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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>As filed with the Securities and Exchange
Commission on&nbsp;November 20, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right"><B>Registration No. 333-</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>UNITED STATES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Washington, D.C. 20549</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM S-1</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOVELOS THERAPEUTICS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Exact name of registrant as specified
in its charter)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 34%; font-size: 10pt; font-weight: bold; text-align: center"><B>Delaware</B></TD>
    <TD STYLE="width: 2%; font-size: 10pt; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 31%; font-size: 10pt; font-weight: bold; text-align: center"><B>2834</B></TD>
    <TD STYLE="width: 2%; font-size: 10pt; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 31%; font-size: 10pt; font-weight: bold; text-align: center"><B>04-3321804</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(State or other jurisdiction</I></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>of incorporation or organization)</I></P></TD>
    <TD STYLE="font-size: 10pt; text-align: center">&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Primary Standard Industrial</I></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>Classification Code Number)</I></P></TD>
    <TD STYLE="font-size: 10pt; text-align: center">&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(I.R.S. Employer</I></P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>Identification Number)</I></P></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>One Gateway Center</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Suite 504</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Newton, Massachusetts 02458</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(617) 244-1616</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Address, including zip code, and telephone
number, including area code, of registrant&rsquo;s principal executive offices)</I></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Harry S. Palmin</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>President and Chief Executive Officer</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Novelos Therapeutics, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>One Gateway Center, Suite 504</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Newton, Massachusetts 02458</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(617) 244-1616</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>(Name, address, including zip code, and
telephone number, including area code, of agent for service)</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Copies to:</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Paul Bork, Esq.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Foley Hoag LLP</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>155 Seaport Boulevard</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Boston, Massachusetts 02210</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(617) 832-1000</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><I>Approximate date of commencement of proposed
sale to the public:</I> As soon as practicable after this Registration Statement is declared effective.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box.&nbsp; &nbsp; </FONT><FONT STYLE="font-family: Wingdings">x</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement number of the earlier effective registration statement for
the same offering. </FONT><FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. </FONT><FONT STYLE="font-family: Wingdings">&uml;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. </FONT><FONT STYLE="font-family: Wingdings">&uml;</FONT><FONT STYLE="font-family: Times New Roman, Times, Serif">
&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of &ldquo;large accelerated filer,&rdquo; &ldquo;accelerated filer,&rdquo; and &ldquo;smaller reporting company&rdquo; in Rule
12b-2 of the Exchange Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Check one):</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 62%; padding-left: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Large accelerated filer&nbsp;&nbsp;&nbsp; </FONT><FONT STYLE="font-family: Wingdings">&uml;</FONT></TD>
    <TD STYLE="width: 38%"><FONT STYLE="font-family: Times New Roman, Times, Serif">Accelerated filer&nbsp;&nbsp; </FONT><FONT STYLE="font-family: Wingdings">&uml;</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-left: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif">Non-accelerated filer&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT STYLE="font-family: Wingdings">&uml;</FONT></TD>
    <TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Smaller reporting company&nbsp; </FONT><FONT STYLE="font-family: Wingdings">x</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Do not check if a smaller reporting company)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CALCULATION OF REGISTRATION FEE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt; border-top: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; border-top: Black 1pt solid">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt; border-top: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; border-top: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; border-top: Black 1pt solid">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt; border-top: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; border-top: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; border-top: Black 1pt solid">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt; border-top: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; border-top: Black 1pt solid">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; border-top: Black 1pt solid">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt; border-top: Black 1pt solid">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; border-top: Black 1pt solid">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Title&nbsp;of&nbsp;Each&nbsp;Class&nbsp;of<BR> Securities&nbsp;to&nbsp;be<BR> Registered</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount&nbsp;being<BR> Registered</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Proposed<BR> Maximum<BR> Offering<BR> Price&nbsp;Per<BR> Security</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Proposed<BR> Maximum<BR> Aggregate<BR> Offering<BR> Price&nbsp;(1)</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Amount&nbsp;of Registration&nbsp;Fee</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 40%; text-align: left; padding-bottom: 1pt">Units consisting of Common Stock and Warrants</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; border-bottom: Black 1pt solid; text-align: right">11,764,706</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 12%; border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 12%; border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="width: 12%; border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="width: 1%; padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Common Stock, par value $0.00001 per share&nbsp; (2)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,764,706</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.85</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">10,000,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,364.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Warrants to purchase Common Stock (2)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">17,647,059</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">-</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Common Stock issuable upon exercise of Warrants</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">17,647,059</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.85</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">15,000,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,046.00</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">25,000,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,410.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 3%">(1)</TD>
    <TD STYLE="width: 94%">Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended, using the closing price as reported on the OTC Markets on November 16, 2012, which was $0.85.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(2)</TD>
    <TD>Pursuant to Rule 416, the securities being registered hereunder include such indeterminate number of additional shares of common stock as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38pt; text-indent: -19pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B>The registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment
which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant
to said Section&nbsp;8(a), may determine.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: red"><B>The information in this preliminary prospectus
is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting
offers to buy these securities in any jurisdiction where the offer or sale is not permitted.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right; color: red"><B>SUBJECT TO COMPLETION, DATED
November 20, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; color: red"><B>PRELIMINARY PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><IMG SRC="tlogo.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Novelos Therapeutics, Inc.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>11,764,706 Units Consisting of</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>11,764,706 Shares of Common Stock and</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Class A Warrants to Purchase 5,882,353
Shares of Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Class B Warrants to Purchase 11,764,706
Shares of Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are offering up to&nbsp;11,764,706 units
consisting of 11,764,706 shares of our common stock, Class A Warrants to purchase up to&nbsp;5,882,353 shares of our common stock
and Class B Warrants to purchase up to 11,764,706 shares of common stock. The Class A Warrants and Class B Warrants will be exercisable
immediately after the closing of this offering. The Class A Warrants will be exercisable until the close of business on the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;anniversary
of the date of issuance at an exercise price equal to $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; and the Class B Warrants
will be exercisable until the close of business on the &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;day following
the date of issuance at an exercise price equal to $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. Each investor
will receive, for each unit purchased, a share of common stock, a Class A Warrant to purchase one-half of a share of our common
stock and a Class B Warrant to purchase one share of our common stock. The units will not be certificated and the common stock
and warrants will be immediately separable and will be separately transferable immediately upon issuance. The securities are being
offered on a &ldquo;best efforts&rdquo; basis, and we are not required to sell any specific dollar amount or number of securities.
The offering price for the units and the exercise price of the warrants will remain fixed for the duration of the offering. All
costs associated with the registration will be borne by us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our common stock is quoted on the OTCQX platform of OTC Markets
under the symbol NVLT. We do not intend to apply for a listing of the warrants on any securities exchange and we do not expect
that the warrants will be quoted on OTC Markets. On November 19, 2012, the last reported sale price of our common stock on the
OTCQX was $ 0.80 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Investing in the offered securities involves a high
degree of risk. See &ldquo;Risk Factors&rdquo; beginning on page 6 of this prospectus for a discussion of information that
you should consider before investing in our securities.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><B>Per&nbsp;Unit</B></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center"><B>Total</B></TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 70%; text-indent: -0.25in; padding-left: 0.25in">Public offering price</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right"></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in">Placement agent&rsquo;s fees (1)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in">Proceeds, before expenses, to us</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right"></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%">(1)</TD>
    <TD STYLE="width: 94%">In addition we have agreed to issue the placement agent warrants to purchase up to an aggregate of 7 % of the number of shares of common stock sold in this offering and to pay the placement agent a non-accountable expense allowance equal to 1% of the gross offering proceeds.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Burrill LLC (&ldquo;Burrill&rdquo;) has agreed to act as
our exclusive placement agent in connection with this offering. In addition, Burrill may engage one or more sub-placement
agents or selected dealers. The placement agent is not purchasing the securities offered by us, is not required to sell any
specific number or dollar amount of securities, but will assist us in this offering on a &ldquo;reasonable best
efforts&rdquo; basis. We have agreed to pay the placement agent a cash fee equal to 7% of the gross proceeds of the offering
of securities by us and grant a warrant exercisable for a number of shares of common stock equal to 7% of the number of units
sold in the offering. We estimate the total expenses of this offering, excluding the placement agent fees, will be
approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. Because there is no minimum offering
amount required as a condition to closing in this offering, the actual public offering amount, placement agent fees, and
proceeds to us, if any, are not presently determinable and may be substantially less than the total maximum offering amounts
set forth above. See &ldquo;Plan of Distribution&rdquo; beginning on page 52 of this prospectus for more information on this
offering and the placement agent arrangement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This offering will terminate on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
unless the offering is fully subscribed before that date or we decide to terminate the offering prior to that date. In either event,
the offering may be closed without further notice to you.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><IMG SRC="tlogo2.jpg"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The date of this prospectus is&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Cancer-Targeted, Broad Spectrum, Multi-Product
Technology Platform</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><IMG SRC="tpg6a.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">FDG Compared with <B>LIGHT</B> as a Cancer
PET Imaging Agent in a Lung Cancer Patient with a Brain Metastasis</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><IMG SRC="tpg6b.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Time-Lapse Photography Illustrating Tumor
Regression in Mouse After a Single Dose of <B>HOT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><IMG SRC="tpg6c.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><I>The images provided above are for
illustrative purposes only and may not be indicative of all results.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;<B><I>The above illustrations do not
refer to products approved by the FDA.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><I>Novelos has not received any revenue
from the sale of its products</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOVELOS THERAPEUTICS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TABLE OF CONTENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: top; width: 88%">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 2%; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 10%; border-bottom: black 1pt solid; text-align: center">Page</TD></TR>
<TR>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">PROSPECTUS SUMMARY</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">1</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">RISK FACTORS</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">6</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">FORWARD-LOOKING STATEMENTS</TD>
    <TD STYLE="vertical-align: top; text-align: center"></TD>
    <TD STYLE="vertical-align: bottom; text-align: center">18</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">USE OF PROCEEDS</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">18</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">CAPITALIZATION</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">20</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">20</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">DILUTION</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">22</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">22</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">BUSINESS</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">29</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">LITIGATION</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">41</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">PROPERTIES</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">41</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">MANAGEMENT</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">42</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">49</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">50</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">PLAN OF DISTRIBUTION</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">52</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">DESCRIPTION OF SECURITIES</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">53</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">55</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">WHERE YOU CAN FIND MORE INFORMATION</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">55</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">LEGAL MATTERS</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">56</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">EXPERTS</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">56</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">GLOSSARY OF CERTAIN SCIENTIFIC TERMS</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">56</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: top">FINANCIAL STATEMENTS</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">F-1</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">No dealer, salesperson or other person has been authorized to
give any information or to make any representations other than those contained in this prospectus in connection with the offer
contained in this prospectus and, if given or made, such information or representations must not be relied upon as having been
authorized by us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Neither the delivery of this prospectus nor any sale made hereunder
shall under any circumstances create an implication that there has been no change in our affairs since the date hereof. This prospectus
does not constitute an offer to sell or a solicitation of an offer to buy securities other than those specifically offered hereby
or of any securities offered hereby in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation.
The information contained in this prospectus speaks only as of the date of this prospectus unless the information specifically
indicates that another date applies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This prospectus has been prepared based on information provided
by us and by other sources that we believe are reliable. This prospectus summarizes certain documents and other information in
a manner we believe to be accurate, but we refer you to the actual documents, if any, for a more complete understanding of what
we discuss in this prospectus. All of such documents are filed as exhibits to the registration statement of which this prospectus
is a part. In making a decision to invest in the securities offered in this prospectus, you must rely on your own examination of
us and the terms of the offering and securities offered in this prospectus, including the merits and risks involved.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are not making any representation to you regarding the legality
of an investment in the securities offered in this prospectus under any legal investment or similar laws or regulations. You should
not consider any information in this prospectus to be legal, business, tax or other advice. You should consult your own attorney,
business advisor and tax advisor for legal, business and tax advice regarding an investment in our securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">You may only rely on the information contained in this prospectus
or that we have referred you to. We have not authorized anyone to provide you with different information. This prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any securities other than the securities offered by this prospectus.
This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities in any circumstances in
which such offer or solicitation is unlawful or in any state or to any person within any state to whom such offer would be unlawful
under the laws or securities regulations of such state. No offers will be made to, nor accepted from, any person that does not
meet the definition of an &ldquo;institutional investor&rdquo; under the blue sky laws of its state of domicile unless otherwise
specified in the &ldquo;Plan of Distribution&rdquo; section below. Neither the delivery of this prospectus nor any sale made in
connection with this prospectus shall, under any circumstances, create any implication that there has been no change in our affairs
since the date of this prospectus or that the information contained by reference to this prospectus is correct as of any time after
its date. In this prospectus, references to &ldquo;Novelos Therapeutics, Inc.,&rdquo; &ldquo;the Company,&rdquo; &ldquo;we,&rdquo;
&ldquo;us,&rdquo; and &ldquo;our,&rdquo; refer to Novelos Therapeutics, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt; text-align: center"><B>PROSPECTUS SUMMARY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt"><I>This summary highlights information contained elsewhere
in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before
investing in our securities, you should carefully read this entire prospectus, including our financial statements and the related
notes and the information set forth under the headings &ldquo;Risk Factors&rdquo; and &ldquo;Management&rsquo;s Discussion and
Analysis of Financial Condition and Results of Operations,&rdquo; in each case included elsewhere in this prospectus.&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt"><I>On April 8, 2011, Novelos entered into a business
combination with Cellectar, Inc., a privately held Wisconsin corporation that designed and developed products to detect, treat
and monitor a wide variety of human cancers (the Acquisition). References in this prospectus to &ldquo;Cellectar&rdquo; relate
to the activities and financial information of Cellectar, Inc. prior to the Acquisition, references to &ldquo;Novelos&rdquo; relate
to the activities and financial information of Novelos Therapeutics, Inc. prior to the Acquisition and references to &ldquo;we&rdquo;
&ldquo;us&rdquo; or &ldquo;the Company&rdquo; relate to the activities and obligations of the combined company following the Acquisition.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt"><B>Please refer to the Glossary of Certain
Scientific Terms on page 56 of this prospectus for definitions of certain technical and scientific terms used throughout this
prospectus.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Our Business</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Novelos Therapeutics, Inc. is a pharmaceutical company developing
drugs for the treatment and diagnosis of cancer.&nbsp; Since the Acquisition, we have been developing novel drugs for the treatment
and diagnosis of cancer based on the Cellectar compounds. We believe our cancer-targeted compounds (referred to as LIGHT, HOT and
GLOW2) are selectively taken up and retained in cancer cells, including cancer stem cells, versus normal cells. Thus, our therapeutic
compounds appear to directly kill cancer cells while minimizing harm to normal cells. This offers the potential for a paradigm
shift in cancer therapy by providing efficacy versus all three major drivers of mortality in cancer: primary tumors, metastases
and stem cell-based relapse. I-124-CLR1404 (LIGHT) is a small-molecule, broad-spectrum, cancer-targeted positron emission tomography
(PET) imaging agent. We believe LIGHT has first-in-class potential and Phase 1-2 clinical trials are ongoing across 11 solid tumor
indications. I-131-CLR1404 (HOT) is a small-molecule, broad-spectrum, cancer-targeted molecular radiotherapeutic that delivers
cytotoxic (cell-killing) radiation directly and selectively to cancer cells and cancer stem cells. We believe HOT also has first-in-class
potential. The HOT Phase 1b dose-escalation trial is ongoing and, subject to additional funding, we expect HOT to enter Phase 2
trials in the third quarter of 2013 as a monotherapy for solid tumors with significant unmet medical need. Importantly, the chemical
identity of LIGHT and HOT could enable use of LIGHT as an ideal biomarker for HOT to potentially predict efficacy in individual
cancer patients. CLR1502 (GLOW2) is a preclinical, cancer-targeted, non-radioactive optical imaging agent that may improve the
outcome of cancer surgery (effectively acting as an adjunct therapeutic agent by virtue of intraoperative tumor margin illumination)
as well as enable non-invasive tumor imaging. Together, we believe our compounds are able to &ldquo;find, treat and follow&rdquo;
cancer anywhere in the body in a novel, effective and highly selective way.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">LIGHT is a small-molecule, broad-spectrum, cancer-targeted imaging
agent that we believe has first-in-class potential for selective detection of tumors and metastases in a broad range of cancers.
LIGHT is comprised of a proprietary phospholipid ether analog (PLE), acting as a cancer-targeted delivery and retention vehicle,
covalently labeled with iodine-124, a short-lived PET imaging radioisotope. PET imaging used in conjunction with CT scanning has
now become the imaging method of choice in oncology. In studies to date, LIGHT selectively illuminated malignant tumors in 52 of
54 animal models of cancer, demonstrating broad-spectrum, cancer-selective uptake and retention. Investigator-sponsored Phase 1-2
trials of LIGHT as a PET imaging agent are ongoing across 11 solid tumor indications. Initial positive imaging results have been
established in patients with lung and brain cancers. These human trials, if successful, would likely provide proof-of-concept for
LIGHT as a PET imaging agent with the potential to supplant the current &ldquo;gold standard&rdquo; agent, 18F-fluoro-deoxyglucose
(FDG), due to what we believe to be LIGHT&rsquo;s superior cancer-specificity and more favorable logistics of clinical use. As
a chemically identical biomarker for HOT, we believe that LIGHT tumor uptake data could accelerate clinical development of HOT
by guiding selection of indications for HOT Phase 2 trials and potentially be used in such trials to identify suitable patients
and assess therapeutic efficacy. For the same reason, and in view of the quantitative nature of PET imaging, LIGHT imaging may
be capable of estimating an efficacious dose of HOT in individual patients.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">HOT is a small-molecule, broad-spectrum, cancer-targeted molecular
radiotherapeutic that we believe has first-in-class potential. HOT is comprised of a proprietary PLE, acting as a cancer-targeted
delivery and retention vehicle, covalently labeled with iodine-131, a cytotoxic radioisotope that is already in common use to treat
thyroid and other cancer types. The ongoing Phase 1b dose-escalation trial is aimed at determining the Maximum Tolerated Dose of
HOT. We expect to initiate HOT Phase 2 efficacy trials, subject to additional funding, as a monotherapy for solid tumors with significant
unmet medical need as soon as a starting dose is established. We may determine such a dose based on an efficacy signal or an acceptable
safety profile in the Phase 1b trial. Selection of indications for Phase 2, as well as aspects of trial design, will be guided
by ongoing PET imaging trials in cancer patients with LIGHT, a chemically identical biomarker for HOT. Preclinical experiments
in more than a dozen <I>in vivo</I> (in animals) tumor models have demonstrated selective killing of cancer cells along with a
benign safety profile. In view of HOT&rsquo;s selective uptake and retention in a wide range of solid tumors and in cancer stem
cells, its single-agent efficacy in animal models and its non-specific mechanism of cancer-killing (radiation), we are first developing
HOT as a monotherapy for solid tumors with significant unmet medical need.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">GLOW2 is a small-molecule, broad-spectrum, cancer-targeted,
non-radioactive optical imaging agent that we believe has first-in-class potential for intraoperative tumor margin illumination
and non-invasive tumor imaging. GLOW2 is comprised of a proprietary PLE, acting as a cancer-targeted delivery and retention vehicle,
covalently attached to a near-infrared (800nm) fluorophore. According to the American Cancer Society (2011), most cancer patients
will have some type of surgery, and Cancer Facts and Figures indicated that approximately 1.3 million cancer patients were diagnosed
with solid tumors in the U.S. alone in 2011. GLOW2 may facilitate and enable diagnostic, staging, debulking and curative cancer
surgeries, intraoperatively in real time (i.e. during the actual surgical procedure) by defining tumor margins and regional lymph
node involvement, resulting in more accurate tumor resectioning and improved outcome and prognosis. In this context, GLOW2 would
effectively act as an adjunct therapeutic agent. In preclinical <I>in vivo </I>(in animals) tumor models, non-invasive optical
imaging showed pronounced accumulation of GLOW2 in tumors versus normal organs and tissues in addition to successfully delineated
tumor margins during tumor resection. Thus, GLOW2 may also have utility for non-invasive imaging of relatively superficial tumor
types in man (e.g., melanoma, head &amp; neck, colon, esophageal). Subject to additional funding, we expect to submit an IND for
GLOW2 in the second half of 2013 and begin clinical trials shortly thereafter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our core technology platform is based upon the research conducted
by Cellectar&rsquo;s founder and our Chief Scientific Officer, Dr. Jamey Weichert, which commenced in 1994 at the University of
Michigan (U. Mich.) where phospholipid ether analogs were initially designed, synthesized, radiolabeled, and evaluated. Since 1998,
Dr. Weichert has continued his research at the University of Wisconsin (U. Wisc.) and founded Cellectar in 2002 to further develop
and commercialize the technology. Cellectar obtained exclusive rights to the related technology patents in North America owned
by U. Mich. in 2003, and continued development of the platform while obtaining ownership of numerous additional patents and patent
applications in North America, Europe and Japan (lasting until 2025, 2028 and 2030, without extensions) prior to the Acquisition.
The license granted by U. Mich. to Cellectar (the U. Mich. license) gives us the exclusive right to develop, manufacture, market
and sublicense our HOT and LIGHT compounds, and provides, among other things, that we pay a royalty equal to 3% of net sales of
any licensed products sold by us or our sublicensees, with a reduction in such royalties in the case of certain incoming or outgoing
sublicense arrangements. The license also requires us to make payments to U. Mich., ranging from $50,000 to $200,000, upon the
achievement of certain key regulatory and commercial milestones, for an aggregate of up to $400,000 in milestone payments. The
license expires upon the expiration of the last covered Michigan patent (currently 2016 without extensions).&nbsp; U. Mich. may
terminate the agreement if we cease operations, if we fail to make any required payments under the agreement, or if we otherwise
materially breach the agreement, subject to the applicable notice and cure periods. If the U. Mich. license expires or terminates
for any reason, it will not impact the ownership of the additional patents that we have independently obtained. However the early
termination of the U. Mich. license would result in the loss of our rights to use the covered patents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Key Risks and Uncertainties</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt">We are subject to numerous risks and uncertainties,
including the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">We will require additional capital in order to continue our operations,
and may have difficulty raising additional capital;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">We are a development stage company with a history of losses and can
provide no assurance of our future operating results;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">At present, our success depends solely on the successful commercialization
of Cellectar compounds;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">We have a history of recurring losses and an accumulated deficit which,
among other factors, raise substantial doubt about our ability to continue as a going concern, which may hinder our ability to
obtain future financing;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">The failure to complete development of our therapeutic technology,
to obtain government approvals, including required FDA approvals, or to comply with ongoing governmental regulations could prevent,
delay or limit introduction or sale of proposed products and result in failure to achieve revenues or maintain our ongoing business;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">Clinical trials involve a lengthy and expensive process with an uncertain
outcome, and results of earlier studies and trials may not be predictive of future trial results;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">We may be required to suspend or discontinue clinical trials due to
unexpected side effects or other safety risks that could preclude approval of our product candidates;</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">We have limited in-house research and manufacturing capacity and will
rely, to some extent, on research and manufacturing facilities at various universities, hospitals, contract research organizations
and contract manufacturers for a portion of our research, development, and manufacturing. In the event we exceed our in-house capacity
or lose access to those facilities, our ability to gain FDA approval and commercialization of our drug delivery technology and
products could be delayed or impaired;</FONT></TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">We are exposed to product, clinical and preclinical liability risks
that could create a substantial financial burden should we be sued; and</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">We could suffer monetary damages or incur substantial costs in the
event of future legal proceedings.</FONT></TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For a more detailed description of the material risks and uncertainties
we face, please see &ldquo;Risk Factors&rdquo; beginning on page 6 of this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Company Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our headquarters and manufacturing operation, which is compliant
with current Good Manufacturing Practices (cGMP), is located at 3301 Agriculture Drive, Madison, Wisconsin 53716. Our principal
executive offices are located at One Gateway Center, Suite 504, Newton, Massachusetts 02458. Our telephone number is (617) 244-1616
and our web address is www.novelos.com. The information included or referred to on, or accessible through, our website does not
constitute part of, and is not incorporated by reference into, this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>The Offering</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt; text-align: center">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 47%; font-style: italic"><I>Securities offered by us:</I></TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 51%">Up to 11,764,706 units. Each unit will consist of one share of our common stock, a Class A Warrant to purchase up to one-half of a share of our common stock at an exercise price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share and a Class B Warrant to purchase up to one share of our common stock at an exercise price of $ &nbsp;&nbsp;&nbsp;&nbsp;per share. Investors will be permitted to purchase only even numbers of units, hence Warrants will be exercisable only for whole numbers of shares.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: italic"><I>Description of Class A Warrants:</I></TD>
    <TD>&nbsp;</TD>
    <TD>The Class A warrants will be exercisable on or after the closing date of this offering until the close of business on the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;anniversary of the date of issuance.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: italic">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: italic"><I>Description of Class B Warrants:</I></TD>
    <TD>&nbsp;</TD>
    <TD>The Class B Warrants will be exercisable on or after the closing date of this offering until the close of business on the &nbsp;&nbsp;&nbsp;&nbsp; day following the date of issuance.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: italic">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: italic"><I>Securities Purchase Agreement:</I></TD>
    <TD>&nbsp;</TD>
    <TD>The securities to be offered by us in this offering will be issued and sold pursuant to a securities purchase agreement between us and each investor.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: italic"><I>Common Stock to be outstanding after this offering:</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; shares. (1)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: italic"><I>Use of Proceeds:</I></TD>
    <TD>&nbsp;</TD>
    <TD>We expect to use the net proceeds received from this offering to fund our research and development activities, including furthering the development of LIGHT, HOT and GLOW2 and for general corporate purposes, including capital expenditures, working capital, and, potentially, acquisition activities. For a more complete description of our anticipated use of proceeds from this offering, see &ldquo;Use of Proceeds.&rdquo;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: italic"><I>Risk Factors:</I></TD>
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">See &ldquo;Risk Factors&rdquo; beginning on page 6 and
        the         other information included in this prospectus for a discussion of factors you should carefully consider before
        deciding whether         to purchase our securities.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-style: italic"><I>OTCQX symbol for our Common Stock:</I></TD>
    <TD>&nbsp;</TD>
    <TD>NVLT</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%">(1)</TD>
    <TD STYLE="width: 94%">The number of shares of our common stock to be outstanding after this offering is based on&nbsp;46,397,997 shares of common stock outstanding as of November 16, 2012 and excludes, as of that date:</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 76pt; text-indent: -0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 76pt; text-indent: -0.5in"></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">shares issuable upon the exercise of warrants sold in this offering;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">an aggregate of 4,675,754 shares of common stock issuable upon the
exercise of outstanding stock options issued to employees, directors and consultants, including under our 2006 Stock Incentive
Plan;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">an aggregate of 5,432,996 additional shares of common stock reserved
for future issuance under our 2006 Stock Incentive Plan;</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">an aggregate of 21,512,459 additional shares of common stock reserved
for issuance under outstanding warrant agreements entered into in connection with financing transactions completed during 2012
and 2011 with expiration dates between January 31, 2013 and November 1, 2017, at exercise prices ranging from $0.60 per share to
$1.25 per share; and</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.75in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif">an aggregate of 223,874 additional shares of common stock reserved
for issuance under various outstanding warrant agreements, with expiration dates between May 7, 2012 and December 31, 2015, at
exercise prices ranging from $0.60 per share to $100.98 per share.</FONT></TD></TR></TABLE>



<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 76pt; text-indent: -0.5in"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 76pt; text-indent: -0.5in">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt">Unless we specifically state otherwise, the share information
in this prospectus is as of November 16, 2012 and reflects or assumes no exercise of outstanding options or warrants to purchase
shares of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 4pt">The shares issued to Cellectar shareholders in the Acquisition
constituted immediately following the Acquisition (and immediately prior to the private placement that followed the Acquisition),
approximately 85% of our outstanding common stock after giving effect to the Acquisition. Since the former stockholders of Cellectar
retained the majority voting interest in the combined business following the Acquisition, the Acquisition has been accounted for
as a reverse acquisition whereby Cellectar, Inc. is treated as the acquirer for accounting and financial reporting purposes. As
such, the financial information for periods prior to the Acquisition presented in this prospectus represents the historical financial
information of Cellectar, except for the capital structure which represents the historical amounts of Cellectar retroactively adjusted
to reflect the legal capital structure of Novelos by applying the exchange ratio established in the Acquisition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B>Summary Historical Financial Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 11.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2.5pt">The following table summarizes our financial data.
We have derived the following summary of our statements of operations data for the nine months ended September 30, 2012 and 2011
and the summary of our balance sheet data as of September 30, 2012 from our unaudited consolidated financial statements appearing
elsewhere in this prospectus. We have derived the following summary of our statements of operations data for the fiscal years ended
December 31, 2011 and 2010 and the summary of our balance sheet data as of&nbsp;December 31, 2011 and 2010&nbsp;from our audited
financial statements appearing elsewhere in this prospectus. The following summary of our financial data set forth below should
be read together with our financial statements and the related notes to those statements, as well as the section titled &ldquo;Management&rsquo;s
Discussion and Analysis of Financial Condition and Results of Operations,&rdquo; appearing elsewhere in this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nine&nbsp;Months&nbsp;Ended<BR> September&nbsp;30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year&nbsp;Ended<BR> December&nbsp;31,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Statement of Operations Data:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 40%; text-align: left; padding-left: 9pt">Research and development costs</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3,896,005</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">2,445,429</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">3,599,080</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">2,984,207</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">General and administrative costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,695,503</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,827,510</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,692,433</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,156,549</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Merger costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">-</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">746,207</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">746,207</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52,925</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Total costs and expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,591,508</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,019,146</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,037,720</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,193,681</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Other expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(48,418</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(450,356</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(397,702</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(366,582</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Net loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,639,926</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,469,502</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(7,435,422</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,560,263</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Net loss attributable to common stockholders</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(7,183,285</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,469,502</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(7,435,422</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,560,263</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Basic and diluted net loss attributable to common stockholders per common share</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.18</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.25</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.31</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.36</TD><TD STYLE="text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2.5pt">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September&nbsp;30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December&nbsp;31,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Balance Sheet Data:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 55%; text-align: left; padding-left: 9pt">Current assets</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">5,988,743</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">5,815,927</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,279,781</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Working capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,251,951</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,312,346</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">374,964</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Total assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,389,051</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,563,176</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,802,142</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Long term debt, including current portion</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">450,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">450,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,846,728</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Total stockholders&rsquo; equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,066,741</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,481,123</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133,762</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>RISK FACTORS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Investing in our securities involves a high degree of risk.
Before you invest in our securities, you should be aware that our business faces numerous financial and market risks, including
those described below, as well as general economic and business risks. The following discussion provides information concerning
the material risks and uncertainties that we have identified and believe may adversely affect our business, financial condition
and results of operations. Before you decide whether to invest in our securities, you should carefully consider these risks and
uncertainties, together with all of the other information included in this prospectus.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Risks Related to Our Business and Industry</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We will require additional capital in order to continue our
operations, and may have difficulty raising additional capital.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We expect that we will continue to generate significant operating
losses for the foreseeable future. At September 30, 2012, our consolidated cash balance was approximately $5,598,000. In October
2012, we received approximately $953,000 in proceeds from the exercise of warrants to purchase common stock. On November 2, 2012
we completed a private placement of our common stock and warrants that generated gross proceeds of $2,000,000. The proceeds from
the private placement are designated for use towards the construction of a clinical-stage manufacturing facility for I-124-CLR1404
(LIGHT) at our Madison, WI location. We estimate that the project will cost a total of approximately $3,000,000 and will take approximately
one year to complete. We anticipate that construction will commence in late 2012, although we have not yet entered into contractual
commitments with vendors. We may seek to obtain the additional capital required to complete the project from additional sales of
common stock (other than through this offering), proceeds from warrant exercises, and/or from equipment financing. We believe our
cash on hand at September 30, 2012 plus the proceeds from exercises of warrants during October 2012, together with the net proceeds
from this offering (assuming $10,000,000 of units are sold in this offering), would be adequate to fund operations into the middle
of the first quarter of 2014<I>.</I> During that time, we anticipate that we will incur approximately $15,500,000 in costs, subject
to the availability of funds. Of this amount, approximately $11,700,000 is estimated for research and development activities and
approximately $3,800,000 is estimated for general and administrative costs. The research and development costs consist of approximately
$2,900,000 for the development of HOT (including approximately $1,100,000 in Phase 1b trial costs and approximately $1,800,000
in Phase 2 trial costs), approximately $1,900,000 for the development of LIGHT, approximately $1,700,000 for the development of
GLOW2 and approximately $5,200,000 for our general, unallocated research and development costs including salaries, overhead, patent
and other costs that are not specific to a certain development project. In addition to these estimated costs, we may incur up to
an estimated total of $13,200,000 in development costs during 2014 and 2015, if necessary, to complete the Phase 1b dose-escalation
trial, the Phase 2 trials in HOT, the investigator sponsored trials in LIGHT and the Phase 2 trials in LIGHT.&nbsp;We will require
additional funds to conduct research and development, establish and conduct clinical and preclinical trials, establish commercial-scale
manufacturing arrangements and provide for the marketing and distribution of our products. Our ability to execute our operating
plan depends on our ability to obtain additional funding via the sale of equity and/or debt securities, a strategic transaction
or otherwise. We plan to actively pursue financing alternatives. However, there can be no assurance that we will obtain the necessary
funding in the amounts we seek or that it will be available on a timely basis or upon terms acceptable to us. If we obtain capital
by issuing debt or preferred stock, the holders of such securities would likely obtain rights that are superior to those of holders
of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our capital requirements and our ability to meet them depend
on many factors, including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 91%">the number of potential products and technologies in development;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>continued progress and cost of our research and development programs;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>progress with preclinical studies and clinical trials;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>the time and costs involved in obtaining regulatory clearance;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>costs of developing sales, marketing and distribution channels and our ability to sell our drugs;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>costs involved in establishing manufacturing capabilities for clinical trial and commercial quantities of our drugs;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>competing technological and market developments;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>market acceptance of our products;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>costs for recruiting and retaining management, employees and consultants;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>costs for educating physicians regarding the application and use of our products;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>whether or not we obtain listing on a national exchange and, if not, our prospects for obtaining such listing;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>uncertainty and economic instability resulting from terrorist acts and other acts of violence or war; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>the condition of capital markets and the economy generally, both in the U.S. and globally.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We may consume available resources more
rapidly than currently anticipated, resulting in the need for additional funding sooner than expected. We may seek to raise any
necessary additional funds through the issuance of warrants, equity or debt financings or executing collaborative arrangements
with corporate partners or other sources, which may be dilutive to existing stockholders or have a material effect on our current
or future business prospects. In addition, in the event that additional funds are obtained through arrangements with collaborative
partners or other sources, we may have to relinquish economic and/or proprietary rights to some of our technologies or products
under development that we would otherwise seek to develop or commercialize by ourselves. If we cannot secure adequate financing
when needed, we may be required to delay, scale back or eliminate one or more of our research and development programs or to enter
into license or other arrangements with third parties to commercialize products or technologies that we would otherwise seek to
develop ourselves and commercialize ourselves. In such event, our business, prospects, financial condition, and results of operations
may be adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We are a development stage company with a history of losses
and can provide no assurance of our future operating results.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are a development stage company and
have incurred net losses and negative cash flows since inception. We currently have no product revenues, and may not succeed in
developing or commercializing any products that will generate product or licensing revenues. We do not expect to have any products
on the market for several years. Our primary activity to date has been research and development. In addition, development of our
product candidates requires a process of preclinical and clinical testing, during which our product candidates could fail. We may
not be able to enter into agreements with one or more companies experienced in the manufacturing and marketing of therapeutic drugs
and, to the extent that we are unable to do so, we will not be able to market our product candidates. Whether we achieve profitability
or not will depend on our success in developing, manufacturing, and marketing our product candidates. We have experienced net losses
and negative cash flows from operating activities since inception and we expect such losses and negative cash flows to continue
for the foreseeable future. As of December 31, 2011, we had working capital of $5,312,346 and stockholders&rsquo; equity of $9,481,123.
As of September 30, 2012, we had working capital of $5,251,951 and stockholders&rsquo; equity of $9,066,741. For the period from
Cellectar&rsquo;s inception in November 2002 until the business combination with Novelos on April 8, 2011, and thereafter through
September 30, 2012, Cellectar (and, from and after the business combination, Novelos) incurred aggregated net losses of $38,120,352.
Net loss for the year ended December 31, 2011 was $7,435,422 and the net loss for the nine months ended September 30, 2012 was
$6,639,926. We may never achieve profitability.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>At present, our success depends solely
on the successful commercialization of our three compounds in development. </B>&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Prior to the Acquisition, Novelos had for over ten years been
developing oxidized glutathione-based compounds for the treatment of cancer, including NOV-002, an injectable small-molecule compound
based on a proprietary formulation of oxidized glutathione that Novelos had been developing for use in combination with standard-of-care
chemotherapies for the treatment of solid tumors, and NOV-205, a hepatoprotective agent with immunomodulating and anti-inflammatory
properties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Following the Acquisition, development of NOV-002 and NOV-205
was suspended and we are now focused on the development of novel drugs for the treatment and diagnosis of cancer based on the cancer-targeting
technologies of Cellectar: I-124-CLR1404 (LIGHT, labeled with a short-lived radioisotope, iodine-124), I-131-CLR1404 (HOT, a radiolabeled
compound) and CLR1502 (GLOW2, a preclinical, cancer-targeted, non-radioactive optical imaging agent. As a result, the successful
commercialization of LIGHT, HOT and GLOW2 is crucial for our success. Our proposed products and their potential applications are
in an early stage of clinical and manufacturing/process development and face a variety of risks and uncertainties. Principally,
these risks include the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; width: 5%">&middot;</TD>
    <TD STYLE="width: 91%">future clinical trial results may show that our cancer-targeting technologies are not well tolerated by recipients at its effective doses or are not efficacious;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>future clinical trial results may be inconsistent with previous preliminary testing results and data from earlier studies may be inconsistent with clinical data;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>even if our cancer-targeting technologies are shown to be safe and effective for their intended purposes, we may face significant or unforeseen difficulties in obtaining or manufacturing sufficient quantities at reasonable prices or at all;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>our ability to complete the development and commercialization of our cancer-targeting technologies for their intended use is substantially dependent upon our ability to obtain and maintain experienced and committed partners to assist us with obtaining clinical and regulatory approvals for, and the manufacturing, marketing and distribution of, our products;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>even if our cancer-targeting technologies are successfully developed, commercially produced and receive all necessary regulatory approvals, there is no guarantee that there will be market acceptance of our products; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>our competitors may develop therapeutics or other treatments which are superior or less costly than our own with the result that our product candidates, even if they are successfully developed, manufactured and approved, may not generate sufficient revenues to offset the development and manufacturing costs of our product candidates.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">If we are unsuccessful in dealing with any of these risks, or
if we are unable to successfully commercialize our cancer-targeting technologies for some other reason, our business, prospects,
financial condition, and results of operations may be adversely affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We have a history of recurring losses and an accumulated
deficit which, among other factors, raise substantial doubt about our ability to continue as a going concern, which may hinder
our ability to obtain future financing.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our financial statements as of December 31, 2011 were prepared
under the assumption that we will continue as a going concern. The independent registered public accounting firm that audited our
2011 financial statements, in their report, included an explanatory paragraph referring to our recurring losses&nbsp;since inception&nbsp;and
expressing substantial doubt in our ability to continue as a going concern. Our financial statements do not include any adjustments
that might result from the outcome of this uncertainty. Our ability to continue as a going concern depends on our ability to obtain
additional equity or debt financing, attain further operating efficiencies, reduce expenditures, and, ultimately, to generate revenue.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>The failure to complete development of our technology, to
obtain government approvals, including required FDA approvals, or to comply with ongoing governmental regulations could prevent,
delay or limit introduction or sale of proposed products and result in failure to achieve revenues or maintain our ongoing business.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our research and development activities and the manufacture
and marketing of our intended products are subject to extensive regulation for safety, efficacy and quality by numerous government
authorities in the U.S. and abroad. Before receiving clearance to market our proposed products by the FDA, we will have to demonstrate
that our products are safe and effective for the patient population for the diseases that are to be treated. Clinical trials, manufacturing
and marketing of drugs are subject to the rigorous testing and approval process of the FDA and equivalent foreign regulatory authorities.
The Federal Food, Drug and Cosmetic Act and other federal, state and foreign statutes and regulations govern and influence the
testing, manufacturing, labeling, advertising, distribution and promotion of drugs and medical devices. As a result, clinical trials
and regulatory approval can take many years to accomplish and require the expenditure of substantial financial, managerial and
other resources.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In order to be commercially viable, we must successfully research,
develop, obtain regulatory approval for, manufacture, introduce, market and distribute our technologies. This includes meeting
a number of critical developmental milestones including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; width: 3%">&middot;</TD>
    <TD STYLE="width: 91%">demonstrating benefit from delivery of each specific drug for specific medical indications;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>demonstrating through preclinical and clinical trials that each drug is safe and effective; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>demonstrating that we have established viable Good Manufacturing Practices capable of potential scale-up.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The timeframe necessary to achieve these developmental milestones
may be long and uncertain, and we may not successfully complete these milestones for any of our intended products in development.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition to the risks previously discussed, our technology
is subject to developmental risks that include the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; width: 3%">&middot;</TD>
    <TD STYLE="width: 91%">uncertainties arising from the rapidly growing scientific aspects of drug therapies and potential treatments;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>uncertainties arising as a result of the broad array of alternative potential treatments related to cancer and other diseases; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>anticipated expense and time believed to be associated with the development and regulatory approval of treatments for cancer and other diseases.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In order to conduct the clinical trials that are necessary to
obtain approval by the FDA to market a product, it is necessary to receive clearance from the FDA to conduct such clinical trials.
The FDA can halt clinical trials at any time for safety reasons or because we or our clinical investigators do not follow the FDA&rsquo;s
requirements for conducting clinical trials. If we are unable to receive clearance to conduct clinical trials for a product, or
the trials are halted by the FDA, we will not be able to achieve any revenue from such product in the U.S. as it is illegal to
sell any drug for use in humans in the U.S. without FDA approval.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Even if we do ultimately receive FDA approval for any of our
products, these products will be subject to extensive ongoing regulation, including regulations governing manufacturing, labeling,
packaging, testing, dispensing, prescription and procurement quotas, record keeping, reporting, handling, shipment and disposal
of any such drug. Failure to obtain and maintain required registrations or to comply with any applicable regulations could further
delay or preclude development and commercialization of our drugs and subject us to enforcement action.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Clinical trials involve a lengthy and expensive process with
an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In order to receive regulatory approval for the commercialization
of our product candidates, we must conduct, at our own expense, extensive clinical trials to demonstrate safety and efficacy of
these product candidates. Clinical testing is expensive, it can take many years to complete and its outcome is uncertain. Failure
can occur at any time during the clinical trial process. For example, we incurred costs of over $35 million in clinical trial expenses
over a period of 4 years in connection with the Phase 3 trial of NOV-002 for non-small cell lung cancer, and NOV-002 did not ultimately
demonstrate efficacy for that indication.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may experience delays in clinical testing of our product
candidates. We do not know whether planned clinical trials will begin on time, will need to be redesigned or will be completed
on schedule, if at all. Clinical trials can be delayed for a variety of reasons, including delays in obtaining regulatory approval
to commence a trial, in reaching agreement on acceptable clinical trial terms with prospective sites, in obtaining institutional
review board approval to conduct a trial at a prospective site, in recruiting patients to participate in a trial or in obtaining
sufficient supplies of clinical trial materials. Many factors affect patient enrollment, including the size of the patient population,
the proximity of patients to clinical sites, the eligibility criteria for the trial, competing clinical trials and new drugs approved
for the conditions we are investigating. Prescribing physicians will also have to decide to use our product candidates over existing
drugs that have established safety and efficacy profiles. Any delays in completing our clinical trials will increase our costs,
slow down our product development and approval process and delay our ability to generate revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition, the results of preclinical studies and early clinical
trials of our product candidates do not necessarily predict the results of later-stage clinical trials. Product candidates in later
stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through initial clinical
testing. The data collected from clinical trials of our product candidates may not be sufficient to support the submission of a
new drug application or to obtain regulatory approval in the United States or elsewhere. Because of the uncertainties associated
with drug development and regulatory approval, we cannot determine if or when we will have an approved product for commercialization
or achieve sales or profits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our clinical trials may not demonstrate sufficient levels of
efficacy necessary to obtain the requisite regulatory approvals for our drugs, and our proposed drugs may not be approved for marketing.
We suffered significant setbacks in the development of NOV-002 and NOV-205, as some of the promising results of earlier trials
were not demonstrated in later stage trials. As a result, following the Acquisition, development of these compounds has been suspended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We may be required to suspend or discontinue clinical trials
due to unexpected side effects or other safety risks that could preclude approval of our product candidates.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our clinical trials may be suspended at any time for a number
of reasons. For example, we may voluntarily suspend or terminate our clinical trials if at any time we believe that they present
an unacceptable risk to the clinical trial patients. In addition, regulatory agencies may order the temporary or permanent discontinuation
of our clinical trials at any time if they believe that the clinical trials are not being conducted in accordance with applicable
regulatory requirements or that they present an unacceptable safety risk to the clinical trial patients.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Administering any product candidates to humans may produce undesirable
side effects. These side effects could interrupt, delay or halt clinical trials of our product candidates and could result in the
FDA or other regulatory authorities denying further development or approval of our product candidates for any or all targeted indications.
Ultimately, some or all of our product candidates may prove to be unsafe for human use. Moreover, we could be subject to significant
liability if any volunteer or patient suffers, or appears to suffer, adverse health effects as a result of participating in our
clinical trials.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We have limited in-house research and manufacturing capacity
and will continue to rely, to some extent, on research and manufacturing facilities at various universities, hospitals, contract
research organizations and contract manufacturers for a portion of our research, development, and manufacturing. In the event we
exceed our in-house capacity or lose access to those facilities, our ability to gain FDA approval and commercialization of our
drug delivery technology and products could be delayed or impaired.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We remain in the research and development and clinical and preclinical
trial phase of product commercialization and have limited experience in establishing, supervising and conducting commercial manufacturing.
Accordingly, if our products are approved for commercial sale, we will need to establish the capability, or engage a contract manufacturer
that has the capability, to commercially manufacture our products in accordance with FDA and other regulatory requirements. There
can be no assurance that we would be able to successfully establish any such capability, or identify a suitable manufacturing partner
on acceptable terms.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">At the present time, we have limited research, development or
manufacturing capabilities within our facilities. Our manufacturing facility in Madison, Wisconsin has adequate capacity to supply
drug product for Phase 2 studies of HOT, but we will need to expand for larger Phase 3 studies. LIGHT is currently manufactured
by our collaborator, the University of Wisconsin at Madison, in small quantities, for use in investigator-sponsored clinical trials
pursuant to a materials transfer agreement expiring in June 2013. However, this agreement may be terminated at any time by either
party. We rely and expect to continue to rely, to some extent, on contracting with third parties to use their facilities to conduct
research, development and manufacturing. The limited facilities we have to conduct research, development and manufacturing may
delay or impair our ability to gain FDA approval and commercialization of our drug delivery technology and products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Although, we recently completed a private placement resulting
in gross proceeds of $2,000,000, which we have agreed to use towards the construction of a clinical-stage manufacturing facility
for I-124-CLR1404 (LIGHT) at our Madison, WI location, we estimate that the project will cost a total of approximately $3,000,000
and will take approximately one year to complete. We anticipate that construction will commence in late 2012. We have limited experience
with such construction, and we may encounter delays or cost overruns in completing it, and we may have difficulty raising the additional
capital required to fully fund the project.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may rely on third-party contract research organizations,
service providers and suppliers to support development and clinical testing of our products. This may expose us to the risks of
not being able to directly oversee the production and quality of the manufacturing process. Furthermore, these contractors, whether
foreign or domestic, may experience regulatory compliance difficulties, mechanical shutdowns, employee strikes or other unforeseeable
acts that may delay production. Failure of any of these contractors to provide the required services in a timely manner or on commercially
reasonable terms could materially delay the development and approval of our products, increase our expenses and materially harm
our business, prospects, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We believe that we have a good working relationship with our
contractors. However, should the situation change, we may be required to relocate these activities on short notice, and we do not
currently have access to alternate facilities to which we could relocate our research, development and/or manufacturing activities.
The cost and time to establish or locate an alternate research, development and/or manufacturing facility to develop our technology
would be substantial and would delay obtaining FDA approval and commercializing our products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We are exposed to product, clinical and preclinical liability
risks that could create a substantial financial burden should we be sued.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our business exposes us to potential product liability and other
liability risks that are inherent in the testing, manufacturing and marketing of pharmaceutical products. In addition, the use,
in our clinical trials, of pharmaceutical products that we or our current or potential collaborators may develop and then subsequently
sell may cause us to bear a portion of or all product liability risks. While we carry an insurance policy covering up to $5,000,000
per occurrence and $5,000,000 in the aggregate of liability incurred in connection with such claims should they arise, there can
be no assurance that our insurance will be adequate to cover all situations. Moreover, there can be no assurance that such insurance,
or additional insurance, if required, will be available in the future or, if available, will be available on commercially reasonable
terms. Furthermore, our current and potential partners with whom we have collaborative agreements or our future licensees may not
be willing to indemnify us against these types of liabilities and may not themselves be sufficiently insured or have a net worth
sufficient to satisfy any product liability claims. A successful product liability claim or series of claims brought against us
could have a material adverse effect on our business, prospects, financial condition and results of operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Acceptance of our products in the marketplace is uncertain
and failure to achieve market acceptance will prevent or delay our ability to generate revenues.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our future financial performance will depend, at least in part,
on the introduction and customer acceptance of our proposed products. Even if approved for marketing by the necessary regulatory
authorities, our products may not achieve market acceptance. The degree of market acceptance will depend on a number of factors
including:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; width: 5%">&middot;</TD>
    <TD STYLE="width: 91%">receiving regulatory clearance of marketing claims for the uses that we are developing;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>establishing and demonstrating the advantages, safety and efficacy of our technologies;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>pricing and reimbursement policies of government and third-party payers such as insurance companies, health maintenance organizations and other health plan administrators;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>our ability to attract corporate partners, including pharmaceutical companies, to assist in commercializing our intended products; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>our ability to market our products.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Physicians, patients, payers or the medical community in general
may be unwilling to accept, use or recommend any of our products. If we are unable to obtain regulatory approval or commercialize
and market our proposed products as planned, we may not achieve any market acceptance or generate revenue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We may face litigation from third parties who claim that
our products infringe on their intellectual property rights, particularly because there is often substantial uncertainty about
the validity and breadth of medical patents.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may be exposed to future litigation by third parties based
on claims that our technologies, products or activities infringe on the intellectual property rights of others or that we have
misappropriated the trade secrets of others. This risk is exacerbated by the fact that the validity and breadth of claims covered
in medical technology patents and the breadth and scope of trade-secret protection involve complex legal and factual questions
for which important legal principles are unresolved. Any litigation or claims against us, whether or not valid, could result in
substantial costs, could place a significant strain on our financial and managerial resources and could harm our reputation. The
U. Mich. license does require, and license agreements that we may enter into in the future would likely require, that we pay the
costs associated with defending this type of litigation. In addition, intellectual property litigation or claims could force us
to do one or more of the following:&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; width: 3%">&middot;</TD>
    <TD STYLE="width: 91%">cease selling, incorporating or using any of our technologies and/or products that incorporate the challenged intellectual property, which would adversely affect our ability to generate revenue;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>obtain a license from the holder of the infringed intellectual property right, which license may be costly or may not be available on reasonable terms, if at all; or</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>redesign our products, which would be costly and time-consuming.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>If we are unable to protect or enforce our rights to intellectual
property adequately or to secure rights to third-party patents, we may lose valuable rights, experience reduced market share, assuming
any, or incur costly litigation to protect our intellectual property rights.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our ability to obtain licenses to patents, maintain trade-secret
protection and operate without infringing the proprietary rights of others will be important to commercializing any products under
development. Therefore, any disruption in access to the technology could substantially delay the development of our technology.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The patent positions of biotechnology and pharmaceutical companies,
such as ours, that involve licensing agreements are frequently uncertain and involve complex legal and factual questions. In addition,
the coverage claimed in a patent application can be significantly reduced before the patent is issued or in subsequent legal proceedings.
Consequently, our patent applications and any issued and licensed patents may not provide protection against competitive technologies
or may be held invalid if challenged or circumvented. To the extent we license patents from third parties, as in the case of the
U. Mich. license, the early termination of any such license agreement would result in the loss of our rights to use the covered
patents, which could severely delay, inhibit or eliminate our ability to develop and commercialize compounds based on the licensed
patents. Our competitors may also independently develop products similar to ours or design around or otherwise circumvent patents
issued or licensed to us. In addition, the laws of some foreign countries may not protect our proprietary rights to the same extent
as U.S. law.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We also rely on trade secrets, technical know-how and continuing
technological innovation to develop and maintain our competitive position. Although we generally require our employees, consultants,
advisors and collaborators to execute appropriate confidentiality and assignment-of-inventions agreements, our competitors may
independently develop substantially equivalent proprietary information and techniques, reverse engineer our information and techniques,
or otherwise gain access to our proprietary technology. We may be unable to meaningfully protect our rights in trade secrets, technical
know-how and other non-patented technology.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may have to resort to litigation to protect our rights for
certain intellectual property or to determine their scope, validity or enforceability of our intellectual property rights. Enforcing
or defending our rights is expensive, could cause diversion of our resources and may not prove successful. Any failure to enforce
or protect our rights could cause us to lose the ability to exclude others from using our technology to develop or sell competing
products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Confidentiality agreements with employees and others may
not adequately prevent disclosure of our trade secrets and other proprietary information and may not adequately protect our intellectual
property, which could limit our ability to compete.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We operate in the highly technical field of research and development
of small molecule drugs, and rely in part on trade-secret protection in order to protect our proprietary trade secrets and unpatented
know-how. However, trade secrets are difficult to protect, and we cannot be certain that our competitors will not develop the same
or similar technologies on their own. We have taken steps, including entering into confidentiality agreements with our employees,
consultants, outside scientific collaborators, sponsored researchers and other advisors, to protect our trade secrets and unpatented
know-how. These agreements generally require that the other party keep confidential and not disclose to third parties all confidential
information developed by the party or made known to the party by us during the course of the party&rsquo;s relationship with us.
We also typically obtain agreements from these parties which provide that inventions conceived by the party in the course of rendering
services to us will be our exclusive property. However, these agreements may not be honored and may not effectively assign intellectual
property rights to us. Enforcing a claim that a party has illegally obtained and is using our trade secrets or know-how is difficult,
expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States may be less willing
to protect trade secrets or know-how. The failure to obtain or maintain trade-secret protection could adversely affect our competitive
position.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We may be subject to claims that our employees have wrongfully
used or disclosed alleged trade secrets of their former employers.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As is common in the biotechnology and pharmaceutical industry,
we employ individuals who were previously employed at other biotechnology or pharmaceutical companies, including our competitors
or potential competitors. Although no claims against us are currently pending, we may be subject to claims that we or these employees
have used or disclosed trade secrets or other proprietary information of their former employers, either inadvertently or otherwise.
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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>The use of hazardous materials, including radioactive materials,
in our research and development imposes certain compliance costs on us and may subject us to liability for claims arising from
the use or misuse of these materials.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our research and development, manufacturing and administration
of our drugs involve the controlled use of hazardous materials, including chemicals and radioactive materials, such as radioactive
isotopes. We are subject to federal, state and local laws and regulations governing the storage, use and disposal of these materials
and some waste products and are required to maintain both a manufacturer&rsquo;s license and a radioactive materials license with
State of Wisconsin agencies. We believe that our safety procedures for the storage, use and disposal of these materials comply
with the standards prescribed by federal, state and local regulations. However, we cannot completely eliminate the risk of accidental
contamination or injury from these materials. If there were to be an accident, we could be held liable for any damages that result,
which could exceed our financial resources. We currently maintain insurance coverage, with limits of up to $2,500,000 depending
on the nature&nbsp;of the claim,&nbsp;for damages resulting from the hazardous materials we use; however, future claims may exceed
the amount of our coverage. Also, we do not have insurance coverage for pollution cleanup and removal. Currently the costs of complying
with federal, state and local regulations are not significant, and consist primarily of waste disposal expenses and permitting
fees. However, they could become expensive, and current or future environmental regulations may impair our research, development,
production and commercialization efforts. If we are unable to maintain the required licenses and permits for any reason, it will
negatively impact our research and development activities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Due to our limited marketing, sales and distribution experience,
we may be unsuccessful in our efforts to sell our proposed products, enter into relationships with third parties or develop a direct
sales organization.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have not established marketing, sales or distribution capabilities
for our proposed products. Until such time as our proposed products are further along in the development process, we will not devote
any meaningful time and resources to this effort. At the appropriate time, we intend to develop our own sales and marketing capabilities
or enter into agreements with third parties to sell our products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have limited experience in developing, training or managing
a sales force. If we choose to establish a direct sales force, we may incur substantial additional expenses in developing, training
and managing such an organization. We may be unable to build a sales force on a cost-effective basis or at all. Any such direct
marketing and sales efforts may prove to be unsuccessful. In addition, we will compete with many other companies that currently
have extensive marketing and sales operations. Our marketing and sales efforts may be unable to compete against these other companies.
We may be unable to establish a sufficient sales and marketing organization on a timely basis, if at all.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">If we choose to enter into agreements with third parties to
sell our proposed products, we may be unable to establish or maintain third-party relationships on a commercially reasonable basis,
if at all. In addition, these third parties may have similar or more established relationships with our competitors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may be unable to engage qualified distributors. Even if engaged,
these distributors may:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; width: 3%">&middot;</TD>
    <TD STYLE="width: 91%">fail to adequately market our products;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>fail to satisfy financial or contractual obligations to us;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>offer, design, manufacture or promote competing products; or</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>cease operations with little or no notice.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">If we fail to develop sales, marketing and distribution channels,
we would experience delays in product sales and incur increased costs, which would have a material adverse effect on our business,
prospects, financial condition, and results of operation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>If we are unable to convince physicians of the benefits of
our intended products, we may incur delays or additional expense in our attempt to establish market acceptance.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Achieving use of our products in the target market of cancer
diagnosis and treatment may require physicians to be informed regarding these products and their intended benefits. The time and
cost of such an educational process may be substantial. Inability to successfully carry out this physician education process may
adversely affect market acceptance of our proposed products. We may be unable to timely educate physicians regarding our intended
proposed products in sufficient numbers to achieve our marketing plans or to achieve product acceptance. Any delay in physician
education may materially delay or reduce demand for our proposed products. In addition, we may expend significant funds towards
physician education before any acceptance or demand for our proposed products is created, if at all.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>The market for our proposed products is rapidly changing
and competitive, and new therapeutics, new drugs and new treatments that may be developed by others could impair our ability to
maintain and grow our business and remain competitive.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The pharmaceutical and biotechnology industries are subject
to rapid and substantial technological change. Developments by others may render our technologies and intended products noncompetitive
or obsolete, or we may be unable to keep pace with technological developments or other market factors. Technological competition
from pharmaceutical and biotechnology companies, universities, governmental entities and others diversifying into the field is
intense and is expected to increase. Most of these entities have significantly greater research and development capabilities and
budgets than we do, as well as substantially more marketing, manufacturing, financial and managerial resources. These entities
represent significant competition for us. Acquisitions of, or investments in, competing pharmaceutical or biotechnology companies
by large corporations could increase our competitors&rsquo; financial, marketing, manufacturing and other resources.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our resources are limited and we may experience management,
operational or technical challenges inherent in such activities and novel technologies. Competitors have developed or are in the
process of developing technologies that are, or in the future may be, the basis for competition. Some of these technologies may
accomplish therapeutic effects similar to those of our technology, but through different means. Our competitors may develop drugs
and drug delivery technologies that are more effective than our intended products and, therefore, present a serious competitive
threat to us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We do not know of any current or potential direct competitors
for HOT and LIGHT. Marketed drugs Zevalin&reg; (Spectrum Pharmaceuticals) and Bexxar&reg; (Glaxo Smith Kline) provide examples
of targeted radiotherapeutics specifically for lymphoma indication. FDG is the current standard for PET imaging for cancer and
may be an alternative diagnostic imaging agent to LIGHT.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The potential widespread acceptance of therapies that are alternatives
to ours may limit market acceptance of our products even if they are commercialized. Many of our targeted diseases and conditions
can also be treated by other medication or drug delivery technologies. These treatments may be widely accepted in medical communities
and have a longer history of use. The established use of these competitive drugs may limit the potential for our technologies and
products to receive widespread acceptance if commercialized.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>If users of our products are unable to obtain adequate reimbursement
from third-party payers, or if additional healthcare reform measures are adopted, it could hinder or prevent our product candidates&rsquo;
commercial success.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The continuing efforts of government and insurance companies,
health maintenance organizations and other payers of healthcare costs to contain or reduce costs of healthcare may adversely affect
our ability to generate future revenues and achieve profitability, including by limiting the future revenues and profitability
of our potential customers, suppliers and collaborative partners. For example, in certain foreign markets, pricing or profitability
of prescription pharmaceuticals is subject to government control. The U.S. government is implementing, and other governments have
shown significant interest in pursuing, healthcare reform. Any government-adopted reform measures could adversely affect the pricing
of healthcare products and services in the U.S. or internationally and the amount of reimbursement available from governmental
agencies or other third-party payers. The continuing efforts of the U.S. and foreign governments, insurance companies, managed
care organizations and other payers of healthcare services to contain or reduce healthcare costs may adversely affect our ability
to set prices for our products, should we be successful in commercializing them, and this would negatively affect our ability to
generate revenues and achieve and maintain profitability.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">New laws, regulations and judicial decisions, or new interpretations
of existing laws, regulations and decisions, that relate to healthcare availability, methods of delivery or payment for healthcare
products and services, or sales, marketing or pricing of healthcare products and services, also may limit our potential revenue
and may require us to revise our research and development programs. The pricing and reimbursement environment may change in the
future and become more challenging for several reasons, including policies advanced by the current or future executive administrations
in the U.S., new healthcare legislation or fiscal challenges faced by government health administration authorities. Specifically,
in both the U.S. and some foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the
healthcare system in ways that could affect our ability to sell our products profitably. In the U.S., changes in federal healthcare
policy were enacted in 2010 and are being implemented. Some reforms could result in reduced reimbursement rates for our product
candidates, which would adversely affect our business strategy, operations and financial results. Our ability to commercialize
our products will depend in part on the extent to which appropriate reimbursement levels for the cost of our products and related
treatment are obtained by governmental authorities, private health insurers and other organizations, such as health maintenance
organizations (HMOs). Third-party payers are increasingly challenging the prices charged for medical drugs and services. Also,
the trend toward managed healthcare in the U.S. and the concurrent growth of organizations such as HMOs that could control or significantly
influence the purchase of healthcare services and drugs, as well as legislative proposals to reform healthcare or change government
insurance programs, may all result in lower prices for or rejection of our drugs. The cost containment measures that healthcare
payers and providers are instituting and the effect of any healthcare reform could materially harm our ability to operate profitably.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We depend on key personnel who may terminate their employment
with us at any time, and our success will depend on our ability to hire additional qualified personnel.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our success will depend to a significant degree on the continued
services of our chief executive officer, Harry Palmin, Cellectar founder and our chief scientific officer, Dr. Jamey Weichert,
and our senior vice president of research and development, Dr. Christopher Pazoles. There can be no assurance that these individuals
will continue to provide services to us. In addition, our success may depend on our ability to attract and retain other highly
skilled personnel. We may be unable to recruit such personnel on a timely basis, if at all. Our management and other employees
may voluntarily terminate their employment with us at any time. The loss of services of key personnel, or the inability to attract
and retain additional qualified personnel, could result in delays in development or approval of our products, loss of sales and
diversion of management resources. To date, we have not experienced difficulties attracting and retaining highly qualified personnel,
but there can be no assurance we will be successful in doing so in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Risks Related to our Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B>Our stock price has experienced price fluctuations.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">There can be no assurance that the market price for our common
stock will remain at its current level and a decrease in the market price could result in substantial losses for investors. The
market price of our common stock may be significantly affected by one or more of the following factors:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; width: 3%">&middot;</TD>
    <TD STYLE="width: 91%">announcements or press releases relating to the biopharmaceutical sector or to our own business or prospects;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>regulatory, legislative, or other developments affecting us or the healthcare industry generally;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>sales by holders of restricted securities pursuant to effective registration statements, including the registration statement of which this prospectus forms a part, or exemptions from registration; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>market conditions specific to biopharmaceutical companies, the healthcare industry and the stock market generally.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Seven of our stockholders beneficially&nbsp;own approximately
61% of our outstanding common stock, which limits the influence of other stockholders.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of November 16, 2012, 61% of our outstanding common stock
is&nbsp;beneficially owned&nbsp;by seven stockholders. The interests of these stockholders may differ from those of other stockholders.
These stockholders will likely continue to have the ability to significantly affect the outcome of all corporate actions requiring
stockholder approval, including the following actions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; width: 3%">&middot;</TD>
    <TD STYLE="width: 91%">the election of directors;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>the amendment of charter documents; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>the approval of certain mergers and other significant corporate transactions, including a sale of substantially all of our assets.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>There may be a limited public market for our securities;
we presently fail to qualify for listing on any national securities exchanges.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our common stock currently does not meet all of the requirements
for initial listing on a registered stock exchange. Specifically, our cash on hand is not sufficient to fund operations for twelve
months and the bid price of our common stock is less than the minimum bid price required to obtain a listing. Trading in our common
stock continues to be conducted in the over-the-counter market (currently the OTCQX). As a result, an investor may find it difficult
to dispose of or to obtain accurate quotations as to the market value of our common stock, and our common stock may be less attractive
for margin loans, or for investment by financial institutions, as consideration in future capital raising transactions or other
contexts. During September 2012, we received a notice from OTC Markets Group notifying us that the Company&rsquo;s Investment Bank
Designated Advisor for Disclosure (&ldquo;DAD&rdquo;) and sponsor to the OTCQX, Rodman and Renshaw, LLC had ceased conducting its
securities business and no longer qualified as a DAD. We are currently in the process of identifying a new investment bank sponsor
and will seek to engage a new DAD prior to the end of the year. There can be no assurance that we will find a new sponsor that
is acceptable to us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our common stock has historically been a &ldquo;penny stock&rdquo;
under SEC rules. It may be more difficult to resell shares of common stock classified as &ldquo;penny stock&rdquo;.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our common stock has historically been a &ldquo;penny stock&rdquo;
under applicable SEC rules (generally defined as non-exchange traded stock with a per-share price below $5.00). These rules impose
additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than
those who qualify as &ldquo;established customers&rdquo; or &ldquo;accredited investors.&rdquo; For example, broker-dealers must
determine the appropriateness for non-qualifying persons of investments in penny stocks. Broker-dealers must also provide, prior
to a transaction in a penny stock not otherwise exempt from the rules, a standardized risk disclosure document that provides information
about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and
offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the transaction, furnish
monthly account statements showing the market value of each penny stock held in the customer&rsquo;s account, provide a special
written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser&rsquo;s written
agreement to the transaction.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Legal remedies available to an investor in &quot;penny stocks&quot;
may include the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; width: 3%">&middot;</TD>
    <TD STYLE="width: 94%">if a &quot;penny stock&quot; is sold to the investor in violation of the requirements listed above, or other federal or states securities laws, the investor may be able to cancel the purchase and receive a refund of the investment.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>if a &ldquo;penny stock&rdquo; is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">However, investors who have signed arbitration agreements may
have to pursue their claims through arbitration.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">These requirements may have the effect of reducing the level
of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional
burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities,
which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers
to sell our common stock and may affect your ability to resell our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Many brokerage firms will discourage or refrain from recommending
investments in penny stocks. Most institutional investors will not invest in penny stocks. In addition, many individual investors
will not invest in penny stocks due, among other reasons, to the increased financial risk generally associated with these investments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For these reasons, penny stocks may have a limited market and,
consequently, limited liquidity. We can give no assurance at what time, if ever, our common stock will not be classified as a &ldquo;penny
stock&rdquo; in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>If we fail to maintain effective internal controls over financial
reporting, the price of our common stock may be adversely affected.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our internal control over financial reporting may have weaknesses
and conditions that could require correction or remediation, the disclosure of which may have an adverse impact on the price of
our common stock. We are required to establish and maintain appropriate internal controls over financial reporting. Failure to
establish those controls, or any failure of those controls once established, could adversely affect our public disclosures regarding
our business, prospects, financial condition or results of operations. In addition, management&rsquo;s assessment of internal controls
over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial
reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to
be addressed in our internal control over financial reporting or disclosure of management&rsquo;s assessment of our internal controls
over financial reporting may have an adverse impact on the price of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We are required to comply with certain provisions of Section
404 of the Sarbanes-Oxley Act of 2002 and if we fail to continue to comply, our business could be harmed and our stock price could
decline.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley
Act of 2002 require an annual assessment of internal controls over financial reporting, and for certain issuers an attestation
of this assessment by the issuer&rsquo;s independent registered public accounting firm. The standards that must be met for management
to assess the internal controls over financial reporting as effective are evolving and complex, and require significant documentation,
testing, and possible remediation to meet the detailed standards. We expect to incur significant expenses and to devote resources
to Section 404 compliance on an ongoing basis. It is difficult for us to predict how long it will take or costly it will be to
complete the assessment of the effectiveness of our internal control over financial reporting for each year and to remediate any
deficiencies in our internal control over financial reporting. As a result, we may not be able to complete the assessment and remediation
process on a timely basis. In addition, although attestation requirements by our independent registered public accounting firm
are not presently applicable to us we could become subject to these requirements in the future and we may encounter problems or
delays in completing the implementation of any resulting changes to internal controls over financial reporting. In the event that
our Chief Executive Officer or Chief Financial Officer determine that our internal control over financial reporting is not effective
as defined under Section 404, we cannot predict how regulators will react or how the market prices of our shares will be affected;
however, we believe that there is a risk that investor confidence and share value may be negatively affected.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our common stock could be further diluted as the result of
the issuance of additional shares of common stock, convertible securities, warrants or options.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In the past, we have issued common stock, convertible securities
(such as convertible preferred stock and notes) and warrants in order to raise money. We have also issued options and warrants
as compensation for services and incentive compensation for our employees and directors. We have shares of common stock reserved
for issuance upon the exercise of certain of these securities and may increase the shares reserved for these purposes in the future.
Our issuance of additional common stock, convertible securities, options and warrants could affect the rights of our stockholders,
could reduce the market price of our common stock or could result in adjustments to exercise prices of outstanding warrants (resulting
in these securities becoming exercisable for, as the case may be, a greater number of shares of our common stock), or could obligate
us to issue additional shares of common stock to certain of our stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Shares eligible for future sale may adversely affect the
market.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">From time to time, certain of our stockholders may be eligible
to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to
Rule 144 promulgated under the Securities Act, subject to certain limitations. In general, pursuant to amended Rule 144, non-affiliate
stockholders may sell freely after six months subject only to the current public information requirement. Affiliates may sell after
six months subject to the Rule 144 volume, manner of sale (for equity securities), current public information, and notice requirements.
Of the approximately&nbsp;46 million shares of our common stock outstanding as of November 16, 2012, approximately 19.8 million
shares are tradable without restriction, and approximately an additional 15.2 million shares that had been issued in unregistered
transactions and are held by non-affiliates are tradable without time or volume limitations pursuant to Rule 144. We have registered
the resale of an additional 4,000,000 shares of our common stock, pursuant to registration obligations. Any substantial resales
of our common stock pursuant to Rule 144 or an effective registration statement may have a material adverse effect on the market
price of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Provisions of our charter, bylaws, and Delaware law may make
an acquisition of us or a change in our management more difficult.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Certain provisions of our amended restated certificate of incorporation
and bylaws could discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable,
including transactions in which an investor might otherwise receive a premium for their shares. These provisions also could limit
the price that investors might be willing to pay in the future for shares of our common stock or warrants, thereby depressing the
market price of our common stock. Stockholders who wish to participate in these transactions may not have the opportunity to do
so.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Furthermore, these provisions could prevent or frustrate attempts
by our stockholders to replace or remove our management. These provisions:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; width: 3%">&middot;</TD>
    <TD STYLE="width: 91%">provide for the division of our board into three classes as nearly equal in size as possible with staggered three-year terms and further limit the removal of directors and the filling of vacancies;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>authorize our board of directors to issue without stockholder approval blank-check preferred stock that, if issued, could operate as a &ldquo;poison pill&rdquo; to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our board of directors;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>require that stockholder actions must be effected at a duly called stockholder meeting and prohibit stockholder action by written consent;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>establish advance notice requirements for stockholder nominations to our board of directors or for stockholder proposals that can be acted on at stockholder meetings;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%">&nbsp;</TD>
    <TD STYLE="font-family: Symbol; width: 3%">&middot;</TD>
    <TD STYLE="width: 91%">limit who may call stockholder meetings; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>require the approval of the holders of 75% of the outstanding shares of our capital stock entitled to vote in order to amend certain provisions of our restated certificate of incorporation and restated bylaws.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition, because we are incorporated in Delaware, we are
governed by the provisions of Section 203 of the Delaware General Corporation Law, which may, unless certain criteria are met,
prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining
with us for a prescribed period of time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>We have not paid dividends in the past and do not expect
to pay dividends for the foreseeable future. Any return on investment may be limited to the value of our common stock.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">No cash dividends have been paid on Novelos common stock. We
do not expect to pay cash dividends in the near future. Payment of dividends would depend upon our profitability at the time, cash
available for those dividends, and other factors as our board of directors may consider relevant. If we do not pay dividends, our
common stock may be less valuable because a return on an investor&rsquo;s investment will only occur if our stock price appreciates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Risks Related to this Offering</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>The offering may not be fully subscribed, and, even if the
offering is fully subscribed, we will need additional capital in the future. If additional capital is not available, we may not
be able to continue to operate our business pursuant to our business plan or we may have to discontinue our operations entirely.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The placement agent in this offering will offer the securities
on a &ldquo;reasonable best efforts&rdquo; basis, meaning that we may raise substantially less than the total maximum offering
amounts. We will not provide any refund to investors if less than all of the units are sold. Therefore, in evaluating the offering,
you should not assume that we will receive all of the proceeds from this offering that we would receive if all the units are sold.
If the offering is not fully subscribed, the length of time we will be able to fund our operations with the proceeds will be shortened,
as we do not generate positive cash flow. In order to continue to fund our operations, we would likely have to raise additional
proceeds through debt or equity financing activities. Any equity financings will likely be dilutive to existing stockholders, and
any debt financings will likely involve covenants restricting our business activities. Additional financing may not be available
on acceptable terms, or at all.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Our management team will have immediate and broad discretion
over the use of the net proceeds from this offering and we may use the net proceeds in ways with which you disagree.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">There is no minimum offering amount required as a condition
to closing this offering and therefore net proceeds from this offering will be immediately available to our management to use at
their discretion. We currently intend to use the net proceeds from this offering to fund our research and development activities,
for general corporate purposes, and possibly for acquisitions of other companies, products or technologies, though no such acquisitions
are currently contemplated. See &ldquo;Use of Proceeds.&rdquo; We have not allocated specific amounts of the net proceeds from
this offering for any of the foregoing purposes. Accordingly, our management will have significant discretion and flexibility in
applying the net proceeds of this offering. You will be relying on the judgment of our management with regard to the use of these
net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being
used appropriately. It is possible that the net proceeds will be invested in a way that does not yield a favorable, or any, return
for us or our stockholders. The failure of our management to use such funds effectively could have a material adverse effect on
our business, prospects, financial condition, and results of operation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>You will experience immediate and substantial dilution as
a result of this offering and may experience additional dilution</B> <B>in the future.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">You will incur immediate and substantial dilution as a result
of this offering. After giving effect to the sale by us of up to&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;in units offered
in this offering, at an assumed public offering price of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per unit, and after deducting the placement
agent fees estimated offering expenses payable by us, investors in this offering can expect an immediate dilution of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
per share, or &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%, at the assumed public offering price, assuming no exercise of the warrants.
In addition, in the past, we issued options and warrants to acquire shares of common stock. To the extent these options are ultimately
exercised, you will sustain future dilution. We may also acquire or license other technologies or finance strategic alliances by
issuing equity, which may result in additional dilution to our stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>There is no public market for the warrants to purchase common
stock in this offering.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">There is no established public trading market for the warrants
being offered in this offering, and we do not expect a market to develop. In addition, we do not intend to apply for listing the
warrants on any securities exchange. Without an active market, the liquidity of the warrants will be limited.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>If you are not an institutional investor, you may purchase
shares in this offering only if you reside within the states in which we will apply to have the securities registered or are exempt
from registration, and, if required, meet any requisite suitability standards. </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Because our common stock is quoted on the over-the-counter market
(currently the OTCQX) and not listed on a national securities exchange, this offering must be registered, or be exempt from registration,
in any state in which the units are to be offered or sold. We will apply to register the units, or will seek to obtain an exemption
from registration, only in certain states. In addition, if we register the units in the State of California, sales will only be
made to residents of California who have not less than (i) a $60,000 liquid net worth (exclusive of home, home furnishings and
automobile) plus $60,000 gross annual income, or (ii) a $225,000 liquid net worth. Investors in Wisconsin must qualify as &ldquo;Accredited
Investors&rdquo; as that term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended, and modified
by Section 413 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. If you are not an &ldquo;institutional
investor,&rdquo; you must be a resident of these jurisdictions to purchase our shares in the offering. The definition of an &ldquo;institutional
investor&rdquo; varies from state to state, but generally includes financial institutions, broker-dealers, banks, insurance companies
and other qualified entities. If you are not an institutional investor, you may purchase shares in this offering only if you reside
in the jurisdictions where there is an effective registration or exemption, and, if required, meet any requisite suitability standards.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORWARD-LOOKING STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This prospectus, including the documents that we incorporate
by reference, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the
Securities Act), and Section 21E of the Exchange Act. Such forward-looking statements include those that express plans, anticipation,
intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. These forward-looking
statements are based on our current expectations and projections about future events and they are subject to risks and uncertainties
known and unknown that could cause actual results and developments to differ materially from those expressed or implied in such
statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In some cases, you can identify forward-looking statements by
terminology, such as &ldquo;expects,&rdquo; &ldquo;anticipates,&rdquo; &ldquo;intends,&rdquo; &ldquo;estimates,&rdquo; &ldquo;plans,&rdquo;
&ldquo;believes,&rdquo; &ldquo;seeks,&rdquo; &ldquo;may,&rdquo; &ldquo;should&rdquo;, &ldquo;could&rdquo; or the negative of such
terms or other similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties that could cause
actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety
by reference to the factors discussed throughout this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">You should read this prospectus and the documents that we reference
herein and therein and have filed as exhibits to the registration statement, of which this prospectus is part, completely and with
the understanding that our actual future results may be materially different from what we expect. You should assume that the information
appearing in this prospectus is accurate as of the date on the front cover of this prospectus or such prospectus supplement only.
Because the risk factors referred to above could cause actual results or outcomes to differ materially from those expressed in
any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements.
Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update
any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors
will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all
of the information presented in this prospectus and any accompanying prospectus supplement, and particularly our forward-looking
statements, by these cautionary statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>USE OF PROCEEDS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Based on an assumed public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
per unit, we estimate that the net proceeds to us from the sale of the&nbsp;securities that we are offering, assuming gross proceeds
of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, assuming the offering is fully subscribed, will
be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, after deducting the placement agent
fee and estimated offering expenses. In addition, if all of the warrants included in the units offered pursuant to this prospectus
are exercised in full for cash, we will receive approximately an additional $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million
in cash.&nbsp;&nbsp;However, the warrants contain a cashless exercise provision that permit exercise of warrants on a cashless
basis at any time where there is no effective registration statement under the Securities Act of 1933, as amended, covering the
issuance of the underlying shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We may not be successful in selling any or all of the securities
offered hereby. Because there is no minimum offering amount required as a condition to closing in this offering, we may sell less
than all of the securities offered hereby, which may significantly reduce the amount of proceeds received by us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We expect to use any proceeds received from this offering as
follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 94%">to fund our research and development activities, including the further development of our LIGHT, HOT and GLOW2 compounds in a wide range of cancers; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>for general corporate purposes, such as general and administrative expenses, capital expenditures, working capital, prosecution and maintenance of our intellectual property, and the potential investment in technologies or products that complement our business.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We believe that our cash on hand at September 30, 2012, plus
proceeds received in October 2012 from the exercise of warrants to purchase common stock, together with the net proceeds from this
offering (assuming $10 million of units are sold in this offering and no exercise of the warrants being issued pursuant to the
offering) would be adequate to fund operations through February 2014. We estimate that our&nbsp;costs during that time will be&nbsp;approximately
$15.5 million. This amount consists of approximately $2.9 million for HOT development, approximately $1.9 million for LIGHT development,
approximately $1.7 million for GLOW2 development and approximately $5.2 million for general, fixed and overhead research and development
expenses that are not allocated to specific projects and approximately $3.8 million in general and administrative costs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The above cost estimates contemplate the following clinical
development activity:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%; font-family: Symbol">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 94%">continuation of the investigator-sponsored LIGHT Phase 1-2 imaging trials in brain cancer which we anticipate will generate additional proof-of-concept data, having generated initial proof-of-concept data in the second quarter of 2012;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>continuation of the investigator-sponsored LIGHT Phase 1-2 imaging trials in lung cancer which we anticipate will generate additional proof-of-concept data, having generated initial proof-of-concept data in the second quarter of 2012;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>continuation of an investigator-sponsored LIGHT Phase1-2 imaging trial across 9 solid tumors, which we anticipate will generate initial proof-of-concept data in the first quarter of 2013;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>initiation of company-sponsored LIGHT Phase 2 imaging trials in brain cancer and another solid tumor indication in the first quarter of 2014;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>continuation of the HOT Phase 1b dose-escalation trial;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>initiation of a HOT Phase 2a trial in brain cancer or lung cancer in the third quarter of 2013 which we anticipate will generate initial efficacy data in the first quarter of 2014;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>initiation of a HOT Phase 2 trial in other solid tumors in the fourth quarter of 2013; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-family: Symbol">&nbsp;</TD>
    <TD STYLE="font-family: Symbol"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>filing of an IND for GLOW2 in the second half of 2013, and initiation of a Phase 1-2 clinical trial in the first quarter of 2014.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We estimate that an additional $13.2 million in funding will
be required in order to operate through the completion of the HOT and LIGHT Phase 2 trials.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On November 2, 2012, we completed a private placement of our
common stock and warrants that generated gross proceeds of $2,000,000. The proceeds from the private placement are designated for
use towards the construction of a clinical-stage manufacturing facility for I-124-CLR1404 (LIGHT) at our Madison, WI location.
We estimate that that the project will cost a total of approximately $3,000,000 and will take approximately one year to complete.
We anticipate that construction will commence in late 2012, although we have not yet entered into contractual commitments with
vendors. We may seek to obtain the additional capital required to complete the project from additional sales of common stock (other
than through this offering), proceeds from warrant exercises, and/or from equipment financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have no current understandings, commitments or agreements
with respect to any acquisition of or investment in any technologies or products.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Even if we sell all of the securities subject to this offering
on favorable terms, of which there can be no assurance, we will still need to obtain additional financing in the future in order
to fully fund these product candidates through the regulatory approval process. We may seek such additional financing through public
or private equity or debt offerings or other sources, including collaborative or other arrangements with corporate partners, and
through government grants and contracts. There can be no assurance we will be able to obtain such additional financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Although we currently anticipate that we will use the net proceeds
of this offering as described above, there may be circumstances where a reallocation of funds may be necessary. The amounts and
timing of our actual expenditures will depend upon numerous factors, including the progress of our development and commercialization
efforts, the progress of our clinical studies, whether or not we enter into strategic collaborations or partnerships and our operating
costs and expenditures. Accordingly, our management will have significant flexibility in applying the net proceeds of this offering.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The costs and timing of drug development and regulatory approval,
particularly conducting clinical studies, are highly uncertain, are subject to substantial risks and can often change. Accordingly,
we may change the allocation of use of these proceeds as a result of contingencies such as the progress and results of our clinical
studies and other development activities, the establishment of collaborations, our manufacturing requirements and regulatory or
competitive developments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pending the application of the net proceeds as described above
or otherwise, we may invest the proceeds in short-term, investment-grade, interest-bearing securities or guaranteed obligations
of the U.S. government or other securities.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CAPITALIZATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table sets forth our cash and cash equivalents
and capitalization, each as of September 30, 2012:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 94%">on an actual basis; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD STYLE="font-family: Symbol">&middot;</TD>
    <TD>on a pro forma as adjusted basis to give effect to the issuance of the&nbsp;securities offered hereby.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">You should consider this table in conjunction with our financial
statements and the notes to those financial statements included elsewhere in this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">As&nbsp;of&nbsp;September&nbsp;30,&nbsp;2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Actual</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Pro&nbsp;Forma&nbsp;As <BR>Adjusted&nbsp;(1)</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 70%; text-align: left; text-indent: -0.25in; padding-left: 0.25in">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">5,597,764</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in">Wisconsin Department of Commerce Loan</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">450,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 0.25in">Capital lease obligations</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,665</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in">Total debt obligations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">454,665</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in">Stockholders&rsquo; equity (deficit):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 0.25in">Common stock, par value $0.00001 per share: 150,000,000 shares authorized; 43,460,497 issued as of September 30, 2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">434</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 27pt">Additional paid in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47,186,659</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.25in; padding-left: 27pt">Deficit accumulated during the development stage</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(38,120,352</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.25in; padding-left: 0.25in">Total stockholders&rsquo; equity</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,066,741</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -0.25in; padding-left: 0.25in">Total capitalization</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,521,406</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">(1)</TD>
    <TD STYLE="width: 97%">Assumes that $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;of&nbsp;units&nbsp;are&nbsp;sold in this offering at an assumed offering price of $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per&nbsp;unit and that the net proceeds thereof are approximately $ &nbsp;&nbsp;&nbsp;&nbsp;after placement agent fees and estimated offering expenses.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Market Information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our common stock was quoted on the OTC Bulletin Board under
the symbol NVLT beginning on June 14, 2005 and until February 16, 2012, since which time it has been quoted on the OTCQX platform.
The following table provides, for the periods indicated, the high and low bid prices for our common stock. These over-the-counter
market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 1in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Fiscal&nbsp;Year&nbsp;2010</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">High</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center; border-bottom: Black 1pt solid">Low</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 70%; text-align: left">First Quarter</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">466.36</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">26.16</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Second Quarter</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42.66</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14.67</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Third Quarter</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23.08</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.17</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Fourth Quarter</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.17</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.82</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 1in">
<TR STYLE="vertical-align: bottom">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; border-bottom: black 1pt solid"><B>Fiscal Year 2011</B></P></TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center">High</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center">Low</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 70%">First Quarter</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">$</TD>
    <TD STYLE="width: 12%; text-align: right">8.10</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">$</TD>
    <TD STYLE="width: 12%; text-align: right">1.52</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Second Quarter</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">3.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">0.95</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Third Quarter</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1.13</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Fourth Quarter</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1.39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">0.33</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 1in">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: black 1pt solid; font-weight: bold"><B>Fiscal&nbsp;Year&nbsp;2012</B></TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center">&nbsp; High</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; text-align: center">&nbsp; Low</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 70%">First Quarter</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">$</TD>
    <TD STYLE="width: 12%; text-align: right">0.99</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">$</TD>
    <TD STYLE="width: 12%; text-align: right">0.40</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Second Quarter</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">0.75</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Third Quarter</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">0.91</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Fourth Quarter (through November 16, 2012)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">0.85</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The above share prices have been adjusted to&nbsp;give effect
to&nbsp;a 1-for-153 reverse split of our common stock completed April 8, 2011 in connection with the Acquisition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During September 2012, we received a notice from OTC Markets
Group notifying us that the Company&rsquo;s Investment Bank Designated Advisor for Disclosure (&ldquo;DAD&rdquo;) and sponsor to
the OTCQX, Rodman and Renshaw, LLC had ceased conducting its securities business and no longer qualified as a DAD. We are currently
in the process of identifying a new investment bank sponsor and will seek to engage a new DAD prior to the end of the year. There
can be no assurance that we will find a new sponsor that is acceptable to us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On November 16, 2012 there were 358 holders of record of our
common stock. This number does not include stockholders for whom shares were held in a &ldquo;nominee&rdquo; or &ldquo;street&rdquo;
name.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have not declared or paid any cash dividends on our common
stock and do not anticipate declaring or paying any cash dividends in the foreseeable future. We currently expect to retain future
earnings, if any, for the development of our business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our transfer agent and registrar is American Stock Transfer
and Trust Company, 59 Maiden Lane, New York, NY 10038.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Equity compensation plans</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table provides information as of December 31,
2011 regarding shares authorized for issuance under our equity compensation plans, including individual compensation arrangements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have two equity compensation plans approved by our stockholders:&nbsp;&nbsp;the
2000 Stock Option and Incentive Plan and the 2006 Stock Incentive Plan.&nbsp;&nbsp;During 2004 and 2005, we also issued options
to our directors and consultants that were not approved by our stockholders and during 2011 we issued options to certain consultants
that were not approved by our stockholders.&nbsp;&nbsp;These options are exercisable within a ten-year period from the date of
the grant and vest at various intervals with all options being fully vested within three years of the date of grant.&nbsp;&nbsp;The
option price per share is not less than the fair market value of our common stock on the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Equity compensation plan information</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; border-bottom: Black 1pt solid">Plan&nbsp;category</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number&nbsp;of&nbsp;shares&nbsp;to<BR> be&nbsp;issued&nbsp;upon<BR> exercise&nbsp;of&nbsp;outstanding<BR> options,&nbsp;warrants&nbsp;and<BR> rights&nbsp;(#)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted-average<BR> exercise&nbsp;price&nbsp;of<BR> outstanding&nbsp;options,<BR> warrants&nbsp;and&nbsp;rights&nbsp;($)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number&nbsp;of&nbsp;shares<BR> remaining&nbsp;available&nbsp;for<BR> future&nbsp;issuance&nbsp;under<BR> equity&nbsp;compensation&nbsp;plans<BR> (excluding&nbsp;shares&nbsp;reflected<BR> in&nbsp;column&nbsp;(a))&nbsp;(#)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">(a)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">(b)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center">(c)</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 55%; text-align: left; text-indent: -9pt; padding-left: 9pt">Equity compensation plans approved by stockholders</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">4,717,500</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1.63</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">2,281,112</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt">Equity compensation plans not approved by stockholders</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">110,138</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; text-align: right">10.16</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Total</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,827,638</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">$</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">1.82</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,281,112</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DILUTION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our net tangible book value as of September 30, 2012 was $7,391,279,
or $0.17 per share of common stock, based upon 43,460,497 shares outstanding as of that date. Net&nbsp;tangible book value per
share is determined by dividing such number of outstanding shares of common stock into our net tangible book value, which is our
total tangible assets, less total liabilities. After giving effect to the sale of the&nbsp;securities in this offering at the assumed
public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per unit, after deducting the placement agent fee and other estimated
offering expenses payable by us, our pro forma net tangible book value at September 30, 2012 would have been approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
million, or $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share. This represents an immediate increase in net tangible book value of
approximately $ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share to our existing stockholders, and an immediate dilution of $ &nbsp;&nbsp;&nbsp;&nbsp;per
share to investors purchasing securities in the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table illustrates the per share dilution to investors
purchasing securities in the offering:&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 72%">Assumed public offering price per unit</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 11%"></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">$</TD>
    <TD STYLE="width: 12%; text-align: right"></TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Net tangible book value per share as of September 30, 2012</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">0.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Increase per share attributable to sale of securities to investors</TD>
    <TD STYLE="border-bottom: black 1pt solid">$</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Pro forma net tangible book value per share after the offering</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">$</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Dilution per share to investors</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The foregoing illustration does not reflect potential dilution
from the exercise of outstanding options or warrants to purchase shares of our common stock. The foregoing illustration also does
not reflect the dilution that would result from the exercise of the warrants sold in the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>The following discussion and analysis should be read together
with our financial statements and the related notes appearing elsewhere in this prospectus. This discussion contains forward-looking
statements reflecting our current expectations that involve risks and uncertainties. See &ldquo;Special Note Regarding Forward-Looking
Statements&rdquo; for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results
and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors,
including those set forth under &ldquo;Risk Factors&rdquo; and elsewhere in this prospectus.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Acquisition</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On April 8, 2011, we completed the Acquisition.&nbsp;&nbsp;Immediately
prior to the Acquisition, we completed a 1-for-153 reverse split of our common stock. We then issued 17,001,596 shares of our common
stock to the former shareholders of Cellectar as consideration for the Acquisition, constituting approximately 85% of our outstanding
common stock after giving effect to the Acquisition.&nbsp;&nbsp;Upon the closing of the Acquisition, we completed the private placement
of 6,846,537 shares of our common stock and warrants to purchase an additional 6,846,537 shares of our common stock.&nbsp;&nbsp;The
Acquisition was accounted for as a reverse acquisition whereby Cellectar, Inc. was treated as the acquirer for accounting and financial
reporting purposes. As such, references to the results of operations for the twelve months ended December 31, 2010 represent the
historical results of Cellectar. References to the results of operations for the twelve months ended December 31, 2011 include
the historical results of Cellectar from January 1, 2011 through April 8, 2011 and include the consolidated results of the combined
company from April 9, 2011 through December 31, 2011.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As a result of the Acquisition, we have implemented a revised
business plan focused on the development of the Cellectar compounds.&nbsp;&nbsp;We conduct our operations from Cellectar&rsquo;s
headquarters in Madison, Wisconsin and our executive offices are in Newton, Massachusetts. Further development of our other compounds
(NOV-002 and NOV-205) has been suspended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On April 8, 2011, immediately prior to the Acquisition, Cellectar
paid approximately $627,000 in full settlement of a note payable to a bank.&nbsp;&nbsp;The payment was made in order to avoid an
event of default that would have occurred as a result of the change of control that occurred as a result of the Acquisition.&nbsp;&nbsp;On
April 8, 2011, the holders of Cellectar convertible notes converted outstanding principal of $2,720,985 and accrued unpaid interest
into a total of 4,181,535 shares of common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Overview</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">We are
a pharmaceutical company developing novel drugs for the treatment and diagnosis of cancer. Our cancer-targeted compounds are selectively
taken up and retained in cancer cells, including cancer stem cells, versus normal cells. Thus, our therapeutic compounds appear
to directly kill cancer cells while minimizing harm to normal cells. This offers the potential for a paradigm shift in cancer therapy
by providing efficacy versus all three major drivers of mortality in cancer: primary tumors, metastases and stem cell-based relapse.
