a drug product’s efficacy and safety. Upon specific request by a clinical trial sponsor, the FDA will evaluate the protocol and respond to a sponsor’s questions regarding, among other things, primary efficacy endpoints, trial conduct and data analysis, within 45 days of receipt of the request. The FDA ultimately assesses whether the protocol design and planned analysis of the trial are acceptable to support regulatory approval of the product candidate with respect to the effectiveness in the indication studied. All agreements and disagreements between the FDA and the sponsor regarding an SPA must be clearly documented in an SPA letter or the minutes of a meeting between the sponsor and the FDA. However, even if an agreement regarding an SPA is reached, an SPA agreement does not guarantee approval of a product candidate, and even if the FDA agrees to the design, execution, and analysis proposed in protocols reviewed under the SPA process, the FDA may revoke or alter its agreement in

certain circumstances. In particular, an SPA agreement is not binding on the FDA if public health concerns emerge that were unrecognized at the time of the SPA agreement, other new scientific concerns regarding product safety or efficacy arise, the sponsor company fails to comply with the agreed upon trial protocols, or the relevant data, assumptions or information provided by the sponsor in a request for the SPA change or are found to be false or omit relevant facts. In addition, even after an SPA agreement is finalized, the SPA agreement may be modified, and such modification will be deemed binding on the FDA review division, except under the circumstances described above, if the FDA and the sponsor agree in writing to modify the protocol and such modification is intended to improve the trial. The FDA retains significant latitude and discretion in interpreting the terms of the SPA agreement and the data and results from any trial that is the subject of the SPA agreement. We cannot assure you that our Phase 3 clinical trial of tozadenant will succeed, will be deemed binding by the FDA under our SPA, or will result in any FDA approval for tozadenant. We expect that the FDA will review our compliance with the protocol under our SPA agreement and that it will conduct inspections at some of the sites where the trial will be conducted. We cannot assure you that each of the clinical trial sites will pass such FDA inspections, and negative inspection results could significantly delay or prevent any potential approval for tozadenant. If the FDA revokes or alters its agreement under the SPA, or interprets the data collected from the clinical trial differently than we do, the FDA may not deem the data sufficient to support an application for regulatory approval, which could materially adversely affect our business, financial condition and results of operations. A revocation or alteration of our existing SPA could significantly delay or prevent approval of our application. Our SPA agreement with the FDA does not ensure that tozadenant will receive marketing approval or that the approval process will be faster than conventional regulatory procedures.

If we fail to obtain regulatory approval in any jurisdiction, we will not be able to market our products in that jurisdiction.

We intend to market our product candidates, including tozadenant, if approved, in international markets through partnerships. Such marketing will require separate regulatory approvals in each market and compliance with numerous and varying regulatory requirements. The approval procedures vary from country to country and may require additional testing. In addition, in many countries outside the United States, a product must undergo health economic assessments to agree on pricing and/or be approved for reimbursement before it can be approved for sale in that country, or before it becomes commercially viable. The FDA and the EMA may come to different conclusions regarding approval of a marketing application. Approval by the FDA or EMA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or by the FDA or EMA. We may not obtain regulatory approvals on a timely basis, if at all. We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products in any market. If we or any future partner are unable to obtain regulatory approval for tozadenant or our other product candidates in one or more significant jurisdictions, then the commercial opportunity for tozadenant or our other product candidates, and our financial condition, will be adversely affected.

We have also requested scientific advice from the EMA with respect to the design of our Phase 3 trial of tozadenant. Based on their response, we expect EMA approval of tozadenant to be contingent on conducting studies in addition to the Phase 3 program. We plan to engage in further discussions with the EMA with respect to their requirements for the approval of tozadenant.

Even if our product candidates obtain regulatory approval, we will be subject to ongoing regulatory review, which may result in significant additional expense. Additionally, our product candidates, if approved, could be subject to restrictions, and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our products.

If marketing authorization is obtained for any of our product candidates, the product will remain subject to continual regulatory review and therefore authorization could be subsequently withdrawn or restricted. Any regulatory approvals that we receive for our product candidates may also be subject to limitations on the approved indicated uses for which the product may be marketed or to conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor safety and efficacy. In addition, if the FDA, the EMA or a comparable foreign regulatory authority approves any of our product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping, and, potentially, other post-marketing obligations, may result in significant expense and limit our ability to commercialize such products. These requirements include submissions of

safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs and cGCPs for any clinical trials that we conduct post-approval. Later discovery of previously unknown problems with an approved product, including adverse effects of unanticipated severity or frequency, or with manufacturing operations or processes, or failure to comply with regulatory requirements, may result in, among other things:

If any of these events occurs, our ability to sell such product may be impaired, and we may incur substantial additional expense to comply with regulatory requirements, which could materially adversely affect our business, financial condition and results of operations. The policies of the FDA, EMA or a comparable foreign regulatory authority may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, which would adversely affect our business, prospects and ability to achieve or sustain profitability.

We may be unable to obtain orphan drug designation or exclusivity in the United States for BTT1023. If our competitors are able to obtain orphan drug exclusivity for their products in the same indication for which we are developing BTT1023, we may not be able to have our product candidate approved by the applicable regulatory authority for a significant period of time. Conversely, we may not be able to benefit from the associated marketing exclusivity from orphan drug exclusivity that we obtain.

Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product candidate as an orphan drug if it is a drug 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. In the European Union, the European Commission may designate a product candidate as an orphan medicinal product if it is a medicine for the diagnosis, prevention or treatment of life-threatening or very serious conditions that affects not more than five in 10,000 persons in the European Union, or it is unlikely that marketing of the medicine would generate sufficient returns to justify the investment needed for its development. BTT1023 has been granted orphan drug designation for PSC in Europe, and we intend to pursue orphan drug designation for BTT1023 in the United States. However, there is no assurance we will be able to receive orphan drug designation for BTT1023 in the United States, and even if we are successful in obtaining orphan drug designation for BTT1023 in the United States, orphan drug status may not ensure that we have market exclusivity in a particular market. Further, the granting of a request for orphan drug designation does not alter the standard regulatory requirements and process for obtaining marketing approval.

Generally, if a product candidate with an orphan drug designation receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which, subject to certain exceptions, precludes the FDA from approving the marketing application of another drug for the same indication for that time period or precludes the EMA, and other national drug regulators in the European Union, from accepting the marketing application for another medicinal product for the same indication. The applicable period is seven years in the United States and ten years in the European Union. The European Union period can be reduced to six years if a product no longer meets the criteria for orphan drug designation or if the product is sufficiently profitable so that market exclusivity is no longer justified. Orphan drug exclusivity may be lost in the United States if the FDA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the product to meet the needs of patients with the rare disease or condition.

Even if we obtain orphan drug exclusivity for BTT1023 or another of our product candidates, that exclusivity may not effectively protect the product from competition because exclusivity can be suspended under certain circumstances. In the United States, even after an orphan drug is approved, the FDA can subsequently approve another drug for the same condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care. In the European Union, orphan exclusivity will not prevent a marketing authorization from being granted for a similar medicinal product in the same indication if the new product is safer, more effective or otherwise clinically superior to the first product or if the marketing authorization holder of the first product is unable to supply sufficient quantities of the product.

Risks Related to Commercialization of Our Product Candidates

We are likely to face significant competition and if our competitors develop and market products that are more effective, safer or less expensive than our product candidates, our commercial opportunities will be negatively impacted.

We are currently developing product candidates that are likely to compete with other drugs and therapies that currently exist or are being developed. Products we may develop in the future are also likely to face competition from other drugs and therapies, some of which we may not currently be aware. We have competitors both in the United States and internationally, including major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies, universities and other research institutions. Many of our competitors have significantly greater financial, manufacturing, marketing, drug development, technical and human resources than we do.

Large pharmaceutical companies, in particular, have extensive experience in clinical testing, obtaining regulatory approvals, recruiting patients and in manufacturing pharmaceutical products. These companies also have significantly greater research and marketing capabilities than we do and may also have products that have been approved or are in late stages of development, and collaborative arrangements in our target markets with leading companies and research institutions. Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make the product candidates that we develop obsolete. As a result of all of these factors, our competitors may succeed in obtaining patent protection and/or marketing approval or discovering, developing and commercializing products in our field before we do.

Smaller and other early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These companies compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. In addition, the biopharmaceutical industry is characterized by rapid technological change. If we fail to stay at the forefront of technological change, we may be unable to compete effectively. Technological advances or products developed by our competitors may render our product candidates obsolete, less competitive or not economical.

We are aware of a number of pharmaceutical and biotechnology companies that are actively engaged in the research and development of pharmaceutical products for the same, or similar, therapeutic indications as we are. A number of these companies are developing competing drugs or treatment methods to those that we are targeting. As competitors develop their product candidates, they may develop proprietary positions in certain areas that may have a material adverse effect on the competitiveness of our products on the market. We may not always be aware of development of competing products or technologies and, therefore, there may be significant competing products or treatment methods in development of which we have no knowledge.

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe adverse effects, are more convenient or are less expensive than any products that we may develop. Our competitors may also obtain FDA, EMA or comparable foreign regulatory approval for their products more rapidly than we may obtain approval for ours, which could delay approval of our products and/or result in our competitors establishing a strong market position before we are able to enter the market. Even if our product candidates achieve marketing approval, they may be priced at a significant premium over competitive products if any have been approved by then, resulting in reduced competitiveness.

