UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Amendment No. 2

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

ZAFGEN, INC.

(Exact name of registrant as specified in its charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

PRELIMINARY PROXY STATEMENT DATED APRIL 27, 2020—SUBJECT TO COMPLETION

Dear Zafgen Stockholders:

You are cordially invited to attend the 2020 annual meeting of the stockholders of Zafgen, Inc., a Delaware corporation (referred to as “Zafgen”) which will be held at [●], local time, on [●] (referred to as the “annual meeting”). The annual meeting will be a virtual stockholder meeting, conducted solely through remote audio access via a webcast at http://www.viewproxy.com/Zafgen/2020/VM. In order to attend the annual meeting virtually via the Internet, Zafgen stockholders must register at http://www.viewproxy.com/Zafgen/2020 (click on “Virtual Meeting Registration”) by 11:59 p.m., Eastern Time, on [●], 2020. This is an important annual meeting that affects your investment in Zafgen.

On December 17, 2019, Zafgen and Chondrial Therapeutics, Inc. (referred to as “Chondrial”) entered into an Agreement and Plan of Merger, as amended (referred to as the “merger agreement”), pursuant to which a wholly-owned subsidiary of Zafgen will merge with and into Chondrial with Chondrial surviving as a wholly-owned subsidiary of Zafgen (referred to as the “merger”). At the effective time of the merger, each share of Chondrial’s common stock, par value $0.01 per share, (referred to as “Chondrial common stock”), outstanding immediately prior to the effective time of the merger will be converted into the right to receive approximately [●] shares of Zafgen’s common stock, par value $0.001 per share (referred to as “Zafgen common stock”), subject to adjustment to account for the effect of a reverse stock split of Zafgen common stock, at a ratio mutually agreed to by Zafgen and Chondrial in the range of one new share for every [●] to [●] shares outstanding (or any number in between), to be implemented immediately prior to and contingent upon the consummation of the merger as discussed in this proxy statement, and further adjusted based on Zafgen’s net cash immediately prior to the closing of the merger. Following the merger, Zafgen will change its name to “Larimar Therapeutics, Inc.” (referred to as “Larimar” or the “combined company”).

Under the terms of the merger agreement, the number of shares of Zafgen common stock to be issued to Chondrial’s sole stockholder, Chondrial Therapeutics Holdings, LLC (referred to as “Holdings”), at the closing of the merger will be determined based on an exchange ratio, which will be calculated based on the total number of outstanding shares of Zafgen common stock and Chondrial common stock, each on a fully-diluted basis, and the respective valuations of Chondrial and Zafgen, as of immediately prior to the closing of the merger. As of the effective date of the merger agreement, the closing date valuation of Chondrial (referred to as the “Chondrial valuation”) was assumed to be $67,500,000 but is subject to adjustment as described below, and the closing date valuation of Zafgen (referred to as the “Zafgen valuation”) was assumed to be $45,000,000 but is subject to adjustment as described below. Accordingly, if there is no adjustment to the Zafgen valuation or the Chondrial valuation as described below, then immediately following the effective time of the merger, Chondrial’s sole stockholder, Holdings, will own or hold rights to acquire 60% of the combined company, on a fully-diluted basis, and Zafgen’s stockholders will own or hold rights to acquire 40% of the combined company, on a fully-diluted basis. Without giving effect to the proposed reverse stock split of Zafgen common stock described elsewhere in this proxy statement, and based on the foregoing percentages as of a March 31, 2020 closing, the exchange ratio for the Chondrial common stock would be approximately 645,509.6444 shares of Zafgen common stock for each share of Chondrial common stock (approximately 64,550,964 total shares of Zafgen common stock would be issued to Chondrial’s stockholder, on a fully diluted basis). There will be no adjustment to the number of shares of Zafgen common stock to be issued to Chondrial’s stockholder based on the market value of Zafgen common stock, and the market value of Zafgen common stock may vary significantly from the market value as of the date of this proxy statement. Holdings currently expects that it will distribute the shares of Zafgen common stock it receives in the merger to its members promptly after the completion of the merger.

In addition, the Zafgen target net cash and lower target net cash and upper target net cash amounts will be reduced by $21,311 per day beginning on March 31, 2020 through the closing date of the merger, and the Chondrial valuation will be increased by $111,656 per day beginning on March 31, 2020 through the closing date of the merger, resulting in a corresponding adjustment to the exchange ratio and a potential adjustment to the ownership percentage of Holdings in the combined company. For a complete description of how the ownership percentages and exchange ratio will be determined at the effective time of the merger, please see the section entitled “The Merger Agreement—Merger Consideration” beginning on page [●] of this proxy statement.

At the annual meeting:

After careful consideration, the Zafgen Board has unanimously approved the merger agreement and the proposals referred to above, and has determined that they are advisable, fair and in the best interests of Zafgen’s stockholders. Accordingly, the Zafgen Board unanimously recommends that stockholders vote “FOR” the issuance of Zafgen common stock pursuant to the merger agreement and the resulting “change of control” of Zafgen under the NASDAQ rules, “FOR” the amendment to Zafgen’s ninth amended and restated certificate of incorporation to effect the reverse stock split to maintain the listing of Zafgen common stock on the NASDAQ Global Market (referred to as “NASDAQ”), “FOR,” on an advisory, non-binding, basis, the specified compensation that may become payable to Zafgen’s named executive officers in connection with the merger, “FOR,” the election of three directors, Jeffrey S. Hatfield, John L. LaMattina, Ph.D., and Frank E. Thomas, to serve as Class III directors, “FOR,” on an advisory, non-binding, basis, the compensation paid to Zafgen’s named executive officers in 2019, “FOR,” on an advisory, non-binding, basis, the frequency of “every year” for future advisory votes on executive compensation, “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as Zafgen’s independent registered public accounting firm for the fiscal year ending December 31, 2020 and “FOR” the adjournment of the annual meeting if necessary to solicit additional proxies if there are not sufficient votes to approve the issuance of Zafgen common stock pursuant to the merger agreement and the transactions contemplated therein or to approve an amendment to Zafgen’s ninth amended and restated certificate of incorporation to effect a reverse stock split of Zafgen common stock at the time of the annual meeting.

Shares of Zafgen common stock are currently listed on NASDAQ under the symbol “ZFGN.” After completion of the merger, it is expected that Zafgen common stock will trade on NASDAQ under the symbol “LRMR.”

More information about Zafgen, Chondrial and the proposed transactions are contained in the accompanying proxy statement. Zafgen urges you to read the proxy statement carefully and in its entirety. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER “RISK FACTORS” BEGINNING ON PAGE [●].

Your vote is important. Whether or not you expect to attend the virtual annual meeting, please complete, date, sign and promptly return the accompanying proxy card in the enclosed postage paid envelope to ensure that your shares will be represented and voted at the annual meeting. You can also vote your shares via the internet or by telephone as provided in the instructions set forth in the enclosed proxy card. If you hold your shares in “street name” through a broker, you should follow the procedures provided by your broker.

Zafgen is excited about the opportunities the merger brings to its stockholders, and we thank you for your consideration and continued support.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the merger described in this proxy statement or the Zafgen common stock to be issued in connection with the merger or determined if this proxy statement is accurate or adequate. Any representation to the contrary is a criminal offense.

This proxy statement is dated [●], 2020 and is first being mailed to stockholders on or about [●], 2020.

PRELIMINARY PROXY STATEMENT DATED APRIL 27, 2020—SUBJECT TO COMPLETION

3 CENTER PLAZA, SUITE 610,

BOSTON, MASSACHUSETTS 02108

NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON [●], 2020.

To the Stockholders of Zafgen, Inc.:

Notice is hereby given that the 2020 annual meeting of stockholders of Zafgen, Inc. (referred to as “Zafgen”) will be held virtually, conducted via live audio webcast at [●], local time, on [●], 2020, at http://www.viewproxy.com/Zafgen/2020/VM, to consider and act upon the following matters:

If Zafgen is to complete the merger with Chondrial, stockholders must approve Proposal 1 and Proposal 2. The approval of Proposal 3, Proposal 4, Proposal 5, Proposal 6, Proposal 7, or Proposal 8 is not a condition to the completion of the merger with Chondrial.

Zafgen common stock is the only type of security entitled to vote at the annual meeting. The board of directors has fixed [●], 2020 as the record date for the determination of stockholders entitled to notice of, and to vote at, the annual meeting and any adjournment or postponement thereof. Only holders of record of shares of Zafgen common stock at the close of business on the record date are entitled to notice of, and to vote at, the annual meeting. At the close of business on the record date, Zafgen had [●] shares of common stock outstanding

and entitled to vote at the annual meeting. Each holder of record of shares of common stock on the record date will be entitled to one vote for each share held on all matters to be voted upon at the annual meeting.

Your vote is important. The affirmative vote of the holders of a majority of the votes properly cast on such matter at the annual meeting is required for approval of Proposals 1, 3, 5, 7 and 8. The affirmative vote of holders of a majority of the outstanding shares of Zafgen common stock as of the record date for the annual meeting is required for approval of Proposal 2. For Proposal 4, directors are elected by a plurality of the affirmative votes cast by those shares present virtually, or represented by proxy, and entitled to vote at the annual meeting. The three nominees for director receiving the highest number of affirmative votes will be elected. For Proposal 6, the frequency that receives the highest number of votes will be deemed to be the non-binding recommendation of Zafgen’s stockholders. Whether or not you plan to attend the virtual annual meeting virtually, please submit your proxy promptly by telephone or via the internet in accordance with the instructions on the enclosed proxy card or complete, date, sign and promptly return the accompanying proxy card in the enclosed postage paid envelope to ensure that your shares will be represented and voted at the annual meeting. If you date, sign and return your proxy card without indicating how you wish to vote, your proxy will be counted as a vote in favor of Proposals 1, 2, 3, 5, 7 and 8, and as a vote for each of the directors nominated for election as described in Proposal 4 and for “every year” for Proposal 6.

THE ZAFGEN BOARD HAS DETERMINED AND BELIEVES THAT EACH OF THE PROPOSALS OUTLINED ABOVE IS ADVISABLE, FAIR AND IN THE BEST INTERESTS OF ZAFGEN AND ITS STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED EACH SUCH PROPOSAL. THE ZAFGEN BOARD UNANIMOUSLY RECOMMENDS THAT ZAFGEN’S STOCKHOLDERS VOTE “FOR” PROPOSALS 1, 2, 3, 5, 7 AND 8, “FOR” EACH OF THE DIRECTORS NOMINATED FOR ELECTION AS DESCRIBED IN PROPOSAL 4 AND FOR “EVERY YEAR” FOR PROPOSAL 6.

REFERENCES TO ADDITIONAL INFORMATION

This proxy statement under Section 14(a) of the Securities Exchange Act of 1934, as amended (referred to as the “Exchange Act”), and the rules thereunder, contains a notice of meeting with respect to the annual meeting of stockholders at which Zafgen’s stockholders will consider and vote on the proposals to approve the issuance of Zafgen common stock issuable to the holders of Chondrial’s common stock pursuant to the merger agreement described in this proxy statement and the resulting “change of control” of Zafgen under the NASDAQ rules, an amendment to Zafgen’s ninth amended and restated certificate of incorporation to effect a reverse stock split of Zafgen common stock to maintain the listing of Zafgen common stock on NASDAQ, the payment of the specified compensation that may become payable to Zafgen’s named executive officers in connection with the merger, the election of Class III directors of the Zafgen Board, the payment of the compensation that was paid to Zafgen’s named executive officers in 2019, the frequency of future advisory votes on the compensation of Zafgen’s named executive officers, the ratification of the appointment of PricewaterhouseCoopers LLP as Zafgen’s registered public accounting firm for fiscal year 2020 and an adjournment of the annual meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposals 1 and/or 2.

Additional business and financial information about Zafgen can be found in documents previously filed by Zafgen with the U.S. Securities and Exchange Commission (referred to as the “SEC”). This information is available to you without charge on the SEC’s website (www.sec.gov), Zafgen stockholders will also be able to obtain the proxy statement, free of charge, from Zafgen by requesting copies in writing using the following contact information:

ZAFGEN, INC.

Attn: Corporate Secretary

3 Center Plaza, Suite 610

Boston, MA 02108

Tel: (617) 622-4003

You may also request additional copies from Zafgen’s proxy solicitor, The Proxy Advisory Group, LLC, using the following contact information:

18 East 41st Street, 20th Floor

New York, NY 10017-6219

Stockholders Call Toll-Free: (888) 337-7699

To ensure timely delivery of these documents, any request should be made no later than [●], 2020 to receive them before the annual meeting. See “Where You Can Find Additional Information” beginning on page [●].

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND THE MERGER

Except as specifically indicated, the following information and all other information contained in this proxy statement does not give effect to the reverse stock split described in Proposal 2.

The following section provides answers to frequently asked questions about the annual meeting of stockholders and the merger. This section, however, only provides summary information. These questions and answers may not address all issues that may be important to you as a stockholder. For a more complete response to these questions and for additional information, please refer to the cross-referenced pages below. You should carefully read this entire proxy statement, including each of the annexes.

The Zafgen valuation of $45,000,000 is based on a projected “net cash” balance (or cash, cash equivalents and marketable securities minus outstanding liabilities) at the closing of $40,000,000, plus an additional $5,000,000 of enterprise value. If Zafgen’s actual net cash as of a determination date prior to the closing is between $39,500,000 and $40,500,000, no adjustment will be made to the ownership percentages based on Zafgen’s net cash. If Zafgen’s net cash is less than $39,500,000, the ownership percentage of Chondrial’s stockholder in the combined company will be increased based on the difference between Zafgen’s actual net cash and the Zafgen target net cash (i.e. $40,000,000). If Zafgen’s net cash is greater than $40,500,000, the ownership percentage of Chondrial’s stockholder in the combined company will be decreased based on the difference between Zafgen’s actual net cash and the Zafgen target net cash (i.e. $40,000,000). In addition, the Zafgen target net cash and lower target net cash and upper target net cash amounts will be reduced by $21,311 per day beginning on March 31, 2020 through the closing date of the merger, and the Chondrial valuation will be increased by $111,656 per day beginning on March 31, 2020 through the closing date of the merger, resulting in a corresponding adjustment to the exchange ratio and an increase to the ownership percentage of Chondrial’s stockholder in the combined company.

Without giving effect to the proposed reverse stock split of Zafgen common stock described elsewhere in this proxy statement, and based on the foregoing percentages as of a March 31, 2020 closing, the exchange ratio for the Chondrial common stock would be approximately 645,509.6444 shares of Zafgen common stock for each share of Chondrial common stock (approximately 64,550,964 total shares of Zafgen common stock would be issued to Chondrial’s stockholder, on a fully diluted basis).

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For a more complete discussion of Zafgen’s reasons for the merger, please see the section entitled “The Merger—Zafgen’s Reasons for the Merger; Recommendations of the Zafgen Board of Directors” beginning on page [●] of this proxy statement.

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For a more complete discussion of the exchange ratio at the effective time of the merger, please see the section entitled “The Merger Agreement—Merger Consideration” beginning on page [●] of this proxy statement.

For a more complete description of the tax consequences of the merger, please see the section entitled “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page [●] of this proxy statement.

In the case of the merger, Zafgen will be issuing approximately 64,550,964 shares of its common stock on a fully diluted basis, and the common stock to be issued pursuant to the merger agreement will represent greater than 20% of its voting stock. Accordingly, Zafgen is seeking stockholder of approval of this issuance under the NASDAQ rules.

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Q:    What do I need to do now?

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If your shares of Zafgen common stock are held by a bank, broker or other nominee, you are considered the beneficial owner of shares held in “street name,” and the proxy materials are being forwarded to you together with a voting instruction card. Since a beneficial owner is not the stockholder of record, you may not vote these shares during the annual meeting unless you obtain a proxy from your broker issued in your name giving you the right to vote the shares at the annual meeting.

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For a more complete discussion of the exchange ratio at the effective time of the merger, please see the section entitled “The Merger Agreement—Merger Consideration” beginning on page [●] of this proxy statement.

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SELECTED HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA

The following tables present summary historical financial data for each of Zafgen and Chondrial, summary unaudited pro forma condensed combined financial data for Zafgen and Chondrial and comparative historical and unaudited pro forma per share data for Zafgen and Chondrial. The following information does not give effect to the proposed reverse stock split.

Selected Historical Consolidated Financial Data of Zafgen

The following table summarizes Zafgen’s consolidated financial data. Zafgen derived the following consolidated statements of operations data for the years ended December 31, 2019 and 2018 and the consolidated balance sheet data as of December 31, 2019 and 2018 from its audited consolidated financial statements and related notes, included in Zafgen’s Annual Report on Form 10-K for the year ended December 31, 2019 and incorporated by reference herein. Zafgen derived the following consolidated statements of operations data for the years ended December 31, 2017, 2016 and 2015 and the consolidated balance sheet data as of December 31, 2017, 2016 and 2015 from its audited consolidated financial statements and related notes not included or incorporated in this proxy statement. The following selected financial data have been derived from Zafgen’s consolidated financial statements and should be read in conjunction with “Zafgen’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes included elsewhere in this proxy statement or incorporated by reference herein. Zafgen’s historical results are not necessarily indicative of the results that may be expected in any future period.