I-124-CLR1404 (LIGHT) is a small-molecule,</FONT> <FONT STYLE="font: 10pt Times New Roman, Times, Serif">broad-spectrum, cancer-targeted
PET imaging agent. We believe LIGHT has first-in-class potential and Phase 1-2 clinical trials are ongoing across 11 solid tumor
indications. I-131-CLR1404 (HOT) is a small-molecule, broad-spectrum, cancer-targeted molecular radiotherapeutic that delivers
cytotoxic radiation directly and selectively to cancer cells and cancer stem cells. We believe HOT also has first-in-class potential.
The HOT Phase 1b dose-escalation trial is ongoing and we expect HOT to enter Phase 2 trials in the third quarter of 2013, subject
to additional funding, as a monotherapy for solid tumors with significant unmet medical need. CLR1502 (GLOW2) is a preclinical,
cancer-targeted, non-radioactive optical imaging agent for intraoperative tumor margin illumination and non-invasive tumor imaging.
Together, we believe our compounds are able to &ldquo;find, treat and follow&rdquo; cancer anywhere in the body in a novel, effective
and highly selective way. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">LIGHT is a small-molecule, broad-spectrum, cancer-targeted imaging
agent that we believe has first-in-class potential for selective detection of tumors and metastases in a broad range of cancers.
LIGHT is comprised of a proprietary phospholipid ether analog (PLE), acting as a cancer-targeted delivery and retention vehicle,
covalently labeled with iodine-124, a short-lived PET imaging radioisotope. PET imaging used in conjunction with CT scanning has
now become the imaging method of choice in oncology. In studies to date, LIGHT selectively illuminated malignant tumors in 52 of
54 animal models of cancer, demonstrating broad-spectrum, cancer-selective uptake and retention. Investigator-sponsored Phase 1-2
trials of LIGHT as a PET imaging agent are ongoing across 11 solid tumor indications. Initial positive imaging results have been
established in patients with lung and brain cancers. These human trials, if successful, would likely provide proof-of-concept for
LIGHT as a PET imaging agent with the potential to supplant the current &ldquo;gold standard&rdquo; agent, 18F-fluoro-deoxyglucose
(FDG), due to what we believe to be LIGHT&rsquo;s superior cancer-specificity and more favorable logistics of clinical use. As
a chemically identical biomarker for HOT, we believe that LIGHT tumor uptake data could accelerate clinical development of HOT
by guiding selection of indications for HOT Phase 2 trials and potentially be used in such trials to identify suitable patients
and assess therapeutic efficacy. For the same reason, and in view of the quantitative nature of PET imaging, LIGHT imaging may
be capable of estimating an efficacious dose of HOT in individual patients.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">HOT is a small-molecule, broad-spectrum, cancer-targeted molecular
radiotherapeutic that we believe has first-in-class potential. HOT is comprised of a proprietary phospholipid ether analog (PLE),
acting as a cancer-targeted delivery and retention vehicle, covalently labeled with iodine-131, a cytotoxic (cell-killing) radioisotope
that is already in common use to treat thyroid and other cancer types. The ongoing Phase 1b dose-escalation trial is aimed at determining
the Maximum Tolerated Dose of HOT. We expect to initiate HOT Phase 2 efficacy trials, subject to additional funding, as a monotherapy
for solid tumors with significant unmet medical need as soon as a starting dose is established. We may determine such a dose based
on an efficacy signal or an acceptable safety profile in the Phase 1b trial. Selection of indications for Phase 2, as well as aspects
of trial design, will be guided by ongoing PET imaging trials in cancer patients with LIGHT, a chemically identical biomarker for
HOT. Preclinical experiments in more than a dozen <I>in vivo</I> (in animals) tumor models have demonstrated selective killing
of cancer cells along with a benign safety profile. In view of HOT&rsquo;s selective uptake and retention in a wide range of solid
tumors and in cancer stem cells, its single-agent efficacy in animal models and its non-specific mechanism of cancer-killing (radiation),
we are first developing HOT as a monotherapy for solid tumors with significant unmet medical need.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">GLOW2 is a small-molecule, broad-spectrum, cancer-targeted,
non-radioactive optical imaging agent that we believe has first-in-class potential for intraoperative tumor margin illumination
and non-invasive tumor imaging. GLOW2 is comprised of a proprietary phospholipid ether analog (PLE), acting as a cancer-targeted
delivery and retention vehicle, covalently attached to a near-infrared (800nm) fluorophore. According to the American Cancer Society
(2011), most cancer patients will have some type of surgery, and Cancer Facts and Figures indicated that approximately 1.3 million
cancer patients were diagnosed with solid tumors in the U.S. alone in 2011. GLOW2 may facilitate and enable diagnostic, staging,
debulking and curative cancer surgeries, intraoperatively in real time (i.e. during the actual surgical procedure) by defining
tumor margins and regional lymph node involvement, resulting in more accurate tumor resectioning and improved outcome and prognosis.
In this context, GLOW2 would effectively act as an adjunct therapeutic agent. In preclinical <I>in vivo </I>(in animals) tumor
models, non-invasive optical imaging showed pronounced accumulation of GLOW2 in tumors versus normal organs and tissues in addition
to successfully delineated tumor margins during tumor resection. Thus, GLOW2 may also have utility for non-invasive imaging of
relatively superficial tumor types in man (e.g., melanoma, head &amp; neck, colon, esophageal). Subject to additional funding,
we expect to submit an IND for GLOW2 in the second half of 2013 and begin clinical trials shortly thereafter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Prior to the Acquisition, for more than 10 years, Novelos had
been developing oxidized glutathione-based compounds for the treatment of cancer, including NOV-002, an injectable small-molecule
compound based on a proprietary formulation of oxidized glutathione that Novelos had been developing for use in combination with
standard of care chemotherapies for the treatment of solid tumors. From 2005 through 2010 Novelos raised approximately $67 million
in capital for the development of our compounds. From November 2006 through January 2010, Novelos conducted a Phase 3 trial of
NOV-002 plus first-line chemotherapy in advanced non-small cell lung cancer which, when completed in February 2010, did not meet
its primary and secondary efficacy endpoints.&nbsp;&nbsp;Following the completion of the Phase 3 trial during 2010, Novelos continued
clinical development of NOV-002 in breast cancer and NOV-205 in hepatitis C, although further development of those compounds has
been suspended. Novelos also explored strategic alternatives which resulted in the completion of the Acquisition in April 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Results of Operations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Executive summary</I></B>.&nbsp;&nbsp;In March 2010, Cellectar
completed a Phase 1a dosimetry trial of HOT in humans (the Phase 1a Trial), demonstrating initial safety and establishing dosing
parameters for a Phase 1b dose-escalation trial.&nbsp;&nbsp;Following the completion of the Phase 1a Trial and as a result of limited
funding, Cellectar suspended research and manufacturing activities, terminated certain non-key personnel and implemented salary
reductions in an effort to contain costs while Cellectar concentrated on its fundraising efforts.&nbsp;&nbsp;Following the Acquisition,
we have resumed development activities including the commencement of clinical trials in HOT and LIGHT. The increases in research
and development costs for the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011 and the
year ended December 31, 2011 as compared to the year ended December 31, 2010 are primarily related to the recommencement of research
activities following the Acquisition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Research and</I></B> <B><I>development expense.</I></B>
&nbsp;&nbsp;Research and development expense consists of costs incurred in identifying, developing and testing, and manufacturing
product candidates, which primarily include salaries and related expenses for personnel, costs of our research and manufacturing
facility, cost of manufacturing materials, fees paid to professional service providers for independent monitoring and analysis
of our clinical trials, and costs to secure intellectual property. The Company analyzes its research and development expenses based
on four categories as follows: clinical projects, preclinical projects, chemistry and manufacturing costs, and general fixed and
overhead costs that are not allocated to the functional project costs, including personnel costs, manufacturing facility costs,
related overhead costs and patent costs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>General and administrative expense.</I></B> &nbsp;&nbsp;General
and administrative expense consists primarily of salaries and other related costs for personnel in executive, finance and administrative
functions.&nbsp;&nbsp;Other costs include insurance, costs for public and investor relations, directors&rsquo; fees and professional
fees for legal and accounting services.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Nine Months Ended September 30, 2012 and 2011</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Research and Development.</I> &nbsp;&nbsp;Research and development
expense for the nine months ended September 30, 2012 was approximately $3,896,000 (comprised of $596,000 in clinical project costs,
$252,000 of preclinical project costs, $330,000 of manufacturing and related costs and $2,718,000 in general unallocated research
and development costs) compared to approximately $2,445,000 (comprised of $37,000 in clinical project costs, $141,000 of preclinical
project costs, $95,000 of chemistry, manufacturing and related costs and $2,172,000 in general unallocated research and development
costs) for the same period in 2011.&nbsp;&nbsp;The approximately $1,451,000, or 59%, increase in research and development expense
occurred in several categories.&nbsp;&nbsp;The $559,000 increase in clinical projects in the nine months ended September 30, 2012
versus the comparable period in 2011 is related to costs associated with the Phase 1-2 trials for LIGHT and the Phase 1b trial
for HOT. The $111,000 increase in preclinical projects for the nine months ended September 30, 2012 versus the same period in 2011
was related to contributions to the UW towards unrestricted research activities and increased consulting to support preclinical
research activities. Manufacturing costs increased $235,000 primarily as a result of increased chemistry and manufacturing activities
to support the clinical trials. General unallocated research and development costs increased approximately $546,000 primarily as
a result of an approximately $285,000 increase in salary and related costs resulting principally from the addition of employees
following the Acquisition; an approximately $152,000 increase in stock-based compensation associated with recognition of compensation
expense over the vesting periods of stock option grants in May and December 2011; an approximately $67,000 increase in patent expenses
and approximately $18,000 increase in travel costs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>General and Administrative.</I> &nbsp;&nbsp;General and administrative
expense for the nine months ended September 30, 2012 was approximately $2,696,000 compared to approximately $1,828,000 in the same
period of 2011.&nbsp;&nbsp;The $868,000, or 47%, increase in general and administrative costs was primarily related to the following
items: stock-based compensation increased approximately $352,000 resulting from the recognition of compensation expense over the
vesting periods of stock options granted in May and December 2011; salary increased approximately $293,000 resulting principally
from the addition of employees following the Acquisition; the cost of subcontracted services increased by approximately $120,000
as a result of increased investor relations activities and costs associated with public company reporting. Insurance costs increased
approximately $57,000, directors&rsquo; fees increased approximately $39,000, rent increased approximately $14,000 associated with
the addition of the Massachusetts location and travel costs increased approximately $28,000 due principally to an increase in travel
between our Massachusetts and Wisconsin offices. These increases were offset by an approximately $146,000 decrease in expense attributable
to a $125,000 reimbursement of a retention payment received from the Company&rsquo;s directors and officers insurance carrier following
the dismissal with prejudice on June 11, 2012 of the securities litigation described in Note 14. The Company recorded this reimbursement
as a reduction of legal fees in the three months ended September 30, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Merger Costs. </I> We did not incur any merger-related costs
in the nine months ended September 30, 2012. Merger costs during the nine months ended September 30, 2011 consisted of $450,000
in investment banking fees, $286,000 in legal fees and $10,000 in insurance costs.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Grant income.&nbsp;&nbsp;</I>Qualifying therapeutic discovery
projects, among others, include those designed to treat or prevent diseases or conditions by conducting preclinical or clinical
activities for the purpose of securing FDA approval of a product.&nbsp;&nbsp;We received payments of approximately $44,000 in the
first nine months of 2011 under a cash grant from the U.S. Internal Revenue Service as a qualifying therapeutic discovery project
credit pursuant to Patient Protection and Affordable Care Act. The payments have been recorded as a component of other income.
There were no such payments in 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Loss on</I> <I>Derivative Warrants.</I> We recorded losses
on derivative warrants of approximately $42,000 and $67,000 in the nine months ended September 30, 2012 and 2011, respectively.
These amounts represent the change in fair value, during the respective period, of outstanding warrants which contain &ldquo;down-round&rdquo;
anti-dilution provisions whereby the number of shares for which the warrants are exercisable and/or the exercise price of the warrants
is subject to change in the event of certain issuances of stock at prices below the then-effective exercise prices of the warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Interest expense, net</I>.&nbsp;&nbsp;Interest expense, net
for the nine months ended September 30, 2012 and 2011 consists approximately of the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nine Months Ended September 30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="color: black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="color: black; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="color: black; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; color: black; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 70%; color: black; text-align: left">Interest expense, convertible notes</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(159,000</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Beneficial conversion feature, convertible notes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(258,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Interest expense, bank note</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Interest expense, other</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(9,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Interest income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(6,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(428,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Since the Convertible Notes were converted based on <FONT STYLE="color: black">revised
conversion terms that resulted in the issuance of an additional 343,963 shares of common stock than would have been issued if the
Convertible Notes had been converted in accordance with their original terms, the value of these additional shares of approximately
$258,000 was recorded as a component of interest expense in the quarter ended June 30, 2011. The decrease in interest expense on
the convertible notes and bank note was a result of the settlement of those obligations in connection with the Acquisition. </FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black"><I>Deemed Dividend on Warrant Amendment</I><B>.
</B></FONT>During the nine months ended September 30, 2012, the Company amended the terms of its Class B Warrants with certain
investors who held warrants to purchase 5,255,000 shares of our common stock to extend the expiration date for the exercise of
such warrants until October 11, 2012. These warrants had been issued in connection with the June Offering, had an expiration date
of September 11, 2012 and are exercisable at a price of $1.00 per share. The modification of the expiration date of the warrants
resulted in a deemed dividend to warrant holders of approximately $543,000 which was calculated as the difference between the fair
value of the warrants immediately before and after the modification using the Black-Scholes option pricing model.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The deemed dividends have been included in the calculation of
net loss attributable to common stockholders of approximately $7,183,000, or $0.18 per share, for the nine months ended September
30, 2012. The deemed dividends are excluded from our net loss (from operating activities) of approximately $6,640,000, or $0.17
per share, for the nine months ended September 30, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">No deemed dividend was recorded in the nine months ended September
30, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Twelve Months Ended December 31, 2011 and 2010</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Research and Development.</I> &nbsp;&nbsp;Research and development
expense for the year ended December 31, 2011 was approximately $3,599,000 (comprised of approximately $166,000 in clinical project
costs, $207,000 of preclinical project costs, $205,000 of manufacturing and related costs and $3,021,000 in general unallocated
research and development costs) compared to approximately $2,984,000 (comprised of $200,000 in clinical project costs, $459,000
of preclinical project costs, $58,000 of manufacturing and related costs and $2,267,000 in general unallocated research and development
costs) for 2010.&nbsp;&nbsp;The approximately $615,000, or 20.6%, increase in research and development resulted from increases
in manufacturing and general unallocated research costs partially offset by decreases in clinical and preclinincal costs. The $34,000
decrease in clinical projects in the year ended December 31, 2011 versus 2010 was related to a $200,000 decrease in costs related
to the completion of the Phase 1a trial in March 2010 partially offset by clinical costs incurred in 2011 related to the Company&rsquo;s
Phase 1b trial for HOT. The $252,000 decrease in preclinical projects, for the year ended December 31, 2011 versus 2010 was primarily
related to a $210,000 decrease in subcontracted preclinical research as those activities had increased in the first half of 2010
in preparation for future clinical trials. These decreases were offset by an increase of approximately $754,000 in general unallocated
research and development costs primarily due to an approximately $215,000 increase in salary and related costs as a result of increases
in personnel following the Acquisition, an approximately $165,000 increase in stock-based compensation resulting from stock options
granted in May 2011 and December 2011 following the Acquisition, an approximately $87,000 increase in patent costs as well as increases
in subcontracted services, facilities and equipment maintenance costs incurred as we resumed manufacturing and research activities
following the Acquisition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>General and Administrative.</I> &nbsp;&nbsp;General and administrative
expense for the year ended December 31, 2011 was approximately $2,692,000 compared to approximately $1,157,000 in 2010.&nbsp;&nbsp;The
$1,535,000, or 132.7%, increase in general and administrative costs were primarily related to the following items: Salary increased
approximately $582,000 resulting from the addition of employees in connection with the Acquisition and the removal of salary reductions
that had been in place in order to conserve cash; stock-based compensation increased by $390,000 associated with stock option grants
made in May and December 2011; the cost of subcontracted services increased by approximately $331,000 as a result of increased
investor relations activities, directors&rsquo; fees and costs associated with public company reporting. Insurance costs increased
approximately $67,000, rent increased approximately $49,000 associated with the addition of the Massachusetts location following
the Acquisition and travel costs increased approximately $53,000 due principally to an increase in travel between our Massachusetts
and Wisconsin offices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Merger Costs.</I> Merger costs during the year ended December
31, 2011 consisted of $450,000 in investment banking fees, approximately $286,000 in legal fees and approximately $10,000 in insurance
costs compared to approximately $53,000 of merger costs in 2010, primarily related to legal fees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Grant income.&nbsp;&nbsp;</I> Qualifying therapeutic discovery
projects, among others, include those designed to treat or prevent diseases or conditions by conducting preclinical or clinical
activities for the purpose of securing FDA approval of a product.&nbsp;&nbsp;The Company received payments of approximately $44,000
in the year ended December 31, 2011 compared to $200,000 for 2010 under a cash grant from the U.S. Internal Revenue Service as
a qualifying therapeutic discovery project credit pursuant to Patient Protection and Affordable Care Act. The payments have been
recorded as a component of other income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Loss on</I> <I>Derivative Warrants.</I> We recorded a loss
on derivative warrants of approximately $12,000 in the year ended December 31, 2011. This amount represents the change in fair
value, during the respective period, of outstanding warrants that contain &ldquo;down-round&rdquo; anti-dilution provisions whereby
the number of shares for which the warrants are exercisable and/or the exercise price of the warrants is subject to change in the
event of certain issuances of stock at prices below the then-effective exercise prices of the warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Interest expense, net</I>.&nbsp;&nbsp;Interest expense, net,
for the years ended December 31, 2011 and 2010 consists approximately of the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year&nbsp;Ended&nbsp;December&nbsp;31,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 70%; text-align: left">Interest expense, convertible notes</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(159,000</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(305,000</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Beneficial conversion feature, convertible notes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(258,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(214,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Interest expense, bank note</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,500</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(55,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Interest expense, other</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(11,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(7,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Interest income</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">15,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(430,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(566,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Since the convertible notes were converted based on revised
conversion terms that resulted in the issuance of an additional 343,963 shares of common stock than would have been issued if the
convertible notes had been converted in accordance with their original terms, the value of these additional shares of approximately
$258,000 was recorded as a component of interest expense at the date of conversion in 2011. Since the convertible notes were convertible
into common stock at the date of issuance at a price per share which is less than the estimated fair value of our common stock
at that date, the estimated intrinsic value of the beneficial conversion feature of approximately $214,000 was recorded as a component
of interest expense on the date of issuance in 2010. The decrease in interest expense on the convertible notes and bank note was
a result of the settlement of those obligations in connection with the Acquisition. The increase in other interest expense is principally
a result of the issuance of notes payable to the Wisconsin Department of Commerce in September 2010. The reduction of interest
income was a result of a decrease in average cash balances and interest rates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Liquidity and Capital Resources</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have financed our operations since inception primarily through
the sale of equity securities and securities convertible into equity securities. To date, Cellectar and Novelos have raised capital
aggregating approximately $120 million. Novelos has raised capital aggregating approximately $93 million, including proceeds from
the April 2011and November 2012 private placements, the December 2011 underwritten offering, the June 2012 public offering and
cash warrant exercises during 2012. Since its inception and prior to the Acquisition, Cellectar had raised capital aggregating
approximately $27 million.&nbsp;&nbsp;As of September 30, 2012, we had approximately $5,598,000 in cash and cash equivalents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the nine months ended September 30, 2012, approximately
$4,891,000 in cash was used in operations. During this period we reported a net loss of approximately $6,640,000. However, this
loss included the following non-cash items: an approximately $42,000 loss on derivative warrants, approximately $1,160,000 in stock-based
compensation, and approximately $384,000 in depreciation and amortization expense. Changes in working capital provided cash of
approximately $163,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the nine months ended September 30, 2012, we purchased
approximately $37,000 of equipment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In June 2012 we completed a public offering of our common stock
and warrants for net proceeds of approximately $4,871,000. During the nine months ended September 30, 2012, we received approximately
$151,000 in connection with warrant exercises.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="color: black">The consolidated financial statements
included elsewhere in this prospectus have been prepared on a basis that assumes that we will continue as a going concern and that
contemplates the continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal
course of business. We have incurred losses since inception in devoting substantially all of our efforts toward research and development
and had an accumulated deficit of $38,120,352 at September 30, 2012. During the nine months ended September 30, 2012, we generated
a net loss of $6,639,926 and we expect that we will continue to generate operating losses for the foreseeable future. At September
30, 2012, our cash balance was approximately $5,598,000. We believe our cash on hand, combined with the proceeds received from
the exercise of warrants to purchase common stock during October 2012, is adequate to fund operations through May 2013. </FONT>On
November 2, 2012, we completed a private placement of our common stock and warrants that generated gross proceeds of $2,000,000.
The proceeds from the private placement are designated for use towards the construction of a clinical-stage manufacturing facility
for I-124-CLR1404 (LIGHT) at our Madison, WI location. We estimate that that the project will cost a total of approximately $3,000,000
and will take approximately one year to complete. We anticipate that construction will commence in late 2012, although we have
not yet entered into contractual commitments with vendors. We may seek to obtain the additional capital required to complete the
project from additional sales of common stock (other than proceeds from this offering), proceeds from warrant exercises, and/or
from equipment financing. <FONT STYLE="color: black">Our ability to execute our operating plan beyond May 2013 depends on our ability
to obtain additional funding via the sale of equity and/or debt securities, a strategic transaction or otherwise. </FONT>We have
in the past successfully completed multiple rounds of financing but, due to market conditions and other factors, including our
development stage, the proceeds we have been able to secure have been less than the amounts we initially sought to obtain. Other
than the uncertainties regarding our ability to obtain additional funding, there are currently no known trends, demands, commitments,
events or uncertainties that are likely to materially affect our liquidity.<B> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Critical Accounting Policies and Estimates</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The preparation of financial statements and related disclosures
in conformity with accounting principles generally accepted in the United States, or GAAP, requires management to make certain
estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial
statements, as well as the reported amounts of revenues and expenses during the periods presented. Management bases its estimates
and judgments on historical experience, knowledge of current conditions and various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results could differ from those estimates. We review these estimates and
assumptions periodically and reflect the effects of revisions in the period that they are determined to be necessary.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We believe that the following accounting policies reflect our
more significant judgments and estimates used in the preparation of our financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Accrued Liabilities.</I> As part of the process of preparing
financial statements, we are required to estimate accrued liabilities. This process involves identifying services that have been
performed on our behalf, and estimating the level of service performed and the associated cost incurred for such service as of
each balance sheet date in our financial statements. Examples of estimated expenses for which we accrue include: contract service
fees such as amounts paid to clinical research organizations and investigators in conjunction with clinical trials; fees paid to
vendors in conjunction with the manufacturing of clinical materials; and professional service fees, such as for lawyers and accountants.
In connection with such service fees, our estimates are most affected by our understanding of the status and timing of services
provided relative to the actual levels of services incurred by such service providers. The majority of our service providers invoice
us monthly in arrears for services performed. In the event that we do not identify certain costs that have begun to be incurred,
or we over- or underestimate the level of services performed or the costs of such services, our reported expenses for such period
would be too high or too low. The date on which certain services commence, the level of services performed on or before a given
date and the cost of such services are often determined based on subjective judgments. We make these judgments based on the facts
and circumstances known to us, in accordance with GAAP.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Goodwill and Other Intangible Assets.</I> As of September
30, 2012 and December 31, 2011 there was approximately $1,675,000 of goodwill recorded in connection with the Acquisition. We are
required to evaluate goodwill for impairment annually or whenever events or changes in circumstances suggest that the carrying
value of an asset may not be recoverable. The Company evaluates goodwill for impairment annually in the fourth fiscal quarter and
additionally on an interim basis if an event occurs or circumstances change such as a decline in the Company&rsquo;s stock price,
or a material adverse change in the business climate, which would more likely than not reduce the fair value of the reporting unit
below its carrying amount.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Stock-based Compensation</I>. We account for stock-based
compensation by measuring the cost of employee services received in exchange for an award of equity instruments based on the grant-date
fair value of the award, using the Black-Scholes option-pricing model. The cost of non-performance based awards is recognized over
the period during which an employee is required to provide service in exchange for the award, the requisite service period (usually
the vesting period). For stock options with performance-based vesting provisions, recognition of compensation expense commences
if and when the achievement of the performance criteria is deemed probable and is recognized over the relevant performance period.
We account for transactions in which services are received from non-employees in exchange for equity instruments based on the fair
value of such services received or of the equity instruments issued (using the Black-Scholes option-pricing model) whichever is
more reliably measured. The measurement of stock-based compensation for non-employees is subject to periodic adjustments as the
options vest, and the expense is recognized over the period during which a non-employee is required to provide services for the
award (usually the vesting period).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Accounting for equity instruments granted or sold by us under
accounting guidance requires fair-value estimates of the equity instrument granted or sold. If our estimates of the fair value
of these equity instruments are too high or too low, our expenses may be over- or understated. For equity instruments granted or
sold in exchange for the receipt of goods or services, we estimate the fair value of the equity instruments based on consideration
of factors that we deem to be relevant at that time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Derivative Warrants.</I> Certain warrants to purchase common
stock that do not meet the requirements for classification as equity, in accordance with the Derivatives and Hedging Topic of the
FASB ASC, are classified as liabilities on our balance sheet. In such instances, net-cash settlement is assumed for financial reporting
purposes, even when the terms of the underlying contracts do not provide for a net-cash settlement. These warrants are considered
derivative instruments as the agreements contain &ldquo;down-round&rdquo; provisions whereby the number of shares for which the
warrants are exercisable and/or the exercise price of the warrants is subject to change in the event of certain issuances of stock
at prices below the then-effective exercise price of the warrants. The primary underlying risk exposure pertaining to the warrants
is the change in fair value of the underlying common stock. Such financial instruments are initially recorded at fair value, or
relative fair value when issued with other instruments, with subsequent changes in fair value recorded as a component of gain or
loss on derivatives in each reporting period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The fair value of the outstanding derivative warrants is estimated
as of a reporting date. The Company uses valuation methods and assumptions that consider among others the fair value of the underlying
stock, risk-free interest rate, volatility, expected life and dividend rates in estimating fair value for the warrants considered
to be derivative instruments. We estimate volatility based on an average of our historical volatility and volatility estimates
of publicly held drug development companies with similar market capitalizations. If our estimates of the fair value of these derivative
warrants are too high or too low, our expenses may be over- or understated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Fair value measurements.</I> We account for certain financial
assets at fair value, defined as the price that would be received to sell an asset or pay to transfer a liability (i.e., exit price)
in the principal, most advantageous market for the asset or liability in an orderly transaction between market participants on
the measurement date. As such, fair value is a market-based measurement that is determined based on assumptions that market participant
would use in pricing an asset or liability. If management made different assumptions or judgments, material differences in measurements
of fair value could occur.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Contingencies.</I> From time to time, we may become involved
in legal disputes regarding our products in development, intellectual property rights, stockholder claims or other matters. We
are currently involved in two such matters that are ongoing. We assess each matter to determine if a contingent liability should
be recorded. In making this assessment, we may consult, depending on the nature of the matter, with external legal counsel and
technical experts. Based on the information we obtain, combined with our judgment regarding all the facts and circumstances of
each matter, we determine whether it is probable that a contingent loss may be incurred and whether the amount of such loss can
be reasonably estimated. Should a loss be probable and reasonably estimable we record a loss. In determining the amount of the
loss, we consider advice received from experts in the specific matter, current status of legal proceedings, if any, prior case
history and other factors. Should the judgments and estimates made by us be incorrect, we may need to record additional contingent
losses that could materially adversely impact the results of operations and financial conditions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>BUSINESS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Business of Novelos</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Novelos Therapeutics, Inc. (Novelos or the Company) is a pharmaceutical
company developing compounds for the treatment and diagnosis of cancer.&nbsp; On April 8, 2011, Novelos entered into a business
combination with Cellectar, Inc. (Cellectar), a privately held Wisconsin corporation that designed and developed products to detect,
treat and monitor a wide variety of human cancers (the Acquisition). Following the Acquisition, we have been developing novel drugs
for the treatment and diagnosis of cancer.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We believe our cancer-targeted compounds (referred to as LIGHT,
HOT and GLOW2) are selectively taken up and retained in cancer cells, including cancer stem cells, versus normal cells. Thus, our
therapeutic compounds appear to directly kill cancer cells while minimizing harm to normal cells. This offers the potential for
a paradigm shift in cancer therapy by providing efficacy versus all three major drivers of mortality in cancer: primary tumors,
metastases and stem cell-based relapse. I-124-CLR1404 (LIGHT) is a small-molecule, broad-spectrum, cancer-targeted positron emission
tomography (PET) imaging agent. We believe LIGHT has first-in-class potential and Phase 1-2 clinical trials are ongoing across
11 solid tumor indications. I-131-CLR1404 (HOT) is a small-molecule, broad-spectrum, cancer-targeted molecular radiotherapeutic
that delivers cytotoxic (cell-killing) radiation directly and selectively to cancer cells and cancer stem cells. We believe HOT
also has first-in-class potential. The HOT Phase 1b dose-escalation trial is ongoing and we expect HOT to enter Phase 2 trials
in the third quarter of 2013, subject to additional funding, as a monotherapy for solid tumors with significant unmet medical need.
CLR1502 (GLOW2) is a preclinical, cancer-targeted, non-radioactive optical imaging agent for intraoperative tumor margin illumination
and non-invasive tumor imaging. Together, we believe our compounds are able to &ldquo;find, treat and follow&rdquo; cancer anywhere
in the body in a novel, effective and highly selective way.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Market Overview</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our target market is broad and represents the market for the
treatment and diagnosis of cancer. According to Drug Discovery News (April 2009) and PharmaLive (October 8, 2009), the global market
for cancer pharmaceuticals reached an estimated $66 billion in 2007, nearly doubling from $35 billion in 2005 and is expected to
grow to $80 billion by 2012.&nbsp; Furthermore, the US National Cancer Institute (January 12, 2011) estimates that the overall
cost of treating cancer in the US will increase to $158 billion by 2020 from $125 billion in 2010 and Global Industry Analysts
(GIA) forecasts the global market for cancer therapies to reach $225 billion by 2017 (November 2011). According to BCC Research
(April 2011), the total market for next-generation cancer diagnostics was $776 million in 2010 and is growing at a compounded annual
growth rate of 47%, to reach a forecast market size of $5.3 billion in 2015.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Technology Overview</I> </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our compounds are optimized phospholipid ether analogs (PLEs)
that interact with lipid rafts, which are specialized microdomains within cell membranes. Importantly, the core chemical structure
shared across all three products provides selective targeting of cancer cells, including cancer stem cells, in preference to normal
cells (due to enrichment of lipid rafts in the former).&nbsp; The cancer-targeting PLE carrier molecule was deliberately designed
to be coupled to imaging or therapeutic molecules. For example iodine can be attached via a very stable covalent bond resulting
in two distinct products differing only with respect to the isotope of iodine they contain &ndash; HOT contains radioactive I-131
and LIGHT contains the shorter-lived radioactive I-124. Because of their chemical identity, LIGHT also represents an ideal biomarker
that may be used to predict tumor sensitivity of HOT and, potentially, establish an efficacious dose in individual patients. Other,
non-radioactive molecules can also be attached to the PLE core. In the case of GLOW2, this is an infrared emitting fluorophore
(800 nm) whose signal can penetrate through up to approximately 1 cm of tissue. This may enable GLOW2&rsquo;s use to visualize
tumor margins during cancer surgery (effectively acting as an adjunct therapeutic agent) and to non-invasively detect relatively
superficial tumors. Thus, to date, three cancer-targeted product profiles have been generated from a single chemical core structure
that is the foundation of our technology platform &ndash; a diagnostic PET imaging agent, LIGHT, a molecular radiotherapeutic agent,
HOT and a non-radioactive optical imaging agent to increase the success of cancer surgery and non-invasively image certain tumors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our core technology platform is based on research conducted
by Cellectar&rsquo;s founder and our Chief Scientific Officer, Dr. Jamey Weichert, beginning in 1994 at the University of Michigan
(U. Mich.), where phospholipid ether analogs were initially designed, synthesized, radiolabeled, and evaluated. Since 1998, Dr.
Weichert has continued his research at the University of Wisconsin (U. Wisc.) and subsequently founded Cellectar in 2002 to further
develop and commercialize the technology. Cellectar obtained exclusive rights to the related technology patents owned by U. Mich.
in 2003 and continued development of the platform while obtaining ownership of numerous additional patents and patent applications
(lasting until 2025, 2028 and 2030 without extensions) prior to the Acquisition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Products in Development</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>LIGHT</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">I-124-CLR1404
(LIGHT) is a small-molecule,</FONT> <FONT STYLE="font: 10pt Times New Roman, Times, Serif">broad-spectrum, cancer-targeted imaging
agent that we believe has first-in-class potential for selective detection of tumors and metastases in a broad range of cancers.
LIGHT is comprised of a proprietary phospholipid ether analog (PLE), acting as a cancer-targeted delivery and retention vehicle,
covalently labeled with iodine-124, a short-lived PET imaging radioisotope. PET imaging used in conjunction with CT scanning has
now become the imaging method of choice in oncology. In studies to date, LIGHT selectively illuminated malignant tumors in 52 of
54 animal models of different cancer types, demonstrating broad-spectrum, cancer-selective uptake and retention. Investigator-sponsored
Phase 1-2 trials of LIGHT as a PET imaging agent are ongoing at the University of Wisconsin across 11 solid tumor indications.
The investigator-sponsored IND for LIGHT was submitted on March 28, 2003 and was approved by the FDA on April 25, 2003. The IND
is held by Dr. Lance Hall at the University of Wisconsin, who both initiates and conducts the investigation and under whose immediate
direction the investigational drug is administered. Novelos, the National Cancer Institute or the University of Wisconsin Institute
for Clinical and Translational Research provide funding for the trials and the data is shared with Novelos while the trials progress
and at the conclusion of the trials. Initial positive imaging results have been established in patients with lung and brain cancers.
These human trials, if successful, would likely provide proof-of-concept for LIGHT as a PET imaging agent with the potential to
supplant the current &ldquo;gold standard&rdquo; agent, 18F-fluoro-deoxyglucose (FDG), due to what we believe to be LIGHT&rsquo;s
superior cancer-specificity and more favorable logistics of clinical use. As a chemically identical biomarker for HOT, LIGHT we
believe that tumor uptake data could accelerate clinical development of HOT by guiding selection of indications for HOT Phase 2
trials and potentially be used in such trials to identify suitable patients and assess therapeutic efficacy. For the same reason,
and in view of the quantitative nature of PET imaging, LIGHT imaging may be capable of estimating an efficacious dose of HOT in
individual patients.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Chemically, LIGHT is comprised of our proprietary PLE, 18-(p-[I-124]iodophenyl)
octadecyl phosphocholine, acting as a cancer-targeted delivery and retention vehicle, covalently labeled with iodine -124, a radioactive&nbsp;isotope
with a radiation half-life of four days.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We compared LIGHT and FDG side by side (24 hours apart) in the
same tumor-bearing mouse (PC3 human prostate carcinoma) that was also treated with carrageenan to induce inflammation.&nbsp; As
expected, FDG demonstrated significant uptake into the inflammatory lesion and organs such as heart and bladder compared to the
malignant tumors, which were poorly imaged.&nbsp; LIGHT, on the other hand, showed no uptake into the inflammatory lesion and organs,
yet clear and demonstrable uptake into the tumors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Additionally, the radioisotopic half-life of only 110 minutes
for fluorine-18 labeled agents, such as FDG, severely limits their delivery range relative to the point of manufacture.&nbsp; I-124
has a four-day half-life that permits worldwide distribution of LIGHT from one manufacturing location.&nbsp; Additionally, the
longer half-life affords a longer imaging window of up to seven days following injection.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The third part of an investigator-sponsored Phase 1-2 trial
of LIGHT as a PET imaging agent for patients with advanced non-small cell lung cancer (NSCLC) was initiated in December 2011 at
the University of Wisconsin Carbone Cancer Center (UWCCC) and first patient was enrolled in February 2012. Dr. Anne M. Traynor
at UWCCC is the principal investigator for this trial. Novelos provides funding for the trial and the data is shared with Novelos
while the study progresses and at the conclusion of the study. Up to 9 patients will be enrolled across two dose levels (5 mCi
and 3 mCi) in this Phase 1-2 trial. The first cohort comprising three patients dosed with LIGHT at 5mCi has been successfully completed.
We saw clear and sustained uptake of LIGHT in cancerous tumors against low background and have not observed any adverse safety
signals. Although still early and in a small number of subjects, there is some suggestion that LIGHT imaging was more tumor-selective
than the comparator modality 18F-fluoro-deoxyglucose (18F-FDG) PET. In addition, in one patient, three brain metastases were detected
with LIGHT that were not seen with FDG, altering the treatment plan for this patient. Having observed initial cancer-specific uptake
with LIGHT at 5 mCi dose in NSCLC patients, and as we seek a minimally efficacious dose, we are enrolling three patients at 3 mCi
dose in the next cohort.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">An investigator-sponsored Phase 1-2 trial of LIGHT as a PET
imaging agent for brain cancer was initiated in December 2011 at UWCCC and first patient was enrolled in March 2012. Dr. Lance
Hall at the UWCCC is the principal investigator for this trial. This trial is being funded by UWCCC and an Institute for Clinical
and Translational Research (ICTR) grant, whereas the data is shared with Novelos while the study progresses and at the conclusion
of the study. Up to 20 patients will be enrolled at a 5 mCi dose. In June 2012, we announced that three glioma patients were dosed
with LIGHT at 5 mCi. The preliminary results from these three glioma patients showed strong and sustained uptake of LIGHT in cancerous
tumors was seen against very low background and no adverse safety signals were observed. Patient enrollment is continuing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">An investigator-sponsored Phase 1-2 trial of LIGHT as a PET
imaging agent for patients with multiple solid tumor types (triple negative breast, prostate, colorectal, gastric, ovarian, pancreatic,
esophageal, soft tissue sarcoma, and head &amp; neck cancer) was initiated in August 2012 at the University of Wisconsin Carbone
Cancer Center (UWCCC) and the first patient was enrolled in October 2012.&nbsp; Dr. Glenn Liu at UWCCC is the principal investigator
for this trial.&nbsp; Novelos provides funding for the trial and the data is shared with Novelos while the study progresses and
at the conclusion of the study.&nbsp; Up to 9 patients per tumor type will be enrolled across two dose levels (5 mCi and 3 mCi)
in this Phase 1-2 trial.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">An investigator-sponsored Phase 1-2 trial of LIGHT as a PET
imaging agent for metastatic brain cancer was initiated in January 2012 at UWCCC and the clinical trial protocol is being amended
to facilitate patient enrollment. Dr. Lance Hall at the UWCCC is the principal investigator for this clinical trial. Dr. Jamey
Weichert is the primary principal investigator for the $1.2 million grant from the National Cancer Institute, which funds the trial.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are constructing a clinical-stage manufacturing facility
for LIGHT at our Madison, WI location, which, subject to additional funding, is expected to be completed in the fourth quarter
of 2013. Once the facility is completed, we plan to initiate company-sponsored LIGHT Phase 2 trials in solid tumor indications,
starting in the first quarter of 2014. The objectives of these Phase 2 trials will include comparison to standard of care cancer
imaging with pathology confirmation, as well as optimization of dosing and imaging parameters. Meanwhile, we will continue exploration
of dose and imaging time points, along with comparison to standard of care cancer imaging, in the ongoing investigator-sponsored
LIGHT Phase 1-2 trials.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">According to Bio-Tech Systems (November 2010), sales of FDG
in the US in 2009 were approximately $300 million and projected to grow to approximately $900 million in 2017. FDG accumulates
in any tissue having increased glucose metabolism compared to surrounding tissue. As a result and in contrast to LIGHT, FDG is
not selective for malignant tumors. FDG localizes in certain normal tissue such as heart, kidney and brain tissues that also have
high glucose metabolism. FDG is also known to localize in inflammatory sites. Other major limitations to the use of FDG are found
in pelvic imaging due to the high renal (kidney) clearance of the compound. These characteristics of FDG, therefore, decrease its
diagnostic specificity for certain malignancies. FDG is no longer covered by patent and is typically manufactured onsite at PET
imaging medical facilities because of its limited (110 minute) half-life.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>HOT</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">I-131-CLR1404 (HOT) is a small-molecule, broad-spectrum, cancer-targeted
molecular radiotherapeutic that we believe has first-in-class potential.&nbsp; HOT is comprised of a proprietary phospholipid ether
analog (PLE), acting as a cancer-targeted delivery and retention vehicle, covalently labeled with iodine-131, a cytotoxic (cell-killing)
radioisotope that is already in common use to treat thyroid and other cancer types. It is this &ldquo;intracellular radiation&rdquo;
mechanism of cancer cell killing, coupled with delivery to a wide range of malignant tumor types that we believe imbues HOT with
broad-spectrum anti-cancer activity.&nbsp; Selective uptake and retention has also been demonstrated in cancer stem cells compared
with normal cells, offering the prospect of longer lasting cancer remission. In 2009, we filed an IND with the FDA to study HOT
in humans.&nbsp; In early 2010, we successfully completed a Phase 1a dosimetry trial demonstrating initial safety, tumor imaging
and pharmokinetic consistency and establishing a starting dose for a Phase 1b dose-escalation trial.&nbsp; Radiation dosimetry
measures how much radiation is absorbed by tumors and body organs in order to optimize delivery of radiation therapy. The ongoing
Phase 1b dose-escalation trial is aimed at determining the Maximum Tolerated Dose of HOT. We expect to initiate HOT Phase 2 efficacy
trials, subject to additional funding, as a monotherapy for solid tumors with significant unmet medical need, such as glioma and
lung cancer, as soon as a starting dose is established. We may determine such a dose based on an efficacy signal or an acceptable
safety profile in the Phase 1b trial. Selection of indications for Phase 2, as well as aspects of trial design, will be guided
by ongoing PET imaging trials in cancer patients with LIGHT, a chemically identical biomarker for HOT. Preclinical experiments
in <I>in vivo</I> (in animals) tumor models have demonstrated selective killing of cancer cells along with a benign safety profile.
HOT&rsquo;s anti-tumor/survival-prolonging activities have been demonstrated in more than a dozen xenograft models (human tumor
cells implanted into animals) including breast, prostate, lung, glioma (brain), pancreatic, ovarian, uterine, renal and colorectal
cancers and melanoma.&nbsp; &nbsp;In all but two models, a single administration of a well-tolerated dose of HOT was sufficient
to demonstrate efficacy.&nbsp; In view of HOT&rsquo;s selective uptake and retention in a wide range of solid tumors and in cancer
stem cells, its single-agent efficacy in animal models and its non-specific mechanism of cancer-killing (radiation), we are first
developing HOT as a monotherapy for solid tumors with significant unmet medical need.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Chemically, HOT is comprised of our proprietary PLE, 18-(p-[I-131]iodophenyl)
octadecyl phosphocholine, acting as a cancer-targeted delivery and retention vehicle, covalently labeled with iodine-131, a cytotoxic
radioisotope with a radiation half-life of eight days.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>



<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="margin: 0"></P>

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<P STYLE="margin: 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Single intravenous, well-tolerated doses of HOT administered
therapeutically in animals (i.e., after primary tumors were established) have been observed to result in significant anti-tumor
and/or survival benefit compared to control animals in mouse xenograft tumor models including ovarian, pancreatic, non-small cell
lung, triple-negative breast, prostate, glioma, colorectal and kidney cancers.&nbsp;Survival benefit generally reflected the degree
of tumor growth suppression.&nbsp; Efficacy was also seen in a xenograft model employing human uterine sarcoma cells which over-express
efflux pumps known to underlie resistance to many standard chemotherapeutic drugs. The broad <I>in vivo</I> efficacy profile of
HOT across many tumor types is reflected in the fact that selective tumor localization of LIGHT (which uses the same cancer-targeting
drug delivery and retention vehicle as HOT) has been demonstrated in over 50 xenograft, spontaneous and transgenic cancer models.&nbsp;
HOT was also tested in combination with a standard efficacious dose of gemcitabine in a pancreatic cancer xenograft model.&nbsp;
Single doses of HOT or gemcitabine given alone were equally efficacious while the combination therapy was significantly more efficacious
than either treatment alone (additive).&nbsp; In each xenograft study, the dose of HOT was ~100 &micro;Ci, which is approximately
50-fold less than the maximum tolerated dose of HOT determined in a six-month rat radiotoxicity study.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Extensive, IND-enabling, Good Laboratory Practices (GLP) <I>in
vivo</I> and <I>in vitro</I> preclinical pharmacokinetic/distribution, toxicology and drug safety studies were successfully completed
using non-pharmacological concentrations/doses of PLE consistent with its role as a delivery/retention vehicle in HOT.&nbsp; Tissue
distribution studies supported prediction of acceptable human organ exposures and body clearance for HOT.&nbsp; Importantly, and
in sharp distinction from biological products labeled with I-131, the small molecule HOT showed very minimal variation in excretion
kinetics and tissue distribution among individuals within species or across a 500-fold variation in dose.&nbsp; Single- and repeated-dose
animal toxicology studies indicated very high margins of safety (80-200x) over the anticipated maximum human therapy dose of HOT.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In February 2010 we completed a Phase 1a dosimetry trial with
a single intravenous dose of 10 mCi HOT in eight patients with relapsed or refractory advanced solid tumors.&nbsp; Single doses
of HOT were well tolerated.&nbsp; The reported adverse events were all considered minimal, manageable and either not dose limiting
or not related to HOT. There were no serious adverse events reported.&nbsp; Analysis of total body imaging and blood and urine
samples collected over 42 days following injection indicated that doses of HOT expected to be therapeutically effective can be
administered without harming vital organs.&nbsp; Two subjects (one with colorectal cancer metastasized to lung and another with
prostate cancer) had tumors that were imaged with 3D nuclear scanning (SPECT/CT) on day 6 after administration of HOT.&nbsp; Uptake
of HOT into tumor tissue (but not adjacent normal tissue or bone marrow) was clearly demonstrated in both subjects.&nbsp; Echoing
animal studies, pharmacokinetic analyses demonstrated a prolonged half-life of radioactivity in the plasma after HOT administration
(approximately 200 hours) and that there was no significant variation in excretion or radiation dosimetry among subjects.&nbsp;
The trial established an initial dose of 12.5 mCi/m2 (for example, 20 mCi dose for a patient with 1.6m<SUP>2</SUP> body surface
area) for the Phase 1b escalating dose trial that is ongoing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">The primary
objective of this multicenter Phase 1b dose-escalation trial in patients with a range of advanced solid tumors is to define the
Maximum Tolerated Dose (MTD) of HOT.&nbsp; In addition to determining the MTD, the Phase 1b trial is intended to evaluate overall
tumor response (using standard RESIST 1.1 criteria) and safety.</FONT> <FONT STYLE="font: 10pt Times New Roman, Times, Serif">In
September 2012, we announced that that we had successfully completed the second cohort in this Phase 1b dose-escalation trial.
The second two-patient cohort was successfully dosed with 25 mCi/m2 of HOT, triggering enrollment into the third cohort at 37.5
mCi/m2. Data from the second cohort indicated HOT was well-tolerated, without any dose limiting or sub-dose limiting toxicities,
enabling enrollment of the first patient in the third cohort.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Concurrently, separate studies are expected to generate imaging
data in cancer patients using LIGHT.&nbsp; These imaging trials with LIGHT are expected to a facilitate selection of indications
and trial designs for HOT Phase 2 trials with an initial focus on solid tumors with significant unmet medical need, planned to
begin in the third quarter of 2013, in the event we obtain the additional funding necessary for that purpose.&nbsp; Based on its
broad-spectrum mechanism of action and wide-ranging single agent activity in animal cancer models, HOT&nbsp;is anticipated to&nbsp;be
used as monotherapy through proof-of-concept clinical trials, with subsequent exploration of combination with chemotherapeutic
agents (a number of which are known to be radiosensitizers and thus with potential to enhance the efficacy of HOT).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Tumor treatment with radioactive isotopes has been used as a
fundamental cancer therapeutic for decades.&nbsp; The goals of targeted cancer therapy &mdash; selective delivery of effective
doses of isotopes that destroy tumor tissue, sparing of surrounding normal tissue, and non-accumulation in vital organs such as
the liver and kidneys &mdash; remain goals of novel therapies as well.&nbsp; We believe our isotope delivery technology is poised
to achieve these goals.&nbsp; Because, to date, HOT has been shown to reliably and near-universally accumulate in cancer cells
and because the therapeutic properties of the iodine-131 are well known, we believe the risk of non-efficacy in human clinical
trials is less than that of other cancer therapies at this stage of development, although no assurance can be given.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Other targeted radiotherapies include the marketed drugs Zevalin&reg;
(90Y, Spectrum Pharmaceuticals) and Bexxar&reg; (I-131, GSK).&nbsp; In both cases, tumor-targeting is monoclonal antibody-based
and limited to non-Hodgkins lymphoma, which is a type of cancer involving cells of the immune system.&nbsp; Thus, these agents
are not appropriate comparators for HOT because of their limited therapeutic utility (only one type of tumor) and because their
target indication is often well-managed by other drugs (unlike HOT, which has potential to treat tumor types for which the current
standard of care is associated with very poor outcomes). Notably, both Zevalin&reg; and Bexxar&reg; were approved on the basis
of objective response rates (shrinking of tumors) without data to support improvement in survival, suggesting that regulatory approval
of radiopharmaceuticals may be based on relatively shorter and smaller pivotal clinical trials than is often the case in oncology.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In conclusion, we believe that HOT is not subject to the full
extent of development risk typically associated with early-stage cancer therapeutics for the following reasons:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 94%">HOT is selectively taken up by and retained in cancer versus normal cells and its PLE delivery vehicle is intended to be given to patients in sub-pharmacological doses, resulting in an improved safety profile compared to standard chemotherapy.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>HOT does not rely on inhibition or enhancement of a specific pathway; it works by exposing cancer cells to sustained lethal radiation from within.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>To date, HOT (as demonstrated with LIGHT studies) has shown near-universal cancer-specific retention in more than 50 <I>in vivo</I> tumor models, making the molecule potentially effective in numerous cancer types (broad-spectrum) as compared to type-specific therapies.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>We believe we have completed all applicable preclinical safety, pharmacology and toxicology studies that we believe will be required for an NDA including both single-dose and multi-dose studies.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>HOT is a small molecule that is easily characterized and synthesized and is therefore not subject to scale-up and manufacturing risks typically associated with large molecules such as monoclonal antibodies.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>HOT exploits a new cancer-selective delivery and retention mechanism, but is paired with a proven and effective radioisotope (I-131) for therapy.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>GLOW2</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">GLOW2 is a small-molecule, broad-spectrum, cancer-targeted,
non-radioactive optical imaging agent that we believe has first-in-class potential for intraoperative tumor margin illumination
and non-invasive tumor imaging. GLOW2 is comprised of a proprietary phospholipid ether analog (PLE), acting as a cancer-targeted
delivery and retention vehicle, covalently attached to a near-infrared (800nm) fluorophore. According to the American Cancer Society
(2011), most cancer patients will have some type of surgery, and Cancer Facts and Figures indicated that approximately 1.3 million
cancer patients were diagnosed with solid tumors in the U.S. alone in 2011. GLOW2 may facilitate and enable diagnostic, staging,
debulking and curative cancer surgeries, intraoperatively in real time (i.e. during the actual surgical procedure) by defining
tumor margins and regional lymph node involvement, resulting in more accurate tumor resectioning and improved outcome and prognosis.
In this context, GLOW2 would effectively act as an adjunct therapeutic agent. In preclinical <I>in vivo </I>(in animals) tumor
models, non-invasive optical imaging showed pronounced accumulation of GLOW2 in tumors versus normal organs and tissues in addition
to successfully delineated tumor margins during tumor resection. Thus, GLOW2 may also have utility for non-invasive imaging of
relatively superficial tumor types in man (e.g., melanoma, head &amp; neck, colon, esophageal). Subject to additional funding,
we expect to submit an IND for GLOW2 in the second half of 2013 and begin clinical trials shortly thereafter.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Other Pipeline Compounds</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have other preclinical compounds that are based on our proprietary
cancer-targeting technology. For example, CLR1404 (COLD) is a cancer-targeted chemotherapy when used in high (100x) pharmacology
relevant doses that, in preclinical experiments, has been observed to inhibit the phosphatidylinosotol 3-kinase (PI3K)/Akt survival
pathway, which is overexpressed in many types of cancer.&nbsp; As a result, in such preclinical experiments COLD has been observed
to selectively inhibit Akt activity, induce apoptosis through caspase activation and inhibit cell proliferation in cancer cells
versus normal cells.&nbsp; COLD also exhibits significant <I>in vivo</I> efficacy in mouse xenograft tumor models, including non-small
cell lung cancer and triple-negative breast cancers, producing long-lasting tumor growth suppression and significantly increased
survival.&nbsp; We believe COLD has the potential to be best-in-class versus other Akt inhibitors in development due to (a) cancer
cell/cancer stem cell targeting, resulting in cancer-selective inhibition of Akt and cell proliferation or (b) suitability for
intravenous administration that we believe offers the prospect of greater systemic exposure and hence Akt inhibition in cancer
cells, which we believe would result in superior efficacy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Technology </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">LIGHT, HOT and GLOW2 are optimized PLEs that interact with lipid
rafts, which are specialized microdomains within cell membranes. Importantly, the core chemical structure shared across all three
products provides selective targeting of cancer cells, including cancer stem cells, in preference to normal cells (due to enrichment
of lipid rafts in the former).&nbsp; The cancer-targeting PLE carrier molecule was deliberately designed to be coupled to imaging
or therapeutic molecules. For example iodine can be attached via a very stable covalent bond resulting in two distinct products
differing only with respect to the isotope of iodine they contain &ndash; HOT contains short-lived radioactive I-131 and LIGHT
contains the even more short-lived radioactive I-124. Because of their chemical identity, LIGHT also represents an ideal biomarker
that can be used to predict tumor sensitivity HOT and, potentially, establish an efficacious dose in individual patients. Other,
non-radioactive molecules can also be attached to the PLE core. In the case of GLOW2, this is an infrared emitting fluorophore
(800 nm) whose signal can penetrate through up to approximately 1 cm of tissue. This may enable GLOW2&rsquo;s use to visualize
tumor margins during cancer surgery (effectively acting as an adjunct therapeutic agent) and to non-invasively detect relatively
superficial tumors. Thus, to date, three cancer-targeted product profiles have been generated from a single chemical core structure
that is the foundation of our technology platform &ndash; a diagnostic PET imaging agent, LIGHT, a molecular radiotherapeutic agent,
HOT and a non-radioactive optical imaging agent to increase the success of cancer surgery and non-invasively image certain tumors,
GLOW2.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Using another fluorescent-labeled PLE (CLR1501 or GLOW1), selective
uptake and retention has been demonstrated in cancer cells <I>in vitro</I>.&nbsp; Twenty-four hours after treatment, a variety
of human tumor cell types (melanoma, colorectal, uterine, pancreatic, ovarian, glioblastoma) show six- to ten-fold more staining
with GLOW1 relative to&nbsp;&nbsp;normal cells (e.g., skin fibroblasts).&nbsp; Significantly, uptake/retention was also seen in
cancer stem cells, which are known to be relatively resistant to both chemotherapy and radiation andmay therefore contribute to
eventual relapse of disease following conventional chemotherapy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Malignant tumor targeting, including targeting of cancer stem
cells, has also been demonstrated <I>in vivo</I>. For example, mice without intact immune systems, and inoculated with Panc-1 (pancreatic
carcinoma), were injected with GLOW2 24 or 96 hours prior to imaging.&nbsp; <I>In vivo</I> optical imaging showed pronounced accumulation
of GLOW2 in tumors versus non-target organs and tissues.&nbsp; Similarly, PET imaging of tumor-bearing animals (colon, glioma,
triple negative breast and pancreatic tumor xenograft models) administered the imaging agent LIGHT clearly shows selective uptake
and retention by both primary tumors and metastases, including cancer stem cells.&nbsp; Furthermore, PET/CT analysis following
co-injection of HOT (for therapy) and LIGHT (for imaging) revealed time-dependent tumor shrinkage and disappearance (over 9 days)
in a cancer xenograft model.&nbsp; Finally, we believe that the capability of our technology to target cancer stem cells <I>in
vivo</I> was demonstrated by treating tumor-bearing mice with GLOW1 and then removing the tumor and isolating cancer stem cells,
which continued to display GLOW1 labeling even after three weeks in cell culture.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The basis for selective tumor targeting of our compounds lies
in differences between the plasma membranes of cancer cells as compared to those of most normal cells.&nbsp; Specifically, cancer
cell membranes are highly enriched in &ldquo;lipid rafts&rdquo;.&nbsp; Lipid rafts are specialized regions of the membrane phospholipid
bilayer that contain high concentrations of cholesterol and sphingolipids and serve to organize cell surface and intracellular
signaling molecules (e.g., growth factor and cytokine receptors, the phophatidylinosotol 3-kinase (P13K)/Akt survival pathway).
Data suggests that lipid rafts serve portals of entry for PLEs such as LIGHT, HOT and GLOW2.&nbsp; The marked selectivity of our
compounds for cancer cells versus non-cancer cells is due to the fact that cancer cells have far more lipid rafts. In addition
to accumulating in lipid rafts, LIGHT, HOT and GLOW2 are transported into the cytoplasm, where they distribute to organelle membranes
(mitochondria, ER, lysosomes) but not the nucleus. The pivotal role played by lipid rafts is underscored by the fact that disruption
of lipid raft architecture suppresses uptake of PLEs into cancer cells.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Legacy Products</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior to the Acquisition, Novelos had been
developing NOV-002, a small-molecule immunomodulating and anti-cancer compound based on a proprietary formulation of oxidized glutathione.&nbsp;
NOV-002 has been administered to approximately 1,000 cancer patients in clinical trials and was in Phase 2 development for solid
tumors in combination with chemotherapy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From November 2006 through January 2010,
we conducted a Phase 3 trial of NOV-002 plus first-line chemotherapy in advanced non-small cell lung cancer (NSCLC) following three
Phase 2 trials (two conducted in Russia and one conducted by us in the U.S.) that had demonstrated clinical activity and safety.&nbsp;
The Phase 3 trial enrolled 903 patients, 452 of whom received NOV-002.&nbsp; In February 2010, we announced that the primary endpoint
of improvement in overall survival compared to first-line chemotherapy alone was not met in this pivotal Phase 3 trial.&nbsp; Following
evaluation of the detailed trial data, we announced in March 2010 that the secondary endpoints also were not met in the trial and
that adding NOV-002 to paclitaxel and carboplatin chemotherapy was not statistically or meaningfully different in terms of efficacy-related
endpoints or recovery from chemotherapy toxicity versus chemotherapy alone. However, NOV-002 was safe and did not add to the overall
toxicity of chemotherapy.&nbsp; Based on the results from the Phase 3 trial, we have discontinued development of NOV-002 for NSCLC
in combination with first-line paclitaxel and carboplatin chemotherapy.&nbsp; The aggregate costs incurred in connection with our
development of NOV-002, including administrative overhead, were approximately $70 million.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Prior to the Acquisition, Novelos had also
been developing NOV-205, a second oxidized glutathione-based compound. NOV-205 had been administered to approximately 200 hepatitis
patients in clinical trials and was in Phase 2 development for chronic hepatitis C non-responders.&nbsp; An IND for NOV-205 as
a monotherapy for chronic hepatitis C was accepted by the FDA in 2006.&nbsp; A U.S. Phase 1b clinical trial with NOV-205 in patients
who previously failed treatment with pegylated interferon plus ribavirin was completed in December 2007.&nbsp; Based on favorable
safety results of that trial, in March 2010 Novelos initiated a multi-center U.S. Phase 2 trial evaluating NOV-205 as monotherapy
in up to 40 chronic hepatitis C genotype 1 patients who previously failed treatment with pegylated interferon plus ribavirin.&nbsp;
Safety was established in twenty patients receiving either 30mg or 60mg of NOV-205 daily for 49 days; however, no viral load reduction
was observed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Further development of NOV-002 and NOV-205
has been suspended.&nbsp; At this time, we expect to devote our resources to the development and commercialization of the Cellectar
compounds, and we do not expect to conduct any further development of the oxidized glutathione compounds. The IND for NOV-205 was
withdrawn on July 5, 2011.&nbsp;&nbsp;We anticipate that the IND for NOV-002 will be placed on inactive status.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B>Manufacturing </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We manufacture HOT at our current Good Manufacturing Practices
compliant (cGMP) radiopharmaceutical manufacturing facility in Madison, Wisconsin.&nbsp; This facility, consisting of approximately
19,500 square feet, contains offices, laboratories, a radiopharmaceutical research lab, a cGMP radiopharmaceutical manufacturing
suite and a cGMP analytical laboratory for product release.&nbsp; Our manufacturing facility holds a State of Wisconsin Department
of Health Services Radioactive Materials License which authorizes the use and possession of radioactive material for both manufacturing
and distribution activities. This license establishes a possession limit of 9 Curies of iodine-131. The facility also holds a State
of Wisconsin DHS Radioactive Materials License which authorizes the use and possession of radioactive materials by Cellectar for
research and development. The research and development license permits the use and possession of iodine-125, iodine-131 and iodine-124
in quantities sufficient to support in-house HOT manufacturing and other research needs. Each of these iodine isotopes is purchased
from third party vendors. LIGHT manufacturing is conducted by our collaborator, the University of Wisconsin in Madison, in connection
with investigator-sponsored clinical trials, pursuant to a materials transfer agreement expiring in June 2013. The materials transfer
agreement contains standard provisions for the protection of data and intellectual property and may be terminated by either party
at any time before expiration. We are in the process of negotiating a fee-based arrangement with the University of Wisconsin covering
the manufacture of LIGHT.&nbsp; Under Novelos&rsquo; guidance, in the fall of 2011 the LIGHT manufacturing facility at the University
of Wisconsin was made compliant with stricter FDA guidelines and requirements for cGMP PET agent production that officially went
into effect in June 2012. On November 2, 2012, we completed a private placement of our common stock and warrants for gross proceeds
of $2,000,000. The proceeds from the private placement are designated for use towards the construction of a clinical-stage manufacturing
facility for I-124-CLR1404 (LIGHT) at our Madison, WI location. We estimate that that the project will cost a total of approximately
$3,000,000 and will take approximately one year to complete. We anticipate that construction will commence in late 2012, although
we have not yet entered into contractual commitments with vendors. We may seek to obtain the additional capital required to complete
the project from additional sales of common stock (other than through this offering), proceeds from warrant exercises, and/or from
equipment financing. The drug substance is identical for both products with the exception of the different iodine isotope used
in each.&nbsp; The base molecule is a dry powder produced via a six-step synthetic scheme.&nbsp; The release specifications for
drug substance have been established and validated.&nbsp; The impurity levels at small scale are very low suggesting that larger
scale production should be feasible.&nbsp; We have also demonstrated 24-month stability for the drug substance in desiccated and
refrigerated form.&nbsp; We believe our laboratories are well equipped with the appropriate equipment for manufacturing pilot and
small-scale batches in accordance with cGMP.&nbsp; We believe we have adequate capacity for any Phase 2 trials of HOT and the potential
for larger scale build-out for larger Phase 3 trials.&nbsp; All investigational drug substance and product intended for human use
during clinical studies will be manufactured according to the guidelines of the International Conference on Harmonisation of Technical
Requirements for Registration of Pharmaceuticals for Human Use, FDA requirements (CFR part 211) and cGMP. GLOW2 is currently synthesized
at a laboratory (gram) scale in our Madison facility via a non-cGMP process. This process is expected to increase in scale and
cGMP compliance as part of IND-enabling studies over the coming year.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Sales and Marketing</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have not entered into any joint development or similar partnering
agreements with respect to LIGHT, HOT, GLOW2 or COLD.&nbsp; We plan to pursue and evaluate all available options to develop, launch
and commercialize our compounds.&nbsp; These options presently include, but are not limited to, entering into a partnering arrangement
with a pharmaceutical company or various pharmaceutical companies with strong development and commercial expertise and infrastructure
in the U.S, Europe and/or Japan.&nbsp; While we currently do not plan to build our own sales force or utilize a contract sales
organization for launch and commercialization of our compounds, we may reconsider in the future.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Competition for Our Clinical-Stage Compounds</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>LIGHT</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">FDG is the current gold standard for cancer PET imaging.&nbsp;
According to Bio-Tech Systems (November 2010), sales of FDG in the US in 2009 were approximately $300 million and projected to
grow to approximately $880 million in 2017.&nbsp; FDG accumulates in any tissue having increased glucose metabolism compared to
surrounding tissue.&nbsp; As a result, and in contrast to LIGHT, FDG is not selective for malignant tumors.&nbsp; FDG localizes
in certain normal tissue such as heart, kidney and brain tissues that also have high glucose metabolism.&nbsp; FDG is also known
to localize in inflammatory sites.&nbsp; Other major limitations to the use of FDG are found in pelvic imaging due to the high
renal (kidney) clearance of the compound.&nbsp; We believe these characteristics of FDG, therefore, decrease its diagnostic specificity
for certain malignancies. FDG is no longer covered by patent and is typically manufactured onsite at PET imaging medical facilities
because of its limited (110 minute) half-life.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We compared LIGHT and FDG side by side (24 hours apart) in the
same tumor-bearing mouse that was also treated with carageenan to induce inflammation.&nbsp; As expected, FDG demonstrated significant
uptake into the inflammatory lesion and organs such as heart and bladder compared to the malignant tumors, which were poorly imaged.&nbsp;
LIGHT, on the other hand, showed no uptake into the inflammatory lesion and organs, yet clear and demonstrable uptake into the
tumors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Additionally, the radioisotopic half-life of only 110 minutes
for fluorine-18 labeled agents, such as FDG, severely limits their delivery range relative to the point of manufacture. I-124 has
a four-day half-life that permits worldwide distribution of LIGHT from one manufacturing location.&nbsp; Additionally, the longer
half-life affords a longer imaging window of up to seven days following injection.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>HOT</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">HOT&rsquo;s &ldquo;intracellular radiation&rdquo; mechanism
of cancer cell killing, coupled with delivery to a wide range of malignant tumor types, imbues HOT with broad-spectrum anti-cancer
activity.&nbsp; Selective uptake and retention has also been demonstrated in cancer stem cells compared with normal stem cells,
offering a prospect of longer lasting cancer remission. Other targeted radiotherapies include the marketed drugs Zevalin&reg; (manufactured
by Spectrum Pharmaceuticals) and Bexxar&reg; (manufactured by GlaxoSmithKline).&nbsp; In both cases, tumor-targeting is monoclonal
antibody-based and limited to non-Hodgkins lymphoma, which is a type of cancer involving cells of the immune system.&nbsp; Thus,
these agents are not appropriate comparators for HOT because of their limited therapeutic utility (only one type of tumor) and
because their target indication is often well-managed by other drugs (unlike HOT which has potential to treat tumor types for which
the current standard of care is associated with very poor outcomes). Notably, both Zevalin&reg; and Bexxar&reg; were approved on
the basis of objective response rates (shrinking of tumors) without data to support improvement in survival, suggesting that regulatory
approval of radiopharmaceuticals may be based on relatively shorter and smaller pivotal clinical trials than is often the case
in oncology.&nbsp; We do not believe Zevalin&reg; or Bexxar&reg; would be competing products of HOT in any material respect. Other
cancer-targeted molecular radiotherapeutic agents are in various stages of development for solid tumors. These primarily utilize
monoclonal antibodies for cancer cell targeting and are, therefore, each restricted to a relatively narrow range of tumor indications
compared to HOT.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Intellectual Property </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have established a broad U.S. and international intellectual
property rights portfolio around our proprietary cancer-targeting phospholipid ether (&ldquo;PLE&rdquo;) technology platform including
LIGHT, HOT and GLOW2.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our proprietary rights include patents and patent applications
that are either owned by us or exclusively licensed to us by the University of Michigan (the &ldquo;Michigan patents&rdquo;). LIGHT
and HOT are covered by the Michigan patents that provide compound (composition of matter) coverage in the U.S. and Canada and expire
in 2016.&nbsp; Our patents and applications cover methods of use, composition and method of manufacture related to LIGHT, HOT,
GLOW2 and other PLEs.&nbsp; Many of these patents and applications are filed in key commercial markets worldwide.&nbsp; These patents
will generally expire between 2025 and 2030 unless extended.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In particular, LIGHT is covered by the Michigan patents as well
as two of our U.S. patents, one of which is directed to its use for virtual colonoscopy (expiring 2025) and another of which is
directed to its use for <I>in vitro</I> diagnostics (expiring 2025).&nbsp; LIGHT is also covered by pending U.S., Japanese and
European patent applications directed to its use for <I>in vivo</I> diagnostics and once issued should expire in 2025.&nbsp; Lastly,
the use of LIGHT for diagnostics purposes with cancer stem cells is pending in the U.S., Japan and Europe. Patents resulting from
these applications are expected to expire in 2030.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">HOT is covered by two additional series of our patents and applications
aside from the Michigan patents.&nbsp; The first is directed to a method of use for cancer therapy and has also been filed in Europe
and Japan, in addition to the U.S.&nbsp; These are expected to expire in 2025.&nbsp; Secondly, an application directed to cancer
stem-cell therapy is pending in the U.S., Europe, Russia and Japan. Patents resulting from these applications are expected to expire
in 2030. Some of these resulting patents may be extendable on a country-by-country basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">GLOW2
is covered by patent applications directed to the compound, methods of use and method of manufacture that have been filed in U.S.,
Europe, Russia and Japan.</FONT> <FONT STYLE="font: 10pt Times New Roman, Times, Serif">Patents resulting from these applications
are expected to expire in 2029. Some of these resulting patents may be extendable on a country-by-country basis.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Separate from any patent protection and following product approval
by regulatory authorities, data exclusivity may be available for various compounds for up to 10 years on a country-by-country basis
(e.g., up to 5 years in the U.S.).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The early termination of the University of Michigan license
agreement would result in the loss of our rights to use the covered patents.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition to the above noted patents/applications directed
to LIGHT, HOT and GLOW2, we own other patents/applications directed to different forms of phospholipid ethers and methods of manufacturing
of phospholipid ethers.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We also own all intellectual property rights in the U.S and
Europe related to our clinical-stage pipeline compound, NOV-002, and other preclinical compounds based on oxidized glutathione.&nbsp;
Issued composition-of-matter patents cover proprietary formulations of oxidized glutathione that do not expire until 2019, and
these patents include methods of manufacture for oxidized glutathione formulated with various metals.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Licenses / Collaborations</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In September 2003, Cellectar entered into a license agreement
with the University of Michigan (the U. Mich. license), which granted Cellectar exclusive rights to the development, manufacture
and marketing of products under several composition of matter patents in North America that expire at varying dates in 2016.&nbsp;
The U. Mich. license expires upon the expiration of the last covered patent.&nbsp; We are responsible for an annual license fee
of $10,000 and are required to pay costs associated with the maintenance of the patents covered by the U. Mich. license.&nbsp;
Additionally, we are required to make milestone payments of $50,000 upon the filing of a New Drug Application (NDA) for a licensed
product intended for use in a therapeutic or diagnostic application (such milestone fees may be deferred and paid within twelve
months of the first commercial sale of such product) and make certain milestone payments within a year following the first commercial
sale of any licensed products.&nbsp; The sales milestones range from $100,000 to $200,000, dependent upon whether the drug is for
use in a diagnostic or therapeutic application, provided that if sales in the first 12 months are less than the amount of the milestone,
then we are required to pay 50% of all sales until the milestone is satisfied. The milestone payments may total up to $400,000.
The U. Mich. license provides that we pay a royalty equal to 3% of net sales of any licensed products sold by us or our sublicensees
for such licensed products, provided however if the sublicense fee payable to us is between 4% and 5% of net sales, then the royalties
payable to U. Mich. shall be equal to 50% of the sublicense fee.&nbsp; Furthermore, the U. Mich. license provides for a reduction
in the royalties owed by up to 50% if we are required to pay royalties to any third parties related to the sale of the licensed
products.&nbsp; If we receive any revenue in consideration of rights to the licensed technology that is not based on net sales,
excluding any funded research and development, we are required to pay U. Mich. 10% of amounts received. During 2003, pursuant to
the U. Mich. license, Cellectar paid approximately $54,000 of back patent costs and issued 203,483 shares of common stock to U.
Mich. as partial consideration for the rights described above. U. Mich. may terminate the agreement if we cease operations, if
we fail to make any required payment under the agreement, or if we otherwise materially breach the agreement, subject to applicable
notice and cure periods.&nbsp; To date, we have made all payments as they have become due, there have been no defaults under the
U. Mich. license, nor have we ever been notified of a default by U. Mich. We may terminate the agreement with six months&rsquo;
notice to U. Mich. and the return of licensed product and related data.&nbsp; The U. Mich. license contained milestones that required
certain development activities to be completed by specified dates. All such development milestones have been either completed or
removed by subsequent amendment to the agreement.&nbsp; U. Mich. has provided no warranties as to validity or otherwise with respect
to the licensed technology.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Employees</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of November 16, 2012 we had 20 full time employees. We believe
our relationships with our employees are good.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Regulation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The production, distribution, and marketing of products employing
our technology, and our development activities, are subject to extensive governmental regulation in the United States and in other
countries.&nbsp; In the United States, we are subject to the Federal Food, Drug, and Cosmetic Act, as amended, and the regulations
of the FDA, as well as to other federal, state, and local statutes and regulations, including the federal, state and local laws
and regulations governing the storage, use and disposal of hazardous materials, including radioactive isotopes.&nbsp; These laws,
and similar laws outside the United States, govern the clinical and preclinical testing, manufacture, safety, effectiveness, approval,
labeling, distribution, sale, import, export, storage, record-keeping, reporting, advertising, and promotion of drugs.&nbsp; Product
development and approval within this regulatory framework, if successful, will take many years and involve the expenditure of substantial
resources.&nbsp; Violations of regulatory requirements at any stage may result in various adverse consequences, including the FDA&rsquo;s
and other health authorities&rsquo; delay in approving or refusal to approve a product.&nbsp; Violations of regulatory requirements
also may result in enforcement actions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following paragraphs provide further information on certain
legal and regulatory issues with a particular potential to affect our operations or future marketing of products employing our
technology.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Research, Development, and Product Approval Process</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The research, development, and approval process in the United
States and elsewhere is intensive and rigorous and generally takes many years to complete.&nbsp; The typical process required by
the FDA before a therapeutic drug may be marketed in the United States includes:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%">&nbsp;</TD>
    <TD STYLE="width: 5%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 89%">preclinical laboratory and animal tests performed under the FDA&rsquo;s Good Laboratory Practices regulations, referred to herein as GLP;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>submission to the FDA of an Investigational New Drug (&ldquo;IND&rdquo;) application, which must become effective before human clinical trials may commence;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>human clinical studies performed under the FDA&rsquo;s Good Clinical Practices regulations, to evaluate the drug&rsquo;s safety and effectiveness for its intended uses;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>FDA review of whether the facility in which the drug is manufactured, processed, packed, or held meets standards designed to assure the product&rsquo;s continued quality; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>submission of a marketing application to the FDA, and approval of the application by the FDA.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Preclinical Testing</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During preclinical testing, studies are performed with respect
to the chemical and physical properties of candidate formulations. These studies are subject to GLP requirements. Biological testing
is typically done in animal models to demonstrate the activity of the compound against the targeted disease or condition and to
assess the apparent effects of the new product candidate on various organ systems, as well as its relative therapeutic effectiveness
and safety. An IND must be submitted to the FDA and become effective before studies in humans may commence.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Clinical Trials</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Clinical trial programs in humans generally follow a three-phase
process.&nbsp; Typically, Phase 1 studies are conducted in small numbers of healthy volunteers or, on occasion, in patients afflicted
with the target disease.&nbsp; Phase 1 studies are conducted to determine the metabolic and pharmacological action of the product
candidate in humans and the side effects associated with increasing doses, and, if possible, to gain early evidence of effectiveness.&nbsp;
In Phase 2, studies are generally conducted in larger groups of patients having the target disease or condition in order to validate
clinical endpoints, and to obtain preliminary data on the effectiveness of the product candidate and optimal dosing. This phase
also helps determine further the safety profile of the product candidate.&nbsp; In Phase 3, large-scale clinical trials are generally
conducted in patients having the target disease or condition to provide sufficient data for the statistical proof of effectiveness
and safety of the product candidate as required by United States regulatory agencies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In the case of products for certain serious or life-threatening
diseases, the initial human testing may be done in patients with the disease rather than in healthy volunteers. Because these patients
are already afflicted with the target disease or condition, it is possible that such studies will also provide results traditionally
obtained in Phase 2 studies. These studies are often referred to as &ldquo;Phase 1-2&rdquo; studies. However, even if patients
participate in initial human testing and a Phase 1/2 study carried out, the sponsor is still responsible for obtaining all the
data usually obtained in both Phase 1 and Phase 2 studies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Before proceeding with a study, sponsors may seek a written
agreement from the FDA regarding the design, size, and conduct of a clinical trial. This is known as a Special Protocol Assessment
(SPA). Among other things, SPAs can cover clinical studies for pivotal trials whose data will form the primary basis to establish
a product&rsquo;s efficacy. SPAs help establish upfront agreement with the FDA about the adequacy of a clinical trial design to
support a regulatory approval, but the agreement is not binding if new circumstances arise. There is no guarantee that a study
will ultimately be adequate to support an approval even if the study is subject to an SPA.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">United States law requires that studies conducted to support
approval for product marketing be &ldquo;adequate and well controlled.&rdquo; In general, this means that either a placebo or a
product already approved for the treatment of the disease or condition under study must be used as a reference control. Studies
must also be conducted in compliance with good clinical practice requirements, and informed consent must be obtained from all study
subjects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The clinical trial process for a new compound can take ten years
or more to complete. The FDA may prevent clinical trials from beginning or may place clinical trials on hold at any point in this
process if, among other reasons, it concludes that study subjects are being exposed to an unacceptable health risk. Trials may
also be prevented from beginning or may be terminated by institutional review boards, who must review and approve all research
involving human subjects. Side effects or adverse events that are reported during clinical trials can delay, impede, or prevent
marketing authorization. Similarly, adverse events that are reported after marketing authorization can result in additional limitations
being placed on a product&rsquo;s use and, potentially, withdrawal of the product from the market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Submission of NDA</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Following the completion of clinical trials, the data is analyzed
to determine whether the trials successfully demonstrated safety and effectiveness and whether a product approval application may
be submitted. In the United States, if the product is regulated as a drug, a New Drug Application (&ldquo;NDA&rdquo;) must be submitted
and approved before commercial marketing may begin. The NDA must include a substantial amount of data and other information concerning
the safety and effectiveness of the compound from laboratory, animal, and human clinical testing, as well as data and information
on manufacturing, product quality and stability, and proposed product labeling.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Each domestic and foreign manufacturing establishment, including
any contract manufacturers we may decide to use, must be listed in the NDA and must be registered with the FDA.&nbsp; The application
generally will not be approved until the FDA conducts a manufacturing inspection, approves the applicable manufacturing process
and determines that the facility is in compliance with cGMP requirements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Under the Prescription Drug User Fee Act, as amended, the FDA
receives fees for reviewing an NDA and supplements thereto, as well as annual fees for commercial manufacturing establishments
and for approved products. These fees can be significant. For fiscal year 2012, the NDA review fee alone is $1,841,500, although
certain limited deferral, waivers, and reductions may be available.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Each NDA submitted for FDA approval is usually reviewed for
administrative completeness and reviewability within 45 to 60 days following submission of the application. If deemed complete,
the FDA will &ldquo;file&rdquo; the NDA, thereby triggering substantive review of the application. The FDA can refuse to file any
NDA that it deems incomplete or not properly reviewable. The FDA has established performance goals for the review of NDAs&mdash;
six months for priority applications and 10 months for standard applications. However, the FDA is not legally required to complete
its review within these periods and these performance goals may change over time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Moreover, the outcome of the review, even if generally favorable,
typically is not an actual approval but an &ldquo;action letter&rdquo; that describes additional work that must be done before
the application can be approved. The FDA&rsquo;s review of an application may involve review and recommendations by an independent
FDA advisory committee. Even if the FDA approves a product, it may limit the approved therapeutic uses for the product as described
in the product labeling, require that warning statements be included in the product labeling, require that additional studies be
conducted following approval as a condition of the approval, impose restrictions and conditions on product distribution, prescribing,
or dispensing in the form of a risk management plan, or otherwise limit the scope of any approval.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Post NDA Regulation</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Significant legal and regulatory requirements also apply after
FDA approval to market under an NDA. These include, among other things, requirements related to adverse event and other reporting,
product advertising and promotion and ongoing adherence to cGMPs, as well as the need to submit appropriate new or supplemental
applications and obtain FDA approval for certain changes to the approved product labeling, or manufacturing process. The FDA also
enforces the requirements of the Prescription Drug Marketing Act which, among other things, imposes various requirements in connection
with the distribution of product samples to physicians.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The regulatory framework applicable to the production, distribution,
marketing and/or sale of our product pipeline may change significantly from the current descriptions provided herein in the time
that it may take for any of our products to reach a point at which an NDA is approved.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Overall research, development, and approval times depend on
a number of factors, including the period of review at FDA, the number of questions posed by the FDA during review, how long it
takes to respond to the FDA&rsquo;s questions, the severity or life-threatening nature of the disease in question, the availability
of alternative treatments, the availability of clinical investigators and eligible patients, the rate of enrollment of patients
in clinical trials, and the risks and benefits demonstrated in the clinical trials.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Other United States Regulatory Requirements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In the United States, the research, manufacturing, distribution,
sale, and promotion of drug and biological products are potentially subject to regulation by various federal, state, and local
authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services (formerly the Heath Care Financing
Administration), other divisions of the United States Department of Health and Human Services (e.g., the Office of Inspector General),
the United States Department of Justice and individual United States Attorney offices within the Department of Justice, and state
and local governments. For example, sales, marketing, and scientific/educational grant programs must comply with the anti-fraud
and abuse provisions of the Social Security Act, the False Claims Act, the privacy provision of the Health Insurance Portability
and Accountability Act, and similar state laws, each as amended. Pricing and rebate programs must comply with the Medicaid rebate
requirements of the Omnibus Budget Reconciliation Act of 1990 and the Veterans Health Care Act of 1992, each as amended. If products
are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and
requirements apply. All of these activities are also potentially subject to federal and state consumer protection, unfair competition,
and other laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our research and development, manufacturing and administration
of our drugs involve the controlled use of hazardous materials, including chemicals and radioactive materials, such as radioactive
isotopes. Therefore, we are subject to federal, state and local laws and regulations governing the storage, use and disposal of
these materials and some waste products and are required to maintain both a manufacturer&rsquo;s license and a radioactive materials
license with State of Wisconsin agencies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Moreover, we are now, and may become subject to, additional
federal, state, and local laws, regulations, and policies relating to safe working conditions, laboratory practices, the experimental
use of animals, and/or the use, storage, handling, transportation, and disposal of human tissue, waste, and hazardous substances,
including radioactive and toxic materials and infectious disease agents used in conjunction with our research work.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Foreign Regulatory Requirements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We and any future collaborative partners may be subject to widely
varying foreign regulations, which may be quite different from those of the FDA, governing clinical trials, manufacture, product
registration and approval, and pharmaceutical sales. Whether or not FDA approval has been obtained, we or any future collaboration
partners must obtain a separate approval for a product by the comparable regulatory authorities of foreign countries prior to the
commencement of product marketing in these countries. In certain countries, regulatory authorities also establish pricing and reimbursement
criteria. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA
approval. In addition, under current United States law, there are restrictions on the export of products not approved by the FDA,
depending on the country involved and the status of the product in that country.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Reimbursement and Pricing Controls</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In many of the markets where we or any future collaborative
partners would commercialize a product following regulatory approval, the prices of pharmaceutical products are subject to direct
price controls by law and to drug reimbursement programs with varying price control mechanisms. Public and private health care
payers control costs and influence drug pricing through a variety of mechanisms, including through negotiating discounts with the
manufacturers and through the use of tiered formularies and other mechanisms that provide preferential access to certain drugs
over others within a therapeutic class. Payers also set other criteria to govern the uses of a drug that will be deemed medically
appropriate and therefore reimbursed or otherwise covered. In particular, many public and private health care payers limit reimbursement
and coverage to the uses of a drug that are either approved by the FDA or that are supported by other appropriate evidence (for
example, published medical literature) and appear in a recognized drug compendium. Drug compendia are publications that summarize
the available medical evidence for particular drug products and identify which uses of a drug are supported or not supported by
the available evidence, whether or not such uses have been approved by the FDA. For example, in the case of Medicare coverage for
physician-administered oncology drugs, the Omnibus Budget Reconciliation Act of 1993, with certain exceptions, prohibits Medicare
carriers from refusing to cover unapproved uses of an FDA-approved drug if the unapproved use is supported by one or more citations
in the American Hospital Formulary Service Drug Information, the American Medical Association Drug Evaluations, or the United States
Pharmacopoeia Drug Information. Another commonly cited compendium, for example under Medicaid, is the DRUGDEX Information System.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In recent years, there have been positive developments regarding
medical reimbursement for therapeutic radiopharmaceuticals in the United States.&nbsp; The Centers for Medicare and Medicaid Services
have proposed that the reimbursement for radiopharmaceuticals shift from a cost-to-charge ratio (CCR) to an average selling price
(ASP) plus 4% model.&nbsp; There has been support expressed for this proposal by government agencies, key industry members and
the industry consortium, The Council on Radionuclides and Radiopharmaceuticals.&nbsp; The historical CCR model resulted in a reimbursement
rate that was lower than the cost to purchase the drugs, thus creating a disincentive for hospitals to prescribe radiopharmaceuticals.&nbsp;
The current ASP proposal is a solution to this reimbursement problem.&nbsp; Furthermore, there are proposals pending, which, if
adopted, would decrease the physician reimbursement for chemotherapy and conventional radiation therapy.&nbsp; The proposed reduction
in physician reimbursement for chemotherapy could likely result in the movement of a large volume of cancer care from the physician&rsquo;s
office to the hospital environment.&nbsp; The proposed reduction in physician reimbursement for radiation therapy would result
in a gap in revenue for radiation oncologists.&nbsp; Both proposed reductions favor an increase in opportunities to prescribe therapeutic
radiopharmaceuticals.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>LITIGATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A putative federal securities class action complaint was filed
on March 5, 2010 in the United States District Court for the District of Massachusetts by an alleged shareholder of Novelos, on
behalf of himself and all others who purchased or otherwise acquired Novelos common stock in the period between December 14, 2009
and February 24, 2010, against Novelos and its President and Chief Executive Officer, Harry S. Palmin.&nbsp; On October 1, 2010,
the court appointed lead plaintiffs (Boris Urman and Ramona McDonald) and appointed lead plaintiffs&rsquo; counsel.&nbsp; On October
22, 2010, an amended complaint was filed.&nbsp; The amended complaint claimed, among other things, that Novelos violated Section
10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder in connection with alleged misleading
disclosures related to the progress of the Phase 3 clinical trial of NOV-002 for non-small cell lung cancer.&nbsp; In December
2010, the defendants filed a motion to dismiss the complaint with prejudice.&nbsp; On June 23, 2011, the motion to dismiss was
granted and the case was dismissed without prejudice.&nbsp; Because the dismissal was without prejudice, the plaintiffs could&nbsp;reinstitute
the&nbsp;proceeding by filing&nbsp;an amended complaint.&nbsp; In August 2011, the plaintiffs filed a second amended complaint
realleging that the defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 in connection with alleged misleading
disclosures related to the Phase 3 clinical trial for NOV-002 in non-small cell lung cancer. In September 2011, the defendants
filed a motion to dismiss the second amended complaint. On June 11, 2012, the second amended complaint was dismissed with prejudice.
The plaintiffs did not file a notice of appeal prior to the expiration of the deadline for such filing on July 13, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">From its inception through 2010, Novelos was primarily engaged
in the development of certain oxidized glutathione-based compounds for application as therapies for disease, particularly cancer.
These compounds were originally developed in Russia and in June 2000, Novelos acquired commercial rights from the Russian company
(&ldquo;ZAO BAM&rdquo;) which owned the compounds and related Russian patents. In April 2005, Novelos acquired worldwide rights
to the compounds (except for the Russian Federation) in connection with undertaking extensive development activities in an attempt
to secure US Food and Drug Administration (&ldquo;FDA&rdquo;) approval of the compounds as therapies. These development activities
culminated in early 2010 in an unsuccessful Phase 3 clinical trial of an oxidized glutathione compound (NOV-002) as a therapy for
non-small cell lung cancer. After the disclosure of the negative outcome of the Phase 3 clinical trial in 2010, ZAO BAM claimed
that Novelos modified the chemical composition of NOV-002 without prior notice to or approval from ZAO BAM, constituting a material
breach of the June 2000 technology and assignment agreement. In September 2010, Novelos filed a complaint in Massachusetts Superior
Court seeking a declaratory judgment by the court that the June 2000 agreement has been entirely superseded by the April 2005 agreement
and that the obligations of the June 2000 agreement have been performed and fully satisfied. ZAO BAM answered the complaint and
alleged counterclaims. In August 2011, Novelos filed a motion for judgment on the pleadings as to the declaratory judgment count
and all counts of ZAO BAM&rsquo;s amended counterclaims. On October 17, 2011, the court ruled in favor of Novelos on each of the
declaratory judgment claims and dismissed all counts of ZAO BAM&rsquo;s counterclaim. Judgment in favor of Novelos was entered
on October 20, 2011. On November 14, 2011 ZAO BAM filed a notice of appeal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We do not anticipate that these litigation contingencies will
have a material adverse effect on the Company&rsquo;s future financial position, results of operations or cash flows.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PROPERTIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We lease our executive office in Newton, Massachusetts.&nbsp;
Our office consists of approximately 2,000 square feet and is rented for approximately $5,300 per month.&nbsp; This lease may be
terminated by either party with one month&rsquo;s notice.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We lease office, laboratory and manufacturing space in Madison,
Wisconsin.&nbsp; The space consists of approximately 19,500 square feet and is rented for approximately $12,900 per month and expires
on September 14, 2014.&nbsp; The lease may be renewed for two-year periods through 2024 with an increase of 3% in annual rent.