There is a large number of companies developing or marketing treatments for central nervous system diseases and disorders, including many major pharmaceutical and biotechnology companies. These treatments consist of small molecule drug products in the case of Parkinson’s, Alzheimer’s and related neurodegenerative diseases and biologic therapeutics that work by using next-generation antibody technology platforms in the case of inflammation and fibrotic diseases.

Tozadenant

Current therapies, including levodopa, the most widely prescribed treatment for Parkinson’s, lose effectiveness in most patients over time. The adenosine A _2a antagonists represent a novel mechanism of action for the treatment of Parkinson’s, with the potential for treating both motor and nonmotor symptoms, and may have the potential for slowing disease progression. Currently approved adjunctive treatment for Parkinson’s can be considered complementary rather than competitive to tozadenant as they may be used in combination. However, as most adjunctive treatments to levodopa will be generic by the time that we expect tozadenant to be approved for marketing, it is probable that they will be used prior to tozadenant.

Istradefylline (approved in Japan; Phase 3 elsewhere), also an adenosine A _2a antagonist, potentially addresses the same patient population as tozadenant. Istradefylline was refused FDA approval in 2008, but was approved for sale in Japan (as Nouriast) in 2013. Kyowa Hakko Kirin currently has a 600-patient 12-week double blind Phase 3 study of istradefylline underway in the United States, which is expected to be completed in the first half of 2016. If istradefylline is approved and commercially launched in the United States prior to tozadenant, it will result in direct competition with a molecule sharing the same mechanism of action.

SYN120

Currently, there are no therapies that cure Parkinson’s or Alzheimer’s. Existing therapies for both Parkinson’s dementia and Alzheimer’s are targeted at symptomatic improvement of cognitive function. Rivastigmine is the only product approved in the United States for the treatment of Parkinson’s dementia. Five drugs have been approved by the FDA for symptomatic treatment of Alzheimer’s.

There are several 5HT ₆ antagonists currently in development. Lundbeck’s LuAE58054 is in Phase 3 and GlaxoSmithKline reported results of a Phase 2 trial of SB742457 in mid-2011. SB742457 was acquired by Axovant Sciences, Inc. in December 2014 (referred to as RVT-101) and announced the start of a Phase 3 program of RVT-101 for the treatment of mild-to-moderate Alzheimer’s in October 2015. When added on to Aricept, the current standard of care for Alzheimer’s, both SB742457 and LuAE58054 demonstrated improvement in cognition in patients with Alzheimer’s, validating the relevance of 5HT ₆ receptors as a therapeutic target. These 5HT ₆ antagonists are further advanced in development than SYN120 and may become treatment options prior to when SYN120 could reach the market. Differentiating SYN120 from these products will be necessary to effectively compete with them and we cannot assure you that this will be possible.

Other major development targets for symptomatic treatments of cognitive deficits are nicotinic acetylcholine receptor (nAChR) agonists or modulators and histamine H ₃ receptor antagonists. Several nAChR compounds are in early-stage development. Pimavanserin, a 5HT _2a inverse agonist, has recently shown promise in improving neuropsychiatric symptoms in Parkinson’s disease psychosis and therefore has validated the importance of the 5HT _2a receptor as a target in this condition. We expect that pimavanserin will be approved for treatment of Parkinson’s disease psychosis prior to when SYN120 could be launched, and pimavanserin could become the standard for treatment of the condition. Differentiation of SYN120 from pimavanserin will be necessary for it to compete effectively and we cannot assure you that this will be possible.

BTT1023

There are currently no FDA approved agents that can prevent, arrest or reverse fibrosis. We are aware of four competing clinical development programs in PSC all of which are in Phase 2. Gilead’s simtuzumab (GS-6624) anti-lysyl oxidase-like 2 antibody targets an enzyme important for fibrogenesis and, if efficacious, is expected to improve liver pathology. The other three programs in development for PSC of which we are aware target bile acid transport in some way. Dr. Falk Pharma’s norUrso is an ursodeoxycholic acid that may improve liver function. Lumena Pharmaceuticals (recently acquired by Shire plc) is developing LUM001, a bile acid transport inhibitor currently in a small, open label, pilot trial in PSC with safety and tolerability as primary endpoints and an estimated trial completion date of December 2015. Like norUrso it may improve liver function but is not expected to affect the

underlying disease. Intercept’s obeticholic acid is another semi-synthetic bile acid analogue which could improve liver function and which may have anti-fibrotic effects, and is currently in a trial with an estimated completion date in June 2019.

For more information on competition, see “Item 4. Information on the Company—B. Business Overview—Competition.”

The successful commercialization of our product candidates will depend in part on the extent to which governmental authorities and health insurers establish adequate reimbursement levels and pricing policies.

The successful commercialization of our product candidates will depend, in part, on the extent to which third-party coverage and reimbursement for our products will be available from government and health administration authorities, private health insurers and other third-party payors.

These bodies may deny or revoke the reimbursement status of a given drug product or establish prices for new or existing marketed products at levels that are too low to enable us to realize an appropriate return on our investment in product development. Obtaining and maintaining reimbursement status is time consuming and costly. Significant uncertainty exists as to the reimbursement status of newly approved medical products. Furthermore, rules and regulations regarding reimbursement change frequently, in some cases at short notice, and we believe that changes in these rules and regulations are likely. In addition, many governments and health insurers are increasingly attempting to manage health care costs by limiting both coverage and the level of reimbursement of new products. As a result, they may not cover or provide adequate payment for our future products.

The unavailability or inadequacy of third-party coverage and reimbursement could have a material adverse effect on the market acceptance of our product candidates and the future revenues we may expect to receive from those products. In addition, we are unable to predict what additional legislation or regulation relating to the health care industry or third-party coverage and reimbursement may be enacted in the future, or what effect such legislation or regulation would have on our business.

Even if approved, if any of our products or product candidates do not achieve broad market acceptance among physicians, patients, the medical community and third-party payors, our revenue generated from their sales will be limited.

Even when product development is successful and regulatory approval has been obtained, our ability to generate any significant revenue depends on the acceptance of the products by physicians and patients. The degree of market acceptance of our products will depend on a number of factors, including:

If any of our products or product candidates are approved, but do not achieve an adequate level of acceptance by physicians, patients and the medical community, we may not generate sufficient revenue from these products, and we may not become or remain profitable. In addition, efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may never be successful.

The market for tozadenant and our other product candidates may not be as large as we expect.

Our estimates of the potential market opportunity for tozadenant include several key assumptions based on our industry knowledge, industry publications, third-party research reports and other surveys. These assumptions include the size of the Parkinson’s disease market, the number of patients who are treated and may become eligible for treatment with tozadenant and our penetration into that market. While we believe that our internal assumptions are reasonable, if any of these assumptions proves to be inaccurate, then the actual market for tozadenant could be smaller than our estimates of our potential market opportunity. If the actual market for tozadenant is smaller than we expect, our product revenue may be limited and it may be more difficult for us to achieve or maintain profitability. Similar estimates and assumptions apply to all of our product candidates.

We have never commercialized a product candidate before and may lack the necessary expertise, personnel and resources to successfully commercialize our products on our own or together with suitable partners.

We have relied, and will continue to rely, on Lundbeck for the commercialization of Selincro. We currently have no sales force, marketing or distribution capabilities and we have never commercialized a product candidate. For our product candidates for which we retain commercialization rights, we will have to develop our own sales, marketing and supply organization or outsource these activities to a third party.

Factors that may affect our ability to commercialize our product candidates on our own include recruiting and retaining adequate numbers of effective sales and marketing personnel, obtaining access to or persuading adequate numbers of physicians to prescribe our drug candidates and other unforeseen costs associated with creating an independent sales and marketing organization. Developing a sales and marketing organization will be expensive and time consuming and could delay the launch of our product candidates. We may not be able to build an effective sales and marketing organization. If we are unable to build our own distribution and marketing capabilities or to find suitable partners for the commercialization of our product candidates, we may not generate revenues from them or be able to reach or sustain profitability.

Risks Related to Our Reliance on Third Parties

Collaborations on products and product candidates are important to our business, and future collaborations may also be important to us. If we are unable to maintain any of these collaborations, if these collaborations are not successful or if we fail to enter into new strategic relationships, our business could be adversely affected.

We have in the past entered into, and intend to continue to enter into, collaborations with other companies that we believe could provide us with valuable funding and other benefits. However, we cannot assure you that any such collaboration will continue or be successful. For example, in August 2010, Synosia Therapeutics AG, or Synosia, which we acquired in February 2011, entered into a license and collaboration agreement with UCB, or the UCB Collaboration Agreement, to develop and commercialize tozadenant. Pursuant to the UCB Collaboration Agreement,

UCB was granted an option to receive an exclusive license to tozadenant. However, in March 2014, UCB terminated the UCB Collaboration Agreement and returned its rights to us following an assessment of its early and late stage clinical development pipeline as well as its other preclinical opportunities, which according to UCB, did not reflect any concerns regarding the safety or efficacy of tozadenant. The decision was made prior to the End of Phase 2 meeting with the FDA. In addition, we have entered into various other collaboration and license arrangements with third parties, including our development collaborations with the Parkinson Study Group, the National Institute of Health Research and the University of Birmingham, our license agreement with Roche Palo Alto LLC, Hoffman-La Roche Inc. and F. Hoffman-La Roche Ltd., collectively, the Roche Entities, and such agreement, the Roche License Agreement, and the Lundbeck License Agreement for the development and commercialization of Selincro. We cannot assure you that any such collaboration or license agreement will be successful.