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Selected Historical Financial Data of Chondrial

The following table summarizes Chondrial’s consolidated financial data. Chondrial has derived the statements of operations data for the years ended December 31, 2019 and 2018 and the balance sheet data as of December 31, 2019 and 2018 from Chondrial’s consolidated audited financial statements included elsewhere in this proxy statement. You should read the following selected financial data together with Chondrial’s consolidated financial statements and the related notes appearing at the end of this proxy statement and “Chondrial’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page [●] of this proxy statement. Chondrial’s historical results are not necessarily indicative of the results that may be expected in any future period.

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Selected Unaudited Pro Forma Combined Financial Data of Zafgen and Chondrial

The following selected unaudited pro forma combined financial data presents the pro forma financial position and results of operations of the combined business based on the historical financial statements of Zafgen and Chondrial, after giving effect to the merger. The unaudited pro forma combined balance sheet data as of December 31, 2019 gives effect to the merger as if it took place on December 31, 2019. The unaudited pro forma combined statement of operations data for the year ended December 31, 2019 gives effect to the merger as if it took place on January 1, 2019.

In the unaudited pro forma combined financial data, the merger has been accounted for as an asset acquisition, with Chondrial being the accounting acquirer. Using the estimated total consideration for the merger, management has preliminarily allocated such consideration to the assets acquired and liabilities assumed of Zafgen in the merger based on a preliminary valuation analysis and purchase price allocation. This preliminary purchase price allocation was used to prepare pro forma adjustments in the unaudited pro forma combined financial statements. The final purchase price allocation will be determined when management has determined the final consideration paid in the merger and completed the detailed valuations and necessary calculations. The final purchase price allocation could differ materially from the preliminary purchase price allocation used to prepare the pro forma adjustments and the unaudited pro forma combined financial statements. The final purchase price allocation may (i) include changes to assets and liabilities included in the pro forma combined financial data and (ii) include changes to the fair value of purchase consideration in the merger.

The unaudited pro forma combined financial statements were prepared in accordance with Article 11 of SEC Regulation S-X. Accordingly, the historical consolidated financial data of Zafgen and Chondrial has been adjusted to give pro forma effect to events that are (i) directly attributable to the merger, (ii) factually supportable, and (iii) with respect to the unaudited pro forma combined statement of operations, expected to have a continuing impact on the results of operations of the combined company. In addition, the pro forma adjustments reflecting the completion of the merger are based upon the application of the asset acquisition method of accounting in accordance with GAAP and upon the assumptions set forth in the unaudited pro forma combined financial statements.

The unaudited pro forma combined financial information has been prepared for illustrative purposes only and is not necessarily indicative of the financial position or results of operations in future periods or the results that actually would have been realized had Zafgen and Chondrial been a combined company during the specified periods.

The following selected unaudited pro forma combined financial data should be read in conjunction with the section entitled “Unaudited Pro Forma Combined Financial Statements,” beginning on page [●], Zafgen’s audited consolidated financial statements and the notes thereto included to in the section entitled “Zafgen’s Audited Consolidated Financial Statements” in this proxy statement, Chondrial’s consolidated audited financial

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statements and the notes thereto included in the sections entitled “Chondrial’s Audited Consolidated Financial Statements” and “Notes to Chondrial’s Audited Consolidated Financial Statements,” respectively, the sections entitled “Zafgen’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” beginning on page [●], and “Chondrial’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” beginning on page [●], and the other information contained in this proxy statement.

The following information does not give effect to the proposed reverse stock split of Zafgen common stock described in the section entitled “Matters Being Submitted to a Vote of Zafgen’s Stockholders—Proposal 2: Approval of the Reverse Stock Split,” beginning on page [●] of this proxy statement.

Comparative Historical and Unaudited Pro Forma Per Share Data

The information below reflects historical per share information for Zafgen and Chondrial and unaudited pro forma per share information of the combined company as if Zafgen and Chondrial had been combined as of or for the periods presented. The per share amounts below do not give effect to the proposed reverse stock split of Zafgen common stock described in the section entitled “Matters Being Submitted to a Vote of Zafgen’s Stockholders—Proposal 2: Approval of the Reverse Stock Split,” beginning on page [●] of this proxy statement.

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The pro forma amounts in the table below have been derived from the unaudited pro forma combined financial information included in the section entitled “Unaudited Pro Forma Combined Financial Statements,” beginning on page [●] of this proxy statement. The pro forma amounts are presented for illustrative purposes only and are not necessarily indicative of what the financial position or the results of operations of the combined company would have been had Zafgen and Chondrial been combined as of or for the periods presented.

The information below should be read in conjunction with the audited consolidated financial statements of Zafgen and the related notes, the audited consolidated financial statements of Chondrial and the related notes, and the unaudited pro forma combined financial information and the related notes, all of which are included elsewhere in this proxy statement or in annexes to this proxy statement or incorporated by reference herein.

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MARKET PRICE AND DIVIDEND INFORMATION

Zafgen common stock began trading on NASDAQ under the symbol “ZFGN” on June 18, 2014. Chondrial is a private company and its common stock is not publicly traded. There has never been, nor is there expected to be in the future, a public market for Chondrial common stock.

On December 17, 2019, the last full trading day prior to the public announcement of the proposed merger, the closing price per share of Zafgen common stock as reported on NASDAQ was $0.83 per share. On [●], 2020, the last practicable date before the printing of this proxy statement, the closing price per share of Zafgen common stock as reported on NASDAQ was $[●], per share.

Following the consummation of the merger, and subject to successful application for initial listing with NASDAQ, Zafgen common stock will continue to be listed on NASDAQ, but will trade under the symbol “LRMR” and under the combined company’s new name, “Larimar Therapeutics, Inc.” (referred to as “Larimar”).

As of the record date, Zafgen had approximately [●] stockholders of record.

Zafgen has never declared or paid cash dividends on Zafgen common stock. Zafgen currently anticipates that all of its earnings in the foreseeable future will be used for the operation and growth of its business, and does not expect to pay any cash dividends to Zafgen stockholders. Payment of future dividends, if any, will be at the discretion of the Zafgen Board.

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RISK FACTORS

You should consider the following factors in evaluating whether to approve the issuance of shares of Zafgen common stock in the merger and the resulting “change of control” of Zafgen under the NASDAQ rules and the amendment to Zafgen’s ninth amended and restated certificate of incorporation to effect a reverse stock split of Zafgen common stock. These factors should be considered in conjunction with the other information included or incorporated by reference by Zafgen in this proxy statement.

Risks Related to the Merger

If the proposed merger with Chondrial is not consummated, Zafgen’s business could suffer materially and Zafgen’s stock price could decline.

The consummation of the proposed merger with Chondrial is subject to a number of closing conditions, including the approval by Zafgen’s stockholders, approval by NASDAQ of Zafgen’s application for initial listing of Zafgen common stock in connection with the merger, and other customary closing conditions. Zafgen is targeting a closing of the transaction in the second quarter of 2020.

If the proposed merger is not consummated, Zafgen may be subject to a number of material risks, and its business and stock price could be adversely affected, as follows:

In addition, if the merger agreement is terminated and the Zafgen Board determines to seek another business combination, it may not be able to find a third party willing to provide equivalent or more attractive consideration

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than the consideration to be provided by each party in the merger. In such circumstances, the Zafgen Board may elect to, among other things, divest all or a portion of Zafgen’s business, or take the steps necessary to liquidate all of Zafgen’s business and assets, and in either such case, the consideration that Zafgen receives may be less attractive than the consideration to be received by Zafgen pursuant to the merger agreement.

If Zafgen does not successfully consummate the merger or another strategic transaction, the Zafgen Board may decide to pursue a dissolution and liquidation of Zafgen. In such an event, the amount of cash available for distribution to Zafgen’s stockholders will depend heavily on the timing of such liquidation as well as the amount of cash that will need to be reserved for commitments and contingent liabilities.

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

The amount of merger consideration may vary depending on the amount of net cash of Zafgen as of a certain determination date prior to closing and the date on which the closing occurs, which could result in Zafgen’s stockholders owning a smaller percentage of the combined company than expected.

Under the terms of the merger agreement, the number of shares of Zafgen common stock to be issued to Chondrial’s stockholder at the closing of the merger will be determined based on an exchange ratio, which will be calculated based on the total number of outstanding shares of Zafgen common stock and Chondrial common stock, each on a fully-diluted basis, and the respective valuations of Chondrial and Zafgen, as of immediately prior to the closing of the merger. If the closing occurs on or before March 31, 2020 and there is no adjustment to the closing valuation of Zafgen (as described below), then immediately following the effective time of the merger, Chondrial’s stockholder will own, or hold rights to acquire, 60% of the common stock of the combined company, on a fully-diluted basis, and Zafgen’s existing stockholders will own or hold rights to acquire 40% of the common stock of the combined company, on a fully-diluted basis. The respective valuations of Chondrial and Zafgen, and the corresponding ownership percentages of Chondrial’s stockholder and existing Zafgen stockholders, may be adjusted upward or downward based on the date the closing occurs and the net cash balance (defined in the merger agreement as cash, cash equivalents and marketable securities minus certain outstanding liabilities) of Zafgen as of a determination date prior to the closing of the merger, and as a result, either Zafgen’s stockholders could own less of the combined company than expected. There can be no assurances as to Zafgen’s level of net cash between now and closing or as to the date the closing will occur.

Zafgen’s net cash may be less than $30,000,000 at the closing of the merger, which would cause a condition to Chondrial’s obligation to consummate the merger to fail to be satisfied and may result in the termination of the merger agreement.

Zafgen is required to have a net cash balance of at least $30,000,000 at the closing of the merger as a condition to Chondrial’s obligation to consummate the merger. For purposes of the merger agreement, net cash is subject to certain reductions, including, without limitation, accounts payable, accrued expenses (except those

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related to the merger), current liabilities payable in cash, unpaid expenses related to the merger and certain other unpaid obligations, including outstanding lease obligations. The liability with regards to the Company’s outstanding lease obligations is a large component of Zafgen’s net cash and COVID-19 has created uncertainties surrounding the Company’s ability to take the steps necessary to sublease or negotiate a buy-out of its existing leases. In the event that Zafgen’s net cash falls below this threshold, a condition to the Chondrial’s obligation to consummate the merger will fail to be satisfied and Chondrial will have the right to terminate the merger agreement at an outside date of September 17, 2020 (subject to extension as provided in the merger agreement) if Zafgen’s net cash continues to be lower than the $30,000,000 threshold.

Some of Zafgen’s officers and directors have conflicts of interest that may influence them to support or approve the merger.

Officers and directors of Zafgen participate in arrangements that provide them with interests in the merger that are different from yours, including, among others, their continued service as a director of the combined company, retention and severance benefits, the acceleration of restricted stock and option vesting and continued indemnification. These interests, among others, may influence the officers and directors of Zafgen to support or approve the merger. For a more detailed discussion see “The Merger—Interests of Zafgen’s Directors and Executive Officers in the Merger” beginning on page [●] of this proxy statement.

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

In general, either party can refuse to complete the merger if there is a material adverse change affecting the other party between December 17, 2019, the date of the merger agreement, and the closing. However, some types of changes do not permit either party to refuse to complete the merger, even if such changes would have a material adverse effect on Zafgen or Chondrial, to the extent they resulted from the following and do not have a materially disproportionate effect on Zafgen or Chondrial, as the case may be:

If adverse changes occur but Zafgen and Chondrial must still complete the merger, the combined company’s stock price may suffer.

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The market price of the combined company’s common stock may decline as a result of the merger.

The market price of the combined company’s common stock may decline as a result of the merger for a number of reasons including if:

Zafgen’s stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger.

If the combined company is unable to realize the strategic and financial benefits currently anticipated from the merger, Zafgen’s stockholders will have experienced substantial dilution of their ownership interest without receiving any commensurate benefit. Significant management attention and resources will be required to integrate the two companies. Delays in this process could adversely affect the combined company’s business, financial results, financial condition and stock price following the merger.

During the pendency of the merger, Zafgen or Chondrial may not be able to enter into a business combination with another party and will be subject to contractual limitations on certain actions because of restrictions in the merger agreement.

Covenants in the merger agreement impede the ability of Zafgen or Chondrial to make acquisitions or complete other transactions that are not in the ordinary course of business pending completion of the merger. As a result, if the merger is not completed, the parties may be at a disadvantage to their competitors. In addition, while the merger agreement is in effect and subject to limited exceptions, each party is prohibited from soliciting, initiating, encouraging or taking actions designed to facilitate any inquiries or the making of any proposal or offer that could lead to the entering into certain extraordinary transactions with any third party, such as a sale of assets, an acquisition of Zafgen common stock, a tender offer for Zafgen common stock, a merger or other business combination outside the ordinary course of business. Any such transactions could be favorable to such party’s stockholders.

Because the lack of a public market for Chondrial common stock makes it difficult to evaluate the fairness of the merger, Chondrial’s stockholder may receive consideration in the merger that is greater than or less than the fair market value of Chondrial common stock.

The outstanding share capital of Chondrial is privately held and is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of Chondrial. Since the percentage of Zafgen’s equity to be issued to Chondrial’s stockholder was determined based on negotiations between the parties, it is possible that the value of the Zafgen common stock to be issued in connection with the merger will be greater than the fair market value of Chondrial. Alternatively, it is possible that the value of the shares of Zafgen common stock to be issued in connection with the merger will be less than the fair market value of Chondrial.

The combined company will incur significant transaction costs as a result of the merger, including investment banking, legal and accounting fees. In addition, the combined company will incur significant consolidation and integration expenses which cannot be accurately estimated at this time. These costs could include the possible relocation of certain operations from Massachusetts to other offices of the combined company as well as costs associated with terminating existing office leases and the loss of benefits of certain favorable office leases. Actual transaction costs may substantially exceed Chondrial’s estimates and may have an adverse effect on the combined company’s financial condition and operating results.

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Failure of the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code could harm the combined company.

The parties intend for the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code, as amended. For a full description of the tax consequences of the merger, see “The Merger—Material U.S. Federal Income Tax Consequences of the Merger” beginning on page [●] of this proxy statement. To comply with the requirements for a Section 368(a) reorganization, certain structural and other requirements for the transaction must be met; if not satisfied, Chondrial’s stockholder could be subject to tax liability.

The merger is expected to result in a limitation on Zafgen’s ability to utilize its net operating loss carryforward.

Under Section 382 of the Code, use of Zafgen’s net operating loss carryforwards (referred to as “NOLs”) will be limited if Zafgen experiences an “ownership change.” For these purposes, an ownership change generally occurs where the aggregate stock ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a specified testing period. Zafgen is expected to experience an ownership change as a result of the merger and therefore its ability to utilize its NOLs and certain credit carryforwards remaining at the effective time will be limited. The limitation will be determined by the fair market value of Zafgen common stock outstanding prior to the ownership change, multiplied by the applicable federal rate. Limitations imposed on Zafgen’s ability to utilize NOLs could cause U.S. federal and state income taxes to be paid earlier than would be paid if such limitations were not in effect and could cause such NOLs to expire unused, in each case reducing or eliminating the benefit of such NOLs.

Certain stockholders could attempt to influence changes within Zafgen which could adversely affect Zafgen’s operations, financial condition and the value of Zafgen common stock.

Zafgen’s stockholders may from time-to-time seek to acquire a controlling stake in Zafgen, engage in proxy solicitations, advance stockholder proposals or otherwise attempt to effect changes. Campaigns by stockholders to effect changes at publicly-traded companies are sometimes led by investors seeking to increase short-term stockholder value through actions such as financial restructuring, increased debt, special dividends, stock repurchases or sales of assets or the entire company. Responding to proxy contests and other actions by activist stockholders can be costly and time-consuming, and could disrupt Zafgen’s operations and divert the attention of the Zafgen Board and senior management from the pursuit of the proposed merger transaction. These actions could adversely affect Zafgen’s operations, financial condition, Zafgen’s ability to consummate the merger and the value of Zafgen common stock.

Zafgen and Chondrial may become involved in securities litigation or stockholder derivative litigation in connection with the merger, and this could divert the attention of Zafgen and Chondrial management and harm the combined company’s business, and insurance coverage may not be sufficient to cover all related costs and damages.

Securities litigation or stockholder derivative litigation frequently follows the announcement of certain significant business transactions, such as the sale of a business division or announcement of a business combination transaction. Zafgen and Chondrial may become involved in this type of litigation in connection with the merger, and the combined company may become involved in this type of litigation in the future. Litigation often is expensive and diverts management’s attention and resources, which could adversely affect the business of Zafgen, Chondrial and the combined company.

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

If the merger is not completed and the merger agreement is terminated under certain circumstances, Zafgen or Chondrial may be required to pay the other party a termination fee of $3,375,000 and/or an expense reimbursement of up to $350,000. Even if a termination fee or expense reimbursement is not payable in connection with a termination of the merger agreement, each of Zafgen and Chondrial will have incurred significant fees and expenses, which must be paid whether or not the merger is completed. Further, if the merger is not completed, it could significantly harm the market price of Zafgen common stock.

The Exchange Ratio is not adjustable based on the market price of Zafgen common stock so the merger consideration at the closing may have greater or lesser value than the market price at the time the merger agreement was signed.

The merger agreement has set the Exchange Ratio (as defined in the merger agreement) for Chondrial common stock, and the Exchange Ratio (as defined in the merger agreement) is based on the outstanding Chondrial common stock and the outstanding Zafgen common stock, in each case immediately prior to the closing of the merger as described under the heading “The Merger—Merger Consideration.” Applying the exchange ratio formula in the merger agreement, Chondrial’s stockholder immediately before the merger is expected to own [●]% of the outstanding capital stock of Zafgen immediately following the merger, and the stockholders of Zafgen immediately before the merger are expected to own approximately [●]% of the outstanding capital stock of Zafgen immediately following merger, subject to certain assumptions. Under certain circumstances further described in the merger agreement, however, these ownership percentages may be adjusted upward or downward based on the date the closing occurs and the cash levels of the respective companies at the closing of the merger, and as a result, either Zafgen’s stockholders could own less of the combined company than expected.