We are planning to undertake the construction of a clinical-stage manufacturing facility for I-124-CLR1404 (LIGHT) at our Madison,
WI location that we anticipate will take approximately one year to complete and will commence in late 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We believe that our present facilities are adequate to meet
our current needs.&nbsp; If new or additional space is required, we believe that adequate facilities are available at competitive
prices.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>MANAGEMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of November 16, 2012 our directors<SUP>(1)</SUP> and executive
officers are:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 34%; font-weight: bold"><B>Name</B></TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 10%; font-weight: bold; text-align: center"><B>Age</B></TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 52%; font-weight: bold"><B>Position</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Stephen A. Hill, B.M. B.Ch., M.A., F.R.C.S. (2)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">54</TD>
    <TD>&nbsp;</TD>
    <TD>Chairman of the Board and Director (Class II)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Harry S. Palmin</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">42</TD>
    <TD>&nbsp;</TD>
    <TD>President, Chief Executive Officer and Director (Class III)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>J. Patrick Genn</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">56</TD>
    <TD>&nbsp;</TD>
    <TD>Vice President of Investor Relations</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Kimberly A. Hawkins</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">40</TD>
    <TD>&nbsp;</TD>
    <TD>Vice President of Clinical Development</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Christopher J. Pazoles, Ph.D.</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">62</TD>
    <TD>&nbsp;</TD>
    <TD>Senior Vice President of Research and Development</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Joanne M. Protano</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">44</TD>
    <TD>&nbsp;</TD>
    <TD>Vice President, Chief Financial Officer and Treasurer</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Jamey P. Weichert, Ph.D.</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">57</TD>
    <TD>&nbsp;</TD>
    <TD>Chief Scientific Officer and Director (Class III)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Thomas Rockwell Mackie, Ph.D. (3)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">58</TD>
    <TD>&nbsp;</TD>
    <TD>Director (Class I)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>James S. Manuso, Ph.D. (3)(2)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">63</TD>
    <TD>&nbsp;</TD>
    <TD>Director (Class I)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>John Neis (4)(3)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">57</TD>
    <TD>&nbsp;</TD>
    <TD>Director (Class II)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>John E. Niederhuber, M.D. (4)(2)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">74</TD>
    <TD>&nbsp;</TD>
    <TD>Director (Class I)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Howard M. Schneider (4)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">68</TD>
    <TD>&nbsp;</TD>
    <TD>Director (Class III)</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Michael F. Tweedle, Ph.D. (3)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">62</TD>
    <TD>&nbsp;</TD>
    <TD>Director (Class II)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 6%">(1)</TD>
    <TD STYLE="width: 90%">Our certificate of incorporation provides for the&nbsp;division of the Board into three classes, Class I, Class II and Class III, as nearly equal in size as possible with staggered three-year terms.&nbsp; At each annual meeting of our stockholders, the terms of one such class expires.&nbsp; Terms of the Class II directors are to expire at our next annual meeting, or such later time at which their respective successors are duly elected and qualified.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(2)</TD>
    <TD>Member of the nominating and corporate governance committee.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(3)</TD>
    <TD>Member of the compensation committee.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(4)</TD>
    <TD>Member of the audit committee.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our executive officers are appointed by, and serve at the discretion
of, our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Stephen A. Hill</B>.&nbsp; Dr. Hill was elected the chairman
of the board of directors of Novelos in September 2007. Dr Hill was appointed the President and CEO of Targacept Inc. in November
2012, effective December 1, 2012. Dr. Hill was the President and CEO of 21CB, a nonprofit initiative of UPMC designed to provide
the United States government with a domestic solution for its biodefense and infectious disease biologics portfolio, from March
2011 until December 2011.&nbsp; Dr. Hill served as the President and Chief Executive Officer of Solvay Pharmaceuticals, Inc. from
April 2008 until its acquisition by Abbott Laboratories in 2010.&nbsp; Prior to joining Solvay, Dr. Hill had served as ArQule's
President and Chief Executive Officer since April 1999.&nbsp; Prior to his tenure at ArQule, Dr. Hill was the Head of Global Drug
Development at F. Hoffmann-La Roche Ltd. from 1997 to 1999.&nbsp; Dr. Hill joined Roche in 1989 as Medical Adviser to Roche Products
in the United Kingdom.&nbsp; He held several senior positions at Roche, including Medical Director where he was responsible for
clinical trials of compounds across a broad range of therapeutic areas, including CNS, HIV, cardiovascular, metabolic and oncology
products.&nbsp; Subsequently, he served as Head of International Drug Regulatory Affairs at Roche headquarters in Basel, Switzerland,
where he led the regulatory submissions for seven major new chemical entities.&nbsp; Dr. Hill also was a member of Roche's Portfolio
Management, Research, Development and Pharmaceutical Division Executive Boards.&nbsp; Prior to Roche, Dr. Hill served seven years
with the National Health Service in the United Kingdom in General and Orthopedic Surgery.&nbsp; Dr. Hill has served as the chairman
of the board of directors of Audeo Oncology, Inc. since June 2012. Dr. Hill is a Fellow of the Royal College of Surgeons of England
and holds his scientific and medical degrees from St. Catherine's College at Oxford University. Dr. Hill&rsquo;s extensive experience
in a broad range of senior management positions with companies in the life sciences sector make him a highly qualified member of
our board of directors.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Harry S. Palmin</B>.&nbsp; &nbsp;Mr. Palmin has served as
president and a director of Novelos since 1998 and as its chief executive officer since January 2005. From 1998 to September 2005,
he served as our acting chief financial officer. From 1996 to 1998, he was a vice president at Lehman Brothers and from 1993 to
1996, he was an associate at Morgan Stanley. Mr. Palmin earned a B.A. in economics and business and a M.A. in international economics
and finance from the International Business School at Brandeis University. He has also studied at the London School of Economics
and the Copenhagen Business School. Mr. Palmin&rsquo;s experience managing the funding and development of our product candidates
for 14 years and his knowledge of capital markets are strong qualifications to serve on the Board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>J. Patrick Genn</B>. Mr. Genn was appointed our vice president
of investor relations in December 2011. He has 28 years of senior management experience in finance, banking and investment management.
Mr. Genn was previously President of Continuum Investment Holdings, Inc. from 2006 through mid-2010 while serving on the board
of directors of several biotech and technology companies including Cellectar, Inc. From 2001 through 2005, he was an advisor and
consultant to several companies including Carmel Valley Ventures and Continuum Investment Partners. Mr. Genn held several senior
management positions at Wells Fargo between 1987 and 2001. He was a member of the senior management team that launched its mortgage
lending division in 1987 and its premier banking division in 1993. He was also a member of the core mergers and acquisitions integration
team and managed private client services in San Diego, CA. Mr. Genn received a B.B.A. in Marketing and a M.S. in Product Management
from the University of Wisconsin-Madison.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Kimberly A. Hawkins.&nbsp;</B> Ms. Hawkins has served as
our vice president of clinical development since November 2010 and, prior to that, as our director of clinical development beginning
in May 2006. She has worked for 18 years in the biopharmaceutical industry managing and overseeing clinical operations for multiple
global Phase 1, 2 and 3 clinical studies. From 2001 to 2006, Ms. Hawkins was a senior manager in clinical development at Antigenics,
Inc., a cancer biotechnology company where she managed multiple Phase 1 and 2 studies. From 1994 to 2001 she was employed by Genzyme
Corporation, Center for Clinical Research Practice, where she held the positions of clinical research associate, trainer of good
clinical practice and study coordinator. From 1993 to 1994 she held the position of clinical research coordinator at Boston Medical
Center. Ms. Hawkins has a B.S. degree in Human Physiology from Boston University and a Master&rsquo;s Degree in Public Health from
Boston University School of Public Health.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Christopher J. Pazoles</B>.&nbsp; Dr. Pazoles has served
as our vice president of research and development since July 2005. He has 30 years of biopharmaceutical research and development
and senior management experience. From May 2004 to June 2005, he held a senior research and development position at the Abbott
Bioresearch Center, a division of Abbott Laboratories. From October 2002 to January 2004, he served as chief operating officer
and head of research and development at ALS Therapy Development Foundation. From 1994 to October 2002, Dr. Pazoles served as vice
president of research for Phytera, Inc. From 1981 to 1994, he served as a researcher and senior manager with Pfizer. Dr. Pazoles
holds a Ph.D. in microbiology from the University of Notre Dame.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Joanne M. Protano</B>.&nbsp; Ms. Protano was appointed our
vice president, chief financial and accounting officer, and treasurer in December 2007. She has 20 years of finance and senior
management experience. She previously held the position of Senior Director of Finance and Controller of Novelos from June 2006
to December 2007. From 1996 to 2006, she held various management and senior management positions with Ascential Software, Inc.
and predecessor companies including Assistant Controller, Reporting for Ascential Software, Vice President and Chief Financial
Officer for the Ascential Software Division of Informix Software, Inc. and Corporate Controller of Ardent Software, Inc. Prior
to her tenure in the technology industry, from 1990 to 1996 she was employed by Deloitte and Touche LLP as an audit manager, serving
technology and healthcare clients. Ms. Protano received a B.S. in business administration from Bryant College.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B>Jamey P. Weichert.&nbsp;</B> Dr. Weichert was the primary
founder of Cellectar and served as Cellectar&rsquo;s Chairman and Chief Scientific Officer beginning in 2002. He was appointed
as the Chief Scientific Officer and a director of Novelos at the time of the Acquisition. Dr. Weichert is an Associate Professor
of the Departments of Radiology, Medical Physics, Pharmaceutics and member of the Comprehensive Cancer Center at the University
of Wisconsin, Madison. He has a bachelor&rsquo;s degree in chemistry from the University of Minnesota and a doctorate in medicinal
chemistry from U. Mich. His research interests include the design, synthesis and evaluation of biomimetic CT and MRI imaging agents
and diapeutic radiopharmaceuticals. He has been involved in molecularly targeted imaging agent development his entire professional
career and has developed or co-developed several imaging agents nearing clinical trial status. Dr. Weichert serves or has served
on the editorial boards of numerous scientific journals and has authored more than 40 peer reviewed publications and 150 abstracts.
He also has 20 issued or pending patents related to drug delivery, imaging and contrast agent development. Dr. Weichert&rsquo;s
experience founding and managing the development of our Cellectar product candidates and his knowledge of radiation technology
are strong qualifications to serve on the Board.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Thomas
Rockwell Mackie.&nbsp;</B> &nbsp;Dr. Mackie became a director of Novelos at the time of Novelos&rsquo;s 2011 business combination
with Cellectar, Inc. (the &ldquo;Acquisition&rdquo;). He had served as a director of Cellectar since December 2006. In 1997, he
co-founded TomoTherapy Incorporated, a maker of advanced radiation therapy solutions for the treatment of cancer and other diseases
and served as Chairman of its board of directors from 1999 until its acquisition by Accuray Incorporated in June 2011. Dr. Mackie
also served as President of TomoTherapy Inc. from 1997 until 1999 and as Treasurer from 1997 until 2000. From 2010 to the present,
he has served as the Director, Medical Device Focus Area of the Morgridge Institute for Research at the University of Wisconsin,
Madison and, since 1987, Dr. Mackie has been a professor in the departments of Medical Physics and Human Oncology at the University
of Wisconsin, where he established the TomoTherapy research program. Dr. Mackie also co-founded Geometrics Corporation (now merged
with ADAC Corp.), which developed a radiotherapy treatment planning system. Dr. Mackie currently serves as a director of Shine
Medical Technologies and Bioionix Inc. and served on the management committee of Wisconsin Investment Partners from 2006 to 2009.
Dr. Mackie has a B.Sc. in Physics from the University of Saskatchewan and a Ph.D. in Physics from the University of Alberta in
Edmonton. Dr. Mackie&rsquo;s qualifications to serve on the Board include his extensive senior management experience with radiation
technology companies.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>James S. Manuso</B>.&nbsp; Dr. Manuso has served as a director
of Novelos since August 2007. Since January 2005, Dr. Manuso has served as Chairman and Chief Executive Officer of SuperGen, Inc.
(now renamed Astex Pharmaceuticals, Inc.), served as President of SuperGen from January 2005 through July 2011 and has served as
a director of SuperGen since February 2001. Dr. Manuso is co-founder and former president and chief executive officer of Galenica
Pharmaceuticals, Inc. Dr. Manuso co-founded and, from 1998 to 2002, was general partner of PrimeTech Partners, a biotechnology
venture management partnership, and Managing General Partner of The Channel Group LLC, an international life sciences corporate
advisory firm. He was also president of Manuso, Alexander &amp; Associates, Inc., management consultants and financial advisors
to pharmaceutical and biotechnology companies. Dr. Manuso was a vice president and Director of Health Care Planning and Development
for The Equitable Companies (now Group Axa), where he also served as Acting Medical Director. He currently serves on the board
of directors of the Biotechnology Industry Organization (BIO) and its Health Section Governing Board and serves on the board of
privately-held KineMed, Inc. He previously served on the boards of Merrion Pharmaceuticals Ltd. (Dublin, Ireland), Inflazyme Pharmaceuticals,
Inc. (Vancouver, Canada), Symbiontics, Inc., (ZyStor, Inc., sold to BioMarin), Quark Biotech, Inc., Galenica Pharmaceuticals, Inc.,
Supratek Pharma, Inc., and EuroGen, Ltd. (London, UK). Dr. Manuso earned a B.A. in economics and chemistry from New York University,
a Ph.D. in experimental psychophysiology from the Graduate Faculty of The New School University, a certificate in health systems
management from Harvard Business School, and an executive M.B.A. from Columbia Business School. Dr. Manuso&rsquo;s experience founding,
leading and serving as a director for pharmaceutical companies makes him a highly qualified member of the Board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>John Neis.&nbsp;</B> Mr. Neis became a director of Novelos
at the time of the Acquisition. He had served as director of Cellectar since February 2008. Mr. Neis has been Managing Director
of Venture Investors LLC since 1986 and heads the firm&rsquo;s Healthcare practice. He has over 23 years&rsquo; experience in the
venture capital industry and has served on the Board of Directors of numerous companies from formation through initial public offering
or sale. Mr. Neis currently serves on the boards of directors of Virent Energy Systems, Deltanoid Pharmaceuticals, Inviragen, Inc.
and Mithridion, Inc. He is a former member of the Boards of Directors of several firms including TomoTherapy, Third Wave Technologies
(acquired by Hologic) and NimbleGen Systems (acquired by Roche). Mr. Neis was appointed to the Board of the Wisconsin Technology
Council and he also serves on the advisory boards for the Weinert Applied Ventures Program and Tandem Press at the University of
Wisconsin - Madison. Mr. Neis has a B.S. in Finance from the University of Utah, and a M.S. in Marketing and Finance from the University
of Wisconsin, Madison. He is a Chartered Financial Analyst. Mr. Neis&rsquo; extensive experience leading emerging companies makes
him a highly qualified member of the Board.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>John E. Niederhuber. </B> Dr. Niederhuber became a director
of Novelos at the time of the Acquisition. From August 2010 to the present, Dr. Niederhuber has served as executive vice president
of Inova Health System and chief executive officer of the Inova Translational Medicine Institute. Since July 2011, he has been
an adjunct Professor of Oncology at the Johns Hopkins University School of Medicine and Deputy Director of The Johns Hopkins Clinical
Research Network. Since August 2010, Dr. Niederhuber has served as a Director on the Emergent Biosolutions Board. Dr. Niederhuber
served as Director of the National Cancer Institute (NCI) from 2005 to 2010. He has also served as NCI's Chief Operating Officer
and Deputy Director for Translational and Clinical Sciences. Dr. Niederhuber served as Chair of the National Cancer Advisory Board
(NCAB) from 2002 to 2004. In addition to his management and advisory roles, Dr. Niederhuber has remained involved in research,
through his laboratory on the National Institutes of Health (NIH) campus. Under his leadership, the Tumor and Stem Cell Biology
Section, which is a part of the Cell and Cancer Biology Branch of NCI's Center for Cancer Research, is studying tissue stem cells
as the cell-of-origin for cancer. Dr. Niederhuber also holds a clinical appointment on the NIH Clinical Center Medical Staff. As
a surgeon, Dr. Niederhuber's clinical emphasis is on gastrointestinal cancer, hepatobiliary (liver, bile duct, and gall bladder)
cancer, and breast cancer. He is recognized for his pioneering work in hepatic artery infusion chemotherapy and was the first to
demonstrate the feasibility of totally implantable vascular access devices. Dr. Niederhuber is a graduate of Bethany College in
West Virginia and the Ohio State University School of Medicine. He was an NIH Academic Trainee in Surgery at the University of
Michigan from 1969 to 1970 and was a Visiting Fellow in the Division of Immunology at The Karolinska Institute in Stockholm, Sweden
from 1970 to 1971. He completed his training in surgery at the University of Michigan in 1973 and was a member of the faculty of
the University of Michigan from 1973 to 1987, being promoted to Professor of Microbiology/Immunology and Professor of Surgery in
1980. During 1986 and 1987, he was Visiting Professor in the Department of Molecular Biology and Genetics at The Johns Hopkins
University School of Medicine in Baltimore, MD. Dr. Niederhuber&rsquo;s qualifications to serve on the Board include his extensive
experience with cancer research.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Howard M. Schneider</B> .&nbsp; Mr. Schneider has served
as a director of Novelos since February 2005. Mr. Schneider is currently retired. From January to December 2003, he served as chief
executive officer of Metrosoft, Inc., and had been an advisor to such company from July to December 2002. From May 2000 to May
2001, he served as president of Wofex Brokerage, Inc. and from 1965 to 1999, he served as an executive at Bankers Trust Company
holding a variety of positions in the commercial banking and investment banking businesses. Mr. Schneider received a B.A. in economics
from Harvard College and a M.B.A. from New York University. Mr. Schneider&rsquo;s extensive senior management experience in the
financial sector makes him a highly qualified member of our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Michael F. Tweedle.&nbsp; &nbsp;</B> Dr. Tweedle became a
director of Novelos at the time of the Acquisition. Since May 2009 he has served as Professor and Stefanie Spielman Chair in Cancer
Imaging in Radiology and the James Comprehensive Cancer Center of Ohio State University, Director of the Wright Center Molecular
Imaging (MI) Agents Laboratory of Ohio State University, and since May 2010, has had an adjunct appointment in the Chemistry Department
of Ohio State University. Prior to joining Ohio State University, his academic appointments included Adjunct Associate Professor
at University of Pennsylvania and the Science Advisory Board of New York University. Dr. Tweedle was the President of Bracco Research
USA Inc. from 1995 to 2009 where he was the lead scientist and chief executive for creation of new molecular imaging pharmaceuticals.
His industrial experience in drug discovery research also includes appointments at the Diagnostics Drug Discovery Division at Bristol-Myers
Squibb, New England Nuclear, NEN/DuPont Pharmaceuticals, and The Squibb Institute for Medical Research. He has invented and led
translational development of diagnostic imaging pharmaceuticals for nuclear medicine, one of the first gadolinium-based MRI agents
(ProHance TM), X ray, Optical and US agents, and a radiotheranostic. In 2005 he won the Harry Fisher Medal. Dr. Tweedle holds a
B.A from Knox College and a Ph.D. from Rice University and was a Stanford University NRS Fellow. Dr. Tweedle&rsquo;s qualifications
to serve on the Board of directors include his extensive experience with radiation and cancer research and drug discovery.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Code of Ethics</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The board of directors has adopted a Code of Ethics applicable
to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal
accounting officer. A copy of the Code of Ethics is available at our website www.novelos.com.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Compensation of Directors and Executive
Officers</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Summary Compensation:</I> The following table sets forth
certain information about the compensation we paid or accrued with respect to our principal executive officer and our two most
highly compensated executive officers (other than our chief executive officer) who served as executive officers during the year
ended December 31, 2011 and whose annual compensation exceeded $100,000 for that year.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Other annual compensation in the form of perquisites and other
personal benefits has been omitted as the aggregate amount of those perquisites and other personal benefits was less than $10,000
for each person listed.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: black 1pt solid; font-weight: bold"><B>Name&nbsp;and&nbsp;Principal&nbsp;Position</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Year</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Salary<BR>
($)</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Bonus<BR>
($)<BR>
(1)</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Option<BR>
Awards&nbsp;($)<BR>
(2)</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>All&nbsp;other<BR>
compensation<BR>
($)</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Total&nbsp;($)</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 35%">Harry S. Palmin (3)(4)</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 5%; text-align: center">2011</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">$</TD>
    <TD STYLE="width: 7%; text-align: right">270,000</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">$</TD>
    <TD STYLE="width: 7%; text-align: right">0</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 2%">$</TD>
    <TD STYLE="width: 8%; text-align: right">917,570</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 6%">$</TD>
    <TD STYLE="width: 7%; text-align: right">0</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">$</TD>
    <TD STYLE="width: 7%; text-align: right">1,187,570</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">President, Chief Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">2010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">270,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">270,000</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Christopher J. Pazoles (3)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">246,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">271,470</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">517,720</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: bottom; padding-left: 9pt">Senior Vice President of Research and Development</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">2010</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">$</TD>
    <TD STYLE="vertical-align: top; text-align: right">235,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">$</TD>
    <TD STYLE="vertical-align: top; text-align: right">39,167</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">$</TD>
    <TD STYLE="vertical-align: top; text-align: right">0</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">$</TD>
    <TD STYLE="vertical-align: top; text-align: right">0</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">$</TD>
    <TD STYLE="vertical-align: top; text-align: right">274,167</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Joanne M. Protano (3)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">190,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">203,603</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">393,603</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: bottom; padding-left: 9pt">Vice President, Chief Financial&nbsp;Officer and Treasurer</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: center">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">2010</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">$</TD>
    <TD STYLE="vertical-align: top; text-align: right">175,000</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">$</TD>
    <TD STYLE="vertical-align: top; text-align: right">29,167</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">$</TD>
    <TD STYLE="vertical-align: top; text-align: right">0</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">$</TD>
    <TD STYLE="vertical-align: top; text-align: right">0</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">$</TD>
    <TD STYLE="vertical-align: top; text-align: right">204,167</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 4%">(1)&nbsp;</TD>
    <TD STYLE="width: 93%">Bonus amounts for Dr. Pazoles and Ms. Protano in 2010 represent retention bonuses paid as of October 1, 2010 pursuant to their respective retention agreements dated May 14, 2010.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(2)&nbsp;</TD>
    <TD>The amounts shown in this column represent the aggregate grant-date fair value of each stock award, without regard to the portion of the award that vested during the respective year and was estimated on the grant date using the Black-Scholes option-pricing model. There were no option grants during 2010.&nbsp; The compensation expense associated with the vested portion of the option grants as recorded in our statement of operations for the year ended December 31, 2011 was $123,718 for Mr. Palmin, $48,547 for Dr. Pazoles and $36,411 for Ms. Protano.&nbsp;&nbsp; The unrecorded compensation expense associated with the unvested portion of the option grants is $793,852 for Mr. Palmin, $222,923 for Dr. Pazoles and $167,192 for Ms. Protano. See Note 10 to the financial statements for a description of the assumptions used in estimating the fair value of stock options and recognition of compensation expense.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 4%">(3)</TD>
    <TD STYLE="width: 93%">Effective January 1, 2012, all salaries were increased by 2%, including the salaries of the named executive officers.&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>(4)</TD>
    <TD>The aggregate grant-date fair value for option awards granted to Mr. Palmin during 2011 excludes $772,305 related to performance-based awards because such awards with an aggregate value of $381,277 were forfeited during 2011 and it is not yet probable that performance awards with a grant-date fair value totaling $391,028 will vest.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Employment Agreements</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On January 31, 2006, we entered into an employment agreement
with Harry Palmin effective January 1, 2006, whereby he agreed to serve as our president and chief executive officer for an initial
term of two years at an annual salary of $225,000.&nbsp; The agreement is automatically renewed for successive one-year terms unless
notice of termination is provided by either party at least 90 days prior to the end of such term.&nbsp; The agreement was renewed
for an additional one-year term on January 1, 2011 in accordance with its terms.&nbsp; On December 17, 2007, the Board of Directors
approved an increase in Mr. Palmin&rsquo;s annual salary to $270,000 effective January 1, 2008.&nbsp; He is eligible to receive
an annual cash bonus at the discretion of the compensation committee and he is entitled to participate in our employee fringe benefit
plans or programs generally available to our senior executives.&nbsp; The agreement provides that in the event that we terminate
Mr. Palmin without cause (as defined below)&nbsp;or he resigns for good reason (as defined below), we will (i) pay Mr. Palmin his
pro rata share of the average of his annual bonus paid during the two fiscal years preceding his termination; (ii) pay Mr. Palmin
his base salary for 11 months after the date of termination; (iii) continue to provide him benefits for 11 months after the date
of termination; and (iv) fifty percent of his unvested stock options will vest.&nbsp; The agreement provides for the vesting of
unvested options upon a Change of Control, defined as the sale of all or substantially all of the assets or issued and outstanding
capital stock of the Company, (ii) merger or consolidation involving the Company in which stockholders of the Company immediately
before such merger or consolidation do not own immediately after such merger or consolidation capital stock or other equity interests
of the surviving corporation or entity representing more than fifty percent (50%) in voting power of capital stock or other equity
interests of such surviving corporation or entity outstanding immediately after such merger or consolidation, or (iii) a change,
without the approval of the board of directors, in the composition of the board of directors such that directors who were serving
as of the date of the agreement cease to constitute a majority of the board of directors. The agreement also contains a non-compete
provision, which prohibits Mr. Palmin from competing with us for one year after termination of his employment with us.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&ldquo;Cause&rdquo; means (i) gross neglect of duties for which
employed; (ii) committing fraud, misappropriation or embezzlement in the performance of duties as our employee; (iii) conviction
or guilty or nolo plea of a felony or misdemeanor involving moral turpitude; or (iv) willfully engaging in conduct materially injurious
to us or violating a covenant contained in the employment agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&ldquo;Good Reason&rdquo; means (i) the failure of our board
of directors to elect Mr. Palmin to the offices of president and chief executive officer; (ii) the failure by our stockholders
to continue to elect Mr. Palmin to our board of directors; (iii) our failure to pay Mr. Palmin the compensation provided for in
the employment agreement, except for across-the-board cuts applicable to all of our officers on an equal percentage basis, provided
that such reduction is approved by our board of directors; (iv) relocation of Mr. Palmin&rsquo;s principal place of employment
to a location beyond 50 miles of Newton, Massachusetts; (v) a reduction of base salary or material reduction in other benefits
or any material change by us to Mr. Palmin&rsquo;s function, duties, authority, or responsibilities, which change would cause Mr.
Palmin&rsquo;s position with us to become one of lesser responsibility, importance, or scope; and (vi) our material breach of any
of the other provisions of the employment agreement.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On June 1, 2011, the employment agreement between the Company
and Harry Palmin dated January 31, 2006 was amended to remove the obligation of the Company to continue to pay Mr. Palmin&rsquo;s
salary and benefits for a period of 11 months following termination by the Company without Cause or termination by Mr. Palmin with
Good Reason.&nbsp; The Company may elect that the obligation of Mr. Palmin not to compete with the Company survive for a period
of one year from his termination, provided however that Mr. Palmin would continue to receive his base salary during that one-year
noncompetition period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We had entered into retention agreements with each of our four
vice presidents.&nbsp; The agreements provided for the lump-sum payment of six months&rsquo; base salary and benefits to each such
officer following a termination without cause or a resignation with good reason occurring on or before November 14, 2011.&nbsp;
Certain of the agreements provided that if the executives were employed by us as of October 1, 2010, they would receive a payment
of two months&rsquo; base salary as a retention bonus on that date. The retention bonus was paid in October 2010 and would have
been deducted from the severance amounts that became payable upon a subsequent involuntary termination.&nbsp; The retention agreements
expired in November 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Outstanding Equity Awards at Fiscal Year-End</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth certain
information regarding stock options held as of December 31, 2011 by the executive officers named in the summary compensation table.
There were no option grants during 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="17" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Individual&nbsp;Grants</B></TD>
    <TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold"><B>Name</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Year<BR>
of&nbsp;Grant</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Number&nbsp;of<BR>
securities<BR>
underlying<BR>
unexercised<BR>
options<BR>
(# exercisable)</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Number&nbsp;of<BR>
securities<BR>
underlying<BR>
unexercised<BR>
options<BR>
(# unexercisable)</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Exercise<BR>
or<BR>
base&nbsp;price<BR>
($/share)</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Expiration<BR>
date</B></TD>
    <TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 23%">Harry S. Palmin</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 8%; text-align: right">2011</TD>
    <TD STYLE="width: 3%">(1)</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 11%; text-align: right">&mdash;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 12%; text-align: right">335,100</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 2%">$</TD>
    <TD STYLE="width: 10%; text-align: right">0.45</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 12%; text-align: right">12/16/2021</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2011</TD>
    <TD>(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">335,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">5/18/2021</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2011</TD>
    <TD>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">83,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">586,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">5/18/2021</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2009</TD>
    <TD>(3)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,090</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">543</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">114.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">12/8/2019</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2008</TD>
    <TD>(4)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2,614</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">65.79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">12/15/2018</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2007</TD>
    <TD>(4)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">69.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">12/17/2017</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2006</TD>
    <TD>(4)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">980</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">139.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">12/11/2016</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2005</TD>
    <TD>(5)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,633</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1.53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1/31/2015</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2005</TD>
    <TD>(5)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">980</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1.53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">3/31/2015</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2004</TD>
    <TD>(6)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2,156</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1.53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">4/1/2014</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2003</TD>
    <TD>(7)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">107.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">8/1/2013</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Christopher J. Pazoles</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2011</TD>
    <TD>(3)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">0.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">12/16/2021</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2011</TD>
    <TD>(3)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">33,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">166,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">5/18/2021</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2009</TD>
    <TD>(3)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">871</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">436</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">114.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">12/8/2019</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2008</TD>
    <TD>(4)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">65.79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">12/15/2018</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2007</TD>
    <TD>(4)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">816</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">69.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">12/17/2017</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2006</TD>
    <TD>(4)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">139.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">12/11/2016</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2005</TD>
    <TD>(8)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1.53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">4/8/2015</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Joanne M. Protano</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2011</TD>
    <TD>(3)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">75,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">0.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">12/16/2021</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2011</TD>
    <TD>(3)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">24,999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">125,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">5/18/2021</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2009</TD>
    <TD>(3)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">871</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">436</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">114.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">12/8/2019</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2008</TD>
    <TD>(4)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">65.79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">12/15/2018</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2007</TD>
    <TD>(4)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">69.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">12/17/2017</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2006</TD>
    <TD>(4)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">139.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">12/11/2016</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2006</TD>
    <TD>(4)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">392</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">139.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">6/16/2016</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%">(1)</TD>
    <TD STYLE="width: 94%">These shares vest quarterly in increments of one-sixteenth over four years from the date of grant.&nbsp; The exercise price equals the closing price on the date of grant.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>(2)</TD>
    <TD>These shares vest based on the achievement of specified milestones.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>(3)</TD>
    <TD>These shares vest quarterly in increments of one-twelfth over three years from the date of grant.&nbsp; The exercise price equals the closing price on the date of grant.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>(4)</TD>
    <TD>These shares vest annually in increments of one-third over three years from the date of grant.&nbsp; The exercise price equals the closing price on the date of grant.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>(5)</TD>
    <TD>These shares initially vested over a two-year period.&nbsp; Pursuant to their terms, the shares fully vested upon the completion of a non-bridge loan financing, which occurred in the second quarter of 2005.&nbsp; The exercise price equals the fair market value of our common stock on the date of grant as determined by our board of directors.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>(6)</TD>
    <TD>These shares initially vested one-third upon grant and one-third annually over the following two years. Pursuant to their terms, one additional year of vesting occurred upon the completion of a non-bridge loan financing, which occurred in the second quarter of 2005.&nbsp; The exercise price equals the fair market value of our common stock on the date of grant as determined by our board of directors.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 6%">(7)</TD>
    <TD STYLE="width: 94%">These shares vest annually in increments of one-third over three years from the date of grant. The exercise price equals the fair market value of our common stock on the date of grant as determined by our board of directors.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>(8)</TD>
    <TD>These shares vested in increments of one-fourth every six months over two years from the date of grant. The exercise price equals the fair market value of our common stock on the date of grant as determined by our board of directors.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Options granted pursuant to the 2006 Stock Incentive Plan will
become fully vested upon a termination event within one year following a change in control, as defined.&nbsp; A termination event
is defined as either termination of employment other than for cause or constructive termination resulting from a significant reduction
in either the nature or scope of duties and responsibilities, a reduction in compensation or a required relocation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Director Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Summary Compensation:&nbsp;&nbsp;</I> The following table
sets forth certain information about the compensation we paid or accrued with respect to our directors who served during the year
ended December 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: black 1pt solid; font-weight: bold"><B>Name&nbsp;and&nbsp;Principal&nbsp;Position</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Year</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Director<BR>
Fees<BR>
($)&nbsp;(2)</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Option<BR>
Awards<BR>
($)&nbsp;(3)</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>All&nbsp;other<BR>
compensation<BR>
($)</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Total&nbsp;($)</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 40%">Stephen A. Hill, Chairman (1)</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: center">2011</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">$</TD>
    <TD STYLE="width: 8%; text-align: right">46,250</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">$</TD>
    <TD STYLE="width: 8%; text-align: right">201,368</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 6%">$</TD>
    <TD STYLE="width: 8%; text-align: right">&mdash;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">$</TD>
    <TD STYLE="width: 8%; text-align: right">247,618</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>T. Rockwell Mackie (1)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">25,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">134,245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">159,745</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>James S. Manuso, Director (1)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">27,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">134,245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">161,745</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>John Neis, Director (1)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">24,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">134,245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">158,995</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>John E. Niederhuber, Director (1)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">24,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">134,245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">158,245</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Howard M. Schneider, Director (1)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">40,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">134,245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">174,745</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Michael F. Tweedle, Director (1)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">21,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">134,245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&mdash;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">155,995</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

<!-- Field: Rule-Page --><DIV ALIGN="CENTER"><DIV STYLE="font-size: 1pt; border-top: Black 1pt solid; width: 25%">&nbsp;</DIV></DIV><!-- Field: /Rule-Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 5%">(1)</TD>
    <TD STYLE="width: 95%">As of December 31, 2011, outstanding options to purchase common stock held by directors were as follows:&nbsp;&nbsp;Dr. Hill 227,285; Dr. Mackie 150,000; Dr. Manuso 151,958; Mr. Neis 150,000; Dr. Niederhuber 150,000; Mr. Schneider 151,629; Dr. Tweedle 150,000.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>(2)</TD>
    <TD>Director fees include all fees earned for director services including quarterly fees, meeting fees and committee chairman fees.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>(3)</TD>
    <TD>The amounts shown in this column represent the aggregate grant-date fair value of the stock awards during the year, without regard to the portion of the awards that vested during the respective year and was estimated on the grant date using the Black-Scholes option-pricing model. The compensation expense associated with&nbsp; the vested portion of the option awards as recorded in our statement of operations for the year ended December 31, 2011 was $54,005 for&nbsp; Dr. Hill and $36,001 each for Dr. Mackie, Dr. Manuso,&nbsp; Mr. Neis,&nbsp; Dr. Niederhuber, Mr. Schneider&nbsp; and&nbsp; Dr. Tweedle.&nbsp; The unrecorded compensation expense associated with the unvested portion of the option awards was $147,363 for Dr. Hill and $98,244 each for Dr. Mackie, Dr. Manuso, Mr. Neis, Dr. Niederhuber, Mr. Schneider and Dr. Tweedle. The fair value of each stock award was estimated on the grant date using the Black-Scholes option-pricing model. See Note 10 to the financial statements for a description of the assumptions used in estimating the fair value of stock options and recognition of compensation expense.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During 2011, we paid our non-employee directors a cash fee of
$5,000 per quarter.&nbsp;&nbsp;The non-employee directors also received a fee of $1,500 for any board or committee meeting attended
and $750 for each telephonic board or committee meeting in which the director participated.&nbsp;&nbsp;We also paid our chairman
an additional annual fee in the amount of $15,000, our non-employee director who serves as the chair of the audit committee an
additional annual fee of $10,000 and our non-employee directors who served as the chairman of the compensation and the nominating
and corporate governance committees an additional annual fee of $5,000.&nbsp;&nbsp;We reimbursed directors for reasonable out-of-pocket
expenses incurred in attending board and committee meetings and undertaking certain matters on our behalf.&nbsp;&nbsp;Directors
who are our employees do not receive separate fees for their services as directors.&nbsp;&nbsp;There has been no change to cash
fees payable to non-employee directors for 2012. &nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITY OWNERSHIP OF CERTAIN</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>BENEFICIAL OWNERS AND MANAGEMENT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">At the close of business on November 16, 2012, there were 46,397,997
shares of our common stock outstanding. The following table provides information regarding beneficial ownership of our common stock
as of November 16, 2012:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 11%">&nbsp;</TD>
    <TD STYLE="width: 4%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 85%">Each person known by us to be the beneficial owner of more than five percent of our common stock;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>Each of our directors;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>Each executive officer named in the summary compensation table; and</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD>All of our current directors and executive officers as a group.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The address of each executive officer and director is c/o Novelos
Therapeutics, Inc., One Gateway Center, Suite 504, Newton, Massachusetts 02458. The persons named in this table have sole voting
and investment power with respect to the shares listed, except as otherwise indicated. In these cases, the information with respect
to voting and investment power has been provided to us by the security holder. The identification of natural persons having voting
or investment power over securities held by a beneficial owner listed in the table below does not constitute an admission of beneficial
ownership of any such natural person. Shares included in the &ldquo;Right to Acquire&rdquo; column consist of shares that may be
purchased through the exercise of options or warrants that are exercisable within 60 days of November 16, 2012<I>.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border-bottom: black 1pt solid; font-weight: bold"><B>Name&nbsp;and&nbsp;Address&nbsp;of&nbsp;Beneficial&nbsp;Owner</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Outstanding</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Right&nbsp;to<BR>
Acquire</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Total</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Percentage</B></TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 46%">Venture Investors LLC (1) <BR>
University Technology Park<BR>
505 S. Rosa Road; Suite 201<BR>
Madison, Wisconsin&nbsp;&nbsp;53719</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 11%; text-align: right">6,174,308</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right">3,470,000</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 11%; text-align: right">9,644,308</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 8%; text-align: right">19.3</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>CLS Capital Holdings Limited (2)<BR>
Bordeaux Court, Les Echelons<BR>
St. Peter Port, Guernsey, GY13DR<BR>
Channel Islands</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">3,819,201</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">3,583,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">7,402,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">14.8</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Greenway Properties Inc. (3)<BR> 725 Heartland Trail, Suite 102<BR> Madison, Wisconsin&nbsp;&nbsp;53707</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">3,637,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,900,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">5,537,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">11.5</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Jamey P. Weichert (4)<BR>
c/o Novelos Therapeutics, Inc.<BR>
3301 Agriculture Drive<BR>
Madison, Wisconsin&nbsp;&nbsp;53716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">4,706,730</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">90,665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">4,797,395</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">10.3</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Fidelity Management and Research Co. (5)<BR>
82 Devonshire Street<BR>
Boston, Massachusetts 02109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">5,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">10.2</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Renova Industries Ltd. (6)</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">2nd Terrace West</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Centreville; P.O. Box N-7755</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Nassau, Bahamas</P></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">3,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">5,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">10.1</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Sabby Management, LLC (7)</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">10 Mountainview Road, Suite 205</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Upper Saddle River, NJ 07458</P></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">2,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">1,250,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">3,750,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">7.9</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Harry S. Palmin</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">3,576</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">266,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">270,025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">*</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Christopher J. Pazoles</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">138,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">138,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">*</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Joanne M. Protano</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">103,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">103,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">*</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Stephen A. Hill</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">152,285</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">152,285</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">*</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Thomas Rockwell Mackie</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">116,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">216,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">*</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>James S. Manuso</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">101,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">101,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">*</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>John Neis (1) (2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">6,174,308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">3,470,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">9,644,308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">19.3</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>John E. Niederhuber</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">*</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Howard M. Schneider</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">101,629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">102,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">*</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Michael F. Tweedle</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">-</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">*</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>All directors and officers as a group (13 persons)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">11,072,041</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">4,968,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">16,040,602</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">31.2</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">(1)</TD>
    <TD STYLE="width: 97%">Ownership consists of shares of common stock held by Venture Investors Early Stage Fund IV Limited Partnership and Advantage Capital Wisconsin Partners I, Limited Partnership.&nbsp; VIESF IV GP LLC is the general partner of Venture Investors Early Stage Fund IV Limited Partnership and Venture Investors LLC is the submanager and special limited partner of Advantage Capital Wisconsin Partners I, Limited Partnership. The investment decisions of VIESF IV GP LLC and Venture Investors LLC are made collectively by six managers, including Mr. Neis.&nbsp; Each such manager and Mr. Neis disclaim such beneficial ownership except to the extent of his pecuniary interest therein.&nbsp; The address of Mr. Neis is c/o Venture Investors LLC, 505 South Rosa Road, #201, Madison, Wisconsin 53719. Shares in the &ldquo;Right to Acquire&rdquo; column consist of the following warrants held by Venture Investors Early Stage Fund IV Limited: warrants to purchase 2,000,000 shares common stock at $0.75 per share, expiring on March 31, 2016, warrants to purchase 1,100,000 shares of common stock at $0.60 per share expiring on December 6, 2016 and warrants to purchase 270,000 shares of common stock at $1.25 per share expiring on June 13, 2017. Shares in the &ldquo;Right to Acquire&rdquo; column also include options to purchase&nbsp;100,000 shares of common stock at exercise prices ranging from $0.45 to $1.40 per share, issued to Mr. Neis.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>(2)</TD>
    <TD>Shares in the &ldquo;Right to Acquire&rdquo; column consist of warrants to purchase 3,333,334 shares of common stock at $0.60 per share expiring on December 6, 2016 and warrants to purchase 250,000 shares of common stock at $1.25 per share expiring on June 13, 2017. Interlock Director Ltd. has sole dispositive and voting power over shares held by CLS Capital Holdings Limited. Interlock Director Ltd. exercises such power through Michael Kupenga and a combination of two directors of Virtus Directors Limited.&nbsp; The Virtus directors consist of the following individuals: David Allison, Roderick Arthur, Nicholas Moss, Trevor Pinchemain, Stephen Kirk, Grada Hek, Martin LePage, Lesley Pinchemain, Cerisse Fisher, Pierre Renier and Jonathan Seymour.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;(3)</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;Shares in the &ldquo;Outstanding&rdquo; column include
        shares held by Jeffery Straubel.&nbsp; Jeffrey Straubel is the President and principal owner of Greenway Properties, Inc. and has
        sole dispositive and voting power over shares held by Greenway Properties, Inc.&nbsp; Shares in the &ldquo;Right to Acquire&rdquo;
        column consist of warrants to purchase 1,000,000 shares common stock at $0.75 per share, expiring on March 31, 2016, warrants to
        purchase 600,000 shares of common stock at $0.60 per share expiring on December 6, 2016 and warrants to purchase 300,000 shares
        of common stock at $1.25 per share expiring on June 13, 2017.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>(4)</TD>
    <TD>Dr. Weichert serves as a director and our Chief Scientific Officer. The shares beneficially owned by him have been included in the total of directors and officers as a group.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>(5)</TD>
    <TD>Consists of shares held by Fidelity Select Portfolios: Biotechnology Portfolio and Fidelity Advisor Series VII: Fidelity Advisor.&nbsp; Dispositive and voting power for the shares is held by the Fidelity Funds Board of Trustees. Shares in the &ldquo;Right to Acquire&rdquo; column consist of warrants to purchase shares of common stock at $0.60 per share expiring on December 6, 2016.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(6)</P></TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Dispositive and voting power for the shares is held by a majority
        vote of the board of directors of Renova Industries, Ltd. consisting of Carl Stadelhofer, Marco Montanari, and Oliver Chaponnier.
        Shares in the &ldquo;Right to Acquire&rdquo; column consist of warrants to purchase 2,000,000 shares of common stock at $1.00 per
        share expiring on January 31, 2013 and warrants to purchase 1,000,000 shares of common stock at $1.25 per share expiring on November
        2, 2017.</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>(7)</TD>
    <TD>Consists of shares held by Sabby Healthcare Volatility Master Fund. Ltd. and Sabby Volatility Warrant Master Fund, Ltd.&nbsp; Shares in the &ldquo;Right to Acquire&rdquo; column include warrants to purchase shares of common stock at $1.25 per share expiring on June 13, 2017. The warrants beneficially owned by Sabby Management LLC provide that the number of shares of common stock to be obtained by each of the holders upon exercise cannot exceed the number of shares that, when combined with all other shares of our common stock and securities beneficially owned by them, would result in them owning more than 9.99% of our outstanding common stock, provided, however that this limitation may be revoked by the stockholder upon 61 days prior notice to us. No warrants to purchase common stock have been omitted from this table as a result of these provisions since the beneficial ownership does not exceed the specified limitation.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We do not have a written policy for the review, approval or
ratification of transactions with related parties or conflicted transactions.&nbsp; When such transactions arise, they are referred
to the Audit Committee for consideration or for referral to the Board of Directors for its consideration.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">One of our directors, John Neis, is a managing director of Venture
Investors LLC, which beneficially owns approximately 19% of our common stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Jamey Weichert, our Chief Scientific Officer and principal founder
of Cellectar, and a director and shareholder of the Company, is a faculty member at the University of Wisconsin-Madison (U. Wisc.).&nbsp;During
the year ended December 31, 2011, we made contributions totaling $206,500 to U. Wisc. for use towards unrestricted research activities.
During the nine months ended September 30, 2012, we made contributions to UW totaling $206,500 for use towards unrestricted research
activities and paid UW $144,044 for costs associated with clinical trial agreements. The Company made contributions to the UW of
$125,000 during the nine months ended September 30, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in"><B>Legacy Compounds &ndash; Transactions and
Litigation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">From its inception through 2010, Novelos was
primarily engaged in the development of certain oxidized glutathione-based compounds for application as therapies for disease,
particularly cancer. These compounds were originally developed in Russia. In June 2000, Novelos acquired commercial rights from
the Russian company (&ldquo;ZAO BAM&rdquo;) which owned the compounds and related Russian patents. In April 2005, Novelos acquired
worldwide rights to the compounds (except for the Russian Federation) in connection with undertaking extensive development activities
in an attempt to secure US Food and Drug Administration (&ldquo;FDA&rdquo;) approval of the compounds as therapies. These development
activities culminated in early 2010 in an unsuccessful Phase 3 clinical trial of an oxidized glutathione compound (NOV-002) as
a therapy for non-small cell lung cancer. The principal equity owner of ZAO BAM, Mark Balazovsky, was a founder of Novelos and
served as a director until November 2006. Pursuant to the April 2005 royalty and technology transfer agreement, Novelos is required
to pay ZAO BAM royalties equal to 1.2% of net sales of oxidized glutathione products and $2,000,000 for each new oxidized glutathione
drug following FDA approval of such drug. In the absence of royalty payments, Novelos is required to pay ZAO BAM 3% of all license
revenues plus 9% of the amount by which Novelos&rsquo; license revenues exceed its total expenses. In 2008, Novelos paid $15,000
to ZAO BAM representing 3% of payment under a foreign license agreement. Novelos is also obligated to pay Oxford Group, Ltd., or
its assignees, a royalty in the amount of 0.8% of our net sales of oxidized glutathione-based products. Simyon Palmin, a founder
of Novelos, a director until August 15, 2008 and the father of Harry Palmin, is president of Oxford Group. At this time, Novelos
does not expect to devote any substantial resources to the further development of its oxidized glutathione compounds.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">After the disclosure of the negative outcome
of the Phase 3 clinical trial in 2010, ZAO BAM claimed that Novelos modified the chemical composition of NOV-002 without prior
notice to or approval from ZAO BAM, constituting a material breach of the June 2000 technology and assignment agreement. In September
2010, Novelos filed a complaint in Massachusetts Superior Court seeking a declaratory judgment by the court that the June 2000
agreement has been entirely superseded by the April 2005 agreement and that the obligations of the June 2000 agreement have been
performed and fully satisfied. ZAO BAM answered the complaint and alleged counterclaims. In August 2011, Novelos filed a motion
for judgment on the pleadings as to the declaratory judgment count and all counts of ZAO BAM&rsquo;s amended counterclaims. On
October 17, 2011, the court ruled in favor of Novelos on each of the declaratory judgment claims and dismissed all counts of ZAO
BAM&rsquo;s counterclaim. Judgment in favor of Novelos was entered on October 20, 2011. On November 14, 2011 ZAO BAM filed a notice
of appeal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Director Independence</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Each member of the Audit Committee, the Compensation Committee
and the Nominating and Corporate Governance Committee and seven of our nine directors meet the independence requirements of the
Nasdaq Stock Market for membership on the committees on which he serves.&nbsp; The board of directors considered the information
included in transactions with related parties as outlined above along with other information the board considered relevant, when
considering the independence of each director. Harry S. Palmin and Jamey P. Weichert are not independent directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PLAN OF DISTRIBUTION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are offering units consisting of up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock,
Class A Warrants to purchase an additional  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock and Class B Warrants to purchase an additional  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common
stock for $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per unit, each unit consisting of one share of common stock,
a Class A Warrant to purchase one share of common stock and a Class B Warrant to purchase one-half a share of common stock for
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per unit, with aggregate gross proceeds of up to $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.&nbsp;&nbsp;
However, there is no minimum offering amount required as a condition to closing and we may sell significantly fewer units in the
offering.&nbsp; The offering will terminate on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
unless the offering is fully subscribed before that date or we decide to terminate the offering prior to that date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In determining the offering price for the units and the exercise
price of the warrants, we will consider a number of factors including, but not limited to, the current market price of our common
stock, trading prices of our common stock over time, the illiquidity and volatility of our common stock, our current financial
condition and the prospects for our future cash flows and earnings, and market and economic conditions at the time of the offering.&nbsp;
Once the offering price is determined, the offering price for the units and the exercise price of the warrants will remain fixed
for the duration of the offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Burrill, which we refer to as the placement agent, has entered
into a placement agency agreement with us in which it has agreed to act as our placement agent in connection with the offering.
The placement agent may engage one or more sub-placement agents or selected dealers to assist with the offering. Among other things,
the placement agent will assist us in identifying and evaluating prospective investors and approach prospective investors regarding
the offering. The placement agent will assist us on a &ldquo;reasonable best efforts&rdquo; basis. The placement agent will have
no obligation to buy any of the securities from us, nor is it required to arrange the purchase or sale of any specific number or
dollar amount of securities. We will enter into a securities purchase agreement directly with each investor in connection with
this offering, which will set forth the terms of the offering, as described in this prospectus, will include customary representations
and warranties regarding the offering, the units to be issued and sold, and our business, and will contain customary conditions
to closing and other customary terms. The placement agent agreement terminates upon the earlier of (1) the closing of the offering
or (2) one hundred and twenty days after the effective date of the agreement provided, that if the registration statement is not
declared effective by the Commission within 100 days of the date of the placement agent agreement and the offering is still being
pursued by the Company, the term shall be extended to 16 business days after the effective date of the registration statement or
such earlier date that the Company abandons the offering. The placement agent agreement further provides that the agreement may
be terminated by Burrill at any time upon ten days&rsquo; prior written notice.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This offering will be made only to persons who qualify as &ldquo;institutional
investors&rdquo; under the securities laws of the state of their residence, or for entities, of their domicile, or to legal entities
to whom offers and sales may be made without qualification or registration of this offering under the securities laws of their
state of domicile. If we make offers or sell to investors in Wisconsin, they must qualify as &ldquo;Accredited Investors&rdquo;
as that term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended, and modified by Section 413
of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have agreed to pay Burrill a placement fee equal to 7% of
the aggregate gross proceeds to us from the sale of the securities in the offering and, subject to compliance with FINRA Rule 5110(f)(2)(D),
a non-accountable expense allowance equal to 1% of the gross proceeds of this offering.&nbsp; We have advanced the sum of $30,000
against the 1% non-accountable expense allowance, which pursuant to FINRA Rule 5110(f)(2)(D) shall be reimbursed to us in the event
that the offering is terminated and to the extent the expenses have not been actually incurred.&nbsp; We estimate total expenses
of this offering, excluding the placement agent fees, will be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.&nbsp;
The following table shows the per share and total fees we will pay to the placement agent assuming the sale of all of the units
offered pursuant to this prospectus.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="CENTER" STYLE="font: 10pt Times New Roman, Times, Serif; width: 40%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 43%">Per unit</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 4%">$</TD>
    <TD STYLE="width: 41%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Total</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition to the cash fees set forth above, we have agreed
to issue to the placement agent warrants to purchase up to an aggregate of 7% of the aggregate number of shares of common stock
sold in this offering (excluding any shares of common stock issuable upon exercise of the warrants).&nbsp; The placement agent
warrants shall have substantially the same terms as the warrants offered by this prospectus, except that the exercise price shall
be 125% of the public offering price per share, or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, and the expiration date shall
be five years from the effective date of the registration statement of which this prospectus forms a part. Pursuant to FINRA Rule
5110(f)(2)(H)(vi) and (vii), the placement agent warrants do not have anti-dilution protections.&nbsp; Pursuant to FINRA Rule 5110(g)(1),
neither the placement agent warrants nor any shares of common stock issued upon exercise of the placement agent warrants may be
sold, transferred, assigned, pledged, or hypothecated, or be subject to any hedging, short sale, derivative, put, or call transaction
that would result in the effective economic disposition of such securities by any person for a period of 180 days immediately following
the date of effectiveness or commencement of sales of this offering, except the transfer of any security: (i) by operation of law
or by reason of reorganization, (ii) to any FINRA member firm participating in the offering and the officers and partners thereof,
if all securities so transferred remain subject to the lock-up restriction described above for the remainder of the time period,
(iii) if the aggregate amount of our securities held by the placement agent or related person does not exceed 1% of the securities
being offered, (iv) that is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no
participating member manages or otherwise directs investments by the fund, and participating members in the aggregate do not own
more than 10% of the equity in the fund, or (v) the exercise or conversion of any security, if all securities received remain subject
to the lock-up restriction set forth above for the remainder of the time period.&nbsp; Because there is no minimum offering amount
required as a condition to closing, the actual total proceeds received by us and total offering commissions and warrants issuable
to the placement agent, if any, are not presently determinable and may be substantially less than the maximum amount set forth
above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have agreed to indemnify the placement agent against certain
liabilities under the Securities Act of 1933, as amended. The placement agent may be deemed to be an underwriter within the meaning
of Section&nbsp;2(a)(11) of the Securities Act and any commissions received by it and any profit realized on the sale of the securities
by it while acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act.&nbsp; The
placement agent would be required to comply with the requirements of the Securities Exchange Act of 1934, as amended, or the Exchange
Act, including without limitation, Regulation M under the Exchange Act.&nbsp; These rules&nbsp;and regulations may limit the timing
of purchases and sales of shares of common stock and warrants to purchase shares of common stock by the placement agent.&nbsp;
Under these rules&nbsp;and regulations, the placement agent many not (i)&nbsp;engage in any stabilization activity in connection
with our securities; and (ii)&nbsp;bid for or purchase any of our securities or attempt to induce any person to purchase an of
our securities, other than as permitted under Regulation M, until they have completed their participation in the distribution.&nbsp;
The placement agent has informed us that it will not engage in overallotment, stabilizing transactions or syndicate covering transactions
in connection with this offering.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DESCRIPTION OF SECURITIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Under our amended and restated certificate of incorporation,
our authorized capital stock consists of 150,000,000 shares of common stock, $0.00001 par value per share, and 7,000 shares of
preferred stock, $0.00001 par value per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our amended and restated certificate of incorporation authorizes
us to issue shares of our preferred stock from time to time in one or more series without stockholder approval.&nbsp; No shares
of preferred stock are outstanding,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">All outstanding shares of our common stock are duly authorized,
validly issued, fully-paid and non-assessable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Common Stock</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Voting.</I> Holders of our common stock are entitled to one
vote per share held of record on all matters to be voted upon by our stockholders. Our common stock does not have cumulative voting
rights. Persons who hold a majority of the outstanding common stock entitled to vote on the election of directors can elect all
of the directors who are eligible for election.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Dividends.</I> Subject to preferences that may be applicable
to the holders of any outstanding shares of our preferred stock, the holders of our common stock are entitled to receive such lawful
dividends as may be declared by our board of directors.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Liquidation and Dissolution.</I> In the event of our liquidation,
dissolution or winding up, and subject to the rights of the holders of any outstanding shares of our preferred stock, the holders
of shares of our common stock will be entitled to receive pro rata all of our remaining assets available for distribution to our
stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Other Rights and Restrictions.</I> Our amended and restated
certificate of incorporation prohibits us from granting preemptive rights to any of our stockholders. All outstanding shares are
fully paid and non-assessable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On June 30, 2011, the Company held a special meeting of stockholders.&nbsp;
At the meeting, the stockholders approved, among other things, separate amendments to the certificate of incorporation that would
effect a reverse split of the Company&rsquo;s common stock within a range of 1:2 to 1:10, and authorized the Company&rsquo;s board
of directors to determine the ratio at which the reverse split will be effected by filing the appropriate amendment to the certificate
of incorporation, or to determine not to proceed with the reverse split at all.&nbsp; The purpose of the proposed reverse split
was to increase the price per share of the Company&rsquo;s common stock in order to exceed the minimum price per share required
to secure a listing on a national securities exchange and was contemplated in connection with the Company&rsquo;s underwritten
public offering that closed on December 6, 2011. The Company did not obtain the NASDAQ listing and did not effect the reverse split
in connection with the offering. While the Company may effect a reverse split at a later date, the Company has no immediate plans
to proceed with the reverse split or a listing on a national securities exchange.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Class A and Class B Warrants to be Issued as Part of this
Offering</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Warrants offered in this offering will be issued in&nbsp;a
form filed as an exhibit to the registration statement of which this prospectus is a part. You should review a copy of the form
of Class A and Class B Warrant for a complete description of the terms and conditions applicable to the Class A and Class B Warrants.
The following is a brief summary of the Class A and Class B Warrants and is subject in all respects to the provisions contained
in the form of warrant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Each Class A Warrant represents the right to purchase one share
of common stock at an exercise price equal to $&nbsp;&nbsp;&nbsp;&nbsp;, subject to adjustment as described below. Each Class A
Warrant may be exercised on or after the applicable closing date of this offering through and including the close of business on
the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;anniversary of the date of issuance. Each Class B Warrant represents the right to
purchase one-half a share of common stock at an exercise price equal to $ &nbsp; , subject to adjustment as described below. Each
Class B Warrant may be exercised on or after the applicable closing date of this offering through and including the close of business
on the &nbsp;&nbsp;&nbsp;day following of the date of issuance. Each Class A and Class B Warrant will have a cashless exercise
right in&nbsp;the event that the shares of common stock underlying such Class A and Class B Warrants are not covered by an effective
registration statement at the time of such exercise.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The exercise price and the number of shares underlying the Class
A and Class B Warrants are subject to appropriate adjustment in the event of stock splits, stock dividends on our common stock,
stock combinations or similar events affecting our common stock. In addition, in the event we consummate any merger, consolidation,
sale or other reorganization event in which our common stock is converted into or exchanged for securities, cash or other property
or we consummate a sale of substantially all of our assets, then following such event, the holders of the Class A and Class B Warrants
will be entitled to receive upon exercise of the Class A and Class B Warrants the kind and amount of securities, cash or other
property which the holders would have received had they exercised the Class A and Class B Warrants immediately prior to such reorganization
event.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">No fractional shares of common stock will be issued in connection
with the exercise of a Class A and Class B Warrant. In lieu of fractional shares, we will pay the holder an amount in cash equal
to the fractional amount multiplied by the market value of a share of common stock. A Class A and Class B Warrant may be transferred
by a holder, upon surrender of the Class A and Class B Warrant, properly endorsed (by the holder executing an assignment in the
form attached to the Class A and Class B Warrant). The Class A and Class B Warrants will not be listed on any securities exchange
or automated quotation system and we do not intend to arrange for any exchange or quotation system to list or quote the Class A
and Class B Warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Anti-Takeover Effect of Certain Charter and By-Law Provisions</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Provisions of our charter and our by-laws could make it more
difficult to acquire us by means of a merger, tender offer, proxy contest, open market purchases, removal of incumbent directors
and otherwise. These provisions, which are summarized below, are expected to discourage types of coercive takeover practices and
inadequate takeover bids and to encourage persons seeking to acquire control of us to first negotiate with us. We believe that
the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal
to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals because negotiation of
these proposals could result in an improvement of their terms.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Authorized but Unissued Stock</I> . We have shares of common
stock and preferred stock available for future issuance, in some cases, without stockholder approval. We may issue these additional
shares for a variety of corporate purposes, including public offerings to raise additional capital, corporate acquisitions, stock
dividends on our capital stock or equity compensation plans.&nbsp; The existence of unissued and unreserved common stock and preferred
stock may enable our board of directors to issue shares to persons friendly to current management or to issue preferred stock with
terms that could render more difficult or discourage a third-party attempt to obtain control of us, thereby protecting the continuity
of our management. In addition, if we issue preferred stock, the issuance could adversely affect the voting power of holders of
common stock and the likelihood that such holders will receive dividend payments and payments upon liquidation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Amendments to by-laws</I>. Our certificate of incorporation
and by-laws authorize the Board to amend, repeal, alter or rescind the by-laws at any time without stockholder approval.&nbsp;
Allowing the Board to amend our by-laws without stockholder approval enhances Board control over our by-laws.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Classification of Board; removal of directors; vacancies.&nbsp;</I>
Our certificate of incorporation provide for the&nbsp; division of the Board into three classes as nearly equal in size as possible
with staggered three-year terms;&nbsp; that directors may be removed only for cause by the affirmative vote of the holders of two-thirds
of our shares of capital stock entitled to vote; and&nbsp; that any vacancy on the Board, however occurring, including a vacancy
resulting from an enlargement of the board, may be filled only by the vote of a majority of the directors then in office.&nbsp;
The limitations on the removal of directors and the filling of vacancies could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from acquiring, control of us. Our certificate of incorporation requires
the affirmative vote of the holders of at least 75% of our shares of capital stock issued and outstanding and entitled to vote
to amend or repeal any of these provisions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Notice Periods for Stockholder Meetings</I>. Our by-laws
provide that for business to be brought by a stockholder before an annual meeting of stockholders, the stockholder must give&nbsp;written
notice to the corporation not less than 90 nor more than 120 days prior to the one year anniversary of the date of the annual meeting
of stockholders of the previous year; provided, however, that in the event that the annual meeting of stockholders is called for
a date that is not within 30 days before or after such anniversary date, notice by the stockholder must be received not later than
the close of business on the tenth day following the day on which the corporation's notice of the date of the&nbsp;meeting is first
given or made to the stockholders or disclosed to the general public, whichever occurs first.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Stockholder action; special meetings</I>.&nbsp; Our certificate
of incorporation provides that stockholder action may not be taken by written action in lieu of a meeting and provides special
meetings of the stockholders may only be called by our president or by our Board. These provisions could have the effect of delaying
until the next stockholders' meeting stockholder actions that are favored by the holders of a majority of our outstanding voting
securities. These provisions may also discourage another person or entity from making a tender offer for our common stock, because
that person or entity, even if it acquired a majority of our outstanding voting securities, would be able to take action as a stockholder
only at a duly called stockholders' meeting, and not by written consent. Our certificate of incorporation requires the affirmative
vote of the holders of at least 75% of our shares of capital stock issued and outstanding and entitled to vote to amend or repeal
the provisions relating to prohibition on action by written consent and the calling of a special meeting of stockholders.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Nominations</I>.&nbsp; Our by-laws provide that nominations
for election of directors may be made only by (i) the Board or a committee appointed by the Board; or (ii) a stockholder entitled
to vote on director election, if the stockholder provides notice to the Secretary of the Corporation presented not less than 90
days nor more than 120 days prior to the anniversary of the last annual meeting (subject to the limited exceptions set forth in
the bylaws). These provisions may deter takeovers by requiring that any stockholder wishing to conduct a proxy contest have its
position solidified well in advance of the meeting at which directors are to be elected and by providing the incumbent Board with
sufficient notice to allow them to put an election strategy in place.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>DISCLOSURE OF COMMISSION POSITION ON</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INDEMNIFICATION FOR SECURITIES ACT LIABILITIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Our charter contains provisions to indemnify our directors and
officers to the maximum extent permitted by Delaware law. We believe that indemnification under our charter covers at least negligence
on the part of an indemnified person. Our charter permits us to advance expenses incurred by an indemnified person in connection
with the defense of any action or proceeding arising out of the person&rsquo;s status or service as our director, officer, employee
or other agent upon an undertaking by the person to repay those advances if it is ultimately determined that the person is not
entitled to indemnification.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the&nbsp;registrant has been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>WHERE YOU CAN FIND MORE INFORMATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We are a reporting company and file annual, quarterly and special
reports, and other information with the Securities and Exchange Commission. Copies of the reports and other information may be
read and copied at the SEC&rsquo;s Public Reference Room at 100 F Street NE, Washington, D.C. 20549. You can request copies of
such documents by writing to the SEC and paying a fee for the copying cost. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a web site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants that file electronically with the SEC.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This prospectus is part of a registration statement on Form
S-1 that we filed with the SEC. Certain information in the registration statement has been omitted from this prospectus in accordance
with the rules and regulations of the SEC. We have also filed exhibits and schedules with the registration statement that are excluded
from this prospectus. For further information you may:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%; font-family: Symbol">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 94%">read a copy of the registration statement, including the exhibits and schedules, without charge at the SEC&rsquo;s Public Reference Room; or</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%; font-family: Symbol">&nbsp;</TD>
    <TD STYLE="width: 3%; font-family: Symbol">&middot;</TD>
    <TD STYLE="width: 94%">obtain a copy from the SEC upon payment of the fees prescribed by the SEC.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>LEGAL MATTERS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The validity of the securities being offered by this prospectus
will be passed upon for us by Foley Hoag LLP, Boston, Massachusetts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXPERTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The audited financial statements of Novelos Therapeutics, Inc.
included in this prospectus and elsewhere in the registration statement have been so included in reliance upon the report of Grant
Thornton LLP, independent registered public accountants, upon the authority of said firm as experts in accounting and auditing
in giving said report.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>GLOSSARY OF CERTAIN SCIENTIFIC TERMS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Akt -</I></B> Akt (also known as Akt/PKB)&nbsp;is an important
cell signaling enzyme (a serine/threonine protein kinase) that plays a key role in multiple cellular processes such as glucose
metabolism, cell proliferation,&nbsp;apoptosis, transcription and cell migration.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Apoptosis -</I></B> A highly regulated, normal cell process
leading to programmed cell death by which organisms can eliminate damaged or aberrant cells.&nbsp; Apoptosis is often abnormally
suppressed in cancer cells, contributing to their uncontrolled proliferation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Caspases -</I></B> Caspases are a family of enzymes (cysteine-aspartic
proteases&nbsp;or&nbsp;cysteine-dependent&nbsp;aspartate-directed proteases)&nbsp;that play essential roles in&nbsp;apoptosis&nbsp;(programmed
cell death),&nbsp;necrosis, and&nbsp;inflammation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Cytotoxic -</I></B> Cytotoxicity is the quality of being
toxic to cells (i.e. cell-killing).&nbsp; Many cancer chemotherapeutic drugs are cytotoxic to cancer cells (and, to some extent,
normal cells) thus resulting in unwanted side-effects e.g. nausea/vomiting, hair loss, suppression of the immune system.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Dosimetry -</I></B> Radiation&nbsp;dosimetry&nbsp;is the
calculation of absorbed dose and optimization of dose delivery in&nbsp;radiation therapy.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Lipid Rafts -</I></B> Specialized regions of the membrane
phospholipid bilayer that contain high concentrations of cholesterol and sphingolipids and serve to organize cell surface and intracellular
signaling molecules (e.g. growth factor and cytokine receptors, the phophatidylinosotol 3-kinase (P13K)/Akt survival pathway).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Radiolabeled -</I></B> Refers to a molecule containing
a radioisotope as a part of its structure.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Radioisotope -</I></B> Also referred to as radioactive
isotopes or radionuclides.&nbsp; These are variants of atoms of particular chemical elements (e.g. iodine) with an unstable nucleus
that can undergo radioactive decay during which ionizing radiation (e.g. gamma rays, subatomic particles) is emitted.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Uptake &ndash;</I></B> An act of taking in or absorbing,
especially into a living organism, tissue or cell.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Xenograft -</I></B> Tissue, organs or cells from an individual
of one species transplanted into or grafted onto an individual of another species.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INDEX TO FINANCIAL STATEMENTS FOR NOVELOS
THERAPEUTICS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR>
    <TD STYLE="vertical-align: bottom; width: 90%">&nbsp;</TD>
    <TD STYLE="vertical-align: top; width: 10%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Page</B></TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt">Report of Independent Registered Public Accounting Firm</TD>
    <TD STYLE="text-align: center">F-2</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt">Consolidated Balance Sheets at September 30, 2012, December 31, 2011 and 2010</TD>
    <TD STYLE="text-align: center">F-3</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt">Consolidated Statements of Operations for the Nine Months Ended September 30, 2012 and 2011, Years Ended December 31, 2011 and 2010, and the Cumulative Development-Stage Period from November 7, 2002 (date of inception) to December 31, 2011</TD>
    <TD STYLE="text-align: center">F-4</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt">Consolidated Statements of Stockholders&rsquo; Equity&nbsp;for the Nine Months Ended September 30, 2012, Years Ended December 31, 2011 and 2010, and&nbsp;the Cumulative Development-Stage Period from November 7, 2002 (date of inception) to December 31, 2011</TD>
    <TD STYLE="text-align: center">F-5</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt">Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011, Years Ended December 31, 2011 and 2010, and the Cumulative Development-Stage Period from November 7, 2002 (date of inception) to December 31, 2011</TD>
    <TD STYLE="text-align: center">F-6</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt; text-indent: -9pt">Notes to Consolidated Financial Statements</TD>
    <TD STYLE="text-align: center">F-7</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">To the Board of Directors and Shareholders</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Novelos Therapeutics, Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have audited the accompanying consolidated balance sheets
of Novelos Therapeutics, Inc. and Subsidiary (a Development Stage Company) (a Delaware corporation) (the Company) as of December
31, 2011 and 2010, and the related consolidated statements of operations, stockholders&rsquo; equity, and cash flows for each of
the two years in the period ended December 31, 2011 and the period from November 7, 2002 (date of inception) through December 31,
2011. These financial statements are the responsibility of the Company&rsquo;s management. Our responsibility is to express an
opinion on these financial statements based on our audits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have,
nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Company&rsquo;s internal control over financial reporting. Accordingly,
we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of Novelos Therapeutics, Inc. and Subsidiary, as of December
31, 2011 and 2010, and the results of their operations and their cash flows for each of the two years in the period ended December
31, 2011 and the period from November 7, 2002 (date of inception) through December 31, 2011, in conformity with accounting principles
generally accepted in the United States of America.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred
losses since its inception and, as of December 31, 2011, had an accumulated deficit of $31,480,426. These conditions, along with
other matters as set forth in Note 1, raise substantial doubt about the Company&rsquo;s ability to continue as a going concern.
Management&rsquo;s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">/s/ Grant Thornton LLP</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Boston, Massachusetts</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">March 9, 2012</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOVELOS THERAPEUTICS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED BALANCE SHEETS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September&nbsp;30,<BR> 2012<BR> (unaudited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December&nbsp;31,<BR> 2011<BR> (audited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December&nbsp;31,<BR> 2010<BR> (audited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="font-weight: bold">ASSETS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">CURRENT ASSETS:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; text-align: left; text-indent: -9pt; padding-left: 27pt">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">5,597,764</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">5,505,960</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">673,739</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 27pt">Restricted cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">55,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">555,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 27pt">Prepaid expenses and other current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">335,979</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">254,967</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">51,042</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 45pt">Total current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,988,743</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,815,927</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,279,781</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">FIXED ASSETS, NET</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,697,624</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,044,565</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,510,489</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">GOODWILL</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,675,462</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,675,462</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt">OTHER ASSETS</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">27,222</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">27,222</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,872</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 9pt">TOTAL ASSETS</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,389,051</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,563,176</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,802,142</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt">LIABILITIES AND STOCKHOLDERS&rsquo; EQUITY</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">CURRENT LIABILITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 27pt">Accounts payable and accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">712,808</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">478,041</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">392,881</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 27pt">Accrued interest</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">305,049</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 27pt">Derivative liability</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">21,628</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23,305</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 27pt">Notes payable, current portion</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">204,802</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 27pt">Capital lease obligations, current portion</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,356</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,235</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,085</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 45pt">Total current liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">736,792</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">503,581</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">904,817</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">LONG-TERM LIABILITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 8.7pt; padding-left: 9pt">Convertible debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,720,985</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 8.7pt; padding-left: 9pt">Notes payable, net of current portion</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">450,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">450,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">920,941</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 8.7pt; padding-left: 9pt">Deferred rent</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">133,209</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">124,381</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">115,311</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: 8.7pt; padding-left: 9pt">Capital lease obligations, net of current portion</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,309</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,091</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,326</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: 26.7pt; padding-left: 9pt">Total long-term liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">585,518</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">578,472</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,763,563</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt">TOTAL LIABILITIES</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,322,310</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,082,053</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,668,380</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">COMMITMENTS AND CONTINGENCIES (Notes 13 and 14)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">STOCKHOLDERS&rsquo; EQUITY:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -9pt; padding-left: 27pt">Preferred stock, $0.00001 par value; 7,000 shares authorized; none issued and outstanding as of September 30, 2012, December 31, 2011 and 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 27pt">Common stock, $0.00001 par value; 150,000,000 shares authorized; 43,460,497, 36,907,824 and 12,820,102 shares issued and outstanding at September 30, 2012, December 31, 2011 and 2010, respectively</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">434</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">369</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">128</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 27pt">Additional paid-in capital</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47,186,659</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">40,961,180</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24,178,638</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 27pt">Deficit accumulated during the development stage</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(38,120,352</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(31,480,426</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(24,045,004</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 45pt">Total stockholders&rsquo; equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,066,741</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,481,123</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">133,762</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 9pt">TOTAL LIABILITIES AND STOCKHOLDERS&rsquo; EQUITY</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,389,051</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,563,176</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,802,142</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.25in"><I>See report of independent
registered public accounting firm and accompanying notes to the consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>&nbsp;</I></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOVELOS THERAPEUTICS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF OPERATIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nine&nbsp;Months&nbsp;Ended&nbsp; <BR>September&nbsp;30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year&nbsp;Ended&nbsp; <BR>December&nbsp;31,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt">Cumulative<BR> Development-<BR> Stage&nbsp;Period<BR> from&nbsp;November<BR> 7,&nbsp;2002&nbsp;(date&nbsp;of<BR> inception)<BR> through<BR> December&nbsp;31,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012<BR> (unaudited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011<BR> (unaudited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011<BR> (audited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010<BR> (audited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011<BR> (audited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">COSTS AND EXPENSES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 45%; text-align: left; text-indent: -9pt; padding-left: 0.25in">Research and development</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">3,896,005</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">2,445,429</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">3,599,080</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">2,984,207</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">20,805,039</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">General and administrative</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,695,503</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,827,510</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,692,433</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,156,549</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,662,611</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Merger costs</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">746,207</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">746,207</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">52,925</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">799,133</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 27pt">Total costs and expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,591,508</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,019,146</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">7,037,720</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,193,681</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">31,266,783</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt">LOSS FROM OPERATIONS</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(6,591,508</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(5,019,146</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,037,720</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,193,681</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(31,266,783</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">OTHER INCOME (EXPENSE):</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Grant income</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44,479</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44,479</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">200,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">244,479</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Loss on derivative warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(42,178</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(66,820</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(12,158</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(12,158</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Interest expense, net</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,240</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(428,015</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(430,023</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(566,156</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(447,125</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 0.25in">Other income (expense)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(426</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,161</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 0.5in">Total other expense, net</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(48,418</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(450,356</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(397,702</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(366,582</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(213,643</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt">NET LOSS</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(6,639,926</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(5,469,502</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,435,422</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,560,263</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(31,480,426</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt">DEEMED DIVIDEND ON WARRANTS</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(543,359</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 9pt">NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(7,183,285</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(5,469,502</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(7,435,422</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(4,560,263</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(31,480,426</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 9pt">BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.18</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.25</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.31</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.36</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(2.84</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 9pt">SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">39,611,899</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">21,847,984</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">23,959,008</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">12,820,102</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">11,090,838</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.25in"><I>See report of independent
registered public accounting firm and accompanying notes to the consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOVELOS THERAPEUTICS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CONSOLIDATED STATEMENTS OF STOCKHOLDERS&rsquo;
EQUITY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Common&nbsp;Stock</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Additional</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Deficit<BR>
    Accumulated<BR> During&nbsp;the</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">Total</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center; padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Shares</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt">Par<BR>
    Amount</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Paid-in<BR>
    Capital</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Development</B><BR>
    <B>Stage</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 8pt"><B>Stockholders&rsquo;</B><BR>
    <B>Equity</B></FONT></TD><TD NOWRAP STYLE="padding-bottom: 1pt; text-align: center"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">BALANCE AT NOVEMBER 7, 2002</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 45%; text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of
    common stock for cash</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">6,440,123</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">64</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">590,205</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="width: 8%; text-align: right"><FONT STYLE="font-size: 8pt">590,269</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock
    in exchange for professional services</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">101,220</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">9,107</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">9,108</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Net
    loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">BALANCE AT DECEMBER 31, 2002</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">6,541,343</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">65</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">599,312</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">599,377</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock
    for cash, net of issuance costs</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">37,958</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">4,937</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">4,937</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock
    in exchange for licensed technology</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">203,483</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">80,410</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">80,412</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Net
    loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(295,790</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(295,790</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">BALANCE AT DECEMBER 31, 2003</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">6,782,784</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">67</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">684,659</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(295,790</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">388,936</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Net
    loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(342,761</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(342,761</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">BALANCE AT DECEMBER 31, 2004</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">6,782,784</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">67</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">684,659</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(638,551</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">46,175</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock
    for cash, net of issuance costs</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">610,664</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">6</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">835,862</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">835,868</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Net
    loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(481,837</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(481,837</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">BALANCE AT DECEMBER 31, 2005</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">7,393,448</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">73</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,520,521</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(1,120,388</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">400,206</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock
    for cash, net of issuance costs</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,202,179</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">22</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">7,097,050</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">7,097,072</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Common stock repurchased</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(43,819</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(31,667</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(31,667</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Stock-based compensation</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">43,994</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">43,994</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Net
    loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(963,440</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(963,440</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">BALANCE AT DECEMBER 31, 2006</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">9,551,808</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">95</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">8,629,898</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(2,083,828</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">6,546,165</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock
    for cash, net of issuance costs</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">60,250</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">249,999</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">250,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Exercise of warrant to
    purchase common stock</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">75,045</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">249,999</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">250,000</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Stock-based compensation</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">570,392</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">570,392</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Net
    loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(5,090,325</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(5,090,325</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">BALANCE AT DECEMBER 31, 2007</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">9,687,103</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">97</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">9,700,288</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(7,174,153</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,526,232</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock
    for cash, net of issuance costs</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3,132,999</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">31</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,931,531</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,931,562</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Stock-based compensation</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">477,488</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">477,488</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Net
    loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(6,090,715</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(6,090,715</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">BALANCE AT DECEMBER 31, 2008</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,820,102</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">128</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">23,109,307</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(13,264,868</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">9,844,567</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Stock-based compensation</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">502,199</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">502,199</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Net
    loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(6,219,873</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(6,219,873</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">BALANCE AT DECEMBER 31, 2009</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,820,102</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">128</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">23,611,506</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(19,484,741</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">4,126,893</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Stock-based compensation</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">353,340</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">353,340</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Intrinsic value of beneficial
    conversion feature associated with convertible debt issued in exchange for cash</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">213,792</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">213,792</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Net
    loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(4,560,263</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(4,560,263</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">BALANCE AT DECEMBER 31, 2010</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">12,820,102</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">128</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">24,178,638</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(24,045,004</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">133,762</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock
    upon conversion of convertible notes</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">4,181,535</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">42</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3,184,665</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">3,184,707</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock
    in a business combination</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,959,871</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">30</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,219,873</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">2,219,903</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Cash paid in lieu of fractional
    shares in a business combination</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(41</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(145</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(145</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock
    and warrants, net of issuance costs</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">16,928,204</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">169</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">10,164,377</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">10,164,546</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Intrinsic value of beneficial
    conversion feature associated with the conversion of convertible debt</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">257,973</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">257,973</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock
    upon the cashless exercise of warrants and reclassification of derivative liability to additional paid-in-capital</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">18,153</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">48,339</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">48,339</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Stock-based compensation</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">907,460</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">907,460</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Net
    loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(7,435,422</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(7,435,422</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">BALANCE AT DECEMBER 31, 2011</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">36,907,824</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">369</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">40,961,180</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">(31,480,426</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">9,481,123</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock
    upon cashless exercise of warrants and reclassification of derivative liability to additional paid-in-capital</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">981,073</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">10</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">43,845</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">43,855</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock
    upon exercise of warrants</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">150,800</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">150,799</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">150,800</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Issuance of common stock
    in connection with registered offering, net of issuance costs</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">5,420,800</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">54</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">4,870,924</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">4,870,978</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Stock-based compensation</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,159,911</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 8pt">1,159,911</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">Net
    loss</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">&mdash;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(6,639,926</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 8pt">(6,639,926</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-indent: -0.1in; padding-left: 0.1in"><FONT STYLE="font-size: 8pt">BALANCE AT SEPTEMBER
    30, 2012 (UNAUDITED)</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">43,460,497</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">434</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">47,186,659</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">(38,120,352</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">)</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 8pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 8pt">9,066,741</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>See report of independent registered public accounting firm
and accompanying notes to the consolidated financial statements</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOVELOS THERAPEUTICS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>STATEMENTS OF CASH FLOWS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nine&nbsp;Months&nbsp;Ended<BR> September&nbsp;30,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year&nbsp;Ended<BR> December&nbsp;31,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Cumulative<BR> Development-Stage<BR> Period&nbsp;from&nbsp;November<BR> 7,&nbsp;2002&nbsp;through<BR> December&nbsp;31,&nbsp;2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><B>2012</B><BR> (unaudited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><B>2011</B><BR> (unaudited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><B>2011</B><BR> (audited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid"><B>2010</B><BR> (audited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="text-align: center; border-bottom: Black 1pt solid">(audited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 45%; text-align: left; text-indent: -9pt; padding-left: 0.25in">Net loss</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">(6,639,926</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">(5,469,502</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">(7,435,422</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">(4,560,263</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">(31,480,426</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Adjustments to reconcile net loss to cash used in operating activities:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.5in">Depreciation and amortization</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">384,083</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">439,587</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">584,841</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">580,114</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,416,038</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 0.5in">Stock-based compensation</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,159,911</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">655,656</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">907,460</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">353,340</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,854,873</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.5in">Intrinsic value of beneficial conversion feature associated with convertible debt</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">257,973</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">257,973</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">213,792</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">471,765</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.5in">Issuance of stock for technology and services</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">89,520</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 9pt; padding-left: 0.25in">Impairment of intangible assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,671</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,671</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: 9pt; padding-left: 0.25in">Loss on disposal of fixed assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,009</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,009</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,477</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: 9pt; padding-left: 0.25in">Loss on derivative warrants</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">42,178</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66,820</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,158</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,158</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Changes in:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.5in">Prepaid expenses and other current assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(81,012</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(224,548</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(175,883</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">18,584</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(238,797</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.5in">Accounts payable and accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">234,767</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(331,357</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(294,969</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(322,707</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">97,912</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 27pt">Accrued interest</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">158,672</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">158,673</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">305,049</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">463,722</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 27pt">Deferred rent</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">8,828</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,083</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,070</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,973</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">124,381</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 35.6pt">Cash used in operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,891,171</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,434,607</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(5,970,090</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3,382,447</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(25,132,706</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">CASH FLOWS FROM INVESTING ACTIVITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Cash acquired in a business combination</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">905,649</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">905,649</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">905,649</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Purchases of fixed assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(37,142</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(112,195</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(118,411</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,652</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,486,592</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Proceeds from sale of fixed assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 0.25in">Purchases of short-term certificates of deposit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,500,730</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Proceeds from short-term certificates of deposit</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,500,730</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Change in restricted cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">500,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">500,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(55,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;Payment for intangible assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(19,671</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 45pt">Cash provided by (used in) investing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(37,142</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,293,454</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,287,238</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,652</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,648,614</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">CASH FLOWS FROM FINANCING ACTIVITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Proceeds from issuance of convertible notes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,720,985</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,720,985</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Proceeds from long-term obligations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">450,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,677,945</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Payments on long-term obligations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(675,743</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(675,743</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(190,789</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,227,944</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Payments on capital lease obligations</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,661</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,549</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,085</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,944</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4,648</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Proceeds from issuance of common stock, net of issuance costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,870,978</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,866,406</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,164,546</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">31,874,254</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -9pt; padding-left: 0.25in">Proceeds from exercise of warrant</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150,800</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">250,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Repurchase of common stock</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(31,667</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Cash paid in lieu of fractional shares in a business combination</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(145</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(145</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(145</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 0.25in">Change in deferred issuance costs</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(130,800</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">28,500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">99,461</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">28,500</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 45pt">Cash provided by (used in) financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,020,117</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,058,169</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">9,515,073</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,077,713</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">35,287,280</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">INCREASE (DECREASE) IN CASH AND EQUIVALENTS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">91,804</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">917,016</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,832,221</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(306,386</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,505,960</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt">CASH AND EQUIVALENTS AT BEGINNING OF PERIOD</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,505,960</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">673,739</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">673,739</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">980,125</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 9pt">CASH AND EQUIVALENTS AT END OF PERIOD</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,597,764</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,590,755</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,505,960</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">673,739</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,505,960</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 0.25in">Interest paid</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">13,716</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">13,716</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">54,454</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">208,689</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 0.25in">Fair value of derivative warrants reclassified to additional paid-in capital upon cashless exercise</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">43,855</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">48,339</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">48,339</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">48,339</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 0.25in">Issuance of common stock upon conversion of notes payable and accrued interest</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,184,707</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,184,707</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,184,707</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 0.25in">Fair value of assets acquired in exchange for securities in a business combination</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">78,408</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">78,408</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">78,408</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 0.25in">Fair value of liabilities assumed in exchange for securities in a business combination</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(439,616</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(439,616</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(439,616</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 0.25in">Excess of purchase price over net assets acquired in a business combination</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,675,462</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,675,462</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,675,462</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><I>See report of independent registered
public accounting firm and accompanying notes to the consolidated financial statements.</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOVELOS THERAPEUTICS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(a Development Stage Company)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;(ALL INFORMATION AS OF AND FOR
THE NINE MONTHS ENDED<BR>
SEPTEMBER 30, 2012 AND 2011 IS UNAUDITED)</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><B>1. NATURE OF BUSINESS, ORGANIZATION
AND GOING CONCERN</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Novelos Therapeutics, Inc. (&ldquo;Novelos&rdquo; or the &ldquo;Company&rdquo;)
is a pharmaceutical company developing novel drugs for the treatment and diagnosis of cancer. On April 8, 2011, Novelos completed
a business combination with Cellectar, Inc. (&ldquo;Cellectar&rdquo;), a privately held Wisconsin corporation that designed and
developed products to detect, treat and monitor a wide variety of human cancers, and Cell Acquisition Corp. (the &ldquo;Merger
Subsidiary&rdquo;), a Wisconsin corporation and a wholly owned subsidiary of Novelos. Pursuant to the transaction Cellectar was
merged into the Merger Subsidiary (the &ldquo;Acquisition&rdquo;, see Note 4). References in these financial statements and notes
to &ldquo;Cellectar&rdquo; relate to the activities and financial information of Cellectar prior to the Acquisition, references
to &ldquo;Novelos&rdquo; relate to the activities and financial information of Novelos prior to the Acquisition and references
to &ldquo;the Company&rdquo; or &ldquo;we&rdquo; or &ldquo;us&rdquo; or &ldquo;our&rdquo; relate to the activities and obligations
of the combined Company following the Acquisition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Immediately prior to the Acquisition, Novelos completed a 1-for-153
reverse split of its common stock.&nbsp; Novelos then issued to the shareholders of Cellectar at that date 17,001,596 shares of
its common stock as consideration for the Acquisition, representing a ratio of 0.8435 shares of Novelos common stock in exchange
for one share of Cellectar common stock (the &ldquo;Exchange Ratio&rdquo;) as set forth in the Agreement and Plan of Merger (the
&ldquo;Merger Agreement&rdquo;) dated April 8, 2011.&nbsp; The shares issued to Cellectar shareholders in the Acquisition constituted
approximately 85% of Novelos&rsquo; outstanding common stock after giving effect to the Acquisition.&nbsp; Upon the closing of
the Acquisition, the Company completed the private placement of 6,846,537 shares of its common stock and warrants to purchase an
additional 6,846,537 shares of its common stock for gross proceeds of approximately $5,135,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Accounting principles generally accepted in the United States
require that a company whose security holders retain the majority voting interest in the combined business be treated as the acquirer
for financial reporting purposes.&nbsp; Accordingly, the Acquisition was accounted for as a reverse acquisition whereby Cellectar,
Inc. was treated as the acquirer for accounting and financial reporting purposes. The financial statements presented herein as
of and for the twelve months ended December 31, 2010 represent the historical financial information of Cellectar, except for the
capital structure which represents the historical amounts of Cellectar, retroactively adjusted to reflect the legal capital structure
of Novelos by applying the Exchange Ratio. On April, 8, 2011, Cellectar was merged into the Merger Subsidiary a wholly owned subsidiary
of Novelos; as such, the financial statements presented herein as of and for the twelve months ended December 31, 2011 include
the historical results of Cellectar from January 1, 2011 through April 8, 2011, except for the capital structure which represents
the historical amounts of Cellectar, retroactively adjusted to reflect the legal capital structure of Novelos by applying the Exchange
Ratio, and include the consolidated results of the combined company from April 9, 2011 through December 31, 2011 and the financial
statements presented herein as of and for the nine months ended September 30, 2011 include the historical results of Cellectar
from January 1, 2011 through April 8, 2011, except for the capital structure which represents the historical amounts of Cellectar,
retroactively adjusted to reflect the legal capital structure of Novelos by applying the Exchange Ratio, and include the consolidated
results of the combined company from April 9, 2011 through September 30, 2011. The financial statements as of and for the nine
months ended September 30, 2012 include the consolidated results of the combined company for that period. All per-share amounts
and outstanding shares, including all common stock equivalents, and stock options, have been retroactively restated in these financial
statements and notes for all periods presented to reflect the capital structure of Novelos by applying the Exchange Ratio.&nbsp;&nbsp;The
cumulative capital activity from the date of inception (November 7, 2002) up to the closing of the Acquisition, as presented in
the accompanying statement of stockholders&rsquo; equity, equals 17,001,596 shares of common stock, which represents the equity
interests the legal parent (Novelos) issued to effect the Acquisition. The number of authorized shares of common stock disclosed
on the balance sheet (150,000,000) represents the number of authorized shares of Novelos common stock following the Acquisition.&nbsp;
Additionally, on the accompanying balance sheet as of December 31, 2010 and statements of stockholders&rsquo; equity for the period
from inception (November 7, 2002) to December 31, 2010 the aggregate par value of the issued common stock was reduced to reflect
the $0.00001 par value of Novelos common stock associated with the shares of Cellectar common stock adjusted for the Exchange Ratio
and the difference was reclassified to additional paid-in capital.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As a result of the Acquisition, the Company has implemented
a revised business plan focused on the development of the Cellectar compounds.&nbsp; Development of Novelos&rsquo; other compounds
(NOV-002 and NOV-205) has been suspended.&nbsp; The Company is conducting its operations from Cellectar&rsquo;s headquarters in
Madison, Wisconsin and the Company&rsquo;s executive offices are in Newton, Massachusetts.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company is subject to a number of risks similar to those
of other small pharmaceutical companies. Principal among these risks are dependence on key individuals, competition from substitute
products and larger companies, the successful development and marketing of its products in a highly regulated environment and the
need to obtain additional financing necessary to fund future operations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The accompanying financial statements have been prepared on
a basis that assumes that the Company will continue as a going concern and that contemplates the continuity of operations, realization
of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has incurred losses
since inception in devoting substantially all of its efforts toward research and development and has an accumulated deficit of
$31,480,426 at December 31, 2011 and an accumulated deficit of $38,120,352 as of September 30, 2012. During the year ended December
31, 2011 and the nine months ended September 20, 2012, the Company generated a net loss of $7,435,422 and $6,639,926, respectively
and the Company expects that it will continue to generate operating losses for the foreseeable future.&nbsp; The Company believes
that its cash on hand at September 30, 2012, combined with the cash proceeds received from warrant exercises in October 2012 (see
Note 19), is adequate to fund operations at budgeted levels through May 2013.&nbsp; On November 2, 2012, the Company completed
a private placement of its common stock and warrants for total proceeds of $2,000,000. The proceeds from the private placement
are designated for use towards the construction of a clinical-stage manufacturing facility for I-124-CLR1404 (LIGHT) at the Company&rsquo;s
Madison, WI location. The Company estimates that the project will cost a total of approximately $3,000,000, will take approximately
one year to complete and will commence in late 2012, although the Company has not yet entered into contractual commitments with
vendors. The Company may seek to obtain the additional capital required to complete the project from additional sales of common
stock, proceeds from warrant exercise, and/or from equipment financing. The Company&rsquo;s ability to execute its operating plan
beyond May 2013 depends on its ability to obtain additional funding via the sale of equity and/or debt securities, a strategic
transaction or otherwise.&nbsp; The Company plans to continue to actively pursue financing alternatives, but there can be no assurance
that it will obtain the necessary funding.&nbsp; The accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The accompanying unaudited consolidated balance sheet as of
September 30, 2012, the consolidated statements of operations for the nine months ended September 30, 2012 and 2011, and the consolidated
statements of cash flows for the nine months ended September 30, 2012 and 2011 and the related interim information contained within
the notes to the consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities
and Exchange Commission (&ldquo;SEC&rdquo;) for interim financial information. Accordingly, they do not include all of the information
and the notes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management,
the unaudited interim consolidated financial statements reflect all adjustments, consisting of normal and recurring adjustments,
necessary for the fair presentation of the Company&rsquo;s consolidated financial position at September 30, 2012 and consolidated
results of its operations and its cash flows for the nine months ended September 30, 2012 and 2011. The results for the nine months
ended September 30, 2012 are not necessarily indicative of future results.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The accompanying consolidated financial statements reflect the
application of certain accounting policies, as described in this note and elsewhere in the accompanying notes to the consolidated
financial statements.&nbsp; The consolidated financial statements as of and for the twelve months ended December 31, 2011 are presented
on a consolidated basis to reflect the Acquisition described in Note 4.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Principles of Consolidation</I></B> &mdash; The consolidated
financial statements include the accounts of the Company and the accounts of its wholly-owned subsidiary. All intercompany accounts
and transactions have been eliminated in consolidation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Development Stage Company</I></B> &mdash; The Company
has been in the development stage since its inception.&nbsp; The primary activities since inception have been organizational activities,
research and development and raising capital.&nbsp; No significant revenues have been generated from planned operations.&nbsp;
As of September 30, 2012, December 31, 2011 and 2010, the Company remained in the development stage.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The summary unaudited condensed statement of operations for
the cumulative development-stage period from November 7, 2002 (date of inception) through September 30, 2012 is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="RIGHT" STYLE="border-collapse: collapse; width: 93%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">COSTS AND EXPENSES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 89%; text-align: left; text-indent: -9pt; padding-left: 0.25in">Research and development</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">24,701,044</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">General and administrative</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,358,114</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 0.25in">Merger costs</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">799,133</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 0.5in">Total costs and expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">37,858,291</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt">LOSS FROM OPERATIONS</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(37,858,291</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt">OTHER EXPENSE, NET</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(262,061</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt">NET LOSS</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">$</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(38,120,352</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt">DEEMED DIVIDEND ON WARRANTS</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(543,359</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 9pt">NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(38,663,711</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 9pt">BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(2.92</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 9pt">SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">13,238,063</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE><BR STYLE="clear: both">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;The summary unaudited condensed statement of cash flow
for the cumulative development-stage period from November 7, 2002 (date of inception) through September 30, 2012 is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="RIGHT" STYLE="border-collapse: collapse; width: 93%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 89%; text-align: left; text-indent: -9pt; padding-left: 0.25in">Net loss</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">(38,120,352</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Adjustments to reconcile net loss to cash used in operating activities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,486,674</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 0.25in">Changes in working capital</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">609,801</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 45pt">Cash used in operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(30,023,877</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">CASH FLOWS FROM INVESTING ACTIVITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Cash acquired in a business combination</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">905,649</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Purchases of fixed assets, net of $7,000 proceeds from sale of fixed assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,516,734</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Change in restricted cash</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(55,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 0.25in">Payment for intangible assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(19,671</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 45pt">Cash used in investing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(4,685,756</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">CASH FLOWS FROM FINANCING ACTIVITIES:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Proceeds from issuance of common stock and warrants, net of issuance costs, repurchase of common stock, and cash paid in lieu of fractional shares in a business combination</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">37,114,220</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Change in deferred issuance costs</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">28,500</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 0.25in">Proceeds from issuance of long-term obligations and convertible notes</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,398,930</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 0.25in">Payments on long-term obligations</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,234,253</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 45pt">Cash provided by financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">40,307,397</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">INCREASE IN CASH AND EQUIVALENTS</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,597,764</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt">CASH AND EQUIVALENTS AT BEGINNING OF PERIOD</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 9pt">CASH AND EQUIVALENTS AT END OF PERIOD</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,597,764</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 0.25in">Interest paid</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">208,689</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 0.25in">Fair value of derivative warrants reclassified to additional paid-in capital upon cashless exercise</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">92,194</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 0.25in">Issuance of common stock upon the conversion of notes payable and accrued interest</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,184,707</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 0.25in">Fair value of assets acquired in exchange for securities in a business combination</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">78,408</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 0.25in">Fair value of liabilities assumed in exchange for securities in a business combination</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(439,616</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt; text-indent: -9pt; padding-left: 0.25in">Excess of purchase price over net assets acquired in a business combination</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,675,462</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE><BR STYLE="clear: both">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Use of Estimates</I></B> &mdash; The preparation of financial
statements in conformity with accounting principles generally accepted in the United States requires management to make estimates
and judgments that may affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets
and liabilities. On an on-going basis, management evaluates its estimates including those related to unbilled vendor amounts and
share-based compensation. Management bases its estimates on historical experience and on various other assumptions that are believed
to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
Actual results may differ from those estimates under different assumptions or conditions. Changes in estimates are reflected in
reported results in the period in which they become known.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Cash and Cash Equivalents</I></B> &mdash; All short-term
investments purchased with maturities of three months or less are considered to be cash equivalents.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Restricted Cash</I></B> &mdash; Restricted cash at September
30, 2012 and December 31, 2011 consists of a certificate of deposit required under the Company&rsquo;s lease agreement for its
Madison, Wisconsin facility (see Note 13).&nbsp; Restricted cash at December 31, 2010 consists of a certificate of deposit required
for collateral for a promissory note with a bank (see Note 8) and a certificate of deposit required under the Company&rsquo;s lease
agreement for its Madison, Wisconsin facility (see Note 13).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Fixed Assets</I></B> &mdash; Property and equipment are
stated at cost. Depreciation on property and equipment is provided using the straight-line method over the estimated useful lives
of the assets (5 years).&nbsp; Due to the significant value of leasehold improvements purchased during the initial 3-year lease
term and the economic penalty for not extending the building lease, leasehold improvements are depreciated over 17 years (their
estimated useful life), which represents the full term of the lease, including all extensions (Note 13).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Goodwill</I></B> &mdash; Intangible assets at September
30, 2012 and December 31, 2011 consist of goodwill recorded in connection with the Acquisition. Goodwill is not amortized, but
is required to be evaluated for impairment annually or whenever events or changes in circumstances suggest that the carrying value
of an asset may not be recoverable. The Company evaluates goodwill for impairment annually in the fourth fiscal quarter and additionally
on an interim basis if an event occurs or there is a change in circumstances, such as a decline in the Company&rsquo;s stock price
or a material adverse change in the business climate, which would more likely than not reduce the fair value of the reporting unit
below its carrying amount.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Impairment of Long</I></B>-<B><I>Lived Assets</I></B>
&mdash; Long-lived assets other than intangible assets consist of fixed assets, which we periodically evaluate for potential impairment.