In the future, we may enter into additional collaborations to fund our development programs or to gain access to sales, marketing or distribution capabilities. Our existing collaborations, and any future collaborations we enter into, may pose a number of risks, including the following:

If our collaborations on research and development candidates do not result in the successful development and commercialization of products or if one of our collaborators terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration. If we do not receive the funding we expect under these agreements, our development of our product candidates could be delayed and we may need additional resources to develop our product candidates. All of the risks relating to product development, regulatory approval and commercialization described in this annual report on Form 20-F also apply to the activities of our program collaborators.

Additionally, subject to its contractual obligations to us, if one of our collaborators is involved in a business combination, the collaborator might deemphasize or terminate the development or commercialization of any product candidate licensed to it by us. If one of our collaborators terminates its agreement with us, we may find it more difficult to attract new collaborators in a timely manner.

We may in the future determine to collaborate with additional pharmaceutical and biotechnology companies for development and potential commercialization of our product candidates. We may face significant competition in seeking appropriate collaborators. Our ability to reach a definitive agreement for a collaboration will depend, among other things, upon our 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. These factors may include the design or results of clinical trials, the likelihood of approval by the FDA, the EMA or comparable foreign regulatory authorities, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally. The collaborator may also consider alternative product candidates for similar indications that may be available to collaborate on and whether such collaboration could be more attractive than the one with us for our product candidate.

Collaborations are complex and time consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators. If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we may have to curtail the development of a product candidate, reduce or delay one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to fund and undertake development or commercialization activities on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into collaborations and do not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our product candidates or bring them to market and our business may be materially and adversely affected.

The success of our strategic partnerships and collaborations depends, to a significant degree, on the performance of our partners, over which we have little or no control.

In November 2006, we entered into an option agreement to negotiate the Lundbeck License Agreement, and subsequently entered into the Lundbeck License Agreement in May 2007. Pursuant to the Lundbeck License Agreement, we granted Lundbeck an exclusive, royalty-bearing, sublicensable worldwide license under certain patents and know-how related to Selincro owned by or exclusively licensed to us, to develop, manufacture and commercialize Selincro for any purpose. Under the terms of the Lundbeck License Agreement, we are eligible to receive royalties from Lundbeck on net sales of Selincro on a product-by-product and country-by-country basis until the later of either the date when there are no valid patent rights owned by us covering the licensed product or other statutory exclusivity rights covering the licensed product in force and May 23, 2017. We are also eligible to receive certain milestone payments under the Lundbeck License Agreement, upon the achievement of specified regulatory and commercial milestones. The timing of any milestone payments that we may receive is dependent on a

combination of factors, including the successful registration of the product for alcohol dependence in non-European countries, the successful registrations in indications other than alcohol dependence and the level of sales of Selincro that Lundbeck achieves. In addition, the level of sales that Lundbeck achieves also determines the level of royalties that we will receive under the Lundbeck License Agreement. Lundbeck is solely responsible for all manufacturing costs and expenses, as well as commercialization activities relating to licensed products. Lundbeck is subject to certain obligations requiring it to use commercially reasonable efforts to develop and commercialize Selincro in various countries. If Lundbeck is required to perform additional studies in certain countries in order to obtain regulatory approval to market and sell Selincro products to treat alcohol dependence in such countries, Lundbeck may offset certain development costs related to such studies against any future royalties or milestone payments payable to us. The ability of Lundbeck to continue to successfully commercialize Selincro is entirely outside of our control and we cannot assure you that we will receive or when we will receive further milestone payments and/or any royalties.

Lundbeck conducts, and we would expect any future partner we may have to conduct, its own regular strategic reviews of its research and development and/or commercialization programs and may elect to delay or terminate one or more of these strategic or collaborative partnerships, develop independently or in collaboration with a third party products that could compete with our product or product candidates, and could fail to commit sufficient resources to the development or commercialization of our product or product candidates which are subject to these partnerships or collaborations or otherwise fail to perform as we expect. In August 2015, Lundbeck announced a restructuring program which will reduce its budget and focus resources on five its core global products, which do not include Selincro. As a result of this restructuring, Lundbeck may devote fewer resources to Selincro, which could negatively affect the amount of royalty revenues that we receive based on the level of net sales of Selincro. If our revenues from upfront license payments, milestone payments and royalties generated from Selincro or, in the future, any of our product candidates that are subject to similar partnerships and collaborations are substantially reduced, this could have a material adverse effect on our business, financial condition and results of operations.

We rely on third parties to conduct our nonclinical and clinical trials and perform other tasks for us. If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or comply with regulatory requirements, we may not be able to obtain regulatory approval for, or commercialize, our product candidates and our business could be substantially harmed.

We have relied upon and plan to continue to rely upon third-party CROs to monitor and manage data for our ongoing nonclinical and clinical programs, including the clinical trials of tozadenant, SYN120 and BTT1023. In addition, we rely on investigators and sponsors with which we collaborate on investigator-sponsored trials, such as the investigators and sponsors conducting the Phase 2a clinical trial of SYN120 in Parkinson’s dementia and the Phase 2 clinical trial of BTT1023 in PSC. We rely on these parties for execution of our nonclinical and clinical studies and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our trials is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities. We and our CROs, Contract Manufacturing Organizations, or CMOs and other vendors are required to comply with cGMP, cGCP, and Good Laboratory Practice, or GLP, which are regulations and guidelines enforced by the FDA, the EMA or comparable foreign regulatory authorities for all of our product candidates in nonclinical and clinical development. Regulatory authorities enforce these regulations through periodic inspections of trial sponsors, principal investigators, trial sites and other contractors. If we, or any of our CROs or vendors, fail to comply with applicable regulations, the data generated in our nonclinical and clinical trials may be deemed unreliable and the FDA, the EMA or comparable foreign regulatory authorities may require us to perform additional nonclinical and clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that all of our clinical trials comply with cGCP regulations. In addition, our clinical trials must be conducted with product produced under cGMP regulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process.

If any of our relationships with these third-party CROs terminates, we may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable terms. In addition, our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our ongoing nonclinical and clinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our protocols, regulatory requirements, or for other reasons, our clinical trials may be extended, delayed, or terminated

and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. During the course of development and conducting our clinical trials, the projected costs of such studies may be increased by our CROs. As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase, and our ability to generate revenue could be delayed.

Switching or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition, and prospects.

We currently rely on third-party suppliers and other third parties for production of our product candidates and our dependence on these third parties may impair the advancement of our research and development programs and the development of our product candidates.

We currently rely on and expect to continue to rely on third parties for the manufacturing and supply of drug products for the clinical trials of our product candidates, including tozadenant, SYN120 and BTT1023. For the foreseeable future, we expect to continue to rely on such third parties for the manufacture of any of our product candidates on a clinical or, if any of our product candidates receives regulatory approval, commercial scale. Reliance on third-party providers may expose us to different risks than if we were to manufacture product candidates ourselves. The facilities used by our contract manufacturers to manufacture our product candidates must be approved by the FDA, the EMA or comparable foreign regulatory authorities pursuant to inspections that will be conducted after we submit an NDA or comparable approval application to the FDA, the EMA or comparable foreign regulatory authorities. Although we have auditing rights with all our manufacturing counterparties, we do not have control over a supplier’s or manufacturer’s compliance with these laws, regulations and applicable cGMP standards and other laws and regulations, such as those related to environmental, health and safety matters. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA, the EMA or comparable foreign regulatory authorities, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities. In addition, we have no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA, the EMA or comparable foreign regulatory authorities does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved. Any failure to achieve and maintain compliance with these laws, regulations and standards could subject us to the risk that we may have to suspend the manufacturing of our product candidates or that obtained approvals could be revoked, which would adversely affect our business and reputation.

Furthermore, third-party providers may breach agreements they have with us because of factors beyond our control. They may also terminate or refuse to renew their agreements because of their own financial difficulties or business priorities, potentially at a time that is costly or otherwise inconvenient for us. If they do not successfully carry out their contractual duties or obligations or meet expected deadlines, including due to scheduling conflicts, there might be a disruption in the clinical supply chain that would directly impact the continuity of our clinical trials. If we were unable to find adequate replacement or another acceptable solution in time, our clinical trials could be delayed or our commercial activities could be harmed.

In addition, the fact that we are dependent on our suppliers and other third parties for the manufacture, packaging and labeling, storage and distribution of our product candidates means that we are subject to the risk that our product candidates and, if approved, commercial products may have manufacturing defects that we have limited ability to prevent or control. The sale of products containing such defects could result in recalls or regulatory enforcement action that could adversely affect our business, financial condition and results of operations.

Growth in the costs and expenses of components or raw materials may also adversely influence our business, financial condition and results of operations. Supply sources could be interrupted from time to time and, if interrupted, we cannot assure you that supplies could be resumed (whether in part or in whole) within a reasonable time frame and at an acceptable cost or at all.