Any changes in the market price of Zafgen common stock before the completion of the merger will not affect the number of shares of Zafgen common stock issuable to Chondrial’s stockholder pursuant to the merger agreement. Therefore, if before the completion of the merger the market price of Zafgen common stock declines from the market price on the date of the merger agreement, then Chondrial’s stockholder could receive merger consideration with substantially lower value than the value of such merger consideration on the date of the merger agreement. Similarly, if before the completion of the merger the market price of Zafgen common stock increases from the market price of Zafgen common stock on the date of the merger agreement, then Chondrial’s stockholder could receive merger consideration with substantially greater value than the value of such merger consideration on the date of the merger agreement. The merger agreement does not include a price-based termination right. Because the exchange ratio does not adjust as a result of changes in the market price of Zafgen common stock, for each one percentage point change in the market price of Zafgen common stock, there is a corresponding one percentage point rise or decline, respectively, in the value of the total merger consideration payable to Chondrial’s stockholder pursuant to the merger agreement.

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

The terms of the merger agreement prohibit each of Zafgen and Chondrial from soliciting alternative takeover proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances when the Zafgen Board determines in good faith that an unsolicited alternative takeover proposal is or is reasonably likely to lead to a superior takeover proposal and that failure to cooperate with the proponent of the proposal would be reasonably likely to be inconsistent with the Zafgen Board’s fiduciary duties.

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If the conditions to the merger are not met, the merger may not occur.

Even if the share issuance and reverse stock split are approved by Zafgen’s stockholders, specified conditions must be satisfied or waived to complete the merger. These conditions are set forth in the merger agreement and described in the section entitled “The Merger Agreement—Conditions to the Completion of the Merger”. Zafgen cannot assure you that all of the conditions will be satisfied or waived. If the conditions are not satisfied or waived, the merger will not occur or will be delayed, and Zafgen and Chondrial each may lose some or all of the intended benefits of the merger.

Risks Related to the Reverse Stock Split

The reverse stock split may not increase Zafgen’s stock price over the long-term.

The principal purpose of the reverse stock split is to increase the per-share market price of Zafgen common stock above the minimum bid price requirement under the NASDAQ rules so that the listing of the combined company and the shares of Zafgen common stock being issued in the merger on NASDAQ will be approved. It cannot be assured, however, that the reverse stock split will accomplish this objective for any meaningful period of time. While it is expected that the reduction in the number of outstanding shares of common stock will proportionally increase the market price of Zafgen common stock, it cannot be assured that the reverse stock split will increase the market price of its common stock by a multiple of the reverse stock split ratio chosen by the Zafgen Board in its sole discretion, or result in any permanent or sustained increase in the market price of Zafgen common stock, which is dependent upon many factors, including Zafgen’s business and financial performance, general market conditions, and prospects for future success. Thus, while the stock price of the combined company might meet the continued listing requirements for NASDAQ initially, it cannot be assured that it will continue to do so.

The reverse stock split may decrease the liquidity of Zafgen common stock.

Although the Zafgen Board believes that the anticipated increase in the market price of Zafgen common stock could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the reverse stock split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for Zafgen common stock.

The reverse stock split may lead to a decrease in Zafgen’s overall market capitalization.

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

Risks Related to Zafgen

Zafgen may not be able to comply with all applicable listing requirements or standards of NASDAQ and NASDAQ could delist Zafgen common stock.

Zafgen common stock is currently listed on NASDAQ. In order to maintain that listing, Zafgen must satisfy minimum financial and other continued listing requirements and standards. One such requirement is that Zafgen

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maintain a minimum bid price of at least $1.00 per share for Zafgen common stock. For example, in April 2020, Zafgen received a letter from the Listing Qualifications Department of the NASDAQ (referred to as the “NASDAQ Notice”) advising Zafgen that for 30 consecutive trading days preceding the date of the NASDAQ Notice, the bid price of Zafgen common stock had closed below the $1.00 per share minimum required for continued listing on NASDAQ pursuant to Nasdaq Listing Rule 5450(a)(1) (referred to as the “minimum bid price requirement”).

Under Nasdaq Listing Rule 5810(c)(3)(A), if during the 180 calendar day period following the date of the NASDAQ Notice the closing bid price of Zafgen common stock is at or above $1.00 for a minimum of 10 consecutive business days, Zafgen will regain compliance with the minimum bid price requirement and Zafgen common stock will continue to be eligible for listing on NASDAQ, absent noncompliance with any other requirement for continued listing. On April 16, 2020, NASDAQ announced it was providing temporary relief from continued listing bid price requirements through June 30, 2020. Under the relief Zafgen will have additional time to regain compliance with the listing bid price requirements with the compliance period beginning July 1, 2020. As such, the compliance period for Zafgen will expire on December 28, 2020.

If Zafgen does not regain compliance with the minimum bid price requirement within an allotted grace period, then under Nasdaq Listing Rule 5810(c)(3)(A)(i) Zafgen may transfer to The Nasdaq Capital Market, provided that Zafgen meets the applicable market value of the publicly held shares requirement for continued listing as well as all other standards for initial listing of Zafgen common stock on The Nasdaq Capital Market and Zafgen notifies NASDAQ of Zafgen’s intention to cure the deficiency during a second grace period. Following a transfer to The Nasdaq Capital Market, Zafgen may be afforded an additional 180-days to regain compliance with the minimum bid price requirement. If Zafgen does not regain compliance with the minimum bid price requirement within the allotted grace period, shares of Zafgen common stock would be subject to delisting. In the event that Zafgen common stock is not eligible for continued listing on NASDAQ or another national securities exchange, trading of Zafgen common stock could be conducted in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board. In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, Zafgen common stock, and there would likely also be a reduction in Zafgen coverage by security analysts and the news media, which could cause the price of Zafgen common stock to decline further. Also, it may be difficult for Zafgen to raise additional capital if Zafgen is not listed on a major exchange.

In September 2019, Zafgen received a similar notice from NASDAQ that Zafgen was not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on NASDAQ. Prior to the expiration of the then compliance period, Zafgen came into compliance with the minimum bid price requirements and was notified by NASDAQ of such compliance and the matter was closed.

For additional risks related to the business of Zafgen, please refer to the section entitled “Item 1A. Risk Factors” set forth in Zafgen’s Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the SEC on March 5, 2020, as updated by the subsequent quarterly reports on Form 10-Q.

Risks Related to Chondrial

Risks Related to Chondrial’s Financial Position and Need for Capital

Chondrial has incurred significant losses since its inception and anticipates that it will incur continued losses for the foreseeable future.

Since Chondrial’s inception in November 2016, it has devoted substantially all of its resources to the development of CTI-1601. Chondrial has incurred significant losses in each year of operation since its inception. For the year ended December 31, 2019, Chondrial had net losses of $23.1 million and as of December 31, 2019, had an accumulated deficit of $23.1 million and Chondrial expects to continue to incur significant expenses and net operating losses for the foreseeable future. The Chondrial financial statements for the years ended December 31, 2019 and December 31, 2018 include disclosures regarding management’s assessment of Chondrial’s ability

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to continue as a going concern and a report from Chondrial’s independent registered public accounting firm that includes an explanatory paragraph regarding going concern, as there is substantial doubt about Chondrial’s ability to continue as a going concern due to its current liquidity position and recurring losses from operations since inception and negative cash flows from operating activities.

Chondrial has devoted substantially all of its financial resources and efforts to research and development, including nonclinical studies and Chondrial’s clinical development program as well as the development of manufacturing processes. Chondrial expects to incur significant losses for the foreseeable future to further develop and commercialize its lead drug candidate.

Chondrial expects that its expenses will increase substantially if and as it:

Net losses and negative cash flows have had, and will continue to have, an adverse effect on Chondrial’s stockholder’s (deficit) equity and working capital.

Chondrial has no commercial revenue and may never become profitable.

To date, Chondrial has not generated any commercial revenue. Chondrial’s ability to generate revenue and become profitable depends upon its ability to obtain regulatory approval for, and successfully commercialize, CTI-1601 or other product candidates that it may develop, in-license or acquire in the future.

This will require success in a range of challenging activities, including completing clinical trials of CTI-1601 or any future product candidates, obtaining marketing approval for CTI-1601 and any future product candidates, manufacturing, marketing and selling those products for which Chondrial, or any future collaborators, may obtain marketing approval, satisfying any post-marketing requirements and obtaining reimbursement for Chondrial’s products from private insurance or government payors. Even if Chondrial is able to successfully achieve the above, Chondrial does not know what the reimbursement status of CTI-1601 or any other future product candidates will be or when any of these products will generate revenue for Chondrial, if at all. Chondrial has not generated, and does not expect to generate, any product revenue for the foreseeable future, and expects to continue to incur significant operating losses for the foreseeable future due to the cost of research and development, nonclinical studies and clinical trials and the regulatory approval process for CTI-1601 and any future product candidates.

Chondrial’s ability to generate revenue from CTI-1601 or any future product candidates also depends on a number of additional factors, including its ability to:

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Because of the uncertainties and risks associated with these activities, Chondrial is unable to accurately predict the timing and amount of increased expenses, and if or when it might achieve or maintain profitability. Chondrial and any future collaborators may never succeed in these activities and, even if it does, or any future collaborators do, Chondrial may never generate revenues that are large enough for it to achieve profitability. Even if Chondrial is able to complete the processes described above, it anticipates incurring significant costs associated with commercializing CTI-1601 or any of its future product candidates. Even if Chondrial achieves profitability in the future, it may not be able to sustain profitability in subsequent periods.

Chondrial will need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force Chondrial to delay, limit or terminate its product development efforts or other operations.

Chondrial expects to continue to spend substantial and increasing amounts to conduct clinical trials of CTI-1601 and further research and development activities for CTI-1601, and for any additional product candidates that it may develop, in-license or acquire in the future. In addition, Chondrial’s expenses will increase as it expands, through development, in-license or acquisition, its pipeline of product candidates. If Chondrial obtains marketing approval for any of its product candidates, Chondrial will likely incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution to the extent that such sales, marketing, manufacturing and distribution are not the responsibility of a future collaborator. Accordingly, Chondrial will need to obtain additional funding in connection with its continuing operations.

As of December 31, 2019, Chondrial’s existing cash and cash equivalents were $1.0 million. This amount, combined with the cash and cash equivalents of Zafgen that will be acquired in the merger and the additional $15.0 million of funding to be received through the Series B bridge convertible preferred units offering, will not be sufficient to fund all of the efforts that it plans to undertake or to fund the completion of development of CTI-1601. Accordingly, Chondrial will be required to obtain further funding through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources. The incurrence of indebtedness would result in increased fixed payment obligations and Chondrial may be required to agree to certain restrictive covenants, such as limitations on its ability to incur additional debt, limitations on its ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact its ability to conduct its business.

Any additional fundraising efforts may divert Chondrial’s management from their day-to-day activities, which may adversely affect its ability to develop and commercialize its product candidates. In addition, Chondrial cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to it, if at all. Chondrial could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and it may be required to relinquish rights to some of its technologies or product candidates or otherwise agree to terms unfavorable to Chondrial, any of which may have a material adverse effect on its business, operating results and prospects.

If Chondrial is unable to obtain funding on a timely basis, or on acceptable terms, it may be required to significantly curtail, delay or discontinue one or more of its research or development programs or the

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commercialization of any product candidate. Chondrial’s failure to raise capital as and when needed would have a negative impact on its business, financial condition and results of operations and its ability to pursue the development of CTI-1601 or future product candidates.

Raising additional capital may cause dilution to Chondrial’s existing stockholders, restrict its operations or require it to relinquish rights to its technologies, CTI-1601 or other product candidates that it may develop, in-license or acquire in the future.

Chondrial may seek additional capital through a combination of private and public equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. To the extent Chondrial raises additional capital through the sale of equity or convertible debt securities, existing ownership interests will be diluted and the terms of such financings may include liquidation or other preferences that adversely affect the rights of existing stockholders. Debt financings may be coupled with an equity component, such as warrants to purchase shares, which could also result in dilution of Chondrial’s existing stockholder’s ownership.

If Chondrial raises additional funds through strategic partnerships and alliances and licensing arrangements with third parties, it may have to relinquish valuable rights to CTI-1601 or other product candidates that it may develop, in-license or acquire in the future, or grant licenses on terms that are not favorable to it.

Chondrial’s ability to use its NOLs and certain other tax attributes may be limited.

Under Section 382 of the Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. Chondrial has completed several financings since its inception, which it believes have resulted in a change in control as defined by Section 382 of the Code. Chondrial may also experience ownership changes in the future as a result of subsequent shifts in its stock ownership. As a result, if Chondrial earns net taxable income, its ability to use its pre-change NOLs to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to Chondrial. The Tax Cuts and Jobs Act of 2017 (referred to as the “Tax Act”), which significant reformed the Code, also reduced the corporate income tax rate to 21%, from a prior rate of 35%. This may cause a reduction in the economic benefit of Chondrial’s NOLs and other deferred tax assets available to Chondrial. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed and would adversely affect Chondrial’s business, financial condition and results of operations.

Risks Related to Chondrial’s Product Development and Regulatory Approvals

The success of Chondrial is currently dependent upon the success of its sole product candidate, CTI-1601, which is currently in Phase 1 clinical trials. Chondrial cannot be certain that it will be successful with its clinical development or that Chondrial will be able to obtain regulatory approval for CTI-1601.

Chondrial currently has no drug products for sale and its business is currently dependent on its successful clinical development, regulatory approval and commercialization of CTI-1601, which is in Phase 1 clinical trials.

If Chondrial’s efforts to develop and commercialize CTI-1601 for the treatment of Friedreich’s Ataxia are unsuccessful, or Chondrial experiences significant delays in doing so, its business could also be substantially harmed. The success of CTI-1601 will depend on several factors, including the following:

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Many of these factors are outside of Chondrial’s control, including the clinical development and regulatory approval processes, results of nonclinical and toxicology studies and clinical trials, potential threats to Chondrial’s intellectual property rights and the manufacturing, marketing and sales efforts, respectively, of any current or future third-party contractors. The process of obtaining regulatory approval is expensive and time consuming. The FDA and foreign regulatory authorities may never approve CTI-1601 for sale and marketing, and even if CTI-1601 is ultimately approved, regulatory approval may be delayed or limited in the United States or in other jurisdictions. Even if Chondrial is authorized to sell and market CTI-1601 in one or more markets, there is no assurance that Chondrial will be able to successfully market CTI-1601 or that CTI-1601 will achieve market acceptance sufficient to generate profits. If Chondrial is unable to successfully develop and commercialize CTI-1601 due to failure to obtain regulatory approval for CTI-1601, to successfully market CTI-1601, to generate profits from the sale of CTI-1601, or due to other risk factors outlined in this report, it would have material adverse effects on Chondrial’s business, financial condition, and results of operations as CTI-1601 is currently Chondrial’s sole product candidate.

Clinical development is a lengthy and expensive process with an uncertain outcome, and the results of nonclinical studies, toxicology studies or clinical trials may not be predictive of future nonclinical studies, toxicology studies or clinical trial results.

Clinical development is expensive and can take many years to complete, and its outcome is inherently uncertain. Chondrial cannot guarantee that any nonclinical studies, toxicology studies or clinical trials will be conducted as planned or completed on schedule, if at all, and failure can occur at any time during the nonclinical study, toxicology study or clinical trial process. Despite promising nonclinical, toxicology or clinical results, any product candidate can unexpectedly fail at any stage of nonclinical, toxicology or clinical development. The historical failure rate for product candidates in Chondrial’s industry is high, especially for products in early stages of development.

The results from nonclinical studies, toxicology studies or clinical trials of a product candidate may not predict the results of later nonclinical or clinical trials of the product candidate, and interim results of a clinical

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trial are not necessarily indicative of final results. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy characteristics despite having progressed through nonclinical studies and initial clinical trials. It is not uncommon to observe results in clinical trials that are unexpected based on nonclinical studies and early clinical trials, and many product candidates fail in clinical trials despite very promising early results.

Moreover, this and any future nonclinical and clinical data may be susceptible to varying interpretations and analyses. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical development even after achieving promising results in earlier studies. Furthermore, Chondrial cannot assure you that it will be able to successfully progress any future nonclinical programs from candidate identification to Phase 1 clinical development. As is typical in candidate development, Chondrial has a program of ongoing toxicology studies in animals for CTI-1601 and cannot provide assurance that the findings from such studies or any ongoing or future clinical trials will not adversely affect the clinical development of CTI-1601. For the foregoing reasons, Chondrial cannot be certain that its ongoing and planned nonclinical studies and clinical trials will be successful. If nonclinical or clinical trials for CT1-1601 or any future product candidates or indications fail to demonstrate safety or efficacy to the satisfaction of the FDA or the equivalent regulatory authorities in other countries, the FDA or equivalent regulatory authority will not approve Chondrial’s product candidates in those and other indications, which could have a material adverse effect on Chondrial’s business, financial condition and results of operations.