Whenever events or circumstances change, an assessment is made as to whether there has been an impairment in the value of long-lived
assets by determining whether projected undiscounted cash flows generated by the applicable asset exceed its net book value as
of the assessment date. During 2010, following a reduction in staff and suspension of research and manufacturing activities in
order to reduce operating costs, it was determined that the trademarks previously capitalized as intangible assets had been impaired
and the carrying value was reduced to zero.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Stock-Based Compensation</I></B> &mdash; The Company uses
the Black-Scholes option-pricing model to calculate the grant-date fair value of stock option awards. The resulting compensation
expense, net of expected forfeitures, for awards that are not performance-based is recognized on a straight-line basis over the
service period of the award, which is generally three years for stock options. For stock options with performance-based vesting
provisions, recognition of compensation expense, net of expected forfeitures, commences if and when the achievement of the performance
criteria is deemed probable. The compensation expense, net of expected forfeitures, for performance-based stock options is recognized
over the relevant performance period. Non-employee stock-based compensation is accounted for in accordance with the guidance of
FASB ASC Topic 505, <I>Equity.&nbsp;</I> As such, the Company recognizes expense based on the estimated fair value of options granted
to non-employees over their vesting period, which is generally the period during which services are rendered and deemed completed
by such non-employees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>Research and Development</I></B>
&mdash; Research and development costs are expensed as incurred.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Income Taxes</I></B> &mdash; Income taxes are accounted
for using the liability method of accounting.&nbsp; Under this method, deferred tax assets and liabilities are determined based
on temporary differences between the financial statement basis and tax basis of assets and liabilities and net operating loss and
credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse.&nbsp; The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the
enactment date.&nbsp; Valuation allowances are established when it is more likely than not that some portion of the deferred tax
assets will not be realized.&nbsp; Management has provided a full valuation allowance against the Company&rsquo;s gross deferred
tax asset.&nbsp; Tax positions taken or expected to be taken in the course of preparing tax returns are required to be evaluated
to determine whether the tax positions are &ldquo;more likely than not&rdquo; to be sustained by the applicable tax authority.&nbsp;
Tax positions deemed not to meet a more-likely-than-not threshold would be recorded as tax expense in the current year.&nbsp; There
were no uncertain tax positions that require accrual to or disclosure in the financial statements as of September 30, 2012, December
31, 2011 and 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Comprehensive Loss</I></B> &mdash; There were no components
of comprehensive loss other than net loss in all of the periods presented.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Grant Income</I></B> &mdash; Cellectar received a cash
grant of approximately $44,000 and $200,000 for the years ended December 31, 2011 and 2010, respectively, from the U.S. Internal
Revenue Service as a qualifying therapeutic discovery project credit pursuant to the Patient Protection and Affordable Care Act.&nbsp;
This grant has been recorded as a component of other income.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Fair Value of Financial Instruments</I></B> &mdash; The
guidance under FASB ASC Topic 825, <I>Financial Instruments</I> , requires disclosure of the fair value of certain financial instruments.
Financial instruments in the accompanying financial statements consist of cash equivalents, accounts payable, convertible debt
and long-term obligations.&nbsp; The carrying amount of cash equivalents, investments and accounts payable&nbsp;approximate&nbsp;their&nbsp;fair
value due to their short-term nature.&nbsp; The estimated fair value of the convertible debt, determined on an as-converted basis
including conversion of accumulated unpaid interest, was approximately $3,264,000 at December 31, 2010, respectively.&nbsp; There
was no convertible debt outstanding at September 30, 2012 or December 31, 2011. The carrying value of long-term obligations, including
the current portion, approximates fair value because the fixed interest rate approximates current market rates of interest available
in the market.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Derivative Instruments</I></B> <I>&nbsp;</I> &ndash; The
Company generally does not use derivative instruments to hedge exposures to cash flow or market risks.&nbsp; However, certain warrants
to purchase common stock that do not meet the requirements for classification as equity, in accordance with the Derivatives and
Hedging Topic of the Financial Accounting Standards Board Accounting Standards Codification (&ldquo;FASB ASC&rdquo;), are classified
as liabilities.&nbsp; In such instances, net-cash settlement is assumed for financial reporting purposes, even when the terms of
the underlying contracts do not provide for a net-cash settlement. These warrants are considered derivative instruments because
the agreements contain &ldquo;down-round&rdquo; provisions whereby the number of shares for which the warrants are exercisable
and/or the exercise price of the warrants are subject to change in the event of certain issuances of stock at prices below the
then-effective exercise price of the warrants. The number of shares issuable under such warrants was 27,310 and 77,729 at September
30, 2012 and December 31, 2011, respectively. The primary underlying risk exposure pertaining to the warrants is the change in
fair value of the underlying common stock.&nbsp; Such financial instruments are initially recorded at fair value with subsequent
changes in fair value recorded as a component of gain or loss on derivatives on the consolidated statements of operations in each
reporting period. If these instruments subsequently meet the requirements for equity classification, the Company reclassifies the
fair value to equity. At September 30, 2012 and December 31, 2011, these warrants represented the only outstanding derivative instruments
issued or held by the Company.&nbsp; There were no outstanding derivative instruments at December 31, 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Concentration of Credit Risk</I></B> &mdash; Financial
instruments that subject the Company to credit risk consist of cash and equivalents on deposit with financial institutions. The
Company&rsquo;s excess cash as of September 30, 2012 and December 31, 2011 is on deposit in a non-interest-bearing transaction
account that is fully covered by FDIC deposit insurance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>New Accounting Pronouncements</I></B> &mdash;&nbsp;In
January 2010, the FASB issued ASU No.&nbsp;2010-06, <I>Improving Disclosures about Fair Value Measurements</I> , which requires
additional disclosures about the amounts of and reasons for significant transfers in and out of Level&nbsp;1 and Level&nbsp;2 fair
value measurements. This standard also clarifies existing disclosure requirements related to the level of disaggregation of fair
value measurements for each class of assets and liabilities and disclosures about inputs and valuation techniques used to measure
fair value for both recurring and non-recurring Level&nbsp;2 and Level&nbsp;3 measurements. Since this new accounting standard
only required additional disclosure, the adoption of the standard in the first quarter of 2010 did not impact the accompanying
financial statements. Additionally, effective for interim and annual periods beginning after December&nbsp;15, 2010, this standard
will require additional disclosure and require an entity to present disaggregated information about activity in Level&nbsp;3 fair
value measurements on a gross basis, rather than one net amount.&nbsp; The adoption of this accounting standard did not impact
the accompanying financial statements.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In December 2010, the FASB issued ASU No. 2010-29, <I>Disclosures
of Supplementary Pro Forma Information for Business Combinations</I> , which, if comparative financial statements are presented,
requires the supplemental pro forma disclosure of revenue and earnings to be presented as if the business combination had occurred
at the beginning of the comparable prior annual reporting period only.&nbsp; This standard also expands the supplemental pro forma
disclosures required under FASB ASC Topic 850, <I>Business Combinations</I> , to include a description of the nature and amount
of material nonrecurring pro forma adjustments directly attributable to the business combination in the reported pro forma revenue
and earnings.&nbsp; This standard is effective for the Company for any business combinations completed after January 1, 2011.&nbsp;
The Company adopted the provisions of this standard during the first quarter of 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In May 2011, the FASB issued ASU No. 2011-04, <I>Amendments
to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. Generally Accepted Accounting Principles (&ldquo;GAAP&rdquo;)
and International Financial Reporting Standards (&ldquo;IFRSs&rdquo;).</I> &nbsp;This standard updates accounting guidance to clarify
the measurement of fair value to align the guidance and improve the comparability surrounding fair value measurement within GAAP
and IFRSs.&nbsp; The standard also updates requirements for measuring fair value and expands the required disclosures.&nbsp; The
standard does not require additional fair value measurements and was not intended to establish valuation standards or affect valuation
practices outside of financial reporting.&nbsp; This standard will become effective for the Company on January 1, 2012. The adoption
of this standard on January 1, 2012 did not have a material impact on the Company&rsquo;s financial statements or required disclosures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In June 2011, the FASB issued ASU No. 2011-05, <I>Presentation
of Comprehensive Income.</I> &nbsp;This standard eliminates the current option to report other comprehensive income and its components
in the statement of changes in equity. The standard is intended to enhance comparability between entities that report under US&nbsp;GAAP
and those that report under IFRS, and to provide a more consistent method of presenting non-owner transactions that affect an entity&rsquo;s
equity. Under the ASU, an entity can elect to present items of net income and other comprehensive income in one continuous statement,
referred to as the statement of comprehensive income, or in two separate, but consecutive, statements. Each component of net income
and each component of other comprehensive income, together with totals for comprehensive income and its two parts, net income and
other comprehensive income, would need to be displayed under either alternative. The statement(s) would need to be presented with
equal prominence as the other primary financial statements. The ASU does not change items that constitute net income and other
comprehensive income, when an item of other comprehensive income must be reclassified to net income or the earnings-per-share computation
(which will continue to be based on net income). The new US&nbsp;GAAP requirements are effective for public entities as of the
beginning of a fiscal year that begins after December&nbsp;15, 2011 and interim and annual periods thereafter. Early adoption is
permitted, but full retrospective application is required under the accounting standard. The adoption of this standard on January
1, 2012 did not have a material impact on the Company&rsquo;s financial statements or required disclosures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In September 2011, the FASB issued ASU No. 2011-08, <I>Intangibles
&ndash; Goodwill and Other (Topic 350) Testing Goodwill for Impairment.</I> &nbsp;&nbsp;This standard simplifies how an entity
tests goodwill for impairment and allows an entity to first assess qualitative factors in determining whether it is more likely
than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary
to perform the two-step goodwill impairment test.&nbsp;&nbsp;This standard is effective for entities as of the beginning of a fiscal
year that begins after December 15, 2011 and interim and annual periods thereafter.&nbsp;&nbsp;Early adoption is permitted. The
adoption of this standard on January 1, 2012 did not have a material impact on the Company&rsquo;s financial statements or required
disclosures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In December 2011, the FASB issued ASU No. 2011-12, <I>Deferral
of Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income
in ASU 2011-05,</I> which defers the requirement in ASU No. 2011-05 that companies present reclassification adjustments for each
component of accumulated other comprehensive income. All other requirements of ASU No. 2011-05 remain unchanged.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In August 2012, the FASB issued ASU No. 2012-03, <I>Technical
Amendments and Corrections to SEC Section</I>. This standard provides amendments to SEC Paragraphs Pursuant to SEC Staff Accounting
Bulletin No. 114, Technical Amendments Pursuant to SEC Release No. 339-9250, and Corrections Related to FASB Accounting Standards
Update 2010-22. The adoption of this standard did not have a material impact on the Company&rsquo;s financial statement or required
disclosures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In October 2012, the FASB issued ASU No. 2012-04, <I>Technical
Improvements and Corrections</I>. This standard provides changes and clarification to the codification through reference corrections
and source literature amendments. This standard is effective for entities as of the beginning of a fiscal year that begins after
December 15, 2012. The Company does not expect that the adoption of this standard will have a material impact on the Company&rsquo;s
financial statements or required disclosures.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Reclassifications</I></B> &mdash; Certain prior-period
amounts have been reclassified to conform to the current-period presentation.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>3. FAIR VALUE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In accordance with Fair Value Measurements and Disclosures Topic
of the FASB ASC 820, the Company groups its financial assets and financial liabilities generally measured at fair value in three
levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine
fair value.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 3%">&middot;</TD>
    <TD STYLE="width: 94%">Level 1: Input prices quoted in an active market for identical financial assets or liabilities.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&middot;</TD>
    <TD>Level 2: Inputs other than prices quoted in Level 1, such as prices quoted for similar financial assets and liabilities in active markets, prices for identical assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&middot;</TD>
    <TD>Level 3: Input prices quoted that are significant to the fair value of the financial assets or liabilities which are not observable or supported by an active market.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Assets and liabilities measured at fair value on a recurring
basis are summarized below:&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="14" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>September&nbsp;30,&nbsp;2012</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Level&nbsp;1</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Level&nbsp;2</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Level&nbsp;3</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Fair&nbsp;Value</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 47%; font-weight: bold"><B>Liabilities:</B></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 8%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 8%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt; padding-bottom: 2.5pt">Warrants</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double">$</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double">$</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">21,628</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double">$</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double">$</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">21,628</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="14" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>December&nbsp;31,&nbsp;2011</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Level&nbsp;1</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Level&nbsp;2</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Level&nbsp;3</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Fair&nbsp;Value</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 47%; font-weight: bold"><B>Liabilities:</B></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 8%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 8%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt; padding-bottom: 2.5pt">Warrants</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double">$</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double">$</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">23,305</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double">$</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double">$</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">23,305</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="14" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>December&nbsp;31,&nbsp;2010</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Level&nbsp;1</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Level&nbsp;2</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Level&nbsp;3</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Fair&nbsp;Value</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold">&nbsp;</TD>
    <TD STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 47%; font-weight: bold"><B>Liabilities:</B></TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 8%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 8%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: right">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt; padding-bottom: 2.5pt">Warrants</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double">$</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double">$</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double">$</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double">$</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">-</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company uses the Black-Scholes option pricing model and
assumptions that consider, among other variables, the fair value of the underlying stock, risk-free interest rate, volatility,
expected life and dividend rates in estimating fair value for the warrants considered to be derivative instruments. Assumptions
used are generally consistent with those disclosed for stock-based compensation (see Note 10).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>4. ACQUISITION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Merger Agreement</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On April 8, 2011, Novelos acquired Cellectar through a merger
with and into the Merger Subsidiary, pursuant to the Merger Agreement entered into on that date.&nbsp; As a result of the Acquisition,
the Merger Subsidiary, which was renamed Cellectar, Inc., owns all assets of and operates the business previously owned and operated
by Cellectar.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In the Acquisition, the former stockholders of Cellectar received
an aggregate number of shares of Novelos common stock constituting approximately 85% of the outstanding shares of Novelos common
stock, after giving effect to the Acquisition but before giving effect to the concurrent private placement of Novelos securities
described below.&nbsp; Prior to the Acquisition, Novelos amended and restated its certificate of incorporation and in connection
therewith, among other things, effected a 1-for-153 reverse split of its common stock resulting in&nbsp;2,959,871 shares of Novelos
common stock outstanding. Novelos then issued 17,001,596 shares of Novelos common stock to the stockholders of Cellectar upon the
effective date of the Acquisition.&nbsp; Warrants and options to purchase Novelos common stock that were outstanding prior to the
Acquisition remained outstanding following the Acquisition. These consist of warrants to purchase a total of 315,164 shares of
Novelos common stock with prices ranging from $16.07 to $191.25 and options to purchase a total of 49,159 shares of Novelos common
stock with prices ranging from $1.53 to $1,072.53.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The financial advisor to Cellectar in the Acquisition, received
a cash fee of $200,000 upon the completion of the Acquisition in consideration of their services.&nbsp; The financial advisor to
Novelos in the Acquisition, received a cash fee of $250,000 upon the completion of the Acquisition in consideration of their services.&nbsp;
These amounts were recorded as merger costs and expensed as incurred on the date of the Acquisition.&nbsp; In addition to the investment
banking fees, the Company also incurred an additional $296,207 of merger-related legal and other costs during the year ended December
31, 2011 and $52,925 during the year ended December 31, 2010 which were included as a component of expense in the respective period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Acquisition was completed principally to leverage synergies
between Novelos&rsquo; strategic focus and experience in developing and funding the development of cancer drugs and Cellectar&rsquo;s
portfolio of cancer-targeted compounds.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Purchase Accounting</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Acquisition was accounted for using the purchase method
of accounting as a reverse acquisition.&nbsp; In a reverse acquisition, the post-acquisition net assets of the surviving combined
company includes the historical cost basis of the net assets of the accounting acquirer (Cellectar) plus the fair value of the
net assets of the accounting acquiree (Novelos).&nbsp; Further, under the purchase method, the purchase price is allocated to the
assets acquired, liabilities assumed, and identifiable intangible assets based on their estimated fair values with the remaining
excess purchase price over net assets acquired allocated to goodwill.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The fair value of the consideration transferred in the Acquisition
was $2,219,903 and was calculated as the number of shares of common stock that Cellectar would have had to issue (adjusted for
the Exchange Ratio) in order for Novelos shareholders to hold a 15% equity interest in the combined Company post-acquisition (but
prior to the concurrent private placement), multiplied by the estimated fair value of the Company&rsquo;s common stock on the acquisition
date.&nbsp; The estimated fair value of the Company&rsquo;s common stock was based on the offering price of the common stock sold
in the private placement which was both completed concurrently with and conditioned upon the closing of the Acquisition.&nbsp;
This price was determined to be the best indication of fair value on that date since the price was based on an arm&rsquo;s length
negotiation with a group consisting of both new and existing investors that had been advised of the pending Acquisition and assumed
similar liquidity risk as those investors holding the majority of shares being valued as purchase consideration.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table summarizes the Company&rsquo;s determination
of fair values of the assets acquired and the liabilities as of the date of acquisition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 89%; text-align: left; padding-bottom: 2.5pt">Consideration &ndash; issuance of securities</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="width: 8%; border-bottom: Black 2.5pt double; text-align: right">2,219,903</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Prepaid expenses and other assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">71,892</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Fixed assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,515</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Accrued liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(380,130</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Derivative liability</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(59,485</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">Goodwill</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,675,462</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total purchase price &ndash; net of cash acquired of $905,649</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,314,254</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company determined that the acquired Novelos legacy technology
had no value as of the date of the acquisition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Goodwill</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Of the total purchase price of $2,219,903, $1,675,462 was allocated
to goodwill.&nbsp;Goodwill represents the excess of the purchase price of an acquired business over the fair value of the underlying
net tangible and intangible assets. The goodwill includes the value of the Novelos work force (management team). None of the goodwill
associated with the Acquisition is deductible for income tax purposes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">There were no changes in goodwill during the year ended December
31, 2011, after the initial purchase accounting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company is required to perform an annual impairment test
related to goodwill which is performed in the fourth quarter of each year, or sooner if changes in circumstances suggest that the
carrying value of an asset may not be recoverable. During the fourth quarter of 2011, the annual test was performed and it was
determined that there had been no impairment to goodwill.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">There were no changes in circumstances during the nine months
ended September 30, 2012 that would suggest that the goodwill is not recoverable. There were no changes in goodwill during the
nine months ended September 30, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>5. FIXED ASSETS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Fixed assets consisted of the following at December 31:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 78%; text-align: left">Office and laboratory equipment</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">3,069,889</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">2,984,375</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Computer software</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Leasehold improvements</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,324,672</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,317,597</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total fixed assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,398,561</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,301,972</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Less accumulated depreciation and amortization</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,353,996</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,791,483</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Fixed assets, net</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,044,565</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,510,489</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the years ended December 31, 2011 and 2010, the Company
incurred approximately $585,000 and $580,000 of depreciation expense, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the nine months ended September 30, 2012, the change
to net fixed assets consisted of an increase of approximately $384,083 to accumulated depreciation and amortization and purchases
of equipment totaling approximately $37,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>6. LICENSE AGREEMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>2003 License Agreement with the University of Michigan</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In September 2003, Cellectar entered into an exclusive license
agreement (the &ldquo;U. Mich. Agreement&rdquo;) with the Regents of the University of Michigan, (&ldquo;U. Mich.&rdquo;) for the
development, manufacture and marketing of products under several composition-of-matter patents in North America that expire at
varying dates in 2016.&nbsp; The U. Mich. Agreement expires upon the expiration of the last covered patent.&nbsp; The Company is
responsible for an annual license fee of $10,000 and is required to pay costs associated with the maintenance of the patents covered
by the U. Mich. Agreement.&nbsp; Additionally, the Company is required to make milestone payments of $50,000 upon the filing of
a New Drug Application (&ldquo;NDA&rdquo;) for a licensed product intended for use in a therapeutic or diagnostic application (such
milestone fees may be deferred and paid within 12 months of the first commercial sale of such products) and make certain milestone
payments within a year following the first commercial sale of any licensed products.&nbsp; The sales milestones range from $100,000
to $200,000, dependent upon whether the drug is for use in a diagnostic or therapeutic application, provided that if sales in the
first 12 months are less than the amount of the milestone, then we are required to pay 50% of all sales until the milestone is
satisfied.&nbsp;The milestone payments may&nbsp;total up to $400,000. The U. Mich. Agreement provides that the Company pay a royalty
equal to 3% of net sales of any licensed products sold by the Company or its sublicensees for such licensed products, provided
however if the sublicense fee payable to the Company is between 4% and 5% of net sales, then the royalties payable to U. Mich.
Shall be equal to 50% of the sublicense fee.&nbsp; Furthermore, the U. Mich. Agreement provides for a reduction in the royalties
owed by up to 50% if the Company is required to pay royalties to any third parties related to the sale of the licensed products.&nbsp;
If the Company receives any revenue in consideration of rights to the licensed technology that is not based on net sales, excluding
any funded research and development, the Company is required to pay U. Mich. 10% of amounts received.&nbsp; U. Mich. may terminate
the agreement if the Company ceases operations, if the Company fails to make any required payment under the agreement, or if the
Company otherwise materially breaches the agreement, subject to the applicable notice and cure periods.&nbsp; To date, the Company
has made all payments as they have become due, there have been no defaults under the U. Mich. Agreement, nor has the Company been
notified of a default by U. Mich. The Company may terminate the agreement with six months&rsquo; notice to U. Mich. and the return
of licensed product and related data.&nbsp; The U. Mich. Agreement contained milestones that required certain development activities
to be completed by specified dates. All such development milestones have either been completed or have been removed by subsequent
amendment to the agreement.&nbsp; U. Mich. has provided no warranties as to validity or otherwise with respect to the licensed
technology.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company paid approximately $600 and $300 to U. Mich. for
the reimbursement of patent maintenance fees during the years ended December 31, 2011 and 2010, respectively.&nbsp; As of December
31, 2011 and 2010, all annual license fees have been paid in a timely manner.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In connection with the U. Mich. Agreement, during 2003 Cellectar
paid approximately $54,000 of back patent costs and issued 203,483 shares of common stock to U. Michigan as partial consideration
for the rights described above.&nbsp; The estimated fair-market value of the issuance was $80,412 and was recorded as a license
cost and is included as a component of stockholders equity in the accompanying balance sheets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><B><I>License Agreement with Wisconsin
Alumni Research Foundation</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In January 2006, Cellectar entered into a license agreement
(the &ldquo;WARF Agreement&rdquo;) with the Wisconsin Alumni Research Foundation (&ldquo;WARF&rdquo;) under which Cellectar received
a license, with a right to grant sublicenses, to develop, manufacture, and market products with respect to certain patents.&nbsp;
The WARF Agreement required an initial license fee of $8,800 and provided that Cellectar pay royalties equal to 0.3% of sales of
any licensed products.&nbsp; Cellectar was also required to reimburse WARF for patent filing fees and related costs.&nbsp; During
the year ended December 31, 2010 there were no costs related to the patents under the WARF Agreement.&nbsp;&nbsp;During 2010, the
WARF Agreement was terminated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Novelos License Agreements</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During 2007, Novelos entered into a Collaboration Agreement
with Lee&rsquo;s Pharmaceutical (HK) Ltd. (&ldquo;Lee&rsquo;s Pharm&rdquo;) whereby Lee&rsquo;s Pharm obtained an exclusive license
to develop, manufacture and commercialize NOV-002 and NOV-205 in China, Hong Kong, Taiwan and Macau (the &ldquo;Chinese Territory&rdquo;).
Under the terms of the agreement the Company is entitled to receive up to $1,700,000 in future milestone payments upon the completion
of development and marketing milestones by Lee&rsquo;s Pharm and to receive royalty payments of between 12-25% of net sales of
NOV-205 and NOV-002, as applicable, in the Chinese Territory and receive royalty payments of 12-15% of net sales of NOV-205 in
the Chinese Territory. The agreement expires upon the expiration of the last patent covering any of the licensed products, or twelve
years from the date of the first commercial sale in China, whichever occurs later.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During 2009, Novelos entered into a collaboration agreement
(the &ldquo;Collaboration Agreement&rdquo;) with Mundipharma International Corporation Limited (&ldquo;Mundipharma&rdquo;) to develop,
manufacture and commercialize, on an exclusive basis, Licensed Products (as defined in the Collaboration Agreement), including
NOV-002, in Europe (other than the Russian Territory), Asia (other than the Chinese Territory) and Australia (collectively referred
to as the &ldquo;Mundipharma Territory&rdquo;).&nbsp; Mundipharma is an independent associated company of Purdue Pharma, L.P. (&ldquo;Purdue&rdquo;).&nbsp;
The Collaboration Agreement provides for Mundipharma to pay the Company royalties and fixed milestone payments based on sales and
commercial launches in the licensed territories.&nbsp; For countries in which patents are held, the Collaboration Agreement expires
on a country-by-country basis within the Mundipharma Territory on the earlier of (1) expiration of the last applicable Novelos
patent within the country or (2) the determination that any patents within the country are invalid, obvious or otherwise unenforceable.&nbsp;
For countries in which no patents are held, the Collaboration Agreement expires the earlier of 15 years from its effective date
or upon generic product competition in the country resulting in a 20% drop in Mundipharma&rsquo;s market share.&nbsp; The Company
may terminate the Collaboration Agreement upon breach or default by Mundipharma.&nbsp; Mundipharma may terminate the Collaboration
Agreement upon breach or default, filing of voluntary or involuntary bankruptcy by Novelos, the termination of certain agreements
with companies associated with the originators of the licensed technology, or 30-day notice for no reason.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has suspended development of the products covered
by the collaboration agreements described above. The Company does not anticipate that the collaboration agreements will have a
material effect on its future results of operations, cash flows, and financial position.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>7. CONVERTIBLE DEBT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On January 25, 2010, Cellectar issued nine convertible promissory
notes (&ldquo;Convertible Notes&rdquo;) in an aggregate principal amount of $2,720,985.&nbsp; The Convertible Notes provided for
interest of 12% compounded annually with a maturity date of the earlier of (i) the date on which Cellectar&rsquo;s cash reserves
fall below $250,000 or (ii) January 20, 2011.&nbsp; Upon an event of default, as defined, the interest rate increased by 10% to
22%.&nbsp; The outstanding principal balance, together with any unpaid interest, was convertible immediately, by the lenders, into
common stock of the Company at $0.82987 per share (giving effect to the Exchange Ratio).&nbsp; Furthermore, the Convertible Notes
were subject to an automatic conversion feature equal to 70% of the per share price of a qualified financing, should the Company
complete a qualified financing transaction which raises at least $20,000,000 in proceeds to the Company.&nbsp; Since the Convertible
Notes were convertible into common stock at date of issuance at a per share price which was less than the estimated fair value
of the Company&rsquo;s common stock at that date, the Convertible Notes contained a beneficial conversion feature (&ldquo;BCF&rdquo;).&nbsp;
The estimated intrinsic value of the BCF of $213,792 was determined as the difference between the conversion price and the estimated
fair value of Cellectar common stock on the date of issuance, multiplied by the 3,278,786 shares of common stock into which the
Convertible Notes were convertible at issuance. This amount was recorded as a component of interest expense on the date of issuance.&nbsp;
The estimated per-share fair value of Cellectar common stock was determined by management based on a number of factors including
an independent valuation, which was determined to be the best indication of the fair value as of the issuance date of the Convertible
Notes.&nbsp; Since the conversion price was subject to adjustment in the event of a qualified transaction, as defined, the Convertible
Notes also contain a contingent beneficial conversion feature (&ldquo;CBCF&rdquo;).&nbsp; This contingency did not materialize;
therefore no intrinsic value was allocated to the CBCF.&nbsp; As of December 31, 2011 and 2010, principal of $0 and $2,720,985
was outstanding, respectively, on the Convertible Notes.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of December 31, 2010, the Convertible Notes were classified
as a long-term obligation on the accompanying December 31, 2010 balance sheet as a result of the conversion of the short-term obligation
through the issuance of equity securities in connection with the Acquisition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On January 20, 2011, the Convertible Notes matured but remained
unpaid.&nbsp; Following the maturity and default of the Convertible Notes, the holders of the Convertible Notes agreed that all
of the outstanding Convertible Notes would be automatically converted simultaneous with the completion of an acquisition and financing
(the &ldquo;Conversion Time&rdquo;), if completed.&nbsp; The amount of shares issued upon such conversion would be dependent on
the amount of investment made by the note holders at the Conversion Time and were negotiated based on outstanding principal and
projected accrued interest based on an assumed closing date for the acquisition and financing.&nbsp; Since the number of shares
to be issued upon conversion could not be determined until the Conversion Time, the Convertible Notes contained a CBCF.&nbsp; On
April 1, 2011, Cellectar&rsquo;s Board of Directors voted to accept the note holders consent to convert the Convertible Notes into
4,181,535 shares of common stock immediately prior to the Acquisition.&nbsp; On April 8, 2011, immediately prior to the Acquisition,
the principal and unpaid interest on the Convertible Notes was converted into the agreed total of 4,181,535 shares of common stock.&nbsp;
Upon conversion of the Convertible Notes, the Company reclassified the aggregate outstanding principal and interest totaling $3,184,707
to a component of additional paid-in capital.&nbsp; The revised conversion terms resulted in the issuance of an additional 343,963
shares of common stock over the 3,837,572 shares of common stock that would have been issued if the unpaid principal and accrued
interest on the Convertible Notes had been converted on that date in accordance with their original terms at the stated conversion
price.&nbsp; On the date of conversion, the Company determined that the value of these additional shares was $257,973, based on
the $0.75 per share offering price of the common stock sold in the private placement completed concurrently with the Acquisition,
which is the best indication of fair value on the date of conversion.&nbsp; Since the conversion was not completed until April
8, 2011, the value of the additional shares of $257,973 was recorded as a component of interest expense during the second quarter
of 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>8.&nbsp; LONG-TERM NOTES PAYABLE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On January 11, 2008, Cellectar entered into a loan agreement
with a bank to borrow up to $1,200,000.&nbsp; The borrowing, evidenced by a note (the &ldquo;Bank Note&rdquo;), bore interest at
a rate of 7.01% per annum, could be prepaid without penalty and was payable in 48 monthly principal and interest payments of $20,520
with a balloon payment of any remaining unpaid principal and interest on March 28, 2012.&nbsp; In the event of default of payment,
Cellectar would be required to pay a late charge equal to 5% of the delinquent payment and the interest rate on the unpaid principal
would be increased by 3%.&nbsp; The Bank Note was collateralized by substantially all assets of Cellectar and a deposit account
in the amount of $500,000.&nbsp; As of December 31, 2010, the cash collateral is classified as restricted cash in the accompanying
balance sheet.&nbsp;&nbsp; On April 8, 2011, immediately prior to the Acquisition, Cellectar paid approximately $627,000 in full
settlement of the Bank Note. The payment was made in order to avoid an event of default that would have occurred as a result of
the change of control that occurred at the time of the Acquisition. As of December 31, 2011 and 2010, $0 and $470,941 are classified
as a long-term note payable in the accompanying balance sheets, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 15, 2010, Cellectar entered into certain loan agreements
with the Wisconsin Department of Commerce (&ldquo;WDOC Notes&rdquo;) to borrow a total of $450,000.&nbsp; The WDOC Notes bear interest
at 2% per annum beginning on the date of disbursement and allow for the deferral of interest and principal payments until April
30, 2015.&nbsp; In the event of default of payment, interest on the delinquent payment is payable at a rate equal to 12% per annum.&nbsp;
Monthly payments of $20,665 for principal and interest shall commence on May 1, 2015 and continue for 23 equal installments with
the final installment of any remaining unpaid principal and interest due on April 1, 2017.&nbsp; As of December 31, 2011 and 2010,
$450,000 is classified as a long-term note payable in the accompanying balance sheets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Long-term notes payable consists of the following as of December
31:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="RIGHT" STYLE="border-collapse: collapse; width: 93%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 78%; text-align: left">Bank Note, 7.01% interest</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">675,743</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Wisconsin Department of Commerce,&nbsp; 2% interest</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">450,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">450,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">450,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,125,743</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Less current portion</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(204,802</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Long-term note payable, net of current portion</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">450,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">920,941</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE><BR STYLE="clear: both">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of December 31, 2011, long-term notes payable matures as
follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="RIGHT" STYLE="border-collapse: collapse; width: 93%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Years ended December 31,</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">2012</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">2013</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">2014</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 89%; text-align: left; text-indent: -9pt; padding-left: 9pt">2015</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%; text-align: right">119,957</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">2016</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">243,591</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt; text-align: left">Thereafter</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">86,452</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">450,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE><BR STYLE="clear: both">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the years ended December 31, 2011 and 2010, the Company
incurred approximately $17,500 and $62,000 of interest expense related to these long-term notes payable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">No payments were made on long-term obligations in the nine months
ended September 30, 2012. The Company incurred approximately $7,000 of interest expense related to the long-term notes payable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of September 30, 2012, the outstanding principal on the WDOC
Notes of $450,000 is classified as long-term debt outstanding in the accompanying balance sheet.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>9. STOCKHOLDERS&rsquo; EQUITY</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On January 1, 2008, Cellectar converted from a Wisconsin limited
liability company to a Wisconsin corporation (the &ldquo;Conversion&rdquo;). Each issued and outstanding unit of equity in the
limited liability company immediately prior to the Conversion was converted into one issued and outstanding share of Cellectar
common stock and each unexercised unit option outstanding immediately prior to the Conversion was converted into an option to acquire
the same number of shares of the corporation&rsquo;s common stock.&nbsp; For the purpose of presentation in these financial statements,
all amounts and disclosures related to equity issuances prior to the Acquisition have been retroactively restated by applying the
Exchange Ratio in order to reflect the capital structure of Novelos and therefore the issuance of Novelos common stock, rather
than member units in the limited liability company or common stock of Cellectar, as applicable.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">From inception until the Acquisition on April 8, 2011, Cellectar
issued 12,559,218 shares of common stock for net proceeds of approximately $21,710,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>April 2011 Private Placement</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Concurrently with and conditioned upon the execution of the
Merger Agreement, the Company entered into a securities purchase agreement with certain accredited investors under which the Company
sold an aggregate of 6,846,537 units, each unit consisting of one share of its common stock and a warrant to purchase one share
of its common stock, at a price of $0.75 per unit, for gross proceeds of approximately $5,135,000 (the &ldquo;April Private Placement&rdquo;).&nbsp;
The warrants have an exercise price of $0.75 and expire on March 31, 2016.&nbsp; The warrant exercise price and/or the common stock
issuable pursuant to such warrant will be subject to adjustment only for stock dividends, stock splits or similar capital reorganizations
so that the rights of the warrant holders after such event will be equivalent to the rights of warrant holders prior to such event.&nbsp;
The relative fair value of the warrants issued to the investors was $2,124,286 at issuance and has been included as a component
of stockholders&rsquo; equity.&nbsp; The Company uses the Black-Scholes option pricing model to value warrants and applies assumptions
that consider, among other variables, the fair value of the underlying stock, risk-free interest rate, volatility, expected life
and dividend rates in estimating fair value for the warrants. Assumptions used are generally consistent with those disclosed for
stock-based compensation (see Note 10).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The securities purchase agreement includes certain registration
requirements which were subsequently extended by the consent of purchasers holding a majority of shares of the Company&rsquo;s
common stock issued in the April Private Placement, which holders constituted the requisite holders, as defined. The Company was
required to file with the SEC a registration statement covering the resale of the shares of common stock and the shares of common
stock underlying the warrants issued pursuant to the securities purchase agreement that are not otherwise saleable under an available
exemption from registration requirements.&nbsp; The Company was also required to use commercially reasonable efforts to have the
registration statement declared effective by July 28, 2012 and is required to keep the registration statement continuously effective
under the Securities Act of 1933, as amended (the &ldquo;Securities Act&rdquo;), until the earlier of the date when all the registrable
securities covered by the registration statement have been sold or such time as all the registrable securities covered by the registration
statement can be sold under Rule 144 without any volume limitations. The Company filed a registration statement with the SEC on
July 17, 2012 covering the resale of 4,000,000 shares of common stock pursuant to the registration requirements and this registration
statement was declared effective on July 26, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company will be allowed to suspend the use of the registration
statement for not more than 30 consecutive days on not more than two occasions in any 12-month period (the &ldquo;Allowed Delay&rdquo;).&nbsp;
If the Company suspends the use of the registration for longer than the Allowed Delay, it may be required to pay to the purchasers
liquidated damages equal to 1.5% per month (pro-rated on a daily basis for any period of less than a full month) of the aggregate
purchase price of the units purchased until the use of the registration statement is no longer suspended, not to exceed 5% of the
aggregate purchase price.&nbsp; The Company has also granted piggy-back registration rights with respect to any shares of common
stock that it is required to exclude from the registration statement as a condition of its effectiveness, and has also agreed to
file further registration statements with respect to any such shares six months after the effective date of the initial registration
statement. As of December 31, 2011, and through the date of this filing, the Company has not concluded that it is probable that
damages will become due; therefore, no accrual for damages has been recorded.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company paid to the placement agent for the financing a
cash fee equal to $200,000 and issued warrants to purchase 192,931 shares of its common stock (having an exercise price of $0.75
and which expire March 31, 2016) in consideration for their advisory services with respect to the financing pursuant to the placement
agency agreement.&nbsp; The placement agent is entitled to registration rights with respect to the shares of common stock issuable
upon exercise of these warrants.&nbsp; The cash fee was recorded as a reduction of gross proceeds received.&nbsp; The estimated
fair value of the warrants issued to the placement agent was $112,096 and was recorded as a component of stockholders&rsquo; equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>December 2011 Underwritten Offering</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On December 6, 2011, the Company completed an underwritten public
offering of 10,081,667 shares of its common stock and warrants to purchase up to an aggregate of 10,081,667 shares of its common
stock at an exercise price of $0.60 per share, expiring on December 6, 2016, for gross proceeds of $6,049,000 and net proceeds
of $5,298,140 after deducting transaction costs (the &ldquo;Underwritten Offering&rdquo;). The warrant exercise price and the common
stock issuable pursuant to such warrant are subject to adjustment only for stock dividends, stock splits and similar capital reorganizations
so that the rights of the warrant holders after such event will be equivalent to the rights of the warrant holders prior to such
event. The relative fair value of the warrants issued to the investors was $2,350,320 at issuance and has been included as a component
of stockholders&rsquo; equity.&nbsp; The Company uses the Black-Scholes option pricing model to value warrants and applies assumptions
that consider, among other variables, the fair value of the underlying stock, risk-free interest rate, volatility, expected life
and dividend rates in estimating fair value for the warrants. Assumptions used are generally consistent with those disclosed for
stock-based compensation (see Note 10). The Company paid the underwriter a cash fee of $302,000, which was recorded as a reduction
of the gross proceeds received.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>June 2012 Public Offering</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On June 13, 2012, pursuant to securities purchase agreements
entered into with investors on June 7, 2012, the Company completed a registered public offering of an aggregate of 5,420,800 shares
of its common stock, warrants to purchase up to an aggregate of 5,420,800 at an exercise price of $1.00 per share, exercisable
for 90 days from issuance (the &ldquo;Class B Warrants&rdquo;), and warrants to purchase up to an aggregate of 2,710,400 shares
of its common stock at an exercise price of $1.25 per share, exercisable for five years from issuance, for total gross proceeds
of $5,420,800 and net proceeds of $4,870,978 after deducting transaction costs (the &ldquo;June Offering&rdquo;). The warrant exercise
price and the common stock issuable pursuant to such warrants are subject to adjustment only for stock dividends, stock splits
and similar capital reorganizations, in which event the rights of the warrant holders would be adjusted as necessary so that they
would be equivalent to the rights of the warrant holders prior to such event. The relative fair value of the warrants issued to
the investors was $1,994,631 at issuance and has been included as a component of stockholders&rsquo; equity.&nbsp; In the June
Offering, the Company paid a cash fee of $379,456 and issued warrants to purchase 271,040 shares of its common stock at an exercise
price of $1.25 per share expiring on June 13, 2017 to the placement agent. The cash fee was recorded as a reduction of the gross
proceeds received. The estimated fair value of the warrants issued to the placement agent was $255,703 and was recorded as a component
of stockholders&rsquo; equity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 10, 2012, the Company amended the terms of the
Class B Warrants with investors who held warrants to purchase 5,255,000 shares of our common stock to extend the expiration date
for the exercise of such warrants until October 11, 2012. An investor who held Class B Warrants to purchase 15,000 shares of our
common stock did not elect to amend their agreement and such warrants expired on September 11, 2012. These warrants had been issued
in connection with the June Offering, had an expiration date of September 11, 2012 and were exercisable at a price of $1.00 per
share. The modification of the expiration date of the warrants resulted in a deemed dividend to warrant holders of $543,359 which
was calculated as the difference between the fair value of the warrants immediately before and after the modification using the
Black-Scholes option pricing model. The deemed dividend is reflected as an adjustment to net loss to arrive at net loss attributable
to common stockholders in the nine months ended September 30, 2012. Since the Company had an accumulated deficit at the time of
the modification, there was no impact to the components of stockholders&rsquo; equity as a result of the recognition of the deemed
dividend.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the nine months ended September 30, 2012, Class B Warrants
were exercised for an aggregate of 150,800 shares of common stock and the Company received aggregate cash proceeds of $150,800
in respect of those exercises. Subsequent to September 30, 2012, Class B Warrants were exercised for an aggregate of 937,500 shares
of common stock and the Company received aggregate cash proceeds of $937,500. The balance of the Class B Warrants, exercisable
for up to 4,317,500 shares of common stock, expired (see Note 19).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>November Private Placement </I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">See Note 19 for details regarding a private placement of common
stock and warrants that was completed in November 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Legacy Warrants</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Outstanding warrants to purchase 315,164 shares of common stock,
originally issued in connection with Novelos equity and debt financings from 2007 through 2010, remained outstanding subsequent
to the Acquisition (Note 4).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Common Stock Warrants</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table summarizes information with regard to outstanding
warrants to purchase common stock as of December 31, 2011.&nbsp; There were no outstanding common stock purchase warrants as of
December 31, 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold"><B>Offering</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Number&nbsp;of&nbsp;Shares<BR>
Issuable&nbsp;Upon<BR>
Exercise&nbsp;of<BR>
Outstanding<BR>
Warrants</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Exercise<BR>
Price</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Expiration&nbsp;Date</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 40%">December 6, 2011 Underwritten Offering</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 4%">&nbsp;</TD>
    <TD STYLE="width: 15%; text-align: right">10,081,667</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">$</TD>
    <TD STYLE="width: 15%; text-align: right">0.60</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 17%; text-align: right">December 6, 2016</TD>
    <TD STYLE="width: 1%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>April 8, 2011 Private Placement</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">7,039,468</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">March 31, 2016</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Legacy warrants (1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">77,729</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">0.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">July 27, 2015</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Legacy warrants</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">105,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">16.065</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">July 27, 2015</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>Legacy warrants</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">91,524</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">99.45-100.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">December 31, 2015</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>Legacy warrants</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid">&nbsp;</TD>
    <TD STYLE="border-bottom: black 1pt solid; text-align: right">8,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>$</TD>
    <TD STYLE="text-align: right">191.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: right">May 2, 2012</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Total</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">17,403,989</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="text-align: right; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(1)&nbsp; The exercise prices of these warrants are subject
to adjustment for &ldquo;down-rounds&rdquo; and have been accounted for as derivative instruments as described in Note 3.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On May 4, 2011, 18,153 shares of common stock were issued in
connection with the cashless exercise of warrants to purchase 27,310 shares of common stock at $0.75 per share.&nbsp; The Company
reclassified $48,339 from the derivative liability to additional paid-in capital upon the exercise of the warrants. In connection
with the December 2011 Underwritten Offering, 5,000 warrants previously issued to the placement agent were cancelled.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The warrant activity during the nine months ended September
30, 2012 was as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company issued 23,495 shares of common stock in connection
with the cashless exercise of warrants to purchase50,419 shares of common stock at $0.60 per share expiring on July 27, 2015. The
Company reclassified $43,855 from the derivative liability to additional paid-in capital upon the exercise of the warrants.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company issued 374,597 shares of common stock in connection
with the cashless exercise of warrants to purchase 980,657 shares of common stock at $0.75 per share expiring on March 31, 2016.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company issued 582,981 shares of common stock in connection
with the cashless exercise of warrants to purchase 833,333 shares of common stock. The warrants had an expiration date of December
6, 2016 and an exercise price of $0.60 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company issued 150,800 shares of common stock related to
the exercise of warrants to purchase 150,800 shares of common stock. The warrants had an expiration date of September 11, 2012
and an exercise price of $1.00 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On May 7, 2012, warrants to purchase 8,561 shares of common
stock at $191.25 expired unexercised. On September 11, 2012, warrants to purchase 15,000 shares of common stock at $1.00 per share
expired unexercised.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of September 30, 2012, 23,767,459 warrants remained outstanding.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I><U>Reserved Shares</U></I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following shares were reserved for future issuance upon
exercise of stock options and warrants or conversion of debt:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="RIGHT" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nine&nbsp;Months&nbsp;Ended&nbsp;September&nbsp;30,<BR> (unaudited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">December&nbsp;31,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP>&nbsp;</TD><TD NOWRAP>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 48%">Warrants</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">23,767,459</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">7,327,322</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">17,403,989</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&mdash;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Stock options</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,675,754</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,632,638</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,827,638</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">769,189</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Convertible notes</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3,646,370</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total number of shares reserved for future issuance</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">28,443,213</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,959,960</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">22,231,627</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,415,559</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE><BR STYLE="clear: both">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>10.&nbsp; STOCK-BASED COMPENSATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Prior to the Acquisition, Cellectar&rsquo;s Board of Directors
determined exercise prices and vesting periods on the date of grant, subject to the provisions of the 2006 Unit Option Plan and
the 2008 Stock Incentive Plan (collectively, the &ldquo;Cellectar Plans&rdquo;). Options have been granted at or above the estimated
fair-market value of the common stock at the grant date. Options granted pursuant to the 2006 Cellectar Plan and 2008 Plan generally
would have become fully vested in the event of a business combination whereby the options are not assumed or replaced by the surviving
company, as defined. On March 17, 2011, in contemplation of the Acquisition, Cellectar terminated the remaining options outstanding
granted under the Cellectar Plans and the Cellectar Plans were terminated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In connection with the Acquisition, the Company assumed options
to purchase 49,159 shares of common stock at exercise prices ranging from $1.53 to $1,072.53.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>2006 Novelos Stock Option Plan.</I> &nbsp; Following the
Acquisition, option grants to directors and employees will be made under the Novelos Therapeutics 2006 Stock Incentive Plan (the
&ldquo;Plan&rdquo;).&nbsp; On May 18, 2011, the Board of Directors of the Company approved certain amendments to the Plan to, among
other things, increase the aggregate number of shares of the Company&rsquo;s common stock reserved for issuance under the Plan
(including any shares that have already been issued thereunder), to 7,000,000 and remove the 750,000 share annual individual limitation
on grants under the Plan.&nbsp; On June 30, 2011, the Company&rsquo;s stockholders approved those amendments. On August 23, 2012,
the Board of Directors adopted an amendment to the Plan to increase the aggregate number of common stock reserved for issuance
under the Plan to 10,000,000, which was approved by the Company&rsquo;s stockholders on October 25, 2012 (see Note 19).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A total of 7,000,000 shares of common stock are reserved for
issuance under the Plan for grants of incentive or nonqualified stock options, rights to purchase restricted and unrestricted shares
of common stock, stock appreciation rights and performance share grants.&nbsp; A committee of the board of directors determines
exercise prices, vesting periods and any performance requirements on the date of grant, subject to the provisions of the Plan.&nbsp;
Options are granted at or above the fair market value of the common stock at the grant date and expire on the tenth anniversary
of the grant date.&nbsp; Vesting periods are generally between one and four years.&nbsp; Options granted pursuant to the Plan generally
will become fully vested upon a termination event occurring within one year following a change in control, as defined.&nbsp; A
termination event is defined as either termination of employment or services other than for cause or constructive termination of
employees or consultants resulting from a significant reduction in either the nature or scope of duties and responsibilities, a
reduction in compensation or a required relocation.&nbsp; As of December 31, 2011, there are an aggregate of 2,281,112 shares available
for future grants under the Plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Accounting for Stock-Based Compensation</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company uses the Black-Scholes option-pricing model to calculate
the grant-date fair value of stock option awards. The resulting compensation expense, net of expected forfeitures, for non-performance
based awards is recognized on a straight-line basis over the service period of the award, which is generally three years for stock
options. For stock options with performance-based vesting provisions, recognition of compensation expense, net of expected forfeitures,
commences if and when the achievement of the performance criteria is deemed probable. The compensation expense, net of expected
forfeitures, for performance-based stock options is recognized over the relevant performance period. Evaluation of the probability
of meeting performance targets is evaluated at the end of each reporting period. Non-employee stock-based compensation is accounted
for in accordance with the guidance of FASB ASC Topic 505, <I>Equity.&nbsp;</I> As such, the Company recognizes expense based on
the estimated fair value of options granted to non-employees over their vesting period, which is generally the period during which
services are rendered and deemed completed by such non-employees.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table summarizes amounts charged to expense for
stock-based compensation related to employee and director stock option grants and stock-based compensation recorded in connection
with stock options granted to non-employee consultants:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nine&nbsp;Months&nbsp;Ended<BR> September&nbsp;30,<BR> (unaudited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Year&nbsp;Ended<BR> December&nbsp;31,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Cumulative<BR> Development-<BR> Stage&nbsp;Period<BR> from<BR> November&nbsp;7,<BR> 2002&nbsp;through<BR> December&nbsp;31,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Employee and director stock option grants:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 45%; text-align: left; padding-left: 9pt">Research and development</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">234,816</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">121,393</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">190,172</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">61,791</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">488,558</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">General and administrative</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">747,808</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">349,781</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">570,884</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">291,549</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,148,187</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">982,624</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">471,174</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">761,056</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">353,340</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,636,745</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Non-employee consultant stock option grants:</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Research and development</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">85,265</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">46,851</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,157</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,157</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">General and administrative</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">92,022</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">137,631</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">110,247</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">181,971</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">177,287</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">184,482</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">146,404</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">218,128</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total stock-based compensation</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,159,911</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">655,656</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">907,460</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">353,340</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,854,873</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On July 14, 2010, the expiration date of vested options held
by a former employee was extended until July 8, 2015.&nbsp; The extension constituted a modification to the terms of the award
and additional stock-based compensation was measured as the excess of the fair value of the modified award over the fair value
of the original award immediately before the modification.&nbsp; Accordingly, incremental stock-based compensation expense of approximately&nbsp;$20,000
was recorded in connection with the modification.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company granted 5,026,500 stock options to employees and
non-employees during the twelve months ended December 31, 2011 under the Plan, of which 670,200 were performance-based awards.
As of December 31, 2011, 335,100 of these performance-based awards were outstanding and 335,100 had been forfeited and as of September
30, 2012, 167,550 of these performance-based awards were outstanding and 502,650 had been expired. No compensation expense has
been recognized related to the performance-based awards as the Company does not believe that it is probable that the performance
targets will be met. The Company issued options to purchase a total of 200,000 shares of common stock to non-employees outside
of any formalized plan, but 100,000 were forfeited as a result of the cancellation and replacement as described below.&nbsp; Exercise
prices for all grants made in the during the twelve months ended December 31, 2011 were equal to the market value of the Company&rsquo;s
common stock on the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On May 18, 2011, the Company cancelled 100,000 options originally
granted on April 25, 2011 with an exercise price of $3.00 per share and issued 100,000 replacement stock option awards with an
exercise price of $1.40.&nbsp; The cancellation and replacement constituted a modification to the terms of the award and additional
stock-based compensation was measured as the excess of the fair value of the modified award over the fair value of the original
award immediately before the modification.&nbsp; Accordingly, incremental stock-based compensation expense of $4,494 was recorded
in connection with the modification.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company granted 24,000 stock options to employees during
the nine months ended September 30, 2012 under the Plan. The exercise price for the grants made during the nine months ended September
30, 2012 were equal to the market value of the Company&rsquo;s common stock on the date of grant.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Assumptions Used In Determining Fair Value</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Valuation and amortization method</I>. The fair value of
each stock award is estimated on the grant date using the Black-Scholes option-pricing model.&nbsp; The estimated fair value of
employee stock options is amortized to expense using the straight-line method over the vesting period. The estimated fair value
of the non-employee options is amortized to expense over the period during which a non-employee is required to provide services
for the award (usually the vesting period).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Volatility.</I> Cellectar estimated volatility based on a
review of volatility estimates of publicly held drug development companies in a similar stage of development. Subsequent to the
Acquisition, the Company estimates volatility based on an average of (1) the Company&rsquo;s historical volatility since its common
stock has been publicly traded and (2) review of volatility estimates of publicly held drug development companies with similar
market capitalizations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Risk-free interest rate</I>. The risk-free interest rate
is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term assumption.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Expected term</I>. The expected term of stock options granted
is based on an estimate of when options will be exercised in the future. The Company applied the simplified method of estimating
the expected term of the options, as described in the SEC&rsquo;s Staff Accounting Bulletins 107 and 110, as the Company has had
a significant change in its business operations as result of the Acquisition and the historical experience is not indicative of
the expected behavior in the future. The expected term, calculated under the simplified method, is applied to groups of stock options
that have similar contractual terms. Using this method, the expected term is determined using the average of the vesting period
and the contractual life of the stock options granted. The Company applied the simplified method to non-employees who have a truncation
of term based on termination of service and utilizes the contractual life of the stock options granted for those non-employee grants
which do not have a truncation of service.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Forfeitures.</I> &nbsp; Stock-based compensation expense
is recorded only for those awards that are expected to vest.&nbsp; FASB ASC Topic 718 requires forfeitures to be estimated at the
time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.&nbsp; The term
&ldquo;forfeitures&rdquo; is distinct from &ldquo;cancellations&rdquo; or &ldquo;expirations&rdquo; and represents only the unvested
portion of the surrendered option.&nbsp; An annual forfeiture rate of 0% was applied to all unvested options as of December 31,
2010 as Cellectar had experienced very few forfeitures through 2009 and there was insufficient history to develop an accurate estimate
of future forfeitures.&nbsp; An annual forfeiture rate of 0% was applied to all unvested options as of December 31, 2011 as the
historical experience of forfeitures is not representative of expected future forfeiture rates as a result of the significant changes
in the business operations as a result of the Acquisition. Additionally, the majority of the 2011 forfeitures were related to unmet
milestones on performance-based options that are not representative of the expected future forfeiture rates for the Company&rsquo;s
service-based awards. This analysis will be re-evaluated semi-annually and the forfeiture rate will be adjusted as necessary.&nbsp;
Ultimately, the actual expense recognized over the vesting period will be for only those shares that vest.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table summarizes weighted-average values and assumptions
used for options granted to employees, directors and consultants in the periods indicated:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center"><B>Nine&nbsp;Months&nbsp;<BR> Ended&nbsp;September<BR> 30,&nbsp;2012</B></TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: right">&nbsp;</TD>
    <TD NOWRAP COLSPAN="2" STYLE="border-bottom: windowtext 1pt solid; font-weight: bold; text-align: center">Nine&nbsp;Months<BR> Ended<BR> September&nbsp;30,<BR> 2011</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: left; vertical-align: bottom">&nbsp;</TD>
    <TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Twelve&nbsp;Months<BR>
Ended<BR>
December&nbsp;31,&nbsp;2011</B></TD>
    <TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: bottom; width: 38%; padding-left: 0.4pt">Volatility</TD>
    <TD STYLE="vertical-align: top; width: 3%; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 16%; text-align: right">&nbsp;115</TD>
    <TD STYLE="vertical-align: bottom; width: 3%">%</TD>
    <TD STYLE="vertical-align: bottom; width: 3%; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 13%; text-align: right">110</TD>
    <TD STYLE="vertical-align: bottom; width: 3%; text-align: left">%</TD>
    <TD STYLE="vertical-align: top; width: 3%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 3%">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; width: 13%; text-align: right">110 - 115</TD>
    <TD STYLE="vertical-align: bottom; width: 2%">%&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: bottom; padding-left: 0.4pt">Risk-free interest rate</TD>
    <TD STYLE="vertical-align: top; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;0.925</TD>
    <TD STYLE="vertical-align: bottom">%</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">1.84%-3.17</TD>
    <TD STYLE="vertical-align: bottom; text-align: left">%</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">0.89% &ndash; 3.17</TD>
    <TD STYLE="vertical-align: bottom">%&nbsp;</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: bottom; padding-left: 0.4pt">Expected life (years)</TD>
    <TD STYLE="vertical-align: top; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;6.0</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">5.5 &ndash; 6.25</TD>
    <TD STYLE="vertical-align: bottom; text-align: left">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">5.5 &ndash; 6.25</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: bottom; padding-left: 0.4pt">Dividend</TD>
    <TD STYLE="vertical-align: top; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;0</TD>
    <TD STYLE="vertical-align: bottom">%</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">0</TD>
    <TD STYLE="vertical-align: bottom; text-align: left">%</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">0</TD>
    <TD STYLE="vertical-align: bottom">%</TD></TR>
<TR STYLE="background-color: rgb(204,255,204)">
    <TD STYLE="vertical-align: bottom; padding-left: 0.4pt">Weighted-average exercise price</TD>
    <TD STYLE="vertical-align: top; text-align: right">$</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;1.00</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">$</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">1.45</TD>
    <TD STYLE="vertical-align: bottom; text-align: left">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">$</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">1.16</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD></TR>
<TR STYLE="background-color: White">
    <TD STYLE="vertical-align: bottom; padding-left: 0.4pt">Weighted-average grant-date fair value</TD>
    <TD STYLE="vertical-align: top; text-align: right">$</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">&nbsp;0.85</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">$</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">1.22</TD>
    <TD STYLE="vertical-align: bottom; text-align: left">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: bottom">$</TD>
    <TD STYLE="vertical-align: bottom; text-align: right">0.98</TD>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Stock Option Activity</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A summary of stock option activity under stock option plans
is as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Number&nbsp;of<BR> Shares<BR> Issuable&nbsp;Upon<BR> Exercise&nbsp;of<BR> Outstanding<BR> Options</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted<BR> Average<BR> Exercise&nbsp;Price</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Weighted<BR> Average<BR> Remaining<BR> Contracted<BR> Term&nbsp;in<BR> Years</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Aggregate<BR> Intrinsic<BR> Value</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">Outstanding at November 7, 2002</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 48%; padding-left: 9pt">Granted</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">922,654</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2.52</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Forfeited</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(12,653</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; text-align: right">3.04</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">Outstanding at January 1, 2009</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">910,001</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2.86</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">90,929</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">0.76</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt">&nbsp;&nbsp;Forfeited</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(9,194</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; text-align: right">2.72</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">Outstanding at December 31, 2009</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">991,736</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2.68</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-indent: -9pt; padding-left: 0.25in">Canceled</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(222,547</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; text-align: right">2.63</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">Outstanding at December 31, 2010</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">769,189</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2.69</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">&nbsp;&nbsp;Canceled</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(769,189</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2.69</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Options acquired in connection with a business combination</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">49,159</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">100.52</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,226,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Canceled</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(9,992</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">115.16</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Forfeited</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(438,029</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; text-align: right">2.44</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-indent: -9pt; padding-left: 9pt">Outstanding at December 31, 2011</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,827,638</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.82</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Granted</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">24,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.00</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 9pt">Forfeited</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(175,884</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">$</TD><TD STYLE="padding-bottom: 1pt; text-align: right">1.36</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Outstanding at September 30, 2012 (unaudited)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,675,754</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">$</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">1.82</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Vested, December 31, 2010</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">743,450</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">$</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">2.69</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">4.07</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Unvested, December 31, 2010</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">25,739</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">$</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">2.62</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">5.08</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Exercisable at December 31, 2010</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">743,450</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">$</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">2.69</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">4.07</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Vested, December 31, 2011</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">636,634</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">$</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">6.48</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">9.17</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Unvested, December 31, 2011</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,191,004</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">$</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">1.12</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">9.59</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Exercisable at December 31, 2011</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">636,634</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">$</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">6.48</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">9.17</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Vested, September 30, 2012 (unaudited)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,954,046</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">$</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">2.92</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">8.69</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">252,062</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Unvested, September 30, 2012 (unaudited)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,721,708</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">$</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">1.06</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">8.87</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">620,198</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Exercisable at September 30, 2012 (unaudited)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,954,046</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">$</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">2.92</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: right">8.69</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">252,062</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">There were no stock options granted during the twelve months
ended December 31, 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The aggregate intrinsic value of options outstanding is calculated
based on the positive difference between the estimated per-share fair value of common stock at the end of the respective period
and the exercise price of the underlying options.&nbsp;At December 31, 2011 and 2010, the estimated fair-market value of common
stock was less than the exercise price of the underlying options, as such, the aggregate intrinsic value is $0.&nbsp; There have
been no option exercises to date. Shares of common stock issued upon the exercise of options are from authorized but unissued shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The weighted-average grant-date fair value of options granted
during the year ended December 31, 2011 and for the period from November 7, 2002 to December 31, 2011 was $0.98 and $1.28, respectively.&nbsp;
There were no options granted during the year ended December 31, 2010.&nbsp; The total fair value of shares vested during December
31, 2011 and 2010 and for the period November 7, 2002 (date of inception) to December 31, 2011 was $756,400, $199,600 and $2,806,400,
respectively.&nbsp; &nbsp;The weighted-average grant-date fair value of vested and unvested options outstanding at December 31,
2011 and 2010 was $1.31 and $0.89 and $2.01 and $1.91, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of December 31, 2010, there was approximately $58,000 of
total unrecognized compensation cost, all of which was attributable to unvested stock-based compensation arrangements related to
employees, which was recognized in the twelve months ended December 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 4, 2011, in contemplation of the Acquisition and in
accordance with terms of the applicable option agreements, Cellectar accelerated the vesting on all outstanding and unvested options
at that date and notified all option holders that any unexercised options as of March 17, 2011 would then be terminated.&nbsp;
On March 17, 2011, Cellectar terminated all outstanding options.&nbsp; The remaining unamortized compensation expense of $58,000
was recorded related to the acceleration of outstanding options in the quarter ended March 31, 2011.&nbsp; No additional compensation
expense was recorded related to the acceleration of unvested shares as the acceleration did not represent a modification to the
original terms of the options.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of December 31, 2011, there was $2,956,117 of total unrecognized
compensation cost related to unvested stock-based compensation arrangements.&nbsp; Of this total amount, the Company expects to
recognize $1,321,168, $1,051,631, $507,630 and $75,688 during 2012, 2013, 2014 and 2015, respectively.&nbsp; The Company expects
3,855,904 in unvested options to vest in the future.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As of September 30, 2012, there was $2,007,878 of total unrecognized
compensation cost related to unvested stock-based compensation arrangements.&nbsp; Of this total amount, the Company expects to
recognize $332,937, $1,052,094, $512,204 and $110,643 during 2012, 2013, 2014 and 2015, respectively.&nbsp; The Company expects
2,554,158 in unvested options, excluding performance-based awards, to vest in the future.&nbsp; The weighted-average grant-date
fair value of vested and unvested options outstanding at September 30, 2012 was $1.04 and $0.87, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>11. &nbsp;INCOME TAXES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Tax provision (benefit)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-left: 9pt">Current</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 0.25in">Federal</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; padding-left: 0.25in">State</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Total current</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-left: 9pt">Deferred</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; padding-left: 0.25in">Federal</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">(944,333</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">(1,592,000</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt; padding-left: 0.25in">State</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(161,963</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(290,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Total deferred</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,106,296</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,882,000</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Change in valuation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,106,296</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,882,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Deferred tax assets consisted of the following at December 31:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Deferred tax assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%; text-align: left; padding-left: 9pt">Federal net operating loss</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">19,447,371</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">6,116,804</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Federal research and development tax credit carryforwards</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,956,146</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">390,600</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">State net operating loss</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,444,816</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">814,492</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">State research and development tax credit carryforwards</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">597,608</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">220,738</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Capitalized research and development expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,007,013</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Capital loss carryforward (expires beginning in 2012)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">340,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Stock-based compensation expense</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">333,206</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">552,859</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-left: 9pt">Intangible assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">555,198</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-left: 9pt">Charitable contribution carryforwards</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">44,370</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">49,725</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Accrued liabilities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">35,314</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">25,327</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total deferred tax assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,761,042</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,170,545</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Deferred tax liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Depreciable assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(346,870</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(434,056</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Total deferred tax liabilities</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(346,870</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(434,056</TD><TD STYLE="text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Net deferred tax assets</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">38,414,172</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7,736,489</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 9pt">Less valuation allowance</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(38,414,172</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,736,489</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total deferred tax assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;As of December 31, 2011, the Company had federal and state
net operating loss carryforwards (&ldquo;NOLs&rdquo;) of approximately $57,198,000 and $46,533,000 respectively, which expire beginning
in 2031 and 2025, respectively.&nbsp; In addition, the Company has federal and state research and development and investment tax
credits of approximately $1,956,000 and $905,000, respectively.&nbsp; The amount of NOLs which may be utilized annually in future
periods will be limited pursuant to Section 382 of the Internal Revenue Code as a result of substantial changes in the Company&rsquo;s
ownership that have occurred or that may occur in the future.&nbsp; The Company has not quantified the amount of such limitations.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Because of the Company&rsquo;s limited operating history, continuing
losses and uncertainty associated with the utilization of the NOLs in the future, management has provided a full allowance against
the gross deferred tax asset.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company did not have unrecognized tax benefits or accrued
interest and penalties at any time during the years ended December 31, 2011 or 2010, and does not anticipate having unrecognized
tax benefits over the next twelve months.&nbsp; The Company is subject to audit by the IRS and state taxing authorities for tax
periods commencing January 1, 2008. Additionally, the Company may be subject to examination by the IRS for years beginning prior
to January 1, 2008 as a result of its NOLs. However, any adjustment related to these periods would be limited to the amount of
the NOL generated in the year(s) under examination.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">For the nine months ended September 30, 2012, the federal and
state NOLs increased by approximately $6,640,000 as a result of the loss recorded.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>12. &nbsp; NET LOSS PER SHARE</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Basic net loss per share is computed by dividing net loss by
the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by
dividing net loss, as adjusted, by the sum of the weighted average number of shares of common stock and the dilutive potential
common stock equivalents then outstanding.&nbsp; Potential common stock equivalents consist of stock options and convertible debt.&nbsp;
Since there is a net loss attributable to common stockholders for the years ended December 31, 2011 and 2010, the inclusion of
common stock equivalents in the computation for those periods would be antidilutive. Accordingly, basic and diluted net loss per
share is the same for all periods presented.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following potentially dilutive securities have been excluded
from the computation of diluted net loss per share since their inclusion would be antidilutive:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="RIGHT" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Nine&nbsp;Months&nbsp;Ended&nbsp;September&nbsp;30,<BR> (unaudited)</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Twelve&nbsp;Months&nbsp;Ended<BR> December&nbsp;31,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Cumulative<BR> Development-<BR> Stage&nbsp;Period<BR> from&nbsp;November<BR> 7,&nbsp;2002<BR> (inception)<BR> through<BR> December&nbsp;31,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2012</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 35%; text-align: left; padding-bottom: 2.5pt">Convertible debt</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">3,646,370</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="width: 1%; border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="width: 1%; padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">Warrants</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">23,767,459</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7,327,322</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">17,403,989</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">17,403,989</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Stock options</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,675,754</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3,632,638</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,827,638</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">769,189</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,827,638</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE><BR STYLE="clear: both">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>13.&nbsp; COMMITMENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Real Property Leases</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 5, 2007, Cellectar entered into a 36-month lease
for office and manufacturing space, commencing September 15, 2007.&nbsp; The lease provides for the option to extend the lease
under its current terms for seven additional two-year terms.&nbsp; Rent is $8,050 per month for the first year and then escalates
by 3% per year for the duration of the term including any lease extension terms.&nbsp; The lease also requires the payment of monthly
rent of $1,140 for approximately 3,400 square feet of expansion space.&nbsp; The monthly rent for the expansion space is fixed
until such time as the expansion space is occupied at which time the rent would increase to the current per square foot rate in
effect under the original lease terms.&nbsp; The Company is responsible for certain building-related costs such as property taxes,
insurance, and repairs and maintenance.&nbsp; Rent expense is recognized on a straight-line basis and accordingly the difference
between the recorded rent expense and the actual cash payments has been recorded as deferred rent as of each balance sheet dates.&nbsp;
Due to the significant value of leasehold improvements purchased during the initial 3-year lease term and the economic penalty
for not extending the building lease, straight-line rent expense and the associated deferred rent has been calculated over 17 years,
which represents the full term of the lease, including all extensions.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company is required to remove certain alterations, additions
and improvements upon termination of the lease that altered a portion of the rentable space.&nbsp; In no event shall the cost of
such removal, at commercially reasonable rates, paid by the Company exceed $55,000 (&ldquo;Capped Amount&rdquo;). Any amount in
excess of the Capped Amount shall be the obligation of the landlord.&nbsp; The Company is required to maintain a certificate of
deposit equal to the Capped Amount during the term of the lease, which amount is shown as restricted cash on the accompanying balance
sheets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The lease has been extended, in accordance with its terms, through
September 14, 2014. Future minimum lease payments under this non-cancelable lease are approximately as follows:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Years ended December 31,</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 87%; text-align: left; text-indent: -9pt; padding-left: 9pt">2012</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">126,000</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">2013</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">123,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">2014</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">94,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; text-indent: -9pt; padding-left: 9pt">2015</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt; text-indent: -9pt; padding-left: 9pt; text-align: left">Thereafter</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">343,000</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company also leases office space in Newton, MA, which has
a term that is month-to-month and requires monthly rental payments of $5,300.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Rent expense was approximately $170,000 and $143,000 for the
nine months ended September 30, 2012 and 2011, respectively and $197,000 and $159,000 for the years ended December 31, 2011 and
2010, respectively and approximately $1,141,000 from inception to December 31, 2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Equipment Lease</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Certain equipment is leased under a capital lease.&nbsp; The
lease agreement requires monthly principal and interest payments of $217 and expires on September 3, 2014.&nbsp; The outstanding
obligation is being amortized using a 7% interest rate based on comparable borrowing rates.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table provides the estimated future minimum rental
payments under all capital leases together with the present value of the net minimum lease payments as of December 31, 2011:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Minimum<BR> lease<BR> payments</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Less&nbsp;interest</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Present&nbsp;value<BR> of&nbsp;net<BR> minimum<BR> lease<BR> payments</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 61%; text-align: center">2012</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,608</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">373</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,235</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: center">2013</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,608</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">211</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,397</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: center; padding-bottom: 1pt">2014</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,739</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">45</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,694</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,955</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">629</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,326</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The equipment recorded under capitalized leases is included
in fixed assets as of December 31:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 85%; font: 10pt Times New Roman, Times, Serif; margin-left: 0.25in">
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD><TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD><TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 74%; text-align: left">Office equipment</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">10,973</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">10,973</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left; padding-bottom: 1pt">Less accumulated amortization</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(5,123</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,928</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">5,850</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">8,045</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>14.&nbsp; CONTINGENCIES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>Litigation</U></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company is party to certain legal matters that existed with
Novelos prior to the Acquisition. The following summarizes the status of those matters.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>Class Action</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A putative federal securities class action complaint was filed
on March 5, 2010 in the United States District Court for the District of Massachusetts by an alleged shareholder of Novelos, on
behalf of himself and all others who purchased or otherwise acquired Novelos common stock in the period between December 14, 2009
and February 24, 2010, against Novelos and its President and Chief Executive Officer, Harry S. Palmin.&nbsp; On October 1, 2010,
the court appointed lead plaintiffs (Boris Urman and Ramona McDonald) and appointed lead plaintiffs&rsquo; counsel.&nbsp; On October
22, 2010, an amended complaint was filed.&nbsp; The amended complaint claims, among other things, that Novelos violated Section
10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder in connection with alleged misleading
disclosures related to the progress of the Phase 3 clinical trial of NOV-002 for non-small cell lung cancer.&nbsp; On December
6, 2010, the defendants filed a motion to dismiss the complaint with prejudice.&nbsp; On January 20, 2011, the plaintiffs filed
their opposition to our motion and on March 3, 2011, the defendants filed their response to the opposition. On June 23, 2011, the
motion to dismiss was granted and the case was dismissed without prejudice.&nbsp; Because the dismissal was without prejudice,
the plaintiffs could&nbsp;reinstitute the&nbsp;proceeding by filing&nbsp;an amended complaint.&nbsp; On August 5, 2011, the plaintiffs
filed a second amended complaint realleging that the defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 in connection
with alleged misleading disclosures related to the Phase 3 clinical trial for NOV-002 in non-small cell lung cancer. On September
9, 2011, the defendants filed a motion to dismiss the second amended complaint. The plaintiffs&rsquo; opposition to the motion&nbsp;was
filed on&nbsp;October 14, 2011 and the defendants filed a reply brief on November 4, 2011. On June 11, 2012, the second amended
complaint was dismissed with prejudice. The plaintiffs did not file a notice of appeal prior to the expiration of the deadline
for such filing on July 13, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>BAM Dispute</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0in">From its inception through 2010, Novelos was
primarily engaged in the development of certain oxidized glutathione-based compounds for application as therapies for disease,
particularly cancer. These compounds were originally developed in Russia and in June 2000, Novelos acquired commercial rights from
the Russian company (&ldquo;ZAO BAM&rdquo;) which owned the compounds and related Russian patents. In April 2005, Novelos acquired
worldwide rights to the compounds (except for the Russian Federation) in connection with undertaking extensive development activities
in an attempt to secure US Food and Drug Administration (&ldquo;FDA&rdquo;) approval of the compounds as therapies. These development
activities culminated in early 2010 in an unsuccessful Phase 3 clinical trial of an oxidized glutathione compound (NOV-002) as
a therapy for non-small cell lung cancer. After the disclosure of the negative outcome of the Phase 3 clinical trial in 2010, ZAO
BAM claimed that Novelos modified the chemical composition of NOV-002 without prior notice to or approval from ZAO BAM, constituting
a material breach of the June 2000 technology and assignment agreement. In September 2010, Novelos filed a complaint in Massachusetts
Superior Court seeking a declaratory judgment by the court that the June 2000 agreement has been entirely superseded by the April
2005 agreement and that the obligations of the June 2000 agreement have been performed and fully satisfied. ZAO BAM answered the
complaint and alleged counterclaims. In August 2011, Novelos filed a motion for judgment on the pleadings as to the declaratory
judgment count and all counts of ZAO BAM&rsquo;s amended counterclaims. On October 17, 2011, the court ruled in favor of Novelos
on each of the declaratory judgment claims and dismissed all counts of ZAO BAM&rsquo;s counterclaim. Judgment in favor of Novelos
was entered on October 20, 2011. On November 14, 2011 ZAO BAM filed a notice of appeal.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We do not anticipate that these litigation contingencies will
have a material impact on the Company&rsquo;s future financial position, results of operations or cash flows.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>15.&nbsp; EMPLOYEE RETIREMENT PLAN</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On January 1, 2009, Cellectar adopted a Safe Harbor defined
contribution plan under Section 401(k) of the Internal Revenue Code which covered eligible employees who meet minimum age requirements
and allowed participants to contribute a portion of their annual compensation on a pre-tax basis.&nbsp; Cellectar contributed 3%
of each participant&rsquo;s compensation.&nbsp; Contributions made for the year ended December 31, 2010 was $23,000. The plan was
canceled effective August 30, 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Following the Acquisition, the Company has a defined contribution
plan under Section 401(k) of the Internal Revenue Code which allows eligible employees who meet minimum age requirements to contribute
a portion of their annual compensation on a pre-tax basis.&nbsp; The Company has not made any matching contributions under this
plan.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>16.&nbsp; RELATED PARTY TRANSACTIONS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Jamey Weichert, the Company&rsquo;s Chief Scientific Officer
and principal founder of Cellectar, and a director and shareholder of the Company, is a faculty member at the University of Wisconsin-Madison
(&ldquo;UW&rdquo;).&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the year ended December 31, 2011, the Company made contributions
totaling $206,500 to UW, for use towards unrestricted research activities.&nbsp; No payments were made to UW during the year ended
December 31, 2010.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the nine months ended September 30, 2012, the Company
made contributions to UW totaling $206,500 for use towards unrestricted research activities and paid UW $144,044 for costs associated
with clinical trial agreements. The Company made contributions to the UW of $125,000 during the nine months ended September 30,
2011.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>17.&nbsp; SUPPLEMENTAL PRO FORMA INFORMATION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The table below summarizes&nbsp;net loss for the periods shown
as though the Acquisition occurred as of January 1, 2010:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="RIGHT" STYLE="border-collapse: collapse; width: 95%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="6" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">For&nbsp;the&nbsp;Twelve&nbsp;Months&nbsp;Ended&nbsp;December&nbsp;31,</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP>&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2011</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
    <TD COLSPAN="2" NOWRAP STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2010</TD><TD NOWRAP STYLE="padding-bottom: 1pt; font-weight: bold">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="width: 74%">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 10%; text-align: right">&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net loss</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(7,256,438</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,704,966</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
</TABLE><BR STYLE="clear: both">

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The pro forma&nbsp;net loss&nbsp;has been adjusted for the following:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 3%">1) &nbsp;&nbsp;</TD>
    <TD STYLE="width: 97%">Elimination of $165,000, and $361,000 of interest expense for the twelve months ended December 31, 2011 and 2010, respectively; such amounts relate to interest accrued on the Convertible Notes which were converted immediately prior to the Acquisition (see Note 7) and the Bank Note which was paid in full settlement of the note immediately prior to the Acquisition (see Note 8).</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;2) &nbsp;&nbsp;</TD>
    <TD>Recognition of an additional beneficial conversion feature (&ldquo;BCF&rdquo;) of $463,000 in the year ended December 31, 2010 and the elimination of BCF of $258,000 in the year ended December 31, 2011 in connection with the conversion of the Convertible Notes, which is assumed to have occurred on January 1, 2010 for the purpose of pro forma presentation (see Note 7).</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>3) &nbsp;&nbsp;</TD>
    <TD>Elimination of Acquisition costs incurred during the year ended December 31, 2011 and 2010, which are assumed to have been incurred prior to January 1, 2010 for the purpose of presentation in the pro forma statements of operations.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;4) &nbsp;&nbsp;</TD>
    <TD>Elimination of $450,000 of investment banking fees incurred upon the consummation of the Acquisition on April 8, 2011 from the twelve months ended December 31, 2011.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;5) &nbsp;&nbsp;</TD>
    <TD>Elimination of dividends and deemed dividends on Novelos&rsquo; preferred convertible stock, which is assumed to have been exchanged for common stock at January 1, 2010 in order to reflect the post-acquisition capital structure for the purpose of pro forma presentation.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;6) &nbsp;&nbsp;</TD>
    <TD>Elimination of Novelos historical revenue related to the amortization of deferred revenue that was determined to have no fair value in purchase accounting.</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;7) &nbsp;&nbsp;</TD>
    <TD>Elimination of liquidated damages accrued in 2010 related to Novelos&rsquo; convertible preferred stock. The liquidated damages are assumed not to have accrued as the preferred stock&nbsp;is assumed to&nbsp;have been exchanged for common stock at January 1, 2010 in order to reflect the post-acquisition capital structure for the purpose of pro forma presentation.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>18. PROPOSED REVERSE STOCK SPLIT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On June 30, 2011, the Company held a special meeting of stockholders.&nbsp;
At the meeting, the stockholders approved, among other things, separate amendments to the certificate of incorporation that would
effect a reverse split of the Company&rsquo;s common stock within a range of 1:2 to 1:10, and authorized the Company&rsquo;s board
of directors to determine the ratio at which the reverse split will be effected by filing the appropriate amendment to the certificate
of incorporation, or to determine not to proceed with the reverse split at all.&nbsp; The purpose of the proposed reverse split
was to increase the price per share of the Company&rsquo;s common stock in order to exceed the minimum price per share required
to secure a listing on a national securities exchange and was contemplated in connection with the Company&rsquo;s underwritten
public offering that closed on December 6, 2011 (see Note 9). The Company did not obtain the NASDAQ listing and did not effect
the reverse split in connection with the offering. While the Company may effect a reverse split at a later date, the Company has
no immediate plans to proceed with the reverse split or a listing on a national securities exchange.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;<B>19. SUBSEQUENT EVENTS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>November Private Placement</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On November 2, 2012, the Company completed a private
placement of 2,000,000 shares of its common stock, warrants to purchase up to an aggregate of 2,000,000 shares of common
stock at an exercise price of $1.00 per share, exercisable for 90 days from issuance, and warrants to purchase up to an
aggregate of 1,000,000 shares of its common stock at an exercise price of $1.25 per share, exercisable for five years from
issuance, for total gross proceeds of $2,000,000 (the &ldquo;November Private Placement&rdquo;). The warrant exercise price
and the common stock issuable pursuant to such warrants are subject to adjustment only for stock dividends, stock spilts and
similar capital reorganizations, in which event the rights of the warrant holders would be adjusted as necessary so that they
would be equivalent to the rights of the warrant holders prior to such event. The proceeds from the November Private
Placement are designated for use towards the construction of a clinical-stage manufacturing facility for I-124-CLR1404
(LIGHT) at the Company&rsquo;s Madison, WI location. The Company estimates that the project will cost a total of
approximately $3,000,000 and, will take approximately one year to complete. The Company anticipates that construction will
commence in late 2012, although the Company has not yet entered into contractual commitments with vendors. The Company may
seek to obtain the additional capital required to complete the project from additional sales of common stock, proceeds from
warrant exercises, or from equipment financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Warrant Exercises and Expirations</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-family: Times New Roman, Times, Serif">During
October 2012, warrants were exercised for an aggregate of 937,500 shares of common stock underlying the warrants and</FONT> <FONT STYLE="font-family: Times New Roman, Times, Serif">the
Company received cash proceeds of $937,500. The warrants were issued in June 2012, had an amended expiration date of October 11,
2012 and an exercise price of $1.00 per share.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On October 11, 2012, warrants to purchase 4,317,500 shares of
common stock at $1.00 per share expired unexercised.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Stockholder Meeting</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On October 25, 2012, the Company held a special meeting in lieu
of annual meeting of stockholders. At the meeting, the stockholders reelected Thomas Rockwell Mackie, James S. Manuso and John
E. Niederhuber as Class I directors and approved an amendment to the 2006 Stock incentive Plan to increase the number of shares
of common stock issuable thereunder from 7,000,000 to 10,000,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

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    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">In Humans, <B>HOT</B> Targets Cancerous
Tumors - Not Normal Tissue or Bone Marrow</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(SPECT/CT imaging of HOT in Phase 1a and
1b clinical trials)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; color: Red"><IMG SRC="tpg97a.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">HOT Selectively Targets Cancer Stem Cells</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Fluorescence photomicrographs; Green =
uptake of fluorescent-labeled PLE)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; color: Red"><IMG SRC="tpg97b.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">cGMP Radiopharmaceutical Manufacturing Facility
at Our Headquarters in Madison, WI</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><IMG SRC="tpg97c.jpg" ALT=""></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><I>The images provided above are for
illustrative purposes only and may not be indicative of all results.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><I>The above illustrations do not refer
to products approved by the FDA.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><I>Novelos has not received any revenue
from the sale of its products.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B><I>&nbsp;</I></B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>PART II</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>INFORMATION NOT REQUIRED IN PROSPECTUS</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Item 13. Other Expenses of Issuance and Distribution</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table provides information
regarding the various actual and anticipated expenses (other than placement agent fees) payable by us in connection with the issuance
and distribution of the securities being registered hereby.&nbsp;&nbsp;All amounts shown are estimates except the Securities and
Exchange Commission registration fee.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD NOWRAP STYLE="font-weight: bold">Nature of Expense</TD><TD NOWRAP STYLE="font-weight: bold">&nbsp;</TD>
    <TD NOWRAP STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD NOWRAP STYLE="font-weight: bold; text-align: right"><B>Amount</B></TD><TD NOWRAP STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="width: 87%; text-align: left">SEC registration fee</TD><TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">3,410</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Accounting fees and expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">20,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Legal fees and expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">75,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="text-align: left">Transfer agent&rsquo;s fees and expenses</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="text-align: left">Printing and related fees</TD><TD>&nbsp;</TD>
    <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,000</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: White">
    <TD STYLE="padding-bottom: 1pt">Miscellaneous</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom; background-color: rgb(204,255,204)">
    <TD STYLE="padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
    <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">121,410</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
</TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Item 14. Indemnification of Directors and Officers</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Section 102(b)(7) of the Delaware General Corporation Law allows
us to adopt a charter provision eliminating or limiting the personal liability of directors to us or our stockholders for breach
of fiduciary duty as directors, but the provision may not eliminate or limit the liability of directors for (a) any breach of the
director's duty of loyalty to us or our stockholders, (b) any acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (c) unlawful payments of dividends or unlawful stock repurchases or redemptions under
Section 174 of the Delaware General Corporation Law or (d) any transaction from which the director derived an improper personal
benefit. Article Seventh of our charter provides that none of our directors shall be personally liable to us or our stockholders
for monetary damages for any breach of fiduciary duty as a director, subject to the limitations imposed by Section 102(b)(7). Article
Seventh also provides that no amendment to or repeal of Article Seventh shall apply to or have any effect on the liability or the
alleged liability of any director with respect to any acts or omissions of such director occurring prior to such amendment or repeal.