Our current and anticipated future dependence upon others for the manufacturing of tozadenant, SYN120 and BTT1023 and any other product candidate that we develop may adversely affect our future profit margins and our ability to commercialize any products that receive marketing approval on a timely and competitive basis.

Certain of the drug substances and drug products for our product candidates are currently acquired from single-source suppliers. The loss of these suppliers, or their failure to supply us with the drug substance or drug product, could materially and adversely affect our business.

We do not currently, and do not expect in the future to, independently conduct manufacturing activities for our product candidates, including tozadenant, SYN120 and BTT1023. Our contract manufacturers may have a relationship with a preferred single supplier for certain materials for the manufacture of tozadenant, SYN120 and BTT1023. We are therefore reliant upon single-source third-party CMOs to manufacture and supply the drug substance and drug product and components thereof. We do not currently have any other reliable suppliers for the drug substance or drug product of our product candidates and, although we believe that there are alternate sources of supply that could satisfy our clinical and commercial requirements and have performed preliminary investigations to identify back-up manufacturers for our portfolio, we cannot assure you that identifying alternate sources and establishing relationships with such sources with the desired scale and capability would not result in significant delay and additional costs in the development of our product candidates. Additionally, we may not be able to enter into supply arrangements with alternative suppliers on commercially reasonable terms, or at all. A delay in the development of our product candidates or having to enter into a new agreement with a different third party on less favorable terms than we have with our current suppliers could have a material adverse impact upon our business.

Risks Related to Our Intellectual Property

If we are unable to obtain and maintain sufficient intellectual property protection for our product or product candidates, or if the scope of our intellectual property protection is not sufficiently broad, our ability to commercialize our product and product candidates successfully and to compete effectively may be adversely affected.

Our success depends in large part on our ability to obtain and maintain protection with respect to our intellectual property and proprietary technology. We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our products and product candidates, including Selincro and tozadenant. The patent position of pharmaceutical companies is generally uncertain because it involves complex legal and factual considerations. The standards applied by the United States Patent and Trademark Office, or USPTO, and foreign patent offices in granting patents are not always applied uniformly or predictably, and can change. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in pharmaceutical or biotechnology patents. The patent applications that we own or in-license may fail to result in issued patents, and if they do, such patents may not cover our products or product candidates in the United States or in other countries. Accordingly, we cannot predict whether additional patents protecting our technology will issue in the United States or in non-U.S. jurisdictions, or whether any patents that do issue will have claims of adequate scope to provide us with a competitive advantage. Additionally, the laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States, and many companies have encountered significant problems in protecting and defending such rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property rights, particularly those relating to biotechnology, which could make it difficult for us to stop the infringement of our licensed and owned patents, the reproduction of our manufacturing or other know-how or marketing of competing products in violation of our proprietary rights generally. Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.

Competitors may use our technologies in jurisdictions where we have not obtained or are unable to adequately enforce patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States and Europe. These products may compete with our products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Proceedings to enforce our patent rights in jurisdictions outside the United States, Europe and Japan, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert

claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

The patent prosecution process is expensive and time consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we may fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. In addition, we or our licensors may only pursue, obtain or maintain patent protection in a limited number of countries. There is no assurance that all potentially relevant prior art relating to our patents and patent applications has been found. We may be unaware of prior art that could be used to invalidate an issued patent or prevent our pending patent applications from issuing as patents. Even if patents do successfully issue and even if such patents cover our products or product candidates, third parties (including our licensees) may challenge their validity, enforceability or scope, which may result in such patents being narrowed or invalidated. Further, the existence of issued patents does not guarantee our right to practice the patented technology or commercialize the patented product. Third parties may have or obtain rights to patents which they may use to prevent or attempt to prevent us from commercializing Selincro or any of our patented product candidates. If these other parties are successful in obtaining valid and enforceable patents, and establishing our infringement of those patents, we could be prevented from selling Selincro or any of our other products unless we were able to obtain a license under such third-party patents. In addition, third parties may seek approval to market their own products similar to or otherwise competitive with our products. In these circumstances, we may need to defend and/or assert our patents, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or agency of competent jurisdiction may find our patents invalid and/or unenforceable.

Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property, provide exclusivity for our products or product candidates, prevent others from designing around our claims or otherwise provide us with a competitive advantage. Additionally, our confidentiality agreements and other contractual protections may not be adequate to protect our intellectual property from unauthorized disclosure, third-party infringement or misappropriation. We may not have adequate remedies in the case of a breach of any such agreements, and our trade secrets and other proprietary information could be disclosed to our competitors, or others may independently develop substantially equivalent or superior proprietary information and techniques or otherwise gain access to our trade secrets or disclose such technologies. In addition, the research resulting in certain of our licensed patent rights and technology has been, and may in the future be, funded by the U.S. government. As a result, the government may have certain rights, including march-in rights, to such patent rights and technology.

If the patent applications we own or have in-licensed with respect to Selincro, tozadenant or our other product candidates fail to issue as patents, if their breadth or strength of protection is narrowed or threatened, or if they fail to provide meaningful exclusivity, it could dissuade companies from collaborating with us and adversely affect our competitive position. We cannot offer any assurances about which, if any, patents will issue, the breadth of any such patents or whether any issued patents will be found invalid or unenforceable or will be threatened by third parties. Any successful challenge to these patents or any other patents owned by or licensed to us could deprive us of rights necessary for the successful commercialization of any product or product candidate that we may develop and could impair or eliminate our ability to collect future revenues and royalties with respect to such products or product candidates. Since patent applications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we were the first to file any patent application related to a product or product candidate. If third parties have prepared and filed patent applications in the United States that also claim technology to which we have rights, we may have to participate in interference proceedings in the USPTO to determine priority of invention for patent applications filed before March 16, 2013, or in derivation proceedings to determine inventorship for patent applications filed after such date. In addition, patents have a limited lifespan. In the United States and most foreign jurisdictions, the natural expiration of a patent is generally 20 years after its effective filing date. Various extensions may be available; however, the life of a patent and the protection it affords is limited. If we encounter delays in obtaining regulatory approvals, the period of time during which we could market a product under patent protection could be reduced. Even if patents covering our product candidates are obtained, once such patents expire, we may be vulnerable to competition from similar or generic products. The launch of a generic version of one of our products in particular would be likely to result in an immediate and substantial reduction in the demand for our product, which could have a material adverse effect on our business.

Any loss of patent protection could have a material adverse impact on our business. We may be unable to prevent competitors from entering the market with a product that is similar to or the same as our products and product candidates.

Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.

As is the case with other biotechnology and pharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity, and obtaining and enforcing biopharmaceutical patents is costly, time consuming, and inherently uncertain. The U.S. Supreme Court has ruled on several patent cases in recent years, and these decisions have narrowed the scope of patent protection available in certain circumstances or weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our and our licensors’ ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents once obtained. Depending on future decisions by the U.S. Congress, the federal courts and the USPTO, as well as similar bodies in foreign jurisdictions, the laws and regulations governing patents could change in unpredictable ways that may weaken our and our licensors’ ability to obtain new patents or to enforce existing patents and patents we and our licensors or collaborators may obtain in the future.

Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our and our licensors’ patent applications and the enforcement or defense of our or our licensors’ issued patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art, may affect patent litigation and switch the U.S. patent system from a “first to invent” system to a “first to file” system. The USPTO recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our or our licensors’ patent applications and the enforcement or defense of our or our licensors’ issued patents, all of which could have a material adverse effect on our business and financial condition.

Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties.

Our success will depend in part on our ability to operate without infringing the proprietary rights of third parties. Other entities may have or obtain patents or proprietary rights that could limit our ability to make, use, sell, offer for sale or import our products and future approved products or impair our competitive position.

Patents could be issued to third parties that we may ultimately be found to infringe. Third parties may have or obtain valid and enforceable patents or proprietary rights that could block us from developing product candidates using our technology. Our failure to obtain or maintain a license to any technology that we require may materially harm our business, financial condition and results of operations. Furthermore, we would be exposed to a threat of litigation.

In the pharmaceutical industry, significant litigation and other proceedings regarding patents, patent applications, trademarks and other intellectual property rights have become commonplace. The types of situations in which we may become a party to such litigation or proceedings include:

Any such lawsuit would be costly and could affect our results of operations and divert the attention of our management and scientific personnel. There is a risk that a court would decide that we or our collaborators are infringing the third party’s patents and would order us or our collaborators to stop the activities covered by the patents. In that event, we or our collaborators may not have a viable alternative to the technology protected by the patent and may need to halt work on the affected product candidate or cease commercialization of an approved product. In addition, there is a risk that a court may order us or our collaborators to pay the other party damages. An adverse outcome in any litigation or other proceeding could subject us to significant liabilities to third parties and require us to cease using the technology that is at issue or to license the technology from third parties. We may not be able to obtain any required licenses on commercially acceptable terms or at all. Any of these outcomes could have a material adverse effect on our business.