Chondrial does not know whether any clinical trials for CTI-1601 will be completed on schedule, if at all, as the commencement and completion of clinical trials can be delayed, prevented or terminated for a number of reasons, including as a result of ambiguous or negative interim results. In addition, a clinical trial may be suspended or terminated by Chondrial, the FDA, other regulatory authorities, the institutional review boards (referred to as “IRBs”) or ethics committees, a data monitoring committee, or safety review committee, overseeing the clinical trial at issue or other regulatory authorities due to a number of factors, including, among others:

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Failures or delays in the completion of Chondrial’s clinical trials could result in increased costs and could delay, prevent or limit its ability to generate revenue and continue Chondrial’s business.

Chondrial’s lead product candidate CTI-1601 is currently in Phase 1 clinical trials, and there are a number of FDA regulatory requirements that Chondrial must satisfy before it can commence late-stage clinical trials of CTI-1601. To receive approval of CTI-1601 in other countries Chondrial will also have to satisfy their regulatory requirements. Satisfaction of these requirements will entail substantial time, effort and financial resources. Chondrial may never satisfy these requirements. Clinical trials may also be delayed or terminated as result of ambiguous or negative interim results or events outside of Chondrial’s control. Chondrial is currently evaluating CTI-1601 in a SAD Phase 1 clinical trial in patients with Friedreich’s Ataxia. The first two cohorts of patients have completed the SAD clinical trial; however, due to the continued impact of COVID-19, Chondrial has delayed initiation of the next cohort in the SAD clinical trial. Chondrial is conducting the clinical trial at one clinical trial site in New Jersey. Because Friedreich’s Ataxia is a rare disease, there are a limited number of patients in close proximity to the clinical trial site and clinical trial patients travel from throughout the United States to the clinical trial site to participate. The travel advisories and risk of infection related to COVID-19 have presented increased risks to patients traveling to Chondrial’s clinical trial site for dosing. Due to the uncertainty surrounding COVID-19, Chondrial cannot estimate when the next cohort of patients will begin the clinical trial. While top line results from the SAD and MAD clinical trials were originally expected by the end of 2020, the delay in the clinical trial timeline caused by the ongoing impact of COVID-19 may result in top line results being delayed until the first half of 2021. If Phase 1 clinical trials of CTI-1601 fail or further delays occur, Chondrial may not be able to develop and commercialize CTI-1601 and could fail to realize the potential advantages of doing so, and it could materially adversely affect Chondrial’s business, financial condition and results of operations.

Chondrial may not be successful in its efforts to identify, discover or acquire additional product candidates.

Chondrial only has one product candidate CTI-1601, which is in Phase 1 clinical trials in the United States. Therefore, the success of Chondrial’s business largely depends upon Chondrial’s ability to identify, develop, in-license or acquire and commercialize products targeting rare diseases. Chondrial may focus its efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful. In addition, Chondrial’s research methodology may be unsuccessful in identifying potential product candidates or Chondrial’s potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval.

Research programs to identify new product candidates require substantial technical, financial and human resources. Chondrial may focus Chondrial’s efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful. If any of these events occur, Chondrial may be forced to abandon Chondrial’s development efforts for a program or programs, which would have a material adverse effect on Chondrial’s business, financial condition and results of operations.

Chondrial has no marketed proprietary products and has not yet advanced a product candidate beyond Phase 1 clinical trials, which makes it difficult to assess Chondrial’s ability to develop CTI-1601 or any future product candidates and commercialize any resulting products independently.

As a company, Chondrial has no experience in Phase 2 and later stage clinical development, and related regulatory requirements or the commercialization of products. Chondrial has not yet demonstrated its ability to

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independently and repeatedly conduct clinical development after Phase 1, which has not yet been successfully completed, successfully conduct an international multi-center clinical trial, complete a clinical trial, conduct a pivotal clinical trial, obtain regulatory approval, manufacture drug product on a commercial scale or arrange for a third party to do so on Chondrial’s behalf, and commercialize therapeutic products. Chondrial will need to develop such abilities if it is to execute on its business strategy to develop and independently commercialize product candidates for orphan and niche indications. To execute on Chondrial’s business plan for the development of independent programs, it will need to successfully:

If Chondrial is unsuccessful in accomplishing these objectives, it will not be able to develop and commercialize any product candidates independently and could fail to realize the potential advantages of doing so, and it would materially adversely affect Chondrial’s business, financial condition and results of operations.

Chondrial cannot be certain that it will be able to successfully complete clinical trials for CTI-1601 or any other product candidates.

Chondrial currently has only one product candidate in clinical development, CTI-1601, which is in Phase 1 clinical trials in the United States. Chondrial’s business currently depends primarily on CTI-1601’s successful clinical development, regulatory approval and commercialization. Chondrial submitted its IND and its application has gone into effect, permitting the conduct of clinical trials. However, the outcome of toxicology studies and early clinical trials may not be positive and may not be predictive of the success of later nonclinical studies or clinical trials, and interim results of clinical trials do not necessarily predict success in those or future clinical trials.

Published clinical data or case reports from third parties or early clinical trial data of CTI-1601 or any future product candidates may not be predictive of the results of later-stage clinical trials. Interpretation of results from early, usually smaller, studies that suggest a clinically meaningful response in some patients, requires caution. Results from later stages of clinical trials enrolling more patients may fail to show the desired safety or efficacy results or otherwise fail to be consistent with the results of earlier trials of the same product candidate. Later clinical trial results may not replicate earlier clinical trials for a variety of reasons, including differences in trial design, different trial endpoints (or lack of trial endpoints in exploratory studies), patient population, number of patients, patient selection criteria, trial duration, drug dosage and formulation and lack of statistical power in the earlier trials. These uncertainties are enhanced where the diseases under study lack established clinical endpoints, validated measures of efficacy, as is often the case with orphan diseases for which no drugs have been developed previously and where the product candidates target novel mechanisms. For example, to Chondrial’s knowledge, CTI-1601 is the only protein replacement therapy being developed for the treatment of Friedreich’s Ataxia and therefore nonclinical studies may not be adequate to predict efficacy in a clinical trial due to its novel protein replacement therapy platform.

In some instances, there can be significant variability in safety or efficacy results between different clinical trials of the same product candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, variability of the disease being studied, changes in and adherence to the dosing regimen and other clinical trial protocols and the rate of dropout among

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clinical trial participants. If Chondrial fails to receive positive results in clinical trials of CTI-1601, the development timeline and regulatory approval and commercialization prospects for CTI-1601, and, correspondingly, Chondrial’s business, financial prospects and results of operation would be negatively impacted.

Further, CTI-1601 or any future product candidates may not be approved even if they achieve their primary endpoint in clinical trials. The FDA, EMA or foreign regulatory authorities may disagree with Chondrial’s trial design and its interpretation of data from nonclinical studies and clinical trials. In addition, any of these regulatory authorities may change its requirements for the approval of a product candidate even after reviewing and providing comments or advice on a protocol for a pivotal clinical trial that, if successful, would potentially form the basis for an application for approval by the FDA, EMA or another regulatory authority. Furthermore, any of these regulatory authorities may also approve CTI-1601 or any future product candidates for a narrower indication than Chondrial may request or may grant approval contingent on the performance of costly post-marketing clinical trials. Any of the above could materially adversely affect Chondrial’s business, financial condition and results of operations.

Unforeseen safety issues or adverse events, including any that may be identified in Chondrial’s ongoing toxicology studies or clinical trials, may delay or prevent the development and regulatory approval of CTI-1601, damage public perception of the safety of CTI-1601 or increase government regulation of CTI-1601.

Chondrial is collecting data about CTI-1601 from ongoing Phase 1 clinical trials and toxicology studies and unforeseen safety issues or adverse events caused by, or other unexpected properties of, CTI-1601 could be identified. Such safety issues or adverse events could cause Chondrial or regulatory authorities to interrupt, delay or halt clinical trials of CTI-1601 or could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities for CTI-1601, which would materially adversely affect Chondrial’s business, financial condition and results of operations.

Even if Chondrial was to receive regulatory approval for CTI-1601 following such events, these events could damage public perception of the safety of CTI-1601 and prevent Chondrial from achieving or maintaining market acceptance of CTI-1601 and significantly impact Chondrial’s ability to successfully commercialize CTI-1601 and generate revenues, all of which would materially adversely affect Chondrial’s business, financial condition and results of operations.

Chondrial may experience difficulties identifying and enrolling patients in its clinical trials given the limited number of patients who have the diseases for which CTI-1601 is being studied or for any other product candidate it may study in the future. Difficulty in enrolling patients could delay or prevent clinical trials of CTI-1601 or any future product candidate.

Identifying and qualifying patients to participate in clinical trials of CTI-1601 is critical to Chondrial’s success. The timing of Chondrial’s clinical trials depends in part on the speed at which it can recruit patients to participate in testing CTI-1601, and Chondrial may experience delays in its clinical trials if it encounters difficulties in enrollment.

The conditions for which Chondrial is planning to evaluate CTI-1601, and any product candidates it may evaluate in the future, are rare genetic diseases. Accordingly, there are limited patient pools from which to draw for clinical trials. Chondrial is investigating its product candidate in Friedreich’s Ataxia, a rare disease. Arranging for investigative sites and recruiting patients for clinical trials in this disease may be very difficult. In addition, if other companies are investigating their investigational products in Friedreich’s Ataxia, it may be more difficult to enroll eligible patients into Chondrial’s clinical trials. If the actual number of patients with Friedreich’s Ataxia is lower than Chondrial believes or if any approval that Chondrial obtains is based on a narrower definition of these patient populations, then the potential market for CTI-1601 will be smaller than Chondrial anticipates.

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In addition to the rarity of Friedreich’s Ataxia and other diseases that Chondrial is studying, the eligibility criteria of Chondrial’s clinical trials will further limit the pool of available study participants as it will require patients to have specific characteristics that it can measure to assure their disease is either severe enough or not too advanced to include them in a clinical trial. The process of finding and diagnosing patients may prove costly, especially since the diseases Chondrial is studying are rare. Chondrial also may not be able to identify, recruit, and enroll a sufficient number of appropriate patients to complete its clinical trials because of demographic criteria for prospective patients, the perceived risks and benefits of the product candidate under study, the proximity and availability of clinical trial sites for prospective patients, and the patient referral practices of physicians. The availability and efficacy of competing therapies and clinical trials can also adversely impact enrollment. If patients are unwilling to participate in Chondrial’s trials for any reason, the timeline for recruiting patients, conducting trials, and obtaining regulatory approval of potential products may be delayed, the commercial prospects of Chondrial’s product candidates will be harmed, and its ability to generate product revenue from any of these product candidates could be delayed or prevented. Furthermore, Chondrial’s inability to enroll a sufficient number of patients for Chondrial’s clinical trials could result in significant delays or may require Chondrial to abandon one or more clinical trials altogether. Enrollment delays in Chondrial’s clinical trials may result in increased development costs for CTI-1601 or any future product candidates, and jeopardize Chondrial’s ability to achieve Chondrial’s clinical development timeline and goals, including the dates by which Chondrial will commence, complete and receive results from clinical trials. Enrollment delays in Chondrial’s clinical trials may also jeopardize Chondrial’s ability to commence sales of and generate revenues from CTI-1601, which could cause the value of Chondrial’s company to decline and limit Chondrial’s ability to obtain additional financing, if needed. Any of these occurrences may harm Chondrial’s business, financial condition, and prospects significantly.

Friedreich’s Ataxia has no FDA-approved treatments, and clinical endpoints required to obtain approval are not well defined.

There are currently no therapies approved to treat Friedreich’s Ataxia. Chondrial has concentrated its research and development efforts on developing a novel therapeutic for the treatment of Friedreich’s Ataxia, and its future success depends on the success of this therapeutic approach. The clinical trial requirements of the FDA and other comparable regulatory agencies and the criteria these regulators use to determine the safety and efficacy of any product candidate vary substantially according to the type, complexity, novelty and intended use and market of the potential product. Given the nature of Friedreich’s Ataxia, Chondrial may have to devise novel clinical endpoints to be tested in its clinical trials, which can lead to some subjectivity in interpreting trial results and could result in regulatory agencies not agreeing with the validity of Chondrial’s endpoints, or Chondrial’s interpretation of the clinical data, and therefore denying approval, which would materially adversely affect Chondrial’s business, financial condition and results of operations. As a result, the design and conduct of clinical trials for a therapeutic product candidate such as CTI-1601 that is intended to deliver human FXN through a subcutaneously administered, recombinant fusion protein in Friedreich’s Ataxia patients is subject to unknown risks, and Chondrial may experience setbacks with its ongoing or planned clinical trials of CTI-1601 in Friedreich’s Ataxia because of the limited clinical experience with its mechanism of action in these patients.

In particular, regulatory authorities in the United States and the European Union (also referred to as the “EU”) have not issued definitive guidance as to how to measure and achieve efficacy in treatments for Friedreich’s Ataxia. As a result, the design and conduct of clinical trials of CTI-1601 may take longer, be more costly or be less effective as part of the novelty of development in Friedreich’s Ataxia. Chondrial may use new or novel endpoints or methodologies, and the FDA or other regulatory authorities may not consider the endpoints of its clinical trials to provide clinically meaningful results. Even if applicable regulatory authorities do not object to Chondrial’s proposed endpoints in an earlier stage clinical trial, such regulatory authorities may require evaluation of additional or different clinical endpoints in later-stage clinical trials.

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CTI-1601 may cause adverse events or undesirable side effects that could delay or prevent its regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

Chondrial is collecting data about CTI-1601 from ongoing Phase 1 clinical trials and toxicology studies and any adverse events or undesirable side effects caused by, or other unexpected properties of, CTI-1601 could cause Chondrial, any future collaborators, an IRB or ethics committee or regulatory authorities to interrupt, delay or halt clinical trials of Chondrial’s product candidate and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities. It is possible that as Chondrial progresses CTI-1601 through clinical trials and toxicology studies, or as the use of CTI-1601 becomes more widespread if it receives regulatory approval, illnesses, injuries, discomforts and other adverse events that were not observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials, will be reported by patients. If such side effects become known later in development or after approval, such findings may harm Chondrial’s business, financial condition and prospects significantly. Further, if a serious safety issue is identified in connection with the use of CTI-1601 commercially or in third-party clinical trials elsewhere, such issues may adversely affect the development potential of CTI-1601 elsewhere or result in regulatory authorities restricting Chondrial’s ability to develop or commercialize CTI-1601.

Further, if CTI-1601, were to receive marketing approval and Chondrial or others identify undesirable side effects caused by the product (or any other product) after the approval, a number of potentially significant negative consequences could result, including:

Any of these events could prevent Chondrial from achieving or maintaining market acceptance of the affected product candidate and could substantially increase the costs of commercializing Chondrial’s product candidates and significantly impact Chondrial’s ability to successfully commercialize Chondrial’s product candidates and generate revenues, all of which would materially adversely affect Chondrial’s business, financial condition and results of operations.

Chondrial’s approach to discover and develop fusion proteins for delivering proteins is novel and may never lead to marketable products.

Chondrial has concentrated its efforts and research and development activities on delivering proteins (FXN or other) to intracellular targets. Chondrial’s future success depends on the successful development and manufacturing of such therapeutics and the effectiveness of Chondrial’s platform. The scientific discoveries that form the basis for Chondrial’s research are relatively new.

CTI-1601 uses a novel and unproven approach and mechanism to treat Friedreich’s Ataxia and therefore its efficacy and safety are difficult to predict, and there is no guarantee that CTI-1601 will be approved by the FDA.

If Chondrial’s lead product candidate proves to be ineffective, unsafe or commercially unviable, it is possible that Chondrial’s platform and pipeline would have little, if any, value, which would substantially harm

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Chondrial’s business, financial condition, results of operations and prospects. In addition, Chondrial’s approach may expose Chondrial to additional financial risks and make it more difficult to raise additional capital than other, more advanced proven technologies, which would materially adversely affect Chondrial’s business, financial condition and results of operations.

Protein replacement therapies are novel, complex and difficult to manufacture. Chondrial could experience manufacturing problems that result in delays in the development or commercialization of Chondrial’s protein replacement therapy platform or product candidates or otherwise harm Chondrial’s business.

The manufacture of fusion proteins, such as CTI-1601 and any fusion protein candidates, is technically complex and necessitates substantial expertise and capital investment. Production difficulties caused by unforeseen events may delay the availability of material for clinical trials and commercial products for CTI-1601 or any fusion protein product that may receive regulatory approval in the future. Additionally, because biologic products are complex, the manufacture of such products and product candidates is more difficult and costly. Chondrial may not be able to have such products reliably manufactured in accordance with the applicable regulatory requirements in sufficient quantities to support its development programs and, if ultimately approved, commercial supply. Chondrial contracts with third parties for the manufacturing of program materials for CTI-1601.

There are a limited number of contract manufacturers who specialize in the manufacture of biologic products and those that do may still be developing appropriate processes, controls and facilities for large-scale production. While Chondrial believes that there will be sufficient sources of supply that can satisfy its clinical and commercial requirements, it cannot be certain that it will be able to identify and establish additional relationships with such sources, if necessary, in a timely manner or at all, and what the terms and costs of such new arrangements would be, or that such suppliers would be able to supply Chondrial’s potential commercial needs. Furthermore, in the event Chondrial’s primary manufacturer cannot meet its needs, any switch to an alternative manufacturer would result in a significant delay, would require FDA approval, and cause material additional costs.