A principal effect of Article Seventh is to eliminate or limit the potential liability of our directors for monetary damages arising
from breaches of their duty of care, unless the breach involves one of the four exceptions described in (a) through (d) above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Section 145 of the Delaware General Corporation Law provides,
in general, that a corporation incorporated under the laws of the State of Delaware, such as us, may indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than
a derivative action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or
agent of another enterprise, against expenses (including attorneys&rsquo; fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. In the case
of a derivative action, a Delaware corporation may indemnify any such person against expenses (including attorneys&rsquo; fees)
actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation,
except that no indemnification will be made in respect of any claim, issue or matter as to which such person will have been adjudged
to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or any other
court in which such action was brought determines such person is fairly and reasonably entitled to indemnity for such expenses.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Article Eighth of our amended and restated certificate of incorporation
and Section 5.1 of our bylaws provide that we will indemnify our directors, officers, employees and agents to the extent and in
the manner permitted by the provisions of the Delaware General Corporation Law, as amended from time to time, subject to any permissible
expansion or limitation of such indemnification, as may be set forth in any shareholders&rsquo; or directors&rsquo; resolution
or by contract.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Item 15. Recent Sales of Unregistered Securities</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In the last three years we have sold the following securities
in reliance on, unless otherwise indicated, the exemption under Section 4(2) of the Securities Act of 1933, as amended, as transactions
not involving any public offering.&nbsp;&nbsp;All share and per share amounts have been adjusted to give effect to the 1-for-153
reverse stock split that occurred immediately prior to the Acquisition.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>From October 1, 2012 through present: </I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On November 2, 2012, pursuant to a securities purchase agreement
dated November 1, 2012 with an institutional investor, we issued 2,000,000 shares of our common stock, warrants to purchase up
to an aggregate of 2,000,000 shares of our common stock at an exercise price of $1.00 per share, exercisable for 90 days from issuance,
and warrants to purchase up to an aggregate of 1,000,000 shares of our common stock at an exercise price of $1.25 per share, exercisable
for five years from issuance, for total gross proceeds of $2,000,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>From July 1, 2012 through September 30, 2012:</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>&nbsp;</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On September 13, 2012, we issued 123,697 shares of common stock
pursuant to the cashless exercise of warrants to purchase 406,451 shares of common stock. The warrants had an expiration date of
March 31, 2016 and an exercise price of $0.75 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>From April 1, 2012 through June 30, 2012:</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On May 18, 2012, we issued 13,210 shares of common stock upon
the cashless exercise of warrants to purchase 23,109 shares of common stock. The warrants had an expiration date of July 27, 2015
and an exercise price of $0.60 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On May 3, 2012, we issued 181,745 shares of common stock upon
the cashless exercise of warrants to purchase 333,333 shares of common stock. The warrants had an expiration date of March 31,
2016 and an exercise price of $0.75 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On April 30, 2012, we issued 25,000 shares of common stock upon
the cashless exercise of warrants to purchase 40,783 shares of common stock. The warrants had an expiration date of March 31, 2016
and an exercise price of $0.75 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On April 26, 2012, we issued 582,981 shares of common stock
upon the cashless exercise of warrants to purchase 833,333 shares of common stock. The warrants had an expiration date of December
6, 2016 and an exercise price of $0.60 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>From January 1, 2012 through March 31, 2012</I>:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 28, 2012, we issued 10,285 shares of our common stock
upon the cashless exercise of warrants to purchase 27,310 shares of common stock.&nbsp;&nbsp;The warrants had an expiration date
of July 27, 2015 and an exercise price of $0.60 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 28, 2012, we issued 44,155 shares of our common stock
upon the cashless exercise of warrants to purchase 200,000 shares of common stock.&nbsp;&nbsp;The warrants had an expiration date
of March 31, 2016 and an exercise price of $0.75 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>2011</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>From July 1, 2011 through December 31, 2011</I>:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">None.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>From April 1, 2011 through June 30, 2011</I>:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On April 8, 2011, we issued an aggregate of 17,001,596 shares
of our common stock as merger consideration to the former shareholders of Cellectar.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Concurrently with the Acquisition, on April 8, 2011, we entered
into a Securities Purchase Agreement with certain accredited investors under which we sold an aggregate of 6,846,537 units, each
unit consisting of one share of our common stock and a warrant to purchase one share of our common stock, at a price of $0.75 per
unit for gross proceeds of $5,134,903.&nbsp;&nbsp;The warrants have an exercise price of $0.75 and expire on March 31, 2016.&nbsp;&nbsp;We
also issued a warrant to purchase 192,931 shares of our common stock for $0.75, expiring March 31, 2016, to the placement agent
in the financing.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On May 3, 2011, we issued 18,153 shares of our common stock
in connection with the cashless exercise of warrants to purchase 27,310 shares of common stock at $0.75 per share.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>From January 1, 2011 through March 31,
2011:</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">None.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>2010</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>From October 1, 2010 through December
31, 2010:</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 30, 2010, we issued 2,228,338
shares of common stock in exchange for all outstanding shares of Series E preferred stock and all outstanding shares of Series
C preferred stock.&nbsp;&nbsp;The issuance was made pursuant to an exchange agreement between the Company and all holders of its
preferred stock.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>From July 1, 2010 through September
30, 2010:</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 27, 2010, we issued five-year warrants
(the Incentive Warrants) to our preferred stockholders for the purchase of up to an aggregate of 105,042 shares of common stock
at an exercise price of $16.07 per share pursuant to a consent and waiver dated July 6, 2010, as amended on July 21, 2010.&nbsp;&nbsp;The
Incentive Warrants were issued in connection with an offering registered under the Securities Act of 1933, as amended, of an aggregate
of 140,056 shares of its common stock and five-year warrants to purchase up to an aggregate of 105,042 shares of its common stock,
for gross proceeds of $1,500,000.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><I>From April 1, 2010 through June 30,
2010:</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">None.&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>From January 1, 2010 through March 31, 2010:</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 90%">We issued 76,769 shares of our common stock upon conversion of approximately 140 shares of our Series E preferred stock, having an aggregate stated value of approximately $7,000,000, and accumulated undeclared dividends thereon.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 90%">We issued 47,000 shares of our common stock upon the cashless exercise of warrants to purchase 77,551 shares of common stock.&nbsp;&nbsp;The warrants had an expiration date of December 31, 2015 and an exercise price of $99.45 per share.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 90%">We issued 1,480 shares of our common stock upon the cashless exercise of warrants to purchase 2,075 shares of common stock.&nbsp;&nbsp;The warrants had an expiration date of August 9, 2010 and an exercise price of $99.45 per share.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 90%">We issued 229 shares of our common stock upon the cashless exercise of warrants to purchase 490 shares of common stock.&nbsp;&nbsp;The warrants had an expiration date of May 2, 2012 and an exercise price of $191.25 per share.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 90%">We issued 2,395 shares of our common stock upon the cashless exercise of warrants to purchase 6,480 shares of common stock. The warrants had an expiration date of March 7, 2011 and an exercise price of $263.16 per share.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 90%">We issued 313 shares of our common stock upon the cashless exercise of warrants to purchase 544 shares of common stock.&nbsp;&nbsp;The warrants had an expiration date of May 2, 2012 and an exercise price of $191.25 per share.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 90%">We issued 2,058 shares of our common stock upon the cashless exercise of warrants to purchase 2,614 shares of common stock. The warrants had an expiration date of April 1, 2010 and an exercise price of $95.62 per share.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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    <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif"><TR><TD STYLE="text-align: center; width: 100%">&nbsp;</TD></TR></TABLE></DIV>
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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>2009</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><I>From October 1, 2009 through December 31, 2009:</I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 90%">We issued 31,384 shares of our common stock upon conversion of approximately 58 shares of our Series E preferred stock, having an aggregate stated value of approximately $2,907,000, and accumulated undeclared dividends thereon.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 90%">We issued 4,330 shares of our common stock upon conversion of 28 shares of our Series C preferred stock having an aggregate stated value of $336,000, and accumulated undeclared dividends thereon.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 90%">We issued 172 shares of our common stock upon the cashless exercise of warrants to purchase an aggregate of 1,316 shares of common stock.&nbsp;&nbsp;The warrants had an expiration date of March 7, 2011 and an exercise price of $263.16 per share.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 90%">We issued 793 shares of our common stock upon the cashless exercise of warrants to purchase an aggregate of 1,320 shares of common stock.&nbsp;&nbsp;The warrants had an expiration date of August 9, 2010 and an exercise price of $0.65 per share.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 90%">We issued 218,648 shares of our common stock upon the cashless exercise of warrants to purchase an aggregate of 320,000 shares of common stock.&nbsp;&nbsp;The warrants had an expiration date of April 1, 2010 and an exercise price of $99.45 per share.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 90%">We issued 249 shares of our common stock upon the cashless exercise of warrants to purchase an aggregate of 396 shares of common stock.&nbsp;&nbsp;The warrants had an expiration date of October 3, 2010 and an exercise price of $99.45 per share.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 7%">&nbsp;</TD>
    <TD STYLE="width: 3%"><FONT STYLE="font-family: Symbol">&middot;</FONT></TD>
    <TD STYLE="width: 90%">We sold 54,466 shares of our common stock and warrants to purchase 19,063 shares of common stock at an exercise price of $100.98 per share for gross proceeds of approximately $5,500,000.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>&nbsp;</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Item 16. Exhibits and Financial Statement Schedules</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD COLSPAN="5" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Incorporated by Reference</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="width: 9%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Exhibit<BR>
No.</B></TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 47%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Description</B></TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 9%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Filed&nbsp;with<BR>
this<BR>
Form S-1</B></TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 7%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Form</B></TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 16%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Filing&nbsp;Date</B></TD>
    <TD NOWRAP STYLE="width: 1%; text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 7%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Exhibit<BR>
No.</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">2.1</TD>
    <TD>&nbsp;</TD>
    <TD>Agreement and Plan of Merger by and among Novelos Therapeutics, Inc., Cell Acquisition Corp. and Cellectar, Inc. dated April 8, 2011&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">April 11, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.1</TD>
    <TD>&nbsp;</TD>
    <TD>Second Amended and Restated Certificate of Incorporation&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">April 11, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">3.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>Amended and Restated By-laws&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">June 1, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">3.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">4.1&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Form of common stock certificate</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">S-1/A</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">November 9, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">4.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Warrant</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;X</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">5.1</TD>
    <TD>&nbsp;</TD>
    <TD>Legal Opinion of Foley Hoag LLP *</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.1</TD>
    <TD>&nbsp;</TD>
    <TD>Employment Agreement with Harry S. Palmin dated January 31, 2006&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">February 6, 2006</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">99.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.2</TD>
    <TD>&nbsp;</TD>
    <TD>Second Amendment to Employment Agreement between the Company and Harry Palmin</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">June 1, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.3</TD>
    <TD>&nbsp;</TD>
    <TD>2000 Stock Option and Incentive Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">SB-2</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 16, 2005</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.2</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.4</TD>
    <TD>&nbsp;</TD>
    <TD>Form of 2004 non-plan non-qualified stock option&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">SB-2</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">November 16, 2005</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.3</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.5</TD>
    <TD>&nbsp;</TD>
    <TD>Form of non-plan non-qualified stock option used from February to May 2005&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">SB-2</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 16, 2005</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.4</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.6</TD>
    <TD>&nbsp;</TD>
    <TD>Form of non-plan non-qualified stock option used after May 2005&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">SB-2</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 16, 2005</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.5</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.7</TD>
    <TD>&nbsp;</TD>
    <TD>Consideration and new technology agreement dated April 1, 2005 with ZAO BAM&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10-QSB</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">August 15, 2005</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.2</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.8</TD>
    <TD>&nbsp;</TD>
    <TD>2006 Stock Incentive Plan, as amended&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">May 23,2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.9</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Incentive Stock Option under Novelos Therapeutics, Inc.&rsquo;s 2006 Stock Incentive Plan&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">December 15, 2006</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.10</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Non-Statutory Stock Option under Novelos Therapeutics, Inc.&rsquo;s 2006 Stock Incentive Plan&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">December 15, 2006</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.2</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;10.11</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Common Stock Purchase Warrant dated May 2, 2007 issued pursuant to the Agreement to Exchange and Consent dated May 2, 2007&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10-QSB</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">May 8, 2007</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">4.2</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.12</TD>
    <TD>&nbsp;</TD>
    <TD>Collaboration Agreement dated February 11, 2009**</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">March 30, 2009</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.39</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.13</TD>
    <TD>&nbsp;</TD>
    <TD>Common Stock Purchase Warrant dated February 11, 2009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">February 18, 2009</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">4.2</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 9%; text-align: center">10.16</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 47%">Form of Placement Agent Agreement Between the Company and Rodman and Renshaw, LLC</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 7%; text-align: center">S-1A</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 16%; text-align: center">June 25, 2010</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 7%; text-align: center">10.50</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.17</TD>
    <TD>&nbsp;</TD>
    <TD>Written Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 6, 2010&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">S-1A</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">July 7, 2010</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.52</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.18</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Common Stock Purchase Warrant issued pursuant to the Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 6, 2010&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">S-1A</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">July 7, 2010</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.53</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.19</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Securities Purchase Agreement dated July 21, 2010&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">July 22, 2010</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.20</TD>
    <TD>&nbsp;</TD>
    <TD>Amendment to Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 21, 2010&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">July 22, 2010</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.2</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.21</TD>
    <TD>&nbsp;</TD>
    <TD>Exchange Agreement dated November 30, 2010 between the Company and the holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">November 30, 2010</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.22</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Common Stock Purchase Warrant dated April 8, 2011&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">April 11, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">4.3</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.23</TD>
    <TD>&nbsp;</TD>
    <TD>Securities Purchase Agreement dated April 8, 2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">April 11, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.24</TD>
    <TD>&nbsp;</TD>
    <TD>Placement Agency Agreement dated April 1, 2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">April 11, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">99.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.25</TD>
    <TD>&nbsp;</TD>
    <TD>License Agreement between Cellectar, LLC and the Regents of the University of Michigan dated September 14, 2003, as amended through June 2010&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;S-1</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;July 1, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;10.31</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.26</TD>
    <TD>&nbsp;</TD>
    <TD>Lease Agreement between Cellectar, LLC and McAllen Properties LLC, as amended and extended to date&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;S-1</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;July 1, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;10.32</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.27</TD>
    <TD>&nbsp;</TD>
    <TD>Loan Agreement between the Wisconsin Department of Commerce and Cellectar, Inc. dated September 15, 2010&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;S-1</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;July 1, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;10.33</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.28</TD>
    <TD>&nbsp;</TD>
    <TD>General Business Security Agreement dated September 15, 2010&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;S-1</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;July 1, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;10.34</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.29</TD>
    <TD>&nbsp;</TD>
    <TD>Underwriting Agreement dated December 1, 2011 between the Company and Rodman and Renshaw, LLC</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">December 7, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">1.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.30</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Warrant dated December 6, 2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">S-1/A</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">November 9, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">4.2</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.31</TD>
    <TD>&nbsp;</TD>
    <TD>Placement Agent Agreement dated April 9, 2012 between the Company and Rodman and Renshaw, LLC</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">S-1</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">April 9, 2012</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.31</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 10%; text-align: center">10.32</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 47%">Form of Securities Purchase Agreement dated June 7, 2012 </TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%; text-align: center">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 7%; text-align: center">8-K</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 16%; text-align: center">June 11, 2012</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 6%; text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.33</TD>
    <TD>&nbsp;</TD>
    <TD>Amendment Agreement dated May 11, 2012 between the Company and Rodman and Renshaw, LLC</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">S-1/A</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">May 14, 2012</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.33</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.34</TD>
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Form of Common Stock Purchase Warrant dated June 13, 2012</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">June 11, 2012</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">4.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.35</TD>
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Form of Amendment to Class B Stock Purchase Warrant</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">September 12, 2012</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.36</TD>
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Securities Purchase Agreement dated November 1, 2012 between
        the Company and Renova Industries Ltd.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10-Q</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">November 6, 2012</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.2</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.37</TD>
    <TD>&nbsp;</TD>
    <TD>Placement Agent Agreement dated November 19, 2012 between the Company and Burrill LLC</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">10.38&nbsp;</P></TD>
    <TD>&nbsp;</TD>
    <TD>Form of Securities Purchase Agreement &nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">21.1</TD>
    <TD>&nbsp;</TD>
    <TD>List of Subsidiaries</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: center">10-K</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">March 9, 2012</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">21.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">23.1</TD>
    <TD>&nbsp;</TD>
    <TD>Consent of Foley Hoag LLP (included in Exhibit 5.1)*</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">23.2</TD>
    <TD>&nbsp;</TD>
    <TD>Consent of Grant Thornton LLP</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">24.1</TD>
    <TD>&nbsp;</TD>
    <TD>Powers of Attorney (included on signature page)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">101</TD>
    <TD>&nbsp;</TD>
    <TD>Interactive Data Files*</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">* To be filed by amendment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">** Portions of this exhibit have been omitted pursuant to a
confidential treatment order.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><I>Item 17. Undertakings.</I></B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">a.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned registrant hereby undertakes:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 14%">&nbsp;</TD>
    <TD STYLE="width: 3%">1.</TD>
    <TD STYLE="width: 83%">To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 17%">&nbsp;</TD>
    <TD STYLE="width: 3%">i.</TD>
    <TD STYLE="width: 80%">To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 17%">&nbsp;</TD>
    <TD STYLE="width: 3%">ii.</TD>
    <TD STYLE="width: 80%">To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the &quot;Calculation of Registration Fee&quot; table in the effective registration statement.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 17%">&nbsp;</TD>
    <TD STYLE="width: 3%">iii.</TD>
    <TD STYLE="width: 80%">To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 14%">&nbsp;</TD>
    <TD STYLE="width: 3%">2.</TD>
    <TD STYLE="width: 83%">That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 14%">&nbsp;</TD>
    <TD STYLE="width: 3%">3.</TD>
    <TD STYLE="width: 83%">To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 14%">&nbsp;</TD>
    <TD STYLE="width: 3%">4.</TD>
    <TD STYLE="width: 83%">That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to the offering shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 14%">&nbsp;</TD>
    <TD STYLE="width: 3%">5.</TD>
    <TD STYLE="width: 83%">That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 20%">&nbsp;</TD>
    <TD STYLE="width: 3%">i.</TD>
    <TD STYLE="width: 77%">Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 20%">&nbsp;</TD>
    <TD STYLE="width: 3%">ii.</TD>
    <TD STYLE="width: 77%">Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 20%">&nbsp;</TD>
    <TD STYLE="width: 3%">iii.</TD>
    <TD STYLE="width: 77%">The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 20%">&nbsp;</TD>
    <TD STYLE="width: 3%">iv.</TD>
    <TD STYLE="width: 77%">Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">b.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to the requirements of the Securities Act of 1933,
as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Newton, Commonwealth of Massachusetts, on November 20, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2" STYLE="font-weight: bold"><B>NOVELOS THERAPEUTICS, INC.</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD COLSPAN="2">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%">&nbsp;</TD>
    <TD STYLE="width: 4%">By:</TD>
    <TD STYLE="width: 46%; border-bottom: black 1pt solid">/s/ Harry S. Palmin</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Harry S. Palmin</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>President and Chief Executive Officer</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We, the undersigned officers and directors of Novelos Therapeutics,
Inc., hereby severally constitute and appoint Harry S. Palmin and Joanne M. Protano, and each of them singly (with full power to
each of them to act alone), our true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution
in each of them for him and in his name, place and stead, and in any and all capacities, to sign for us and in our names in the
capacities indicated below any and all amendments (including post-effective amendments) to this registration statement (or any
other registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities
Act of 1933, as amended), and to file the same, with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as full to all intents
and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any
of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 22%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Signature</B></TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 53%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Title</B></TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 21%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Date</B></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: black 1pt solid">/s/ Harry S. Palmin</TD>
    <TD>&nbsp;</TD>
    <TD>Chief Executive Officer and Director</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 20, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Harry S. Palmin</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;( <I>principal</I> <I>executive officer</I> )</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: black 1pt solid">/s/ Joanne M. Protano</TD>
    <TD>&nbsp;</TD>
    <TD>Chief Financial Officer</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 20, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Joanne M. Protano</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;( <I>principal financial officer and principal accounting officer)</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: black 1pt solid">/s/ Stephen A. Hill </TD>
    <TD>&nbsp;</TD>
    <TD>Chairman of the Board of Directors</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 20, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Stephen A. Hill</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: black 1pt solid">/s/ T. Rockwell Mackie</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 20, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>T. Rockwell Mackie</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: black 1pt solid">/s/ James S. Manuso </TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 20, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>James S. Manuso</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: black 1pt solid">/s/ John Neis</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 20, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>John Neis</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: black 1pt solid">/s/ John E. Niederhuber </TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 20, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>John E. Niederhuber</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 22%; border-bottom: black 1pt solid">/s/ Howard M. Schneider </TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 53%">Director</TD>
    <TD STYLE="width: 2%">&nbsp;</TD>
    <TD STYLE="width: 21%; text-align: center">November 20, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Howard M. Schneider</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: black 1pt solid">/s/ Michael F. Tweedle</TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 20, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Michael F. Tweedle</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="border-bottom: black 1pt solid">/s/ Jamey P. Weichert </TD>
    <TD>&nbsp;</TD>
    <TD>Director</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 20, 2012</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>Jamey P. Weichert</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>EXHIBIT INDEX</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD COLSPAN="5" NOWRAP STYLE="border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Incorporated by Reference</B></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="width: 9%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Exhibit<BR>
No.</B></TD>
    <TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 47%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Description</B></TD>
    <TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 9%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Filed&nbsp;with<BR>
this<BR>
Form S-1</B></TD>
    <TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 7%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Form</B></TD>
    <TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 16%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Filing&nbsp;Date</B></TD>
    <TD NOWRAP STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 7%; border-bottom: black 1pt solid; font-weight: bold; text-align: center"><B>Exhibit<BR>
No.</B></TD></TR>
<TR>
    <TD STYLE="vertical-align: bottom">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD>
    <TD STYLE="vertical-align: top">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">2.1</TD>
    <TD>&nbsp;</TD>
    <TD>Agreement and Plan of Merger by and among Novelos Therapeutics, Inc., Cell Acquisition Corp. and Cellectar, Inc. dated April 8, 2011&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">April 11, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">2.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.1</TD>
    <TD>&nbsp;</TD>
    <TD>Second Amended and Restated Certificate of Incorporation&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">April 11, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">3.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>Amended and Restated By-laws&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">June 1, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">3.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">4.1</TD>
    <TD>&nbsp;</TD>
    <TD>Form of common stock certificate</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">S-1/A</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 9, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">4.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">4.2</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Warrant</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">5.1</TD>
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Legal Opinion of Foley Hoag LLP*</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.1</TD>
    <TD>&nbsp;</TD>
    <TD>Employment Agreement with Harry S. Palmin dated January 31, 2006&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">February 6, 2006</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">99.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.2</TD>
    <TD>&nbsp;</TD>
    <TD>Second Amendment to Employment Agreement between the Company and Harry Palmin</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">June 1, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.3</TD>
    <TD>&nbsp;</TD>
    <TD>2000 Stock Option and Incentive Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">SB-2</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">November 16, 2005</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.2</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.4</TD>
    <TD>&nbsp;</TD>
    <TD>Form of 2004 non-plan non-qualified stock option&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">SB-2</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 16, 2005</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.3</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.5</TD>
    <TD>&nbsp;</TD>
    <TD>Form of non-plan non-qualified stock option used from February to May 2005&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">SB-2</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 16, 2005</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.4</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.6</TD>
    <TD>&nbsp;</TD>
    <TD>Form of non-plan non-qualified stock option used after May 2005&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">SB-2</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">November 16, 2005</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.5</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.7</TD>
    <TD>&nbsp;</TD>
    <TD>Consideration and new technology agreement dated April 1, 2005 with ZAO BAM&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10-QSB</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">August 15, 2005</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.2</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.8</TD>
    <TD>&nbsp;</TD>
    <TD>2006 Stock Incentive Plan, as amended&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">May 23,2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.9</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Incentive Stock Option under Novelos Therapeutics, Inc.&rsquo;s 2006 Stock Incentive Plan&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">December 15, 2006</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.10</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Non-Statutory Stock Option under Novelos Therapeutics, Inc.&rsquo;s 2006 Stock Incentive Plan&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">December 15, 2006</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.2</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;10.11</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Common Stock Purchase Warrant dated May 2, 2007 issued pursuant to the Agreement to Exchange and Consent dated May 2, 2007&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10-QSB</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">May 8, 2007</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">4.2</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 9%; text-align: center">10.12</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 47%">Collaboration Agreement dated February 11, 2009**</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 7%; text-align: center">10-K</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 16%; text-align: center">March 30, 2009</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 7%; text-align: center">10.39</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.13</TD>
    <TD>&nbsp;</TD>
    <TD>Common Stock Purchase Warrant dated February 11, 2009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">February 18, 2009</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">4.2</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.16</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Placement Agent Agreement Between the Company and Rodman and Renshaw, LLC</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">S-1A</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">June 25, 2010</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.50</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.17</TD>
    <TD>&nbsp;</TD>
    <TD>Written Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 6, 2010&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">S-1A</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">July 7, 2010</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.52</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.18</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Common Stock Purchase Warrant issued pursuant to the Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 6, 2010&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">S-1A</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">July 7, 2010</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.53</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.19</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Securities Purchase Agreement dated July 21, 2010&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">July 22, 2010</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.20</TD>
    <TD>&nbsp;</TD>
    <TD>Amendment to Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 21, 2010&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">July 22, 2010</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.2</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.21</TD>
    <TD>&nbsp;</TD>
    <TD>Exchange Agreement dated November 30, 2010 between the Company and the holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">November 30, 2010</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.22</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Common Stock Purchase Warrant dated April 8, 2011&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">April 11, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">4.3</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.23</TD>
    <TD>&nbsp;</TD>
    <TD>Securities Purchase Agreement dated April 8, 2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">April 11, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.24</TD>
    <TD>&nbsp;</TD>
    <TD>Placement Agency Agreement dated April 1, 2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">April 11, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">99.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.25</TD>
    <TD>&nbsp;</TD>
    <TD>License Agreement between Cellectar, LLC and the Regents of the University of Michigan dated September 14, 2003, as amended through June 2010&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;S-1</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;July 1, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;10.31</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.26</TD>
    <TD>&nbsp;</TD>
    <TD>Lease Agreement between Cellectar, LLC and McAllen Properties LLC, as amended and extended to date&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;S-1</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;July 1, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;10.32</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.27</TD>
    <TD>&nbsp;</TD>
    <TD>Loan Agreement between the Wisconsin Department of Commerce and Cellectar, Inc. dated September 15, 2010&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;S-1</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;July 1, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;10.33</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 9%; text-align: center">10.28</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 47%">General Business Security Agreement dated September 15, 2010&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 9%">&nbsp;</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 7%; text-align: center">&nbsp;S-1</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD NOWRAP STYLE="width: 16%; text-align: center">&nbsp;July 1, 2011</TD>
    <TD STYLE="width: 1%">&nbsp;</TD>
    <TD STYLE="width: 7%; text-align: center">&nbsp;10.34</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.29</TD>
    <TD>&nbsp;</TD>
    <TD>Underwriting Agreement dated December 1, 2011 between the Company and Rodman and Renshaw, LLC&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">December 7, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">1.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.30</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Warrant dated December 6, 2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">S-1/A</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">November 9, 2011</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">4.2</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.31</TD>
    <TD>&nbsp;</TD>
    <TD>Placement Agent Agreement dated April 9, 2012 between the Company and Rodman and Renshaw, LLC</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">S-1</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">April 9, 2012</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.31</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.32</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Securities Purchase Agreement</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">June 11, 2012</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.33</TD>
    <TD>&nbsp;</TD>
    <TD>Amendment Agreement dated May 11, 2012 between the Company and Rodman and Renshaw, LLC&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">S-1/A</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">May 14, 2012</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.33</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.34</TD>
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Form of Common Stock Purchase Warrant dated June 13, 2012</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">June 11, 2012</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">4.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.35</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Amendment to Class B Stock Purchase Warrant</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">8-K</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">September 12, 2012</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.36</TD>
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Securities Purchase Agreement between the Company and Renova
        Industries Ltd.</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10-Q</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">November 6, 2012</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">10.2</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.37</TD>
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Placement Agent Agreement dated November 19, 2012 between the
        Company and Burrill LLC</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">10.38</TD>
    <TD>&nbsp;</TD>
    <TD>Form of Securities Purchase Agreement</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">21.1</TD>
    <TD>&nbsp;</TD>
    <TD>List of Subsidiaries</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: center">10-K</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">March 9, 2012</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">21.1</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">23.1</TD>
    <TD>&nbsp;</TD>
    <TD>Consent of Foley Hoag LLP (included in Exhibit 5.1)*</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">23.2</TD>
    <TD>&nbsp;</TD>
    <TD>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Consent of Grant Thornton LLP</P>
        <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">24.1</TD>
    <TD>&nbsp;</TD>
    <TD>Powers of Attorney (included on signature page)</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">X</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="text-align: center">101</TD>
    <TD>&nbsp;</TD>
    <TD>Interactive Data Files*</TD>
    <TD>&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: right">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD>
    <TD STYLE="text-align: center">&nbsp;</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">* To be filed by amendment.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">** Portions of this exhibit have been omitted pursuant to a
confidential treatment order.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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{"company-data": {"conformed-name": "NOVELOS THERAPEUTICS, INC.", "cik": "0001279704", "assigned-sic": "2834", "irs-number": "043321804", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-185053", "film-number": "121216639"}, "business-address": {"street1": "ONE GATEWAY CENTER, SUITE 504", "city": "NEWTON", "state": "MA", "zip": "02458", "phone": "617-244-1616"}, "mail-address": {"street1": "ONE GATEWAY CENTER, SUITE 504", "city": "NEWTON", "state": "MA", "zip": "02458"}, "former-company": {"former-conformed-name": "COMMON HORIZONS INC", "date-changed": "20040211"}}
As filed with the Securities and Exchange
Commission on November 20, 2012
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
NOVELOS THERAPEUTICS, INC.
(Exact name of registrant as specified
in its charter)
Delaware
2834
04-3321804
(State or other jurisdiction
of incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
One Gateway Center
Suite 504
Newton, Massachusetts 02458
(617) 244-1616
(Address, including zip code, and telephone
number, including area code, of registrant's principal executive offices)
Harry S. Palmin
President and Chief Executive Officer
Novelos Therapeutics, Inc.
One Gateway Center, Suite 504
Newton, Massachusetts 02458
(617) 244-1616
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
Copies to:
Paul Bork, Esq.
Foley Hoag LLP
155 Seaport Boulevard
Boston, Massachusetts 02210
(617) 832-1000
Approximate date of commencement of proposed
sale to the public:
As soon as practicable after this Registration Statement is declared effective.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, check the following box.
x
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement number of the earlier effective registration statement for
the same offering.
¨
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule
12b-2 of the Exchange Act.
(Check one):
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
x
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
Title of Each Class of
Securities to be
Registered
Amount being
Registered
Proposed
Maximum
Offering
Price Per
Security
Proposed
Maximum
Aggregate
Offering
Price (1)
Amount of Registration Fee
Units consisting of Common Stock and Warrants
11,764,706
$
-
$
-
$
-
Common Stock, par value $0.00001 per share  (2)
11,764,706
$
0.85
$
10,000,000
$
1,364.00
Warrants to purchase Common Stock (2)
17,647,059
$
-
$
-
$
-
Common Stock issuable upon exercise of Warrants
17,647,059
$
0.85
$
15,000,000
$
2,046.00
Total
$
25,000,000
$
3,410.00
(1)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended, using the closing price as reported on the OTC Markets on November 16, 2012, which was $0.85.
(2)
Pursuant to Rule 416, the securities being registered hereunder include such indeterminate number of additional shares of common stock as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions.
The registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment
which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
The information in this preliminary prospectus
is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting
offers to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED
November 20, 2012
PRELIMINARY PROSPECTUS
Novelos Therapeutics, Inc.
11,764,706 Units Consisting of
11,764,706 Shares of Common Stock and
Class A Warrants to Purchase 5,882,353
Shares of Common Stock
Class B Warrants to Purchase 11,764,706
Shares of Common Stock
We are offering up to 11,764,706 units
consisting of 11,764,706 shares of our common stock, Class A Warrants to purchase up to 5,882,353 shares of our common stock
and Class B Warrants to purchase up to 11,764,706 shares of common stock. The Class A Warrants and Class B Warrants will be exercisable
immediately after the closing of this offering. The Class A Warrants will be exercisable until the close of business on the           anniversary
of the date of issuance at an exercise price equal to $         and the Class B Warrants
will be exercisable until the close of business on the           day following
the date of issuance at an exercise price equal to $          . Each investor
will receive, for each unit purchased, a share of common stock, a Class A Warrant to purchase one-half of a share of our common
stock and a Class B Warrant to purchase one share of our common stock. The units will not be certificated and the common stock
and warrants will be immediately separable and will be separately transferable immediately upon issuance. The securities are being
offered on a "best efforts" basis, and we are not required to sell any specific dollar amount or number of securities.
The offering price for the units and the exercise price of the warrants will remain fixed for the duration of the offering. All
costs associated with the registration will be borne by us.
Our common stock is quoted on the OTCQX platform of OTC Markets
under the symbol NVLT. We do not intend to apply for a listing of the warrants on any securities exchange and we do not expect
that the warrants will be quoted on OTC Markets. On November 19, 2012, the last reported sale price of our common stock on the
OTCQX was $ 0.80 per share.
Investing in the offered securities involves a high
degree of risk. See "Risk Factors" beginning on page 6 of this prospectus for a discussion of information that
you should consider before investing in our securities.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Per Unit
Total
Public offering price
$
$
Placement agent's fees (1)
$
$
Proceeds, before expenses, to us
$
$
(1)
In addition we have agreed to issue the placement agent warrants to purchase up to an aggregate of 7 % of the number of shares of common stock sold in this offering and to pay the placement agent a non-accountable expense allowance equal to 1% of the gross offering proceeds.
Burrill LLC ("Burrill") has agreed to act as
our exclusive placement agent in connection with this offering. In addition, Burrill may engage one or more sub-placement
agents or selected dealers. The placement agent is not purchasing the securities offered by us, is not required to sell any
specific number or dollar amount of securities, but will assist us in this offering on a "reasonable best
efforts" basis. We have agreed to pay the placement agent a cash fee equal to 7% of the gross proceeds of the offering
of securities by us and grant a warrant exercisable for a number of shares of common stock equal to 7% of the number of units
sold in the offering. We estimate the total expenses of this offering, excluding the placement agent fees, will be
approximately $           . Because there is no minimum offering
amount required as a condition to closing in this offering, the actual public offering amount, placement agent fees, and
proceeds to us, if any, are not presently determinable and may be substantially less than the total maximum offering amounts
set forth above. See "Plan of Distribution" beginning on page 52 of this prospectus for more information on this
offering and the placement agent arrangement.
This offering will terminate on                  ,
unless the offering is fully subscribed before that date or we decide to terminate the offering prior to that date. In either event,
the offering may be closed without further notice to you.
The date of this prospectus is                    ,
2012.
Cancer-Targeted, Broad Spectrum, Multi-Product
Technology Platform
FDG Compared with
LIGHT
as a Cancer
PET Imaging Agent in a Lung Cancer Patient with a Brain Metastasis
Time-Lapse Photography Illustrating Tumor
Regression in Mouse After a Single Dose of
HOT
The images provided above are for
illustrative purposes only and may not be indicative of all results.
The above illustrations do not
refer to products approved by the FDA.
Novelos has not received any revenue
from the sale of its products
NOVELOS THERAPEUTICS, INC.
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY
1
RISK FACTORS
6
FORWARD-LOOKING STATEMENTS
18
USE OF PROCEEDS
18
CAPITALIZATION
20
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
20
DILUTION
22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
22
BUSINESS
29
LITIGATION
41
PROPERTIES
41
MANAGEMENT
42
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
49
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
50
PLAN OF DISTRIBUTION
52
DESCRIPTION OF SECURITIES
53
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
55
WHERE YOU CAN FIND MORE INFORMATION
55
LEGAL MATTERS
56
EXPERTS
56
GLOSSARY OF CERTAIN SCIENTIFIC TERMS
56
FINANCIAL STATEMENTS
F-1
No dealer, salesperson or other person has been authorized to
give any information or to make any representations other than those contained in this prospectus in connection with the offer
contained in this prospectus and, if given or made, such information or representations must not be relied upon as having been
authorized by us.
Neither the delivery of this prospectus nor any sale made hereunder
shall under any circumstances create an implication that there has been no change in our affairs since the date hereof. This prospectus
does not constitute an offer to sell or a solicitation of an offer to buy securities other than those specifically offered hereby
or of any securities offered hereby in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation.
The information contained in this prospectus speaks only as of the date of this prospectus unless the information specifically
indicates that another date applies.
This prospectus has been prepared based on information provided
by us and by other sources that we believe are reliable. This prospectus summarizes certain documents and other information in
a manner we believe to be accurate, but we refer you to the actual documents, if any, for a more complete understanding of what
we discuss in this prospectus. All of such documents are filed as exhibits to the registration statement of which this prospectus
is a part. In making a decision to invest in the securities offered in this prospectus, you must rely on your own examination of
us and the terms of the offering and securities offered in this prospectus, including the merits and risks involved.
We are not making any representation to you regarding the legality
of an investment in the securities offered in this prospectus under any legal investment or similar laws or regulations. You should
not consider any information in this prospectus to be legal, business, tax or other advice. You should consult your own attorney,
business advisor and tax advisor for legal, business and tax advice regarding an investment in our securities.
You may only rely on the information contained in this prospectus
or that we have referred you to. We have not authorized anyone to provide you with different information. This prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any securities other than the securities offered by this prospectus.
This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities in any circumstances in
which such offer or solicitation is unlawful or in any state or to any person within any state to whom such offer would be unlawful
under the laws or securities regulations of such state. No offers will be made to, nor accepted from, any person that does not
meet the definition of an "institutional investor" under the blue sky laws of its state of domicile unless otherwise
specified in the "Plan of Distribution" section below. Neither the delivery of this prospectus nor any sale made in
connection with this prospectus shall, under any circumstances, create any implication that there has been no change in our affairs
since the date of this prospectus or that the information contained by reference to this prospectus is correct as of any time after
its date. In this prospectus, references to "Novelos Therapeutics, Inc.," "the Company," "we,"
"us," and "our," refer to Novelos Therapeutics, Inc.
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere
in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before
investing in our securities, you should carefully read this entire prospectus, including our financial statements and the related
notes and the information set forth under the headings "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," in each case included elsewhere in this prospectus.
On April 8, 2011, Novelos entered into a business
combination with Cellectar, Inc., a privately held Wisconsin corporation that designed and developed products to detect, treat
and monitor a wide variety of human cancers (the Acquisition). References in this prospectus to "Cellectar" relate
to the activities and financial information of Cellectar, Inc. prior to the Acquisition, references to "Novelos" relate
to the activities and financial information of Novelos Therapeutics, Inc. prior to the Acquisition and references to "we"
"us" or "the Company" relate to the activities and obligations of the combined company following the Acquisition.
Please refer to the Glossary of Certain
Scientific Terms on page 56 of this prospectus for definitions of certain technical and scientific terms used throughout this
prospectus.
Overview
Our Business
Novelos Therapeutics, Inc. is a pharmaceutical company developing
drugs for the treatment and diagnosis of cancer.  Since the Acquisition, we have been developing novel drugs for the treatment
and diagnosis of cancer based on the Cellectar compounds. We believe our cancer-targeted compounds (referred to as LIGHT, HOT and
GLOW2) are selectively taken up and retained in cancer cells, including cancer stem cells, versus normal cells. Thus, our therapeutic
compounds appear to directly kill cancer cells while minimizing harm to normal cells. This offers the potential for a paradigm
shift in cancer therapy by providing efficacy versus all three major drivers of mortality in cancer: primary tumors, metastases
and stem cell-based relapse. I-124-CLR1404 (LIGHT) is a small-molecule, broad-spectrum, cancer-targeted positron emission tomography
(PET) imaging agent. We believe LIGHT has first-in-class potential and Phase 1-2 clinical trials are ongoing across 11 solid tumor
indications. I-131-CLR1404 (HOT) is a small-molecule, broad-spectrum, cancer-targeted molecular radiotherapeutic that delivers
cytotoxic (cell-killing) radiation directly and selectively to cancer cells and cancer stem cells. We believe HOT also has first-in-class
potential. The HOT Phase 1b dose-escalation trial is ongoing and, subject to additional funding, we expect HOT to enter Phase 2
trials in the third quarter of 2013 as a monotherapy for solid tumors with significant unmet medical need. Importantly, the chemical
identity of LIGHT and HOT could enable use of LIGHT as an ideal biomarker for HOT to potentially predict efficacy in individual
cancer patients. CLR1502 (GLOW2) is a preclinical, cancer-targeted, non-radioactive optical imaging agent that may improve the
outcome of cancer surgery (effectively acting as an adjunct therapeutic agent by virtue of intraoperative tumor margin illumination)
as well as enable non-invasive tumor imaging. Together, we believe our compounds are able to "find, treat and follow"
cancer anywhere in the body in a novel, effective and highly selective way.
LIGHT is a small-molecule, broad-spectrum, cancer-targeted imaging
agent that we believe has first-in-class potential for selective detection of tumors and metastases in a broad range of cancers.
LIGHT is comprised of a proprietary phospholipid ether analog (PLE), acting as a cancer-targeted delivery and retention vehicle,
covalently labeled with iodine-124, a short-lived PET imaging radioisotope. PET imaging used in conjunction with CT scanning has
now become the imaging method of choice in oncology. In studies to date, LIGHT selectively illuminated malignant tumors in 52 of
54 animal models of cancer, demonstrating broad-spectrum, cancer-selective uptake and retention. Investigator-sponsored Phase 1-2
trials of LIGHT as a PET imaging agent are ongoing across 11 solid tumor indications. Initial positive imaging results have been
established in patients with lung and brain cancers. These human trials, if successful, would likely provide proof-of-concept for
LIGHT as a PET imaging agent with the potential to supplant the current "gold standard" agent, 18F-fluoro-deoxyglucose
(FDG), due to what we believe to be LIGHT's superior cancer-specificity and more favorable logistics of clinical use. As
a chemically identical biomarker for HOT, we believe that LIGHT tumor uptake data could accelerate clinical development of HOT
by guiding selection of indications for HOT Phase 2 trials and potentially be used in such trials to identify suitable patients
and assess therapeutic efficacy. For the same reason, and in view of the quantitative nature of PET imaging, LIGHT imaging may
be capable of estimating an efficacious dose of HOT in individual patients.
1
HOT is a small-molecule, broad-spectrum, cancer-targeted molecular
radiotherapeutic that we believe has first-in-class potential. HOT is comprised of a proprietary PLE, acting as a cancer-targeted
delivery and retention vehicle, covalently labeled with iodine-131, a cytotoxic radioisotope that is already in common use to treat
thyroid and other cancer types. The ongoing Phase 1b dose-escalation trial is aimed at determining the Maximum Tolerated Dose of
HOT. We expect to initiate HOT Phase 2 efficacy trials, subject to additional funding, as a monotherapy for solid tumors with significant
unmet medical need as soon as a starting dose is established. We may determine such a dose based on an efficacy signal or an acceptable
safety profile in the Phase 1b trial. Selection of indications for Phase 2, as well as aspects of trial design, will be guided
by ongoing PET imaging trials in cancer patients with LIGHT, a chemically identical biomarker for HOT. Preclinical experiments
in more than a dozen
in vivo
(in animals) tumor models have demonstrated selective killing of cancer cells along with a
benign safety profile. In view of HOT's selective uptake and retention in a wide range of solid tumors and in cancer stem
cells, its single-agent efficacy in animal models and its non-specific mechanism of cancer-killing (radiation), we are first developing
HOT as a monotherapy for solid tumors with significant unmet medical need.
GLOW2 is a small-molecule, broad-spectrum, cancer-targeted,
non-radioactive optical imaging agent that we believe has first-in-class potential for intraoperative tumor margin illumination
and non-invasive tumor imaging. GLOW2 is comprised of a proprietary PLE, acting as a cancer-targeted delivery and retention vehicle,
covalently attached to a near-infrared (800nm) fluorophore. According to the American Cancer Society (2011), most cancer patients
will have some type of surgery, and Cancer Facts and Figures indicated that approximately 1.3 million cancer patients were diagnosed
with solid tumors in the U.S. alone in 2011. GLOW2 may facilitate and enable diagnostic, staging, debulking and curative cancer
surgeries, intraoperatively in real time (i.e. during the actual surgical procedure) by defining tumor margins and regional lymph
node involvement, resulting in more accurate tumor resectioning and improved outcome and prognosis. In this context, GLOW2 would
effectively act as an adjunct therapeutic agent. In preclinical
in vivo
(in animals) tumor models, non-invasive optical
imaging showed pronounced accumulation of GLOW2 in tumors versus normal organs and tissues in addition to successfully delineated
tumor margins during tumor resection. Thus, GLOW2 may also have utility for non-invasive imaging of relatively superficial tumor
types in man (e.g., melanoma, head & neck, colon, esophageal). Subject to additional funding, we expect to submit an IND for
GLOW2 in the second half of 2013 and begin clinical trials shortly thereafter.
Our core technology platform is based upon the research conducted
by Cellectar's founder and our Chief Scientific Officer, Dr. Jamey Weichert, which commenced in 1994 at the University of
Michigan (U. Mich.) where phospholipid ether analogs were initially designed, synthesized, radiolabeled, and evaluated. Since 1998,
Dr. Weichert has continued his research at the University of Wisconsin (U. Wisc.) and founded Cellectar in 2002 to further develop
and commercialize the technology. Cellectar obtained exclusive rights to the related technology patents in North America owned
by U. Mich. in 2003, and continued development of the platform while obtaining ownership of numerous additional patents and patent
applications in North America, Europe and Japan (lasting until 2025, 2028 and 2030, without extensions) prior to the Acquisition.
The license granted by U. Mich. to Cellectar (the U. Mich. license) gives us the exclusive right to develop, manufacture, market
and sublicense our HOT and LIGHT compounds, and provides, among other things, that we pay a royalty equal to 3% of net sales of
any licensed products sold by us or our sublicensees, with a reduction in such royalties in the case of certain incoming or outgoing
sublicense arrangements. The license also requires us to make payments to U. Mich., ranging from $50,000 to $200,000, upon the
achievement of certain key regulatory and commercial milestones, for an aggregate of up to $400,000 in milestone payments. The
license expires upon the expiration of the last covered Michigan patent (currently 2016 without extensions).  U. Mich. may
terminate the agreement if we cease operations, if we fail to make any required payments under the agreement, or if we otherwise
materially breach the agreement, subject to the applicable notice and cure periods. If the U. Mich. license expires or terminates
for any reason, it will not impact the ownership of the additional patents that we have independently obtained. However the early
termination of the U. Mich. license would result in the loss of our rights to use the covered patents.
Key Risks and Uncertainties
We are subject to numerous risks and uncertainties,
including the following:
·
We will require additional capital in order to continue our operations,
and may have difficulty raising additional capital;
·
We are a development stage company with a history of losses and can
provide no assurance of our future operating results;
·
At present, our success depends solely on the successful commercialization
of Cellectar compounds;
·
We have a history of recurring losses and an accumulated deficit which,
among other factors, raise substantial doubt about our ability to continue as a going concern, which may hinder our ability to
obtain future financing;
·
The failure to complete development of our therapeutic technology,
to obtain government approvals, including required FDA approvals, or to comply with ongoing governmental regulations could prevent,
delay or limit introduction or sale of proposed products and result in failure to achieve revenues or maintain our ongoing business;
·
Clinical trials involve a lengthy and expensive process with an uncertain
outcome, and results of earlier studies and trials may not be predictive of future trial results;
·
We may be required to suspend or discontinue clinical trials due to
unexpected side effects or other safety risks that could preclude approval of our product candidates;
·
We have limited in-house research and manufacturing capacity and will
rely, to some extent, on research and manufacturing facilities at various universities, hospitals, contract research organizations
and contract manufacturers for a portion of our research, development, and manufacturing. In the event we exceed our in-house capacity
or lose access to those facilities, our ability to gain FDA approval and commercialization of our drug delivery technology and
products could be delayed or impaired;
2
·
We are exposed to product, clinical and preclinical liability risks
that could create a substantial financial burden should we be sued; and
·
We could suffer monetary damages or incur substantial costs in the
event of future legal proceedings.
For a more detailed description of the material risks and uncertainties
we face, please see "Risk Factors" beginning on page 6 of this prospectus.
Company Information
Our headquarters and manufacturing operation, which is compliant
with current Good Manufacturing Practices (cGMP), is located at 3301 Agriculture Drive, Madison, Wisconsin 53716. Our principal
executive offices are located at One Gateway Center, Suite 504, Newton, Massachusetts 02458. Our telephone number is (617) 244-1616
and our web address is www.novelos.com. The information included or referred to on, or accessible through, our website does not
constitute part of, and is not incorporated by reference into, this prospectus.
3
The Offering
Securities offered by us:
Up to 11,764,706 units. Each unit will consist of one share of our common stock, a Class A Warrant to purchase up to one-half of a share of our common stock at an exercise price of $       per share and a Class B Warrant to purchase up to one share of our common stock at an exercise price of $     per share. Investors will be permitted to purchase only even numbers of units, hence Warrants will be exercisable only for whole numbers of shares.
Description of Class A Warrants:
The Class A warrants will be exercisable on or after the closing date of this offering until the close of business on the         anniversary of the date of issuance.
Description of Class B Warrants:
The Class B Warrants will be exercisable on or after the closing date of this offering until the close of business on the      day following the date of issuance.
Securities Purchase Agreement:
The securities to be offered by us in this offering will be issued and sold pursuant to a securities purchase agreement between us and each investor.
Common Stock to be outstanding after this offering:
shares. (1)
Use of Proceeds:
We expect to use the net proceeds received from this offering to fund our research and development activities, including furthering the development of LIGHT, HOT and GLOW2 and for general corporate purposes, including capital expenditures, working capital, and, potentially, acquisition activities. For a more complete description of our anticipated use of proceeds from this offering, see "Use of Proceeds."
Risk Factors:
See "Risk Factors" beginning on page 6 and
        the         other information included in this prospectus for a discussion of factors you should carefully consider before
        deciding whether         to purchase our securities.
OTCQX symbol for our Common Stock:
NVLT
(1)
The number of shares of our common stock to be outstanding after this offering is based on 46,397,997 shares of common stock outstanding as of November 16, 2012 and excludes, as of that date:
·
shares issuable upon the exercise of warrants sold in this offering;
·
an aggregate of 4,675,754 shares of common stock issuable upon the
exercise of outstanding stock options issued to employees, directors and consultants, including under our 2006 Stock Incentive
Plan;
·
an aggregate of 5,432,996 additional shares of common stock reserved
for future issuance under our 2006 Stock Incentive Plan;
·
an aggregate of 21,512,459 additional shares of common stock reserved
for issuance under outstanding warrant agreements entered into in connection with financing transactions completed during 2012
and 2011 with expiration dates between January 31, 2013 and November 1, 2017, at exercise prices ranging from $0.60 per share to
$1.25 per share; and
·
an aggregate of 223,874 additional shares of common stock reserved
for issuance under various outstanding warrant agreements, with expiration dates between May 7, 2012 and December 31, 2015, at
exercise prices ranging from $0.60 per share to $100.98 per share.
4
Unless we specifically state otherwise, the share information
in this prospectus is as of November 16, 2012 and reflects or assumes no exercise of outstanding options or warrants to purchase
shares of our common stock.
The shares issued to Cellectar shareholders in the Acquisition
constituted immediately following the Acquisition (and immediately prior to the private placement that followed the Acquisition),
approximately 85% of our outstanding common stock after giving effect to the Acquisition. Since the former stockholders of Cellectar
retained the majority voting interest in the combined business following the Acquisition, the Acquisition has been accounted for
as a reverse acquisition whereby Cellectar, Inc. is treated as the acquirer for accounting and financial reporting purposes. As
such, the financial information for periods prior to the Acquisition presented in this prospectus represents the historical financial
information of Cellectar, except for the capital structure which represents the historical amounts of Cellectar retroactively adjusted
to reflect the legal capital structure of Novelos by applying the exchange ratio established in the Acquisition.
Summary Historical Financial Information
The following table summarizes our financial data.
We have derived the following summary of our statements of operations data for the nine months ended September 30, 2012 and 2011
and the summary of our balance sheet data as of September 30, 2012 from our unaudited consolidated financial statements appearing
elsewhere in this prospectus. We have derived the following summary of our statements of operations data for the fiscal years ended
December 31, 2011 and 2010 and the summary of our balance sheet data as of December 31, 2011 and 2010 from our audited
financial statements appearing elsewhere in this prospectus. The following summary of our financial data set forth below should
be read together with our financial statements and the related notes to those statements, as well as the section titled "Management's
Discussion and Analysis of Financial Condition and Results of Operations," appearing elsewhere in this prospectus.
Nine Months Ended
September 30,
Year Ended
December 31,
2012
2011
2011
2010
Statement of Operations Data:
Research and development costs
$
3,896,005
$
2,445,429
$
3,599,080
$
2,984,207
General and administrative costs
2,695,503
1,827,510
2,692,433
1,156,549
Merger costs
-
746,207
746,207
52,925
Total costs and expenses
6,591,508
5,019,146
7,037,720
4,193,681
Other expense
(48,418
)
(450,356
)
(397,702
)
(366,582
)
Net loss
(6,639,926
)
(5,469,502
)
(7,435,422
)
(4,560,263
)
Net loss attributable to common stockholders
(7,183,285
)
(5,469,502
)
(7,435,422
)
(4,560,263
)
Basic and diluted net loss attributable to common stockholders per common share
(0.18
)
(0.25
)
(0.31
)
(0.36
)
September 30,
December 31,
2012
2011
2010
Balance Sheet Data:
Current assets
$
5,988,743
$
5,815,927
$
1,279,781
Working capital
5,251,951
5,312,346
374,964
Total assets
10,389,051
10,563,176
4,802,142
Long term debt, including current portion
450,000
450,000
3,846,728
Total stockholders' equity
9,066,741
9,481,123
133,762
5
RISK FACTORS
Investing in our securities involves a high degree of risk.
Before you invest in our securities, you should be aware that our business faces numerous financial and market risks, including
those described below, as well as general economic and business risks. The following discussion provides information concerning
the material risks and uncertainties that we have identified and believe may adversely affect our business, financial condition
and results of operations. Before you decide whether to invest in our securities, you should carefully consider these risks and
uncertainties, together with all of the other information included in this prospectus.
Risks Related to Our Business and Industry
We will require additional capital in order to continue our
operations, and may have difficulty raising additional capital.
We expect that we will continue to generate significant operating
losses for the foreseeable future. At September 30, 2012, our consolidated cash balance was approximately $5,598,000. In October
2012, we received approximately $953,000 in proceeds from the exercise of warrants to purchase common stock. On November 2, 2012
we completed a private placement of our common stock and warrants that generated gross proceeds of $2,000,000. The proceeds from
the private placement are designated for use towards the construction of a clinical-stage manufacturing facility for I-124-CLR1404
(LIGHT) at our Madison, WI location. We estimate that the project will cost a total of approximately $3,000,000 and will take approximately
one year to complete. We anticipate that construction will commence in late 2012, although we have not yet entered into contractual
commitments with vendors. We may seek to obtain the additional capital required to complete the project from additional sales of
common stock (other than through this offering), proceeds from warrant exercises, and/or from equipment financing. We believe our
cash on hand at September 30, 2012 plus the proceeds from exercises of warrants during October 2012, together with the net proceeds
from this offering (assuming $10,000,000 of units are sold in this offering), would be adequate to fund operations into the middle
of the first quarter of 2014
.
During that time, we anticipate that we will incur approximately $15,500,000 in costs, subject
to the availability of funds. Of this amount, approximately $11,700,000 is estimated for research and development activities and
approximately $3,800,000 is estimated for general and administrative costs. The research and development costs consist of approximately
$2,900,000 for the development of HOT (including approximately $1,100,000 in Phase 1b trial costs and approximately $1,800,000
in Phase 2 trial costs), approximately $1,900,000 for the development of LIGHT, approximately $1,700,000 for the development of
GLOW2 and approximately $5,200,000 for our general, unallocated research and development costs including salaries, overhead, patent
and other costs that are not specific to a certain development project. In addition to these estimated costs, we may incur up to
an estimated total of $13,200,000 in development costs during 2014 and 2015, if necessary, to complete the Phase 1b dose-escalation
trial, the Phase 2 trials in HOT, the investigator sponsored trials in LIGHT and the Phase 2 trials in LIGHT. We will require
additional funds to conduct research and development, establish and conduct clinical and preclinical trials, establish commercial-scale
manufacturing arrangements and provide for the marketing and distribution of our products. Our ability to execute our operating
plan depends on our ability to obtain additional funding via the sale of equity and/or debt securities, a strategic transaction
or otherwise. We plan to actively pursue financing alternatives. However, there can be no assurance that we will obtain the necessary
funding in the amounts we seek or that it will be available on a timely basis or upon terms acceptable to us. If we obtain capital
by issuing debt or preferred stock, the holders of such securities would likely obtain rights that are superior to those of holders
of our common stock.
Our capital requirements and our ability to meet them depend
on many factors, including:
·
the number of potential products and technologies in development;
·
continued progress and cost of our research and development programs;
·
progress with preclinical studies and clinical trials;
·
the time and costs involved in obtaining regulatory clearance;
·
costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;
·
costs of developing sales, marketing and distribution channels and our ability to sell our drugs;
·
costs involved in establishing manufacturing capabilities for clinical trial and commercial quantities of our drugs;
·
competing technological and market developments;
·
market acceptance of our products;
·
costs for recruiting and retaining management, employees and consultants;
·
costs for educating physicians regarding the application and use of our products;
·
whether or not we obtain listing on a national exchange and, if not, our prospects for obtaining such listing;
·
uncertainty and economic instability resulting from terrorist acts and other acts of violence or war; and
·
the condition of capital markets and the economy generally, both in the U.S. and globally.
6
We may consume available resources more
rapidly than currently anticipated, resulting in the need for additional funding sooner than expected. We may seek to raise any
necessary additional funds through the issuance of warrants, equity or debt financings or executing collaborative arrangements
with corporate partners or other sources, which may be dilutive to existing stockholders or have a material effect on our current
or future business prospects. In addition, in the event that additional funds are obtained through arrangements with collaborative
partners or other sources, we may have to relinquish economic and/or proprietary rights to some of our technologies or products
under development that we would otherwise seek to develop or commercialize by ourselves. If we cannot secure adequate financing
when needed, we may be required to delay, scale back or eliminate one or more of our research and development programs or to enter
into license or other arrangements with third parties to commercialize products or technologies that we would otherwise seek to
develop ourselves and commercialize ourselves. In such event, our business, prospects, financial condition, and results of operations
may be adversely affected.
We are a development stage company with a history of losses
and can provide no assurance of our future operating results.
We are a development stage company and
have incurred net losses and negative cash flows since inception. We currently have no product revenues, and may not succeed in
developing or commercializing any products that will generate product or licensing revenues. We do not expect to have any products
on the market for several years. Our primary activity to date has been research and development. In addition, development of our
product candidates requires a process of preclinical and clinical testing, during which our product candidates could fail. We may
not be able to enter into agreements with one or more companies experienced in the manufacturing and marketing of therapeutic drugs
and, to the extent that we are unable to do so, we will not be able to market our product candidates. Whether we achieve profitability
or not will depend on our success in developing, manufacturing, and marketing our product candidates. We have experienced net losses
and negative cash flows from operating activities since inception and we expect such losses and negative cash flows to continue
for the foreseeable future. As of December 31, 2011, we had working capital of $5,312,346 and stockholders' equity of $9,481,123.
As of September 30, 2012, we had working capital of $5,251,951 and stockholders' equity of $9,066,741. For the period from
Cellectar's inception in November 2002 until the business combination with Novelos on April 8, 2011, and thereafter through
September 30, 2012, Cellectar (and, from and after the business combination, Novelos) incurred aggregated net losses of $38,120,352.
Net loss for the year ended December 31, 2011 was $7,435,422 and the net loss for the nine months ended September 30, 2012 was
$6,639,926. We may never achieve profitability.
At present, our success depends solely
on the successful commercialization of our three compounds in development.
Prior to the Acquisition, Novelos had for over ten years been
developing oxidized glutathione-based compounds for the treatment of cancer, including NOV-002, an injectable small-molecule compound
based on a proprietary formulation of oxidized glutathione that Novelos had been developing for use in combination with standard-of-care
chemotherapies for the treatment of solid tumors, and NOV-205, a hepatoprotective agent with immunomodulating and anti-inflammatory
properties.
Following the Acquisition, development of NOV-002 and NOV-205
was suspended and we are now focused on the development of novel drugs for the treatment and diagnosis of cancer based on the cancer-targeting
technologies of Cellectar: I-124-CLR1404 (LIGHT, labeled with a short-lived radioisotope, iodine-124), I-131-CLR1404 (HOT, a radiolabeled
compound) and CLR1502 (GLOW2, a preclinical, cancer-targeted, non-radioactive optical imaging agent. As a result, the successful
commercialization of LIGHT, HOT and GLOW2 is crucial for our success. Our proposed products and their potential applications are
in an early stage of clinical and manufacturing/process development and face a variety of risks and uncertainties. Principally,
these risks include the following:
·
future clinical trial results may show that our cancer-targeting technologies are not well tolerated by recipients at its effective doses or are not efficacious;
·
future clinical trial results may be inconsistent with previous preliminary testing results and data from earlier studies may be inconsistent with clinical data;
·
even if our cancer-targeting technologies are shown to be safe and effective for their intended purposes, we may face significant or unforeseen difficulties in obtaining or manufacturing sufficient quantities at reasonable prices or at all;
·
our ability to complete the development and commercialization of our cancer-targeting technologies for their intended use is substantially dependent upon our ability to obtain and maintain experienced and committed partners to assist us with obtaining clinical and regulatory approvals for, and the manufacturing, marketing and distribution of, our products;
·
even if our cancer-targeting technologies are successfully developed, commercially produced and receive all necessary regulatory approvals, there is no guarantee that there will be market acceptance of our products; and
·
our competitors may develop therapeutics or other treatments which are superior or less costly than our own with the result that our product candidates, even if they are successfully developed, manufactured and approved, may not generate sufficient revenues to offset the development and manufacturing costs of our product candidates.
7
If we are unsuccessful in dealing with any of these risks, or
if we are unable to successfully commercialize our cancer-targeting technologies for some other reason, our business, prospects,
financial condition, and results of operations may be adversely affected.
We have a history of recurring losses and an accumulated
deficit which, among other factors, raise substantial doubt about our ability to continue as a going concern, which may hinder
our ability to obtain future financing.
Our financial statements as of December 31, 2011 were prepared
under the assumption that we will continue as a going concern. The independent registered public accounting firm that audited our
2011 financial statements, in their report, included an explanatory paragraph referring to our recurring losses since inception and
expressing substantial doubt in our ability to continue as a going concern. Our financial statements do not include any adjustments
that might result from the outcome of this uncertainty. Our ability to continue as a going concern depends on our ability to obtain
additional equity or debt financing, attain further operating efficiencies, reduce expenditures, and, ultimately, to generate revenue.
The failure to complete development of our technology, to
obtain government approvals, including required FDA approvals, or to comply with ongoing governmental regulations could prevent,
delay or limit introduction or sale of proposed products and result in failure to achieve revenues or maintain our ongoing business.
Our research and development activities and the manufacture
and marketing of our intended products are subject to extensive regulation for safety, efficacy and quality by numerous government
authorities in the U.S. and abroad. Before receiving clearance to market our proposed products by the FDA, we will have to demonstrate
that our products are safe and effective for the patient population for the diseases that are to be treated. Clinical trials, manufacturing
and marketing of drugs are subject to the rigorous testing and approval process of the FDA and equivalent foreign regulatory authorities.
The Federal Food, Drug and Cosmetic Act and other federal, state and foreign statutes and regulations govern and influence the
testing, manufacturing, labeling, advertising, distribution and promotion of drugs and medical devices. As a result, clinical trials
and regulatory approval can take many years to accomplish and require the expenditure of substantial financial, managerial and
other resources.
In order to be commercially viable, we must successfully research,
develop, obtain regulatory approval for, manufacture, introduce, market and distribute our technologies. This includes meeting
a number of critical developmental milestones including:
·
demonstrating benefit from delivery of each specific drug for specific medical indications;
·
demonstrating through preclinical and clinical trials that each drug is safe and effective; and
·
demonstrating that we have established viable Good Manufacturing Practices capable of potential scale-up.
The timeframe necessary to achieve these developmental milestones
may be long and uncertain, and we may not successfully complete these milestones for any of our intended products in development.
In addition to the risks previously discussed, our technology
is subject to developmental risks that include the following:
·
uncertainties arising from the rapidly growing scientific aspects of drug therapies and potential treatments;
·
uncertainties arising as a result of the broad array of alternative potential treatments related to cancer and other diseases; and
·
anticipated expense and time believed to be associated with the development and regulatory approval of treatments for cancer and other diseases.
In order to conduct the clinical trials that are necessary to
obtain approval by the FDA to market a product, it is necessary to receive clearance from the FDA to conduct such clinical trials.
The FDA can halt clinical trials at any time for safety reasons or because we or our clinical investigators do not follow the FDA's
requirements for conducting clinical trials. If we are unable to receive clearance to conduct clinical trials for a product, or
the trials are halted by the FDA, we will not be able to achieve any revenue from such product in the U.S. as it is illegal to
sell any drug for use in humans in the U.S. without FDA approval.
Even if we do ultimately receive FDA approval for any of our
products, these products will be subject to extensive ongoing regulation, including regulations governing manufacturing, labeling,
packaging, testing, dispensing, prescription and procurement quotas, record keeping, reporting, handling, shipment and disposal
of any such drug. Failure to obtain and maintain required registrations or to comply with any applicable regulations could further
delay or preclude development and commercialization of our drugs and subject us to enforcement action.
8
Clinical trials involve a lengthy and expensive process with
an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.
In order to receive regulatory approval for the commercialization
of our product candidates, we must conduct, at our own expense, extensive clinical trials to demonstrate safety and efficacy of
these product candidates. Clinical testing is expensive, it can take many years to complete and its outcome is uncertain. Failure
can occur at any time during the clinical trial process. For example, we incurred costs of over $35 million in clinical trial expenses
over a period of 4 years in connection with the Phase 3 trial of NOV-002 for non-small cell lung cancer, and NOV-002 did not ultimately
demonstrate efficacy for that indication.
We may experience delays in clinical testing of our product
candidates. We do not know whether planned clinical trials will begin on time, will need to be redesigned or will be completed
on schedule, if at all. Clinical trials can be delayed for a variety of reasons, including delays in obtaining regulatory approval
to commence a trial, in reaching agreement on acceptable clinical trial terms with prospective sites, in obtaining institutional
review board approval to conduct a trial at a prospective site, in recruiting patients to participate in a trial or in obtaining
sufficient supplies of clinical trial materials. Many factors affect patient enrollment, including the size of the patient population,
the proximity of patients to clinical sites, the eligibility criteria for the trial, competing clinical trials and new drugs approved
for the conditions we are investigating. Prescribing physicians will also have to decide to use our product candidates over existing
drugs that have established safety and efficacy profiles. Any delays in completing our clinical trials will increase our costs,
slow down our product development and approval process and delay our ability to generate revenue.
In addition, the results of preclinical studies and early clinical
trials of our product candidates do not necessarily predict the results of later-stage clinical trials. Product candidates in later
stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through initial clinical
testing. The data collected from clinical trials of our product candidates may not be sufficient to support the submission of a
new drug application or to obtain regulatory approval in the United States or elsewhere. Because of the uncertainties associated
with drug development and regulatory approval, we cannot determine if or when we will have an approved product for commercialization
or achieve sales or profits.
Our clinical trials may not demonstrate sufficient levels of
efficacy necessary to obtain the requisite regulatory approvals for our drugs, and our proposed drugs may not be approved for marketing.
We suffered significant setbacks in the development of NOV-002 and NOV-205, as some of the promising results of earlier trials
were not demonstrated in later stage trials. As a result, following the Acquisition, development of these compounds has been suspended.
We may be required to suspend or discontinue clinical trials
due to unexpected side effects or other safety risks that could preclude approval of our product candidates.
Our clinical trials may be suspended at any time for a number
of reasons. For example, we may voluntarily suspend or terminate our clinical trials if at any time we believe that they present
an unacceptable risk to the clinical trial patients. In addition, regulatory agencies may order the temporary or permanent discontinuation
of our clinical trials at any time if they believe that the clinical trials are not being conducted in accordance with applicable
regulatory requirements or that they present an unacceptable safety risk to the clinical trial patients.
Administering any product candidates to humans may produce undesirable
side effects. These side effects could interrupt, delay or halt clinical trials of our product candidates and could result in the
FDA or other regulatory authorities denying further development or approval of our product candidates for any or all targeted indications.
Ultimately, some or all of our product candidates may prove to be unsafe for human use. Moreover, we could be subject to significant
liability if any volunteer or patient suffers, or appears to suffer, adverse health effects as a result of participating in our
clinical trials.
We have limited in-house research and manufacturing capacity
and will continue to rely, to some extent, on research and manufacturing facilities at various universities, hospitals, contract
research organizations and contract manufacturers for a portion of our research, development, and manufacturing. In the event we
exceed our in-house capacity or lose access to those facilities, our ability to gain FDA approval and commercialization of our
drug delivery technology and products could be delayed or impaired.
We remain in the research and development and clinical and preclinical
trial phase of product commercialization and have limited experience in establishing, supervising and conducting commercial manufacturing.
Accordingly, if our products are approved for commercial sale, we will need to establish the capability, or engage a contract manufacturer
that has the capability, to commercially manufacture our products in accordance with FDA and other regulatory requirements. There
can be no assurance that we would be able to successfully establish any such capability, or identify a suitable manufacturing partner
on acceptable terms.
At the present time, we have limited research, development or
manufacturing capabilities within our facilities. Our manufacturing facility in Madison, Wisconsin has adequate capacity to supply
drug product for Phase 2 studies of HOT, but we will need to expand for larger Phase 3 studies. LIGHT is currently manufactured
by our collaborator, the University of Wisconsin at Madison, in small quantities, for use in investigator-sponsored clinical trials
pursuant to a materials transfer agreement expiring in June 2013. However, this agreement may be terminated at any time by either
party. We rely and expect to continue to rely, to some extent, on contracting with third parties to use their facilities to conduct
research, development and manufacturing. The limited facilities we have to conduct research, development and manufacturing may
delay or impair our ability to gain FDA approval and commercialization of our drug delivery technology and products.
9
Although, we recently completed a private placement resulting
in gross proceeds of $2,000,000, which we have agreed to use towards the construction of a clinical-stage manufacturing facility
for I-124-CLR1404 (LIGHT) at our Madison, WI location, we estimate that the project will cost a total of approximately $3,000,000
and will take approximately one year to complete. We anticipate that construction will commence in late 2012. We have limited experience
with such construction, and we may encounter delays or cost overruns in completing it, and we may have difficulty raising the additional
capital required to fully fund the project.
We may rely on third-party contract research organizations,
service providers and suppliers to support development and clinical testing of our products. This may expose us to the risks of
not being able to directly oversee the production and quality of the manufacturing process. Furthermore, these contractors, whether
foreign or domestic, may experience regulatory compliance difficulties, mechanical shutdowns, employee strikes or other unforeseeable
acts that may delay production. Failure of any of these contractors to provide the required services in a timely manner or on commercially
reasonable terms could materially delay the development and approval of our products, increase our expenses and materially harm
our business, prospects, financial condition and results of operations.
We believe that we have a good working relationship with our
contractors. However, should the situation change, we may be required to relocate these activities on short notice, and we do not
currently have access to alternate facilities to which we could relocate our research, development and/or manufacturing activities.
The cost and time to establish or locate an alternate research, development and/or manufacturing facility to develop our technology
would be substantial and would delay obtaining FDA approval and commercializing our products.
We are exposed to product, clinical and preclinical liability
risks that could create a substantial financial burden should we be sued.
Our business exposes us to potential product liability and other
liability risks that are inherent in the testing, manufacturing and marketing of pharmaceutical products. In addition, the use,
in our clinical trials, of pharmaceutical products that we or our current or potential collaborators may develop and then subsequently
sell may cause us to bear a portion of or all product liability risks. While we carry an insurance policy covering up to $5,000,000
per occurrence and $5,000,000 in the aggregate of liability incurred in connection with such claims should they arise, there can
be no assurance that our insurance will be adequate to cover all situations. Moreover, there can be no assurance that such insurance,
or additional insurance, if required, will be available in the future or, if available, will be available on commercially reasonable
terms. Furthermore, our current and potential partners with whom we have collaborative agreements or our future licensees may not
be willing to indemnify us against these types of liabilities and may not themselves be sufficiently insured or have a net worth
sufficient to satisfy any product liability claims. A successful product liability claim or series of claims brought against us
could have a material adverse effect on our business, prospects, financial condition and results of operations.
Acceptance of our products in the marketplace is uncertain
and failure to achieve market acceptance will prevent or delay our ability to generate revenues.
Our future financial performance will depend, at least in part,
on the introduction and customer acceptance of our proposed products. Even if approved for marketing by the necessary regulatory
authorities, our products may not achieve market acceptance. The degree of market acceptance will depend on a number of factors
including:
·
receiving regulatory clearance of marketing claims for the uses that we are developing;
·
establishing and demonstrating the advantages, safety and efficacy of our technologies;
·
pricing and reimbursement policies of government and third-party payers such as insurance companies, health maintenance organizations and other health plan administrators;
·
our ability to attract corporate partners, including pharmaceutical companies, to assist in commercializing our intended products; and
·
our ability to market our products.
Physicians, patients, payers or the medical community in general
may be unwilling to accept, use or recommend any of our products. If we are unable to obtain regulatory approval or commercialize
and market our proposed products as planned, we may not achieve any market acceptance or generate revenue.
10
We may face litigation from third parties who claim that
our products infringe on their intellectual property rights, particularly because there is often substantial uncertainty about
the validity and breadth of medical patents.
We may be exposed to future litigation by third parties based
on claims that our technologies, products or activities infringe on the intellectual property rights of others or that we have
misappropriated the trade secrets of others. This risk is exacerbated by the fact that the validity and breadth of claims covered
in medical technology patents and the breadth and scope of trade-secret protection involve complex legal and factual questions
for which important legal principles are unresolved. Any litigation or claims against us, whether or not valid, could result in
substantial costs, could place a significant strain on our financial and managerial resources and could harm our reputation. The
U. Mich. license does require, and license agreements that we may enter into in the future would likely require, that we pay the
costs associated with defending this type of litigation. In addition, intellectual property litigation or claims could force us
to do one or more of the following:
·
cease selling, incorporating or using any of our technologies and/or products that incorporate the challenged intellectual property, which would adversely affect our ability to generate revenue;
·
obtain a license from the holder of the infringed intellectual property right, which license may be costly or may not be available on reasonable terms, if at all; or
·
redesign our products, which would be costly and time-consuming.
If we are unable to protect or enforce our rights to intellectual
property adequately or to secure rights to third-party patents, we may lose valuable rights, experience reduced market share, assuming
any, or incur costly litigation to protect our intellectual property rights.
Our ability to obtain licenses to patents, maintain trade-secret
protection and operate without infringing the proprietary rights of others will be important to commercializing any products under
development. Therefore, any disruption in access to the technology could substantially delay the development of our technology.
The patent positions of biotechnology and pharmaceutical companies,
such as ours, that involve licensing agreements are frequently uncertain and involve complex legal and factual questions. In addition,
the coverage claimed in a patent application can be significantly reduced before the patent is issued or in subsequent legal proceedings.
Consequently, our patent applications and any issued and licensed patents may not provide protection against competitive technologies
or may be held invalid if challenged or circumvented. To the extent we license patents from third parties, as in the case of the
U. Mich. license, the early termination of any such license agreement would result in the loss of our rights to use the covered
patents, which could severely delay, inhibit or eliminate our ability to develop and commercialize compounds based on the licensed
patents. Our competitors may also independently develop products similar to ours or design around or otherwise circumvent patents
issued or licensed to us. In addition, the laws of some foreign countries may not protect our proprietary rights to the same extent
as U.S. law.
We also rely on trade secrets, technical know-how and continuing
technological innovation to develop and maintain our competitive position. Although we generally require our employees, consultants,
advisors and collaborators to execute appropriate confidentiality and assignment-of-inventions agreements, our competitors may
independently develop substantially equivalent proprietary information and techniques, reverse engineer our information and techniques,
or otherwise gain access to our proprietary technology. We may be unable to meaningfully protect our rights in trade secrets, technical
know-how and other non-patented technology.
We may have to resort to litigation to protect our rights for
certain intellectual property or to determine their scope, validity or enforceability of our intellectual property rights. Enforcing
or defending our rights is expensive, could cause diversion of our resources and may not prove successful. Any failure to enforce
or protect our rights could cause us to lose the ability to exclude others from using our technology to develop or sell competing
products.
Confidentiality agreements with employees and others may
not adequately prevent disclosure of our trade secrets and other proprietary information and may not adequately protect our intellectual
property, which could limit our ability to compete.
We operate in the highly technical field of research and development
of small molecule drugs, and rely in part on trade-secret protection in order to protect our proprietary trade secrets and unpatented
know-how. However, trade secrets are difficult to protect, and we cannot be certain that our competitors will not develop the same
or similar technologies on their own. We have taken steps, including entering into confidentiality agreements with our employees,
consultants, outside scientific collaborators, sponsored researchers and other advisors, to protect our trade secrets and unpatented
know-how. These agreements generally require that the other party keep confidential and not disclose to third parties all confidential
information developed by the party or made known to the party by us during the course of the party's relationship with us.
We also typically obtain agreements from these parties which provide that inventions conceived by the party in the course of rendering
services to us will be our exclusive property. However, these agreements may not be honored and may not effectively assign intellectual
property rights to us. Enforcing a claim that a party has illegally obtained and is using our trade secrets or know-how is difficult,
expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States may be less willing
to protect trade secrets or know-how. The failure to obtain or maintain trade-secret protection could adversely affect our competitive
position.
11
We may be subject to claims that our employees have wrongfully
used or disclosed alleged trade secrets of their former employers.
As is common in the biotechnology and pharmaceutical industry,
we employ individuals who were previously employed at other biotechnology or pharmaceutical companies, including our competitors
or potential competitors. Although no claims against us are currently pending, we may be subject to claims that we or these employees
have used or disclosed trade secrets or other proprietary information of their former employers, either inadvertently or otherwise.
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.
The use of hazardous materials, including radioactive materials,
in our research and development imposes certain compliance costs on us and may subject us to liability for claims arising from
the use or misuse of these materials.
Our research and development, manufacturing and administration
of our drugs involve the controlled use of hazardous materials, including chemicals and radioactive materials, such as radioactive
isotopes. We are subject to federal, state and local laws and regulations governing the storage, use and disposal of these materials
and some waste products and are required to maintain both a manufacturer's license and a radioactive materials license with
State of Wisconsin agencies. We believe that our safety procedures for the storage, use and disposal of these materials comply
with the standards prescribed by federal, state and local regulations. However, we cannot completely eliminate the risk of accidental
contamination or injury from these materials. If there were to be an accident, we could be held liable for any damages that result,
which could exceed our financial resources. We currently maintain insurance coverage, with limits of up to $2,500,000 depending
on the nature of the claim, for damages resulting from the hazardous materials we use; however, future claims may exceed
the amount of our coverage. Also, we do not have insurance coverage for pollution cleanup and removal. Currently the costs of complying
with federal, state and local regulations are not significant, and consist primarily of waste disposal expenses and permitting
fees. However, they could become expensive, and current or future environmental regulations may impair our research, development,
production and commercialization efforts. If we are unable to maintain the required licenses and permits for any reason, it will
negatively impact our research and development activities.
Due to our limited marketing, sales and distribution experience,
we may be unsuccessful in our efforts to sell our proposed products, enter into relationships with third parties or develop a direct
sales organization.
We have not established marketing, sales or distribution capabilities
for our proposed products. Until such time as our proposed products are further along in the development process, we will not devote
any meaningful time and resources to this effort. At the appropriate time, we intend to develop our own sales and marketing capabilities
or enter into agreements with third parties to sell our products.
We have limited experience in developing, training or managing
a sales force. If we choose to establish a direct sales force, we may incur substantial additional expenses in developing, training
and managing such an organization. We may be unable to build a sales force on a cost-effective basis or at all. Any such direct
marketing and sales efforts may prove to be unsuccessful. In addition, we will compete with many other companies that currently
have extensive marketing and sales operations. Our marketing and sales efforts may be unable to compete against these other companies.
We may be unable to establish a sufficient sales and marketing organization on a timely basis, if at all.
If we choose to enter into agreements with third parties to
sell our proposed products, we may be unable to establish or maintain third-party relationships on a commercially reasonable basis,
if at all. In addition, these third parties may have similar or more established relationships with our competitors.
We may be unable to engage qualified distributors. Even if engaged,
these distributors may:
·
fail to adequately market our products;
·
fail to satisfy financial or contractual obligations to us;
·
offer, design, manufacture or promote competing products; or
·
cease operations with little or no notice.
If we fail to develop sales, marketing and distribution channels,
we would experience delays in product sales and incur increased costs, which would have a material adverse effect on our business,
prospects, financial condition, and results of operation.
12
If we are unable to convince physicians of the benefits of
our intended products, we may incur delays or additional expense in our attempt to establish market acceptance.
Achieving use of our products in the target market of cancer
diagnosis and treatment may require physicians to be informed regarding these products and their intended benefits. The time and
cost of such an educational process may be substantial. Inability to successfully carry out this physician education process may
adversely affect market acceptance of our proposed products. We may be unable to timely educate physicians regarding our intended
proposed products in sufficient numbers to achieve our marketing plans or to achieve product acceptance. Any delay in physician
education may materially delay or reduce demand for our proposed products. In addition, we may expend significant funds towards
physician education before any acceptance or demand for our proposed products is created, if at all.
The market for our proposed products is rapidly changing
and competitive, and new therapeutics, new drugs and new treatments that may be developed by others could impair our ability to
maintain and grow our business and remain competitive.
The pharmaceutical and biotechnology industries are subject
to rapid and substantial technological change. Developments by others may render our technologies and intended products noncompetitive
or obsolete, or we may be unable to keep pace with technological developments or other market factors. Technological competition
from pharmaceutical and biotechnology companies, universities, governmental entities and others diversifying into the field is
intense and is expected to increase. Most of these entities have significantly greater research and development capabilities and
budgets than we do, as well as substantially more marketing, manufacturing, financial and managerial resources. These entities
represent significant competition for us. Acquisitions of, or investments in, competing pharmaceutical or biotechnology companies
by large corporations could increase our competitors' financial, marketing, manufacturing and other resources.
Our resources are limited and we may experience management,
operational or technical challenges inherent in such activities and novel technologies. Competitors have developed or are in the
process of developing technologies that are, or in the future may be, the basis for competition. Some of these technologies may
accomplish therapeutic effects similar to those of our technology, but through different means. Our competitors may develop drugs
and drug delivery technologies that are more effective than our intended products and, therefore, present a serious competitive
threat to us.
We do not know of any current or potential direct competitors
for HOT and LIGHT. Marketed drugs Zevalin® (Spectrum Pharmaceuticals) and Bexxar® (Glaxo Smith Kline) provide examples
of targeted radiotherapeutics specifically for lymphoma indication. FDG is the current standard for PET imaging for cancer and
may be an alternative diagnostic imaging agent to LIGHT.
The potential widespread acceptance of therapies that are alternatives
to ours may limit market acceptance of our products even if they are commercialized. Many of our targeted diseases and conditions
can also be treated by other medication or drug delivery technologies. These treatments may be widely accepted in medical communities
and have a longer history of use. The established use of these competitive drugs may limit the potential for our technologies and
products to receive widespread acceptance if commercialized.
If users of our products are unable to obtain adequate reimbursement
from third-party payers, or if additional healthcare reform measures are adopted, it could hinder or prevent our product candidates'
commercial success.
The continuing efforts of government and insurance companies,
health maintenance organizations and other payers of healthcare costs to contain or reduce costs of healthcare may adversely affect
our ability to generate future revenues and achieve profitability, including by limiting the future revenues and profitability
of our potential customers, suppliers and collaborative partners. For example, in certain foreign markets, pricing or profitability
of prescription pharmaceuticals is subject to government control. The U.S. government is implementing, and other governments have
shown significant interest in pursuing, healthcare reform. Any government-adopted reform measures could adversely affect the pricing
of healthcare products and services in the U.S. or internationally and the amount of reimbursement available from governmental
agencies or other third-party payers. The continuing efforts of the U.S. and foreign governments, insurance companies, managed
care organizations and other payers of healthcare services to contain or reduce healthcare costs may adversely affect our ability
to set prices for our products, should we be successful in commercializing them, and this would negatively affect our ability to
generate revenues and achieve and maintain profitability.
13
New laws, regulations and judicial decisions, or new interpretations
of existing laws, regulations and decisions, that relate to healthcare availability, methods of delivery or payment for healthcare
products and services, or sales, marketing or pricing of healthcare products and services, also may limit our potential revenue
and may require us to revise our research and development programs. The pricing and reimbursement environment may change in the
future and become more challenging for several reasons, including policies advanced by the current or future executive administrations
in the U.S., new healthcare legislation or fiscal challenges faced by government health administration authorities. Specifically,
in both the U.S. and some foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the
healthcare system in ways that could affect our ability to sell our products profitably. In the U.S., changes in federal healthcare
policy were enacted in 2010 and are being implemented. Some reforms could result in reduced reimbursement rates for our product
candidates, which would adversely affect our business strategy, operations and financial results. Our ability to commercialize
our products will depend in part on the extent to which appropriate reimbursement levels for the cost of our products and related
treatment are obtained by governmental authorities, private health insurers and other organizations, such as health maintenance
organizations (HMOs). Third-party payers are increasingly challenging the prices charged for medical drugs and services. Also,
the trend toward managed healthcare in the U.S. and the concurrent growth of organizations such as HMOs that could control or significantly
influence the purchase of healthcare services and drugs, as well as legislative proposals to reform healthcare or change government
insurance programs, may all result in lower prices for or rejection of our drugs. The cost containment measures that healthcare
payers and providers are instituting and the effect of any healthcare reform could materially harm our ability to operate profitably.
We depend on key personnel who may terminate their employment
with us at any time, and our success will depend on our ability to hire additional qualified personnel.
Our success will depend to a significant degree on the continued
services of our chief executive officer, Harry Palmin, Cellectar founder and our chief scientific officer, Dr. Jamey Weichert,
and our senior vice president of research and development, Dr. Christopher Pazoles. There can be no assurance that these individuals
will continue to provide services to us. In addition, our success may depend on our ability to attract and retain other highly
skilled personnel. We may be unable to recruit such personnel on a timely basis, if at all. Our management and other employees
may voluntarily terminate their employment with us at any time. The loss of services of key personnel, or the inability to attract
and retain additional qualified personnel, could result in delays in development or approval of our products, loss of sales and
diversion of management resources. To date, we have not experienced difficulties attracting and retaining highly qualified personnel,
but there can be no assurance we will be successful in doing so in the future.
Risks Related to our Common Stock
Our stock price has experienced price fluctuations.
There can be no assurance that the market price for our common
stock will remain at its current level and a decrease in the market price could result in substantial losses for investors. The
market price of our common stock may be significantly affected by one or more of the following factors:
·
announcements or press releases relating to the biopharmaceutical sector or to our own business or prospects;
·
regulatory, legislative, or other developments affecting us or the healthcare industry generally;
·
sales by holders of restricted securities pursuant to effective registration statements, including the registration statement of which this prospectus forms a part, or exemptions from registration; and
·
market conditions specific to biopharmaceutical companies, the healthcare industry and the stock market generally.
Seven of our stockholders beneficially own approximately
61% of our outstanding common stock, which limits the influence of other stockholders.
As of November 16, 2012, 61% of our outstanding common stock
is beneficially owned by seven stockholders. The interests of these stockholders may differ from those of other stockholders.
These stockholders will likely continue to have the ability to significantly affect the outcome of all corporate actions requiring
stockholder approval, including the following actions:
·
the election of directors;
·
the amendment of charter documents; and
·
the approval of certain mergers and other significant corporate transactions, including a sale of substantially all of our assets.
14
There may be a limited public market for our securities;
we presently fail to qualify for listing on any national securities exchanges.
Our common stock currently does not meet all of the requirements
for initial listing on a registered stock exchange. Specifically, our cash on hand is not sufficient to fund operations for twelve
months and the bid price of our common stock is less than the minimum bid price required to obtain a listing. Trading in our common
stock continues to be conducted in the over-the-counter market (currently the OTCQX). As a result, an investor may find it difficult
to dispose of or to obtain accurate quotations as to the market value of our common stock, and our common stock may be less attractive
for margin loans, or for investment by financial institutions, as consideration in future capital raising transactions or other
contexts. During September 2012, we received a notice from OTC Markets Group notifying us that the Company's Investment Bank
Designated Advisor for Disclosure ("DAD") and sponsor to the OTCQX, Rodman and Renshaw, LLC had ceased conducting its
securities business and no longer qualified as a DAD. We are currently in the process of identifying a new investment bank sponsor
and will seek to engage a new DAD prior to the end of the year. There can be no assurance that we will find a new sponsor that
is acceptable to us.
Our common stock has historically been a "penny stock"
under SEC rules. It may be more difficult to resell shares of common stock classified as "penny stock".
Our common stock has historically been a "penny stock"
under applicable SEC rules (generally defined as non-exchange traded stock with a per-share price below $5.00). These rules impose
additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than
those who qualify as "established customers" or "accredited investors." For example, broker-dealers must
determine the appropriateness for non-qualifying persons of investments in penny stocks. Broker-dealers must also provide, prior
to a transaction in a penny stock not otherwise exempt from the rules, a standardized risk disclosure document that provides information
about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and
offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the transaction, furnish
monthly account statements showing the market value of each penny stock held in the customer's account, provide a special
written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser's written
agreement to the transaction.
Legal remedies available to an investor in "penny stocks"
may include the following:
·
if a "penny stock" is sold to the investor in violation of the requirements listed above, or other federal or states securities laws, the investor may be able to cancel the purchase and receive a refund of the investment.
·
if a "penny stock" is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages.
However, investors who have signed arbitration agreements may
have to pursue their claims through arbitration.
These requirements may have the effect of reducing the level
of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional
burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities,
which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers
to sell our common stock and may affect your ability to resell our common stock.
Many brokerage firms will discourage or refrain from recommending
investments in penny stocks. Most institutional investors will not invest in penny stocks. In addition, many individual investors
will not invest in penny stocks due, among other reasons, to the increased financial risk generally associated with these investments.
For these reasons, penny stocks may have a limited market and,
consequently, limited liquidity. We can give no assurance at what time, if ever, our common stock will not be classified as a "penny
stock" in the future.
If we fail to maintain effective internal controls over financial
reporting, the price of our common stock may be adversely affected.
Our internal control over financial reporting may have weaknesses
and conditions that could require correction or remediation, the disclosure of which may have an adverse impact on the price of
our common stock. We are required to establish and maintain appropriate internal controls over financial reporting. Failure to
establish those controls, or any failure of those controls once established, could adversely affect our public disclosures regarding
our business, prospects, financial condition or results of operations. In addition, management's assessment of internal controls
over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial
reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to
be addressed in our internal control over financial reporting or disclosure of management's assessment of our internal controls
over financial reporting may have an adverse impact on the price of our common stock.
15
We are required to comply with certain provisions of Section
404 of the Sarbanes-Oxley Act of 2002 and if we fail to continue to comply, our business could be harmed and our stock price could
decline.
Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley
Act of 2002 require an annual assessment of internal controls over financial reporting, and for certain issuers an attestation
of this assessment by the issuer's independent registered public accounting firm. The standards that must be met for management
to assess the internal controls over financial reporting as effective are evolving and complex, and require significant documentation,
testing, and possible remediation to meet the detailed standards. We expect to incur significant expenses and to devote resources
to Section 404 compliance on an ongoing basis. It is difficult for us to predict how long it will take or costly it will be to
complete the assessment of the effectiveness of our internal control over financial reporting for each year and to remediate any
deficiencies in our internal control over financial reporting. As a result, we may not be able to complete the assessment and remediation
process on a timely basis. In addition, although attestation requirements by our independent registered public accounting firm
are not presently applicable to us we could become subject to these requirements in the future and we may encounter problems or
delays in completing the implementation of any resulting changes to internal controls over financial reporting. In the event that
our Chief Executive Officer or Chief Financial Officer determine that our internal control over financial reporting is not effective
as defined under Section 404, we cannot predict how regulators will react or how the market prices of our shares will be affected;
however, we believe that there is a risk that investor confidence and share value may be negatively affected.
Our common stock could be further diluted as the result of
the issuance of additional shares of common stock, convertible securities, warrants or options.
In the past, we have issued common stock, convertible securities
(such as convertible preferred stock and notes) and warrants in order to raise money. We have also issued options and warrants
as compensation for services and incentive compensation for our employees and directors. We have shares of common stock reserved
for issuance upon the exercise of certain of these securities and may increase the shares reserved for these purposes in the future.
Our issuance of additional common stock, convertible securities, options and warrants could affect the rights of our stockholders,
could reduce the market price of our common stock or could result in adjustments to exercise prices of outstanding warrants (resulting
in these securities becoming exercisable for, as the case may be, a greater number of shares of our common stock), or could obligate
us to issue additional shares of common stock to certain of our stockholders.
Shares eligible for future sale may adversely affect the
market.
From time to time, certain of our stockholders may be eligible
to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to
Rule 144 promulgated under the Securities Act, subject to certain limitations. In general, pursuant to amended Rule 144, non-affiliate
stockholders may sell freely after six months subject only to the current public information requirement. Affiliates may sell after
six months subject to the Rule 144 volume, manner of sale (for equity securities), current public information, and notice requirements.
Of the approximately 46 million shares of our common stock outstanding as of November 16, 2012, approximately 19.8 million
shares are tradable without restriction, and approximately an additional 15.2 million shares that had been issued in unregistered
transactions and are held by non-affiliates are tradable without time or volume limitations pursuant to Rule 144. We have registered
the resale of an additional 4,000,000 shares of our common stock, pursuant to registration obligations. Any substantial resales
of our common stock pursuant to Rule 144 or an effective registration statement may have a material adverse effect on the market
price of our common stock.
Provisions of our charter, bylaws, and Delaware law may make
an acquisition of us or a change in our management more difficult.
Certain provisions of our amended restated certificate of incorporation
and bylaws could discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable,
including transactions in which an investor might otherwise receive a premium for their shares. These provisions also could limit
the price that investors might be willing to pay in the future for shares of our common stock or warrants, thereby depressing the
market price of our common stock. Stockholders who wish to participate in these transactions may not have the opportunity to do
so.
Furthermore, these provisions could prevent or frustrate attempts
by our stockholders to replace or remove our management. These provisions:
·
provide for the division of our board into three classes as nearly equal in size as possible with staggered three-year terms and further limit the removal of directors and the filling of vacancies;
·
authorize our board of directors to issue without stockholder approval blank-check preferred stock that, if issued, could operate as a "poison pill" to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that is not approved by our board of directors;
·
require that stockholder actions must be effected at a duly called stockholder meeting and prohibit stockholder action by written consent;
·
establish advance notice requirements for stockholder nominations to our board of directors or for stockholder proposals that can be acted on at stockholder meetings;
16
·
limit who may call stockholder meetings; and
·
require the approval of the holders of 75% of the outstanding shares of our capital stock entitled to vote in order to amend certain provisions of our restated certificate of incorporation and restated bylaws.
In addition, because we are incorporated in Delaware, we are
governed by the provisions of Section 203 of the Delaware General Corporation Law, which may, unless certain criteria are met,
prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining
with us for a prescribed period of time.
We have not paid dividends in the past and do not expect
to pay dividends for the foreseeable future. Any return on investment may be limited to the value of our common stock.
No cash dividends have been paid on Novelos common stock. We
do not expect to pay cash dividends in the near future. Payment of dividends would depend upon our profitability at the time, cash
available for those dividends, and other factors as our board of directors may consider relevant. If we do not pay dividends, our
common stock may be less valuable because a return on an investor's investment will only occur if our stock price appreciates.
Risks Related to this Offering
The offering may not be fully subscribed, and, even if the
offering is fully subscribed, we will need additional capital in the future. If additional capital is not available, we may not
be able to continue to operate our business pursuant to our business plan or we may have to discontinue our operations entirely.
The placement agent in this offering will offer the securities
on a "reasonable best efforts" basis, meaning that we may raise substantially less than the total maximum offering
amounts. We will not provide any refund to investors if less than all of the units are sold. Therefore, in evaluating the offering,
you should not assume that we will receive all of the proceeds from this offering that we would receive if all the units are sold.
If the offering is not fully subscribed, the length of time we will be able to fund our operations with the proceeds will be shortened,
as we do not generate positive cash flow. In order to continue to fund our operations, we would likely have to raise additional
proceeds through debt or equity financing activities. Any equity financings will likely be dilutive to existing stockholders, and
any debt financings will likely involve covenants restricting our business activities. Additional financing may not be available
on acceptable terms, or at all.
Our management team will have immediate and broad discretion
over the use of the net proceeds from this offering and we may use the net proceeds in ways with which you disagree.
There is no minimum offering amount required as a condition
to closing this offering and therefore net proceeds from this offering will be immediately available to our management to use at
their discretion. We currently intend to use the net proceeds from this offering to fund our research and development activities,
for general corporate purposes, and possibly for acquisitions of other companies, products or technologies, though no such acquisitions
are currently contemplated. See "Use of Proceeds." We have not allocated specific amounts of the net proceeds from
this offering for any of the foregoing purposes. Accordingly, our management will have significant discretion and flexibility in
applying the net proceeds of this offering. You will be relying on the judgment of our management with regard to the use of these
net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being
used appropriately. It is possible that the net proceeds will be invested in a way that does not yield a favorable, or any, return
for us or our stockholders. The failure of our management to use such funds effectively could have a material adverse effect on
our business, prospects, financial condition, and results of operation.
You will experience immediate and substantial dilution as
a result of this offering and may experience additional dilution
in the future.