The pharmaceutical and biotechnology industries have produced a significant number of patents, and it may not always be clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform or predictable. If we are sued for patent infringement, we would need to demonstrate that our products or methods either do not infringe the patent claims of the relevant patent or that the patent claims are invalid or unenforceable, and we may not be able to do this. Proving invalidity is difficult. For example, in the United States, proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents. Even if we are successful in these proceedings, we may incur substantial costs and divert management’s time and attention in pursuing these proceedings, which could have a material adverse effect on us. If we are unable to avoid infringing the patent rights of others, we may be required to seek a license, defend an infringement action or challenge the validity or enforceability of the patents in court. We may not have sufficient resources to bring these actions to a successful conclusion and there is no assurance that such a license would be available or that a court would find in our favor. In addition, if we do not obtain a license, develop or obtain noninfringing technology, fail to defend an infringement action successfully or have infringed patents declared invalid or unenforceable, we may incur substantial monetary damages, encounter significant delays in bringing our product candidates to market and be precluded from manufacturing or selling our product candidates.

The cost of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the cost of such litigation and proceedings more effectively than we can because of their substantially greater resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

We are dependent on third parties for the prosecution, protection, and enforcement of intellectual property rights relating to some of our products and product candidates.

While we normally seek to obtain the right to control the prosecution, maintenance, enforcement and defense of intellectual property rights related to our products and product candidates, there may be times when our licensors or collaborators control, or have a first right to control, the filing, prosecution, enforcement and defense of such rights. For instance, pursuant to the Lundbeck License Agreement, Lundbeck has a first right to enforce our patent rights related to Selincro products against third-party infringers worldwide. Similarly, under the terms of the Roche License Agreement, the Roche Entities have the first right to prosecute, maintain and enforce the licensed patent rights. We cannot be certain that our licensors or collaborators will prosecute, maintain, enforce and defend such intellectual property rights in a manner consistent with the best interests of our business, including by taking reasonable measures to protect the confidentiality of know-how and trade secrets, or the payment of all applicable prosecution and maintenance fees related to Selincro, tozadenant or any of our other product candidates. We also cannot be certain that the drafting or prosecution of the licensed patents by our licensors have been conducted in compliance with applicable laws and regulations, and will result in valid and enforceable patents and other intellectual property rights. If they fail to do so, we could lose our rights to the intellectual property, our ability to

develop and commercialize those products or product candidates may be adversely affected and we may not be able to prevent competitors from making, using and selling competing products.

We depend on licenses for development and commercialization rights to our products, product candidates and technologies. Termination of these rights or the failure to comply with obligations under these or other agreements under which we obtain such rights could materially harm our business and prevent us from developing or commercializing our products and product candidates.

We are party to various agreements, including the Roche License Agreement and our license and commercialization agreement with Medarex, Inc., or the Medarex License Agreement, that we depend on for rights to use various technologies that are material to our business, including intellectual property rights relating to Selincro, tozadenant and other product candidates. In each of these cases, our rights to use the licensed intellectual property are subject to the continuation of and our compliance with the terms of these agreements.

These agreements impose, and we may enter into additional licensing arrangements or other agreements with third parties that may impose, diligence, development and commercialization timelines, milestone payments and royalty, insurance and other obligations on us. For example, pursuant to the Roche License Agreement, we are obligated to make certain milestone payments to the Roche Entities upon the achievement of specified regulatory and commercial milestones. We are also obligated to pay the Roche Entities royalties on net sales of licensed products. Pursuant to the Medarex License Agreement, we are also obligated to make certain milestone payments upon the achievement of specified regulatory and commercial milestones and to pay royalties on net sales of licensed products.

We also have diligence and development obligations under certain of our license agreements. For example, pursuant to the Roche License Agreement, we are required to use commercially reasonable efforts to develop and commercialize licensed products in the United States, Europe and other countries in which we deem it commercially reasonable to do so. Similarly, under the Medarex License Agreement, we must use commercially reasonable efforts to obtain regulatory approvals for BTT1023 worldwide and to pursue commercial sales in countries where such approvals are obtained. If we fail to comply with our obligations under current or future licensing agreements, these agreements may be terminated or the scope of our rights under them may be reduced and we might not have the rights or the financial resources to develop, manufacture or market any product that is covered by these agreements. Termination of these agreements or reduction or elimination of our rights under these agreements may result in our having to negotiate new or reinstated agreements with less favorable terms, seek alternative sources of financing or cause us to lose our rights under these agreements, including our rights to tozadenant, Selincro and other important intellectual property or technology. Any of the foregoing could prevent us from developing or commercializing Selincro, tozadenant or our other product candidates, which could have a material adverse effect on our operating results and overall financial condition.

If trademarks and trade names related to our products or product candidates are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

Our registered or unregistered trademarks or trade names, as well as the registered or unregistered trademarks or trade names used by our licensees or distributors in relation to our products or product candidates, may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We, or our licensees or distributors, may not be able to protect our rights to these trademarks and trade names, which we, our licensees or distributors, need to build name recognition by potential partners or customers in our markets of interest. Over the long term, if we, our licensees or distributors are unable to establish name recognition based on our trademarks and trade names, then we, our licensees or distributors may not be able to compete effectively and our business may be adversely affected.

If we are unable to protect the confidentiality of our proprietary information, the value of our technology and products could be adversely affected.

In addition to patent protection, we also rely on other proprietary rights, including protection of trade secrets, and other proprietary information. To maintain the confidentiality of trade secrets and proprietary information, we enter into confidentiality agreements with our employees, consultants, collaborators, CMOs, CROs and others upon the commencement of their relationships with us. These agreements require that all confidential information

developed by the individual or made known to the individual by us during the course of the individual’s relationship with us be kept confidential and not disclosed to third parties. Our agreements with employees as well as our personnel policies also generally provide that any inventions conceived by the individual in the course of rendering services to us shall be our exclusive property or that we may obtain full rights to such inventions at our election. However, we may not obtain these agreements in all circumstances, and individuals with whom we have these agreements may not comply with their terms. In the event of unauthorized use or disclosure of our trade secrets or proprietary information, these agreements, even if obtained, may not provide meaningful protection, particularly for our trade secrets or other confidential information. To the extent that our employees, consultants or contractors use technology or know-how owned by third parties in their work for us, disputes may arise between us and those third parties as to the rights in related inventions. To the extent that an individual who is not obligated to assign rights in intellectual property to us is rightfully an inventor of intellectual property, we may need to obtain an assignment or a license to that intellectual property from that individual, or a third party or from that individual’s assignee. Such assignment or license may not be available on commercially reasonable terms or at all.

Adequate remedies may not exist in the event of unauthorized use or disclosure of our proprietary information. The disclosure of our trade secrets would impair our competitive position and may materially harm our business, financial condition and results of operations. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to maintain trade secret protection could adversely affect our competitive business position. In addition, others may independently discover or develop our trade secrets and proprietary information, and the existence of our own trade secrets affords no protection against such independent discovery.

As is common in the biotechnology and pharmaceutical industries, we employ individuals who were previously or concurrently employed at research institutions and/or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. We may be subject to claims that these employees, or we, have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers, or that patents and applications we have filed to protect inventions of these employees, even those related to one or more of our product candidates, are rightfully owned by their former or concurrent employer. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

Obtaining and maintaining our patent protection depends on compliance with various procedural, documentary, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for noncompliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to the USPTO and various non-U.S. patent offices at various points over the lifetime of our patents and/or applications. Additionally, the USPTO and various non-U.S. patent offices require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. There are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If such an event were to occur, it could have a material adverse effect on our business.

Certain of our current and former employees and patents are subject to Finnish law and therefore may be eligible to receive compensation based on our future income related to intellectual property invented or coinvented by these employees.

We are based in Finland, and therefore we are subject to Finnish employment law. According to the Finnish Act on the Right in Employee Inventions, which regulates the ownership of, and compensation for, inventions made by employees, several of our employees may be eligible to receive compensation based on our future income related to intellectual property invented or coinvented by these employees.

If we are required to pay additional compensation or face other disputes under the Finnish Act on the Right in Employee Inventions, our results of operations could be adversely affected.

Our internal computer systems, or those of our collaborators or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs.

Our internal computer systems and those of our current and any future collaborators and other contractors or consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we have not experienced any such material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed and the further development and commercialization of our product candidates could be delayed.

Risks Related to Our Business and Industry

Our relationships with health care professionals, institutional providers, principal investigators, consultants, customers (actual and potential) and third-party payors are, and will continue to be, subject, directly and indirectly, to federal and state health care fraud and abuse, false claims, marketing expenditure tracking and disclosure, government price reporting, and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face penalties, including, without limitation, civil, criminal, and administrative penalties, damages, fines, exclusion from government-funded health care programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations.

Our business operations and activities may be directly or indirectly subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute and the federal False Claims Act. If we obtain FDA approval for any of our product candidates and begin commercializing those products in the United States, our potential exposure under such laws will increase significantly, and our costs associated with compliance with such laws are also likely to increase. These laws may impact, among other things, our current activities with principal investigators and research subjects, as well as proposed and future sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by the federal government and state governments in which we conduct our business. The laws that may affect our ability to operate include, but are not limited to:

Medicaid if the physician or a member of the physician’s family has a financial relationship with the entity, and which also prohibits the submission of any claims for reimbursement for designated health services furnished pursuant to a prohibited referral;

In the European Union, the Data Protection Directive, or DPD, which will be replaced by the General Data Protection Regulation in 2018, imposes strict regulations and establishes a series of requirements regarding the storage of personally identifiable information on computers or recorded on other electronic media. This has been implemented by all European Union member states through national laws. DPD provides for specific regulations requiring all non-European Union countries doing business with European Union member states to provide adequate data privacy protection when receiving personal data from persons in any of the European Union member states. The European Union member states may only transfer data outside of the European Union or European Economic Area if such transfer is in compliance with the DPD, or the General Data Protection Regulations from 2018 onwards. In addition, the use and disclosure of personal health and other private information is subject to regulation in other jurisdictions in which we do business or expect to do business in the future. Those jurisdictions may attempt to apply such laws extraterritorially or through treaties or other arrangements with European governmental entities. We cannot assure you that our privacy and security policies and practices will be found sufficient to protect us from liability or adverse publicity relating to the privacy and security of personal information.