As further described in these risk factors, the manufacturers of biologic products must comply with strictly enforced cGMP requirements, state and federal regulations, as well as foreign requirements when applicable. Any failure by Chondrial or its contract manufacturing organizations to adhere to or document compliance to such regulatory requirements could lead to a delay or interruption in the availability of Chondrial’s program materials for clinical trials or commercial use, among other consequences. If Chondrial or its manufacturers fail to comply with the FDA, EMA, or other regulatory authorities, it could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, clinical holds or termination of clinical trials, warning or untitled letters, regulatory communications warning the public about safety issues with a product, import or export refusals, license revocation, seizures, detentions, or recalls of product candidates or product, operating restrictions, criminal prosecutions or debarment, suits under the civil False Claims Act, corporate integrity agreements, or consent decrees any of which could significantly and adversely affect supplies of Chondrial’s product candidates and its business, financial conditions and results of operations could be materially adversely affected.

Chondrial’s dependence upon others for the manufacture of its product candidates may also adversely affect its business, results of operations, financial condition and results of operations, and its ability to commercialize any product candidates that receive regulatory approval on a timely and competitive basis.

Fast track designation by the FDA or any future designations may not lead to a faster development, regulatory review or approval process and it does not increase the likelihood that any of Chondrial’s product candidates will receive marketing approval.

Chondrial has received fast track therapy designation for CTI-1601 for the treatment of Friedreich’s Ataxia. Chondrial may, in the future, apply for other accelerated programs from the FDA (such as breakthrough therapy

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or accelerated approval) for CTI-1601 or future product candidates. Designation for these programs is within the discretion of the FDA. Accordingly, even if Chondrial believes CTI-1601 or a future product candidate meets the criteria for designation, the FDA may disagree. In any event, the receipt of a designation may not result in a faster development process, review or approval compared to products considered for approval under conventional FDA procedures and, in any event, does not assure ultimate approval by the FDA. In addition, even though CTI-1601 has been designated as fast track, the FDA may later decide that it no longer meets the criteria for designation and revoke it. If Chondrial applies for designation to additional accelerated programs from the FDA for CTI-1601 or future product candidates, the FDA might not grant the designation. If Chondrial applies for any similar programs in foreign countries for CTI-1601 or future product candidates, those designations also might not be granted by the regulatory authorities of those countries. Any of the above could adversely affect Chondrial’s business, financial condition and results of operations.

If Chondrial fails to maintain orphan drug designation or other regulatory exclusivity for CTI-1601 or obtain such exclusivity for any of its other product candidates in the future, Chondrial’s competitive position would be harmed

Chondrial received orphan drug designation from the FDA for CTI-1601 in July 2017. In the United States, orphan drug designation entitles a party to financial incentives such as tax advantages and user-fee waivers. In addition, if a product candidate that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including an NDA, to market the same drug for the same indication for seven years, except in limited circumstances, including if the FDA concludes that the later drug is clinically superior to the approved drug. A drug is clinically superior if it is safer, more effective, or makes a major contribution to patient care. Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process.

Chondrial may lose orphan drug exclusivity if Chondrial is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition. Moreover, orphan drug exclusivity may not effectively protect Chondrial’s product candidates from competition because different drugs can be approved for the same condition. Even after an orphan drug is approved, the FDA or comparable foreign regulatory authority can subsequently approve the same drug for the same condition if such regulatory authority concludes that the later drug is clinically superior if it is shown to be safer, more effective or makes a major contribution to patient care. Loss of orphan drug designation for CTI-1601 or the failure to obtain such designation in other countries or for any future product candidates could adversely affect Chondrial’s business, financial condition and results of operation.

Although Chondrial has obtained rare pediatric disease designation for CTI-1601, it may not be eligible to receive a priority review voucher in the event the FDA determines it no longer meets the criteria for designation, revokes the designation or that FDA approval does not occur prior to October 1, 2022.

Chondrial received rare pediatric disease designation from the FDA for CTI-1601 in 2019. Chondrial may, in the future, apply for rare pediatric disease designation from the FDA for future product candidates that may qualify for designation. Vouchers for rare pediatric disease drugs are awarded when the designated drug receives approval. CTI-1601 may not receive approval and therefore, Chondrial may not receive a voucher. In addition, even though CTI-1601 has been designated as a drug for a rare pediatric disease, the FDA may later decide that it no longer meets the criteria for designation, revoke the designation or not award the voucher. If Chondrial applies for designation for future product candidates as drugs for rare pediatric diseases, the FDA may not grant the designation. In addition, the current law authorizing the rare pediatric disease program contains sunset provisions such that the FDA cannot award a voucher after September 30, 2020 unless the designation is granted by September 30, 2020 and the application is approved by September 30, 2022. Therefore, if Chondrial does not receive approval for CTI-1601 by September 30, 2022, or the legislation is not extended, it would not be able to receive a voucher. Furthermore, if the legislation is not extended, Chondrial would not be able to request

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designation for future product candidates or be eligible to receive vouchers for future product candidates. The failure to maintain rare pediatric disease designation for CTI-1601 or if FDA approval does not occur prior to October 1, 2022 could result in the inability to receive a priority review voucher which could adversely affect Chondrial’s business, financial condition and results of operations.

Changes in regulatory requirements, FDA guidance, guidance from other regulatory authorities or unanticipated events during Chondrial’s clinical trials of CTI-1601 may result in changes to clinical trial protocols or additional clinical trial requirements, which could result in increased costs to Chondrial and could delay Chondrial’s development timeline.

Changes in regulatory requirements, FDA guidance or guidance from EMA or unanticipated events during Chondrial’s clinical trials may force Chondrial to terminate or adjust its clinical program. The FDA, or the applicable regulatory authorities may impose additional clinical trial and/or nonclinical study requirements. Amendments to Chondrial’s clinical trial protocols would require resubmission to the FDA, or the applicable regulatory authorities as well as IRBs and ethics committees for review and approval, which may adversely impact the cost, timing or successful completion of a clinical trial. If Chondrial experiences delays completing, or if Chondrial terminates, any of its clinical trials, or if Chondrial is required to conduct additional clinical trials and/or nonclinical studies, the commercial prospects for CTI-1601 or any other potential product candidates may be harmed and Chondrial’s ability to generate product revenue will be delayed, and it would materially adversely affect Chondrial’s business, financial condition and results of operations.

Regulatory requirements governing biologic products have changed frequently and may continue to change in the future. Such requirements may lengthen the regulatory review process, require Chondrial to perform additional nonclinical studies or clinical trials, and increase Chondrial’s costs, or may force Chondrial to delay, limit or terminate certain of Chondrial’s programs.

Regulatory requirements governing biologic drug products are still evolving and may continue to change in the future. As a result, it is difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for CTI-1601 for the treatment of Friedreich’s Ataxia or any other future protein replacement therapy product candidates in any indication, if at all. Regulatory review agencies and the new requirements and guidelines they promulgate may lengthen the regulatory review process, require Chondrial to perform additional or larger studies, increase Chondrial’s development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of Chondrial’s product candidates or lead to significant post-approval studies, limitations or restrictions. Delays, failure or unexpected costs in obtaining, the regulatory approval necessary to bring Chondrial’s product candidates to market could have a material adverse effect on Chondrial’s business, results of operations, financial condition and prospects.

In addition, the clinical trial requirements of the FDA, the EMA and other regulatory authorities and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of such product candidates. The regulatory approval process for novel product candidates such as Chondrial’s can be more expensive and take longer than for other, better known or more extensively studied product candidates.

The clinical trials of CTI-1601 and any future product candidates are, and the manufacturing and marketing of CTI-1601 and any future product candidates will be subject to extensive and rigorous review and regulation by numerous government authorities in the United States and in other countries, such as within the EU, where Chondrial intends to seek regulatory approval of, and market, any product candidate.

Before obtaining regulatory approvals for the commercial sale of any product candidate, Chondrial must demonstrate through nonclinical testing and clinical trials that the product candidate is safe and effective for use in each target indication. This process can take many years. If marketing approval is obtained, it will likely include post-marketing studies, and other post-marketing requirements, and surveillance such as Risk Evaluation

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and Mitigation Strategies (referred to as “REMS”), which will require the expenditure of substantial resources beyond the proceeds Chondrial currently has on hand.

Furthermore, Chondrial is not permitted to market CTI-1601 in the United States or the EU until Chondrial receives approval of a BLA from the FDA or a MAA from the EMA, or in any other foreign countries until Chondrial receives the requisite marketing approval from such countries. The development of drugs for Friedreich’s Ataxia or other rare diseases may require initial nonclinical studies, early and usually smaller, clinical trials and randomized, double-blind placebo controlled long-term safety and efficacy trials in order to test the safety and efficacy of the drug.

CTI-1601 is currently in Phase 1 clinical trials in the United States and will require substantial further clinical development before Chondrial can submit a BLA to the FDA. Development and/or regulatory programs for CTI-1601 in any countries other than the United States (such as a MAA to the EMA) is only in very preliminary stages and may require substantial further development in those countries prior to regulatory submissions seeking regulatory approval for marketing.

Even after successful completion of clinical trials, there is a risk that the FDA or other regulatory agencies may request further information from Chondrial, disagree with Chondrial’s findings or otherwise undertake a lengthy review of its submission.

The FDA and certain European regulatory authorities may delay, limit or deny testing or approval of CTI-1601 for many reasons, including, among others:

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Any of these factors, many of which are beyond Chondrial’s control, could jeopardize Chondrial’s ability to obtain and/or maintain regulatory approval for and successfully market CTI-1601. Any delay or failure in obtaining required approvals could have a material adverse effect on Chondrial’s business, financial condition and results of operations. This process can take many years and will likely require the expenditure of substantial resources. Of the large number of drugs in development in the United States, only a small percentage will successfully complete the FDA regulatory approval process and be commercialized. It is possible that the FDA or other regulatory agencies will not approve any application that Chondrial submits. It is possible that Chondrial’s product candidates may not obtain appropriate regulatory approvals necessary for Chondrial to commence clinical trials for Chondrial’s product candidates. Accordingly, even if Chondrial is able to obtain the requisite financing to continue to fund Chondrial’s development and clinical trials, Chondrial cannot assure that CTI-1601, or any other of Chondrial’s potential product candidates will be successfully developed or commercialized.

Chondrial is subject to healthcare laws and regulations, and health information privacy and security laws, which could expose it to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

Healthcare providers, physicians and others will play a primary role in the recommendation and prescription of CTI-1601 or any potential product candidates, if approved. Chondrial’s future arrangements with third-party payors will expose it broadly to applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which Chondrial markets, sells and distributes CTI-1601 or potential product candidates, if Chondrial obtains marketing approval. In addition, Chondrial may be subject to patient privacy regulation by both the federal government and the states or other countries in which Chondrial conducts its business. Restrictions under applicable federal and state healthcare laws and regulations include the following:

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Ensuring that Chondrial’s future business arrangements with third parties comply with applicable healthcare laws and regulations could be costly. It is possible that governmental authorities will conclude that Chondrial’s business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If Chondrial’s operations, including anticipated activities to be conducted by Chondrial’s sales team, were found to be in violation of any of these laws or any other governmental regulations that may apply to Chondrial, Chondrial may be subject to significant civil, criminal and administrative penalties, damages, fines and exclusion from government funded healthcare programs, such as Medicare and Medicaid, any of which could substantially disrupt Chondrial’s operations and would materially adversely affect Chondrial’s business, financial condition and results of operations. If any of the physicians or other providers or entities with whom Chondrial expects to do business is found not to be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

Recently enacted and future legislation may increase the difficulty and cost for Chondrial to obtain regulatory approval of and commercialize Chondrial’s product candidates and affect the prices it may obtain.

The commercial potential for Chondrial’s approved products, if any, could be affected by changes in healthcare spending and policy in the United States and abroad. Chondrial operates in a highly regulated industry. New laws, regulations or judicial decisions or new interpretations of existing laws, regulations or decisions, related to healthcare availability, the method of delivery or payment for healthcare products and services could adversely affect Chondrial’s business, operations and financial condition.

For example, the ACA, has a significant impact on the healthcare industry. The ACA is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. The current presidential administration has indicated that enacting changes to the ACA is a legislative priority and has alternatively discussed repealing and replacing the ACA. While Congress has not passed repeal legislation to date, the Tax Act includes a provision that repealed the individual mandate, effective January 1, 2019. Further, on January 20, 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal burden on states or a cost, fee, tax, penalty or regulatory burden on individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. On

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October 13, 2017, President Trump signed an Executive Order terminating the cost-sharing subsidies that reimburse insurers under the ACA. In addition, the Centers for Medicare and Medicaid Services (referred to as the “CMS”) has proposed regulations that would give states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through these marketplaces. Congress will likely consider other legislation to replace elements of the ACA. Chondrial does not know at this time what implications these changes and other, proposed changes, if enacted, would have on the ACA’s current requirements or on Chondrial’s future business. Changes to the ACA or other existing health care regulations could significantly impact Chondrial’s business and the pharmaceutical industry.

In addition, on January 31, 2020, the United Kingdom exited from the European Union (referred to as “Brexit”). The effects of Brexit will depend on any agreements the United Kingdom makes to retain access to European Union markets either during a transitional period or more permanently. Brexit could lead to legal uncertainty and potentially divergent national laws and regulation as the United Kingdom determines which European Union laws to replace or replicate.

Chondrial cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If Chondrial or its collaborators are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if Chondrial’s or its collaborators are not able to maintain regulatory compliance, CTI-1601 or any future product candidates may lose any marketing approval that may have been obtained and Chondrial may not achieve or sustain profitability, which would materially adversely affect its business, financial condition and results of operations.

Even if approved, reimbursement policies could limit Chondrial’s ability to sell product candidates that Chondrial elects to sell on its own.

If approved by regulatory authorities, market acceptance and sales of product candidates that Chondrial elects to sell on its own will depend on reimbursement policies and may be affected by healthcare reform measures. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels for those medications. Cost containment is a primary concern in the U.S. healthcare industry and elsewhere. Government authorities and these third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Chondrial cannot be sure that reimbursement will be available for CTI-1601 or future product candidates that Chondrial elects to sell on its own and, if reimbursement is available, the level of such reimbursement. Reimbursement may impact the demand for, or the price of, product candidates that Chondrial elects to sell on its own. If reimbursement is not available or is available only at limited levels, Chondrial may not be able to successfully commercialize product candidates that Chondrial elects to sell on its own.

In some foreign countries, particularly in Canada and European countries, the pricing of prescription pharmaceuticals is subject to strict governmental control. In these countries, pricing negotiations with governmental authorities can take six to 12 months or longer after the receipt of regulatory approval and product launch. To obtain favorable reimbursement for the indications sought or pricing approval in some countries, Chondrial may be required to conduct a clinical trial that compares the cost-effectiveness of product candidates that Chondrial elects to sell on its own with other available therapies. If reimbursement for product candidates that Chondrial elects to sell on its own is unavailable in any country in which Chondrial seeks reimbursement, if it is limited in scope or amount, if it is conditioned upon Chondrial’s completion of additional clinical trials, or if pricing is set at unsatisfactory levels, Chondrial’s business, financial conditions and results of operations could be materially adversely affected.

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Even if Chondrial obtains regulatory and marketing approval for a product candidate, Chondrial’s product candidates will remain subject to regulatory oversight.

Even if Chondrial receives marketing and regulatory approval for CTI-1601 or a future product candidate, regulatory authorities may still impose significant restrictions on the indicated uses or marketing or impose ongoing requirements for potentially costly post-approval studies. CTI-1601 or future product candidates will also be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping and submission of safety and other post-market information. The FDA has significant post-market authority, including, for example, the authority to require labeling changes based on new safety information and to require post-market studies or clinical trials to evaluate serious safety risks related to the use of a drug. Any regulatory approvals that Chondrial receives for CTI-1601 may also be subject to a REMS, limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including post-approval clinical trials, and surveillance to monitor the quality, safety and efficacy of the product, all of which could lead to lower sales volume and revenue. For example, the holder of an approved BLA or NDA is obligated to monitor and report adverse events and any failure of a product to meet the specifications in the BLA or NDA. The holder of an approved BLA or NDA also must submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process. Advertising and promotional materials must comply with FDA rules and are subject to FDA review, in addition to other potentially applicable federal and state laws.

In addition, product manufacturers and their facilities are subject to payment of user fees and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP requirements and adherence to commitments made in the BLA or NDA or foreign marketing application. If Chondrial, or a regulatory authority, discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured or disagrees with the promotion, marketing or labeling of that product, a regulatory authority may impose restrictions relative to that product, the manufacturing facility or Chondrial, including requiring recall or withdrawal of the product from the market or suspension of manufacturing.

If Chondrial or its contractors fail to comply with applicable regulatory requirements following approval of CTI-1601, a regulatory authority may:

Any government investigation of alleged violations of law could require Chondrial to expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit Chondrial’s ability to commercialize CTI-1601 and adversely affect Chondrial’s business, financial condition, results of operations and prospects.

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In addition, the FDA’s policies, and those of equivalent foreign regulatory agencies, may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of CTI-1601. Chondrial cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If Chondrial is slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if Chondrial is not able to maintain regulatory compliance, Chondrial may lose any marketing approval that Chondrial may have obtained and Chondrial may not achieve or sustain profitability, which would materially and adversely affect Chondrial’s business, financial condition, results of operations and prospects.

Even if Chondrial receives marketing approval for CTI-1601 in the United States, Chondrial may never receive regulatory approval to market CTI-1601 outside of the United States.