You will incur immediate and substantial dilution as a result
of this offering. After giving effect to the sale by us of up to $       in units offered
in this offering, at an assumed public offering price of $      per unit, and after deducting the placement
agent fees estimated offering expenses payable by us, investors in this offering can expect an immediate dilution of $      
per share, or       %, at the assumed public offering price, assuming no exercise of the warrants.
In addition, in the past, we issued options and warrants to acquire shares of common stock. To the extent these options are ultimately
exercised, you will sustain future dilution. We may also acquire or license other technologies or finance strategic alliances by
issuing equity, which may result in additional dilution to our stockholders.
There is no public market for the warrants to purchase common
stock in this offering.
There is no established public trading market for the warrants
being offered in this offering, and we do not expect a market to develop. In addition, we do not intend to apply for listing the
warrants on any securities exchange. Without an active market, the liquidity of the warrants will be limited.
17
If you are not an institutional investor, you may purchase
shares in this offering only if you reside within the states in which we will apply to have the securities registered or are exempt
from registration, and, if required, meet any requisite suitability standards.
Because our common stock is quoted on the over-the-counter market
(currently the OTCQX) and not listed on a national securities exchange, this offering must be registered, or be exempt from registration,
in any state in which the units are to be offered or sold. We will apply to register the units, or will seek to obtain an exemption
from registration, only in certain states. In addition, if we register the units in the State of California, sales will only be
made to residents of California who have not less than (i) a $60,000 liquid net worth (exclusive of home, home furnishings and
automobile) plus $60,000 gross annual income, or (ii) a $225,000 liquid net worth. Investors in Wisconsin must qualify as "Accredited
Investors" as that term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended, and modified
by Section 413 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. If you are not an "institutional
investor," you must be a resident of these jurisdictions to purchase our shares in the offering. The definition of an "institutional
investor" varies from state to state, but generally includes financial institutions, broker-dealers, banks, insurance companies
and other qualified entities. If you are not an institutional investor, you may purchase shares in this offering only if you reside
in the jurisdictions where there is an effective registration or exemption, and, if required, meet any requisite suitability standards.
FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate
by reference, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the
Securities Act), and Section 21E of the Exchange Act. Such forward-looking statements include those that express plans, anticipation,
intent, contingency, goals, targets or future development and/or otherwise are not statements of historical fact. These forward-looking
statements are based on our current expectations and projections about future events and they are subject to risks and uncertainties
known and unknown that could cause actual results and developments to differ materially from those expressed or implied in such
statements.
In some cases, you can identify forward-looking statements by
terminology, such as "expects," "anticipates," "intends," "estimates," "plans,"
"believes," "seeks," "may," "should", "could" or the negative of such
terms or other similar expressions. Accordingly, these statements involve estimates, assumptions and uncertainties that could cause
actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety
by reference to the factors discussed throughout this prospectus.
You should read this prospectus and the documents that we reference
herein and therein and have filed as exhibits to the registration statement, of which this prospectus is part, completely and with
the understanding that our actual future results may be materially different from what we expect. You should assume that the information
appearing in this prospectus is accurate as of the date on the front cover of this prospectus or such prospectus supplement only.
Because the risk factors referred to above could cause actual results or outcomes to differ materially from those expressed in
any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements.
Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update
any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors
will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all
of the information presented in this prospectus and any accompanying prospectus supplement, and particularly our forward-looking
statements, by these cautionary statements.
USE OF PROCEEDS
Based on an assumed public offering price of $           
per unit, we estimate that the net proceeds to us from the sale of the securities that we are offering, assuming gross proceeds
of $            million, assuming the offering is fully subscribed, will
be approximately $            million, after deducting the placement agent
fee and estimated offering expenses. In addition, if all of the warrants included in the units offered pursuant to this prospectus
are exercised in full for cash, we will receive approximately an additional $           million
in cash.  However, the warrants contain a cashless exercise provision that permit exercise of warrants on a cashless
basis at any time where there is no effective registration statement under the Securities Act of 1933, as amended, covering the
issuance of the underlying shares.
18
We may not be successful in selling any or all of the securities
offered hereby. Because there is no minimum offering amount required as a condition to closing in this offering, we may sell less
than all of the securities offered hereby, which may significantly reduce the amount of proceeds received by us.
We expect to use any proceeds received from this offering as
follows:
·
to fund our research and development activities, including the further development of our LIGHT, HOT and GLOW2 compounds in a wide range of cancers; and
·
for general corporate purposes, such as general and administrative expenses, capital expenditures, working capital, prosecution and maintenance of our intellectual property, and the potential investment in technologies or products that complement our business.
We believe that our cash on hand at September 30, 2012, plus
proceeds received in October 2012 from the exercise of warrants to purchase common stock, together with the net proceeds from this
offering (assuming $10 million of units are sold in this offering and no exercise of the warrants being issued pursuant to the
offering) would be adequate to fund operations through February 2014. We estimate that our costs during that time will be approximately
$15.5 million. This amount consists of approximately $2.9 million for HOT development, approximately $1.9 million for LIGHT development,
approximately $1.7 million for GLOW2 development and approximately $5.2 million for general, fixed and overhead research and development
expenses that are not allocated to specific projects and approximately $3.8 million in general and administrative costs.
The above cost estimates contemplate the following clinical
development activity:
·
continuation of the investigator-sponsored LIGHT Phase 1-2 imaging trials in brain cancer which we anticipate will generate additional proof-of-concept data, having generated initial proof-of-concept data in the second quarter of 2012;
·
continuation of the investigator-sponsored LIGHT Phase 1-2 imaging trials in lung cancer which we anticipate will generate additional proof-of-concept data, having generated initial proof-of-concept data in the second quarter of 2012;
·
continuation of an investigator-sponsored LIGHT Phase1-2 imaging trial across 9 solid tumors, which we anticipate will generate initial proof-of-concept data in the first quarter of 2013;
·
initiation of company-sponsored LIGHT Phase 2 imaging trials in brain cancer and another solid tumor indication in the first quarter of 2014;
·
continuation of the HOT Phase 1b dose-escalation trial;
·
initiation of a HOT Phase 2a trial in brain cancer or lung cancer in the third quarter of 2013 which we anticipate will generate initial efficacy data in the first quarter of 2014;
·
initiation of a HOT Phase 2 trial in other solid tumors in the fourth quarter of 2013; and
·
filing of an IND for GLOW2 in the second half of 2013, and initiation of a Phase 1-2 clinical trial in the first quarter of 2014.
We estimate that an additional $13.2 million in funding will
be required in order to operate through the completion of the HOT and LIGHT Phase 2 trials.
On November 2, 2012, we completed a private placement of our
common stock and warrants that generated gross proceeds of $2,000,000. The proceeds from the private placement are designated for
use towards the construction of a clinical-stage manufacturing facility for I-124-CLR1404 (LIGHT) at our Madison, WI location.
We estimate that that the project will cost a total of approximately $3,000,000 and will take approximately one year to complete.
We anticipate that construction will commence in late 2012, although we have not yet entered into contractual commitments with
vendors. We may seek to obtain the additional capital required to complete the project from additional sales of common stock (other
than through this offering), proceeds from warrant exercises, and/or from equipment financing.
We have no current understandings, commitments or agreements
with respect to any acquisition of or investment in any technologies or products.
Even if we sell all of the securities subject to this offering
on favorable terms, of which there can be no assurance, we will still need to obtain additional financing in the future in order
to fully fund these product candidates through the regulatory approval process. We may seek such additional financing through public
or private equity or debt offerings or other sources, including collaborative or other arrangements with corporate partners, and
through government grants and contracts. There can be no assurance we will be able to obtain such additional financing.
19
Although we currently anticipate that we will use the net proceeds
of this offering as described above, there may be circumstances where a reallocation of funds may be necessary. The amounts and
timing of our actual expenditures will depend upon numerous factors, including the progress of our development and commercialization
efforts, the progress of our clinical studies, whether or not we enter into strategic collaborations or partnerships and our operating
costs and expenditures. Accordingly, our management will have significant flexibility in applying the net proceeds of this offering.
The costs and timing of drug development and regulatory approval,
particularly conducting clinical studies, are highly uncertain, are subject to substantial risks and can often change. Accordingly,
we may change the allocation of use of these proceeds as a result of contingencies such as the progress and results of our clinical
studies and other development activities, the establishment of collaborations, our manufacturing requirements and regulatory or
competitive developments.
Pending the application of the net proceeds as described above
or otherwise, we may invest the proceeds in short-term, investment-grade, interest-bearing securities or guaranteed obligations
of the U.S. government or other securities.
CAPITALIZATION
The following table sets forth our cash and cash equivalents
and capitalization, each as of September 30, 2012:
·
on an actual basis; and
·
on a pro forma as adjusted basis to give effect to the issuance of the securities offered hereby.
You should consider this table in conjunction with our financial
statements and the notes to those financial statements included elsewhere in this prospectus.
As of September 30, 2012
Actual
Pro Forma As
Adjusted (1)
Cash and cash equivalents
$
5,597,764
$
Wisconsin Department of Commerce Loan
450,000
Capital lease obligations
4,665
Total debt obligations
454,665
Stockholders' equity (deficit):
Common stock, par value $0.00001 per share: 150,000,000 shares authorized; 43,460,497 issued as of September 30, 2012
434
Additional paid in capital
47,186,659
Deficit accumulated during the development stage
(38,120,352
)
Total stockholders' equity
9,066,741
Total capitalization
$
9,521,406
$
(1)
Assumes that $      of units are sold in this offering at an assumed offering price of $         per unit and that the net proceeds thereof are approximately $     after placement agent fees and estimated offering expenses.
MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Market Information
Our common stock was quoted on the OTC Bulletin Board under
the symbol NVLT beginning on June 14, 2005 and until February 16, 2012, since which time it has been quoted on the OTCQX platform.
The following table provides, for the periods indicated, the high and low bid prices for our common stock. These over-the-counter
market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.
20
Fiscal Year 2010
High
Low
First Quarter
$
466.36
$
26.16
Second Quarter
42.66
14.67
Third Quarter
23.08
6.17
Fourth Quarter
9.17
2.82
Fiscal Year 2011
High
Low
First Quarter
$
8.10
$
1.52
Second Quarter
3.82
0.95
Third Quarter
1.55
1.13
Fourth Quarter
1.39
0.33
Fiscal Year 2012
High
Low
First Quarter
$
0.99
$
0.40
Second Quarter
2.20
0.75
Third Quarter
1.20
0.91
Fourth Quarter (through November 16, 2012)
1.07
0.85
The above share prices have been adjusted to give effect
to a 1-for-153 reverse split of our common stock completed April 8, 2011 in connection with the Acquisition.
During September 2012, we received a notice from OTC Markets
Group notifying us that the Company's Investment Bank Designated Advisor for Disclosure ("DAD") and sponsor to
the OTCQX, Rodman and Renshaw, LLC had ceased conducting its securities business and no longer qualified as a DAD. We are currently
in the process of identifying a new investment bank sponsor and will seek to engage a new DAD prior to the end of the year. There
can be no assurance that we will find a new sponsor that is acceptable to us.
On November 16, 2012 there were 358 holders of record of our
common stock. This number does not include stockholders for whom shares were held in a "nominee" or "street"
name.
We have not declared or paid any cash dividends on our common
stock and do not anticipate declaring or paying any cash dividends in the foreseeable future. We currently expect to retain future
earnings, if any, for the development of our business.
Our transfer agent and registrar is American Stock Transfer
and Trust Company, 59 Maiden Lane, New York, NY 10038.
Equity compensation plans
The following table provides information as of December 31,
2011 regarding shares authorized for issuance under our equity compensation plans, including individual compensation arrangements.
We have two equity compensation plans approved by our stockholders:  the
2000 Stock Option and Incentive Plan and the 2006 Stock Incentive Plan.  During 2004 and 2005, we also issued options
to our directors and consultants that were not approved by our stockholders and during 2011 we issued options to certain consultants
that were not approved by our stockholders.  These options are exercisable within a ten-year period from the date of
the grant and vest at various intervals with all options being fully vested within three years of the date of grant.  The
option price per share is not less than the fair market value of our common stock on the date of grant.
Equity compensation plan information
Plan category
Number of shares to
be issued upon
exercise of outstanding
options, warrants and
rights (#)
Weighted-average
exercise price of
outstanding options,
warrants and rights ($)
Number of shares
remaining available for
future issuance under
equity compensation plans
(excluding shares reflected
in column (a)) (#)
(a)
(b)
(c)
Equity compensation plans approved by stockholders
4,717,500
$
1.63
2,281,112
Equity compensation plans not approved by stockholders
110,138
$
10.16
0
Total
4,827,638
$
1.82
2,281,112
21
DILUTION
Our net tangible book value as of September 30, 2012 was $7,391,279,
or $0.17 per share of common stock, based upon 43,460,497 shares outstanding as of that date. Net tangible book value per
share is determined by dividing such number of outstanding shares of common stock into our net tangible book value, which is our
total tangible assets, less total liabilities. After giving effect to the sale of the securities in this offering at the assumed
public offering price of $      per unit, after deducting the placement agent fee and other estimated
offering expenses payable by us, our pro forma net tangible book value at September 30, 2012 would have been approximately $     
million, or $       per share. This represents an immediate increase in net tangible book value of
approximately $      per share to our existing stockholders, and an immediate dilution of $     per
share to investors purchasing securities in the offering.
The following table illustrates the per share dilution to investors
purchasing securities in the offering:
Assumed public offering price per unit
$
Net tangible book value per share as of September 30, 2012
$
0.17
Increase per share attributable to sale of securities to investors
$
Pro forma net tangible book value per share after the offering
$
Dilution per share to investors
$
The foregoing illustration does not reflect potential dilution
from the exercise of outstanding options or warrants to purchase shares of our common stock. The foregoing illustration also does
not reflect the dilution that would result from the exercise of the warrants sold in the offering.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read together
with our financial statements and the related notes appearing elsewhere in this prospectus. This discussion contains forward-looking
statements reflecting our current expectations that involve risks and uncertainties. See "Special Note Regarding Forward-Looking
Statements" for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results
and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors,
including those set forth under "Risk Factors" and elsewhere in this prospectus.
Acquisition
On April 8, 2011, we completed the Acquisition.  Immediately
prior to the Acquisition, we completed a 1-for-153 reverse split of our common stock. We then issued 17,001,596 shares of our common
stock to the former shareholders of Cellectar as consideration for the Acquisition, constituting approximately 85% of our outstanding
common stock after giving effect to the Acquisition.  Upon the closing of the Acquisition, we completed the private placement
of 6,846,537 shares of our common stock and warrants to purchase an additional 6,846,537 shares of our common stock.  The
Acquisition was accounted for as a reverse acquisition whereby Cellectar, Inc. was treated as the acquirer for accounting and financial
reporting purposes. As such, references to the results of operations for the twelve months ended December 31, 2010 represent the
historical results of Cellectar. References to the results of operations for the twelve months ended December 31, 2011 include
the historical results of Cellectar from January 1, 2011 through April 8, 2011 and include the consolidated results of the combined
company from April 9, 2011 through December 31, 2011.
As a result of the Acquisition, we have implemented a revised
business plan focused on the development of the Cellectar compounds.  We conduct our operations from Cellectar's
headquarters in Madison, Wisconsin and our executive offices are in Newton, Massachusetts. Further development of our other compounds
(NOV-002 and NOV-205) has been suspended.
On April 8, 2011, immediately prior to the Acquisition, Cellectar
paid approximately $627,000 in full settlement of a note payable to a bank.  The payment was made in order to avoid an
event of default that would have occurred as a result of the change of control that occurred as a result of the Acquisition.  On
April 8, 2011, the holders of Cellectar convertible notes converted outstanding principal of $2,720,985 and accrued unpaid interest
into a total of 4,181,535 shares of common stock.
22
Overview
We are
a pharmaceutical company developing novel drugs for the treatment and diagnosis of cancer. Our cancer-targeted compounds are selectively
taken up and retained in cancer cells, including cancer stem cells, versus normal cells. Thus, our therapeutic compounds appear
to directly kill cancer cells while minimizing harm to normal cells. This offers the potential for a paradigm shift in cancer therapy
by providing efficacy versus all three major drivers of mortality in cancer: primary tumors, metastases and stem cell-based relapse.
I-124-CLR1404 (LIGHT) is a small-molecule,
broad-spectrum, cancer-targeted
PET imaging agent. We believe LIGHT has first-in-class potential and Phase 1-2 clinical trials are ongoing across 11 solid tumor
indications. I-131-CLR1404 (HOT) is a small-molecule, broad-spectrum, cancer-targeted molecular radiotherapeutic that delivers
cytotoxic radiation directly and selectively to cancer cells and cancer stem cells. We believe HOT also has first-in-class potential.
The HOT Phase 1b dose-escalation trial is ongoing and we expect HOT to enter Phase 2 trials in the third quarter of 2013, subject
to additional funding, as a monotherapy for solid tumors with significant unmet medical need. CLR1502 (GLOW2) is a preclinical,
cancer-targeted, non-radioactive optical imaging agent for intraoperative tumor margin illumination and non-invasive tumor imaging.
Together, we believe our compounds are able to "find, treat and follow" cancer anywhere in the body in a novel, effective
and highly selective way.
LIGHT is a small-molecule, broad-spectrum, cancer-targeted imaging
agent that we believe has first-in-class potential for selective detection of tumors and metastases in a broad range of cancers.
LIGHT is comprised of a proprietary phospholipid ether analog (PLE), acting as a cancer-targeted delivery and retention vehicle,
covalently labeled with iodine-124, a short-lived PET imaging radioisotope. PET imaging used in conjunction with CT scanning has
now become the imaging method of choice in oncology. In studies to date, LIGHT selectively illuminated malignant tumors in 52 of
54 animal models of cancer, demonstrating broad-spectrum, cancer-selective uptake and retention. Investigator-sponsored Phase 1-2
trials of LIGHT as a PET imaging agent are ongoing across 11 solid tumor indications. Initial positive imaging results have been
established in patients with lung and brain cancers. These human trials, if successful, would likely provide proof-of-concept for
LIGHT as a PET imaging agent with the potential to supplant the current "gold standard" agent, 18F-fluoro-deoxyglucose
(FDG), due to what we believe to be LIGHT's superior cancer-specificity and more favorable logistics of clinical use. As
a chemically identical biomarker for HOT, we believe that LIGHT tumor uptake data could accelerate clinical development of HOT
by guiding selection of indications for HOT Phase 2 trials and potentially be used in such trials to identify suitable patients
and assess therapeutic efficacy. For the same reason, and in view of the quantitative nature of PET imaging, LIGHT imaging may
be capable of estimating an efficacious dose of HOT in individual patients.
HOT is a small-molecule, broad-spectrum, cancer-targeted molecular
radiotherapeutic that we believe has first-in-class potential. HOT is comprised of a proprietary phospholipid ether analog (PLE),
acting as a cancer-targeted delivery and retention vehicle, covalently labeled with iodine-131, a cytotoxic (cell-killing) radioisotope
that is already in common use to treat thyroid and other cancer types. The ongoing Phase 1b dose-escalation trial is aimed at determining
the Maximum Tolerated Dose of HOT. We expect to initiate HOT Phase 2 efficacy trials, subject to additional funding, as a monotherapy
for solid tumors with significant unmet medical need as soon as a starting dose is established. We may determine such a dose based
on an efficacy signal or an acceptable safety profile in the Phase 1b trial. Selection of indications for Phase 2, as well as aspects
of trial design, will be guided by ongoing PET imaging trials in cancer patients with LIGHT, a chemically identical biomarker for
HOT. Preclinical experiments in more than a dozen
in vivo
(in animals) tumor models have demonstrated selective killing
of cancer cells along with a benign safety profile. In view of HOT's selective uptake and retention in a wide range of solid
tumors and in cancer stem cells, its single-agent efficacy in animal models and its non-specific mechanism of cancer-killing (radiation),
we are first developing HOT as a monotherapy for solid tumors with significant unmet medical need.
GLOW2 is a small-molecule, broad-spectrum, cancer-targeted,
non-radioactive optical imaging agent that we believe has first-in-class potential for intraoperative tumor margin illumination
and non-invasive tumor imaging. GLOW2 is comprised of a proprietary phospholipid ether analog (PLE), acting as a cancer-targeted
delivery and retention vehicle, covalently attached to a near-infrared (800nm) fluorophore. According to the American Cancer Society
(2011), most cancer patients will have some type of surgery, and Cancer Facts and Figures indicated that approximately 1.3 million
cancer patients were diagnosed with solid tumors in the U.S. alone in 2011. GLOW2 may facilitate and enable diagnostic, staging,
debulking and curative cancer surgeries, intraoperatively in real time (i.e. during the actual surgical procedure) by defining
tumor margins and regional lymph node involvement, resulting in more accurate tumor resectioning and improved outcome and prognosis.
In this context, GLOW2 would effectively act as an adjunct therapeutic agent. In preclinical
in vivo
(in animals) tumor
models, non-invasive optical imaging showed pronounced accumulation of GLOW2 in tumors versus normal organs and tissues in addition
to successfully delineated tumor margins during tumor resection. Thus, GLOW2 may also have utility for non-invasive imaging of
relatively superficial tumor types in man (e.g., melanoma, head & neck, colon, esophageal). Subject to additional funding,
we expect to submit an IND for GLOW2 in the second half of 2013 and begin clinical trials shortly thereafter.
23
Prior to the Acquisition, for more than 10 years, Novelos had
been developing oxidized glutathione-based compounds for the treatment of cancer, including NOV-002, an injectable small-molecule
compound based on a proprietary formulation of oxidized glutathione that Novelos had been developing for use in combination with
standard of care chemotherapies for the treatment of solid tumors. From 2005 through 2010 Novelos raised approximately $67 million
in capital for the development of our compounds. From November 2006 through January 2010, Novelos conducted a Phase 3 trial of
NOV-002 plus first-line chemotherapy in advanced non-small cell lung cancer which, when completed in February 2010, did not meet
its primary and secondary efficacy endpoints.  Following the completion of the Phase 3 trial during 2010, Novelos continued
clinical development of NOV-002 in breast cancer and NOV-205 in hepatitis C, although further development of those compounds has
been suspended. Novelos also explored strategic alternatives which resulted in the completion of the Acquisition in April 2011.
Results of Operations
Executive summary
.  In March 2010, Cellectar
completed a Phase 1a dosimetry trial of HOT in humans (the Phase 1a Trial), demonstrating initial safety and establishing dosing
parameters for a Phase 1b dose-escalation trial.  Following the completion of the Phase 1a Trial and as a result of limited
funding, Cellectar suspended research and manufacturing activities, terminated certain non-key personnel and implemented salary
reductions in an effort to contain costs while Cellectar concentrated on its fundraising efforts.  Following the Acquisition,
we have resumed development activities including the commencement of clinical trials in HOT and LIGHT. The increases in research
and development costs for the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011 and the
year ended December 31, 2011 as compared to the year ended December 31, 2010 are primarily related to the recommencement of research
activities following the Acquisition.
Research and
development expense.
Research and development expense consists of costs incurred in identifying, developing and testing, and manufacturing
product candidates, which primarily include salaries and related expenses for personnel, costs of our research and manufacturing
facility, cost of manufacturing materials, fees paid to professional service providers for independent monitoring and analysis
of our clinical trials, and costs to secure intellectual property. The Company analyzes its research and development expenses based
on four categories as follows: clinical projects, preclinical projects, chemistry and manufacturing costs, and general fixed and
overhead costs that are not allocated to the functional project costs, including personnel costs, manufacturing facility costs,
related overhead costs and patent costs.
General and administrative expense.
General
and administrative expense consists primarily of salaries and other related costs for personnel in executive, finance and administrative
functions.  Other costs include insurance, costs for public and investor relations, directors' fees and professional
fees for legal and accounting services.
Nine Months Ended September 30, 2012 and 2011
Research and Development.
Research and development
expense for the nine months ended September 30, 2012 was approximately $3,896,000 (comprised of $596,000 in clinical project costs,
$252,000 of preclinical project costs, $330,000 of manufacturing and related costs and $2,718,000 in general unallocated research
and development costs) compared to approximately $2,445,000 (comprised of $37,000 in clinical project costs, $141,000 of preclinical
project costs, $95,000 of chemistry, manufacturing and related costs and $2,172,000 in general unallocated research and development
costs) for the same period in 2011.  The approximately $1,451,000, or 59%, increase in research and development expense
occurred in several categories.  The $559,000 increase in clinical projects in the nine months ended September 30, 2012
versus the comparable period in 2011 is related to costs associated with the Phase 1-2 trials for LIGHT and the Phase 1b trial
for HOT. The $111,000 increase in preclinical projects for the nine months ended September 30, 2012 versus the same period in 2011
was related to contributions to the UW towards unrestricted research activities and increased consulting to support preclinical
research activities. Manufacturing costs increased $235,000 primarily as a result of increased chemistry and manufacturing activities
to support the clinical trials. General unallocated research and development costs increased approximately $546,000 primarily as
a result of an approximately $285,000 increase in salary and related costs resulting principally from the addition of employees
following the Acquisition; an approximately $152,000 increase in stock-based compensation associated with recognition of compensation
expense over the vesting periods of stock option grants in May and December 2011; an approximately $67,000 increase in patent expenses
and approximately $18,000 increase in travel costs.
General and Administrative.
General and administrative
expense for the nine months ended September 30, 2012 was approximately $2,696,000 compared to approximately $1,828,000 in the same
period of 2011.  The $868,000, or 47%, increase in general and administrative costs was primarily related to the following
items: stock-based compensation increased approximately $352,000 resulting from the recognition of compensation expense over the
vesting periods of stock options granted in May and December 2011; salary increased approximately $293,000 resulting principally
from the addition of employees following the Acquisition; the cost of subcontracted services increased by approximately $120,000
as a result of increased investor relations activities and costs associated with public company reporting. Insurance costs increased
approximately $57,000, directors' fees increased approximately $39,000, rent increased approximately $14,000 associated with
the addition of the Massachusetts location and travel costs increased approximately $28,000 due principally to an increase in travel
between our Massachusetts and Wisconsin offices. These increases were offset by an approximately $146,000 decrease in expense attributable
to a $125,000 reimbursement of a retention payment received from the Company's directors and officers insurance carrier following
the dismissal with prejudice on June 11, 2012 of the securities litigation described in Note 14. The Company recorded this reimbursement
as a reduction of legal fees in the three months ended September 30, 2012.
24
Merger Costs.
We did not incur any merger-related costs
in the nine months ended September 30, 2012. Merger costs during the nine months ended September 30, 2011 consisted of $450,000
in investment banking fees, $286,000 in legal fees and $10,000 in insurance costs.
Grant income.
Qualifying therapeutic discovery
projects, among others, include those designed to treat or prevent diseases or conditions by conducting preclinical or clinical
activities for the purpose of securing FDA approval of a product.  We received payments of approximately $44,000 in the
first nine months of 2011 under a cash grant from the U.S. Internal Revenue Service as a qualifying therapeutic discovery project
credit pursuant to Patient Protection and Affordable Care Act. The payments have been recorded as a component of other income.
There were no such payments in 2012.
Loss on
Derivative Warrants.
We recorded losses
on derivative warrants of approximately $42,000 and $67,000 in the nine months ended September 30, 2012 and 2011, respectively.
These amounts represent the change in fair value, during the respective period, of outstanding warrants which contain "down-round"
anti-dilution provisions whereby the number of shares for which the warrants are exercisable and/or the exercise price of the warrants
is subject to change in the event of certain issuances of stock at prices below the then-effective exercise prices of the warrants.
Interest expense, net
.  Interest expense, net
for the nine months ended September 30, 2012 and 2011 consists approximately of the following:
Nine Months Ended September 30,
2012
2011
Interest expense, convertible notes
$
—
$
(159,000
)
Beneficial conversion feature, convertible notes
—
(258,000
)
Interest expense, bank note
—
(6,000
)
Interest expense, other
(6,000
)
(9,000
)
Interest income
—
4,000
$
(6,000
)
$
(428,000
)
Since the Convertible Notes were converted based on
revised
conversion terms that resulted in the issuance of an additional 343,963 shares of common stock than would have been issued if the
Convertible Notes had been converted in accordance with their original terms, the value of these additional shares of approximately
$258,000 was recorded as a component of interest expense in the quarter ended June 30, 2011. The decrease in interest expense on
the convertible notes and bank note was a result of the settlement of those obligations in connection with the Acquisition.
Deemed Dividend on Warrant Amendment
.
During the nine months ended September 30, 2012, the Company amended the terms of its Class B Warrants with certain
investors who held warrants to purchase 5,255,000 shares of our common stock to extend the expiration date for the exercise of
such warrants until October 11, 2012. These warrants had been issued in connection with the June Offering, had an expiration date
of September 11, 2012 and are exercisable at a price of $1.00 per share. The modification of the expiration date of the warrants
resulted in a deemed dividend to warrant holders of approximately $543,000 which was calculated as the difference between the fair
value of the warrants immediately before and after the modification using the Black-Scholes option pricing model.
The deemed dividends have been included in the calculation of
net loss attributable to common stockholders of approximately $7,183,000, or $0.18 per share, for the nine months ended September
30, 2012. The deemed dividends are excluded from our net loss (from operating activities) of approximately $6,640,000, or $0.17
per share, for the nine months ended September 30, 2012.
No deemed dividend was recorded in the nine months ended September
30, 2011.
25
Twelve Months Ended December 31, 2011 and 2010
Research and Development.
Research and development
expense for the year ended December 31, 2011 was approximately $3,599,000 (comprised of approximately $166,000 in clinical project
costs, $207,000 of preclinical project costs, $205,000 of manufacturing and related costs and $3,021,000 in general unallocated
research and development costs) compared to approximately $2,984,000 (comprised of $200,000 in clinical project costs, $459,000
of preclinical project costs, $58,000 of manufacturing and related costs and $2,267,000 in general unallocated research and development
costs) for 2010.  The approximately $615,000, or 20.6%, increase in research and development resulted from increases
in manufacturing and general unallocated research costs partially offset by decreases in clinical and preclinincal costs. The $34,000
decrease in clinical projects in the year ended December 31, 2011 versus 2010 was related to a $200,000 decrease in costs related
to the completion of the Phase 1a trial in March 2010 partially offset by clinical costs incurred in 2011 related to the Company's
Phase 1b trial for HOT. The $252,000 decrease in preclinical projects, for the year ended December 31, 2011 versus 2010 was primarily
related to a $210,000 decrease in subcontracted preclinical research as those activities had increased in the first half of 2010
in preparation for future clinical trials. These decreases were offset by an increase of approximately $754,000 in general unallocated
research and development costs primarily due to an approximately $215,000 increase in salary and related costs as a result of increases
in personnel following the Acquisition, an approximately $165,000 increase in stock-based compensation resulting from stock options
granted in May 2011 and December 2011 following the Acquisition, an approximately $87,000 increase in patent costs as well as increases
in subcontracted services, facilities and equipment maintenance costs incurred as we resumed manufacturing and research activities
following the Acquisition.
General and Administrative.
General and administrative
expense for the year ended December 31, 2011 was approximately $2,692,000 compared to approximately $1,157,000 in 2010.  The
$1,535,000, or 132.7%, increase in general and administrative costs were primarily related to the following items: Salary increased
approximately $582,000 resulting from the addition of employees in connection with the Acquisition and the removal of salary reductions
that had been in place in order to conserve cash; stock-based compensation increased by $390,000 associated with stock option grants
made in May and December 2011; the cost of subcontracted services increased by approximately $331,000 as a result of increased
investor relations activities, directors' fees and costs associated with public company reporting. Insurance costs increased
approximately $67,000, rent increased approximately $49,000 associated with the addition of the Massachusetts location following
the Acquisition and travel costs increased approximately $53,000 due principally to an increase in travel between our Massachusetts
and Wisconsin offices.
Merger Costs.
Merger costs during the year ended December
31, 2011 consisted of $450,000 in investment banking fees, approximately $286,000 in legal fees and approximately $10,000 in insurance
costs compared to approximately $53,000 of merger costs in 2010, primarily related to legal fees.
Grant income.
Qualifying therapeutic discovery
projects, among others, include those designed to treat or prevent diseases or conditions by conducting preclinical or clinical
activities for the purpose of securing FDA approval of a product.  The Company received payments of approximately $44,000
in the year ended December 31, 2011 compared to $200,000 for 2010 under a cash grant from the U.S. Internal Revenue Service as
a qualifying therapeutic discovery project credit pursuant to Patient Protection and Affordable Care Act. The payments have been
recorded as a component of other income.
Loss on
Derivative Warrants.
We recorded a loss
on derivative warrants of approximately $12,000 in the year ended December 31, 2011. This amount represents the change in fair
value, during the respective period, of outstanding warrants that contain "down-round" anti-dilution provisions whereby
the number of shares for which the warrants are exercisable and/or the exercise price of the warrants is subject to change in the
event of certain issuances of stock at prices below the then-effective exercise prices of the warrants.
Interest expense, net
.  Interest expense, net,
for the years ended December 31, 2011 and 2010 consists approximately of the following:
Year Ended December 31,
2011
2010
Interest expense, convertible notes
$
(159,000
)
$
(305,000
)
Beneficial conversion feature, convertible notes
(258,000
)
(214,000
)
Interest expense, bank note
(6,500
)
(55,000
)
Interest expense, other
(11,000
)
(7,000
)
Interest income
4,500
15,000
$
(430,000
)
$
(566,000
)
Since the convertible notes were converted based on revised
conversion terms that resulted in the issuance of an additional 343,963 shares of common stock than would have been issued if the
convertible notes had been converted in accordance with their original terms, the value of these additional shares of approximately
$258,000 was recorded as a component of interest expense at the date of conversion in 2011. Since the convertible notes were convertible
into common stock at the date of issuance at a price per share which is less than the estimated fair value of our common stock
at that date, the estimated intrinsic value of the beneficial conversion feature of approximately $214,000 was recorded as a component
of interest expense on the date of issuance in 2010. The decrease in interest expense on the convertible notes and bank note was
a result of the settlement of those obligations in connection with the Acquisition. The increase in other interest expense is principally
a result of the issuance of notes payable to the Wisconsin Department of Commerce in September 2010. The reduction of interest
income was a result of a decrease in average cash balances and interest rates.
26
Liquidity and Capital Resources
We have financed our operations since inception primarily through
the sale of equity securities and securities convertible into equity securities. To date, Cellectar and Novelos have raised capital
aggregating approximately $120 million. Novelos has raised capital aggregating approximately $93 million, including proceeds from
the April 2011and November 2012 private placements, the December 2011 underwritten offering, the June 2012 public offering and
cash warrant exercises during 2012. Since its inception and prior to the Acquisition, Cellectar had raised capital aggregating
approximately $27 million.  As of September 30, 2012, we had approximately $5,598,000 in cash and cash equivalents.
During the nine months ended September 30, 2012, approximately
$4,891,000 in cash was used in operations. During this period we reported a net loss of approximately $6,640,000. However, this
loss included the following non-cash items: an approximately $42,000 loss on derivative warrants, approximately $1,160,000 in stock-based
compensation, and approximately $384,000 in depreciation and amortization expense. Changes in working capital provided cash of
approximately $163,000.
During the nine months ended September 30, 2012, we purchased
approximately $37,000 of equipment.
In June 2012 we completed a public offering of our common stock
and warrants for net proceeds of approximately $4,871,000. During the nine months ended September 30, 2012, we received approximately
$151,000 in connection with warrant exercises.
The consolidated financial statements
included elsewhere in this prospectus have been prepared on a basis that assumes that we will continue as a going concern and that
contemplates the continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the normal
course of business. We have incurred losses since inception in devoting substantially all of our efforts toward research and development
and had an accumulated deficit of $38,120,352 at September 30, 2012. During the nine months ended September 30, 2012, we generated
a net loss of $6,639,926 and we expect that we will continue to generate operating losses for the foreseeable future. At September
30, 2012, our cash balance was approximately $5,598,000. We believe our cash on hand, combined with the proceeds received from
the exercise of warrants to purchase common stock during October 2012, is adequate to fund operations through May 2013.
On
November 2, 2012, we completed a private placement of our common stock and warrants that generated gross proceeds of $2,000,000.
The proceeds from the private placement are designated for use towards the construction of a clinical-stage manufacturing facility
for I-124-CLR1404 (LIGHT) at our Madison, WI location. We estimate that that the project will cost a total of approximately $3,000,000
and will take approximately one year to complete. We anticipate that construction will commence in late 2012, although we have
not yet entered into contractual commitments with vendors. We may seek to obtain the additional capital required to complete the
project from additional sales of common stock (other than proceeds from this offering), proceeds from warrant exercises, and/or
from equipment financing.
Our ability to execute our operating plan beyond May 2013 depends on our ability
to obtain additional funding via the sale of equity and/or debt securities, a strategic transaction or otherwise.
We have
in the past successfully completed multiple rounds of financing but, due to market conditions and other factors, including our
development stage, the proceeds we have been able to secure have been less than the amounts we initially sought to obtain. Other
than the uncertainties regarding our ability to obtain additional funding, there are currently no known trends, demands, commitments,
events or uncertainties that are likely to materially affect our liquidity.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures
in conformity with accounting principles generally accepted in the United States, or GAAP, requires management to make certain
estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial
statements, as well as the reported amounts of revenues and expenses during the periods presented. Management bases its estimates
and judgments on historical experience, knowledge of current conditions and various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results could differ from those estimates. We review these estimates and
assumptions periodically and reflect the effects of revisions in the period that they are determined to be necessary.
We believe that the following accounting policies reflect our
more significant judgments and estimates used in the preparation of our financial statements.
27
Accrued Liabilities.
As part of the process of preparing
financial statements, we are required to estimate accrued liabilities. This process involves identifying services that have been
performed on our behalf, and estimating the level of service performed and the associated cost incurred for such service as of
each balance sheet date in our financial statements. Examples of estimated expenses for which we accrue include: contract service
fees such as amounts paid to clinical research organizations and investigators in conjunction with clinical trials; fees paid to
vendors in conjunction with the manufacturing of clinical materials; and professional service fees, such as for lawyers and accountants.
In connection with such service fees, our estimates are most affected by our understanding of the status and timing of services
provided relative to the actual levels of services incurred by such service providers. The majority of our service providers invoice
us monthly in arrears for services performed. In the event that we do not identify certain costs that have begun to be incurred,
or we over- or underestimate the level of services performed or the costs of such services, our reported expenses for such period
would be too high or too low. The date on which certain services commence, the level of services performed on or before a given
date and the cost of such services are often determined based on subjective judgments. We make these judgments based on the facts
and circumstances known to us, in accordance with GAAP.
Goodwill and Other Intangible Assets.
As of September
30, 2012 and December 31, 2011 there was approximately $1,675,000 of goodwill recorded in connection with the Acquisition. We are
required to evaluate goodwill for impairment annually or whenever events or changes in circumstances suggest that the carrying
value of an asset may not be recoverable. The Company evaluates goodwill for impairment annually in the fourth fiscal quarter and
additionally on an interim basis if an event occurs or circumstances change such as a decline in the Company's stock price,
or a material adverse change in the business climate, which would more likely than not reduce the fair value of the reporting unit
below its carrying amount.
Stock-based Compensation
. We account for stock-based
compensation by measuring the cost of employee services received in exchange for an award of equity instruments based on the grant-date
fair value of the award, using the Black-Scholes option-pricing model. The cost of non-performance based awards is recognized over
the period during which an employee is required to provide service in exchange for the award, the requisite service period (usually
the vesting period). For stock options with performance-based vesting provisions, recognition of compensation expense commences
if and when the achievement of the performance criteria is deemed probable and is recognized over the relevant performance period.
We account for transactions in which services are received from non-employees in exchange for equity instruments based on the fair
value of such services received or of the equity instruments issued (using the Black-Scholes option-pricing model) whichever is
more reliably measured. The measurement of stock-based compensation for non-employees is subject to periodic adjustments as the
options vest, and the expense is recognized over the period during which a non-employee is required to provide services for the
award (usually the vesting period).
Accounting for equity instruments granted or sold by us under
accounting guidance requires fair-value estimates of the equity instrument granted or sold. If our estimates of the fair value
of these equity instruments are too high or too low, our expenses may be over- or understated. For equity instruments granted or
sold in exchange for the receipt of goods or services, we estimate the fair value of the equity instruments based on consideration
of factors that we deem to be relevant at that time.
Derivative Warrants.
Certain warrants to purchase common
stock that do not meet the requirements for classification as equity, in accordance with the Derivatives and Hedging Topic of the
FASB ASC, are classified as liabilities on our balance sheet. In such instances, net-cash settlement is assumed for financial reporting
purposes, even when the terms of the underlying contracts do not provide for a net-cash settlement. These warrants are considered
derivative instruments as the agreements contain "down-round" provisions whereby the number of shares for which the
warrants are exercisable and/or the exercise price of the warrants is subject to change in the event of certain issuances of stock
at prices below the then-effective exercise price of the warrants. The primary underlying risk exposure pertaining to the warrants
is the change in fair value of the underlying common stock. Such financial instruments are initially recorded at fair value, or
relative fair value when issued with other instruments, with subsequent changes in fair value recorded as a component of gain or
loss on derivatives in each reporting period.
The fair value of the outstanding derivative warrants is estimated
as of a reporting date. The Company uses valuation methods and assumptions that consider among others the fair value of the underlying
stock, risk-free interest rate, volatility, expected life and dividend rates in estimating fair value for the warrants considered
to be derivative instruments. We estimate volatility based on an average of our historical volatility and volatility estimates
of publicly held drug development companies with similar market capitalizations. If our estimates of the fair value of these derivative
warrants are too high or too low, our expenses may be over- or understated.
Fair value measurements.
We account for certain financial
assets at fair value, defined as the price that would be received to sell an asset or pay to transfer a liability (i.e., exit price)
in the principal, most advantageous market for the asset or liability in an orderly transaction between market participants on
the measurement date. As such, fair value is a market-based measurement that is determined based on assumptions that market participant
would use in pricing an asset or liability. If management made different assumptions or judgments, material differences in measurements
of fair value could occur.
28
Contingencies.
From time to time, we may become involved
in legal disputes regarding our products in development, intellectual property rights, stockholder claims or other matters. We
are currently involved in two such matters that are ongoing. We assess each matter to determine if a contingent liability should
be recorded. In making this assessment, we may consult, depending on the nature of the matter, with external legal counsel and
technical experts. Based on the information we obtain, combined with our judgment regarding all the facts and circumstances of
each matter, we determine whether it is probable that a contingent loss may be incurred and whether the amount of such loss can
be reasonably estimated. Should a loss be probable and reasonably estimable we record a loss. In determining the amount of the
loss, we consider advice received from experts in the specific matter, current status of legal proceedings, if any, prior case
history and other factors. Should the judgments and estimates made by us be incorrect, we may need to record additional contingent
losses that could materially adversely impact the results of operations and financial conditions.
BUSINESS
Business of Novelos
Novelos Therapeutics, Inc. (Novelos or the Company) is a pharmaceutical
company developing compounds for the treatment and diagnosis of cancer.  On April 8, 2011, Novelos entered into a business
combination with Cellectar, Inc. (Cellectar), a privately held Wisconsin corporation that designed and developed products to detect,
treat and monitor a wide variety of human cancers (the Acquisition). Following the Acquisition, we have been developing novel drugs
for the treatment and diagnosis of cancer.
We believe our cancer-targeted compounds (referred to as LIGHT,
HOT and GLOW2) are selectively taken up and retained in cancer cells, including cancer stem cells, versus normal cells. Thus, our
therapeutic compounds appear to directly kill cancer cells while minimizing harm to normal cells. This offers the potential for
a paradigm shift in cancer therapy by providing efficacy versus all three major drivers of mortality in cancer: primary tumors,
metastases and stem cell-based relapse. I-124-CLR1404 (LIGHT) is a small-molecule, broad-spectrum, cancer-targeted positron emission
tomography (PET) imaging agent. We believe LIGHT has first-in-class potential and Phase 1-2 clinical trials are ongoing across
11 solid tumor indications. I-131-CLR1404 (HOT) is a small-molecule, broad-spectrum, cancer-targeted molecular radiotherapeutic
that delivers cytotoxic (cell-killing) radiation directly and selectively to cancer cells and cancer stem cells. We believe HOT
also has first-in-class potential. The HOT Phase 1b dose-escalation trial is ongoing and we expect HOT to enter Phase 2 trials
in the third quarter of 2013, subject to additional funding, as a monotherapy for solid tumors with significant unmet medical need.
CLR1502 (GLOW2) is a preclinical, cancer-targeted, non-radioactive optical imaging agent for intraoperative tumor margin illumination
and non-invasive tumor imaging. Together, we believe our compounds are able to "find, treat and follow" cancer anywhere
in the body in a novel, effective and highly selective way.
Market Overview
Our target market is broad and represents the market for the
treatment and diagnosis of cancer. According to Drug Discovery News (April 2009) and PharmaLive (October 8, 2009), the global market
for cancer pharmaceuticals reached an estimated $66 billion in 2007, nearly doubling from $35 billion in 2005 and is expected to
grow to $80 billion by 2012.  Furthermore, the US National Cancer Institute (January 12, 2011) estimates that the overall
cost of treating cancer in the US will increase to $158 billion by 2020 from $125 billion in 2010 and Global Industry Analysts
(GIA) forecasts the global market for cancer therapies to reach $225 billion by 2017 (November 2011). According to BCC Research
(April 2011), the total market for next-generation cancer diagnostics was $776 million in 2010 and is growing at a compounded annual
growth rate of 47%, to reach a forecast market size of $5.3 billion in 2015.
Technology Overview
Our compounds are optimized phospholipid ether analogs (PLEs)
that interact with lipid rafts, which are specialized microdomains within cell membranes. Importantly, the core chemical structure
shared across all three products provides selective targeting of cancer cells, including cancer stem cells, in preference to normal
cells (due to enrichment of lipid rafts in the former).  The cancer-targeting PLE carrier molecule was deliberately designed
to be coupled to imaging or therapeutic molecules. For example iodine can be attached via a very stable covalent bond resulting
in two distinct products differing only with respect to the isotope of iodine they contain – HOT contains radioactive I-131
and LIGHT contains the shorter-lived radioactive I-124. Because of their chemical identity, LIGHT also represents an ideal biomarker
that may be used to predict tumor sensitivity of HOT and, potentially, establish an efficacious dose in individual patients. Other,
non-radioactive molecules can also be attached to the PLE core. In the case of GLOW2, this is an infrared emitting fluorophore
(800 nm) whose signal can penetrate through up to approximately 1 cm of tissue. This may enable GLOW2's use to visualize
tumor margins during cancer surgery (effectively acting as an adjunct therapeutic agent) and to non-invasively detect relatively
superficial tumors. Thus, to date, three cancer-targeted product profiles have been generated from a single chemical core structure
that is the foundation of our technology platform – a diagnostic PET imaging agent, LIGHT, a molecular radiotherapeutic agent,
HOT and a non-radioactive optical imaging agent to increase the success of cancer surgery and non-invasively image certain tumors.
29
Our core technology platform is based on research conducted
by Cellectar's founder and our Chief Scientific Officer, Dr. Jamey Weichert, beginning in 1994 at the University of Michigan
(U. Mich.), where phospholipid ether analogs were initially designed, synthesized, radiolabeled, and evaluated. Since 1998, Dr.
Weichert has continued his research at the University of Wisconsin (U. Wisc.) and subsequently founded Cellectar in 2002 to further
develop and commercialize the technology. Cellectar obtained exclusive rights to the related technology patents owned by U. Mich.
in 2003 and continued development of the platform while obtaining ownership of numerous additional patents and patent applications
(lasting until 2025, 2028 and 2030 without extensions) prior to the Acquisition.
Products in Development
LIGHT
I-124-CLR1404
(LIGHT) is a small-molecule,
broad-spectrum, cancer-targeted imaging
agent that we believe has first-in-class potential for selective detection of tumors and metastases in a broad range of cancers.
LIGHT is comprised of a proprietary phospholipid ether analog (PLE), acting as a cancer-targeted delivery and retention vehicle,
covalently labeled with iodine-124, a short-lived PET imaging radioisotope. PET imaging used in conjunction with CT scanning has
now become the imaging method of choice in oncology. In studies to date, LIGHT selectively illuminated malignant tumors in 52 of
54 animal models of different cancer types, demonstrating broad-spectrum, cancer-selective uptake and retention. Investigator-sponsored
Phase 1-2 trials of LIGHT as a PET imaging agent are ongoing at the University of Wisconsin across 11 solid tumor indications.
The investigator-sponsored IND for LIGHT was submitted on March 28, 2003 and was approved by the FDA on April 25, 2003. The IND
is held by Dr. Lance Hall at the University of Wisconsin, who both initiates and conducts the investigation and under whose immediate
direction the investigational drug is administered. Novelos, the National Cancer Institute or the University of Wisconsin Institute
for Clinical and Translational Research provide funding for the trials and the data is shared with Novelos while the trials progress
and at the conclusion of the trials. Initial positive imaging results have been established in patients with lung and brain cancers.
These human trials, if successful, would likely provide proof-of-concept for LIGHT as a PET imaging agent with the potential to
supplant the current "gold standard" agent, 18F-fluoro-deoxyglucose (FDG), due to what we believe to be LIGHT's
superior cancer-specificity and more favorable logistics of clinical use. As a chemically identical biomarker for HOT, LIGHT we
believe that tumor uptake data could accelerate clinical development of HOT by guiding selection of indications for HOT Phase 2
trials and potentially be used in such trials to identify suitable patients and assess therapeutic efficacy. For the same reason,
and in view of the quantitative nature of PET imaging, LIGHT imaging may be capable of estimating an efficacious dose of HOT in
individual patients.
Chemically, LIGHT is comprised of our proprietary PLE, 18-(p-[I-124]iodophenyl)
octadecyl phosphocholine, acting as a cancer-targeted delivery and retention vehicle, covalently labeled with iodine -124, a radioactive isotope
with a radiation half-life of four days.
We compared LIGHT and FDG side by side (24 hours apart) in the
same tumor-bearing mouse (PC3 human prostate carcinoma) that was also treated with carrageenan to induce inflammation.  As
expected, FDG demonstrated significant uptake into the inflammatory lesion and organs such as heart and bladder compared to the
malignant tumors, which were poorly imaged.  LIGHT, on the other hand, showed no uptake into the inflammatory lesion and organs,
yet clear and demonstrable uptake into the tumors.
Additionally, the radioisotopic half-life of only 110 minutes
for fluorine-18 labeled agents, such as FDG, severely limits their delivery range relative to the point of manufacture.  I-124
has a four-day half-life that permits worldwide distribution of LIGHT from one manufacturing location.  Additionally, the
longer half-life affords a longer imaging window of up to seven days following injection.
The third part of an investigator-sponsored Phase 1-2 trial
of LIGHT as a PET imaging agent for patients with advanced non-small cell lung cancer (NSCLC) was initiated in December 2011 at
the University of Wisconsin Carbone Cancer Center (UWCCC) and first patient was enrolled in February 2012. Dr. Anne M. Traynor
at UWCCC is the principal investigator for this trial. Novelos provides funding for the trial and the data is shared with Novelos
while the study progresses and at the conclusion of the study. Up to 9 patients will be enrolled across two dose levels (5 mCi
and 3 mCi) in this Phase 1-2 trial. The first cohort comprising three patients dosed with LIGHT at 5mCi has been successfully completed.
We saw clear and sustained uptake of LIGHT in cancerous tumors against low background and have not observed any adverse safety
signals. Although still early and in a small number of subjects, there is some suggestion that LIGHT imaging was more tumor-selective
than the comparator modality 18F-fluoro-deoxyglucose (18F-FDG) PET. In addition, in one patient, three brain metastases were detected
with LIGHT that were not seen with FDG, altering the treatment plan for this patient. Having observed initial cancer-specific uptake
with LIGHT at 5 mCi dose in NSCLC patients, and as we seek a minimally efficacious dose, we are enrolling three patients at 3 mCi
dose in the next cohort.
30
An investigator-sponsored Phase 1-2 trial of LIGHT as a PET
imaging agent for brain cancer was initiated in December 2011 at UWCCC and first patient was enrolled in March 2012. Dr. Lance
Hall at the UWCCC is the principal investigator for this trial. This trial is being funded by UWCCC and an Institute for Clinical
and Translational Research (ICTR) grant, whereas the data is shared with Novelos while the study progresses and at the conclusion
of the study. Up to 20 patients will be enrolled at a 5 mCi dose. In June 2012, we announced that three glioma patients were dosed
with LIGHT at 5 mCi. The preliminary results from these three glioma patients showed strong and sustained uptake of LIGHT in cancerous
tumors was seen against very low background and no adverse safety signals were observed. Patient enrollment is continuing.
An investigator-sponsored Phase 1-2 trial of LIGHT as a PET
imaging agent for patients with multiple solid tumor types (triple negative breast, prostate, colorectal, gastric, ovarian, pancreatic,
esophageal, soft tissue sarcoma, and head & neck cancer) was initiated in August 2012 at the University of Wisconsin Carbone
Cancer Center (UWCCC) and the first patient was enrolled in October 2012.  Dr. Glenn Liu at UWCCC is the principal investigator
for this trial.  Novelos provides funding for the trial and the data is shared with Novelos while the study progresses and
at the conclusion of the study.  Up to 9 patients per tumor type will be enrolled across two dose levels (5 mCi and 3 mCi)
in this Phase 1-2 trial.
An investigator-sponsored Phase 1-2 trial of LIGHT as a PET
imaging agent for metastatic brain cancer was initiated in January 2012 at UWCCC and the clinical trial protocol is being amended
to facilitate patient enrollment. Dr. Lance Hall at the UWCCC is the principal investigator for this clinical trial. Dr. Jamey
Weichert is the primary principal investigator for the $1.2 million grant from the National Cancer Institute, which funds the trial.
We are constructing a clinical-stage manufacturing facility
for LIGHT at our Madison, WI location, which, subject to additional funding, is expected to be completed in the fourth quarter
of 2013. Once the facility is completed, we plan to initiate company-sponsored LIGHT Phase 2 trials in solid tumor indications,
starting in the first quarter of 2014. The objectives of these Phase 2 trials will include comparison to standard of care cancer
imaging with pathology confirmation, as well as optimization of dosing and imaging parameters. Meanwhile, we will continue exploration
of dose and imaging time points, along with comparison to standard of care cancer imaging, in the ongoing investigator-sponsored
LIGHT Phase 1-2 trials.
According to Bio-Tech Systems (November 2010), sales of FDG
in the US in 2009 were approximately $300 million and projected to grow to approximately $900 million in 2017. FDG accumulates
in any tissue having increased glucose metabolism compared to surrounding tissue. As a result and in contrast to LIGHT, FDG is
not selective for malignant tumors. FDG localizes in certain normal tissue such as heart, kidney and brain tissues that also have
high glucose metabolism. FDG is also known to localize in inflammatory sites. Other major limitations to the use of FDG are found
in pelvic imaging due to the high renal (kidney) clearance of the compound. These characteristics of FDG, therefore, decrease its
diagnostic specificity for certain malignancies. FDG is no longer covered by patent and is typically manufactured onsite at PET
imaging medical facilities because of its limited (110 minute) half-life.
HOT
I-131-CLR1404 (HOT) is a small-molecule, broad-spectrum, cancer-targeted
molecular radiotherapeutic that we believe has first-in-class potential.  HOT is comprised of a proprietary phospholipid ether
analog (PLE), acting as a cancer-targeted delivery and retention vehicle, covalently labeled with iodine-131, a cytotoxic (cell-killing)
radioisotope that is already in common use to treat thyroid and other cancer types. It is this "intracellular radiation"
mechanism of cancer cell killing, coupled with delivery to a wide range of malignant tumor types that we believe imbues HOT with
broad-spectrum anti-cancer activity.  Selective uptake and retention has also been demonstrated in cancer stem cells compared
with normal cells, offering the prospect of longer lasting cancer remission. In 2009, we filed an IND with the FDA to study HOT
in humans.  In early 2010, we successfully completed a Phase 1a dosimetry trial demonstrating initial safety, tumor imaging
and pharmokinetic consistency and establishing a starting dose for a Phase 1b dose-escalation trial.  Radiation dosimetry
measures how much radiation is absorbed by tumors and body organs in order to optimize delivery of radiation therapy. The ongoing
Phase 1b dose-escalation trial is aimed at determining the Maximum Tolerated Dose of HOT. We expect to initiate HOT Phase 2 efficacy
trials, subject to additional funding, as a monotherapy for solid tumors with significant unmet medical need, such as glioma and
lung cancer, as soon as a starting dose is established. We may determine such a dose based on an efficacy signal or an acceptable
safety profile in the Phase 1b trial. Selection of indications for Phase 2, as well as aspects of trial design, will be guided
by ongoing PET imaging trials in cancer patients with LIGHT, a chemically identical biomarker for HOT. Preclinical experiments
in
in vivo
(in animals) tumor models have demonstrated selective killing of cancer cells along with a benign safety profile.
HOT's anti-tumor/survival-prolonging activities have been demonstrated in more than a dozen xenograft models (human tumor
cells implanted into animals) including breast, prostate, lung, glioma (brain), pancreatic, ovarian, uterine, renal and colorectal
cancers and melanoma.   In all but two models, a single administration of a well-tolerated dose of HOT was sufficient
to demonstrate efficacy.  In view of HOT's selective uptake and retention in a wide range of solid tumors and in cancer
stem cells, its single-agent efficacy in animal models and its non-specific mechanism of cancer-killing (radiation), we are first
developing HOT as a monotherapy for solid tumors with significant unmet medical need.
Chemically, HOT is comprised of our proprietary PLE, 18-(p-[I-131]iodophenyl)
octadecyl phosphocholine, acting as a cancer-targeted delivery and retention vehicle, covalently labeled with iodine-131, a cytotoxic
radioisotope with a radiation half-life of eight days.
31
Single intravenous, well-tolerated doses of HOT administered
therapeutically in animals (i.e., after primary tumors were established) have been observed to result in significant anti-tumor
and/or survival benefit compared to control animals in mouse xenograft tumor models including ovarian, pancreatic, non-small cell
lung, triple-negative breast, prostate, glioma, colorectal and kidney cancers. Survival benefit generally reflected the degree
of tumor growth suppression.  Efficacy was also seen in a xenograft model employing human uterine sarcoma cells which over-express
efflux pumps known to underlie resistance to many standard chemotherapeutic drugs. The broad
in vivo
efficacy profile of
HOT across many tumor types is reflected in the fact that selective tumor localization of LIGHT (which uses the same cancer-targeting
drug delivery and retention vehicle as HOT) has been demonstrated in over 50 xenograft, spontaneous and transgenic cancer models. 
HOT was also tested in combination with a standard efficacious dose of gemcitabine in a pancreatic cancer xenograft model. 
Single doses of HOT or gemcitabine given alone were equally efficacious while the combination therapy was significantly more efficacious
than either treatment alone (additive).  In each xenograft study, the dose of HOT was ~100 µCi, which is approximately
50-fold less than the maximum tolerated dose of HOT determined in a six-month rat radiotoxicity study.
Extensive, IND-enabling, Good Laboratory Practices (GLP)
in
vivo
and
in vitro
preclinical pharmacokinetic/distribution, toxicology and drug safety studies were successfully completed
using non-pharmacological concentrations/doses of PLE consistent with its role as a delivery/retention vehicle in HOT.  Tissue
distribution studies supported prediction of acceptable human organ exposures and body clearance for HOT.  Importantly, and
in sharp distinction from biological products labeled with I-131, the small molecule HOT showed very minimal variation in excretion
kinetics and tissue distribution among individuals within species or across a 500-fold variation in dose.  Single- and repeated-dose
animal toxicology studies indicated very high margins of safety (80-200x) over the anticipated maximum human therapy dose of HOT.
In February 2010 we completed a Phase 1a dosimetry trial with
a single intravenous dose of 10 mCi HOT in eight patients with relapsed or refractory advanced solid tumors.  Single doses
of HOT were well tolerated.  The reported adverse events were all considered minimal, manageable and either not dose limiting
or not related to HOT. There were no serious adverse events reported.  Analysis of total body imaging and blood and urine
samples collected over 42 days following injection indicated that doses of HOT expected to be therapeutically effective can be
administered without harming vital organs.  Two subjects (one with colorectal cancer metastasized to lung and another with
prostate cancer) had tumors that were imaged with 3D nuclear scanning (SPECT/CT) on day 6 after administration of HOT.  Uptake
of HOT into tumor tissue (but not adjacent normal tissue or bone marrow) was clearly demonstrated in both subjects.  Echoing
animal studies, pharmacokinetic analyses demonstrated a prolonged half-life of radioactivity in the plasma after HOT administration
(approximately 200 hours) and that there was no significant variation in excretion or radiation dosimetry among subjects. 
The trial established an initial dose of 12.5 mCi/m2 (for example, 20 mCi dose for a patient with 1.6m
2
body surface
area) for the Phase 1b escalating dose trial that is ongoing.
The primary
objective of this multicenter Phase 1b dose-escalation trial in patients with a range of advanced solid tumors is to define the
Maximum Tolerated Dose (MTD) of HOT.  In addition to determining the MTD, the Phase 1b trial is intended to evaluate overall
tumor response (using standard RESIST 1.1 criteria) and safety.
In
September 2012, we announced that that we had successfully completed the second cohort in this Phase 1b dose-escalation trial.
The second two-patient cohort was successfully dosed with 25 mCi/m2 of HOT, triggering enrollment into the third cohort at 37.5
mCi/m2. Data from the second cohort indicated HOT was well-tolerated, without any dose limiting or sub-dose limiting toxicities,
enabling enrollment of the first patient in the third cohort.
Concurrently, separate studies are expected to generate imaging
data in cancer patients using LIGHT.  These imaging trials with LIGHT are expected to a facilitate selection of indications
and trial designs for HOT Phase 2 trials with an initial focus on solid tumors with significant unmet medical need, planned to
begin in the third quarter of 2013, in the event we obtain the additional funding necessary for that purpose.  Based on its
broad-spectrum mechanism of action and wide-ranging single agent activity in animal cancer models, HOT is anticipated to be
used as monotherapy through proof-of-concept clinical trials, with subsequent exploration of combination with chemotherapeutic
agents (a number of which are known to be radiosensitizers and thus with potential to enhance the efficacy of HOT).
Tumor treatment with radioactive isotopes has been used as a
fundamental cancer therapeutic for decades.  The goals of targeted cancer therapy — selective delivery of effective
doses of isotopes that destroy tumor tissue, sparing of surrounding normal tissue, and non-accumulation in vital organs such as
the liver and kidneys — remain goals of novel therapies as well.  We believe our isotope delivery technology is poised
to achieve these goals.  Because, to date, HOT has been shown to reliably and near-universally accumulate in cancer cells
and because the therapeutic properties of the iodine-131 are well known, we believe the risk of non-efficacy in human clinical
trials is less than that of other cancer therapies at this stage of development, although no assurance can be given.
32
Other targeted radiotherapies include the marketed drugs Zevalin®
(90Y, Spectrum Pharmaceuticals) and Bexxar® (I-131, GSK).  In both cases, tumor-targeting is monoclonal antibody-based
and limited to non-Hodgkins lymphoma, which is a type of cancer involving cells of the immune system.  Thus, these agents
are not appropriate comparators for HOT because of their limited therapeutic utility (only one type of tumor) and because their
target indication is often well-managed by other drugs (unlike HOT, which has potential to treat tumor types for which the current
standard of care is associated with very poor outcomes). Notably, both Zevalin® and Bexxar® were approved on the basis
of objective response rates (shrinking of tumors) without data to support improvement in survival, suggesting that regulatory approval
of radiopharmaceuticals may be based on relatively shorter and smaller pivotal clinical trials than is often the case in oncology.
In conclusion, we believe that HOT is not subject to the full
extent of development risk typically associated with early-stage cancer therapeutics for the following reasons:
·
HOT is selectively taken up by and retained in cancer versus normal cells and its PLE delivery vehicle is intended to be given to patients in sub-pharmacological doses, resulting in an improved safety profile compared to standard chemotherapy.
·
HOT does not rely on inhibition or enhancement of a specific pathway; it works by exposing cancer cells to sustained lethal radiation from within.
·
To date, HOT (as demonstrated with LIGHT studies) has shown near-universal cancer-specific retention in more than 50
in vivo
tumor models, making the molecule potentially effective in numerous cancer types (broad-spectrum) as compared to type-specific therapies.
·
We believe we have completed all applicable preclinical safety, pharmacology and toxicology studies that we believe will be required for an NDA including both single-dose and multi-dose studies.
·
HOT is a small molecule that is easily characterized and synthesized and is therefore not subject to scale-up and manufacturing risks typically associated with large molecules such as monoclonal antibodies.
·
HOT exploits a new cancer-selective delivery and retention mechanism, but is paired with a proven and effective radioisotope (I-131) for therapy.
GLOW2
GLOW2 is a small-molecule, broad-spectrum, cancer-targeted,
non-radioactive optical imaging agent that we believe has first-in-class potential for intraoperative tumor margin illumination
and non-invasive tumor imaging. GLOW2 is comprised of a proprietary phospholipid ether analog (PLE), acting as a cancer-targeted
delivery and retention vehicle, covalently attached to a near-infrared (800nm) fluorophore. According to the American Cancer Society
(2011), most cancer patients will have some type of surgery, and Cancer Facts and Figures indicated that approximately 1.3 million
cancer patients were diagnosed with solid tumors in the U.S. alone in 2011. GLOW2 may facilitate and enable diagnostic, staging,
debulking and curative cancer surgeries, intraoperatively in real time (i.e. during the actual surgical procedure) by defining
tumor margins and regional lymph node involvement, resulting in more accurate tumor resectioning and improved outcome and prognosis.
In this context, GLOW2 would effectively act as an adjunct therapeutic agent. In preclinical
in vivo
(in animals) tumor
models, non-invasive optical imaging showed pronounced accumulation of GLOW2 in tumors versus normal organs and tissues in addition
to successfully delineated tumor margins during tumor resection. Thus, GLOW2 may also have utility for non-invasive imaging of
relatively superficial tumor types in man (e.g., melanoma, head & neck, colon, esophageal). Subject to additional funding,
we expect to submit an IND for GLOW2 in the second half of 2013 and begin clinical trials shortly thereafter.
Other Pipeline Compounds
We have other preclinical compounds that are based on our proprietary
cancer-targeting technology. For example, CLR1404 (COLD) is a cancer-targeted chemotherapy when used in high (100x) pharmacology
relevant doses that, in preclinical experiments, has been observed to inhibit the phosphatidylinosotol 3-kinase (PI3K)/Akt survival
pathway, which is overexpressed in many types of cancer.  As a result, in such preclinical experiments COLD has been observed
to selectively inhibit Akt activity, induce apoptosis through caspase activation and inhibit cell proliferation in cancer cells
versus normal cells.  COLD also exhibits significant
in vivo
efficacy in mouse xenograft tumor models, including non-small
cell lung cancer and triple-negative breast cancers, producing long-lasting tumor growth suppression and significantly increased
survival.  We believe COLD has the potential to be best-in-class versus other Akt inhibitors in development due to (a) cancer
cell/cancer stem cell targeting, resulting in cancer-selective inhibition of Akt and cell proliferation or (b) suitability for
intravenous administration that we believe offers the prospect of greater systemic exposure and hence Akt inhibition in cancer
cells, which we believe would result in superior efficacy.
33
Technology
LIGHT, HOT and GLOW2 are optimized PLEs that interact with lipid
rafts, which are specialized microdomains within cell membranes. Importantly, the core chemical structure shared across all three
products provides selective targeting of cancer cells, including cancer stem cells, in preference to normal cells (due to enrichment
of lipid rafts in the former).  The cancer-targeting PLE carrier molecule was deliberately designed to be coupled to imaging
or therapeutic molecules. For example iodine can be attached via a very stable covalent bond resulting in two distinct products
differing only with respect to the isotope of iodine they contain – HOT contains short-lived radioactive I-131 and LIGHT
contains the even more short-lived radioactive I-124. Because of their chemical identity, LIGHT also represents an ideal biomarker
that can be used to predict tumor sensitivity HOT and, potentially, establish an efficacious dose in individual patients. Other,
non-radioactive molecules can also be attached to the PLE core. In the case of GLOW2, this is an infrared emitting fluorophore
(800 nm) whose signal can penetrate through up to approximately 1 cm of tissue. This may enable GLOW2's use to visualize
tumor margins during cancer surgery (effectively acting as an adjunct therapeutic agent) and to non-invasively detect relatively
superficial tumors. Thus, to date, three cancer-targeted product profiles have been generated from a single chemical core structure
that is the foundation of our technology platform – a diagnostic PET imaging agent, LIGHT, a molecular radiotherapeutic agent,
HOT and a non-radioactive optical imaging agent to increase the success of cancer surgery and non-invasively image certain tumors,
GLOW2.
Using another fluorescent-labeled PLE (CLR1501 or GLOW1), selective
uptake and retention has been demonstrated in cancer cells
in vitro
.  Twenty-four hours after treatment, a variety
of human tumor cell types (melanoma, colorectal, uterine, pancreatic, ovarian, glioblastoma) show six- to ten-fold more staining
with GLOW1 relative to  normal cells (e.g., skin fibroblasts).  Significantly, uptake/retention was also seen in
cancer stem cells, which are known to be relatively resistant to both chemotherapy and radiation andmay therefore contribute to
eventual relapse of disease following conventional chemotherapy.
Malignant tumor targeting, including targeting of cancer stem
cells, has also been demonstrated
in vivo
. For example, mice without intact immune systems, and inoculated with Panc-1 (pancreatic
carcinoma), were injected with GLOW2 24 or 96 hours prior to imaging.
In vivo
optical imaging showed pronounced accumulation
of GLOW2 in tumors versus non-target organs and tissues.  Similarly, PET imaging of tumor-bearing animals (colon, glioma,
triple negative breast and pancreatic tumor xenograft models) administered the imaging agent LIGHT clearly shows selective uptake
and retention by both primary tumors and metastases, including cancer stem cells.  Furthermore, PET/CT analysis following
co-injection of HOT (for therapy) and LIGHT (for imaging) revealed time-dependent tumor shrinkage and disappearance (over 9 days)
in a cancer xenograft model.  Finally, we believe that the capability of our technology to target cancer stem cells
in
vivo
was demonstrated by treating tumor-bearing mice with GLOW1 and then removing the tumor and isolating cancer stem cells,
which continued to display GLOW1 labeling even after three weeks in cell culture.
The basis for selective tumor targeting of our compounds lies
in differences between the plasma membranes of cancer cells as compared to those of most normal cells.  Specifically, cancer
cell membranes are highly enriched in "lipid rafts".  Lipid rafts are specialized regions of the membrane phospholipid
bilayer that contain high concentrations of cholesterol and sphingolipids and serve to organize cell surface and intracellular
signaling molecules (e.g., growth factor and cytokine receptors, the phophatidylinosotol 3-kinase (P13K)/Akt survival pathway).
Data suggests that lipid rafts serve portals of entry for PLEs such as LIGHT, HOT and GLOW2.  The marked selectivity of our
compounds for cancer cells versus non-cancer cells is due to the fact that cancer cells have far more lipid rafts. In addition
to accumulating in lipid rafts, LIGHT, HOT and GLOW2 are transported into the cytoplasm, where they distribute to organelle membranes
(mitochondria, ER, lysosomes) but not the nucleus. The pivotal role played by lipid rafts is underscored by the fact that disruption
of lipid raft architecture suppresses uptake of PLEs into cancer cells.
Legacy Products
Prior to the Acquisition, Novelos had been
developing NOV-002, a small-molecule immunomodulating and anti-cancer compound based on a proprietary formulation of oxidized glutathione. 
NOV-002 has been administered to approximately 1,000 cancer patients in clinical trials and was in Phase 2 development for solid
tumors in combination with chemotherapy.
From November 2006 through January 2010,
we conducted a Phase 3 trial of NOV-002 plus first-line chemotherapy in advanced non-small cell lung cancer (NSCLC) following three
Phase 2 trials (two conducted in Russia and one conducted by us in the U.S.) that had demonstrated clinical activity and safety. 
The Phase 3 trial enrolled 903 patients, 452 of whom received NOV-002.  In February 2010, we announced that the primary endpoint
of improvement in overall survival compared to first-line chemotherapy alone was not met in this pivotal Phase 3 trial.  Following
evaluation of the detailed trial data, we announced in March 2010 that the secondary endpoints also were not met in the trial and
that adding NOV-002 to paclitaxel and carboplatin chemotherapy was not statistically or meaningfully different in terms of efficacy-related
endpoints or recovery from chemotherapy toxicity versus chemotherapy alone. However, NOV-002 was safe and did not add to the overall
toxicity of chemotherapy.  Based on the results from the Phase 3 trial, we have discontinued development of NOV-002 for NSCLC
in combination with first-line paclitaxel and carboplatin chemotherapy.  The aggregate costs incurred in connection with our
development of NOV-002, including administrative overhead, were approximately $70 million.
34
Prior to the Acquisition, Novelos had also
been developing NOV-205, a second oxidized glutathione-based compound. NOV-205 had been administered to approximately 200 hepatitis
patients in clinical trials and was in Phase 2 development for chronic hepatitis C non-responders.  An IND for NOV-205 as
a monotherapy for chronic hepatitis C was accepted by the FDA in 2006.  A U.S. Phase 1b clinical trial with NOV-205 in patients
who previously failed treatment with pegylated interferon plus ribavirin was completed in December 2007.  Based on favorable
safety results of that trial, in March 2010 Novelos initiated a multi-center U.S. Phase 2 trial evaluating NOV-205 as monotherapy
in up to 40 chronic hepatitis C genotype 1 patients who previously failed treatment with pegylated interferon plus ribavirin. 
Safety was established in twenty patients receiving either 30mg or 60mg of NOV-205 daily for 49 days; however, no viral load reduction
was observed.
Further development of NOV-002 and NOV-205
has been suspended.  At this time, we expect to devote our resources to the development and commercialization of the Cellectar
compounds, and we do not expect to conduct any further development of the oxidized glutathione compounds. The IND for NOV-205 was
withdrawn on July 5, 2011.  We anticipate that the IND for NOV-002 will be placed on inactive status.
Manufacturing
We manufacture HOT at our current Good Manufacturing Practices
compliant (cGMP) radiopharmaceutical manufacturing facility in Madison, Wisconsin.  This facility, consisting of approximately
19,500 square feet, contains offices, laboratories, a radiopharmaceutical research lab, a cGMP radiopharmaceutical manufacturing
suite and a cGMP analytical laboratory for product release.  Our manufacturing facility holds a State of Wisconsin Department
of Health Services Radioactive Materials License which authorizes the use and possession of radioactive material for both manufacturing
and distribution activities. This license establishes a possession limit of 9 Curies of iodine-131. The facility also holds a State
of Wisconsin DHS Radioactive Materials License which authorizes the use and possession of radioactive materials by Cellectar for
research and development. The research and development license permits the use and possession of iodine-125, iodine-131 and iodine-124
in quantities sufficient to support in-house HOT manufacturing and other research needs. Each of these iodine isotopes is purchased
from third party vendors. LIGHT manufacturing is conducted by our collaborator, the University of Wisconsin in Madison, in connection
with investigator-sponsored clinical trials, pursuant to a materials transfer agreement expiring in June 2013. The materials transfer
agreement contains standard provisions for the protection of data and intellectual property and may be terminated by either party
at any time before expiration. We are in the process of negotiating a fee-based arrangement with the University of Wisconsin covering
the manufacture of LIGHT.  Under Novelos' guidance, in the fall of 2011 the LIGHT manufacturing facility at the University
of Wisconsin was made compliant with stricter FDA guidelines and requirements for cGMP PET agent production that officially went
into effect in June 2012. On November 2, 2012, we completed a private placement of our common stock and warrants for gross proceeds
of $2,000,000. The proceeds from the private placement are designated for use towards the construction of a clinical-stage manufacturing
facility for I-124-CLR1404 (LIGHT) at our Madison, WI location. We estimate that that the project will cost a total of approximately
$3,000,000 and will take approximately one year to complete. We anticipate that construction will commence in late 2012, although
we have not yet entered into contractual commitments with vendors. We may seek to obtain the additional capital required to complete
the project from additional sales of common stock (other than through this offering), proceeds from warrant exercises, and/or from
equipment financing. The drug substance is identical for both products with the exception of the different iodine isotope used
in each.  The base molecule is a dry powder produced via a six-step synthetic scheme.  The release specifications for
drug substance have been established and validated.  The impurity levels at small scale are very low suggesting that larger
scale production should be feasible.  We have also demonstrated 24-month stability for the drug substance in desiccated and
refrigerated form.  We believe our laboratories are well equipped with the appropriate equipment for manufacturing pilot and
small-scale batches in accordance with cGMP.  We believe we have adequate capacity for any Phase 2 trials of HOT and the potential
for larger scale build-out for larger Phase 3 trials.  All investigational drug substance and product intended for human use
during clinical studies will be manufactured according to the guidelines of the International Conference on Harmonisation of Technical
Requirements for Registration of Pharmaceuticals for Human Use, FDA requirements (CFR part 211) and cGMP. GLOW2 is currently synthesized
at a laboratory (gram) scale in our Madison facility via a non-cGMP process. This process is expected to increase in scale and
cGMP compliance as part of IND-enabling studies over the coming year.
Sales and Marketing
We have not entered into any joint development or similar partnering
agreements with respect to LIGHT, HOT, GLOW2 or COLD.  We plan to pursue and evaluate all available options to develop, launch
and commercialize our compounds.  These options presently include, but are not limited to, entering into a partnering arrangement
with a pharmaceutical company or various pharmaceutical companies with strong development and commercial expertise and infrastructure
in the U.S, Europe and/or Japan.  While we currently do not plan to build our own sales force or utilize a contract sales
organization for launch and commercialization of our compounds, we may reconsider in the future.
35
Competition for Our Clinical-Stage Compounds
LIGHT
FDG is the current gold standard for cancer PET imaging. 
According to Bio-Tech Systems (November 2010), sales of FDG in the US in 2009 were approximately $300 million and projected to
grow to approximately $880 million in 2017.  FDG accumulates in any tissue having increased glucose metabolism compared to
surrounding tissue.  As a result, and in contrast to LIGHT, FDG is not selective for malignant tumors.  FDG localizes
in certain normal tissue such as heart, kidney and brain tissues that also have high glucose metabolism.  FDG is also known
to localize in inflammatory sites.  Other major limitations to the use of FDG are found in pelvic imaging due to the high
renal (kidney) clearance of the compound.  We believe these characteristics of FDG, therefore, decrease its diagnostic specificity
for certain malignancies. FDG is no longer covered by patent and is typically manufactured onsite at PET imaging medical facilities
because of its limited (110 minute) half-life.
We compared LIGHT and FDG side by side (24 hours apart) in the
same tumor-bearing mouse that was also treated with carageenan to induce inflammation.  As expected, FDG demonstrated significant
uptake into the inflammatory lesion and organs such as heart and bladder compared to the malignant tumors, which were poorly imaged. 
LIGHT, on the other hand, showed no uptake into the inflammatory lesion and organs, yet clear and demonstrable uptake into the
tumors.
Additionally, the radioisotopic half-life of only 110 minutes
for fluorine-18 labeled agents, such as FDG, severely limits their delivery range relative to the point of manufacture. I-124 has
a four-day half-life that permits worldwide distribution of LIGHT from one manufacturing location.  Additionally, the longer
half-life affords a longer imaging window of up to seven days following injection.
HOT
HOT's "intracellular radiation" mechanism
of cancer cell killing, coupled with delivery to a wide range of malignant tumor types, imbues HOT with broad-spectrum anti-cancer
activity.  Selective uptake and retention has also been demonstrated in cancer stem cells compared with normal stem cells,
offering a prospect of longer lasting cancer remission. Other targeted radiotherapies include the marketed drugs Zevalin® (manufactured
by Spectrum Pharmaceuticals) and Bexxar® (manufactured by GlaxoSmithKline).  In both cases, tumor-targeting is monoclonal
antibody-based and limited to non-Hodgkins lymphoma, which is a type of cancer involving cells of the immune system.  Thus,
these agents are not appropriate comparators for HOT because of their limited therapeutic utility (only one type of tumor) and
because their target indication is often well-managed by other drugs (unlike HOT which has potential to treat tumor types for which
the current standard of care is associated with very poor outcomes). Notably, both Zevalin® and Bexxar® were approved on
the basis of objective response rates (shrinking of tumors) without data to support improvement in survival, suggesting that regulatory
approval of radiopharmaceuticals may be based on relatively shorter and smaller pivotal clinical trials than is often the case
in oncology.  We do not believe Zevalin® or Bexxar® would be competing products of HOT in any material respect. Other
cancer-targeted molecular radiotherapeutic agents are in various stages of development for solid tumors. These primarily utilize
monoclonal antibodies for cancer cell targeting and are, therefore, each restricted to a relatively narrow range of tumor indications
compared to HOT.
Intellectual Property
We have established a broad U.S. and international intellectual
property rights portfolio around our proprietary cancer-targeting phospholipid ether ("PLE") technology platform including
LIGHT, HOT and GLOW2.
Our proprietary rights include patents and patent applications
that are either owned by us or exclusively licensed to us by the University of Michigan (the "Michigan patents"). LIGHT
and HOT are covered by the Michigan patents that provide compound (composition of matter) coverage in the U.S. and Canada and expire
in 2016.  Our patents and applications cover methods of use, composition and method of manufacture related to LIGHT, HOT,
GLOW2 and other PLEs.  Many of these patents and applications are filed in key commercial markets worldwide.  These patents
will generally expire between 2025 and 2030 unless extended.
In particular, LIGHT is covered by the Michigan patents as well
as two of our U.S. patents, one of which is directed to its use for virtual colonoscopy (expiring 2025) and another of which is
directed to its use for
in vitro
diagnostics (expiring 2025).  LIGHT is also covered by pending U.S., Japanese and
European patent applications directed to its use for
in vivo
diagnostics and once issued should expire in 2025.  Lastly,
the use of LIGHT for diagnostics purposes with cancer stem cells is pending in the U.S., Japan and Europe. Patents resulting from
these applications are expected to expire in 2030.
HOT is covered by two additional series of our patents and applications
aside from the Michigan patents.  The first is directed to a method of use for cancer therapy and has also been filed in Europe
and Japan, in addition to the U.S.  These are expected to expire in 2025.  Secondly, an application directed to cancer
stem-cell therapy is pending in the U.S., Europe, Russia and Japan. Patents resulting from these applications are expected to expire
in 2030. Some of these resulting patents may be extendable on a country-by-country basis.
36
GLOW2
is covered by patent applications directed to the compound, methods of use and method of manufacture that have been filed in U.S.,
Europe, Russia and Japan.
Patents resulting from these applications
are expected to expire in 2029. Some of these resulting patents may be extendable on a country-by-country basis.
Separate from any patent protection and following product approval
by regulatory authorities, data exclusivity may be available for various compounds for up to 10 years on a country-by-country basis
(e.g., up to 5 years in the U.S.).
The early termination of the University of Michigan license
agreement would result in the loss of our rights to use the covered patents.
In addition to the above noted patents/applications directed
to LIGHT, HOT and GLOW2, we own other patents/applications directed to different forms of phospholipid ethers and methods of manufacturing
of phospholipid ethers.
We also own all intellectual property rights in the U.S and
Europe related to our clinical-stage pipeline compound, NOV-002, and other preclinical compounds based on oxidized glutathione. 
Issued composition-of-matter patents cover proprietary formulations of oxidized glutathione that do not expire until 2019, and
these patents include methods of manufacture for oxidized glutathione formulated with various metals.
Licenses / Collaborations
In September 2003, Cellectar entered into a license agreement
with the University of Michigan (the U. Mich. license), which granted Cellectar exclusive rights to the development, manufacture
and marketing of products under several composition of matter patents in North America that expire at varying dates in 2016. 
The U. Mich. license expires upon the expiration of the last covered patent.  We are responsible for an annual license fee
of $10,000 and are required to pay costs associated with the maintenance of the patents covered by the U. Mich. license. 
Additionally, we are required to make milestone payments of $50,000 upon the filing of a New Drug Application (NDA) for a licensed
product intended for use in a therapeutic or diagnostic application (such milestone fees may be deferred and paid within twelve
months of the first commercial sale of such product) and make certain milestone payments within a year following the first commercial
sale of any licensed products.  The sales milestones range from $100,000 to $200,000, dependent upon whether the drug is for
use in a diagnostic or therapeutic application, provided that if sales in the first 12 months are less than the amount of the milestone,
then we are required to pay 50% of all sales until the milestone is satisfied. The milestone payments may total up to $400,000.
The U. Mich. license provides that we pay a royalty equal to 3% of net sales of any licensed products sold by us or our sublicensees
for such licensed products, provided however if the sublicense fee payable to us is between 4% and 5% of net sales, then the royalties
payable to U. Mich. shall be equal to 50% of the sublicense fee.  Furthermore, the U. Mich. license provides for a reduction
in the royalties owed by up to 50% if we are required to pay royalties to any third parties related to the sale of the licensed
products.  If we receive any revenue in consideration of rights to the licensed technology that is not based on net sales,
excluding any funded research and development, we are required to pay U. Mich. 10% of amounts received. During 2003, pursuant to
the U. Mich. license, Cellectar paid approximately $54,000 of back patent costs and issued 203,483 shares of common stock to U.
Mich. as partial consideration for the rights described above. U. Mich. may terminate the agreement if we cease operations, if
we fail to make any required payment under the agreement, or if we otherwise materially breach the agreement, subject to applicable
notice and cure periods.  To date, we have made all payments as they have become due, there have been no defaults under the
U. Mich. license, nor have we ever been notified of a default by U. Mich. We may terminate the agreement with six months'
notice to U. Mich. and the return of licensed product and related data.  The U. Mich. license contained milestones that required
certain development activities to be completed by specified dates. All such development milestones have been either completed or
removed by subsequent amendment to the agreement.  U. Mich. has provided no warranties as to validity or otherwise with respect
to the licensed technology.
Employees
As of November 16, 2012 we had 20 full time employees. We believe
our relationships with our employees are good.
Regulation
The production, distribution, and marketing of products employing
our technology, and our development activities, are subject to extensive governmental regulation in the United States and in other
countries.  In the United States, we are subject to the Federal Food, Drug, and Cosmetic Act, as amended, and the regulations
of the FDA, as well as to other federal, state, and local statutes and regulations, including the federal, state and local laws
and regulations governing the storage, use and disposal of hazardous materials, including radioactive isotopes.  These laws,
and similar laws outside the United States, govern the clinical and preclinical testing, manufacture, safety, effectiveness, approval,
labeling, distribution, sale, import, export, storage, record-keeping, reporting, advertising, and promotion of drugs.  Product
development and approval within this regulatory framework, if successful, will take many years and involve the expenditure of substantial
resources.  Violations of regulatory requirements at any stage may result in various adverse consequences, including the FDA's
and other health authorities' delay in approving or refusal to approve a product.  Violations of regulatory requirements
also may result in enforcement actions.
37
The following paragraphs provide further information on certain
legal and regulatory issues with a particular potential to affect our operations or future marketing of products employing our
technology.
Research, Development, and Product Approval Process
The research, development, and approval process in the United
States and elsewhere is intensive and rigorous and generally takes many years to complete.  The typical process required by
the FDA before a therapeutic drug may be marketed in the United States includes:
·
preclinical laboratory and animal tests performed under the FDA's Good Laboratory Practices regulations, referred to herein as GLP;
·
submission to the FDA of an Investigational New Drug ("IND") application, which must become effective before human clinical trials may commence;
·
human clinical studies performed under the FDA's Good Clinical Practices regulations, to evaluate the drug's safety and effectiveness for its intended uses;
·
FDA review of whether the facility in which the drug is manufactured, processed, packed, or held meets standards designed to assure the product's continued quality; and
·
submission of a marketing application to the FDA, and approval of the application by the FDA.
Preclinical Testing
During preclinical testing, studies are performed with respect
to the chemical and physical properties of candidate formulations. These studies are subject to GLP requirements. Biological testing
is typically done in animal models to demonstrate the activity of the compound against the targeted disease or condition and to
assess the apparent effects of the new product candidate on various organ systems, as well as its relative therapeutic effectiveness
and safety. An IND must be submitted to the FDA and become effective before studies in humans may commence.
Clinical Trials
Clinical trial programs in humans generally follow a three-phase
process.  Typically, Phase 1 studies are conducted in small numbers of healthy volunteers or, on occasion, in patients afflicted
with the target disease.  Phase 1 studies are conducted to determine the metabolic and pharmacological action of the product
candidate in humans and the side effects associated with increasing doses, and, if possible, to gain early evidence of effectiveness. 
In Phase 2, studies are generally conducted in larger groups of patients having the target disease or condition in order to validate
clinical endpoints, and to obtain preliminary data on the effectiveness of the product candidate and optimal dosing. This phase
also helps determine further the safety profile of the product candidate.  In Phase 3, large-scale clinical trials are generally
conducted in patients having the target disease or condition to provide sufficient data for the statistical proof of effectiveness
and safety of the product candidate as required by United States regulatory agencies.
In the case of products for certain serious or life-threatening
diseases, the initial human testing may be done in patients with the disease rather than in healthy volunteers. Because these patients
are already afflicted with the target disease or condition, it is possible that such studies will also provide results traditionally
obtained in Phase 2 studies. These studies are often referred to as "Phase 1-2" studies. However, even if patients
participate in initial human testing and a Phase 1/2 study carried out, the sponsor is still responsible for obtaining all the
data usually obtained in both Phase 1 and Phase 2 studies.
Before proceeding with a study, sponsors may seek a written
agreement from the FDA regarding the design, size, and conduct of a clinical trial. This is known as a Special Protocol Assessment
(SPA). Among other things, SPAs can cover clinical studies for pivotal trials whose data will form the primary basis to establish
a product's efficacy. SPAs help establish upfront agreement with the FDA about the adequacy of a clinical trial design to
support a regulatory approval, but the agreement is not binding if new circumstances arise. There is no guarantee that a study
will ultimately be adequate to support an approval even if the study is subject to an SPA.
United States law requires that studies conducted to support
approval for product marketing be "adequate and well controlled." In general, this means that either a placebo or a
product already approved for the treatment of the disease or condition under study must be used as a reference control. Studies
must also be conducted in compliance with good clinical practice requirements, and informed consent must be obtained from all study
subjects.
38
The clinical trial process for a new compound can take ten years
or more to complete. The FDA may prevent clinical trials from beginning or may place clinical trials on hold at any point in this
process if, among other reasons, it concludes that study subjects are being exposed to an unacceptable health risk. Trials may
also be prevented from beginning or may be terminated by institutional review boards, who must review and approve all research
involving human subjects. Side effects or adverse events that are reported during clinical trials can delay, impede, or prevent
marketing authorization. Similarly, adverse events that are reported after marketing authorization can result in additional limitations
being placed on a product's use and, potentially, withdrawal of the product from the market.
Submission of NDA
Following the completion of clinical trials, the data is analyzed
to determine whether the trials successfully demonstrated safety and effectiveness and whether a product approval application may
be submitted. In the United States, if the product is regulated as a drug, a New Drug Application ("NDA") must be submitted
and approved before commercial marketing may begin. The NDA must include a substantial amount of data and other information concerning
the safety and effectiveness of the compound from laboratory, animal, and human clinical testing, as well as data and information
on manufacturing, product quality and stability, and proposed product labeling.
Each domestic and foreign manufacturing establishment, including
any contract manufacturers we may decide to use, must be listed in the NDA and must be registered with the FDA.  The application
generally will not be approved until the FDA conducts a manufacturing inspection, approves the applicable manufacturing process
and determines that the facility is in compliance with cGMP requirements.
Under the Prescription Drug User Fee Act, as amended, the FDA
receives fees for reviewing an NDA and supplements thereto, as well as annual fees for commercial manufacturing establishments
and for approved products. These fees can be significant. For fiscal year 2012, the NDA review fee alone is $1,841,500, although
certain limited deferral, waivers, and reductions may be available.
Each NDA submitted for FDA approval is usually reviewed for
administrative completeness and reviewability within 45 to 60 days following submission of the application. If deemed complete,
the FDA will "file" the NDA, thereby triggering substantive review of the application. The FDA can refuse to file any
NDA that it deems incomplete or not properly reviewable. The FDA has established performance goals for the review of NDAs—
six months for priority applications and 10 months for standard applications. However, the FDA is not legally required to complete
its review within these periods and these performance goals may change over time.
Moreover, the outcome of the review, even if generally favorable,
typically is not an actual approval but an "action letter" that describes additional work that must be done before
the application can be approved. The FDA's review of an application may involve review and recommendations by an independent
FDA advisory committee. Even if the FDA approves a product, it may limit the approved therapeutic uses for the product as described
in the product labeling, require that warning statements be included in the product labeling, require that additional studies be
conducted following approval as a condition of the approval, impose restrictions and conditions on product distribution, prescribing,
or dispensing in the form of a risk management plan, or otherwise limit the scope of any approval.
Post NDA Regulation
Significant legal and regulatory requirements also apply after
FDA approval to market under an NDA. These include, among other things, requirements related to adverse event and other reporting,
product advertising and promotion and ongoing adherence to cGMPs, as well as the need to submit appropriate new or supplemental
applications and obtain FDA approval for certain changes to the approved product labeling, or manufacturing process. The FDA also
enforces the requirements of the Prescription Drug Marketing Act which, among other things, imposes various requirements in connection
with the distribution of product samples to physicians.
The regulatory framework applicable to the production, distribution,
marketing and/or sale of our product pipeline may change significantly from the current descriptions provided herein in the time
that it may take for any of our products to reach a point at which an NDA is approved.
Overall research, development, and approval times depend on
a number of factors, including the period of review at FDA, the number of questions posed by the FDA during review, how long it
takes to respond to the FDA's questions, the severity or life-threatening nature of the disease in question, the availability
of alternative treatments, the availability of clinical investigators and eligible patients, the rate of enrollment of patients
in clinical trials, and the risks and benefits demonstrated in the clinical trials.