In addition, the regulatory approval and commercialization of any of our product candidates outside the United States will also likely subject us to foreign equivalents of the health care laws mentioned above, among other foreign laws.

The ACA, among other things, amended the intent standard of the federal Anti-Kickback Statute and criminal health care fraud statutes to a stricter standard such that a person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. In addition, the ACA codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act.

Efforts to ensure that our business arrangements will comply with applicable health care laws may involve substantial costs. It is possible that governmental and enforcement authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other health care laws and regulations. If we are unable to comply, or have not fully complied, with such laws, we could face penalties, including, without limitation, civil, criminal, and administrative penalties, damages, fines, exclusion from government funded health care programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations.

We may become exposed to costly and damaging liability claims, either when testing our product candidates in the clinic or at the commercial stage; and our product liability insurance may not cover all damages from such claims.

We are exposed to potential product liability and professional indemnity risks that are inherent in the research, development, manufacturing, marketing and use of pharmaceutical products. Currently, we have licensed Selincro to Lundbeck for commercial sale. In addition, the current and future use of product candidates by us in clinical trials, and the sale of any approved products in the future, may expose us to liability claims. These claims might be made by patients that use the product, health care providers, pharmaceutical companies or others selling such products. Any claims against us, regardless of their merit, could be difficult and costly to defend and could materially adversely affect the market for our product candidates or any prospects for commercialization of our product candidates.

Although the clinical trial process is designed to identify and assess potential side effects, it is always possible that a drug, even after regulatory approval, may exhibit unforeseen side effects. If any of our product candidates were to cause adverse side effects during clinical trials or after approval of the product candidate, we may be exposed to substantial liabilities. Physicians and patients may not comply with any warnings that identify known potential adverse effects and patients who should not use our product candidates.

We purchase liability insurance in connection with each of our clinical trials. It is possible that our liabilities could exceed our insurance coverage. We intend to expand our insurance coverage to include the sale of commercial products if we obtain marketing approval for any of our product candidates. However, we may not be able to maintain insurance coverage at a reasonable cost or obtain insurance coverage that will be adequate to satisfy any liability that may arise. If a successful product liability claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, our assets may not be sufficient to cover such claims and our business operations could be impaired.

Should any of the events described above occur, this could have a material adverse effect on our business, financial condition and results of operations, including, but not limited to:

We will be highly dependent upon consumer perceptions of us and the safety and quality of our products. We could be adversely affected if we are subject to negative publicity. We could also be adversely affected if any of our products or any similar products distributed by other companies prove to be, or are asserted to be, harmful to patients. Because of our dependence on consumer perceptions, any adverse publicity associated with illness or other

adverse effects resulting from patients’ use or misuse of our products or any similar products distributed by other companies could have a material adverse impact on our financial condition or results of operations.

Price controls may be imposed in certain markets, which may adversely affect our future profitability.

In some countries, particularly member states of the European Union, the pricing of prescription drugs is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after receipt of marketing approval for a product. In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various countries and parallel distribution, or arbitrage between low-priced and high-priced countries, can further reduce prices. In some countries, we may be required to conduct a clinical trial or other studies that compare the cost-effectiveness of our product candidates to other available therapies in order to obtain or maintain reimbursement or pricing approval. Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be adversely affected.

The impact of recent health care reform legislation and other changes in the health care industry and in health care spending on us is currently unknown, and may adversely affect our business model.

Our revenue prospects could be affected by changes in health care spending and policy in the United States, Europe and other countries. We operate in a highly regulated industry and new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations or decisions, related to health care availability, the method of delivery or payment for health care products and services could negatively impact our business, operations and financial condition.

The United States and state governments continue to propose and pass legislation designed to reduce the cost of health care. In March 2010, the U.S. Congress enacted the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act, which include changes to the coverage and reimbursement of drug products under government health care programs such as:

It is likely that federal and state legislatures within the United States and foreign governments will continue to consider changes to existing health care legislation. We cannot predict the reform initiatives that may be adopted in the future or whether initiatives that have been adopted will be repealed or modified. The continuing efforts of the government, insurance companies, managed care organizations and other payors of health care services to contain or reduce costs of health care may adversely affect:

In addition, other legislative changes have been proposed and adopted since the 2010 health care reform legislation. The Budget Control Act of 2011, as amended, or the Budget Control Act, includes provisions intended to reduce the federal deficit. The Budget Control Act resulted in the imposition of 2% reductions in Medicare payments to providers beginning in 2013. Recent legislation extends reductions through 2023. Any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented, and/or any significant taxes or fees that may be imposed on us, as part of any broader deficit reduction effort or legislative replacement to the Budget Control Act, could have an adverse impact on our anticipated product revenues.

We and our contract manufacturers and our suppliers could be subject to liabilities, fines, penalties or other sanctions under environmental, health and safety laws and regulations if we or they fail to comply with such laws or regulations or otherwise incur costs that could have a material adverse effect on the success of our business.

We currently rely on and expect to continue to rely on third parties for the manufacturing and supply of active pharmaceutical ingredient, or API, and drug products of our product candidates, including tozadenant, SYN120 and BTT1023. These third parties are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, transportation, use, storage, treatment and disposal of hazardous materials and wastes. Although we have auditing rights with all our CMOs for production of API and drug products, we do not have control over a manufacturer’s or supplier’s compliance with environmental, health and safety laws and regulations. Liabilities they incur pursuant to these laws and regulations could result in significant costs or in certain circumstances, an interruption in operations, any of which could adversely affect our business and financial condition if we are unable to find an alternate supplier in a timely manner.

We currently do not operate any manufacturing facility or laboratories to produce hazardous materials. With respect to any hazardous materials or waste which we are currently, or in the future will be, handling, using, storing or disposing of, we cannot eliminate the risk of contamination or injury from these materials or wastes, including at third-party disposal sites. In the event of such contamination or injury, we could be held liable for any resulting damages and liability. We also could incur significant costs associated with civil or criminal fines and penalties for failure to comply with applicable environmental, health and safety laws. Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees, this insurance may not provide adequate coverage against potential liabilities. In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations may also result in substantial fines, penalties or other sanctions.

Risks Related to Employee Matters and Managing Growth

If we fail to attract and keep senior management and key scientific personnel, we may be unable to successfully develop our products, conduct our clinical trials and commercialize our product candidates.

We are highly dependent on the members of our senior management, which consists of Timo Veromaa, our CEO, David Cook, our CFO, Stephen Bandak, our CMO, and Mehdi Paborji, our COO. The loss of the services of any of these persons could impede the achievement of our research, development and commercialization objectives. Also, each of these persons may terminate their employment with us at any time, subject to their individual employment terms and conditions. We do not maintain “key person” insurance for any of our executives or other employees.

Recruiting and retaining qualified scientific, clinical, manufacturing, sales and marketing personnel will also be critical to our success. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, sometimes we may rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors, including our scientific co-founders, may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.

We may encounter difficulties in managing our growth and expanding our operations successfully.

As we seek to advance our product candidates through clinical trials and commercialization, we plan to determine the most appropriate commercial strategy, which may involve setting up our own infrastructure, partnering with another commercial company, or a combination of both to provide these capabilities for us. As our operations expand, we expect that we will need to manage additional relationships with various strategic partners, suppliers and other third parties. Future growth will impose significant added responsibilities on members of management. Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we must be able to manage our development efforts and clinical trials effectively and hire, train and integrate additional management, administrative and, if necessary, sales and marketing personnel. Due to our limited financial resources, we may not be able to accomplish these tasks, and our failure to accomplish any of them could prevent us from successfully growing our company or disrupt our operations.

Risks Related to Ownership of Our American Depositary Shares and of Our Shares

The market price of the ADSs may be highly volatile.

The market price of the ADSs may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

In addition, the stock market in general has experienced substantial price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of particular companies affected. These broad market and industry factors may materially harm the market price of the ADSs, regardless of our operating performance. As a result of this volatility, you may not be able to sell your ADSs at or above the price at which you purchased them. As we operate in a single industry, we are especially vulnerable to these factors to the extent that they affect our industry or our products, or to a lesser extent our markets. In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the price of our shares and the ADSs and trading volume could decline.

The trading market for the ADSs depends in part on the research and reports that securities or industry analysts publish about us or our business. If no or few securities or industry analysts cover us, the trading price for the ADSs and our shares would likely be negatively impacted. If one or more of the analysts who covers us downgrades the ADSs or our shares or publishes incorrect or unfavorable research about our business, the price of the ADSs or our shares would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, or downgrades the ADSs or our shares, demand for the ADSs or our shares could decrease, which could cause the price of the ADSs or trading volume to decline.

We do not currently intend to pay dividends on our securities and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our shares and the ADSs. In addition, any distribution of dividends must be in accordance with the rules and restrictions applying under Finnish law.