Chondrial may pursue marketing approval for CTI-1601 in the United States, the European Union and in other countries worldwide. In order to market any product outside of the United States, Chondrial must establish and comply with the numerous and varying safety, efficacy and other regulatory requirements of other countries, including potential additional clinical trials and/or nonclinical studies. Approval procedures vary among countries and can involve additional testing and additional administrative review periods. The time required to obtain approvals in other countries might differ from that required to obtain FDA approval. The marketing approval processes in other countries may implicate all of the risks detailed above regarding FDA approval in the United States as well as other risks. In particular, in many countries outside of the United States, products must receive pricing and reimbursement approval before the product can be commercialized. Obtaining this approval can result in substantial delays in bringing products to market in such countries. Marketing approval in one country does not necessarily ensure marketing approval in another, but a failure or delay in obtaining marketing approval in one country may have a negative effect on the regulatory process or commercial activities in others. Failure to obtain marketing approval in other countries or any delay or other setback in obtaining such approval would impair Chondrial’s ability to market a product candidate in such foreign markets. Any such impairment would reduce the size of Chondrial’s potential market, which could have a material adverse impact on Chondrial’s business, financial condition, results of operations and prospects.

Chondrial’s future growth depends, in part, on Chondrial’s ability to penetrate foreign markets, where Chondrial would be subject to additional regulatory burdens and other risks and uncertainties.

Chondrial’s future profitability will depend, in part, on Chondrial’s ability to commercialize CTI-1601 and future product candidates in foreign markets for which Chondrial may rely on collaborations with third parties. If Chondrial commercializes a product candidate in foreign markets, Chondrial would be subject to additional risks and uncertainties, including:

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Foreign sales of a product candidate could also be adversely affected by the imposition of governmental controls, political and economic instability, trade restrictions and changes in tariffs.

If Chondrial is unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell CTI-1601, Chondrial may not be able to generate any revenue.

Chondrial does not currently have an established infrastructure for the sales, marketing and distribution of biologic or drug products in the United States or foreign countries. In order to market a product candidate, if approved by the FDA or any other regulatory authority, Chondrial must build Chondrial’s sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. If Chondrial is unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, or if Chondrial is unable to do so on commercially reasonable terms, Chondrial’s business, results of operations, financial condition and prospects will be materially adversely affected.

Even if Chondrial receives marketing approval for CTI-1601, it may not achieve broad market acceptance, which would limit the revenue that Chondrial generates from its sales.

The commercial success of CTI-1601, if developed and approved for marketing by the FDA or EMA or other applicable regulatory authorities, will depend upon the awareness and acceptance of CTI-1601 among the medical community, including physicians, patients, advocacy groups and healthcare payors. Market acceptance of CTI-1601, if approved, will depend on a number of factors, including, among others:

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If CTI-1601 is approved but does not achieve an adequate level of acceptance by patients, advocacy groups, physicians and payors, Chondrial may not generate sufficient revenue from CTI-1601 to become or remain profitable and its business, financial condition and results of operations could be materially adversely affected. Chondrial’s efforts to educate the medical community and third-party payors about the benefits of CTI-1601 may require significant resources and may never be successful.

The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. If Chondrial is found to have improperly promoted off-label uses, Chondrial may become subject to significant liability.

The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products, such as CTI-1601 or any potential product candidates, if approved. If Chondrial receives marketing approval for CTI-1601, or any potential product candidates, physicians may prescribe Chondrial’s product candidates to their patients in a manner that is inconsistent with the approved label. If Chondrial is found to have promoted such off-label uses, Chondrial may become subject to significant liability. The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion and required that they enter into corporate integrity agreements with the Office of Inspector General of the Department of Health and Human Services. The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. If Chondrial cannot successfully manage the promotion of CTI-1601 or any potential product candidates, if approved, Chondrial could become subject to significant liability, which would materially adversely affect Chondrial’s business, financial condition and results of operations.

Competing technologies could emerge, adversely affecting Chondrial’s opportunity to generate revenue from the sale of CTI-1601.

The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. Any new product that competes with an approved product may need to demonstrate compelling advantages in efficacy, convenience, tolerability and safety to be commercially successful. Other competitive factors, including biosimilar and gene therapy competition, could force Chondrial to lower prices or could result in reduced sales. In addition, new products developed by others could emerge as competitors to CTI-1601 or any other potential product candidates. If Chondrial is not able to compete effectively against Chondrial’s current and future competitors, Chondrial’s business will not grow and Chondrial’s financial condition and results of operations will be adversely affected.

Chondrial may face competition from biosimilars and may face increasing competition over time.

Chondrial may face competition from biosimilars in both the United States and Europe, and over time Chondrial may face increasing biosimilar competition. To the extent that governments adopt more permissive approval frameworks and competitors are able to obtain broader or expedited marketing approval for biosimilars, the rate of increased competition for Chondrial’s biologic drug products could accelerate. Expiration or successful challenge of applicable patent rights could trigger such competition, and Chondrial could face more

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litigation regarding the validity and/or scope of its patents. Chondrial’s products may also experience greater competition from lower-cost biosimilars or generics that come to market when branded products that compete with Chondrial’s products lose their own patent protection.

In the EU, the European Commission has granted marketing authorizations for biosimilars pursuant to a set of general and product class-specific guidelines for biosimilar approvals issued in 2005. In addition, in an effort to spur biosimilar utilization and/or increase potential healthcare savings, some EU countries have adopted biosimilar uptake measures such as requiring physician prescribing quotas or promoting switching or pharmacy substitution of biosimilars for the corresponding reference products, and other countries may adopt similar measures. Some EU countries may impose automatic price reductions upon market entry of the second or third biosimilar competitor.

In the United States, in 2010 the ACA authorized the FDA to approve biosimilars via a separate, abbreviated pathway. A growing number of companies have announced that they are in varying stages of development of biosimilar versions of existing biotechnology products. Some companies pursuing development of biosimilars may challenge Chondrial’s patents well in advance of the expiration of Chondrial’s material patents. The U.S. pathway includes the option for biosimilar products meeting certain criteria to be approved as interchangeable with their reference products. Some companies developing biosimilars may seek to register their products as interchangeable biologics, which could make it easier for prescribers or pharmacists to substitute those biosimilars for Chondrial’s products. In addition, critics of the 12-year exclusivity period in the biosimilar pathway law will likely continue to seek to shorten the data exclusivity period and/or to encourage the FDA to interpret narrowly the law’s provisions regarding which new products receive data exclusivity. While Chondrial is unable to predict the precise impact of biosimilars, Chondrial expects in the future for there to be greater competition in the United States as a result of biosimilars and downward pressure on product prices and sales. This additional competition could have a material adverse effect on Chondrial’s business, financial condition and results of operations.

Risks Related to Chondrial’s Business

If Chondrial is unable to manage expected growth in the scale and complexity of its operations, including attracting and hiring additional qualified management, its performance may suffer.

Chondrial is an early-stage clinical biotechnology company with a small number of employees, and Chondrial’s management systems currently in place are not likely to be adequate to support Chondrial’s future growth plans. As a result, Chondrial is highly dependent on Chondrial’s management and scientific personnel. The loss of the services of any of Chondrial’s executive officers, other key employees or consultants and other scientific advisors in the foreseeable future, might impede the achievement of Chondrial’s research, development and commercialization objectives. Chondrial relies on consultants and advisors, including scientific, nonclinical and clinical advisors, to assist it in formulating Chondrial’s development and commercialization strategy. These consultants and advisors may be employed by other employers and may have commitments under consulting or advisory contracts with other entities that may limit their availability to Chondrial. The loss of the services of Chondrial’s executive officers or other key employees could impede the achievement of Chondrial’s research, development and commercialization objectives and seriously harm its ability to successfully implement its business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the competition for talent, particularly with the limited number of individuals in Chondrial’s industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize products.

Recruiting and retaining qualified scientific, medical clinical, manufacturing, quality assurance, regulatory, legal, public company financial, business, sales, marketing and commercial personnel and implementing and improving Chondrial’s operational, financial and management systems will be critical to Chondrial’s ability to grow and succeed. These demands also will require the hiring of additional executive or management-level

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personnel or the development of additional expertise by Chondrial’s senior management personnel. Hiring a significant number of additional employees, particularly those at the executive or management level, would increase Chondrial’s expenses significantly. In addition, Chondrial may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical companies for similar personnel. Chondrial also experiences competition for the hiring of scientific personnel from universities and research institutions. Moreover, delays or failures in clinical trials may also make it more challenging to recruit and retain qualified scientific personnel. If Chondrial is unable to continue to attract and retain high quality personnel, Chondrial’s ability to pursue its business strategy will be limited and its business, financial condition and results of operations would be adversely affected.

Further, if Chondrial fails to expand and enhance Chondrial’s operational, financial and management systems in conjunction with potential future growth, such failure could have a material adverse effect on Chondrial’s business, financial condition and results of operations. Chondrial may be unable to successfully implement these tasks on a larger scale and, accordingly, may not achieve Chondrial’s research, development, business and growth goals.

Chondrial has identified material weaknesses in its internal control over financial reporting. If Chondrial is unable to remediate these material weaknesses, or if Chondrial identifies additional material weaknesses in the future or otherwise fails to maintain an effective system of internal controls, Chondrial may not be able to accurately or timely report its financial condition or results of operations, which may adversely affect Chondrial’s business.

Chondrial has identified material weaknesses in its internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. If Chondrial is unable to remediate these material weaknesses, or if Chondrial identifies additional material weaknesses in the future or otherwise fails to maintain an effective system of internal controls, Chondrial may not be able to accurately or timely report its financial condition or results of operations.

The material weaknesses Chondrial identified were as follows:

Each of these control deficiencies could result in a misstatement of Chondrial’s accounts or disclosures that would result in a material misstatement of our consolidated financial statements that would not be prevented or detected, and accordingly, Chondrial determined these control deficiencies constitute material weaknesses.

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Chondrial is in the process of implementing measures designed to improve its internal control over financial reporting and remediate the control deficiencies that led to this material weakness, including hiring additional finance and accounting personnel and initiating design and implementation of its financial control environment, including the establishment of formal accounting policies and procedures and period-end financial reporting controls. Chondrial cannot assure you that the measures Chondrial has taken to date, and actions Chondrial may take in the future, will be sufficient to remediate the control deficiencies that led to Chondrial’s material weaknesses in its internal control over financial reporting or that they will prevent or avoid potential future material weaknesses. In addition, neither Chondrial’s management nor its independent registered public accounting firm has performed an evaluation of Chondrial’s internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act because no such evaluation has been required. Had Chondrial or its independent registered public accounting firm performed an evaluation of Chondrial’s internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act, additional material weaknesses may have been identified. If Chondrial is unable to successfully remediate its existing or any future material weaknesses in its internal control over financial reporting, or identify any additional material weaknesses, the accuracy and timing of Chondrial’s financial reporting may be adversely affected, Chondrial may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements and investors may lose confidence in Chondrial’s financial reporting.

Chondrial’s internal computer systems, or those of any contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of Chondrial’s product development programs.

Despite the implementation of security measures, Chondrial’s internal computer systems and those of third parties with which Chondrial contracts are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. Any system failure, accident or security breach that causes interruptions in Chondrial’s operations could result in a material disruption of Chondrial’s product development programs and business operations, in addition to possibly requiring substantial expenditures of resources to remedy. For example, the loss of clinical trial data from completed clinical trials could result in delays in Chondrial’s regulatory approval efforts and significantly increase Chondrial’s costs to recover or reproduce the data. To the extent that any disruption or security breach results in a loss or damage to Chondrial’s data or applications, or inappropriate disclosure of confidential or proprietary information, Chondrial may incur liabilities and the further development of Chondrial’s product candidates may be delayed. In addition, Chondrial may not have adequate insurance coverage to provide compensation for any losses associated with such events.

Chondrial could be subject to risks caused by misappropriation, misuse, leakage, falsification or intentional or accidental release or loss of information maintained in the information systems and networks of Chondrial’s company, including personal information of Chondrial’s employees. In addition, outside parties may attempt to penetrate Chondrial’s systems or those of Chondrial’s vendors or fraudulently induce Chondrial’s employees or employees of Chondrial’s vendors to disclose sensitive information in order to gain access to Chondrial’s data. Like other companies, Chondrial may experience threats to Chondrial’s data and systems, including malicious codes and viruses, and other cyber-attacks. The number and complexity of these threats continue to increase over time. If a material breach of Chondrial’s security or that of Chondrial’s vendors occurs, the market perception of the effectiveness of Chondrial’s security measures could be harmed, Chondrial could lose business and Chondrial’s reputation and credibility could be damaged, all of which would materially adversely affect its business, financial condition and results of operations. Chondrial could be required to expend significant amounts of money and other resources to repair or replace information systems or networks. Although Chondrial develops and maintains systems and controls designed to prevent these events from occurring, the development and maintenance of these systems, controls and processes is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. Moreover, despite Chondrial’s efforts, the possibility of these events occurring cannot be eliminated entirely.

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Chondrial may acquire businesses or products, or form strategic alliances, in the future, and Chondrial may not realize the benefits of such acquisitions or alliances.

Chondrial may acquire additional businesses or products, form strategic alliances or create joint ventures with third parties that it believes will complement or augment its existing business. If Chondrial acquires businesses with promising markets or technologies, Chondrial may not be able to realize the benefit of such transactions if it is unable to successfully integrate such businesses with its existing operations and company culture. Chondrial may encounter numerous difficulties in developing, manufacturing and marketing any new products resulting from a strategic alliance or acquisition that delays or prevents Chondrial from realizing their expected benefits or enhancing Chondrial’s business. Chondrial cannot be certain that, following any such transaction, Chondrial will achieve the expected synergies to justify the transaction and it could adversely affect its business, financial condition and results of operations.

Chondrial may seek to establish collaborations and, if it is not able to establish them on commercially reasonable terms, Chondrial may have to alter its development and commercialization plans or expand its internal efforts and growth.

Chondrial’s development programs and the potential commercialization of Chondrial’s product candidates will require substantial additional cash to fund expenses. For CTI-1601, and any future product candidates, Chondrial may decide to collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates in some or all markets.

Chondrial faces significant competition in seeking appropriate collaborators. Whether Chondrial reaches a definitive agreement for a collaboration for CTI-1601 or other potential product candidates will depend, among other things, upon Chondrial’s assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the applicable product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to Chondrial’s ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such collaboration could be more attractive than the one with Chondrial for Chondrial’s product candidate. The terms of any collaboration or other arrangements that Chondrial may establish may not be favorable to Chondrial.

Chondrial may also be restricted under existing license agreements from entering into future agreements on certain terms with potential collaborators. Collaborations are complex and time-consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.

Chondrial may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If Chondrial is unable or unwilling to do so, Chondrial may have to curtail the development potential product candidates for which it is seeking to collaborate, reduce or delay its development program or one or more of its other development programs, delay potential commercialization in some or all markets or reduce the scope of any sales or marketing activities, or increase Chondrial’s expenditures and undertake development or commercialization activities at its own expense, including potentially increasing its infrastructure and investment outside the United States. If Chondrial elects to increase its expenditures to fund development or commercialization activities on its own, Chondrial will need to obtain additional capital, which may not be available to Chondrial on acceptable terms or at all. If it does not have sufficient funds, Chondrial may not be able to further develop its product candidates or bring them to market and generate product revenue. In addition, such efforts may require diversion of a disproportionate amount of Chondrial’s attention away from other

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day-to-day activities and require devotion of a substantial amount of Chondrial’s time to managing these activities.

In addition, any future collaborations that Chondrial enters into may not be successful. The success of Chondrial’s collaboration arrangements will depend heavily on the efforts and activities of its collaborators. Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations. Disagreements between parties to a collaboration arrangement regarding clinical development and commercialization matters can lead to delays in the development process or commercializing the applicable product candidate and, in some cases, termination of the collaboration arrangement. These disagreements can be difficult to resolve if neither of the parties has final decision-making authority. Collaborations with pharmaceutical or biotechnology companies and other third parties often are terminated or allowed to expire by the other party. Any such termination or expiration could adversely affect Chondrial’s business, financial condition, results of operations and could harm its business reputation.

Chondrial faces risks related to health epidemics and other outbreaks of communicable diseases, which could significantly disrupt its operations and may materially and adversely affect its business and financial conditions.

Chondrial’s business could be adversely impacted by the effects of the coronavirus or other epidemics. In December 2019, a novel strain of the coronavirus (COVID-19) emerged in China and the virus has now spread to several other countries. In an effort to halt the outbreak of COVID-19, governments of countries around the world, including the United States, China and several European Union member states, have placed significant travel restrictions or advisories on travel within their respective borders and have instituted shelter-in-place policies that have led to extended business closures. The extent to which the coronavirus and global efforts to contain its spread will impact Chondrial’s operations will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the outbreak and the actions taken to contain or treat the coronavirus outbreak. The continued spread of the coronavirus globally could materially and adversely impact Chondrial’s operations, including without limitation, its manufacturing and supply chain for CTI-1601 and ongoing and planned Phase 1 clinical trials, which are facing, and could continue to face, enrollment difficulties as hospitals or clinical trials sites experience closures. Chondrial is currently evaluating CTI-1601 in a SAD Phase 1 clinical trial in patients with Friedreich’s Ataxia. The first two cohorts of patients have completed the SAD clinical trial; however, due to the continued impact of COVID-19, Chondrial has delayed initiation of the next cohort in the SAD clinical trial. Chondrial is conducting the clinical trial at one clinical trial site in New Jersey. Because Friedreich’s Ataxia is a rare disease, there are a limited number of patients in close proximity to the clinical trial site and clinical trial patients travel from throughout the United States to the clinical trial site to participate. The travel advisories and risk of infection related to COVID-19 have presented increased risks to patients traveling to Chondrial’s clinical trial site for dosing. Due to the uncertainty surrounding COVID-19, Chondrial cannot estimate when the next cohort of patients will begin the clinical trial. While top line results from the SAD and MAD clinical trials were originally expected by the end of 2020, the delay in the clinical trial timeline caused by the ongoing impact of COVID-19 may result in top line results being delayed until the first half of 2021. In addition, employee health and availability could be impacted, which may have a material and adverse effect on Chondrial’s business, financial condition and results of operations. A significant outbreak of coronavirus could also result in widespread global health crisis that could adversely affect global economies and financial markets resulting in an economic downturn that could have a material adverse effect on Chondrial’s business and prospects.