39
Other United States Regulatory Requirements
In the United States, the research, manufacturing, distribution,
sale, and promotion of drug and biological products are potentially subject to regulation by various federal, state, and local
authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services (formerly the Heath Care Financing
Administration), other divisions of the United States Department of Health and Human Services (e.g., the Office of Inspector General),
the United States Department of Justice and individual United States Attorney offices within the Department of Justice, and state
and local governments. For example, sales, marketing, and scientific/educational grant programs must comply with the anti-fraud
and abuse provisions of the Social Security Act, the False Claims Act, the privacy provision of the Health Insurance Portability
and Accountability Act, and similar state laws, each as amended. Pricing and rebate programs must comply with the Medicaid rebate
requirements of the Omnibus Budget Reconciliation Act of 1990 and the Veterans Health Care Act of 1992, each as amended. If products
are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and
requirements apply. All of these activities are also potentially subject to federal and state consumer protection, unfair competition,
and other laws.
Our research and development, manufacturing and administration
of our drugs involve the controlled use of hazardous materials, including chemicals and radioactive materials, such as radioactive
isotopes. Therefore, we are subject to federal, state and local laws and regulations governing the storage, use and disposal of
these materials and some waste products and are required to maintain both a manufacturer's license and a radioactive materials
license with State of Wisconsin agencies.
Moreover, we are now, and may become subject to, additional
federal, state, and local laws, regulations, and policies relating to safe working conditions, laboratory practices, the experimental
use of animals, and/or the use, storage, handling, transportation, and disposal of human tissue, waste, and hazardous substances,
including radioactive and toxic materials and infectious disease agents used in conjunction with our research work.
Foreign Regulatory Requirements
We and any future collaborative partners may be subject to widely
varying foreign regulations, which may be quite different from those of the FDA, governing clinical trials, manufacture, product
registration and approval, and pharmaceutical sales. Whether or not FDA approval has been obtained, we or any future collaboration
partners must obtain a separate approval for a product by the comparable regulatory authorities of foreign countries prior to the
commencement of product marketing in these countries. In certain countries, regulatory authorities also establish pricing and reimbursement
criteria. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA
approval. In addition, under current United States law, there are restrictions on the export of products not approved by the FDA,
depending on the country involved and the status of the product in that country.
Reimbursement and Pricing Controls
In many of the markets where we or any future collaborative
partners would commercialize a product following regulatory approval, the prices of pharmaceutical products are subject to direct
price controls by law and to drug reimbursement programs with varying price control mechanisms. Public and private health care
payers control costs and influence drug pricing through a variety of mechanisms, including through negotiating discounts with the
manufacturers and through the use of tiered formularies and other mechanisms that provide preferential access to certain drugs
over others within a therapeutic class. Payers also set other criteria to govern the uses of a drug that will be deemed medically
appropriate and therefore reimbursed or otherwise covered. In particular, many public and private health care payers limit reimbursement
and coverage to the uses of a drug that are either approved by the FDA or that are supported by other appropriate evidence (for
example, published medical literature) and appear in a recognized drug compendium. Drug compendia are publications that summarize
the available medical evidence for particular drug products and identify which uses of a drug are supported or not supported by
the available evidence, whether or not such uses have been approved by the FDA. For example, in the case of Medicare coverage for
physician-administered oncology drugs, the Omnibus Budget Reconciliation Act of 1993, with certain exceptions, prohibits Medicare
carriers from refusing to cover unapproved uses of an FDA-approved drug if the unapproved use is supported by one or more citations
in the American Hospital Formulary Service Drug Information, the American Medical Association Drug Evaluations, or the United States
Pharmacopoeia Drug Information. Another commonly cited compendium, for example under Medicaid, is the DRUGDEX Information System.
In recent years, there have been positive developments regarding
medical reimbursement for therapeutic radiopharmaceuticals in the United States.  The Centers for Medicare and Medicaid Services
have proposed that the reimbursement for radiopharmaceuticals shift from a cost-to-charge ratio (CCR) to an average selling price
(ASP) plus 4% model.  There has been support expressed for this proposal by government agencies, key industry members and
the industry consortium, The Council on Radionuclides and Radiopharmaceuticals.  The historical CCR model resulted in a reimbursement
rate that was lower than the cost to purchase the drugs, thus creating a disincentive for hospitals to prescribe radiopharmaceuticals. 
The current ASP proposal is a solution to this reimbursement problem.  Furthermore, there are proposals pending, which, if
adopted, would decrease the physician reimbursement for chemotherapy and conventional radiation therapy.  The proposed reduction
in physician reimbursement for chemotherapy could likely result in the movement of a large volume of cancer care from the physician's
office to the hospital environment.  The proposed reduction in physician reimbursement for radiation therapy would result
in a gap in revenue for radiation oncologists.  Both proposed reductions favor an increase in opportunities to prescribe therapeutic
radiopharmaceuticals.
40
LITIGATION
A putative federal securities class action complaint was filed
on March 5, 2010 in the United States District Court for the District of Massachusetts by an alleged shareholder of Novelos, on
behalf of himself and all others who purchased or otherwise acquired Novelos common stock in the period between December 14, 2009
and February 24, 2010, against Novelos and its President and Chief Executive Officer, Harry S. Palmin.  On October 1, 2010,
the court appointed lead plaintiffs (Boris Urman and Ramona McDonald) and appointed lead plaintiffs' counsel.  On October
22, 2010, an amended complaint was filed.  The amended complaint claimed, among other things, that Novelos violated Section
10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder in connection with alleged misleading
disclosures related to the progress of the Phase 3 clinical trial of NOV-002 for non-small cell lung cancer.  In December
2010, the defendants filed a motion to dismiss the complaint with prejudice.  On June 23, 2011, the motion to dismiss was
granted and the case was dismissed without prejudice.  Because the dismissal was without prejudice, the plaintiffs could reinstitute
the proceeding by filing an amended complaint.  In August 2011, the plaintiffs filed a second amended complaint
realleging that the defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 in connection with alleged misleading
disclosures related to the Phase 3 clinical trial for NOV-002 in non-small cell lung cancer. In September 2011, the defendants
filed a motion to dismiss the second amended complaint. On June 11, 2012, the second amended complaint was dismissed with prejudice.
The plaintiffs did not file a notice of appeal prior to the expiration of the deadline for such filing on July 13, 2012.
From its inception through 2010, Novelos was primarily engaged
in the development of certain oxidized glutathione-based compounds for application as therapies for disease, particularly cancer.
These compounds were originally developed in Russia and in June 2000, Novelos acquired commercial rights from the Russian company
("ZAO BAM") which owned the compounds and related Russian patents. In April 2005, Novelos acquired worldwide rights
to the compounds (except for the Russian Federation) in connection with undertaking extensive development activities in an attempt
to secure US Food and Drug Administration ("FDA") approval of the compounds as therapies. These development activities
culminated in early 2010 in an unsuccessful Phase 3 clinical trial of an oxidized glutathione compound (NOV-002) as a therapy for
non-small cell lung cancer. After the disclosure of the negative outcome of the Phase 3 clinical trial in 2010, ZAO BAM claimed
that Novelos modified the chemical composition of NOV-002 without prior notice to or approval from ZAO BAM, constituting a material
breach of the June 2000 technology and assignment agreement. In September 2010, Novelos filed a complaint in Massachusetts Superior
Court seeking a declaratory judgment by the court that the June 2000 agreement has been entirely superseded by the April 2005 agreement
and that the obligations of the June 2000 agreement have been performed and fully satisfied. ZAO BAM answered the complaint and
alleged counterclaims. In August 2011, Novelos filed a motion for judgment on the pleadings as to the declaratory judgment count
and all counts of ZAO BAM's amended counterclaims. On October 17, 2011, the court ruled in favor of Novelos on each of the
declaratory judgment claims and dismissed all counts of ZAO BAM's counterclaim. Judgment in favor of Novelos was entered
on October 20, 2011. On November 14, 2011 ZAO BAM filed a notice of appeal.
We do not anticipate that these litigation contingencies will
have a material adverse effect on the Company's future financial position, results of operations or cash flows.
PROPERTIES
We lease our executive office in Newton, Massachusetts. 
Our office consists of approximately 2,000 square feet and is rented for approximately $5,300 per month.  This lease may be
terminated by either party with one month's notice.
We lease office, laboratory and manufacturing space in Madison,
Wisconsin.  The space consists of approximately 19,500 square feet and is rented for approximately $12,900 per month and expires
on September 14, 2014.  The lease may be renewed for two-year periods through 2024 with an increase of 3% in annual rent.
We are planning to undertake the construction of a clinical-stage manufacturing facility for I-124-CLR1404 (LIGHT) at our Madison,
WI location that we anticipate will take approximately one year to complete and will commence in late 2012.
We believe that our present facilities are adequate to meet
our current needs.  If new or additional space is required, we believe that adequate facilities are available at competitive
prices.
41
MANAGEMENT
As of November 16, 2012 our directors
(1)
and executive
officers are:
Name
Age
Position
Stephen A. Hill, B.M. B.Ch., M.A., F.R.C.S. (2)
54
Chairman of the Board and Director (Class II)
Harry S. Palmin
42
President, Chief Executive Officer and Director (Class III)
J. Patrick Genn
56
Vice President of Investor Relations
Kimberly A. Hawkins
40
Vice President of Clinical Development
Christopher J. Pazoles, Ph.D.
62
Senior Vice President of Research and Development
Joanne M. Protano
44
Vice President, Chief Financial Officer and Treasurer
Jamey P. Weichert, Ph.D.
57
Chief Scientific Officer and Director (Class III)
Thomas Rockwell Mackie, Ph.D. (3)
58
Director (Class I)
James S. Manuso, Ph.D. (3)(2)
63
Director (Class I)
John Neis (4)(3)
57
Director (Class II)
John E. Niederhuber, M.D. (4)(2)
74
Director (Class I)
Howard M. Schneider (4)
68
Director (Class III)
Michael F. Tweedle, Ph.D. (3)
62
Director (Class II)
(1)
Our certificate of incorporation provides for the division of the Board into three classes, Class I, Class II and Class III, as nearly equal in size as possible with staggered three-year terms.  At each annual meeting of our stockholders, the terms of one such class expires.  Terms of the Class II directors are to expire at our next annual meeting, or such later time at which their respective successors are duly elected and qualified.
(2)
Member of the nominating and corporate governance committee.
(3)
Member of the compensation committee.
(4)
Member of the audit committee.
Our executive officers are appointed by, and serve at the discretion
of, our board of directors.
Stephen A. Hill
.  Dr. Hill was elected the chairman
of the board of directors of Novelos in September 2007. Dr Hill was appointed the President and CEO of Targacept Inc. in November
2012, effective December 1, 2012. Dr. Hill was the President and CEO of 21CB, a nonprofit initiative of UPMC designed to provide
the United States government with a domestic solution for its biodefense and infectious disease biologics portfolio, from March
2011 until December 2011.  Dr. Hill served as the President and Chief Executive Officer of Solvay Pharmaceuticals, Inc. from
April 2008 until its acquisition by Abbott Laboratories in 2010.  Prior to joining Solvay, Dr. Hill had served as ArQule's
President and Chief Executive Officer since April 1999.  Prior to his tenure at ArQule, Dr. Hill was the Head of Global Drug
Development at F. Hoffmann-La Roche Ltd. from 1997 to 1999.  Dr. Hill joined Roche in 1989 as Medical Adviser to Roche Products
in the United Kingdom.  He held several senior positions at Roche, including Medical Director where he was responsible for
clinical trials of compounds across a broad range of therapeutic areas, including CNS, HIV, cardiovascular, metabolic and oncology
products.  Subsequently, he served as Head of International Drug Regulatory Affairs at Roche headquarters in Basel, Switzerland,
where he led the regulatory submissions for seven major new chemical entities.  Dr. Hill also was a member of Roche's Portfolio
Management, Research, Development and Pharmaceutical Division Executive Boards.  Prior to Roche, Dr. Hill served seven years
with the National Health Service in the United Kingdom in General and Orthopedic Surgery.  Dr. Hill has served as the chairman
of the board of directors of Audeo Oncology, Inc. since June 2012. Dr. Hill is a Fellow of the Royal College of Surgeons of England
and holds his scientific and medical degrees from St. Catherine's College at Oxford University. Dr. Hill's extensive experience
in a broad range of senior management positions with companies in the life sciences sector make him a highly qualified member of
our board of directors.
Harry S. Palmin
.   Mr. Palmin has served as
president and a director of Novelos since 1998 and as its chief executive officer since January 2005. From 1998 to September 2005,
he served as our acting chief financial officer. From 1996 to 1998, he was a vice president at Lehman Brothers and from 1993 to
1996, he was an associate at Morgan Stanley. Mr. Palmin earned a B.A. in economics and business and a M.A. in international economics
and finance from the International Business School at Brandeis University. He has also studied at the London School of Economics
and the Copenhagen Business School. Mr. Palmin's experience managing the funding and development of our product candidates
for 14 years and his knowledge of capital markets are strong qualifications to serve on the Board.
42
J. Patrick Genn
. Mr. Genn was appointed our vice president
of investor relations in December 2011. He has 28 years of senior management experience in finance, banking and investment management.
Mr. Genn was previously President of Continuum Investment Holdings, Inc. from 2006 through mid-2010 while serving on the board
of directors of several biotech and technology companies including Cellectar, Inc. From 2001 through 2005, he was an advisor and
consultant to several companies including Carmel Valley Ventures and Continuum Investment Partners. Mr. Genn held several senior
management positions at Wells Fargo between 1987 and 2001. He was a member of the senior management team that launched its mortgage
lending division in 1987 and its premier banking division in 1993. He was also a member of the core mergers and acquisitions integration
team and managed private client services in San Diego, CA. Mr. Genn received a B.B.A. in Marketing and a M.S. in Product Management
from the University of Wisconsin-Madison.
Kimberly A. Hawkins.
Ms. Hawkins has served as
our vice president of clinical development since November 2010 and, prior to that, as our director of clinical development beginning
in May 2006. She has worked for 18 years in the biopharmaceutical industry managing and overseeing clinical operations for multiple
global Phase 1, 2 and 3 clinical studies. From 2001 to 2006, Ms. Hawkins was a senior manager in clinical development at Antigenics,
Inc., a cancer biotechnology company where she managed multiple Phase 1 and 2 studies. From 1994 to 2001 she was employed by Genzyme
Corporation, Center for Clinical Research Practice, where she held the positions of clinical research associate, trainer of good
clinical practice and study coordinator. From 1993 to 1994 she held the position of clinical research coordinator at Boston Medical
Center. Ms. Hawkins has a B.S. degree in Human Physiology from Boston University and a Master's Degree in Public Health from
Boston University School of Public Health.
Christopher J. Pazoles
.  Dr. Pazoles has served
as our vice president of research and development since July 2005. He has 30 years of biopharmaceutical research and development
and senior management experience. From May 2004 to June 2005, he held a senior research and development position at the Abbott
Bioresearch Center, a division of Abbott Laboratories. From October 2002 to January 2004, he served as chief operating officer
and head of research and development at ALS Therapy Development Foundation. From 1994 to October 2002, Dr. Pazoles served as vice
president of research for Phytera, Inc. From 1981 to 1994, he served as a researcher and senior manager with Pfizer. Dr. Pazoles
holds a Ph.D. in microbiology from the University of Notre Dame.
Joanne M. Protano
.  Ms. Protano was appointed our
vice president, chief financial and accounting officer, and treasurer in December 2007. She has 20 years of finance and senior
management experience. She previously held the position of Senior Director of Finance and Controller of Novelos from June 2006
to December 2007. From 1996 to 2006, she held various management and senior management positions with Ascential Software, Inc.
and predecessor companies including Assistant Controller, Reporting for Ascential Software, Vice President and Chief Financial
Officer for the Ascential Software Division of Informix Software, Inc. and Corporate Controller of Ardent Software, Inc. Prior
to her tenure in the technology industry, from 1990 to 1996 she was employed by Deloitte and Touche LLP as an audit manager, serving
technology and healthcare clients. Ms. Protano received a B.S. in business administration from Bryant College.
Jamey P. Weichert.
Dr. Weichert was the primary
founder of Cellectar and served as Cellectar's Chairman and Chief Scientific Officer beginning in 2002. He was appointed
as the Chief Scientific Officer and a director of Novelos at the time of the Acquisition. Dr. Weichert is an Associate Professor
of the Departments of Radiology, Medical Physics, Pharmaceutics and member of the Comprehensive Cancer Center at the University
of Wisconsin, Madison. He has a bachelor's degree in chemistry from the University of Minnesota and a doctorate in medicinal
chemistry from U. Mich. His research interests include the design, synthesis and evaluation of biomimetic CT and MRI imaging agents
and diapeutic radiopharmaceuticals. He has been involved in molecularly targeted imaging agent development his entire professional
career and has developed or co-developed several imaging agents nearing clinical trial status. Dr. Weichert serves or has served
on the editorial boards of numerous scientific journals and has authored more than 40 peer reviewed publications and 150 abstracts.
He also has 20 issued or pending patents related to drug delivery, imaging and contrast agent development. Dr. Weichert's
experience founding and managing the development of our Cellectar product candidates and his knowledge of radiation technology
are strong qualifications to serve on the Board.
Thomas
Rockwell Mackie.
Dr. Mackie became a director of Novelos at the time of Novelos's 2011 business combination
with Cellectar, Inc. (the "Acquisition"). He had served as a director of Cellectar since December 2006. In 1997, he
co-founded TomoTherapy Incorporated, a maker of advanced radiation therapy solutions for the treatment of cancer and other diseases
and served as Chairman of its board of directors from 1999 until its acquisition by Accuray Incorporated in June 2011. Dr. Mackie
also served as President of TomoTherapy Inc. from 1997 until 1999 and as Treasurer from 1997 until 2000. From 2010 to the present,
he has served as the Director, Medical Device Focus Area of the Morgridge Institute for Research at the University of Wisconsin,
Madison and, since 1987, Dr. Mackie has been a professor in the departments of Medical Physics and Human Oncology at the University
of Wisconsin, where he established the TomoTherapy research program. Dr. Mackie also co-founded Geometrics Corporation (now merged
with ADAC Corp.), which developed a radiotherapy treatment planning system. Dr. Mackie currently serves as a director of Shine
Medical Technologies and Bioionix Inc. and served on the management committee of Wisconsin Investment Partners from 2006 to 2009.
Dr. Mackie has a B.Sc. in Physics from the University of Saskatchewan and a Ph.D. in Physics from the University of Alberta in
Edmonton. Dr. Mackie's qualifications to serve on the Board include his extensive senior management experience with radiation
technology companies.
43
James S. Manuso
.  Dr. Manuso has served as a director
of Novelos since August 2007. Since January 2005, Dr. Manuso has served as Chairman and Chief Executive Officer of SuperGen, Inc.
(now renamed Astex Pharmaceuticals, Inc.), served as President of SuperGen from January 2005 through July 2011 and has served as
a director of SuperGen since February 2001. Dr. Manuso is co-founder and former president and chief executive officer of Galenica
Pharmaceuticals, Inc. Dr. Manuso co-founded and, from 1998 to 2002, was general partner of PrimeTech Partners, a biotechnology
venture management partnership, and Managing General Partner of The Channel Group LLC, an international life sciences corporate
advisory firm. He was also president of Manuso, Alexander & Associates, Inc., management consultants and financial advisors
to pharmaceutical and biotechnology companies. Dr. Manuso was a vice president and Director of Health Care Planning and Development
for The Equitable Companies (now Group Axa), where he also served as Acting Medical Director. He currently serves on the board
of directors of the Biotechnology Industry Organization (BIO) and its Health Section Governing Board and serves on the board of
privately-held KineMed, Inc. He previously served on the boards of Merrion Pharmaceuticals Ltd. (Dublin, Ireland), Inflazyme Pharmaceuticals,
Inc. (Vancouver, Canada), Symbiontics, Inc., (ZyStor, Inc., sold to BioMarin), Quark Biotech, Inc., Galenica Pharmaceuticals, Inc.,
Supratek Pharma, Inc., and EuroGen, Ltd. (London, UK). Dr. Manuso earned a B.A. in economics and chemistry from New York University,
a Ph.D. in experimental psychophysiology from the Graduate Faculty of The New School University, a certificate in health systems
management from Harvard Business School, and an executive M.B.A. from Columbia Business School. Dr. Manuso's experience founding,
leading and serving as a director for pharmaceutical companies makes him a highly qualified member of the Board.
John Neis.
Mr. Neis became a director of Novelos
at the time of the Acquisition. He had served as director of Cellectar since February 2008. Mr. Neis has been Managing Director
of Venture Investors LLC since 1986 and heads the firm's Healthcare practice. He has over 23 years' experience in the
venture capital industry and has served on the Board of Directors of numerous companies from formation through initial public offering
or sale. Mr. Neis currently serves on the boards of directors of Virent Energy Systems, Deltanoid Pharmaceuticals, Inviragen, Inc.
and Mithridion, Inc. He is a former member of the Boards of Directors of several firms including TomoTherapy, Third Wave Technologies
(acquired by Hologic) and NimbleGen Systems (acquired by Roche). Mr. Neis was appointed to the Board of the Wisconsin Technology
Council and he also serves on the advisory boards for the Weinert Applied Ventures Program and Tandem Press at the University of
Wisconsin - Madison. Mr. Neis has a B.S. in Finance from the University of Utah, and a M.S. in Marketing and Finance from the University
of Wisconsin, Madison. He is a Chartered Financial Analyst. Mr. Neis' extensive experience leading emerging companies makes
him a highly qualified member of the Board.
John E. Niederhuber.
Dr. Niederhuber became a director
of Novelos at the time of the Acquisition. From August 2010 to the present, Dr. Niederhuber has served as executive vice president
of Inova Health System and chief executive officer of the Inova Translational Medicine Institute. Since July 2011, he has been
an adjunct Professor of Oncology at the Johns Hopkins University School of Medicine and Deputy Director of The Johns Hopkins Clinical
Research Network. Since August 2010, Dr. Niederhuber has served as a Director on the Emergent Biosolutions Board. Dr. Niederhuber
served as Director of the National Cancer Institute (NCI) from 2005 to 2010. He has also served as NCI's Chief Operating Officer
and Deputy Director for Translational and Clinical Sciences. Dr. Niederhuber served as Chair of the National Cancer Advisory Board
(NCAB) from 2002 to 2004. In addition to his management and advisory roles, Dr. Niederhuber has remained involved in research,
through his laboratory on the National Institutes of Health (NIH) campus. Under his leadership, the Tumor and Stem Cell Biology
Section, which is a part of the Cell and Cancer Biology Branch of NCI's Center for Cancer Research, is studying tissue stem cells
as the cell-of-origin for cancer. Dr. Niederhuber also holds a clinical appointment on the NIH Clinical Center Medical Staff. As
a surgeon, Dr. Niederhuber's clinical emphasis is on gastrointestinal cancer, hepatobiliary (liver, bile duct, and gall bladder)
cancer, and breast cancer. He is recognized for his pioneering work in hepatic artery infusion chemotherapy and was the first to
demonstrate the feasibility of totally implantable vascular access devices. Dr. Niederhuber is a graduate of Bethany College in
West Virginia and the Ohio State University School of Medicine. He was an NIH Academic Trainee in Surgery at the University of
Michigan from 1969 to 1970 and was a Visiting Fellow in the Division of Immunology at The Karolinska Institute in Stockholm, Sweden
from 1970 to 1971. He completed his training in surgery at the University of Michigan in 1973 and was a member of the faculty of
the University of Michigan from 1973 to 1987, being promoted to Professor of Microbiology/Immunology and Professor of Surgery in
1980. During 1986 and 1987, he was Visiting Professor in the Department of Molecular Biology and Genetics at The Johns Hopkins
University School of Medicine in Baltimore, MD. Dr. Niederhuber's qualifications to serve on the Board include his extensive
experience with cancer research.
Howard M. Schneider
.  Mr. Schneider has served
as a director of Novelos since February 2005. Mr. Schneider is currently retired. From January to December 2003, he served as chief
executive officer of Metrosoft, Inc., and had been an advisor to such company from July to December 2002. From May 2000 to May
2001, he served as president of Wofex Brokerage, Inc. and from 1965 to 1999, he served as an executive at Bankers Trust Company
holding a variety of positions in the commercial banking and investment banking businesses. Mr. Schneider received a B.A. in economics
from Harvard College and a M.B.A. from New York University. Mr. Schneider's extensive senior management experience in the
financial sector makes him a highly qualified member of our board of directors.
44
Michael F. Tweedle.
Dr. Tweedle became a
director of Novelos at the time of the Acquisition. Since May 2009 he has served as Professor and Stefanie Spielman Chair in Cancer
Imaging in Radiology and the James Comprehensive Cancer Center of Ohio State University, Director of the Wright Center Molecular
Imaging (MI) Agents Laboratory of Ohio State University, and since May 2010, has had an adjunct appointment in the Chemistry Department
of Ohio State University. Prior to joining Ohio State University, his academic appointments included Adjunct Associate Professor
at University of Pennsylvania and the Science Advisory Board of New York University. Dr. Tweedle was the President of Bracco Research
USA Inc. from 1995 to 2009 where he was the lead scientist and chief executive for creation of new molecular imaging pharmaceuticals.
His industrial experience in drug discovery research also includes appointments at the Diagnostics Drug Discovery Division at Bristol-Myers
Squibb, New England Nuclear, NEN/DuPont Pharmaceuticals, and The Squibb Institute for Medical Research. He has invented and led
translational development of diagnostic imaging pharmaceuticals for nuclear medicine, one of the first gadolinium-based MRI agents
(ProHance TM), X ray, Optical and US agents, and a radiotheranostic. In 2005 he won the Harry Fisher Medal. Dr. Tweedle holds a
B.A from Knox College and a Ph.D. from Rice University and was a Stanford University NRS Fellow. Dr. Tweedle's qualifications
to serve on the Board of directors include his extensive experience with radiation and cancer research and drug discovery.
Code of Ethics
The board of directors has adopted a Code of Ethics applicable
to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal
accounting officer. A copy of the Code of Ethics is available at our website www.novelos.com.
Compensation of Directors and Executive
Officers
Summary Compensation:
The following table sets forth
certain information about the compensation we paid or accrued with respect to our principal executive officer and our two most
highly compensated executive officers (other than our chief executive officer) who served as executive officers during the year
ended December 31, 2011 and whose annual compensation exceeded $100,000 for that year.
Other annual compensation in the form of perquisites and other
personal benefits has been omitted as the aggregate amount of those perquisites and other personal benefits was less than $10,000
for each person listed.
Name and Principal Position
Year
Salary
($)
Bonus
($)
(1)
Option
Awards ($)
(2)
All other
compensation
($)
Total ($)
Harry S. Palmin (3)(4)
2011
$
270,000
$
0
$
917,570
$
0
$
1,187,570
President, Chief Executive Officer
2010
$
270,000
$
0
$
0
$
0
$
270,000
Christopher J. Pazoles (3)
2011
$
246,250
$
0
$
271,470
$
0
$
517,720
Senior Vice President of Research and Development
2010
$
235,000
$
39,167
$
0
$
0
$
274,167
Joanne M. Protano (3)
2011
$
190,000
$
0
$
203,603
$
0
$
393,603
Vice President, Chief Financial Officer and Treasurer
2010
$
175,000
$
29,167
$
0
$
0
$
204,167
(1)
Bonus amounts for Dr. Pazoles and Ms. Protano in 2010 represent retention bonuses paid as of October 1, 2010 pursuant to their respective retention agreements dated May 14, 2010.
(2)
The amounts shown in this column represent the aggregate grant-date fair value of each stock award, without regard to the portion of the award that vested during the respective year and was estimated on the grant date using the Black-Scholes option-pricing model. There were no option grants during 2010.  The compensation expense associated with the vested portion of the option grants as recorded in our statement of operations for the year ended December 31, 2011 was $123,718 for Mr. Palmin, $48,547 for Dr. Pazoles and $36,411 for Ms. Protano.   The unrecorded compensation expense associated with the unvested portion of the option grants is $793,852 for Mr. Palmin, $222,923 for Dr. Pazoles and $167,192 for Ms. Protano. See Note 10 to the financial statements for a description of the assumptions used in estimating the fair value of stock options and recognition of compensation expense.
45
(3)
Effective January 1, 2012, all salaries were increased by 2%, including the salaries of the named executive officers.
(4)
The aggregate grant-date fair value for option awards granted to Mr. Palmin during 2011 excludes $772,305 related to performance-based awards because such awards with an aggregate value of $381,277 were forfeited during 2011 and it is not yet probable that performance awards with a grant-date fair value totaling $391,028 will vest.
Employment Agreements
On January 31, 2006, we entered into an employment agreement
with Harry Palmin effective January 1, 2006, whereby he agreed to serve as our president and chief executive officer for an initial
term of two years at an annual salary of $225,000.  The agreement is automatically renewed for successive one-year terms unless
notice of termination is provided by either party at least 90 days prior to the end of such term.  The agreement was renewed
for an additional one-year term on January 1, 2011 in accordance with its terms.  On December 17, 2007, the Board of Directors
approved an increase in Mr. Palmin's annual salary to $270,000 effective January 1, 2008.  He is eligible to receive
an annual cash bonus at the discretion of the compensation committee and he is entitled to participate in our employee fringe benefit
plans or programs generally available to our senior executives.  The agreement provides that in the event that we terminate
Mr. Palmin without cause (as defined below) or he resigns for good reason (as defined below), we will (i) pay Mr. Palmin his
pro rata share of the average of his annual bonus paid during the two fiscal years preceding his termination; (ii) pay Mr. Palmin
his base salary for 11 months after the date of termination; (iii) continue to provide him benefits for 11 months after the date
of termination; and (iv) fifty percent of his unvested stock options will vest.  The agreement provides for the vesting of
unvested options upon a Change of Control, defined as the sale of all or substantially all of the assets or issued and outstanding
capital stock of the Company, (ii) merger or consolidation involving the Company in which stockholders of the Company immediately
before such merger or consolidation do not own immediately after such merger or consolidation capital stock or other equity interests
of the surviving corporation or entity representing more than fifty percent (50%) in voting power of capital stock or other equity
interests of such surviving corporation or entity outstanding immediately after such merger or consolidation, or (iii) a change,
without the approval of the board of directors, in the composition of the board of directors such that directors who were serving
as of the date of the agreement cease to constitute a majority of the board of directors. The agreement also contains a non-compete
provision, which prohibits Mr. Palmin from competing with us for one year after termination of his employment with us.
"Cause" means (i) gross neglect of duties for which
employed; (ii) committing fraud, misappropriation or embezzlement in the performance of duties as our employee; (iii) conviction
or guilty or nolo plea of a felony or misdemeanor involving moral turpitude; or (iv) willfully engaging in conduct materially injurious
to us or violating a covenant contained in the employment agreement.
"Good Reason" means (i) the failure of our board
of directors to elect Mr. Palmin to the offices of president and chief executive officer; (ii) the failure by our stockholders
to continue to elect Mr. Palmin to our board of directors; (iii) our failure to pay Mr. Palmin the compensation provided for in
the employment agreement, except for across-the-board cuts applicable to all of our officers on an equal percentage basis, provided
that such reduction is approved by our board of directors; (iv) relocation of Mr. Palmin's principal place of employment
to a location beyond 50 miles of Newton, Massachusetts; (v) a reduction of base salary or material reduction in other benefits
or any material change by us to Mr. Palmin's function, duties, authority, or responsibilities, which change would cause Mr.
Palmin's position with us to become one of lesser responsibility, importance, or scope; and (vi) our material breach of any
of the other provisions of the employment agreement.
On June 1, 2011, the employment agreement between the Company
and Harry Palmin dated January 31, 2006 was amended to remove the obligation of the Company to continue to pay Mr. Palmin's
salary and benefits for a period of 11 months following termination by the Company without Cause or termination by Mr. Palmin with
Good Reason.  The Company may elect that the obligation of Mr. Palmin not to compete with the Company survive for a period
of one year from his termination, provided however that Mr. Palmin would continue to receive his base salary during that one-year
noncompetition period.
We had entered into retention agreements with each of our four
vice presidents.  The agreements provided for the lump-sum payment of six months' base salary and benefits to each such
officer following a termination without cause or a resignation with good reason occurring on or before November 14, 2011. 
Certain of the agreements provided that if the executives were employed by us as of October 1, 2010, they would receive a payment
of two months' base salary as a retention bonus on that date. The retention bonus was paid in October 2010 and would have
been deducted from the severance amounts that became payable upon a subsequent involuntary termination.  The retention agreements
expired in November 2011.
46
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain
information regarding stock options held as of December 31, 2011 by the executive officers named in the summary compensation table.
There were no option grants during 2010.
Individual Grants
Name
Year
of Grant
Number of
securities
underlying
unexercised
options
(# exercisable)
Number of
securities
underlying
unexercised
options
(# unexercisable)
Exercise
or
base price
($/share)
Expiration
date
Harry S. Palmin
2011
(1)
—
335,100
$
0.45
12/16/2021
2011
(2)
—
335,100
1.40
5/18/2021
2011
(1)
83,775
586,425
1.40
5/18/2021
2009
(3)
1,090
543
114.75
12/8/2019
2008
(4)
2,614
—
65.79
12/15/2018
2007
(4)
1,307
—
69.00
12/17/2017
2006
(4)
980
—
139.23
12/11/2016
2005
(5)
1,633
—
1.53
1/31/2015
2005
(5)
980
—
1.53
3/31/2015
2004
(6)
2,156
—
1.53
4/1/2014
2003
(7)
46
—
107.10
8/1/2013
Christopher J. Pazoles
2011
(3)
—
100,000
$
0.45
12/16/2021
2011
(3)
33,333
166,667
1.40
5/18/2021
2009
(3)
871
436
114.75
12/8/2019
2008
(4)
1,307
—
65.79
12/15/2018
2007
(4)
816
—
69.00
12/17/2017
2006
(4)
653
—
139.23
12/11/2016
2005
(8)
654
—
1.53
4/8/2015
Joanne M. Protano
2011
(3)
—
75,000
$
0.45
12/16/2021
2011
(3)
24,999
125,001
1.40
5/18/2021
2009
(3)
871
436
114.75
12/8/2019
2008
(4)
1,307
—
65.79
12/15/2018
2007
(4)
653
—
69.00
12/17/2017
2006
(4)
261
—
139.23
12/11/2016
2006
(4)
392
—
139.23
6/16/2016
(1)
These shares vest quarterly in increments of one-sixteenth over four years from the date of grant.  The exercise price equals the closing price on the date of grant.
(2)
These shares vest based on the achievement of specified milestones.
(3)
These shares vest quarterly in increments of one-twelfth over three years from the date of grant.  The exercise price equals the closing price on the date of grant.
(4)
These shares vest annually in increments of one-third over three years from the date of grant.  The exercise price equals the closing price on the date of grant.
(5)
These shares initially vested over a two-year period.  Pursuant to their terms, the shares fully vested upon the completion of a non-bridge loan financing, which occurred in the second quarter of 2005.  The exercise price equals the fair market value of our common stock on the date of grant as determined by our board of directors.
(6)
These shares initially vested one-third upon grant and one-third annually over the following two years. Pursuant to their terms, one additional year of vesting occurred upon the completion of a non-bridge loan financing, which occurred in the second quarter of 2005.  The exercise price equals the fair market value of our common stock on the date of grant as determined by our board of directors.
47
(7)
These shares vest annually in increments of one-third over three years from the date of grant. The exercise price equals the fair market value of our common stock on the date of grant as determined by our board of directors.
(8)
These shares vested in increments of one-fourth every six months over two years from the date of grant. The exercise price equals the fair market value of our common stock on the date of grant as determined by our board of directors.
Options granted pursuant to the 2006 Stock Incentive Plan will
become fully vested upon a termination event within one year following a change in control, as defined.  A termination event
is defined as either termination of employment other than for cause or constructive termination resulting from a significant reduction
in either the nature or scope of duties and responsibilities, a reduction in compensation or a required relocation.
Director Compensation
Summary Compensation:
The following table
sets forth certain information about the compensation we paid or accrued with respect to our directors who served during the year
ended December 31, 2011.
Name and Principal Position
Year
Director
Fees
($) (2)
Option
Awards
($) (3)
All other
compensation
($)
Total ($)
Stephen A. Hill, Chairman (1)
2011
$
46,250
$
201,368
$
—
$
247,618
T. Rockwell Mackie (1)
2011
25,500
134,245
—
159,745
James S. Manuso, Director (1)
2011
27,500
134,245
—
161,745
John Neis, Director (1)
2011
24,750
134,245
—
158,995
John E. Niederhuber, Director (1)
2011
24,000
134,245
—
158,245
Howard M. Schneider, Director (1)
2011
40,500
134,245
—
174,745
Michael F. Tweedle, Director (1)
2011
21,750
134,245
—
155,995
(1)
As of December 31, 2011, outstanding options to purchase common stock held by directors were as follows:  Dr. Hill 227,285; Dr. Mackie 150,000; Dr. Manuso 151,958; Mr. Neis 150,000; Dr. Niederhuber 150,000; Mr. Schneider 151,629; Dr. Tweedle 150,000.
(2)
Director fees include all fees earned for director services including quarterly fees, meeting fees and committee chairman fees.
(3)
The amounts shown in this column represent the aggregate grant-date fair value of the stock awards during the year, without regard to the portion of the awards that vested during the respective year and was estimated on the grant date using the Black-Scholes option-pricing model. The compensation expense associated with  the vested portion of the option awards as recorded in our statement of operations for the year ended December 31, 2011 was $54,005 for  Dr. Hill and $36,001 each for Dr. Mackie, Dr. Manuso,  Mr. Neis,  Dr. Niederhuber, Mr. Schneider  and  Dr. Tweedle.  The unrecorded compensation expense associated with the unvested portion of the option awards was $147,363 for Dr. Hill and $98,244 each for Dr. Mackie, Dr. Manuso, Mr. Neis, Dr. Niederhuber, Mr. Schneider and Dr. Tweedle. The fair value of each stock award was estimated on the grant date using the Black-Scholes option-pricing model. See Note 10 to the financial statements for a description of the assumptions used in estimating the fair value of stock options and recognition of compensation expense.
During 2011, we paid our non-employee directors a cash fee of
$5,000 per quarter.  The non-employee directors also received a fee of $1,500 for any board or committee meeting attended
and $750 for each telephonic board or committee meeting in which the director participated.  We also paid our chairman
an additional annual fee in the amount of $15,000, our non-employee director who serves as the chair of the audit committee an
additional annual fee of $10,000 and our non-employee directors who served as the chairman of the compensation and the nominating
and corporate governance committees an additional annual fee of $5,000.  We reimbursed directors for reasonable out-of-pocket
expenses incurred in attending board and committee meetings and undertaking certain matters on our behalf.  Directors
who are our employees do not receive separate fees for their services as directors.  There has been no change to cash
fees payable to non-employee directors for 2012.
48
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
At the close of business on November 16, 2012, there were 46,397,997
shares of our common stock outstanding. The following table provides information regarding beneficial ownership of our common stock
as of November 16, 2012:
·
Each person known by us to be the beneficial owner of more than five percent of our common stock;
·
Each of our directors;
·
Each executive officer named in the summary compensation table; and
·
All of our current directors and executive officers as a group.
The address of each executive officer and director is c/o Novelos
Therapeutics, Inc., One Gateway Center, Suite 504, Newton, Massachusetts 02458. The persons named in this table have sole voting
and investment power with respect to the shares listed, except as otherwise indicated. In these cases, the information with respect
to voting and investment power has been provided to us by the security holder. The identification of natural persons having voting
or investment power over securities held by a beneficial owner listed in the table below does not constitute an admission of beneficial
ownership of any such natural person. Shares included in the "Right to Acquire" column consist of shares that may be
purchased through the exercise of options or warrants that are exercisable within 60 days of November 16, 2012
.
Name and Address of Beneficial Owner
Outstanding
Right to
Acquire
Total
Percentage
Venture Investors LLC (1)
University Technology Park
505 S. Rosa Road; Suite 201
Madison, Wisconsin  53719
6,174,308
3,470,000
9,644,308
19.3
CLS Capital Holdings Limited (2)
Bordeaux Court, Les Echelons
St. Peter Port, Guernsey, GY13DR
Channel Islands
3,819,201
3,583,334
7,402,535
14.8
Greenway Properties Inc. (3)
725 Heartland Trail, Suite 102
Madison, Wisconsin  53707
3,637,400
1,900,000
5,537,400
11.5
Jamey P. Weichert (4)
c/o Novelos Therapeutics, Inc.
3301 Agriculture Drive
Madison, Wisconsin  53716
4,706,730
90,665
4,797,395
10.3
Fidelity Management and Research Co. (5)
82 Devonshire Street
Boston, Massachusetts 02109
2,500,000
2,500,000
5,000,000
10.2
Renova Industries Ltd. (6)
2nd Terrace West
Centreville; P.O. Box N-7755
Nassau, Bahamas
2,000,000
3,000,000
5,000,000
10.1
Sabby Management, LLC (7)
10 Mountainview Road, Suite 205
Upper Saddle River, NJ 07458
2,500,000
1,250,000
3,750,000
7.9
Harry S. Palmin
3,576
266,449
270,025
*
Christopher J. Pazoles
-
138,069
138,069
*
Joanne M. Protano
-
103,918
103,918
*
Stephen A. Hill
-
152,285
152,285
*
Thomas Rockwell Mackie
116,121
100,000
216,121
*
James S. Manuso
-
101,958
101,958
*
John Neis (1) (2)
6,174,308
3,470,000
9,644,308
19.3
John E. Niederhuber
-
100,000
100,000
*
Howard M. Schneider
653
101,629
102,282
*
Michael F. Tweedle
-
100,000
100,000
*
All directors and officers as a group (13 persons)
11,072,041
4,968,561
16,040,602
31.2
49
(1)
Ownership consists of shares of common stock held by Venture Investors Early Stage Fund IV Limited Partnership and Advantage Capital Wisconsin Partners I, Limited Partnership.  VIESF IV GP LLC is the general partner of Venture Investors Early Stage Fund IV Limited Partnership and Venture Investors LLC is the submanager and special limited partner of Advantage Capital Wisconsin Partners I, Limited Partnership. The investment decisions of VIESF IV GP LLC and Venture Investors LLC are made collectively by six managers, including Mr. Neis.  Each such manager and Mr. Neis disclaim such beneficial ownership except to the extent of his pecuniary interest therein.  The address of Mr. Neis is c/o Venture Investors LLC, 505 South Rosa Road, #201, Madison, Wisconsin 53719. Shares in the "Right to Acquire" column consist of the following warrants held by Venture Investors Early Stage Fund IV Limited: warrants to purchase 2,000,000 shares common stock at $0.75 per share, expiring on March 31, 2016, warrants to purchase 1,100,000 shares of common stock at $0.60 per share expiring on December 6, 2016 and warrants to purchase 270,000 shares of common stock at $1.25 per share expiring on June 13, 2017. Shares in the "Right to Acquire" column also include options to purchase 100,000 shares of common stock at exercise prices ranging from $0.45 to $1.40 per share, issued to Mr. Neis.
(2)
Shares in the "Right to Acquire" column consist of warrants to purchase 3,333,334 shares of common stock at $0.60 per share expiring on December 6, 2016 and warrants to purchase 250,000 shares of common stock at $1.25 per share expiring on June 13, 2017. Interlock Director Ltd. has sole dispositive and voting power over shares held by CLS Capital Holdings Limited. Interlock Director Ltd. exercises such power through Michael Kupenga and a combination of two directors of Virtus Directors Limited.  The Virtus directors consist of the following individuals: David Allison, Roderick Arthur, Nicholas Moss, Trevor Pinchemain, Stephen Kirk, Grada Hek, Martin LePage, Lesley Pinchemain, Cerisse Fisher, Pierre Renier and Jonathan Seymour.
(3)
Shares in the "Outstanding" column include
        shares held by Jeffery Straubel.  Jeffrey Straubel is the President and principal owner of Greenway Properties, Inc. and has
        sole dispositive and voting power over shares held by Greenway Properties, Inc.  Shares in the "Right to Acquire"
        column consist of warrants to purchase 1,000,000 shares common stock at $0.75 per share, expiring on March 31, 2016, warrants to
        purchase 600,000 shares of common stock at $0.60 per share expiring on December 6, 2016 and warrants to purchase 300,000 shares
        of common stock at $1.25 per share expiring on June 13, 2017.
(4)
Dr. Weichert serves as a director and our Chief Scientific Officer. The shares beneficially owned by him have been included in the total of directors and officers as a group.
(5)
Consists of shares held by Fidelity Select Portfolios: Biotechnology Portfolio and Fidelity Advisor Series VII: Fidelity Advisor.  Dispositive and voting power for the shares is held by the Fidelity Funds Board of Trustees. Shares in the "Right to Acquire" column consist of warrants to purchase shares of common stock at $0.60 per share expiring on December 6, 2016.
(6)
Dispositive and voting power for the shares is held by a majority
        vote of the board of directors of Renova Industries, Ltd. consisting of Carl Stadelhofer, Marco Montanari, and Oliver Chaponnier.
        Shares in the "Right to Acquire" column consist of warrants to purchase 2,000,000 shares of common stock at $1.00 per
        share expiring on January 31, 2013 and warrants to purchase 1,000,000 shares of common stock at $1.25 per share expiring on November
        2, 2017.
(7)
Consists of shares held by Sabby Healthcare Volatility Master Fund. Ltd. and Sabby Volatility Warrant Master Fund, Ltd.  Shares in the "Right to Acquire" column include warrants to purchase shares of common stock at $1.25 per share expiring on June 13, 2017. The warrants beneficially owned by Sabby Management LLC provide that the number of shares of common stock to be obtained by each of the holders upon exercise cannot exceed the number of shares that, when combined with all other shares of our common stock and securities beneficially owned by them, would result in them owning more than 9.99% of our outstanding common stock, provided, however that this limitation may be revoked by the stockholder upon 61 days prior notice to us. No warrants to purchase common stock have been omitted from this table as a result of these provisions since the beneficial ownership does not exceed the specified limitation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We do not have a written policy for the review, approval or
ratification of transactions with related parties or conflicted transactions.  When such transactions arise, they are referred
to the Audit Committee for consideration or for referral to the Board of Directors for its consideration.
One of our directors, John Neis, is a managing director of Venture
Investors LLC, which beneficially owns approximately 19% of our common stock.
50
Jamey Weichert, our Chief Scientific Officer and principal founder
of Cellectar, and a director and shareholder of the Company, is a faculty member at the University of Wisconsin-Madison (U. Wisc.). During
the year ended December 31, 2011, we made contributions totaling $206,500 to U. Wisc. for use towards unrestricted research activities.
During the nine months ended September 30, 2012, we made contributions to UW totaling $206,500 for use towards unrestricted research
activities and paid UW $144,044 for costs associated with clinical trial agreements. The Company made contributions to the UW of
$125,000 during the nine months ended September 30, 2011.
Legacy Compounds – Transactions and
Litigation
From its inception through 2010, Novelos was
primarily engaged in the development of certain oxidized glutathione-based compounds for application as therapies for disease,
particularly cancer. These compounds were originally developed in Russia. In June 2000, Novelos acquired commercial rights from
the Russian company ("ZAO BAM") which owned the compounds and related Russian patents. In April 2005, Novelos acquired
worldwide rights to the compounds (except for the Russian Federation) in connection with undertaking extensive development activities
in an attempt to secure US Food and Drug Administration ("FDA") approval of the compounds as therapies. These development
activities culminated in early 2010 in an unsuccessful Phase 3 clinical trial of an oxidized glutathione compound (NOV-002) as
a therapy for non-small cell lung cancer. The principal equity owner of ZAO BAM, Mark Balazovsky, was a founder of Novelos and
served as a director until November 2006. Pursuant to the April 2005 royalty and technology transfer agreement, Novelos is required
to pay ZAO BAM royalties equal to 1.2% of net sales of oxidized glutathione products and $2,000,000 for each new oxidized glutathione
drug following FDA approval of such drug. In the absence of royalty payments, Novelos is required to pay ZAO BAM 3% of all license
revenues plus 9% of the amount by which Novelos' license revenues exceed its total expenses. In 2008, Novelos paid $15,000
to ZAO BAM representing 3% of payment under a foreign license agreement. Novelos is also obligated to pay Oxford Group, Ltd., or
its assignees, a royalty in the amount of 0.8% of our net sales of oxidized glutathione-based products. Simyon Palmin, a founder
of Novelos, a director until August 15, 2008 and the father of Harry Palmin, is president of Oxford Group. At this time, Novelos
does not expect to devote any substantial resources to the further development of its oxidized glutathione compounds.
After the disclosure of the negative outcome
of the Phase 3 clinical trial in 2010, ZAO BAM claimed that Novelos modified the chemical composition of NOV-002 without prior
notice to or approval from ZAO BAM, constituting a material breach of the June 2000 technology and assignment agreement. In September
2010, Novelos filed a complaint in Massachusetts Superior Court seeking a declaratory judgment by the court that the June 2000
agreement has been entirely superseded by the April 2005 agreement and that the obligations of the June 2000 agreement have been
performed and fully satisfied. ZAO BAM answered the complaint and alleged counterclaims. In August 2011, Novelos filed a motion
for judgment on the pleadings as to the declaratory judgment count and all counts of ZAO BAM's amended counterclaims. On
October 17, 2011, the court ruled in favor of Novelos on each of the declaratory judgment claims and dismissed all counts of ZAO
BAM's counterclaim. Judgment in favor of Novelos was entered on October 20, 2011. On November 14, 2011 ZAO BAM filed a notice
of appeal.
Director Independence
Each member of the Audit Committee, the Compensation Committee
and the Nominating and Corporate Governance Committee and seven of our nine directors meet the independence requirements of the
Nasdaq Stock Market for membership on the committees on which he serves.  The board of directors considered the information
included in transactions with related parties as outlined above along with other information the board considered relevant, when
considering the independence of each director. Harry S. Palmin and Jamey P. Weichert are not independent directors.
51
PLAN OF DISTRIBUTION
We are offering units consisting of up to              shares of common stock,
Class A Warrants to purchase an additional                shares of common stock and Class B Warrants to purchase an additional                shares of common
stock for $           per unit, each unit consisting of one share of common stock,
a Class A Warrant to purchase one share of common stock and a Class B Warrant to purchase one-half a share of common stock for
$         per unit, with aggregate gross proceeds of up to $                .  
However, there is no minimum offering amount required as a condition to closing and we may sell significantly fewer units in the
offering.  The offering will terminate on                     ,
unless the offering is fully subscribed before that date or we decide to terminate the offering prior to that date.
In determining the offering price for the units and the exercise
price of the warrants, we will consider a number of factors including, but not limited to, the current market price of our common
stock, trading prices of our common stock over time, the illiquidity and volatility of our common stock, our current financial
condition and the prospects for our future cash flows and earnings, and market and economic conditions at the time of the offering. 
Once the offering price is determined, the offering price for the units and the exercise price of the warrants will remain fixed
for the duration of the offering.
Burrill, which we refer to as the placement agent, has entered
into a placement agency agreement with us in which it has agreed to act as our placement agent in connection with the offering.
The placement agent may engage one or more sub-placement agents or selected dealers to assist with the offering. Among other things,
the placement agent will assist us in identifying and evaluating prospective investors and approach prospective investors regarding
the offering. The placement agent will assist us on a "reasonable best efforts" basis. The placement agent will have
no obligation to buy any of the securities from us, nor is it required to arrange the purchase or sale of any specific number or
dollar amount of securities. We will enter into a securities purchase agreement directly with each investor in connection with
this offering, which will set forth the terms of the offering, as described in this prospectus, will include customary representations
and warranties regarding the offering, the units to be issued and sold, and our business, and will contain customary conditions
to closing and other customary terms. The placement agent agreement terminates upon the earlier of (1) the closing of the offering
or (2) one hundred and twenty days after the effective date of the agreement provided, that if the registration statement is not
declared effective by the Commission within 100 days of the date of the placement agent agreement and the offering is still being
pursued by the Company, the term shall be extended to 16 business days after the effective date of the registration statement or
such earlier date that the Company abandons the offering. The placement agent agreement further provides that the agreement may
be terminated by Burrill at any time upon ten days' prior written notice.
This offering will be made only to persons who qualify as "institutional
investors" under the securities laws of the state of their residence, or for entities, of their domicile, or to legal entities
to whom offers and sales may be made without qualification or registration of this offering under the securities laws of their
state of domicile. If we make offers or sell to investors in Wisconsin, they must qualify as "Accredited Investors"
as that term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended, and modified by Section 413
of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
We have agreed to pay Burrill a placement fee equal to 7% of
the aggregate gross proceeds to us from the sale of the securities in the offering and, subject to compliance with FINRA Rule 5110(f)(2)(D),
a non-accountable expense allowance equal to 1% of the gross proceeds of this offering.  We have advanced the sum of $30,000
against the 1% non-accountable expense allowance, which pursuant to FINRA Rule 5110(f)(2)(D) shall be reimbursed to us in the event
that the offering is terminated and to the extent the expenses have not been actually incurred.  We estimate total expenses
of this offering, excluding the placement agent fees, will be approximately $            . 
The following table shows the per share and total fees we will pay to the placement agent assuming the sale of all of the units
offered pursuant to this prospectus.
Per unit
$
Total
$
52
In addition to the cash fees set forth above, we have agreed
to issue to the placement agent warrants to purchase up to an aggregate of 7% of the aggregate number of shares of common stock
sold in this offering (excluding any shares of common stock issuable upon exercise of the warrants).  The placement agent
warrants shall have substantially the same terms as the warrants offered by this prospectus, except that the exercise price shall
be 125% of the public offering price per share, or $       per share, and the expiration date shall
be five years from the effective date of the registration statement of which this prospectus forms a part. Pursuant to FINRA Rule
5110(f)(2)(H)(vi) and (vii), the placement agent warrants do not have anti-dilution protections.  Pursuant to FINRA Rule 5110(g)(1),
neither the placement agent warrants nor any shares of common stock issued upon exercise of the placement agent warrants may be
sold, transferred, assigned, pledged, or hypothecated, or be subject to any hedging, short sale, derivative, put, or call transaction
that would result in the effective economic disposition of such securities by any person for a period of 180 days immediately following
the date of effectiveness or commencement of sales of this offering, except the transfer of any security: (i) by operation of law
or by reason of reorganization, (ii) to any FINRA member firm participating in the offering and the officers and partners thereof,
if all securities so transferred remain subject to the lock-up restriction described above for the remainder of the time period,
(iii) if the aggregate amount of our securities held by the placement agent or related person does not exceed 1% of the securities
being offered, (iv) that is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no
participating member manages or otherwise directs investments by the fund, and participating members in the aggregate do not own
more than 10% of the equity in the fund, or (v) the exercise or conversion of any security, if all securities received remain subject
to the lock-up restriction set forth above for the remainder of the time period.  Because there is no minimum offering amount
required as a condition to closing, the actual total proceeds received by us and total offering commissions and warrants issuable
to the placement agent, if any, are not presently determinable and may be substantially less than the maximum amount set forth
above.
We have agreed to indemnify the placement agent against certain
liabilities under the Securities Act of 1933, as amended. The placement agent may be deemed to be an underwriter within the meaning
of Section 2(a)(11) of the Securities Act and any commissions received by it and any profit realized on the sale of the securities
by it while acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act.  The
placement agent would be required to comply with the requirements of the Securities Exchange Act of 1934, as amended, or the Exchange
Act, including without limitation, Regulation M under the Exchange Act.  These rules and regulations may limit the timing
of purchases and sales of shares of common stock and warrants to purchase shares of common stock by the placement agent. 
Under these rules and regulations, the placement agent many not (i) engage in any stabilization activity in connection
with our securities; and (ii) bid for or purchase any of our securities or attempt to induce any person to purchase an of
our securities, other than as permitted under Regulation M, until they have completed their participation in the distribution. 
The placement agent has informed us that it will not engage in overallotment, stabilizing transactions or syndicate covering transactions
in connection with this offering.
DESCRIPTION OF SECURITIES
Under our amended and restated certificate of incorporation,
our authorized capital stock consists of 150,000,000 shares of common stock, $0.00001 par value per share, and 7,000 shares of
preferred stock, $0.00001 par value per share.
Our amended and restated certificate of incorporation authorizes
us to issue shares of our preferred stock from time to time in one or more series without stockholder approval.  No shares
of preferred stock are outstanding,
All outstanding shares of our common stock are duly authorized,
validly issued, fully-paid and non-assessable.
Common Stock
Voting.
Holders of our common stock are entitled to one
vote per share held of record on all matters to be voted upon by our stockholders. Our common stock does not have cumulative voting
rights. Persons who hold a majority of the outstanding common stock entitled to vote on the election of directors can elect all
of the directors who are eligible for election.
Dividends.
Subject to preferences that may be applicable
to the holders of any outstanding shares of our preferred stock, the holders of our common stock are entitled to receive such lawful
dividends as may be declared by our board of directors.
Liquidation and Dissolution.
In the event of our liquidation,
dissolution or winding up, and subject to the rights of the holders of any outstanding shares of our preferred stock, the holders
of shares of our common stock will be entitled to receive pro rata all of our remaining assets available for distribution to our
stockholders.
Other Rights and Restrictions.
Our amended and restated
certificate of incorporation prohibits us from granting preemptive rights to any of our stockholders. All outstanding shares are
fully paid and non-assessable.
On June 30, 2011, the Company held a special meeting of stockholders. 
At the meeting, the stockholders approved, among other things, separate amendments to the certificate of incorporation that would
effect a reverse split of the Company's common stock within a range of 1:2 to 1:10, and authorized the Company's board
of directors to determine the ratio at which the reverse split will be effected by filing the appropriate amendment to the certificate
of incorporation, or to determine not to proceed with the reverse split at all.  The purpose of the proposed reverse split
was to increase the price per share of the Company's common stock in order to exceed the minimum price per share required
to secure a listing on a national securities exchange and was contemplated in connection with the Company's underwritten
public offering that closed on December 6, 2011. The Company did not obtain the NASDAQ listing and did not effect the reverse split
in connection with the offering. While the Company may effect a reverse split at a later date, the Company has no immediate plans
to proceed with the reverse split or a listing on a national securities exchange.
53
Class A and Class B Warrants to be Issued as Part of this
Offering
The Warrants offered in this offering will be issued in a
form filed as an exhibit to the registration statement of which this prospectus is a part. You should review a copy of the form
of Class A and Class B Warrant for a complete description of the terms and conditions applicable to the Class A and Class B Warrants.
The following is a brief summary of the Class A and Class B Warrants and is subject in all respects to the provisions contained
in the form of warrant.
Each Class A Warrant represents the right to purchase one share
of common stock at an exercise price equal to $    , subject to adjustment as described below. Each Class A
Warrant may be exercised on or after the applicable closing date of this offering through and including the close of business on
the       anniversary of the date of issuance. Each Class B Warrant represents the right to
purchase one-half a share of common stock at an exercise price equal to $   , subject to adjustment as described below. Each
Class B Warrant may be exercised on or after the applicable closing date of this offering through and including the close of business
on the    day following of the date of issuance. Each Class A and Class B Warrant will have a cashless exercise
right in the event that the shares of common stock underlying such Class A and Class B Warrants are not covered by an effective
registration statement at the time of such exercise.
The exercise price and the number of shares underlying the Class
A and Class B Warrants are subject to appropriate adjustment in the event of stock splits, stock dividends on our common stock,
stock combinations or similar events affecting our common stock. In addition, in the event we consummate any merger, consolidation,
sale or other reorganization event in which our common stock is converted into or exchanged for securities, cash or other property
or we consummate a sale of substantially all of our assets, then following such event, the holders of the Class A and Class B Warrants
will be entitled to receive upon exercise of the Class A and Class B Warrants the kind and amount of securities, cash or other
property which the holders would have received had they exercised the Class A and Class B Warrants immediately prior to such reorganization
event.
No fractional shares of common stock will be issued in connection
with the exercise of a Class A and Class B Warrant. In lieu of fractional shares, we will pay the holder an amount in cash equal
to the fractional amount multiplied by the market value of a share of common stock. A Class A and Class B Warrant may be transferred
by a holder, upon surrender of the Class A and Class B Warrant, properly endorsed (by the holder executing an assignment in the
form attached to the Class A and Class B Warrant). The Class A and Class B Warrants will not be listed on any securities exchange
or automated quotation system and we do not intend to arrange for any exchange or quotation system to list or quote the Class A
and Class B Warrants.
Anti-Takeover Effect of Certain Charter and By-Law Provisions
Provisions of our charter and our by-laws could make it more
difficult to acquire us by means of a merger, tender offer, proxy contest, open market purchases, removal of incumbent directors
and otherwise. These provisions, which are summarized below, are expected to discourage types of coercive takeover practices and
inadequate takeover bids and to encourage persons seeking to acquire control of us to first negotiate with us. We believe that
the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal
to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals because negotiation of
these proposals could result in an improvement of their terms.
Authorized but Unissued Stock
. We have shares of common
stock and preferred stock available for future issuance, in some cases, without stockholder approval. We may issue these additional
shares for a variety of corporate purposes, including public offerings to raise additional capital, corporate acquisitions, stock
dividends on our capital stock or equity compensation plans.  The existence of unissued and unreserved common stock and preferred
stock may enable our board of directors to issue shares to persons friendly to current management or to issue preferred stock with
terms that could render more difficult or discourage a third-party attempt to obtain control of us, thereby protecting the continuity
of our management. In addition, if we issue preferred stock, the issuance could adversely affect the voting power of holders of
common stock and the likelihood that such holders will receive dividend payments and payments upon liquidation.
Amendments to by-laws
. Our certificate of incorporation
and by-laws authorize the Board to amend, repeal, alter or rescind the by-laws at any time without stockholder approval. 
Allowing the Board to amend our by-laws without stockholder approval enhances Board control over our by-laws.
54
Classification of Board; removal of directors; vacancies.
Our certificate of incorporation provide for the  division of the Board into three classes as nearly equal in size as possible
with staggered three-year terms;  that directors may be removed only for cause by the affirmative vote of the holders of two-thirds
of our shares of capital stock entitled to vote; and  that any vacancy on the Board, however occurring, including a vacancy
resulting from an enlargement of the board, may be filled only by the vote of a majority of the directors then in office. 
The limitations on the removal of directors and the filling of vacancies could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from acquiring, control of us. Our certificate of incorporation requires
the affirmative vote of the holders of at least 75% of our shares of capital stock issued and outstanding and entitled to vote
to amend or repeal any of these provisions.
Notice Periods for Stockholder Meetings
. Our by-laws
provide that for business to be brought by a stockholder before an annual meeting of stockholders, the stockholder must give written
notice to the corporation not less than 90 nor more than 120 days prior to the one year anniversary of the date of the annual meeting
of stockholders of the previous year; provided, however, that in the event that the annual meeting of stockholders is called for
a date that is not within 30 days before or after such anniversary date, notice by the stockholder must be received not later than
the close of business on the tenth day following the day on which the corporation's notice of the date of the meeting is first
given or made to the stockholders or disclosed to the general public, whichever occurs first.
Stockholder action; special meetings
.  Our certificate
of incorporation provides that stockholder action may not be taken by written action in lieu of a meeting and provides special
meetings of the stockholders may only be called by our president or by our Board. These provisions could have the effect of delaying
until the next stockholders' meeting stockholder actions that are favored by the holders of a majority of our outstanding voting
securities. These provisions may also discourage another person or entity from making a tender offer for our common stock, because
that person or entity, even if it acquired a majority of our outstanding voting securities, would be able to take action as a stockholder
only at a duly called stockholders' meeting, and not by written consent. Our certificate of incorporation requires the affirmative
vote of the holders of at least 75% of our shares of capital stock issued and outstanding and entitled to vote to amend or repeal
the provisions relating to prohibition on action by written consent and the calling of a special meeting of stockholders.
Nominations
.  Our by-laws provide that nominations
for election of directors may be made only by (i) the Board or a committee appointed by the Board; or (ii) a stockholder entitled
to vote on director election, if the stockholder provides notice to the Secretary of the Corporation presented not less than 90
days nor more than 120 days prior to the anniversary of the last annual meeting (subject to the limited exceptions set forth in
the bylaws). These provisions may deter takeovers by requiring that any stockholder wishing to conduct a proxy contest have its
position solidified well in advance of the meeting at which directors are to be elected and by providing the incumbent Board with
sufficient notice to allow them to put an election strategy in place.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our charter contains provisions to indemnify our directors and
officers to the maximum extent permitted by Delaware law. We believe that indemnification under our charter covers at least negligence
on the part of an indemnified person. Our charter permits us to advance expenses incurred by an indemnified person in connection
with the defense of any action or proceeding arising out of the person's status or service as our director, officer, employee
or other agent upon an undertaking by the person to repay those advances if it is ultimately determined that the person is not
entitled to indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We are a reporting company and file annual, quarterly and special
reports, and other information with the Securities and Exchange Commission. Copies of the reports and other information may be
read and copied at the SEC's Public Reference Room at 100 F Street NE, Washington, D.C. 20549. You can request copies of
such documents by writing to the SEC and paying a fee for the copying cost. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a web site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants that file electronically with the SEC.
This prospectus is part of a registration statement on Form
S-1 that we filed with the SEC. Certain information in the registration statement has been omitted from this prospectus in accordance
with the rules and regulations of the SEC. We have also filed exhibits and schedules with the registration statement that are excluded
from this prospectus. For further information you may:
·
read a copy of the registration statement, including the exhibits and schedules, without charge at the SEC's Public Reference Room; or
55
·
obtain a copy from the SEC upon payment of the fees prescribed by the SEC.
LEGAL MATTERS
The validity of the securities being offered by this prospectus
will be passed upon for us by Foley Hoag LLP, Boston, Massachusetts.
EXPERTS
The audited financial statements of Novelos Therapeutics, Inc.
included in this prospectus and elsewhere in the registration statement have been so included in reliance upon the report of Grant
Thornton LLP, independent registered public accountants, upon the authority of said firm as experts in accounting and auditing
in giving said report.
GLOSSARY OF CERTAIN SCIENTIFIC TERMS
Akt -
Akt (also known as Akt/PKB) is an important
cell signaling enzyme (a serine/threonine protein kinase) that plays a key role in multiple cellular processes such as glucose
metabolism, cell proliferation, apoptosis, transcription and cell migration.
Apoptosis -
A highly regulated, normal cell process
leading to programmed cell death by which organisms can eliminate damaged or aberrant cells.  Apoptosis is often abnormally
suppressed in cancer cells, contributing to their uncontrolled proliferation.
Caspases -
Caspases are a family of enzymes (cysteine-aspartic
proteases or cysteine-dependent aspartate-directed proteases) that play essential roles in apoptosis (programmed
cell death), necrosis, and inflammation.
Cytotoxic -
Cytotoxicity is the quality of being
toxic to cells (i.e. cell-killing).  Many cancer chemotherapeutic drugs are cytotoxic to cancer cells (and, to some extent,
normal cells) thus resulting in unwanted side-effects e.g. nausea/vomiting, hair loss, suppression of the immune system.
Dosimetry -
Radiation dosimetry is the
calculation of absorbed dose and optimization of dose delivery in radiation therapy.
Lipid Rafts -
Specialized regions of the membrane
phospholipid bilayer that contain high concentrations of cholesterol and sphingolipids and serve to organize cell surface and intracellular
signaling molecules (e.g. growth factor and cytokine receptors, the phophatidylinosotol 3-kinase (P13K)/Akt survival pathway).
Radiolabeled -
Refers to a molecule containing
a radioisotope as a part of its structure.
Radioisotope -
Also referred to as radioactive
isotopes or radionuclides.  These are variants of atoms of particular chemical elements (e.g. iodine) with an unstable nucleus
that can undergo radioactive decay during which ionizing radiation (e.g. gamma rays, subatomic particles) is emitted.
Uptake –
An act of taking in or absorbing,
especially into a living organism, tissue or cell.
Xenograft -
Tissue, organs or cells from an individual
of one species transplanted into or grafted onto an individual of another species.
56
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS FOR NOVELOS
THERAPEUTICS, INC.
(a Development Stage Company)
Page
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets at September 30, 2012, December 31, 2011 and 2010
F-3
Consolidated Statements of Operations for the Nine Months Ended September 30, 2012 and 2011, Years Ended December 31, 2011 and 2010, and the Cumulative Development-Stage Period from November 7, 2002 (date of inception) to December 31, 2011
F-4
Consolidated Statements of Stockholders' Equity for the Nine Months Ended September 30, 2012, Years Ended December 31, 2011 and 2010, and the Cumulative Development-Stage Period from November 7, 2002 (date of inception) to December 31, 2011
F-5
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011, Years Ended December 31, 2011 and 2010, and the Cumulative Development-Stage Period from November 7, 2002 (date of inception) to December 31, 2011
F-6
Notes to Consolidated Financial Statements
F-7
F-
1
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Shareholders
Novelos Therapeutics, Inc.
We have audited the accompanying consolidated balance sheets
of Novelos Therapeutics, Inc. and Subsidiary (a Development Stage Company) (a Delaware corporation) (the Company) as of December
31, 2011 and 2010, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of
the two years in the period ended December 31, 2011 and the period from November 7, 2002 (date of inception) through December 31,
2011. These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have,
nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly,
we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of Novelos Therapeutics, Inc. and Subsidiary, as of December
31, 2011 and 2010, and the results of their operations and their cash flows for each of the two years in the period ended December
31, 2011 and the period from November 7, 2002 (date of inception) through December 31, 2011, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred
losses since its inception and, as of December 31, 2011, had an accumulated deficit of $31,480,426. These conditions, along with
other matters as set forth in Note 1, raise substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ Grant Thornton LLP
Boston, Massachusetts
March 9, 2012
F-
2
NOVELOS THERAPEUTICS, INC.
(a Development Stage Company)
CONSOLIDATED BALANCE SHEETS
September 30,
2012
(unaudited)
December 31,
2011
(audited)
December 31,
2010
(audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
5,597,764
$
5,505,960
$
673,739
Restricted cash
55,000
55,000
555,000
Prepaid expenses and other current assets
335,979
254,967
51,042
Total current assets
5,988,743
5,815,927
1,279,781
FIXED ASSETS, NET
2,697,624
3,044,565
3,510,489
GOODWILL
1,675,462
1,675,462
—
OTHER ASSETS
27,222
27,222
11,872
TOTAL ASSETS
$
10,389,051
$
10,563,176
$
4,802,142
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities
$
712,808
$
478,041
$
392,881
Accrued interest
—
—
305,049
Derivative liability
21,628
23,305
—
Notes payable, current portion
—
—
204,802
Capital lease obligations, current portion
2,356
2,235
2,085
Total current liabilities
736,792
503,581
904,817
LONG-TERM LIABILITIES:
Convertible debt
—
—
2,720,985
Notes payable, net of current portion
450,000
450,000
920,941
Deferred rent
133,209
124,381
115,311
Capital lease obligations, net of current portion
2,309
4,091
6,326
Total long-term liabilities
585,518
578,472
3,763,563
TOTAL LIABILITIES
1,322,310
1,082,053
4,668,380
COMMITMENTS AND CONTINGENCIES (Notes 13 and 14)
STOCKHOLDERS' EQUITY:
Preferred stock, $0.00001 par value; 7,000 shares authorized; none issued and outstanding as of September 30, 2012, December 31, 2011 and 2010
—
—
—
Common stock, $0.00001 par value; 150,000,000 shares authorized; 43,460,497, 36,907,824 and 12,820,102 shares issued and outstanding at September 30, 2012, December 31, 2011 and 2010, respectively
434
369
128
Additional paid-in capital
47,186,659
40,961,180
24,178,638
Deficit accumulated during the development stage
(38,120,352
)
(31,480,426
)
(24,045,004
)
Total stockholders' equity
9,066,741
9,481,123
133,762
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
10,389,051
$
10,563,176
$
4,802,142
See report of independent
registered public accounting firm and accompanying notes to the consolidated financial statements.
F-
3
NOVELOS THERAPEUTICS, INC.
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Ended
September 30,
Year Ended
December 31,
Cumulative
Development-
Stage Period
from November
7, 2002 (date of
inception)
through
December 31,
2012
(unaudited)
2011
(unaudited)
2011
(audited)
2010
(audited)
2011
(audited)
COSTS AND EXPENSES:
Research and development
$
3,896,005
$
2,445,429
$
3,599,080
$
2,984,207
$
20,805,039
General and administrative
2,695,503
1,827,510
2,692,433
1,156,549
9,662,611
Merger costs
—
746,207
746,207
52,925
799,133
Total costs and expenses
6,591,508
5,019,146
7,037,720
4,193,681
31,266,783
LOSS FROM OPERATIONS
(6,591,508
)
(5,019,146
)
(7,037,720
)
(4,193,681
)
(31,266,783
)
OTHER INCOME (EXPENSE):
Grant income
—
44,479
44,479
200,000
244,479
Loss on derivative warrants
(42,178
)
(66,820
)
(12,158
)
—
(12,158
)
Interest expense, net
(6,240
)
(428,015
)
(430,023
)
(566,156
)
(447,125
)
Other income (expense)
—
—
—
(426
)
1,161
Total other expense, net
(48,418
)
(450,356
)
(397,702
)
(366,582
)
(213,643
)
NET LOSS
(6,639,926
)
(5,469,502
)
(7,435,422
)
(4,560,263
)
(31,480,426
)
DEEMED DIVIDEND ON WARRANTS
(543,359
)
—
—
—
—
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
$
(7,183,285
)
$
(5,469,502
)
$
(7,435,422
)
$
(4,560,263
)
$
(31,480,426
)
BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
$
(0.18
)
$
(0.25
)
$
(0.31
)
$
(0.36
)
$
(2.84
)
SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
39,611,899
21,847,984
23,959,008
12,820,102
11,090,838
See report of independent
registered public accounting firm and accompanying notes to the consolidated financial statements.
F-
4
NOVELOS THERAPEUTICS, INC.
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
Common Stock
Additional
Deficit
Accumulated
During the
Total
Shares
Par
Amount
Paid-in
Capital
Development
Stage
Stockholders'
Equity
BALANCE AT NOVEMBER 7, 2002
—
$
—
$
—
$
—
$
—
Issuance of
    common stock for cash
6,440,123
64
590,205
—
590,269
Issuance of common stock
    in exchange for professional services
101,220
1
9,107
—
9,108
Net
    loss
—
—
—
—
—
BALANCE AT DECEMBER 31, 2002
6,541,343
65
599,312
—
599,377
Issuance of common stock
    for cash, net of issuance costs
37,958
—
4,937
—
4,937
Issuance of common stock
    in exchange for licensed technology
203,483
2
80,410
—
80,412
Net
    loss
—
—
—
(295,790
)
(295,790
)
BALANCE AT DECEMBER 31, 2003
6,782,784
67
684,659
(295,790
)
388,936
Net
    loss
—
—
—
(342,761
)
(342,761
)
BALANCE AT DECEMBER 31, 2004
6,782,784
67
684,659
(638,551
)
46,175
Issuance of common stock
    for cash, net of issuance costs
610,664
6
835,862
—
835,868
Net
    loss
—
—
—
(481,837
)
(481,837
)
BALANCE AT DECEMBER 31, 2005
7,393,448
73
1,520,521
(1,120,388
)
400,206
Issuance of common stock
    for cash, net of issuance costs
2,202,179
22
7,097,050
—
7,097,072
Common stock repurchased
(43,819
)
—
(31,667
)
—
(31,667
)
Stock-based compensation
—
—
43,994
—
43,994
Net
    loss
—
—
—
(963,440
)
(963,440
)
BALANCE AT DECEMBER 31, 2006
9,551,808
95
8,629,898
(2,083,828
)
6,546,165
Issuance of common stock
    for cash, net of issuance costs
60,250
1
249,999
—
250,000
Exercise of warrant to
    purchase common stock
75,045
1
249,999
—
250,000
Stock-based compensation
—
—
570,392
—
570,392
Net
    loss
—
—
—
(5,090,325
)
(5,090,325
)
BALANCE AT DECEMBER 31, 2007
9,687,103
97
9,700,288
(7,174,153
)
2,526,232
Issuance of common stock
    for cash, net of issuance costs
3,132,999
31
12,931,531
—
12,931,562
Stock-based compensation
—
—
477,488
—
477,488
Net
    loss
—
—
—
(6,090,715
)
(6,090,715
)
BALANCE AT DECEMBER 31, 2008
12,820,102
128
23,109,307
(13,264,868
)
9,844,567
Stock-based compensation
—
—
502,199
—
502,199
Net
    loss
—
—
—
(6,219,873
)
(6,219,873
)
BALANCE AT DECEMBER 31, 2009
12,820,102
128
23,611,506
(19,484,741
)
4,126,893
Stock-based compensation
—
—
353,340
—
353,340
Intrinsic value of beneficial
    conversion feature associated with convertible debt issued in exchange for cash
—
—
213,792
—
213,792
Net
    loss
—
—
—
(4,560,263
)
(4,560,263
)
BALANCE AT DECEMBER 31, 2010
12,820,102
128
24,178,638
(24,045,004
)
133,762
Issuance of common stock
    upon conversion of convertible notes
4,181,535
42
3,184,665
—
3,184,707
Issuance of common stock
    in a business combination
2,959,871
30
2,219,873
—
2,219,903
Cash paid in lieu of fractional
    shares in a business combination
(41
)
—
(145
)
—
(145
)
Issuance of common stock
    and warrants, net of issuance costs
16,928,204
169
10,164,377
—
10,164,546
Intrinsic value of beneficial
    conversion feature associated with the conversion of convertible debt
—
—
257,973
—
257,973
Issuance of common stock
    upon the cashless exercise of warrants and reclassification of derivative liability to additional paid-in-capital
18,153
—
48,339
—
48,339
Stock-based compensation
—
—
907,460
—
907,460
Net
    loss
—
—
—
(7,435,422
)
(7,435,422
)
BALANCE AT DECEMBER 31, 2011
36,907,824
$
369
$
40,961,180
$
(31,480,426
)
$
9,481,123
Issuance of common stock
    upon cashless exercise of warrants and reclassification of derivative liability to additional paid-in-capital
981,073
10
43,845
—
43,855
Issuance of common stock
    upon exercise of warrants
150,800
1
150,799
—
150,800
Issuance of common stock
    in connection with registered offering, net of issuance costs
5,420,800
54
4,870,924
—
4,870,978
Stock-based compensation
—
—
1,159,911
—
1,159,911
Net
    loss
—
—
—
(6,639,926
)
(6,639,926
)
BALANCE AT SEPTEMBER
    30, 2012 (UNAUDITED)
43,460,497
$
434
$
47,186,659
$
(38,120,352
)
$
9,066,741
See report of independent registered public accounting firm
and accompanying notes to the consolidated financial statements
F-
5
NOVELOS THERAPEUTICS, INC.
(a Development Stage Company)
STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
Year Ended
December 31,
Cumulative
Development-Stage
Period from November
7, 2002 through
December 31, 2011
2012
(unaudited)
2011
(unaudited)
2011
(audited)
2010
(audited)
(audited)
Net loss
$
(6,639,926
)
$
(5,469,502
)
$
(7,435,422
)
$
(4,560,263
)
$
(31,480,426
)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization
384,083
439,587
584,841
580,114
2,416,038
Stock-based compensation
1,159,911
655,656
907,460
353,340
2,854,873
Intrinsic value of beneficial conversion feature associated with convertible debt
—
257,973
257,973
213,792
471,765
Issuance of stock for technology and services
—
—
—
—
89,520
Impairment of intangible assets
—
—
—
19,671
19,671
Loss on disposal of fixed assets
—
6,009
6,009
—
36,477
Loss on derivative warrants
42,178
66,820
12,158
—
12,158
Changes in:
Prepaid expenses and other current assets
(81,012
)
(224,548
)
(175,883
)
18,584
(238,797
)
Accounts payable and accrued liabilities
234,767
(331,357
)
(294,969
)
(322,707
)
97,912
Accrued interest
—
158,672
158,673
305,049
463,722
Deferred rent
8,828
6,083
9,070
9,973
124,381
Cash used in operating activities
(4,891,171
)
(4,434,607
)
(5,970,090
)
(3,382,447
)
(25,132,706
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired in a business combination
—
905,649
905,649
—
905,649
Purchases of fixed assets
(37,142
)
(112,195
)
(118,411
)
(1,652
)
(5,486,592
)
Proceeds from sale of fixed assets
—
—
—
—
7,000
Purchases of short-term certificates of deposit
—
—
—
—
(5,500,730
)
Proceeds from short-term certificates of deposit
—
—
—
—
5,500,730
Change in restricted cash
—
500,000
500,000
—
(55,000
)
Payment for intangible assets
—
—
—
—
(19,671
)
Cash provided by (used in) investing activities
(37,142
)
1,293,454
1,287,238
(1,652
)
(4,648,614
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes
—
—
—
2,720,985
2,720,985
Proceeds from long-term obligations
—
—
—
450,000
1,677,945
Payments on long-term obligations
—
(675,743
)
(675,743
)
(190,789
)
(1,227,944
)
Payments on capital lease obligations
(1,661
)
(1,549
)
(2,085
)
(1,944
)
(4,648
)
Proceeds from issuance of common stock, net of issuance costs
4,870,978
4,866,406
10,164,546
—
31,874,254
Proceeds from exercise of warrant
150,800
—
—
—
250,000
Repurchase of common stock
—
—
—
—
(31,667
)
Cash paid in lieu of fractional shares in a business combination
—
(145
)
(145
)
—
(145
)
Change in deferred issuance costs
—
(130,800
)
28,500
99,461
28,500
Cash provided by (used in) financing activities
5,020,117
4,058,169
9,515,073
3,077,713
35,287,280
INCREASE (DECREASE) IN CASH AND EQUIVALENTS
91,804
917,016
4,832,221
(306,386
)
5,505,960
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD
5,505,960
673,739
673,739
980,125
—
CASH AND EQUIVALENTS AT END OF PERIOD
$
5,597,764
$
1,590,755
$
5,505,960
$
673,739
$
5,505,960
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid
$
—
$
13,716
$
13,716
$
54,454
$
208,689
Fair value of derivative warrants reclassified to additional paid-in capital upon cashless exercise
$
43,855
$
48,339
$
48,339
$
—
$
48,339
Issuance of common stock upon conversion of notes payable and accrued interest
$
—
$
3,184,707
$
3,184,707
$
—
$
3,184,707
Fair value of assets acquired in exchange for securities in a business combination
$
—
$
78,408
$
78,408
$
—
$
78,408
Fair value of liabilities assumed in exchange for securities in a business combination
$
—
$
(439,616
)
$
(439,616
)
$
—
$
(439,616
)
Excess of purchase price over net assets acquired in a business combination
$
—
$
1,675,462
$
1,675,462
$
—
$
1,675,462
See report of independent registered
public accounting firm and accompanying notes to the consolidated financial statements.
F-
6
NOVELOS THERAPEUTICS, INC.
(a Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL INFORMATION AS OF AND FOR
THE NINE MONTHS ENDED
SEPTEMBER 30, 2012 AND 2011 IS UNAUDITED)
1. NATURE OF BUSINESS, ORGANIZATION
AND GOING CONCERN
Novelos Therapeutics, Inc. ("Novelos" or the "Company")
is a pharmaceutical company developing novel drugs for the treatment and diagnosis of cancer. On April 8, 2011, Novelos completed
a business combination with Cellectar, Inc. ("Cellectar"), a privately held Wisconsin corporation that designed and
developed products to detect, treat and monitor a wide variety of human cancers, and Cell Acquisition Corp. (the "Merger
Subsidiary"), a Wisconsin corporation and a wholly owned subsidiary of Novelos. Pursuant to the transaction Cellectar was
merged into the Merger Subsidiary (the "Acquisition", see Note 4). References in these financial statements and notes
to "Cellectar" relate to the activities and financial information of Cellectar prior to the Acquisition, references
to "Novelos" relate to the activities and financial information of Novelos prior to the Acquisition and references
to "the Company" or "we" or "us" or "our" relate to the activities and obligations
of the combined Company following the Acquisition.
Immediately prior to the Acquisition, Novelos completed a 1-for-153
reverse split of its common stock.  Novelos then issued to the shareholders of Cellectar at that date 17,001,596 shares of
its common stock as consideration for the Acquisition, representing a ratio of 0.8435 shares of Novelos common stock in exchange
for one share of Cellectar common stock (the "Exchange Ratio") as set forth in the Agreement and Plan of Merger (the
"Merger Agreement") dated April 8, 2011.  The shares issued to Cellectar shareholders in the Acquisition constituted
approximately 85% of Novelos' outstanding common stock after giving effect to the Acquisition.  Upon the closing of
the Acquisition, the Company completed the private placement of 6,846,537 shares of its common stock and warrants to purchase an
additional 6,846,537 shares of its common stock for gross proceeds of approximately $5,135,000.
Accounting principles generally accepted in the United States
require that a company whose security holders retain the majority voting interest in the combined business be treated as the acquirer
for financial reporting purposes.  Accordingly, the Acquisition was accounted for as a reverse acquisition whereby Cellectar,
Inc. was treated as the acquirer for accounting and financial reporting purposes. The financial statements presented herein as
of and for the twelve months ended December 31, 2010 represent the historical financial information of Cellectar, except for the
capital structure which represents the historical amounts of Cellectar, retroactively adjusted to reflect the legal capital structure
of Novelos by applying the Exchange Ratio. On April, 8, 2011, Cellectar was merged into the Merger Subsidiary a wholly owned subsidiary
of Novelos; as such, the financial statements presented herein as of and for the twelve months ended December 31, 2011 include
the historical results of Cellectar from January 1, 2011 through April 8, 2011, except for the capital structure which represents
the historical amounts of Cellectar, retroactively adjusted to reflect the legal capital structure of Novelos by applying the Exchange
Ratio, and include the consolidated results of the combined company from April 9, 2011 through December 31, 2011 and the financial
statements presented herein as of and for the nine months ended September 30, 2011 include the historical results of Cellectar
from January 1, 2011 through April 8, 2011, except for the capital structure which represents the historical amounts of Cellectar,
retroactively adjusted to reflect the legal capital structure of Novelos by applying the Exchange Ratio, and include the consolidated
results of the combined company from April 9, 2011 through September 30, 2011. The financial statements as of and for the nine
months ended September 30, 2012 include the consolidated results of the combined company for that period. All per-share amounts
and outstanding shares, including all common stock equivalents, and stock options, have been retroactively restated in these financial
statements and notes for all periods presented to reflect the capital structure of Novelos by applying the Exchange Ratio.  The
cumulative capital activity from the date of inception (November 7, 2002) up to the closing of the Acquisition, as presented in
the accompanying statement of stockholders' equity, equals 17,001,596 shares of common stock, which represents the equity
interests the legal parent (Novelos) issued to effect the Acquisition. The number of authorized shares of common stock disclosed
on the balance sheet (150,000,000) represents the number of authorized shares of Novelos common stock following the Acquisition. 
Additionally, on the accompanying balance sheet as of December 31, 2010 and statements of stockholders' equity for the period
from inception (November 7, 2002) to December 31, 2010 the aggregate par value of the issued common stock was reduced to reflect
the $0.00001 par value of Novelos common stock associated with the shares of Cellectar common stock adjusted for the Exchange Ratio
and the difference was reclassified to additional paid-in capital.
As a result of the Acquisition, the Company has implemented
a revised business plan focused on the development of the Cellectar compounds.  Development of Novelos' other compounds
(NOV-002 and NOV-205) has been suspended.  The Company is conducting its operations from Cellectar's headquarters in
Madison, Wisconsin and the Company's executive offices are in Newton, Massachusetts.
F-
7
The Company is subject to a number of risks similar to those
of other small pharmaceutical companies. Principal among these risks are dependence on key individuals, competition from substitute
products and larger companies, the successful development and marketing of its products in a highly regulated environment and the
need to obtain additional financing necessary to fund future operations.
The accompanying financial statements have been prepared on
a basis that assumes that the Company will continue as a going concern and that contemplates the continuity of operations, realization
of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has incurred losses
since inception in devoting substantially all of its efforts toward research and development and has an accumulated deficit of
$31,480,426 at December 31, 2011 and an accumulated deficit of $38,120,352 as of September 30, 2012. During the year ended December
31, 2011 and the nine months ended September 20, 2012, the Company generated a net loss of $7,435,422 and $6,639,926, respectively
and the Company expects that it will continue to generate operating losses for the foreseeable future.  The Company believes
that its cash on hand at September 30, 2012, combined with the cash proceeds received from warrant exercises in October 2012 (see
Note 19), is adequate to fund operations at budgeted levels through May 2013.  On November 2, 2012, the Company completed
a private placement of its common stock and warrants for total proceeds of $2,000,000. The proceeds from the private placement
are designated for use towards the construction of a clinical-stage manufacturing facility for I-124-CLR1404 (LIGHT) at the Company's
Madison, WI location. The Company estimates that the project will cost a total of approximately $3,000,000, will take approximately
one year to complete and will commence in late 2012, although the Company has not yet entered into contractual commitments with
vendors. The Company may seek to obtain the additional capital required to complete the project from additional sales of common
stock, proceeds from warrant exercise, and/or from equipment financing. The Company's ability to execute its operating plan
beyond May 2013 depends on its ability to obtain additional funding via the sale of equity and/or debt securities, a strategic
transaction or otherwise.  The Company plans to continue to actively pursue financing alternatives, but there can be no assurance
that it will obtain the necessary funding.  The accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
The accompanying unaudited consolidated balance sheet as of
September 30, 2012, the consolidated statements of operations for the nine months ended September 30, 2012 and 2011, and the consolidated
statements of cash flows for the nine months ended September 30, 2012 and 2011 and the related interim information contained within
the notes to the consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities
and Exchange Commission ("SEC") for interim financial information. Accordingly, they do not include all of the information
and the notes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management,
the unaudited interim consolidated financial statements reflect all adjustments, consisting of normal and recurring adjustments,
necessary for the fair presentation of the Company's consolidated financial position at September 30, 2012 and consolidated
results of its operations and its cash flows for the nine months ended September 30, 2012 and 2011. The results for the nine months
ended September 30, 2012 are not necessarily indicative of future results.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements reflect the
application of certain accounting policies, as described in this note and elsewhere in the accompanying notes to the consolidated
financial statements.  The consolidated financial statements as of and for the twelve months ended December 31, 2011 are presented
on a consolidated basis to reflect the Acquisition described in Note 4.
Principles of Consolidation
— The consolidated
financial statements include the accounts of the Company and the accounts of its wholly-owned subsidiary. All intercompany accounts
and transactions have been eliminated in consolidation.
Development Stage Company
— The Company
has been in the development stage since its inception.  The primary activities since inception have been organizational activities,
research and development and raising capital.  No significant revenues have been generated from planned operations. 
As of September 30, 2012, December 31, 2011 and 2010, the Company remained in the development stage.
The summary unaudited condensed statement of operations for
the cumulative development-stage period from November 7, 2002 (date of inception) through September 30, 2012 is as follows:
COSTS AND EXPENSES:
Research and development
$
24,701,044
General and administrative
12,358,114
Merger costs
799,133
Total costs and expenses
37,858,291
LOSS FROM OPERATIONS
(37,858,291
)
OTHER EXPENSE, NET
(262,061
)
NET LOSS
$
(38,120,352
)
DEEMED DIVIDEND ON WARRANTS
(543,359
)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
$
(38,663,711
)
BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
$
(2.92
)
SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE
13,238,063
F-
8
The summary unaudited condensed statement of cash flow
for the cumulative development-stage period from November 7, 2002 (date of inception) through September 30, 2012 is as follows:
Net loss
$
(38,120,352
)
Adjustments to reconcile net loss to cash used in operating activities
7,486,674
Changes in working capital
609,801
Cash used in operating activities
(30,023,877
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired in a business combination
905,649
Purchases of fixed assets, net of $7,000 proceeds from sale of fixed assets
(5,516,734
)
Change in restricted cash
(55,000
)
Payment for intangible assets
(19,671
)
Cash used in investing activities
(4,685,756
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock and warrants, net of issuance costs, repurchase of common stock, and cash paid in lieu of fractional shares in a business combination
37,114,220
Change in deferred issuance costs
28,500
Proceeds from issuance of long-term obligations and convertible notes
4,398,930
Payments on long-term obligations
(1,234,253
)
Cash provided by financing activities
40,307,397
INCREASE IN CASH AND EQUIVALENTS
5,597,764
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD
—
CASH AND EQUIVALENTS AT END OF PERIOD
$
5,597,764
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid
$
208,689
Fair value of derivative warrants reclassified to additional paid-in capital upon cashless exercise
$
92,194
Issuance of common stock upon the conversion of notes payable and accrued interest
$
3,184,707
Fair value of assets acquired in exchange for securities in a business combination
$
78,408
Fair value of liabilities assumed in exchange for securities in a business combination
$
(439,616
)
Excess of purchase price over net assets acquired in a business combination
$
1,675,462
Use of Estimates
— The preparation of financial
statements in conformity with accounting principles generally accepted in the United States requires management to make estimates
and judgments that may affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets
and liabilities. On an on-going basis, management evaluates its estimates including those related to unbilled vendor amounts and
share-based compensation. Management bases its estimates on historical experience and on various other assumptions that are believed
to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
Actual results may differ from those estimates under different assumptions or conditions. Changes in estimates are reflected in
reported results in the period in which they become known.
Cash and Cash Equivalents
— All short-term
investments purchased with maturities of three months or less are considered to be cash equivalents.
Restricted Cash
— Restricted cash at September
30, 2012 and December 31, 2011 consists of a certificate of deposit required under the Company's lease agreement for its
Madison, Wisconsin facility (see Note 13).  Restricted cash at December 31, 2010 consists of a certificate of deposit required
for collateral for a promissory note with a bank (see Note 8) and a certificate of deposit required under the Company's lease
agreement for its Madison, Wisconsin facility (see Note 13).
Fixed Assets
— Property and equipment are
stated at cost. Depreciation on property and equipment is provided using the straight-line method over the estimated useful lives
of the assets (5 years).  Due to the significant value of leasehold improvements purchased during the initial 3-year lease
term and the economic penalty for not extending the building lease, leasehold improvements are depreciated over 17 years (their
estimated useful life), which represents the full term of the lease, including all extensions (Note 13).