We have not declared or paid any cash dividends on our shares since our incorporation and do not currently intend to pay cash dividends on our shares in the foreseeable future, as we currently have significant cumulative losses and so do not have distributable reserves. In addition, the Combination Agreement restricts our ability to pay any dividend prior to the completion of the Tender Offer. Currently, we have not adopted a dividend policy. We currently intend to retain all available funds and any future earnings to fund the development and expansion of our business. Therefore, our shareholders are not likely to receive any dividends for the foreseeable future and the success of an investment in our securities will depend upon any future appreciation in their value. Consequently, investors may need to sell all or part of their holdings after price appreciation, which may never occur, as the only way to realize any future gains on their investment. There is no guarantee that the ADSs will appreciate in value or even maintain the price at which our shareholders have purchased the ADSs. Investors seeking cash dividends should not purchase the ADSs.

Further, under the Finnish Companies Act, a company may distribute only the unrestricted equity less the funds to be left undistributed according to the articles of association, if any. In addition, repayment of the capital and accrued interests of our capital loans may restrict our ability to pay dividends in the future. Our capital loans and their terms and conditions have been described in “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources.”

In addition, exchange rate fluctuations may affect the amount of euros that we are able to distribute, and the amount in U.S. dollars that our shareholders receive upon the payment of cash dividends or other distributions we declare and pay in euros, if any. These factors could harm the value of the ADSs, and, in turn, the U.S. dollar proceeds that holders receive from the sale of the ADSs.

The dual listing of our shares and the ADSs may adversely affect the liquidity and value of the ADSs.

Our ADSs are traded on the NASDAQ, and our shares are listed on the Finnish Stock Exchange. Trading of the ADSs or shares in these markets will take place in different currencies (U.S. dollars on the NASDAQ and euros on the Finnish Stock Exchange), and at different times (resulting from different time zones, different trading days and different public holidays in the United States and Finland). The trading prices of our shares on these two markets may differ due to these and other factors. Any decrease in the price of our shares on the Finnish Stock Exchange could cause a decrease in the trading price of the ADSs on the NASDAQ. Investors could seek to sell or buy our shares to take advantage of any price differences between the markets through a practice referred to as arbitrage. Any arbitrage activity could create unexpected volatility in both our share prices on one exchange, and the shares available for trading on the other exchange. In addition, holders of ADSs will not be immediately able to surrender their ADSs and withdraw the underlying shares for trading on the other market without effecting necessary procedures with the depositary. This could result in time delays and additional cost for holders of ADSs. We cannot predict the effect of this dual listing on the value of our shares and the ADSs. However, the dual listing of our shares and the ADSs may reduce the liquidity of these securities in one or both markets and may adversely affect the development of an active trading market for the ADSs in the United States. Although our shares are currently listed on the Finnish Stock Exchange, we may decide at some point in the future to delist our shares from the Finnish Stock Exchange, and our shareholders may approve such delisting. We cannot predict the effect such delisting of our shares on the Finnish Stock Exchange would have on the market price of the ADSs on the NASDAQ. Furthermore, in connection with any distributions of payments under the deposit agreement, the depositary may convert foreign currency itself or through any of its affiliates and, in those cases, acts as principal for its own account and not as an agent, fiduciary or broker on behalf of any other person and earns revenue, including, without limitation, fees and spreads that it will retain for its own account. The depositary makes no representation that the exchange rate used or obtained in any currency conversion will be the most favorable rate that could be obtained at the time or as to the method by which that rate will be determined, subject to its obligations under the deposit agreement.

We have broad discretion in the use of the net proceeds from the offering and may not use them effectively.

Our management will have broad discretion in the application of our liquid assets, including applications for working capital, possible acquisitions and other general corporate purposes, and we may spend or invest them in a way with which our shareholders disagree. The failure by our management to apply these funds effectively could harm our business and financial condition. Pending their use, we may invest our liquid assets in a manner that does not produce income or that loses value. These investments may not yield a favorable return to our investors.

A significant portion of our shares may be sold into the public market in the near future, which could cause the market price of the ADSs or shares to drop significantly, even if our business is doing well.

Future sales of our shares or the ADSs in the public market and the availability of shares for future sale could adversely affect the market price of the ADSs prevailing from time to time. However, sales of substantial numbers of ADSs or shares, or the perception that these sales could occur, could adversely affect prevailing market prices for the ADSs and could impair our future ability to raise equity capital.

We have entered into a registration rights agreement with certain of the investors in the Convertible Notes Financings pursuant to which we have agreed under certain circumstances to file a registration statement to register the resale of the shares and ADSs held by them or shares issuable upon exercise of the warrants held by them, as well as to cooperate in certain public offerings of such shares and ADSs. In addition, the shares subject to our equity incentive plans and the shares reserved for future delivery under such plans will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations. We have filed a registration statement on Form S-8 with the U.S. Securities and Exchange Commission, or the SEC, covering ADSs that represent shares available for future issuance under our equity incentive plans. Upon effectiveness of such registration statements, ADSs representing any shares subsequently issued under such plans will be eligible for sale in the public market, subject to compliance with Rule 144 in the case of our affiliates. Sales of a large number of the ADSs representing the shares issued under these plans in the public market could have an adverse effect on the market price of the ADSs. If these additional shares are sold, or if it is perceived that they will be sold in the public market, the trading price of the ADSs could decline substantially.

Fluctuations in the exchange rate between the U.S. dollar and the euro may increase the risk of holding the ADSs.

Our shares currently trade on the Finnish Stock Exchange and are denominated in euros, while the ADSs that trade on the NASDAQ are denominated in U.S. dollars. Fluctuations in the exchange rate between the U.S. dollar and the euro may result in temporary differences between the value of the ADSs and the value of our shares, which may result in heavy trading by investors seeking to exploit such differences. In addition, as a result of fluctuations in the exchange rate between the U.S. dollar and the euro, the U.S. dollar equivalent of the proceeds that a holder of the ADSs would receive upon the sale in Finland of any shares withdrawn from the depositary and the U.S. dollar equivalent of any cash dividends paid in euros on our shares represented by the ADSs could also decline.

Holders of the ADSs are not treated as shareholders of our company.

Holders of the ADSs with underlying shares in a Finnish public limited liability company are not treated as shareholders of us, unless they withdraw the shares underlying the ADSs from the depositary. The depositary is the holder of the shares underlying the ADSs. Holders of ADSs therefore do not have any rights as shareholders of our company, other than the rights that they have pursuant to the deposit agreement.

You may not be able to exercise your right to vote the shares underlying your ADSs.

Holders of ADSs may exercise voting rights with respect to the shares represented by the ADSs only in accordance with the provisions of the deposit agreement. You may instruct the depositary to vote the number of whole deposited shares your ADSs represent. The depositary will notify you of general meetings of shareholders or other solicitations of consents and arrange to deliver our voting materials to you if we ask it to. Those materials will describe the matters to be voted on and explain how you may instruct the depositary to vote. For instructions to be valid, they must reach the depositary by a date set by the depositary.

You may instruct the depositary to vote the shares underlying your ADSs. Otherwise, you will not be able to exercise your right to vote, unless you withdraw the shares underlying the ADSs you hold. We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions provided that any such failure is in good faith. This means that you may not be able to exercise your right to vote and there may be nothing you can do if your shares are not voted as you requested. If we do not tell the depositary to ask for your instructions, you can still instruct the depositary how to vote, and the depositary may vote as you instruct, but it is not required to do so.

Our management may have the right to vote the shares underlying your ADSs.

Under the deposit agreement, if the depositary asks for your instructions how to vote the shares underlying your ADSs but does not receive those instructions by a specified date, the depositary may give a proxy to our management to vote those shares. This provision may tend to increase the power of our management as against shareholders and make it more difficult for ADS holders and our shareholders to exercise effective control over our board of directors and other matters submitted to a vote by shareholders.

Your right as a holder of ADSs to participate in any future preemptive subscription rights issues or to elect to receive dividends in shares may be limited, which may cause dilution to your holdings.

Under Finnish law, the existing shareholders have a preemptive right to subscribe for shares offered in proportion to the amount of shares in their possession in connection with any offering of shares. However, a general meeting of shareholders may vote, by a majority which represents at least two-thirds of the votes cast and two-thirds of the shares represented at the meeting, to waive this preemptive right provided that, from the company’s perspective, there is a weighty financial reason for the waiver.

Certain non-Finnish shareholders may not necessarily be able to exercise their preemptive subscription rights in our future offerings due to the legislation and regulations of their home country. For example, ADS holders in the United States will not be entitled to exercise or sell such rights unless we register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. In addition, the deposit agreement provides that the depositary need not make rights available to you unless the distribution to ADS holders of both the rights and any related securities are either registered under the Securities Act

or exempted from registration under the Securities Act. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, ADS holders may be unable to participate in our rights offerings and may experience dilution in their holdings. In addition, if the depositary is unable to sell rights that are not exercised or not distributed or if the sale is not lawful or reasonably practicable, it will allow the rights to lapse, in which case you will receive no value for these rights.

You may be subject to limitations on the transfer of your ADSs and the withdrawal of the underlying shares.

Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may refuse to deliver, transfer or register transfers of your ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary think it is advisable to do so because of any requirement of law, government or governmental body, or under any provision of the deposit agreement, or for any other reason subject to your right to cancel your ADSs and withdraw the underlying shares. Temporary delays in the cancellation of your ADSs and withdrawal of the underlying shares may arise because the depositary has closed its transfer books or we have closed our transfer books, the transfer of shares is blocked to permit voting at a shareholders’ meeting or we are paying a dividend on our shares. In addition, you may not be able to cancel your ADSs and withdraw the underlying shares when you owe money for fees, taxes and similar charges and when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of shares or other deposited securities.

As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from NASDAQ corporate governance listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with corporate governance listing standards.

We are a “foreign private issuer,” as defined in the SEC’s rules and regulations. The NASDAQ Listing Rules include certain accommodations in the corporate governance requirements that allow foreign private issuers to follow “home country” corporate governance practices in lieu of the otherwise applicable corporate governance standards of NASDAQ. The application of such exceptions requires that we disclose the NASDAQ Listing Rules that we do not follow and describe the Finnish corporate governance practices we do follow in lieu of the relevant NASDAQ corporate governance standard. We intend to continue to follow Finnish corporate governance practices in lieu of the corporate governance requirements of NASDAQ in certain respects. In accordance with the Finnish Companies Act, our articles of association do not provide quorum requirements generally applicable to general meetings of shareholders. To this extent, our practice varies from the requirement of NASDAQ Listing Rule 5620(c), which requires an issuer to provide in its bylaws for a generally applicable quorum, and that such quorum may not be less than one-third of the outstanding voting stock. Although we must provide shareholders with an agenda and other relevant documents for the general meeting of shareholders, Finnish law does not have a regulatory regime for the solicitation of proxies and the solicitation of proxies is not generally required in Finland; thus, our practice will vary from the requirement of NASDAQ Listing Rule 5620(b). In addition, we have opted out of shareholder approval requirements for the issuance of securities in connection with certain events such as the acquisition of stock or assets of another company, the establishment of or amendments to equity-based compensation plans for employees, a change of control of us and certain private placements. To this extent, our practice varies from the requirements of NASDAQ Rule 5635, which generally requires an issuer to obtain shareholder approval for the issuance of securities in connection with such events. Finnish law does not require the implementation of a remuneration committee. Although we do have a remuneration committee, our practice varies from NASDAQ Listing Rule 5605(d), which sets forth certain requirements as to the responsibilities, composition and independence of a compensation committee. Accordingly, our shareholders may not have the same protection afforded to shareholders of companies that are subject to these NASDAQ requirements.

For an overview of our corporate governance principles, see “Item 16G. Corporate Governance.”

We may lose our foreign private issuer status in the future, which could result in significant additional cost and expense.

While we currently qualify as a foreign private issuer, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter.

In the future, we would lose our foreign private issuer status if we to fail to meet the requirements necessary to maintain our foreign private issuer status as of the relevant determination date. Our foreign private issuer status will be tested on June 30 of each year. We expect that we will maintain our status on June 30, 2016, but in the future we may lose the status if, for example, more than 50% of our executive officers or members of our board of directors are residents or citizens of the United States, or if the majority of our assets are held in the United States.

The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly more than costs we incur as a foreign private issuer. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive in certain respects than the forms available to a foreign private issuer. We would be required under current SEC rules to prepare our financial statements in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP, rather than IFRS. Such conversion of our financial statements to U.S. GAAP would involve significant time and cost, and we would still be required to prepare financial statements in accordance with IFRS under Finnish Stock Exchange requirements. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on United States stock exchanges that are available to foreign private issuers such as the ones described above and exemptions from procedural requirements related to the solicitation of proxies.

We are eligible to be treated as an “emerging growth company,” as defined in the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make the ADSs less attractive to investors.

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including  an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, and to the extent that we no longer qualify as a foreign private issuer, (a) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and (b) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation, including golden parachute compensation.

We may take advantage of these provisions for up to five years or until such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, have more than $700 million in market value of our shares held by non-affiliates, or issue more than $1.0 billion of nonconvertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced burdens. For example, Section 107 of the JOBS Act provides that an emerging growth company can use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. Given that we currently report and expect to continue to report under IFRS, as issued by the International Accounting Standards Board, or IASB, we have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required by the IASB. We have taken advantage of reduced reporting requirements in this annual report on Form 20-F. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold equity securities.

The rights of shareholders in companies subject to Finnish corporate law differ in material respects from the rights of shareholders of corporations incorporated in the United States.

We are a Finnish company with limited liability. Our corporate affairs are governed by our articles of association. The rights of shareholders and the responsibilities of members of our board of directors are in many

ways different from the rights and obligations of shareholders in companies governed by the laws of United States jurisdictions.

Our bylaws and Finnish corporate law contain provisions that may delay or discourage a takeover attempt.

Provisions contained in our articles of association and Finnish corporate laws could make it more difficult for a third party to acquire us, even if doing so might be beneficial to our shareholders. In addition, under Finnish law, certain measures are possible and permissible that may reduce the likelihood of a company becoming subject to a public tender offer. These may include provisions in the articles of association concerning, for example, the maximum number of votes that a shareholder can cast at a shareholders’ meeting, increased majority voting requirements for certain types of shareholder decisions, or a duty to make an offer to purchase outstanding shares at a price specified in the articles of association to all other shareholders upon exceeding a certain ownership threshold. We have not currently adopted any specific provisions in our articles of association that may have the effect of making a takeover of us more difficult or less attractive but there is no guarantee that our shareholders will not adopt such provisions in the future which may delay or discourage a takeover attempt.

U.S. investors may have difficulty enforcing civil liabilities against our company and directors and senior management and the experts named in this annual report on Form 20-F.

We are incorporated under the laws of Finland. Some of our assets are located outside the United States and certain of our directors and members of senior management reside outside of the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons or to enforce against them or us in U.S. courts’ judgments predicated upon the civil liability provisions of the federal securities laws of the United States. Foreign courts may refuse to hear a United States securities law claim because foreign courts may not be the most appropriate forums in which to bring such a claim. Even if a foreign court agrees to hear a claim, it may determine that the law of the jurisdiction in which the foreign court resides, and not U.S. law, is applicable to the claim.

Further, if U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process, and certain matters of procedure would still be governed by the law of the jurisdiction in which the foreign court resides. We have been advised by Hannes Snellman Attorneys Ltd, our Finnish counsel, that there is currently no treaty between the United States and Finland providing for reciprocal recognition and enforceability of judgments rendered in connection with civil and commercial disputes and, accordingly, a final judgment rendered by a U.S. court based on civil liability would not be enforceable in Finland as such. However, a U.S. court’s judgment may carry evidentiary value in any proceedings for civil liability brought in the Finnish courts.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our shares.

Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act of 2002, or any subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements, or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our shares.

For as long as we are an “emerging growth company” under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404. We could be an “emerging growth company” for up to five years. An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls could lead to financial statement restatements and require us to incur the expense of remediation.

If we were classified as a “passive foreign investment company,” or PFIC, in 2015 or any future years, U.S. investors may suffer adverse U.S. federal income tax consequences if we are a PFIC for any taxable year.

Under the Internal Revenue Code of 1986, as amended, or the Code, we will be a PFIC for any taxable year in which, after the application of certain “look-through” rules with respect to subsidiaries, either (i) 75% or more of our gross income consists of “passive income” or (ii) 50% or more of the average quarterly value of our assets consist of assets that produce, or are held for the production of, “passive income.” Passive income generally includes interest, dividends, rents and royalties (except to the extent derived in the active conduct of a trade or business) and the excess of gain over losses from disposition of assets which produce passive income. Whether we will be a PFIC in any year depends on the composition of our income and assets, and the relative fair market value of our assets from time to time, which has varied, and we expect will continue to vary, substantially over time. We believe that we were not a PFIC for U.S. federal income tax purposes for our 2015 taxable year based on (i) certain assumptions regarding the classification of our income and assets for PFIC purposes; and (ii) certain estimates as to the value of our assets, including the implied value of our assets based on our market capitalization on certain dates. However, there can be no assurance that the Internal Revenue Service, or IRS, will not take a different position on our PFIC status for our 2015 taxable year. In addition, while we believe that we were not a PFIC for our 2015 taxable year, because (i) we currently own a substantial amount of passive assets, including cash; and (ii) the valuation of our assets that generate non-passive income for PFIC purposes, including our intangible assets, is uncertain and has varied, and we expect will continue to vary, substantially over time, it is uncertain whether we will be, and there can be no assurance that we will not be, a PFIC in 2016 or any future years. Furthermore, we may, directly or indirectly, hold equity interests in other entities, including certain of our subsidiaries, that are PFICs, or Lower-tier PFICs.

If we were a PFIC for any taxable year during which a U.S. investor holds ADSs, we generally would continue to be treated as a PFIC with respect to that U.S. investor for all succeeding years during which the U.S. investor holds ADSs, even if we ceased to meet the threshold requirements for PFIC status. Such a U.S. investor may be subject to adverse tax consequences, including (i) the treatment of all or a portion of any gain on disposition as ordinary income; (ii) the application of a deferred interest charge on such gain and the receipt of certain dividends; and (iii) compliance with certain reporting requirements.

For the adverse U.S. federal income tax consequences if we were classified as a PFIC, see “Item 10. Additional Information—E. Taxation—Material U.S. Federal Income Tax Considerations for U.S. Holders.”