Compliance with global privacy and data security requirements could result in additional costs and liabilities to Chondrial or inhibit its ability to collect and process data globally, and the failure to comply with such requirements could expose it to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.

The regulatory framework for the collection, use, safeguarding, sharing, transfer and other processing of information worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Globally,

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virtually every jurisdiction in which Chondrial may operate has established its own data security and privacy frameworks with which Chondrial must comply. For example, the European Union’s General Data Protection Regulation 2016/679 (referred to as the “GDPR”) imposes strict obligations on the processing of personal data, including personal health data, and the free movement of such data. The GDPR applies to any company established in the European Union as well as any company outside the European Union that processes personal data in connection with the offering of goods or services to individuals in the European Union or the monitoring of their behavior. The GDPR enhances data protection obligations for processors and controllers of personal data, including, for example, obligations relating to: processing health and other sensitive data; obtaining consent of individuals; providing notice to individuals regarding data processing activities; responding to data subject requests; taking certain measures when engaging third-party processors; notifying data subjects and regulators of data breaches; implementing safeguards to protect the security and confidentiality of personal data; and transferring personal data to countries outside the European Union, including the United States. The GDPR imposes additional obligations and risks upon Chondrial’s business and substantially increases the penalties to which Chondrial could be subject in the event of any non-compliance, including fines of up to €20 million or 4% of total worldwide annual turnover, whichever is higher. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies and obtain compensation for damages. Given the breadth and depth of changes in data protection obligations, if Chondrial is required to comply with the GDPR’s requirements, Chondrial will be required to spend significant time and resources to review its technologies, systems and practices, as well as those of any third-party service providers, contractors or consultants that process or transfer personal data collected in the European Union. The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as healthcare data or other personal information from Chondrial’s clinical trials, could require Chondrial to change its business practices or lead to government enforcement actions, private litigation or significant fines and penalties against Chondrial, reputational harm and could have a material adverse effect on Chondrial’s business, financial condition or results of operations.

Chondrial faces potential product liability exposure, and, if claims are brought against Chondrial, it may incur substantial liability.

The use of CTI-1601 and other potential product candidates in clinical trials, if any, and the sale of CTI-1601 and other potential product candidates, if developed and approved, exposes Chondrial to the risk of product liability claims. Product liability claims might be brought against Chondrial by patients, healthcare providers or others selling or otherwise coming into contact with CTI-1601 or other potential product candidates. For example, Chondrial may be sued if any product Chondrial develops allegedly causes injury or death or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, including as a result of interactions with alcohol or other drugs, negligence, strict liability and a breach of warranties. Claims could also be asserted under state consumer protection acts. If Chondrial becomes subject to product liability claims and cannot successfully defend itself against them, Chondrial could incur substantial liabilities. In addition, regardless of merit or eventual outcome, product liability claims may result in, among other things:

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Chondrial maintains product liability insurance coverage for its clinical trials with a $5 million aggregate coverage limit. Nevertheless, Chondrial’s insurance coverage may be insufficient to reimburse Chondrial for any expenses or losses Chondrial may suffer. Moreover, in the future, Chondrial may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect it against losses, including if insurance coverage becomes increasingly expensive. If Chondrial obtains marketing approval for CTI-1601 or other potential product candidates, Chondrial intends to expand its insurance coverage to include the sale of commercial products; however, it may not be able to obtain this product liability insurance on commercially reasonable terms. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. The cost of any product liability litigation or other proceedings, even if resolved in Chondrial’s favor, could be substantial, particularly in light of the size of Chondrial’s business and financial resources. A product liability claim or series of claims brought against Chondrial could cause its stock price to decline and, if Chondrial is unsuccessful in defending such a claim or claims and the resulting judgments exceed its insurance coverage, Chondrial’s financial condition, business, results of operations and prospects could be materially adversely affected.

Risks Related to Chondrial’s Reliance on Third Parties

Chondrial has limited experience in conducting or supervising clinical trials and must outsource all clinical trials. As a result, many important aspects of Chondrial’s drug development programs are outside of its direct control.

Chondrial has limited experience in conducting or supervising clinical trials that must be performed to obtain data to submit in concert with applications for approval by the FDA or the EMA. As a result, Chondrial expects to continue to rely on CROs, clinical data management organizations and consultants to design, conduct, supervise and monitor its nonclinical studies and clinical trials. Chondrial and its CROs are required to comply with various regulations, including the FDA’s regulations commonly referred to as good clinical practices (referred to as “GCPs”), which are enforced by regulatory agencies, including the FDA, and comparable foreign regulatory authorities to ensure the health, safety and rights of patients are protected in clinical development and clinical trials, and that trial data integrity is assured. Regulatory authorities ensure compliance with these requirements through periodic inspections of trial sponsors, principal investigators and clinical trial sites. Chondrial’s expected reliance on third parties that it does not control does not relieve it of these responsibilities and requirements. If Chondrial or any of its CROs fail to comply with applicable requirements, the clinical data generated in its clinical trials may be deemed unreliable and the FDA, the European Commission or other comparable foreign regulatory authorities may require Chondrial to perform additional clinical trials before approving its marketing applications. Chondrial cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of its clinical trials comply with such requirements. In addition, its clinical trials must be conducted with products produced under cGMP requirements, which mandate, among other things, the methods, facilities and controls used in manufacturing, processing and packaging of a drug product to ensure its safety and identity. Failure to comply with these regulations may require Chondrial to repeat nonclinical studies and/or clinical trials, which would delay the regulatory approval process, and could also subject Chondrial to enforcement action, up to and including, civil and criminal penalties, which would materially adversely affect Chondrial’s business, financial condition and results of operations.

Chondrial’s CROs are not its employees, and except for remedies available to it under its agreements with such CROs, it cannot control whether or not they devote sufficient time and resources to Chondrial’s ongoing clinical and preclinical programs. If CROs do not successfully carry out their contractual duties or obligations or

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meet expected deadlines or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to Chondrial’s clinical protocols, regulatory requirements or for other reasons, Chondrial’s clinical trials may be extended, delayed or terminated and it may not be able to obtain regulatory approval for or successfully commercialize its product candidates. As a result, Chondrial’s operations and the commercial prospects for its product candidates would be harmed, its costs could increase and its ability to generate revenue could be delayed or reduced. In addition, operations of Chondrial’s CROs could be affected by earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or man-made disasters or business interruptions. If their facilities are unable to operate because of an accident or incident, even for a short period of time, some or all of Chondrial’s research and development programs may be harmed or delayed and its operations and financial condition could suffer.

Chondrial has less direct control over the conduct, timing and completion of these clinical trials and the management of data developed through the clinical trials than would be the case if Chondrial were relying entirely upon Chondrial’s own staff. Communicating with outside parties can also be challenging, potentially leading to mistakes as well as difficulties in coordinating activities. These factors may materially adversely affect the willingness or ability of third parties to conduct Chondrial’s clinical trials and may subject Chondrial to unexpected cost increases that are beyond its control. Nevertheless, Chondrial is responsible for ensuring that each of its clinical trials is conducted in accordance with the applicable protocol, legal and regulatory requirements and scientific standards, and Chondrial’s reliance on CROs does not relieve it of its regulatory responsibilities.

Because Chondrial has relied on third parties, its internal capacity to perform these functions is limited. Outsourcing these functions involves risk that third parties may not perform to Chondrial’s standards, may not produce results in a timely manner or may fail to perform at all. Chondrial currently has a small number of employees, which limits the internal resources it has available to engage new third-party providers, if necessary, and monitor existing third-party providers. To the extent Chondrial is unable to engage new third-party providers, if necessary, and successfully manage the performance of third-party service providers in the future, its business may be adversely affected. Though Chondrial carefully manages its relationships with CROs, there can be no assurance that Chondrial will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on its business, financial condition, results of operation and prospects.

Chondrial relies on third-party supply and manufacturing partners for drug supplies for its research and development, nonclinical activities, and clinical activities, and may do the same for any commercial supplies of its product candidates.

Chondrial relies on third-party supply and manufacturing partners to supply the materials and components for, and manufacture, its research and development, nonclinical and clinical study drug substance and product. Chondrial has not yet manufactured or formulated any product candidate on a commercial scale and may not be able to do so for any of its product candidates. Chondrial will work to develop and optimize its manufacturing process, however Chondrial cannot be sure that the process will result in therapies that are safe, potent or effective.

Chondrial does not own manufacturing facilities or supply sources for such components, nonclinical and clinical study drug substance, product and materials, including devices that may be required for administration, but may develop these capabilities in the future. There can be no assurance that Chondrial’s supply of research and development, nonclinical and clinical development of drugs and other materials will not be limited, interrupted, restricted in certain geographic regions or will be of satisfactory quality or continue to be available at acceptable prices. In particular, replacement of any product formulation manufacturer Chondrial may engage could require significant effort and expertise because there may be a limited number of qualified replacements.

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In the event that any of Chondrial’s suppliers or manufacturers fails to perform its obligations to Chondrial in relation to quality, timing or otherwise, or if Chondrial’s supply of components or other materials becomes limited or interrupted for other reasons, Chondrial may be forced to manufacture the materials itself, for which Chondrial currently does not have the capabilities or resources, or enter into an agreement with another third party, which Chondrial may not be able to do on reasonable terms, if at all. In some cases, the technical skills or technology required to manufacture Chondrial’s product candidates may be unique or proprietary to the original manufacturer and Chondrial may have difficulty, or there may be contractual restrictions prohibiting Chondrial from, transferring such skills or technology to another third party and a feasible alternative may not exist. These factors would increase Chondrial’s reliance on such manufacturer or require Chondrial to obtain a license from such manufacturer in order to have another third party manufacture its product candidates. If Chondrial is required to change manufacturers for any reason, it will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines. The delays associated with the verification of a new manufacturer could negatively affect Chondrial’s ability to develop product candidates in a timely manner or within budget.

Chondrial also relies on third parties to store master and working cell banks. Chondrial currently has one master cell bank and one working cell bank for CTI-1601 and believes it would have adequate backup should any cell bank be lost in a catastrophic event. However, it is possible that Chondrial could lose multiple cell banks and have its manufacturing severely impacted by the need to replace the cell banks, which could materially and adversely affect Chondrial’s business, financial condition and results of operations

Chondrial may rely on third party manufacturers if it receives regulatory approval for any product candidate. To the extent that Chondrial has existing, or enters into future, manufacturing arrangements with third parties, it will depend on these third parties to perform their obligations in a timely manner consistent with contractual and regulatory requirements, including those related to quality control and assurance. If Chondrial is unable to obtain or maintain third-party manufacturing for product candidates, or to do so on commercially reasonable terms, Chondrial may not be able to develop and commercialize its product candidates successfully. Chondrial’s or a third party’s failure to execute on Chondrial’s manufacturing requirements could adversely affect Chondrial’s business, financial condition and results of operations in a number of ways, including:

Chondrial and its contract manufacturers are subject to significant regulation with respect to manufacturing Chondrial’s products. The manufacturing facilities on which Chondrial relies may not continue to meet regulatory requirements and have limited capacity.

All entities involved in the preparation of therapeutics for clinical trials or commercial sale, including Chondrial’s existing contract manufacturers for CTI-1601, are subject to extensive regulation. Some components of a finished therapeutic product approved for commercial sale or used in late-stage clinical trials must be manufactured in accordance with cGMP. These regulations govern manufacturing processes and procedures (including record keeping) and the implementation and operation of quality systems to control and assure the quality of investigational products and products approved for sale. Poor control of production processes can lead to the introduction of adventitious agents or other contaminants, or to inadvertent changes in the properties or stability of Chondrial’s product candidates that may not be detectable in final product testing. Chondrial or its

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contract manufacturers must supply all necessary documentation in support of a BLA or NDA on a timely basis and where required, must adhere to the FDA’s or other regulator’s good laboratory practices (referred to as “GLPs”), and cGMP regulations enforced by the FDA or other regulator through facilities inspection programs. The facilities and quality systems of some or all of Chondrial’s third-party contractors must pass a pre-approval inspection for compliance with the applicable regulations as a condition of regulatory approval of CTI-1601 or any of Chondrial’s other potential products. In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of CTI-1601 or Chondrial’s other potential products or the associated quality systems for compliance with the regulations applicable to the activities being conducted. If these facilities do not pass a pre-approval plant inspection, FDA or other regulatory approval of the products will not be granted.

The regulatory authorities also may, at any time following approval of a product for sale, audit the manufacturing facilities of Chondrial’s third-party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of Chondrial’s product specifications or applicable regulations occurs independent of such an inspection or audit, Chondrial or the relevant regulatory authority may require remedial measures that may be costly and/or time-consuming for Chondrial or a third party to implement and that may include the temporary or permanent suspension of a clinical trial or commercial sales or the temporary or permanent closure of a facility. Any such remedial measures imposed upon Chondrial or third parties with whom Chondrial contract could materially harm Chondrial’s business.

If Chondrial or any of Chondrial’s third-party manufacturers fail to maintain regulatory compliance, the FDA or other regulators can impose regulatory sanctions including, among other things, refusal to approve a pending application for a biologic product, or revocation of a pre-existing approval. As a result, Chondrial’s business, financial condition and results of operations may be materially harmed.

Additionally, if supply from one approved manufacturer is interrupted, there could be a significant disruption in commercial supply. The number of manufacturers with the necessary manufacturing capabilities is limited. In addition, an alternative manufacturer would need to be qualified through a BLA or NDA supplement or similar regulatory submission which could result in further delay. The regulatory agencies may also require additional studies if a new manufacturer is relied upon for commercial production. The delays associated with the verification of a new manufacturer could negatively affect Chondrial’s ability to develop product candidates in a timely manner or within budget.

These factors could also cause the delay of manufacturing development, clinical trials, regulatory submissions, required approvals or commercialization of CTI-1601 or any other product candidates, cause Chondrial to incur higher costs and prevent Chondrial from commercializing Chondrial’s products successfully. Furthermore, if Chondrial’s suppliers fail to meet contractual requirements, and Chondrial is unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, Chondrial’s clinical trials may be delayed or Chondrial could lose potential revenues. Any of the above would materially adversely affect its business, financial condition and results of operations.

Chondrial enters into various contracts in the normal course of its business in which Chondrial indemnifies the other party to the contract. In the event Chondrial has to perform under these indemnification provisions, it could materially increase Chondrial’s costs and potential liability.

In the normal course of business, Chondrial periodically enters into academic, commercial, service, collaboration, licensing, consulting and other agreements that contain indemnification provisions. With respect to Chondrial’s academic and other research agreements, Chondrial typically indemnifies the institution and related parties from losses arising from claims relating to the products, processes or services made, used, sold or performed pursuant to the agreements for which Chondrial has secured licenses, and from claims arising from Chondrial’s or its sublicensees’ exercise of rights under the agreement. With respect to Chondrial’s collaboration and contract service agreements, Chondrial indemnifies its collaborators from any third-party product liability

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claims that could result from the production, use or consumption of the product, as well as for alleged infringements of any patent or other intellectual property right by a third party. With respect to consulting agreements, Chondrial indemnifies consultants from claims arising from the good faith performance of their consulting services.

Should Chondrial’s obligation under an indemnification provision exceed applicable insurance coverage or should Chondrial be denied insurance coverage, Chondrial’s business, financial condition and results of operations could be adversely affected. Similarly, if Chondrial is relying on a collaborator to indemnify Chondrial and the collaborator is denied insurance coverage or the indemnification obligation exceeds the applicable insurance coverage, and if the collaborator does not have other assets available to indemnify Chondrial, its business, financial condition and results of operations could be adversely affected.

To the extent Chondrial is able to enter into collaborative arrangements or strategic alliances, Chondrial may be exposed to risks related to those collaborations and alliances.

Biotechnology companies sometimes become dependent upon collaborative arrangements or strategic alliances to complete the development and commercialization of product candidates. If Chondrial elects to enter into collaborative arrangements or strategic alliances, these arrangements may place the development of its product candidates outside its control, may require it to relinquish important rights or may otherwise be on terms unfavorable to it, which could adversely affect Chondrial’s business, financial condition and results of operations.

Dependence on collaborative arrangements or strategic alliances would subject Chondrial to a number of risks, including the risk that:

Risks Related to Chondrial’s Intellectual Property Rights

If Chondrial is unable to adequately protect its proprietary technology or maintain issued patents which are sufficient to protect CTI-1601 or potential product candidates, third parties could compete against Chondrial more directly, which would have a material adverse impact on Chondrial’s business, results of operations, financial condition and prospects.

Chondrial’s commercial success will depend in part on Chondrial’s success in obtaining and maintaining issued patents and other intellectual property rights in the United States and elsewhere and protecting Chondrial’s proprietary technology. If Chondrial does not adequately protect its intellectual property and proprietary technology, competitors may be able to use its technologies and erode or negate any competitive advantage Chondrial may have, which could harm Chondrial’s business and ability to achieve profitability.