F-
9
Goodwill
— Intangible assets at September
30, 2012 and December 31, 2011 consist of goodwill recorded in connection with the Acquisition. Goodwill is not amortized, but
is required to be evaluated for impairment annually or whenever events or changes in circumstances suggest that the carrying value
of an asset may not be recoverable. The Company evaluates goodwill for impairment annually in the fourth fiscal quarter and additionally
on an interim basis if an event occurs or there is a change in circumstances, such as a decline in the Company's stock price
or a material adverse change in the business climate, which would more likely than not reduce the fair value of the reporting unit
below its carrying amount.
Impairment of Long
-
Lived Assets
— Long-lived assets other than intangible assets consist of fixed assets, which we periodically evaluate for potential impairment.
Whenever events or circumstances change, an assessment is made as to whether there has been an impairment in the value of long-lived
assets by determining whether projected undiscounted cash flows generated by the applicable asset exceed its net book value as
of the assessment date. During 2010, following a reduction in staff and suspension of research and manufacturing activities in
order to reduce operating costs, it was determined that the trademarks previously capitalized as intangible assets had been impaired
and the carrying value was reduced to zero.
Stock-Based Compensation
— The Company uses
the Black-Scholes option-pricing model to calculate the grant-date fair value of stock option awards. The resulting compensation
expense, net of expected forfeitures, for awards that are not performance-based is recognized on a straight-line basis over the
service period of the award, which is generally three years for stock options. For stock options with performance-based vesting
provisions, recognition of compensation expense, net of expected forfeitures, commences if and when the achievement of the performance
criteria is deemed probable. The compensation expense, net of expected forfeitures, for performance-based stock options is recognized
over the relevant performance period. Non-employee stock-based compensation is accounted for in accordance with the guidance of
FASB ASC Topic 505,
Equity.
As such, the Company recognizes expense based on the estimated fair value of options granted
to non-employees over their vesting period, which is generally the period during which services are rendered and deemed completed
by such non-employees.
Research and Development
— Research and development costs are expensed as incurred.
Income Taxes
— Income taxes are accounted
for using the liability method of accounting.  Under this method, deferred tax assets and liabilities are determined based
on temporary differences between the financial statement basis and tax basis of assets and liabilities and net operating loss and
credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse.  The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the
enactment date.  Valuation allowances are established when it is more likely than not that some portion of the deferred tax
assets will not be realized.  Management has provided a full valuation allowance against the Company's gross deferred
tax asset.  Tax positions taken or expected to be taken in the course of preparing tax returns are required to be evaluated
to determine whether the tax positions are "more likely than not" to be sustained by the applicable tax authority. 
Tax positions deemed not to meet a more-likely-than-not threshold would be recorded as tax expense in the current year.  There
were no uncertain tax positions that require accrual to or disclosure in the financial statements as of September 30, 2012, December
31, 2011 and 2010.
Comprehensive Loss
— There were no components
of comprehensive loss other than net loss in all of the periods presented.
Grant Income
— Cellectar received a cash
grant of approximately $44,000 and $200,000 for the years ended December 31, 2011 and 2010, respectively, from the U.S. Internal
Revenue Service as a qualifying therapeutic discovery project credit pursuant to the Patient Protection and Affordable Care Act. 
This grant has been recorded as a component of other income.
Fair Value of Financial Instruments
— The
guidance under FASB ASC Topic 825,
Financial Instruments
, requires disclosure of the fair value of certain financial instruments.
Financial instruments in the accompanying financial statements consist of cash equivalents, accounts payable, convertible debt
and long-term obligations.  The carrying amount of cash equivalents, investments and accounts payable approximate their fair
value due to their short-term nature.  The estimated fair value of the convertible debt, determined on an as-converted basis
including conversion of accumulated unpaid interest, was approximately $3,264,000 at December 31, 2010, respectively.  There
was no convertible debt outstanding at September 30, 2012 or December 31, 2011. The carrying value of long-term obligations, including
the current portion, approximates fair value because the fixed interest rate approximates current market rates of interest available
in the market.
F-
10
Derivative Instruments
– The
Company generally does not use derivative instruments to hedge exposures to cash flow or market risks.  However, certain warrants
to purchase common stock that do not meet the requirements for classification as equity, in accordance with the Derivatives and
Hedging Topic of the Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC"), are classified
as liabilities.  In such instances, net-cash settlement is assumed for financial reporting purposes, even when the terms of
the underlying contracts do not provide for a net-cash settlement. These warrants are considered derivative instruments because
the agreements contain "down-round" provisions whereby the number of shares for which the warrants are exercisable
and/or the exercise price of the warrants are subject to change in the event of certain issuances of stock at prices below the
then-effective exercise price of the warrants. The number of shares issuable under such warrants was 27,310 and 77,729 at September
30, 2012 and December 31, 2011, respectively. The primary underlying risk exposure pertaining to the warrants is the change in
fair value of the underlying common stock.  Such financial instruments are initially recorded at fair value with subsequent
changes in fair value recorded as a component of gain or loss on derivatives on the consolidated statements of operations in each
reporting period. If these instruments subsequently meet the requirements for equity classification, the Company reclassifies the
fair value to equity. At September 30, 2012 and December 31, 2011, these warrants represented the only outstanding derivative instruments
issued or held by the Company.  There were no outstanding derivative instruments at December 31, 2010.
Concentration of Credit Risk
— Financial
instruments that subject the Company to credit risk consist of cash and equivalents on deposit with financial institutions. The
Company's excess cash as of September 30, 2012 and December 31, 2011 is on deposit in a non-interest-bearing transaction
account that is fully covered by FDIC deposit insurance.
New Accounting Pronouncements
— In
January 2010, the FASB issued ASU No. 2010-06,
Improving Disclosures about Fair Value Measurements
, which requires
additional disclosures about the amounts of and reasons for significant transfers in and out of Level 1 and Level 2 fair
value measurements. This standard also clarifies existing disclosure requirements related to the level of disaggregation of fair
value measurements for each class of assets and liabilities and disclosures about inputs and valuation techniques used to measure
fair value for both recurring and non-recurring Level 2 and Level 3 measurements. Since this new accounting standard
only required additional disclosure, the adoption of the standard in the first quarter of 2010 did not impact the accompanying
financial statements. Additionally, effective for interim and annual periods beginning after December 15, 2010, this standard
will require additional disclosure and require an entity to present disaggregated information about activity in Level 3 fair
value measurements on a gross basis, rather than one net amount.  The adoption of this accounting standard did not impact
the accompanying financial statements.
In December 2010, the FASB issued ASU No. 2010-29,
Disclosures
of Supplementary Pro Forma Information for Business Combinations
, which, if comparative financial statements are presented,
requires the supplemental pro forma disclosure of revenue and earnings to be presented as if the business combination had occurred
at the beginning of the comparable prior annual reporting period only.  This standard also expands the supplemental pro forma
disclosures required under FASB ASC Topic 850,
Business Combinations
, to include a description of the nature and amount
of material nonrecurring pro forma adjustments directly attributable to the business combination in the reported pro forma revenue
and earnings.  This standard is effective for the Company for any business combinations completed after January 1, 2011. 
The Company adopted the provisions of this standard during the first quarter of 2011.
In May 2011, the FASB issued ASU No. 2011-04,
Amendments
to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. Generally Accepted Accounting Principles ("GAAP")
and International Financial Reporting Standards ("IFRSs").
This standard updates accounting guidance to clarify
the measurement of fair value to align the guidance and improve the comparability surrounding fair value measurement within GAAP
and IFRSs.  The standard also updates requirements for measuring fair value and expands the required disclosures.  The
standard does not require additional fair value measurements and was not intended to establish valuation standards or affect valuation
practices outside of financial reporting.  This standard will become effective for the Company on January 1, 2012. The adoption
of this standard on January 1, 2012 did not have a material impact on the Company's financial statements or required disclosures.
In June 2011, the FASB issued ASU No. 2011-05,
Presentation
of Comprehensive Income.
This standard eliminates the current option to report other comprehensive income and its components
in the statement of changes in equity. The standard is intended to enhance comparability between entities that report under US GAAP
and those that report under IFRS, and to provide a more consistent method of presenting non-owner transactions that affect an entity's
equity. Under the ASU, an entity can elect to present items of net income and other comprehensive income in one continuous statement,
referred to as the statement of comprehensive income, or in two separate, but consecutive, statements. Each component of net income
and each component of other comprehensive income, together with totals for comprehensive income and its two parts, net income and
other comprehensive income, would need to be displayed under either alternative. The statement(s) would need to be presented with
equal prominence as the other primary financial statements. The ASU does not change items that constitute net income and other
comprehensive income, when an item of other comprehensive income must be reclassified to net income or the earnings-per-share computation
(which will continue to be based on net income). The new US GAAP requirements are effective for public entities as of the
beginning of a fiscal year that begins after December 15, 2011 and interim and annual periods thereafter. Early adoption is
permitted, but full retrospective application is required under the accounting standard. The adoption of this standard on January
1, 2012 did not have a material impact on the Company's financial statements or required disclosures.
F-
11
In September 2011, the FASB issued ASU No. 2011-08,
Intangibles
– Goodwill and Other (Topic 350) Testing Goodwill for Impairment.
This standard simplifies how an entity
tests goodwill for impairment and allows an entity to first assess qualitative factors in determining whether it is more likely
than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary
to perform the two-step goodwill impairment test.  This standard is effective for entities as of the beginning of a fiscal
year that begins after December 15, 2011 and interim and annual periods thereafter.  Early adoption is permitted. The
adoption of this standard on January 1, 2012 did not have a material impact on the Company's financial statements or required
disclosures.
In December 2011, the FASB issued ASU No. 2011-12,
Deferral
of Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income
in ASU 2011-05,
which defers the requirement in ASU No. 2011-05 that companies present reclassification adjustments for each
component of accumulated other comprehensive income. All other requirements of ASU No. 2011-05 remain unchanged.
In August 2012, the FASB issued ASU No. 2012-03,
Technical
Amendments and Corrections to SEC Section
. This standard provides amendments to SEC Paragraphs Pursuant to SEC Staff Accounting
Bulletin No. 114, Technical Amendments Pursuant to SEC Release No. 339-9250, and Corrections Related to FASB Accounting Standards
Update 2010-22. The adoption of this standard did not have a material impact on the Company's financial statement or required
disclosures.
In October 2012, the FASB issued ASU No. 2012-04,
Technical
Improvements and Corrections
. This standard provides changes and clarification to the codification through reference corrections
and source literature amendments. This standard is effective for entities as of the beginning of a fiscal year that begins after
December 15, 2012. The Company does not expect that the adoption of this standard will have a material impact on the Company's
financial statements or required disclosures.
Reclassifications
— Certain prior-period
amounts have been reclassified to conform to the current-period presentation.
3. FAIR VALUE
In accordance with Fair Value Measurements and Disclosures Topic
of the FASB ASC 820, the Company groups its financial assets and financial liabilities generally measured at fair value in three
levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine
fair value.
·
Level 1: Input prices quoted in an active market for identical financial assets or liabilities.
·
Level 2: Inputs other than prices quoted in Level 1, such as prices quoted for similar financial assets and liabilities in active markets, prices for identical assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data.
·
Level 3: Input prices quoted that are significant to the fair value of the financial assets or liabilities which are not observable or supported by an active market.
Assets and liabilities measured at fair value on a recurring
basis are summarized below:
September 30, 2012
Level 1
Level 2
Level 3
Fair Value
Liabilities:
Warrants
$
-
$
21,628
$
-
$
21,628
December 31, 2011
Level 1
Level 2
Level 3
Fair Value
Liabilities:
Warrants
$
-
$
23,305
$
-
$
23,305
December 31, 2010
Level 1
Level 2
Level 3
Fair Value
Liabilities:
Warrants
$
-
$
-
$
-
$
-
F-
12
The Company uses the Black-Scholes option pricing model and
assumptions that consider, among other variables, the fair value of the underlying stock, risk-free interest rate, volatility,
expected life and dividend rates in estimating fair value for the warrants considered to be derivative instruments. Assumptions
used are generally consistent with those disclosed for stock-based compensation (see Note 10).
4. ACQUISITION
Merger Agreement
On April 8, 2011, Novelos acquired Cellectar through a merger
with and into the Merger Subsidiary, pursuant to the Merger Agreement entered into on that date.  As a result of the Acquisition,
the Merger Subsidiary, which was renamed Cellectar, Inc., owns all assets of and operates the business previously owned and operated
by Cellectar.
In the Acquisition, the former stockholders of Cellectar received
an aggregate number of shares of Novelos common stock constituting approximately 85% of the outstanding shares of Novelos common
stock, after giving effect to the Acquisition but before giving effect to the concurrent private placement of Novelos securities
described below.  Prior to the Acquisition, Novelos amended and restated its certificate of incorporation and in connection
therewith, among other things, effected a 1-for-153 reverse split of its common stock resulting in 2,959,871 shares of Novelos
common stock outstanding. Novelos then issued 17,001,596 shares of Novelos common stock to the stockholders of Cellectar upon the
effective date of the Acquisition.  Warrants and options to purchase Novelos common stock that were outstanding prior to the
Acquisition remained outstanding following the Acquisition. These consist of warrants to purchase a total of 315,164 shares of
Novelos common stock with prices ranging from $16.07 to $191.25 and options to purchase a total of 49,159 shares of Novelos common
stock with prices ranging from $1.53 to $1,072.53.
The financial advisor to Cellectar in the Acquisition, received
a cash fee of $200,000 upon the completion of the Acquisition in consideration of their services.  The financial advisor to
Novelos in the Acquisition, received a cash fee of $250,000 upon the completion of the Acquisition in consideration of their services. 
These amounts were recorded as merger costs and expensed as incurred on the date of the Acquisition.  In addition to the investment
banking fees, the Company also incurred an additional $296,207 of merger-related legal and other costs during the year ended December
31, 2011 and $52,925 during the year ended December 31, 2010 which were included as a component of expense in the respective period.
The Acquisition was completed principally to leverage synergies
between Novelos' strategic focus and experience in developing and funding the development of cancer drugs and Cellectar's
portfolio of cancer-targeted compounds.
Purchase Accounting
The Acquisition was accounted for using the purchase method
of accounting as a reverse acquisition.  In a reverse acquisition, the post-acquisition net assets of the surviving combined
company includes the historical cost basis of the net assets of the accounting acquirer (Cellectar) plus the fair value of the
net assets of the accounting acquiree (Novelos).  Further, under the purchase method, the purchase price is allocated to the
assets acquired, liabilities assumed, and identifiable intangible assets based on their estimated fair values with the remaining
excess purchase price over net assets acquired allocated to goodwill.
The fair value of the consideration transferred in the Acquisition
was $2,219,903 and was calculated as the number of shares of common stock that Cellectar would have had to issue (adjusted for
the Exchange Ratio) in order for Novelos shareholders to hold a 15% equity interest in the combined Company post-acquisition (but
prior to the concurrent private placement), multiplied by the estimated fair value of the Company's common stock on the acquisition
date.  The estimated fair value of the Company's common stock was based on the offering price of the common stock sold
in the private placement which was both completed concurrently with and conditioned upon the closing of the Acquisition. 
This price was determined to be the best indication of fair value on that date since the price was based on an arm's length
negotiation with a group consisting of both new and existing investors that had been advised of the pending Acquisition and assumed
similar liquidity risk as those investors holding the majority of shares being valued as purchase consideration.
The following table summarizes the Company's determination
of fair values of the assets acquired and the liabilities as of the date of acquisition.
Consideration – issuance of securities
$
2,219,903
Prepaid expenses and other assets
$
71,892
Fixed assets
6,515
Accrued liabilities
(380,130
)
Derivative liability
(59,485
)
Goodwill
1,675,462
Total purchase price – net of cash acquired of $905,649
$
1,314,254
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13
The Company determined that the acquired Novelos legacy technology
had no value as of the date of the acquisition.
Goodwill
Of the total purchase price of $2,219,903, $1,675,462 was allocated
to goodwill. Goodwill represents the excess of the purchase price of an acquired business over the fair value of the underlying
net tangible and intangible assets. The goodwill includes the value of the Novelos work force (management team). None of the goodwill
associated with the Acquisition is deductible for income tax purposes.
There were no changes in goodwill during the year ended December
31, 2011, after the initial purchase accounting.
The Company is required to perform an annual impairment test
related to goodwill which is performed in the fourth quarter of each year, or sooner if changes in circumstances suggest that the
carrying value of an asset may not be recoverable. During the fourth quarter of 2011, the annual test was performed and it was
determined that there had been no impairment to goodwill.
There were no changes in circumstances during the nine months
ended September 30, 2012 that would suggest that the goodwill is not recoverable. There were no changes in goodwill during the
nine months ended September 30, 2012.
5. FIXED ASSETS
Fixed assets consisted of the following at December 31:
2011
2010
Office and laboratory equipment
$
3,069,889
$
2,984,375
Computer software
4,000
—
Leasehold improvements
2,324,672
2,317,597
Total fixed assets
5,398,561
5,301,972
Less accumulated depreciation and amortization
(2,353,996
)
(1,791,483
)
Fixed assets, net
$
3,044,565
$
3,510,489
For the years ended December 31, 2011 and 2010, the Company
incurred approximately $585,000 and $580,000 of depreciation expense, respectively.
During the nine months ended September 30, 2012, the change
to net fixed assets consisted of an increase of approximately $384,083 to accumulated depreciation and amortization and purchases
of equipment totaling approximately $37,000.
6. LICENSE AGREEMENTS
2003 License Agreement with the University of Michigan
In September 2003, Cellectar entered into an exclusive license
agreement (the "U. Mich. Agreement") with the Regents of the University of Michigan, ("U. Mich.") for the
development, manufacture and marketing of products under several composition-of-matter patents in North America that expire at
varying dates in 2016.  The U. Mich. Agreement expires upon the expiration of the last covered patent.  The Company is
responsible for an annual license fee of $10,000 and is required to pay costs associated with the maintenance of the patents covered
by the U. Mich. Agreement.  Additionally, the Company is required to make milestone payments of $50,000 upon the filing of
a New Drug Application ("NDA") for a licensed product intended for use in a therapeutic or diagnostic application (such
milestone fees may be deferred and paid within 12 months of the first commercial sale of such products) and make certain milestone
payments within a year following the first commercial sale of any licensed products.  The sales milestones range from $100,000
to $200,000, dependent upon whether the drug is for use in a diagnostic or therapeutic application, provided that if sales in the
first 12 months are less than the amount of the milestone, then we are required to pay 50% of all sales until the milestone is
satisfied. The milestone payments may total up to $400,000. The U. Mich. Agreement provides that the Company pay a royalty
equal to 3% of net sales of any licensed products sold by the Company or its sublicensees for such licensed products, provided
however if the sublicense fee payable to the Company is between 4% and 5% of net sales, then the royalties payable to U. Mich.
Shall be equal to 50% of the sublicense fee.  Furthermore, the U. Mich. Agreement provides for a reduction in the royalties
owed by up to 50% if the Company is required to pay royalties to any third parties related to the sale of the licensed products. 
If the Company receives any revenue in consideration of rights to the licensed technology that is not based on net sales, excluding
any funded research and development, the Company is required to pay U. Mich. 10% of amounts received.  U. Mich. may terminate
the agreement if the Company ceases operations, if the Company fails to make any required payment under the agreement, or if the
Company otherwise materially breaches the agreement, subject to the applicable notice and cure periods.  To date, the Company
has made all payments as they have become due, there have been no defaults under the U. Mich. Agreement, nor has the Company been
notified of a default by U. Mich. The Company may terminate the agreement with six months' notice to U. Mich. and the return
of licensed product and related data.  The U. Mich. Agreement contained milestones that required certain development activities
to be completed by specified dates. All such development milestones have either been completed or have been removed by subsequent
amendment to the agreement.  U. Mich. has provided no warranties as to validity or otherwise with respect to the licensed
technology.
F-
14
The Company paid approximately $600 and $300 to U. Mich. for
the reimbursement of patent maintenance fees during the years ended December 31, 2011 and 2010, respectively.  As of December
31, 2011 and 2010, all annual license fees have been paid in a timely manner.
In connection with the U. Mich. Agreement, during 2003 Cellectar
paid approximately $54,000 of back patent costs and issued 203,483 shares of common stock to U. Michigan as partial consideration
for the rights described above.  The estimated fair-market value of the issuance was $80,412 and was recorded as a license
cost and is included as a component of stockholders equity in the accompanying balance sheets.
License Agreement with Wisconsin
Alumni Research Foundation
In January 2006, Cellectar entered into a license agreement
(the "WARF Agreement") with the Wisconsin Alumni Research Foundation ("WARF") under which Cellectar received
a license, with a right to grant sublicenses, to develop, manufacture, and market products with respect to certain patents. 
The WARF Agreement required an initial license fee of $8,800 and provided that Cellectar pay royalties equal to 0.3% of sales of
any licensed products.  Cellectar was also required to reimburse WARF for patent filing fees and related costs.  During
the year ended December 31, 2010 there were no costs related to the patents under the WARF Agreement.  During 2010, the
WARF Agreement was terminated.
Novelos License Agreements
During 2007, Novelos entered into a Collaboration Agreement
with Lee's Pharmaceutical (HK) Ltd. ("Lee's Pharm") whereby Lee's Pharm obtained an exclusive license
to develop, manufacture and commercialize NOV-002 and NOV-205 in China, Hong Kong, Taiwan and Macau (the "Chinese Territory").
Under the terms of the agreement the Company is entitled to receive up to $1,700,000 in future milestone payments upon the completion
of development and marketing milestones by Lee's Pharm and to receive royalty payments of between 12-25% of net sales of
NOV-205 and NOV-002, as applicable, in the Chinese Territory and receive royalty payments of 12-15% of net sales of NOV-205 in
the Chinese Territory. The agreement expires upon the expiration of the last patent covering any of the licensed products, or twelve
years from the date of the first commercial sale in China, whichever occurs later.
During 2009, Novelos entered into a collaboration agreement
(the "Collaboration Agreement") with Mundipharma International Corporation Limited ("Mundipharma") to develop,
manufacture and commercialize, on an exclusive basis, Licensed Products (as defined in the Collaboration Agreement), including
NOV-002, in Europe (other than the Russian Territory), Asia (other than the Chinese Territory) and Australia (collectively referred
to as the "Mundipharma Territory").  Mundipharma is an independent associated company of Purdue Pharma, L.P. ("Purdue"). 
The Collaboration Agreement provides for Mundipharma to pay the Company royalties and fixed milestone payments based on sales and
commercial launches in the licensed territories.  For countries in which patents are held, the Collaboration Agreement expires
on a country-by-country basis within the Mundipharma Territory on the earlier of (1) expiration of the last applicable Novelos
patent within the country or (2) the determination that any patents within the country are invalid, obvious or otherwise unenforceable. 
For countries in which no patents are held, the Collaboration Agreement expires the earlier of 15 years from its effective date
or upon generic product competition in the country resulting in a 20% drop in Mundipharma's market share.  The Company
may terminate the Collaboration Agreement upon breach or default by Mundipharma.  Mundipharma may terminate the Collaboration
Agreement upon breach or default, filing of voluntary or involuntary bankruptcy by Novelos, the termination of certain agreements
with companies associated with the originators of the licensed technology, or 30-day notice for no reason.
The Company has suspended development of the products covered
by the collaboration agreements described above. The Company does not anticipate that the collaboration agreements will have a
material effect on its future results of operations, cash flows, and financial position.
F-
15
7. CONVERTIBLE DEBT
On January 25, 2010, Cellectar issued nine convertible promissory
notes ("Convertible Notes") in an aggregate principal amount of $2,720,985.  The Convertible Notes provided for
interest of 12% compounded annually with a maturity date of the earlier of (i) the date on which Cellectar's cash reserves
fall below $250,000 or (ii) January 20, 2011.  Upon an event of default, as defined, the interest rate increased by 10% to
22%.  The outstanding principal balance, together with any unpaid interest, was convertible immediately, by the lenders, into
common stock of the Company at $0.82987 per share (giving effect to the Exchange Ratio).  Furthermore, the Convertible Notes
were subject to an automatic conversion feature equal to 70% of the per share price of a qualified financing, should the Company
complete a qualified financing transaction which raises at least $20,000,000 in proceeds to the Company.  Since the Convertible
Notes were convertible into common stock at date of issuance at a per share price which was less than the estimated fair value
of the Company's common stock at that date, the Convertible Notes contained a beneficial conversion feature ("BCF"). 
The estimated intrinsic value of the BCF of $213,792 was determined as the difference between the conversion price and the estimated
fair value of Cellectar common stock on the date of issuance, multiplied by the 3,278,786 shares of common stock into which the
Convertible Notes were convertible at issuance. This amount was recorded as a component of interest expense on the date of issuance. 
The estimated per-share fair value of Cellectar common stock was determined by management based on a number of factors including
an independent valuation, which was determined to be the best indication of the fair value as of the issuance date of the Convertible
Notes.  Since the conversion price was subject to adjustment in the event of a qualified transaction, as defined, the Convertible
Notes also contain a contingent beneficial conversion feature ("CBCF").  This contingency did not materialize;
therefore no intrinsic value was allocated to the CBCF.  As of December 31, 2011 and 2010, principal of $0 and $2,720,985
was outstanding, respectively, on the Convertible Notes.
As of December 31, 2010, the Convertible Notes were classified
as a long-term obligation on the accompanying December 31, 2010 balance sheet as a result of the conversion of the short-term obligation
through the issuance of equity securities in connection with the Acquisition.
On January 20, 2011, the Convertible Notes matured but remained
unpaid.  Following the maturity and default of the Convertible Notes, the holders of the Convertible Notes agreed that all
of the outstanding Convertible Notes would be automatically converted simultaneous with the completion of an acquisition and financing
(the "Conversion Time"), if completed.  The amount of shares issued upon such conversion would be dependent on
the amount of investment made by the note holders at the Conversion Time and were negotiated based on outstanding principal and
projected accrued interest based on an assumed closing date for the acquisition and financing.  Since the number of shares
to be issued upon conversion could not be determined until the Conversion Time, the Convertible Notes contained a CBCF.  On
April 1, 2011, Cellectar's Board of Directors voted to accept the note holders consent to convert the Convertible Notes into
4,181,535 shares of common stock immediately prior to the Acquisition.  On April 8, 2011, immediately prior to the Acquisition,
the principal and unpaid interest on the Convertible Notes was converted into the agreed total of 4,181,535 shares of common stock. 
Upon conversion of the Convertible Notes, the Company reclassified the aggregate outstanding principal and interest totaling $3,184,707
to a component of additional paid-in capital.  The revised conversion terms resulted in the issuance of an additional 343,963
shares of common stock over the 3,837,572 shares of common stock that would have been issued if the unpaid principal and accrued
interest on the Convertible Notes had been converted on that date in accordance with their original terms at the stated conversion
price.  On the date of conversion, the Company determined that the value of these additional shares was $257,973, based on
the $0.75 per share offering price of the common stock sold in the private placement completed concurrently with the Acquisition,
which is the best indication of fair value on the date of conversion.  Since the conversion was not completed until April
8, 2011, the value of the additional shares of $257,973 was recorded as a component of interest expense during the second quarter
of 2011.
8.  LONG-TERM NOTES PAYABLE
On January 11, 2008, Cellectar entered into a loan agreement
with a bank to borrow up to $1,200,000.  The borrowing, evidenced by a note (the "Bank Note"), bore interest at
a rate of 7.01% per annum, could be prepaid without penalty and was payable in 48 monthly principal and interest payments of $20,520
with a balloon payment of any remaining unpaid principal and interest on March 28, 2012.  In the event of default of payment,
Cellectar would be required to pay a late charge equal to 5% of the delinquent payment and the interest rate on the unpaid principal
would be increased by 3%.  The Bank Note was collateralized by substantially all assets of Cellectar and a deposit account
in the amount of $500,000.  As of December 31, 2010, the cash collateral is classified as restricted cash in the accompanying
balance sheet.   On April 8, 2011, immediately prior to the Acquisition, Cellectar paid approximately $627,000 in full
settlement of the Bank Note. The payment was made in order to avoid an event of default that would have occurred as a result of
the change of control that occurred at the time of the Acquisition. As of December 31, 2011 and 2010, $0 and $470,941 are classified
as a long-term note payable in the accompanying balance sheets, respectively.
F-
16
On September 15, 2010, Cellectar entered into certain loan agreements
with the Wisconsin Department of Commerce ("WDOC Notes") to borrow a total of $450,000.  The WDOC Notes bear interest
at 2% per annum beginning on the date of disbursement and allow for the deferral of interest and principal payments until April
30, 2015.  In the event of default of payment, interest on the delinquent payment is payable at a rate equal to 12% per annum. 
Monthly payments of $20,665 for principal and interest shall commence on May 1, 2015 and continue for 23 equal installments with
the final installment of any remaining unpaid principal and interest due on April 1, 2017.  As of December 31, 2011 and 2010,
$450,000 is classified as a long-term note payable in the accompanying balance sheets.
Long-term notes payable consists of the following as of December
31:
2011
2010
Bank Note, 7.01% interest
$
—
$
675,743
Wisconsin Department of Commerce,  2% interest
450,000
450,000
450,000
1,125,743
Less current portion
—
(204,802
)
Long-term note payable, net of current portion
$
450,000
$
920,941
As of December 31, 2011, long-term notes payable matures as
follows:
Years ended December 31,
2012
$
—
2013
—
2014
—
2015
119,957
2016
243,591
Thereafter
86,452
$
450,000
For the years ended December 31, 2011 and 2010, the Company
incurred approximately $17,500 and $62,000 of interest expense related to these long-term notes payable.
No payments were made on long-term obligations in the nine months
ended September 30, 2012. The Company incurred approximately $7,000 of interest expense related to the long-term notes payable.
As of September 30, 2012, the outstanding principal on the WDOC
Notes of $450,000 is classified as long-term debt outstanding in the accompanying balance sheet.
9. STOCKHOLDERS' EQUITY
On January 1, 2008, Cellectar converted from a Wisconsin limited
liability company to a Wisconsin corporation (the "Conversion"). Each issued and outstanding unit of equity in the
limited liability company immediately prior to the Conversion was converted into one issued and outstanding share of Cellectar
common stock and each unexercised unit option outstanding immediately prior to the Conversion was converted into an option to acquire
the same number of shares of the corporation's common stock.  For the purpose of presentation in these financial statements,
all amounts and disclosures related to equity issuances prior to the Acquisition have been retroactively restated by applying the
Exchange Ratio in order to reflect the capital structure of Novelos and therefore the issuance of Novelos common stock, rather
than member units in the limited liability company or common stock of Cellectar, as applicable.
From inception until the Acquisition on April 8, 2011, Cellectar
issued 12,559,218 shares of common stock for net proceeds of approximately $21,710,000.
April 2011 Private Placement
Concurrently with and conditioned upon the execution of the
Merger Agreement, the Company entered into a securities purchase agreement with certain accredited investors under which the Company
sold an aggregate of 6,846,537 units, each unit consisting of one share of its common stock and a warrant to purchase one share
of its common stock, at a price of $0.75 per unit, for gross proceeds of approximately $5,135,000 (the "April Private Placement"). 
The warrants have an exercise price of $0.75 and expire on March 31, 2016.  The warrant exercise price and/or the common stock
issuable pursuant to such warrant will be subject to adjustment only for stock dividends, stock splits or similar capital reorganizations
so that the rights of the warrant holders after such event will be equivalent to the rights of warrant holders prior to such event. 
The relative fair value of the warrants issued to the investors was $2,124,286 at issuance and has been included as a component
of stockholders' equity.  The Company uses the Black-Scholes option pricing model to value warrants and applies assumptions
that consider, among other variables, the fair value of the underlying stock, risk-free interest rate, volatility, expected life
and dividend rates in estimating fair value for the warrants. Assumptions used are generally consistent with those disclosed for
stock-based compensation (see Note 10).
F-
17
The securities purchase agreement includes certain registration
requirements which were subsequently extended by the consent of purchasers holding a majority of shares of the Company's
common stock issued in the April Private Placement, which holders constituted the requisite holders, as defined. The Company was
required to file with the SEC a registration statement covering the resale of the shares of common stock and the shares of common
stock underlying the warrants issued pursuant to the securities purchase agreement that are not otherwise saleable under an available
exemption from registration requirements.  The Company was also required to use commercially reasonable efforts to have the
registration statement declared effective by July 28, 2012 and is required to keep the registration statement continuously effective
under the Securities Act of 1933, as amended (the "Securities Act"), until the earlier of the date when all the registrable
securities covered by the registration statement have been sold or such time as all the registrable securities covered by the registration
statement can be sold under Rule 144 without any volume limitations. The Company filed a registration statement with the SEC on
July 17, 2012 covering the resale of 4,000,000 shares of common stock pursuant to the registration requirements and this registration
statement was declared effective on July 26, 2012.
The Company will be allowed to suspend the use of the registration
statement for not more than 30 consecutive days on not more than two occasions in any 12-month period (the "Allowed Delay"). 
If the Company suspends the use of the registration for longer than the Allowed Delay, it may be required to pay to the purchasers
liquidated damages equal to 1.5% per month (pro-rated on a daily basis for any period of less than a full month) of the aggregate
purchase price of the units purchased until the use of the registration statement is no longer suspended, not to exceed 5% of the
aggregate purchase price.  The Company has also granted piggy-back registration rights with respect to any shares of common
stock that it is required to exclude from the registration statement as a condition of its effectiveness, and has also agreed to
file further registration statements with respect to any such shares six months after the effective date of the initial registration
statement. As of December 31, 2011, and through the date of this filing, the Company has not concluded that it is probable that
damages will become due; therefore, no accrual for damages has been recorded.
The Company paid to the placement agent for the financing a
cash fee equal to $200,000 and issued warrants to purchase 192,931 shares of its common stock (having an exercise price of $0.75
and which expire March 31, 2016) in consideration for their advisory services with respect to the financing pursuant to the placement
agency agreement.  The placement agent is entitled to registration rights with respect to the shares of common stock issuable
upon exercise of these warrants.  The cash fee was recorded as a reduction of gross proceeds received.  The estimated
fair value of the warrants issued to the placement agent was $112,096 and was recorded as a component of stockholders' equity.
December 2011 Underwritten Offering
On December 6, 2011, the Company completed an underwritten public
offering of 10,081,667 shares of its common stock and warrants to purchase up to an aggregate of 10,081,667 shares of its common
stock at an exercise price of $0.60 per share, expiring on December 6, 2016, for gross proceeds of $6,049,000 and net proceeds
of $5,298,140 after deducting transaction costs (the "Underwritten Offering"). The warrant exercise price and the common
stock issuable pursuant to such warrant are subject to adjustment only for stock dividends, stock splits and similar capital reorganizations
so that the rights of the warrant holders after such event will be equivalent to the rights of the warrant holders prior to such
event. The relative fair value of the warrants issued to the investors was $2,350,320 at issuance and has been included as a component
of stockholders' equity.  The Company uses the Black-Scholes option pricing model to value warrants and applies assumptions
that consider, among other variables, the fair value of the underlying stock, risk-free interest rate, volatility, expected life
and dividend rates in estimating fair value for the warrants. Assumptions used are generally consistent with those disclosed for
stock-based compensation (see Note 10). The Company paid the underwriter a cash fee of $302,000, which was recorded as a reduction
of the gross proceeds received.
June 2012 Public Offering
On June 13, 2012, pursuant to securities purchase agreements
entered into with investors on June 7, 2012, the Company completed a registered public offering of an aggregate of 5,420,800 shares
of its common stock, warrants to purchase up to an aggregate of 5,420,800 at an exercise price of $1.00 per share, exercisable
for 90 days from issuance (the "Class B Warrants"), and warrants to purchase up to an aggregate of 2,710,400 shares
of its common stock at an exercise price of $1.25 per share, exercisable for five years from issuance, for total gross proceeds
of $5,420,800 and net proceeds of $4,870,978 after deducting transaction costs (the "June Offering"). The warrant exercise
price and the common stock issuable pursuant to such warrants are subject to adjustment only for stock dividends, stock splits
and similar capital reorganizations, in which event the rights of the warrant holders would be adjusted as necessary so that they
would be equivalent to the rights of the warrant holders prior to such event. The relative fair value of the warrants issued to
the investors was $1,994,631 at issuance and has been included as a component of stockholders' equity.  In the June
Offering, the Company paid a cash fee of $379,456 and issued warrants to purchase 271,040 shares of its common stock at an exercise
price of $1.25 per share expiring on June 13, 2017 to the placement agent. The cash fee was recorded as a reduction of the gross
proceeds received. The estimated fair value of the warrants issued to the placement agent was $255,703 and was recorded as a component
of stockholders' equity.
F-
18
On September 10, 2012, the Company amended the terms of the
Class B Warrants with investors who held warrants to purchase 5,255,000 shares of our common stock to extend the expiration date
for the exercise of such warrants until October 11, 2012. An investor who held Class B Warrants to purchase 15,000 shares of our
common stock did not elect to amend their agreement and such warrants expired on September 11, 2012. These warrants had been issued
in connection with the June Offering, had an expiration date of September 11, 2012 and were exercisable at a price of $1.00 per
share. The modification of the expiration date of the warrants resulted in a deemed dividend to warrant holders of $543,359 which
was calculated as the difference between the fair value of the warrants immediately before and after the modification using the
Black-Scholes option pricing model. The deemed dividend is reflected as an adjustment to net loss to arrive at net loss attributable
to common stockholders in the nine months ended September 30, 2012. Since the Company had an accumulated deficit at the time of
the modification, there was no impact to the components of stockholders' equity as a result of the recognition of the deemed
dividend.
During the nine months ended September 30, 2012, Class B Warrants
were exercised for an aggregate of 150,800 shares of common stock and the Company received aggregate cash proceeds of $150,800
in respect of those exercises. Subsequent to September 30, 2012, Class B Warrants were exercised for an aggregate of 937,500 shares
of common stock and the Company received aggregate cash proceeds of $937,500. The balance of the Class B Warrants, exercisable
for up to 4,317,500 shares of common stock, expired (see Note 19).
November Private Placement
See Note 19 for details regarding a private placement of common
stock and warrants that was completed in November 2012.
Legacy Warrants
Outstanding warrants to purchase 315,164 shares of common stock,
originally issued in connection with Novelos equity and debt financings from 2007 through 2010, remained outstanding subsequent
to the Acquisition (Note 4).
Common Stock Warrants
The following table summarizes information with regard to outstanding
warrants to purchase common stock as of December 31, 2011.  There were no outstanding common stock purchase warrants as of
December 31, 2010.
Offering
Number of Shares
Issuable Upon
Exercise of
Outstanding
Warrants
Exercise
Price
Expiration Date
December 6, 2011 Underwritten Offering
10,081,667
$
0.60
December 6, 2016
April 8, 2011 Private Placement
7,039,468
$
0.75
March 31, 2016
Legacy warrants (1)
77,729
$
0.60
July 27, 2015
Legacy warrants
105,040
$
16.065
July 27, 2015
Legacy warrants
91,524
$
99.45-100.98
December 31, 2015
Legacy warrants
8,561
$
191.25
May 2, 2012
Total
17,403,989
(1)  The exercise prices of these warrants are subject
to adjustment for "down-rounds" and have been accounted for as derivative instruments as described in Note 3.
On May 4, 2011, 18,153 shares of common stock were issued in
connection with the cashless exercise of warrants to purchase 27,310 shares of common stock at $0.75 per share.  The Company
reclassified $48,339 from the derivative liability to additional paid-in capital upon the exercise of the warrants. In connection
with the December 2011 Underwritten Offering, 5,000 warrants previously issued to the placement agent were cancelled.
F-
19
The warrant activity during the nine months ended September
30, 2012 was as follows:
The Company issued 23,495 shares of common stock in connection
with the cashless exercise of warrants to purchase50,419 shares of common stock at $0.60 per share expiring on July 27, 2015. The
Company reclassified $43,855 from the derivative liability to additional paid-in capital upon the exercise of the warrants.
The Company issued 374,597 shares of common stock in connection
with the cashless exercise of warrants to purchase 980,657 shares of common stock at $0.75 per share expiring on March 31, 2016.
The Company issued 582,981 shares of common stock in connection
with the cashless exercise of warrants to purchase 833,333 shares of common stock. The warrants had an expiration date of December
6, 2016 and an exercise price of $0.60 per share.
The Company issued 150,800 shares of common stock related to
the exercise of warrants to purchase 150,800 shares of common stock. The warrants had an expiration date of September 11, 2012
and an exercise price of $1.00 per share.
On May 7, 2012, warrants to purchase 8,561 shares of common
stock at $191.25 expired unexercised. On September 11, 2012, warrants to purchase 15,000 shares of common stock at $1.00 per share
expired unexercised.
As of September 30, 2012, 23,767,459 warrants remained outstanding.
Reserved Shares
The following shares were reserved for future issuance upon
exercise of stock options and warrants or conversion of debt:
Nine Months Ended September 30,
(unaudited)
December 31,
2012
2011
2011
2010
Warrants
23,767,459
7,327,322
17,403,989
—
Stock options
4,675,754
3,632,638
4,827,638
769,189
Convertible notes
—
—
—
3,646,370
Total number of shares reserved for future issuance
28,443,213
10,959,960
22,231,627
4,415,559
10.  STOCK-BASED COMPENSATION
Prior to the Acquisition, Cellectar's Board of Directors
determined exercise prices and vesting periods on the date of grant, subject to the provisions of the 2006 Unit Option Plan and
the 2008 Stock Incentive Plan (collectively, the "Cellectar Plans"). Options have been granted at or above the estimated
fair-market value of the common stock at the grant date. Options granted pursuant to the 2006 Cellectar Plan and 2008 Plan generally
would have become fully vested in the event of a business combination whereby the options are not assumed or replaced by the surviving
company, as defined. On March 17, 2011, in contemplation of the Acquisition, Cellectar terminated the remaining options outstanding
granted under the Cellectar Plans and the Cellectar Plans were terminated.
In connection with the Acquisition, the Company assumed options
to purchase 49,159 shares of common stock at exercise prices ranging from $1.53 to $1,072.53.
2006 Novelos Stock Option Plan.
Following the
Acquisition, option grants to directors and employees will be made under the Novelos Therapeutics 2006 Stock Incentive Plan (the
"Plan").  On May 18, 2011, the Board of Directors of the Company approved certain amendments to the Plan to, among
other things, increase the aggregate number of shares of the Company's common stock reserved for issuance under the Plan
(including any shares that have already been issued thereunder), to 7,000,000 and remove the 750,000 share annual individual limitation
on grants under the Plan.  On June 30, 2011, the Company's stockholders approved those amendments. On August 23, 2012,
the Board of Directors adopted an amendment to the Plan to increase the aggregate number of common stock reserved for issuance
under the Plan to 10,000,000, which was approved by the Company's stockholders on October 25, 2012 (see Note 19).
F-
20
A total of 7,000,000 shares of common stock are reserved for
issuance under the Plan for grants of incentive or nonqualified stock options, rights to purchase restricted and unrestricted shares
of common stock, stock appreciation rights and performance share grants.  A committee of the board of directors determines
exercise prices, vesting periods and any performance requirements on the date of grant, subject to the provisions of the Plan. 
Options are granted at or above the fair market value of the common stock at the grant date and expire on the tenth anniversary
of the grant date.  Vesting periods are generally between one and four years.  Options granted pursuant to the Plan generally
will become fully vested upon a termination event occurring within one year following a change in control, as defined.  A
termination event is defined as either termination of employment or services other than for cause or constructive termination of
employees or consultants resulting from a significant reduction in either the nature or scope of duties and responsibilities, a
reduction in compensation or a required relocation.  As of December 31, 2011, there are an aggregate of 2,281,112 shares available
for future grants under the Plan.
Accounting for Stock-Based Compensation
The Company uses the Black-Scholes option-pricing model to calculate
the grant-date fair value of stock option awards. The resulting compensation expense, net of expected forfeitures, for non-performance
based awards is recognized on a straight-line basis over the service period of the award, which is generally three years for stock
options. For stock options with performance-based vesting provisions, recognition of compensation expense, net of expected forfeitures,
commences if and when the achievement of the performance criteria is deemed probable. The compensation expense, net of expected
forfeitures, for performance-based stock options is recognized over the relevant performance period. Evaluation of the probability
of meeting performance targets is evaluated at the end of each reporting period. Non-employee stock-based compensation is accounted
for in accordance with the guidance of FASB ASC Topic 505,
Equity.
As such, the Company recognizes expense based on
the estimated fair value of options granted to non-employees over their vesting period, which is generally the period during which
services are rendered and deemed completed by such non-employees.
The following table summarizes amounts charged to expense for
stock-based compensation related to employee and director stock option grants and stock-based compensation recorded in connection
with stock options granted to non-employee consultants:
Nine Months Ended
September 30,
(unaudited)
Year Ended
December 31,
Cumulative
Development-
Stage Period
from
November 7,
2002 through
December 31,
2012
2011
2011
2010
2011
Employee and director stock option grants:
Research and development
$
234,816
$
121,393
$
190,172
$
61,791
$
488,558
General and administrative
747,808
349,781
570,884
291,549
2,148,187
982,624
471,174
761,056
353,340
2,636,745
Non-employee consultant stock option grants:
Research and development
85,265
46,851
36,157
—
36,157
General and administrative
92,022
137,631
110,247
—
181,971
177,287
184,482
146,404
—
218,128
Total stock-based compensation
$
1,159,911
$
655,656
$
907,460
$
353,340
$
2,854,873
On July 14, 2010, the expiration date of vested options held
by a former employee was extended until July 8, 2015.  The extension constituted a modification to the terms of the award
and additional stock-based compensation was measured as the excess of the fair value of the modified award over the fair value
of the original award immediately before the modification.  Accordingly, incremental stock-based compensation expense of approximately $20,000
was recorded in connection with the modification.
The Company granted 5,026,500 stock options to employees and
non-employees during the twelve months ended December 31, 2011 under the Plan, of which 670,200 were performance-based awards.
As of December 31, 2011, 335,100 of these performance-based awards were outstanding and 335,100 had been forfeited and as of September
30, 2012, 167,550 of these performance-based awards were outstanding and 502,650 had been expired. No compensation expense has
been recognized related to the performance-based awards as the Company does not believe that it is probable that the performance
targets will be met. The Company issued options to purchase a total of 200,000 shares of common stock to non-employees outside
of any formalized plan, but 100,000 were forfeited as a result of the cancellation and replacement as described below.  Exercise
prices for all grants made in the during the twelve months ended December 31, 2011 were equal to the market value of the Company's
common stock on the date of grant.
F-
21
On May 18, 2011, the Company cancelled 100,000 options originally
granted on April 25, 2011 with an exercise price of $3.00 per share and issued 100,000 replacement stock option awards with an
exercise price of $1.40.  The cancellation and replacement constituted a modification to the terms of the award and additional
stock-based compensation was measured as the excess of the fair value of the modified award over the fair value of the original
award immediately before the modification.  Accordingly, incremental stock-based compensation expense of $4,494 was recorded
in connection with the modification.
The Company granted 24,000 stock options to employees during
the nine months ended September 30, 2012 under the Plan. The exercise price for the grants made during the nine months ended September
30, 2012 were equal to the market value of the Company's common stock on the date of grant.
Assumptions Used In Determining Fair Value
Valuation and amortization method
. The fair value of
each stock award is estimated on the grant date using the Black-Scholes option-pricing model.  The estimated fair value of
employee stock options is amortized to expense using the straight-line method over the vesting period. The estimated fair value
of the non-employee options is amortized to expense over the period during which a non-employee is required to provide services
for the award (usually the vesting period).
Volatility.
Cellectar estimated volatility based on a
review of volatility estimates of publicly held drug development companies in a similar stage of development. Subsequent to the
Acquisition, the Company estimates volatility based on an average of (1) the Company's historical volatility since its common
stock has been publicly traded and (2) review of volatility estimates of publicly held drug development companies with similar
market capitalizations.
Risk-free interest rate
. The risk-free interest rate
is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term assumption.
Expected term
. The expected term of stock options granted
is based on an estimate of when options will be exercised in the future. The Company applied the simplified method of estimating
the expected term of the options, as described in the SEC's Staff Accounting Bulletins 107 and 110, as the Company has had
a significant change in its business operations as result of the Acquisition and the historical experience is not indicative of
the expected behavior in the future. The expected term, calculated under the simplified method, is applied to groups of stock options
that have similar contractual terms. Using this method, the expected term is determined using the average of the vesting period
and the contractual life of the stock options granted. The Company applied the simplified method to non-employees who have a truncation
of term based on termination of service and utilizes the contractual life of the stock options granted for those non-employee grants
which do not have a truncation of service.
Forfeitures.
Stock-based compensation expense
is recorded only for those awards that are expected to vest.  FASB ASC Topic 718 requires forfeitures to be estimated at the
time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.  The term
"forfeitures" is distinct from "cancellations" or "expirations" and represents only the unvested
portion of the surrendered option.  An annual forfeiture rate of 0% was applied to all unvested options as of December 31,
2010 as Cellectar had experienced very few forfeitures through 2009 and there was insufficient history to develop an accurate estimate
of future forfeitures.  An annual forfeiture rate of 0% was applied to all unvested options as of December 31, 2011 as the
historical experience of forfeitures is not representative of expected future forfeiture rates as a result of the significant changes
in the business operations as a result of the Acquisition. Additionally, the majority of the 2011 forfeitures were related to unmet
milestones on performance-based options that are not representative of the expected future forfeiture rates for the Company's
service-based awards. This analysis will be re-evaluated semi-annually and the forfeiture rate will be adjusted as necessary. 
Ultimately, the actual expense recognized over the vesting period will be for only those shares that vest.
The following table summarizes weighted-average values and assumptions
used for options granted to employees, directors and consultants in the periods indicated:
Nine Months
Ended September
30, 2012
Nine Months
Ended
September 30,
2011
Twelve Months
Ended
December 31, 2011
Volatility
115
%
110
%
110 - 115
%
Risk-free interest rate
0.925
%
1.84%-3.17
%
0.89% – 3.17
%
Expected life (years)
6.0
5.5 – 6.25
5.5 – 6.25
Dividend
0
%
0
%
0
%
Weighted-average exercise price
$
1.00
$
1.45
$
1.16
Weighted-average grant-date fair value
$
0.85
$
1.22
$
0.98
F-
22
Stock Option Activity
A summary of stock option activity under stock option plans
is as follows:
Number of
Shares
Issuable Upon
Exercise of
Outstanding
Options
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contracted
Term in
Years
Aggregate
Intrinsic
Value
Outstanding at November 7, 2002
—
Granted
922,654
$
2.52
Forfeited
(12,653
)
$
3.04
Outstanding at January 1, 2009
910,001
$
2.86
Granted
90,929
$
0.76
Forfeited
(9,194
)
$
2.72
Outstanding at December 31, 2009
991,736
$
2.68
Canceled
(222,547
)
$
2.63
Outstanding at December 31, 2010
769,189
$
2.69
Canceled
(769,189
)
$
2.69
Options acquired in connection with a business combination
49,159
$
100.52
Granted
5,226,500
$
1.16
Canceled
(9,992
)
$
115.16
Forfeited
(438,029
)
$
2.44
Outstanding at December 31, 2011
4,827,638
$
1.82
Granted
24,000
$
1.00
Forfeited
(175,884
)
$
1.36
Outstanding at September 30, 2012 (unaudited)
4,675,754
$
1.82
Vested, December 31, 2010
743,450
$
2.69
4.07
$
—
Unvested, December 31, 2010
25,739
$
2.62
5.08
$
—
Exercisable at December 31, 2010
743,450
$
2.69
4.07
$
—
Vested, December 31, 2011
636,634
$
6.48
9.17
$
—
Unvested, December 31, 2011
4,191,004
$
1.12
9.59
$
—
Exercisable at December 31, 2011
636,634
$
6.48
9.17
$
—
Vested, September 30, 2012 (unaudited)
1,954,046
$
2.92
8.69
$
252,062
Unvested, September 30, 2012 (unaudited)
2,721,708
$
1.06
8.87
$
620,198
Exercisable at September 30, 2012 (unaudited)
1,954,046
$
2.92
8.69
$
252,062
There were no stock options granted during the twelve months
ended December 31, 2010.
The aggregate intrinsic value of options outstanding is calculated
based on the positive difference between the estimated per-share fair value of common stock at the end of the respective period
and the exercise price of the underlying options. At December 31, 2011 and 2010, the estimated fair-market value of common
stock was less than the exercise price of the underlying options, as such, the aggregate intrinsic value is $0.  There have
been no option exercises to date. Shares of common stock issued upon the exercise of options are from authorized but unissued shares.
F-
23
The weighted-average grant-date fair value of options granted
during the year ended December 31, 2011 and for the period from November 7, 2002 to December 31, 2011 was $0.98 and $1.28, respectively. 
There were no options granted during the year ended December 31, 2010.  The total fair value of shares vested during December
31, 2011 and 2010 and for the period November 7, 2002 (date of inception) to December 31, 2011 was $756,400, $199,600 and $2,806,400,
respectively.   The weighted-average grant-date fair value of vested and unvested options outstanding at December 31,
2011 and 2010 was $1.31 and $0.89 and $2.01 and $1.91, respectively.
As of December 31, 2010, there was approximately $58,000 of
total unrecognized compensation cost, all of which was attributable to unvested stock-based compensation arrangements related to
employees, which was recognized in the twelve months ended December 31, 2011.
On March 4, 2011, in contemplation of the Acquisition and in
accordance with terms of the applicable option agreements, Cellectar accelerated the vesting on all outstanding and unvested options
at that date and notified all option holders that any unexercised options as of March 17, 2011 would then be terminated. 
On March 17, 2011, Cellectar terminated all outstanding options.  The remaining unamortized compensation expense of $58,000
was recorded related to the acceleration of outstanding options in the quarter ended March 31, 2011.  No additional compensation
expense was recorded related to the acceleration of unvested shares as the acceleration did not represent a modification to the
original terms of the options.
As of December 31, 2011, there was $2,956,117 of total unrecognized
compensation cost related to unvested stock-based compensation arrangements.  Of this total amount, the Company expects to
recognize $1,321,168, $1,051,631, $507,630 and $75,688 during 2012, 2013, 2014 and 2015, respectively.  The Company expects
3,855,904 in unvested options to vest in the future.
As of September 30, 2012, there was $2,007,878 of total unrecognized
compensation cost related to unvested stock-based compensation arrangements.  Of this total amount, the Company expects to
recognize $332,937, $1,052,094, $512,204 and $110,643 during 2012, 2013, 2014 and 2015, respectively.  The Company expects
2,554,158 in unvested options, excluding performance-based awards, to vest in the future.  The weighted-average grant-date
fair value of vested and unvested options outstanding at September 30, 2012 was $1.04 and $0.87, respectively.
11.  INCOME TAXES
2011
2010
Tax provision (benefit)
Current
Federal
$
—
$
—
State
—
—
Total current
—
—
Deferred
Federal
(944,333
)
(1,592,000
)
State
(161,963
)
(290,000
)
Total deferred
(1,106,296
)
(1,882,000
)
Change in valuation
1,106,296
1,882,000
Total
$
—
$
—
F-
24
Deferred tax assets consisted of the following at December 31:
2011
2010
Deferred tax assets
Federal net operating loss
$
19,447,371
$
6,116,804
Federal research and development tax credit carryforwards
1,956,146
390,600
State net operating loss
2,444,816
814,492
State research and development tax credit carryforwards
597,608
220,738
Capitalized research and development expenses
13,007,013
—
Capital loss carryforward (expires beginning in 2012)
340,000
—
Stock-based compensation expense
333,206
552,859
Intangible assets
555,198
—
Charitable contribution carryforwards
44,370
49,725
Accrued liabilities
35,314
25,327
Total deferred tax assets
38,761,042
8,170,545
Deferred tax liabilities
Depreciable assets
(346,870
)
(434,056
)
Total deferred tax liabilities
(346,870
)
(434,056
)
Net deferred tax assets
38,414,172
7,736,489
Less valuation allowance
(38,414,172
)
(7,736,489
)
Total deferred tax assets
$
—
$
—
As of December 31, 2011, the Company had federal and state
net operating loss carryforwards ("NOLs") of approximately $57,198,000 and $46,533,000 respectively, which expire beginning
in 2031 and 2025, respectively.  In addition, the Company has federal and state research and development and investment tax
credits of approximately $1,956,000 and $905,000, respectively.  The amount of NOLs which may be utilized annually in future
periods will be limited pursuant to Section 382 of the Internal Revenue Code as a result of substantial changes in the Company's
ownership that have occurred or that may occur in the future.  The Company has not quantified the amount of such limitations.
Because of the Company's limited operating history, continuing
losses and uncertainty associated with the utilization of the NOLs in the future, management has provided a full allowance against
the gross deferred tax asset.
The Company did not have unrecognized tax benefits or accrued
interest and penalties at any time during the years ended December 31, 2011 or 2010, and does not anticipate having unrecognized
tax benefits over the next twelve months.  The Company is subject to audit by the IRS and state taxing authorities for tax
periods commencing January 1, 2008. Additionally, the Company may be subject to examination by the IRS for years beginning prior
to January 1, 2008 as a result of its NOLs. However, any adjustment related to these periods would be limited to the amount of
the NOL generated in the year(s) under examination.
For the nine months ended September 30, 2012, the federal and
state NOLs increased by approximately $6,640,000 as a result of the loss recorded.
12.   NET LOSS PER SHARE
Basic net loss per share is computed by dividing net loss by
the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by
dividing net loss, as adjusted, by the sum of the weighted average number of shares of common stock and the dilutive potential
common stock equivalents then outstanding.  Potential common stock equivalents consist of stock options and convertible debt. 
Since there is a net loss attributable to common stockholders for the years ended December 31, 2011 and 2010, the inclusion of
common stock equivalents in the computation for those periods would be antidilutive. Accordingly, basic and diluted net loss per
share is the same for all periods presented.
The following potentially dilutive securities have been excluded
from the computation of diluted net loss per share since their inclusion would be antidilutive:
Nine Months Ended September 30,
(unaudited)
Twelve Months Ended
December 31,
Cumulative
Development-
Stage Period
from November
7, 2002
(inception)
through
December 31,
2012
2011
2011
2010
2011
Convertible debt
—
—
—
3,646,370
—
Warrants
23,767,459
7,327,322
17,403,989
—
17,403,989
Stock options
4,675,754
3,632,638
4,827,638
769,189
4,827,638
F-
25
13.  COMMITMENTS
Real Property Leases
On September 5, 2007, Cellectar entered into a 36-month lease
for office and manufacturing space, commencing September 15, 2007.  The lease provides for the option to extend the lease
under its current terms for seven additional two-year terms.  Rent is $8,050 per month for the first year and then escalates
by 3% per year for the duration of the term including any lease extension terms.  The lease also requires the payment of monthly
rent of $1,140 for approximately 3,400 square feet of expansion space.  The monthly rent for the expansion space is fixed
until such time as the expansion space is occupied at which time the rent would increase to the current per square foot rate in
effect under the original lease terms.  The Company is responsible for certain building-related costs such as property taxes,
insurance, and repairs and maintenance.  Rent expense is recognized on a straight-line basis and accordingly the difference
between the recorded rent expense and the actual cash payments has been recorded as deferred rent as of each balance sheet dates. 
Due to the significant value of leasehold improvements purchased during the initial 3-year lease term and the economic penalty
for not extending the building lease, straight-line rent expense and the associated deferred rent has been calculated over 17 years,
which represents the full term of the lease, including all extensions.
The Company is required to remove certain alterations, additions
and improvements upon termination of the lease that altered a portion of the rentable space.  In no event shall the cost of
such removal, at commercially reasonable rates, paid by the Company exceed $55,000 ("Capped Amount"). Any amount in
excess of the Capped Amount shall be the obligation of the landlord.  The Company is required to maintain a certificate of
deposit equal to the Capped Amount during the term of the lease, which amount is shown as restricted cash on the accompanying balance
sheets.
The lease has been extended, in accordance with its terms, through
September 14, 2014. Future minimum lease payments under this non-cancelable lease are approximately as follows:
Years ended December 31,
2012
$
126,000
2013
123,000
2014
94,000
2015
—
Thereafter
—
$
343,000
The Company also leases office space in Newton, MA, which has
a term that is month-to-month and requires monthly rental payments of $5,300.
Rent expense was approximately $170,000 and $143,000 for the
nine months ended September 30, 2012 and 2011, respectively and $197,000 and $159,000 for the years ended December 31, 2011 and
2010, respectively and approximately $1,141,000 from inception to December 31, 2011.
Equipment Lease
Certain equipment is leased under a capital lease.  The
lease agreement requires monthly principal and interest payments of $217 and expires on September 3, 2014.  The outstanding
obligation is being amortized using a 7% interest rate based on comparable borrowing rates.
F-
26
The following table provides the estimated future minimum rental
payments under all capital leases together with the present value of the net minimum lease payments as of December 31, 2011:
Minimum
lease
payments
Less interest
Present value
of net
minimum
lease
payments
2012
$
2,608
$
373
$
2,235
2013
2,608
211
2,397
2014
1,739
45
1,694
$
6,955
$
629
$
6,326
The equipment recorded under capitalized leases is included
in fixed assets as of December 31:
2011
2010
Office equipment
$
10,973
$
10,973
Less accumulated amortization
(5,123
)
(2,928
)
$
5,850
$
8,045
14.  CONTINGENCIES
Litigation
The Company is party to certain legal matters that existed with
Novelos prior to the Acquisition. The following summarizes the status of those matters.
Class Action
A putative federal securities class action complaint was filed
on March 5, 2010 in the United States District Court for the District of Massachusetts by an alleged shareholder of Novelos, on
behalf of himself and all others who purchased or otherwise acquired Novelos common stock in the period between December 14, 2009
and February 24, 2010, against Novelos and its President and Chief Executive Officer, Harry S. Palmin.  On October 1, 2010,
the court appointed lead plaintiffs (Boris Urman and Ramona McDonald) and appointed lead plaintiffs' counsel.  On October
22, 2010, an amended complaint was filed.  The amended complaint claims, among other things, that Novelos violated Section
10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder in connection with alleged misleading
disclosures related to the progress of the Phase 3 clinical trial of NOV-002 for non-small cell lung cancer.  On December
6, 2010, the defendants filed a motion to dismiss the complaint with prejudice.  On January 20, 2011, the plaintiffs filed
their opposition to our motion and on March 3, 2011, the defendants filed their response to the opposition. On June 23, 2011, the
motion to dismiss was granted and the case was dismissed without prejudice.  Because the dismissal was without prejudice,
the plaintiffs could reinstitute the proceeding by filing an amended complaint.  On August 5, 2011, the plaintiffs
filed a second amended complaint realleging that the defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 in connection
with alleged misleading disclosures related to the Phase 3 clinical trial for NOV-002 in non-small cell lung cancer. On September
9, 2011, the defendants filed a motion to dismiss the second amended complaint. The plaintiffs' opposition to the motion was
filed on October 14, 2011 and the defendants filed a reply brief on November 4, 2011. On June 11, 2012, the second amended
complaint was dismissed with prejudice. The plaintiffs did not file a notice of appeal prior to the expiration of the deadline
for such filing on July 13, 2012.
BAM Dispute
From its inception through 2010, Novelos was
primarily engaged in the development of certain oxidized glutathione-based compounds for application as therapies for disease,
particularly cancer. These compounds were originally developed in Russia and in June 2000, Novelos acquired commercial rights from
the Russian company ("ZAO BAM") which owned the compounds and related Russian patents. In April 2005, Novelos acquired
worldwide rights to the compounds (except for the Russian Federation) in connection with undertaking extensive development activities
in an attempt to secure US Food and Drug Administration ("FDA") approval of the compounds as therapies. These development
activities culminated in early 2010 in an unsuccessful Phase 3 clinical trial of an oxidized glutathione compound (NOV-002) as
a therapy for non-small cell lung cancer. After the disclosure of the negative outcome of the Phase 3 clinical trial in 2010, ZAO
BAM claimed that Novelos modified the chemical composition of NOV-002 without prior notice to or approval from ZAO BAM, constituting
a material breach of the June 2000 technology and assignment agreement. In September 2010, Novelos filed a complaint in Massachusetts
Superior Court seeking a declaratory judgment by the court that the June 2000 agreement has been entirely superseded by the April
2005 agreement and that the obligations of the June 2000 agreement have been performed and fully satisfied. ZAO BAM answered the
complaint and alleged counterclaims. In August 2011, Novelos filed a motion for judgment on the pleadings as to the declaratory
judgment count and all counts of ZAO BAM's amended counterclaims. On October 17, 2011, the court ruled in favor of Novelos
on each of the declaratory judgment claims and dismissed all counts of ZAO BAM's counterclaim. Judgment in favor of Novelos
was entered on October 20, 2011. On November 14, 2011 ZAO BAM filed a notice of appeal.
F-
27
We do not anticipate that these litigation contingencies will
have a material impact on the Company's future financial position, results of operations or cash flows.
15.  EMPLOYEE RETIREMENT PLAN
On January 1, 2009, Cellectar adopted a Safe Harbor defined
contribution plan under Section 401(k) of the Internal Revenue Code which covered eligible employees who meet minimum age requirements
and allowed participants to contribute a portion of their annual compensation on a pre-tax basis.  Cellectar contributed 3%
of each participant's compensation.  Contributions made for the year ended December 31, 2010 was $23,000. The plan was
canceled effective August 30, 2010.
Following the Acquisition, the Company has a defined contribution
plan under Section 401(k) of the Internal Revenue Code which allows eligible employees who meet minimum age requirements to contribute
a portion of their annual compensation on a pre-tax basis.  The Company has not made any matching contributions under this
plan.
16.  RELATED PARTY TRANSACTIONS
Jamey Weichert, the Company's Chief Scientific Officer
and principal founder of Cellectar, and a director and shareholder of the Company, is a faculty member at the University of Wisconsin-Madison
("UW").
During the year ended December 31, 2011, the Company made contributions
totaling $206,500 to UW, for use towards unrestricted research activities.  No payments were made to UW during the year ended
December 31, 2010.
During the nine months ended September 30, 2012, the Company
made contributions to UW totaling $206,500 for use towards unrestricted research activities and paid UW $144,044 for costs associated
with clinical trial agreements. The Company made contributions to the UW of $125,000 during the nine months ended September 30,
2011.
17.  SUPPLEMENTAL PRO FORMA INFORMATION
The table below summarizes net loss for the periods shown
as though the Acquisition occurred as of January 1, 2010:
For the Twelve Months Ended December 31,
2011
2010
Net loss
$
(7,256,438
)
$
(1,704,966
)
The pro forma net loss has been adjusted for the following:
1)
Elimination of $165,000, and $361,000 of interest expense for the twelve months ended December 31, 2011 and 2010, respectively; such amounts relate to interest accrued on the Convertible Notes which were converted immediately prior to the Acquisition (see Note 7) and the Bank Note which was paid in full settlement of the note immediately prior to the Acquisition (see Note 8).
2)
Recognition of an additional beneficial conversion feature ("BCF") of $463,000 in the year ended December 31, 2010 and the elimination of BCF of $258,000 in the year ended December 31, 2011 in connection with the conversion of the Convertible Notes, which is assumed to have occurred on January 1, 2010 for the purpose of pro forma presentation (see Note 7).
3)
Elimination of Acquisition costs incurred during the year ended December 31, 2011 and 2010, which are assumed to have been incurred prior to January 1, 2010 for the purpose of presentation in the pro forma statements of operations.
4)
Elimination of $450,000 of investment banking fees incurred upon the consummation of the Acquisition on April 8, 2011 from the twelve months ended December 31, 2011.
5)
Elimination of dividends and deemed dividends on Novelos' preferred convertible stock, which is assumed to have been exchanged for common stock at January 1, 2010 in order to reflect the post-acquisition capital structure for the purpose of pro forma presentation.
6)
Elimination of Novelos historical revenue related to the amortization of deferred revenue that was determined to have no fair value in purchase accounting.
7)
Elimination of liquidated damages accrued in 2010 related to Novelos' convertible preferred stock. The liquidated damages are assumed not to have accrued as the preferred stock is assumed to have been exchanged for common stock at January 1, 2010 in order to reflect the post-acquisition capital structure for the purpose of pro forma presentation.
F-
28
18. PROPOSED REVERSE STOCK SPLIT
On June 30, 2011, the Company held a special meeting of stockholders. 
At the meeting, the stockholders approved, among other things, separate amendments to the certificate of incorporation that would
effect a reverse split of the Company's common stock within a range of 1:2 to 1:10, and authorized the Company's board
of directors to determine the ratio at which the reverse split will be effected by filing the appropriate amendment to the certificate
of incorporation, or to determine not to proceed with the reverse split at all.  The purpose of the proposed reverse split
was to increase the price per share of the Company's common stock in order to exceed the minimum price per share required
to secure a listing on a national securities exchange and was contemplated in connection with the Company's underwritten
public offering that closed on December 6, 2011 (see Note 9). The Company did not obtain the NASDAQ listing and did not effect
the reverse split in connection with the offering. While the Company may effect a reverse split at a later date, the Company has
no immediate plans to proceed with the reverse split or a listing on a national securities exchange.
19. SUBSEQUENT EVENTS
November Private Placement
On November 2, 2012, the Company completed a private
placement of 2,000,000 shares of its common stock, warrants to purchase up to an aggregate of 2,000,000 shares of common
stock at an exercise price of $1.00 per share, exercisable for 90 days from issuance, and warrants to purchase up to an
aggregate of 1,000,000 shares of its common stock at an exercise price of $1.25 per share, exercisable for five years from
issuance, for total gross proceeds of $2,000,000 (the "November Private Placement"). The warrant exercise price
and the common stock issuable pursuant to such warrants are subject to adjustment only for stock dividends, stock spilts and
similar capital reorganizations, in which event the rights of the warrant holders would be adjusted as necessary so that they
would be equivalent to the rights of the warrant holders prior to such event. The proceeds from the November Private
Placement are designated for use towards the construction of a clinical-stage manufacturing facility for I-124-CLR1404
(LIGHT) at the Company's Madison, WI location. The Company estimates that the project will cost a total of
approximately $3,000,000 and, will take approximately one year to complete. The Company anticipates that construction will
commence in late 2012, although the Company has not yet entered into contractual commitments with vendors. The Company may
seek to obtain the additional capital required to complete the project from additional sales of common stock, proceeds from
warrant exercises, or from equipment financing.
Warrant Exercises and Expirations
During
October 2012, warrants were exercised for an aggregate of 937,500 shares of common stock underlying the warrants and
the
Company received cash proceeds of $937,500. The warrants were issued in June 2012, had an amended expiration date of October 11,
2012 and an exercise price of $1.00 per share.
On October 11, 2012, warrants to purchase 4,317,500 shares of
common stock at $1.00 per share expired unexercised.
Stockholder Meeting
On October 25, 2012, the Company held a special meeting in lieu
of annual meeting of stockholders. At the meeting, the stockholders reelected Thomas Rockwell Mackie, James S. Manuso and John
E. Niederhuber as Class I directors and approved an amendment to the 2006 Stock incentive Plan to increase the number of shares
of common stock issuable thereunder from 7,000,000 to 10,000,000.
F-
29
In Humans,
HOT
Targets Cancerous
Tumors - Not Normal Tissue or Bone Marrow
(SPECT/CT imaging of HOT in Phase 1a and
1b clinical trials)
HOT Selectively Targets Cancer Stem Cells
(Fluorescence photomicrographs; Green =
uptake of fluorescent-labeled PLE)
cGMP Radiopharmaceutical Manufacturing Facility
at Our Headquarters in Madison, WI
The images provided above are for
illustrative purposes only and may not be indicative of all results.
The above illustrations do not refer
to products approved by the FDA.
Novelos has not received any revenue
from the sale of its products.
F-
30
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table provides information
regarding the various actual and anticipated expenses (other than placement agent fees) payable by us in connection with the issuance
and distribution of the securities being registered hereby.  All amounts shown are estimates except the Securities and
Exchange Commission registration fee.
Nature of Expense
Amount
SEC registration fee
$
3,410
Accounting fees and expenses
20,000
Legal fees and expenses
75,000
Transfer agent's fees and expenses
3,000
Printing and related fees
15,000
Miscellaneous
5,000
Total
$
121,410
Item 14. Indemnification of Directors and Officers
Section 102(b)(7) of the Delaware General Corporation Law allows
us to adopt a charter provision eliminating or limiting the personal liability of directors to us or our stockholders for breach
of fiduciary duty as directors, but the provision may not eliminate or limit the liability of directors for (a) any breach of the
director's duty of loyalty to us or our stockholders, (b) any acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (c) unlawful payments of dividends or unlawful stock repurchases or redemptions under
Section 174 of the Delaware General Corporation Law or (d) any transaction from which the director derived an improper personal
benefit. Article Seventh of our charter provides that none of our directors shall be personally liable to us or our stockholders
for monetary damages for any breach of fiduciary duty as a director, subject to the limitations imposed by Section 102(b)(7). Article
Seventh also provides that no amendment to or repeal of Article Seventh shall apply to or have any effect on the liability or the
alleged liability of any director with respect to any acts or omissions of such director occurring prior to such amendment or repeal.
A principal effect of Article Seventh is to eliminate or limit the potential liability of our directors for monetary damages arising
from breaches of their duty of care, unless the breach involves one of the four exceptions described in (a) through (d) above.
Section 145 of the Delaware General Corporation Law provides,
in general, that a corporation incorporated under the laws of the State of Delaware, such as us, may indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than
a derivative action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or
agent of another enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. In the case
of a derivative action, a Delaware corporation may indemnify any such person against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation,
except that no indemnification will be made in respect of any claim, issue or matter as to which such person will have been adjudged
to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware or any other
court in which such action was brought determines such person is fairly and reasonably entitled to indemnity for such expenses.
Article Eighth of our amended and restated certificate of incorporation
and Section 5.1 of our bylaws provide that we will indemnify our directors, officers, employees and agents to the extent and in
the manner permitted by the provisions of the Delaware General Corporation Law, as amended from time to time, subject to any permissible
expansion or limitation of such indemnification, as may be set forth in any shareholders' or directors' resolution
or by contract.
57
Item 15. Recent Sales of Unregistered Securities
In the last three years we have sold the following securities
in reliance on, unless otherwise indicated, the exemption under Section 4(2) of the Securities Act of 1933, as amended, as transactions
not involving any public offering.  All share and per share amounts have been adjusted to give effect to the 1-for-153
reverse stock split that occurred immediately prior to the Acquisition.
2012
From October 1, 2012 through present:
On November 2, 2012, pursuant to a securities purchase agreement
dated November 1, 2012 with an institutional investor, we issued 2,000,000 shares of our common stock, warrants to purchase up
to an aggregate of 2,000,000 shares of our common stock at an exercise price of $1.00 per share, exercisable for 90 days from issuance,
and warrants to purchase up to an aggregate of 1,000,000 shares of our common stock at an exercise price of $1.25 per share, exercisable
for five years from issuance, for total gross proceeds of $2,000,000.
From July 1, 2012 through September 30, 2012:
On September 13, 2012, we issued 123,697 shares of common stock
pursuant to the cashless exercise of warrants to purchase 406,451 shares of common stock. The warrants had an expiration date of
March 31, 2016 and an exercise price of $0.75 per share.
From April 1, 2012 through June 30, 2012:
On May 18, 2012, we issued 13,210 shares of common stock upon
the cashless exercise of warrants to purchase 23,109 shares of common stock. The warrants had an expiration date of July 27, 2015
and an exercise price of $0.60 per share.
On May 3, 2012, we issued 181,745 shares of common stock upon
the cashless exercise of warrants to purchase 333,333 shares of common stock. The warrants had an expiration date of March 31,
2016 and an exercise price of $0.75 per share.
On April 30, 2012, we issued 25,000 shares of common stock upon
the cashless exercise of warrants to purchase 40,783 shares of common stock. The warrants had an expiration date of March 31, 2016
and an exercise price of $0.75 per share.
On April 26, 2012, we issued 582,981 shares of common stock
upon the cashless exercise of warrants to purchase 833,333 shares of common stock. The warrants had an expiration date of December
6, 2016 and an exercise price of $0.60 per share.
From January 1, 2012 through March 31, 2012
:
On March 28, 2012, we issued 10,285 shares of our common stock
upon the cashless exercise of warrants to purchase 27,310 shares of common stock.  The warrants had an expiration date
of July 27, 2015 and an exercise price of $0.60 per share.
On March 28, 2012, we issued 44,155 shares of our common stock
upon the cashless exercise of warrants to purchase 200,000 shares of common stock.  The warrants had an expiration date
of March 31, 2016 and an exercise price of $0.75 per share.
2011
From July 1, 2011 through December 31, 2011
:
None.
From April 1, 2011 through June 30, 2011
:
On April 8, 2011, we issued an aggregate of 17,001,596 shares
of our common stock as merger consideration to the former shareholders of Cellectar.
Concurrently with the Acquisition, on April 8, 2011, we entered
into a Securities Purchase Agreement with certain accredited investors under which we sold an aggregate of 6,846,537 units, each
unit consisting of one share of our common stock and a warrant to purchase one share of our common stock, at a price of $0.75 per
unit for gross proceeds of $5,134,903.  The warrants have an exercise price of $0.75 and expire on March 31, 2016.  We
also issued a warrant to purchase 192,931 shares of our common stock for $0.75, expiring March 31, 2016, to the placement agent
in the financing.
58
On May 3, 2011, we issued 18,153 shares of our common stock
in connection with the cashless exercise of warrants to purchase 27,310 shares of common stock at $0.75 per share.
From January 1, 2011 through March 31,
2011:
None.
2010
From October 1, 2010 through December
31, 2010:
On November 30, 2010, we issued 2,228,338
shares of common stock in exchange for all outstanding shares of Series E preferred stock and all outstanding shares of Series
C preferred stock.  The issuance was made pursuant to an exchange agreement between the Company and all holders of its
preferred stock.
From July 1, 2010 through September
30, 2010:
On July 27, 2010, we issued five-year warrants
(the Incentive Warrants) to our preferred stockholders for the purchase of up to an aggregate of 105,042 shares of common stock
at an exercise price of $16.07 per share pursuant to a consent and waiver dated July 6, 2010, as amended on July 21, 2010.  The
Incentive Warrants were issued in connection with an offering registered under the Securities Act of 1933, as amended, of an aggregate
of 140,056 shares of its common stock and five-year warrants to purchase up to an aggregate of 105,042 shares of its common stock,
for gross proceeds of $1,500,000.
From April 1, 2010 through June 30,
2010:
None.
From January 1, 2010 through March 31, 2010:
·
We issued 76,769 shares of our common stock upon conversion of approximately 140 shares of our Series E preferred stock, having an aggregate stated value of approximately $7,000,000, and accumulated undeclared dividends thereon.
·
We issued 47,000 shares of our common stock upon the cashless exercise of warrants to purchase 77,551 shares of common stock.  The warrants had an expiration date of December 31, 2015 and an exercise price of $99.45 per share.
·
We issued 1,480 shares of our common stock upon the cashless exercise of warrants to purchase 2,075 shares of common stock.  The warrants had an expiration date of August 9, 2010 and an exercise price of $99.45 per share.
·
We issued 229 shares of our common stock upon the cashless exercise of warrants to purchase 490 shares of common stock.  The warrants had an expiration date of May 2, 2012 and an exercise price of $191.25 per share.
·
We issued 2,395 shares of our common stock upon the cashless exercise of warrants to purchase 6,480 shares of common stock. The warrants had an expiration date of March 7, 2011 and an exercise price of $263.16 per share.
·
We issued 313 shares of our common stock upon the cashless exercise of warrants to purchase 544 shares of common stock.  The warrants had an expiration date of May 2, 2012 and an exercise price of $191.25 per share.
·
We issued 2,058 shares of our common stock upon the cashless exercise of warrants to purchase 2,614 shares of common stock. The warrants had an expiration date of April 1, 2010 and an exercise price of $95.62 per share.
59
2009
From October 1, 2009 through December 31, 2009:
·
We issued 31,384 shares of our common stock upon conversion of approximately 58 shares of our Series E preferred stock, having an aggregate stated value of approximately $2,907,000, and accumulated undeclared dividends thereon.
·
We issued 4,330 shares of our common stock upon conversion of 28 shares of our Series C preferred stock having an aggregate stated value of $336,000, and accumulated undeclared dividends thereon.
·
We issued 172 shares of our common stock upon the cashless exercise of warrants to purchase an aggregate of 1,316 shares of common stock.  The warrants had an expiration date of March 7, 2011 and an exercise price of $263.16 per share.
·
We issued 793 shares of our common stock upon the cashless exercise of warrants to purchase an aggregate of 1,320 shares of common stock.  The warrants had an expiration date of August 9, 2010 and an exercise price of $0.65 per share.
·
We issued 218,648 shares of our common stock upon the cashless exercise of warrants to purchase an aggregate of 320,000 shares of common stock.  The warrants had an expiration date of April 1, 2010 and an exercise price of $99.45 per share.
·
We issued 249 shares of our common stock upon the cashless exercise of warrants to purchase an aggregate of 396 shares of common stock.  The warrants had an expiration date of October 3, 2010 and an exercise price of $99.45 per share.
·
We sold 54,466 shares of our common stock and warrants to purchase 19,063 shares of common stock at an exercise price of $100.98 per share for gross proceeds of approximately $5,500,000.
60
Item 16. Exhibits and Financial Statement Schedules
Incorporated by Reference
Exhibit
No.
Description
Filed with
this
Form S-1
Form
Filing Date
Exhibit
No.
2.1
Agreement and Plan of Merger by and among Novelos Therapeutics, Inc., Cell Acquisition Corp. and Cellectar, Inc. dated April 8, 2011
8-K
April 11, 2011
2.1
3.1
Second Amended and Restated Certificate of Incorporation
8-K
April 11, 2011
3.1
3.2
Amended and Restated By-laws
8-K
June 1, 2011
3.1
4.1
Form of common stock certificate
S-1/A
November 9, 2011
4.1
4.2
Form of Warrant
X
5.1
Legal Opinion of Foley Hoag LLP *
10.1
Employment Agreement with Harry S. Palmin dated January 31, 2006
8-K
February 6, 2006
99.1
10.2
Second Amendment to Employment Agreement between the Company and Harry Palmin
8-K
June 1, 2011
10.1
10.3
2000 Stock Option and Incentive Plan
SB-2
November 16, 2005
10.2
10.4
Form of 2004 non-plan non-qualified stock option
SB-2
November 16, 2005
10.3
10.5
Form of non-plan non-qualified stock option used from February to May 2005
SB-2
November 16, 2005
10.4
10.6
Form of non-plan non-qualified stock option used after May 2005
SB-2
November 16, 2005
10.5
10.7
Consideration and new technology agreement dated April 1, 2005 with ZAO BAM
10-QSB
August 15, 2005
10.2
10.8
2006 Stock Incentive Plan, as amended
8-K
May 23,2011
10.1
10.9
Form of Incentive Stock Option under Novelos Therapeutics, Inc.'s 2006 Stock Incentive Plan
8-K
December 15, 2006
10.1
10.10
Form of Non-Statutory Stock Option under Novelos Therapeutics, Inc.'s 2006 Stock Incentive Plan
8-K
December 15, 2006
10.2
10.11
Form of Common Stock Purchase Warrant dated May 2, 2007 issued pursuant to the Agreement to Exchange and Consent dated May 2, 2007
10-QSB
May 8, 2007
4.2
10.12
Collaboration Agreement dated February 11, 2009**
10-K
March 30, 2009
10.39
10.13
Common Stock Purchase Warrant dated February 11, 2009
8-K
February 18, 2009
4.2
61
10.16
Form of Placement Agent Agreement Between the Company and Rodman and Renshaw, LLC
S-1A
June 25, 2010
10.50
10.17
Written Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 6, 2010
S-1A
July 7, 2010
10.52
10.18
Form of Common Stock Purchase Warrant issued pursuant to the Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 6, 2010
S-1A
July 7, 2010
10.53
10.19
Form of Securities Purchase Agreement dated July 21, 2010
8-K
July 22, 2010
10.1
10.20
Amendment to Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 21, 2010
8-K
July 22, 2010
10.2
10.21
Exchange Agreement dated November 30, 2010 between the Company and the holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock
8-K
November 30, 2010
10.1
10.22
Form of Common Stock Purchase Warrant dated April 8, 2011
8-K
April 11, 2011
4.3
10.23
Securities Purchase Agreement dated April 8, 2011
8-K
April 11, 2011
10.1
10.24
Placement Agency Agreement dated April 1, 2011
8-K
April 11, 2011
99.1
10.25
License Agreement between Cellectar, LLC and the Regents of the University of Michigan dated September 14, 2003, as amended through June 2010
S-1
July 1, 2011
10.31
10.26
Lease Agreement between Cellectar, LLC and McAllen Properties LLC, as amended and extended to date
S-1
July 1, 2011
10.32
10.27
Loan Agreement between the Wisconsin Department of Commerce and Cellectar, Inc. dated September 15, 2010
S-1
July 1, 2011
10.33
10.28
General Business Security Agreement dated September 15, 2010
S-1
July 1, 2011
10.34
10.29
Underwriting Agreement dated December 1, 2011 between the Company and Rodman and Renshaw, LLC
8-K
December 7, 2011
1.1
10.30
Form of Warrant dated December 6, 2011
S-1/A
November 9, 2011
4.2
10.31
Placement Agent Agreement dated April 9, 2012 between the Company and Rodman and Renshaw, LLC
S-1
April 9, 2012
10.31
62
10.32
Form of Securities Purchase Agreement dated June 7, 2012
8-K
June 11, 2012
10.1
10.33
Amendment Agreement dated May 11, 2012 between the Company and Rodman and Renshaw, LLC
S-1/A
May 14, 2012
10.33
10.34
Form of Common Stock Purchase Warrant dated June 13, 2012
8-K
June 11, 2012
4.1
10.35
Form of Amendment to Class B Stock Purchase Warrant
8-K
September 12, 2012
10.1
10.36
Securities Purchase Agreement dated November 1, 2012 between
        the Company and Renova Industries Ltd.
10-Q
November 6, 2012
10.2
10.37
Placement Agent Agreement dated November 19, 2012 between the Company and Burrill LLC
X
10.38
Form of Securities Purchase Agreement
X
21.1
List of Subsidiaries
10-K
March 9, 2012
21.1
23.1
Consent of Foley Hoag LLP (included in Exhibit 5.1)*
23.2
Consent of Grant Thornton LLP
X
24.1
Powers of Attorney (included on signature page)
X
101
Interactive Data Files*
* To be filed by amendment.
** Portions of this exhibit have been omitted pursuant to a
confidential treatment order.
Item 17. Undertakings.
a.           The
undersigned registrant hereby undertakes:
1.
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
i.
To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
ii.
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.
iii.
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
63
2.
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
3.
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
4.
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to the offering shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
5.
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
i.
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
ii.
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
iii.
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
iv.
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
b.           Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
64
Pursuant to the requirements of the Securities Act of 1933,
as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Newton, Commonwealth of Massachusetts, on November 20, 2012.
NOVELOS THERAPEUTICS, INC.
By:
/s/ Harry S. Palmin
Harry S. Palmin
President and Chief Executive Officer
SIGNATURES
We, the undersigned officers and directors of Novelos Therapeutics,
Inc., hereby severally constitute and appoint Harry S. Palmin and Joanne M. Protano, and each of them singly (with full power to
each of them to act alone), our true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution
in each of them for him and in his name, place and stead, and in any and all capacities, to sign for us and in our names in the
capacities indicated below any and all amendments (including post-effective amendments) to this registration statement (or any
other registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities
Act of 1933, as amended), and to file the same, with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as full to all intents
and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any
of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Harry S. Palmin
Chief Executive Officer and Director
November 20, 2012
Harry S. Palmin
(
principal
executive officer
)
/s/ Joanne M. Protano
Chief Financial Officer
November 20, 2012
Joanne M. Protano
(
principal financial officer and principal accounting officer)
/s/ Stephen A. Hill
Chairman of the Board of Directors
November 20, 2012
Stephen A. Hill
/s/ T. Rockwell Mackie
Director
November 20, 2012
T. Rockwell Mackie
/s/ James S. Manuso
Director
November 20, 2012
James S. Manuso
/s/ John Neis
Director
November 20, 2012
John Neis
/s/ John E. Niederhuber
Director
November 20, 2012
John E. Niederhuber
/s/ Howard M. Schneider
Director
November 20, 2012
Howard M. Schneider
/s/ Michael F. Tweedle
Director
November 20, 2012
Michael F. Tweedle
/s/ Jamey P. Weichert
Director
November 20, 2012
Jamey P. Weichert
65
EXHIBIT INDEX
Incorporated by Reference
Exhibit
No.
Description
Filed with
this
Form S-1
Form
Filing Date
Exhibit
No.
2.1
Agreement and Plan of Merger by and among Novelos Therapeutics, Inc., Cell Acquisition Corp. and Cellectar, Inc. dated April 8, 2011
8-K
April 11, 2011
2.1
3.1
Second Amended and Restated Certificate of Incorporation
8-K
April 11, 2011
3.1
3.2
Amended and Restated By-laws
8-K
June 1, 2011
3.1
4.1
Form of common stock certificate
S-1/A
November 9, 2011
4.1
4.2
Form of Warrant
X
5.1
Legal Opinion of Foley Hoag LLP*
10.1
Employment Agreement with Harry S. Palmin dated January 31, 2006
8-K
February 6, 2006
99.1
10.2
Second Amendment to Employment Agreement between the Company and Harry Palmin
8-K
June 1, 2011
10.1
10.3
2000 Stock Option and Incentive Plan
SB-2
November 16, 2005
10.2
10.4
Form of 2004 non-plan non-qualified stock option
SB-2
November 16, 2005
10.3
10.5
Form of non-plan non-qualified stock option used from February to May 2005
SB-2
November 16, 2005
10.4
10.6
Form of non-plan non-qualified stock option used after May 2005
SB-2
November 16, 2005
10.5
10.7
Consideration and new technology agreement dated April 1, 2005 with ZAO BAM
10-QSB
August 15, 2005
10.2
10.8
2006 Stock Incentive Plan, as amended
8-K
May 23,2011
10.1
10.9
Form of Incentive Stock Option under Novelos Therapeutics, Inc.'s 2006 Stock Incentive Plan
8-K
December 15, 2006
10.1
10.10
Form of Non-Statutory Stock Option under Novelos Therapeutics, Inc.'s 2006 Stock Incentive Plan
8-K
December 15, 2006
10.2
10.11
Form of Common Stock Purchase Warrant dated May 2, 2007 issued pursuant to the Agreement to Exchange and Consent dated May 2, 2007
10-QSB
May 8, 2007
4.2
66
10.12
Collaboration Agreement dated February 11, 2009**
10-K
March 30, 2009
10.39
10.13
Common Stock Purchase Warrant dated February 11, 2009
8-K
February 18, 2009
4.2
10.16
Form of Placement Agent Agreement Between the Company and Rodman and Renshaw, LLC
S-1A
June 25, 2010
10.50
10.17
Written Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 6, 2010
S-1A
July 7, 2010
10.52
10.18
Form of Common Stock Purchase Warrant issued pursuant to the Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 6, 2010
S-1A
July 7, 2010
10.53
10.19
Form of Securities Purchase Agreement dated July 21, 2010
8-K
July 22, 2010
10.1
10.20
Amendment to Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock dated July 21, 2010
8-K
July 22, 2010
10.2
10.21
Exchange Agreement dated November 30, 2010 between the Company and the holders of Series C Convertible Preferred Stock and Series E Convertible Preferred Stock
8-K
November 30, 2010
10.1
10.22
Form of Common Stock Purchase Warrant dated April 8, 2011
8-K
April 11, 2011
4.3
10.23
Securities Purchase Agreement dated April 8, 2011
8-K
April 11, 2011
10.1
10.24
Placement Agency Agreement dated April 1, 2011
8-K
April 11, 2011
99.1
10.25
License Agreement between Cellectar, LLC and the Regents of the University of Michigan dated September 14, 2003, as amended through June 2010
S-1
July 1, 2011
10.31
10.26
Lease Agreement between Cellectar, LLC and McAllen Properties LLC, as amended and extended to date
S-1
July 1, 2011
10.32
10.27
Loan Agreement between the Wisconsin Department of Commerce and Cellectar, Inc. dated September 15, 2010
S-1
July 1, 2011
10.33
67
10.28
General Business Security Agreement dated September 15, 2010
S-1
July 1, 2011
10.34
10.29
Underwriting Agreement dated December 1, 2011 between the Company and Rodman and Renshaw, LLC
8-K
December 7, 2011
1.1
10.30
Form of Warrant dated December 6, 2011
S-1/A
November 9, 2011
4.2
10.31
Placement Agent Agreement dated April 9, 2012 between the Company and Rodman and Renshaw, LLC
S-1
April 9, 2012
10.31
10.32
Form of Securities Purchase Agreement
8-K
June 11, 2012
10.1
10.33
Amendment Agreement dated May 11, 2012 between the Company and Rodman and Renshaw, LLC
S-1/A
May 14, 2012
10.33
10.34
Form of Common Stock Purchase Warrant dated June 13, 2012
8-K
June 11, 2012
4.1
10.35
Form of Amendment to Class B Stock Purchase Warrant
8-K
September 12, 2012
10.1
10.36
Securities Purchase Agreement between the Company and Renova
        Industries Ltd.
10-Q
November 6, 2012
10.2
10.37
Placement Agent Agreement dated November 19, 2012 between the
        Company and Burrill LLC
X
10.38
Form of Securities Purchase Agreement
X
21.1
List of Subsidiaries
10-K
March 9, 2012
21.1
23.1
Consent of Foley Hoag LLP (included in Exhibit 5.1)*
23.2
Consent of Grant Thornton LLP
X
24.1
Powers of Attorney (included on signature page)
X
101
Interactive Data Files*
* To be filed by amendment.
** Portions of this exhibit have been omitted pursuant to a
confidential treatment order.
68