With respect to Chondrial’s patent portfolio, Chondrial in-licenses from WFUHS certain issued U.S. patents that relate to CTI-1601 and its use for treating Friedreich’s Ataxia. Chondrial in-licenses from IU certain pending

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U.S. provisional patent applications that relate to the composition of CTI-1601 and methods of use, and certain U.S. patents relating to materials and methods relating to the development of CTI-1601. Chondrial also owns or co-owns pending U.S. provisional applications relating to methods of use of CTI-1601, biomarkers and to Chondrial’s platform technology.

In some cases, Chondrial has only filed provisional patent applications on certain aspects of Chondrial’s technologies and each of these provisional patent applications is not eligible to become an issued patent until, among other things, Chondrial files a non-provisional patent application within 12 months of the filing date of the applicable provisional patent application. Any failure to file a non-provisional patent application within this timeline could cause Chondrial to lose the ability to obtain patent protection for the inventions disclosed in the associated provisional patent applications.

With respect to both in-licensed and owned intellectual property, Chondrial cannot predict whether the patent applications Chondrial and its licensors are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors or other third parties.

Chondrial cannot provide any assurances that any of its pending patent applications that mature into issued patents will include claims with a scope sufficient to protect CTI-1601, or other potential product candidates. Other parties have developed technologies that may be related or competitive to Chondrial’s approach and may have filed or may file patent applications and may have received or may receive patents that may overlap or conflict with Chondrial’s patent applications, either by claiming the same methods or formulations or by claiming subject matter that could dominate Chondrial’s patent position. The patent positions of biotechnology and pharmaceutical companies, including Chondrial’s patent position, involve complex legal and factual questions, and, therefore, the issuance, scope, validity and enforceability of any patent claims that Chondrial may obtain cannot be predicted with certainty. Patents, if issued, may be challenged, deemed unenforceable, invalidated, or circumvented. U.S. patents and patent applications may also be subject to interference proceedings, ex parte reexamination, or inter partes review proceedings, supplemental examination and challenges in district court. Patents may be subjected to opposition, post-grant review, or comparable proceedings lodged in various foreign, both national and regional, patent offices. These proceedings could result in either loss of the patent or denial of the patent application or loss or reduction in the scope of one or more of the claims of the patent or patent application. In addition, such proceedings may be costly. Thus, any patents that Chondrial may own or exclusively license may not provide any protection against competitors. Furthermore, an adverse decision in an interference proceeding can result in a third party receiving the patent right sought by Chondrial, which in turn could affect Chondrial’s ability to develop, market or otherwise commercialize CTI-1601, and other potential product candidates.

Furthermore, though an issued patent is presumed valid and enforceable, its issuance is not conclusive as to its validity or its enforceability and it may not provide Chondrial with adequate proprietary protection or competitive advantages against competitors with similar products. Competitors may also be able to design around Chondrial’s patents. Other parties may develop and obtain patent protection for more effective technologies, designs or methods. The laws of some foreign countries do not protect Chondrial’s proprietary rights to the same extent as the laws of the United States, and Chondrial may encounter significant problems in protecting its proprietary rights in these countries. If these developments were to occur, they could have a material adverse effect on Chondrial’s potential future sales.

Chondrial’s ability to enforce its patent rights depends on its ability to detect infringement. It is difficult to detect infringers who do not advertise the components that are used in their products. Moreover, it may be difficult or impossible to obtain evidence of infringement in a competitor’s or potential competitor’s product. Any litigation to enforce or defend Chondrial’s patent rights, even if Chondrial were to prevail, could be costly and time-consuming and would divert the attention of Chondrial’s management and key personnel from its business operations. Chondrial may not prevail in any lawsuits that it initiates and the damages or other remedies awarded if Chondrial were to prevail may not be commercially meaningful.

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In addition, proceedings to enforce or defend Chondrial’s patents could put its patents at risk of being invalidated, held unenforceable, or interpreted narrowly. Such proceedings could also provoke third parties to assert claims against Chondrial, including that some or all of the claims in one or more of Chondrial’s patents are invalid or otherwise unenforceable. If any of Chondrial’s patents covering CTI-1601, are invalidated or found unenforceable, Chondrial’s financial position and results of operations would be materially and adversely impacted. In addition, if a court found that valid, enforceable patents held by third parties covered CTI-1601, Chondrial’s financial position and results of operations would also be materially and adversely impacted.

The degree of future protection for Chondrial’s proprietary rights is uncertain, and Chondrial cannot ensure that:

Chondrial relies upon unpatented trade secrets, unpatented know-how and continuing technological innovation to develop and maintain its competitive position, which Chondrial seeks to protect, in part, by confidentiality agreements with its employees and Chondrial’s consultants. Chondrial also has agreements with its employees and selected consultants that obligate them to assign their inventions to its and has non-compete agreements with some, but not all, of its consultants. It is possible that technology relevant to Chondrial’s business will be independently developed by a person that is not a party to such an agreement. Furthermore, if the employees and consultants who are parties to these agreements breach or violate the terms of these agreements, Chondrial may not have adequate remedies for any such breach or violation, and Chondrial could lose its trade secrets through such breaches or violations. Further, Chondrial’s trade secrets could otherwise become known or be independently discovered by its competitors. If Chondrial is unable to adequately protect its proprietary technology or maintain issued patents which are sufficient to protect CTI-1601 or potential future product candidates, third parties could compete against Chondrial more directly, which would have a material adverse impact on Chondrial’s business, results of operations, financial condition and prospects

Over time, Chondrial will lose its ability to rely upon the intellectual property Chondrial currently owns to prevent competing product, which may impair Chondrial’s ability to generate revenue.

Chondrial has in-licensed certain patents relating to CTI-1601 from WFUHS. The U.S. patents relating to CTI-1601 and its use for the treatment of Friedreich’s Ataxia expire in 2024 and 2025, respectively. Chondrial has also in-licensed certain provisional patent applications relating to the composition of CTI-1601 and methods

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of use from IU, which, if issued as a patent, would expire at the earliest in 2040. Chondrial cannot predict whether these provisional patent applications Chondrial and its licensors are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors or other third parties. When these various patents expire, Chondrial will be unable to use the patents to try to block others from marketing CTI-1601 in the United States.

In addition, given the amount of time required for the development, testing, and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized. As a result, Chondrial’s intellectual property may not provide Chondrial with sufficient rights to exclude others from commercializing products similar or identical to Chondrial’s.

Once Chondrial’s patents expire, Chondrial will be subject to competition from third parties who will be able to use the intellectual property covered by these patents, which could impair its ability to generate revenue and could adversely affect its business, financial condition and results of operations.

Chondrial may infringe the intellectual property rights of others, which may prevent or delay Chondrial’s product development efforts and stop Chondrial from commercializing or increase the costs of commercializing CTI-1601 or other potential product candidates, if approved.

Chondrial’s success will depend in part on its ability to operate without infringing the intellectual property and proprietary rights of third parties. Chondrial cannot ensure that its business, products and methods do not or will not infringe the patents or other intellectual property rights of third parties.

The pharmaceutical industry is characterized by extensive litigation regarding patents and other intellectual property rights. Third parties may allege that CTI-1601 or Chondrial’s other potential product candidates or the use of Chondrial’s technologies infringes patent claims or other intellectual property rights held by them or that Chondrial is employing their proprietary technology without authorization. Patent and other types of intellectual property litigation can involve complex factual and legal questions, and their outcome is uncertain. Any claim relating to intellectual property infringement that is successfully asserted against Chondrial may require it to pay substantial damages, including treble damages and attorneys’ fees if Chondrial is found to be willfully infringing another party’s patents, for past use of the asserted intellectual property and royalties and other consideration going forward if Chondrial is forced to take a license. In addition, if any such claim were successfully asserted against Chondrial and it could not obtain such a license, Chondrial may be forced to stop or delay developing, manufacturing, selling or otherwise commercializing CTI-1601.

Even if Chondrial is successful in these proceedings, it may incur substantial costs and divert management time and attention in pursuing these proceedings, which could have a material adverse effect on Chondrial. If Chondrial is unable to avoid infringing the patent rights of others, it may be required to seek a license, defend an infringement action or challenge the validity of the patents in court, or redesign Chondrial’s products. Patent litigation is costly and time consuming. Chondrial may not have sufficient resources to bring these actions to a successful conclusion. In addition, intellectual property litigation or claims could force Chondrial to do one or more of the following:

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Any of these risks coming to fruition could have a material adverse effect on Chondrial’s business, results of operations, financial condition and prospects.

Chondrial may be subject to claims challenging the inventorship or ownership of its patents and other intellectual property.

Chondrial may also be subject to claims that former employees or other third parties have an ownership interest in Chondrial’s patents or other intellectual property. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If Chondrial fails in defending any such claims, in addition to paying monetary damages, Chondrial may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on Chondrial’s business, financial condition and results of operations. Even if Chondrial is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Obtaining and maintaining Chondrial’s patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and Chondrial’s patent protection could be reduced or eliminated for non-compliance with these requirements.

The U.S. Patent and Trademark Office (referred to as the “U.S. PTO”) and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier than would otherwise have been the case, which would adversely affect Chondrial’s business, financial condition and results of operations.

Chondrial may be involved in lawsuits to protect or enforce its patents or the patents of Chondrial’s licensors, which could be expensive, time-consuming and unsuccessful.

Competitors may infringe Chondrial’s patents or the patents of Chondrial’s licensors. To counter infringement or unauthorized use, Chondrial may be required to file infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of Chondrial’s or Chondrial’s licensors is not valid, is unenforceable and/or is not infringed, or may refuse to stop the other party from using the technology at issue on the grounds that Chondrial’s patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of Chondrial’s patents at risk of being invalidated or interpreted narrowly and could put Chondrial’s patent applications at risk of not issuing which could materially adversely affect its business, financial condition and results of operations.

Interference proceedings provoked by third parties or brought by Chondrial may be necessary to determine the priority of inventions with respect to Chondrial’s patents or patent applications or those of Chondrial’s licensors. An unfavorable outcome could require Chondrial to cease using the related technology or to attempt to license rights to it from the prevailing party. Chondrial’s business, financial condition and results of operations could be harmed if the prevailing party does not offer Chondrial a license on commercially reasonable terms. Chondrial’s defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract Chondrial’s management and other employees. Chondrial may not be able to prevent, alone or with Chondrial’s licensors, misappropriation of Chondrial’s intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States, which could adversely affect Chondrial’s business, financial condition and results of operations.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of Chondrial’s confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings,

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motions or other interim proceedings or developments. If investors perceive these results to be negative, it could have a material adverse effect on the price of Chondrial common stock.

Issued patents covering Chondrial’s product candidates could be found invalid or unenforceable if challenged in court.

If Chondrial or one of its licensing partners initiated legal proceedings against a third party to enforce a patent covering Chondrial’s product candidate, the defendant could counterclaim that the patent covering Chondrial’s product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge include alleged failures to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for unenforceability assertions include allegations that someone connected with prosecution of the patent withheld relevant information from the U.S. PTO, or made a misleading statement, during prosecution. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post grant review and equivalent proceedings in foreign jurisdictions, e.g., opposition proceedings. Such proceedings could result in revocation or amendment of Chondrial’s patents in such a way that they no longer cover Chondrial’s product candidates or competitive products. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to validity, for example, Chondrial cannot ensure that there is no invalidating prior act, of which Chondrial and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, Chondrial would lose at least part, and perhaps all, of the patent protection on Chondrial’s product candidates. Such a loss of patent protection would have a material adverse impact on Chondrial’s business, financial condition, and results of operations.

Chondrial does not seek to protect its intellectual property rights in all jurisdictions throughout the world and Chondrial may not be able to adequately enforce its intellectual property rights even in the jurisdictions where Chondrial seeks protection.

Filing, prosecuting and defending patents on product candidates in all countries and jurisdictions throughout the world would be prohibitively expensive, and Chondrial’s intellectual property rights in some countries outside the United States could be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, Chondrial may not be able to prevent third parties from practicing Chondrial’s inventions in all countries outside the United States, or from selling or importing products made using Chondrial’s inventions in and into the United States or other jurisdictions. Competitors may use Chondrial’s technologies in jurisdictions where Chondrial has not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where Chondrial has patent protection, but enforcement is not as strong as that in the United States. These products may compete with Chondrial’s products and Chondrial’s patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for Chondrial to stop the infringement of its patents or marketing of competing products in violation of Chondrial’s proprietary rights generally. For example, an April 2014 report from the Office of the United States Trade Representative identified a number of countries, including India and China, where challenges to the procurement and enforcement of patent rights have been reported. Several countries, including India and China, have been listed in the report every year since 1989. Proceedings to enforce Chondrial’s patent rights in foreign jurisdictions could result in substantial costs and divert Chondrial’s efforts and attention from other aspects of Chondrial’s business, could put Chondrial’s patents at risk of being invalidated or interpreted narrowly, could put Chondrial’s patent applications at risk of not

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issuing and could provoke third parties to assert claims against Chondrial. Chondrial may not prevail in any lawsuits that it initiates and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, Chondrial’s efforts to enforce its intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that Chondrial develops or licenses, which would materially adversely affect its business, financial condition and results of operations.

Chondrial is dependent on licensed intellectual property for CTI-1601. If Chondrial were to lose its rights to licensed intellectual property, Chondrial may not be able to continue developing or commercializing CTI-1601, if approved.

Chondrial has an exclusive license with WFUHS, pursuant to which Chondrial exclusively licenses certain patent rights relating to the TAT-frataxin fusion protein and its use, on a worldwide basis. Chondrial has an exclusive license with IU, pursuant to which Chondrial exclusively licenses certain patent rights relating to CTI-1601 and its use for the treatment of mitochondrial diseases, on a worldwide basis. Chondrial may enter into additional licenses for third-party intellectual property that are necessary or useful to Chondrial’s business. Current or future licensors may also allege that Chondrial has breached its license agreement and may accordingly seek to terminate Chondrial’s license with them. In addition, current or future licensors may decide to terminate Chondrial’s license at will. If successful, this could result in loss of Chondrial’s right to use the licensed intellectual property, which could materially adversely affect its ability to develop and commercialize CTI-1601, if approved, as well as harm Chondrial’s competitive business position, its business prospects, financial condition and results of operations.

If Chondrial fails to comply with Chondrial’s obligations in the agreements under which Chondrial license intellectual property rights from third parties or otherwise experience disruptions to Chondrial’s business relationships with Chondrial’s licensors, Chondrial could lose license rights that are important to Chondrial’s business.

Chondrial license agreements with WFUHS and IU impose, and Chondrial expects its future license agreements will impose, various development, diligence, commercialization, and other obligations on Chondrial in order to maintain the licenses. In spite of Chondrial’s efforts, WFUHS, IU, or a future licensor might conclude that Chondrial has materially breached its obligations under such license agreements and seek to terminate the license agreements, thereby removing or limiting Chondrial’s ability to develop and commercialize products and technology covered by these license agreements. If these licenses are terminated, or if the underlying patent rights licensed thereunder fail to provide the intended exclusivity, competitors or other third parties would have the freedom to seek regulatory approval of, and to market, products identical to Chondrial’s and it may be required to cease its development and commercialization of certain of Chondrial’s product candidates or of CTI-1601. Any of the foregoing could have a material adverse effect on Chondrial’s competitive position, business, financial conditions, results of operations, and prospects.

Moreover, disputes may arise regarding intellectual property subject to a licensing agreement, including:

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The agreements under which Chondrial currently licenses intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what Chondrial believes to be the scope of its rights to the relevant intellectual property or technology, or increase what Chondrial believes to be its financial or other obligations under the relevant agreement, either of which could have a material adverse effect on Chondrial’s business, financial condition, results of operations, and prospects. Moreover, if disputes over intellectual property that Chondrial has licensed prevent or impair Chondrial’s ability to maintain its current licensing arrangements on commercially acceptable terms, Chondrial may be unable to successfully develop and commercialize CTI-1601, which could have a material adverse effect on Chondrial’s business, financial conditions, results of operations, and prospects.

Some intellectual property may have been discovered through government funded programs and thus may be subject to federal regulations such as “march-in” rights, certain reporting requirements and a preference for U.S.-based companies. Compliance with such regulations may limit Chondrial’s exclusive rights, and limit Chondrial’s ability to contract with non-U.S. manufacturers.

Chondrial’s in-licensed patent rights from WFUHS and from IU were funded in part by the U.S. government and are therefore subject to certain federal regulations. When new technologies are developed with U.S. government funding, the U.S. government generally obtains certain rights in any resulting patents, including a non-exclusive license authorizing the U.S. government to use the invention or to have others use the invention on its behalf. The U.S. government’s rights may also permit it to disclose the funded inventions and technology to third parties and to exercise march in rights to use or allow third parties to use the technology Chondrial has licensed that was developed using U.S. government funding. The U.S. government may exercise its march in rights if it determines that action is necessary because Chondrial fails to achieve practical application of the government-funded technology, or because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to U.S. industry. In addition, Chondrial’s rights in such inventions may be subject to certain requirements to manufacture products embodying such inventions in the United States in certain circumstances and if this requirement is not waived. Any exercise by the U.S. government of such rights or by any third party of its reserved rights could have a material adverse effect on Chondrial’s competitive position, business, financial condition, results of operations, and prospects.

Chondrial has not yet registered trademarks for a commercial trade name for CTI-1601 or other potential product candidates and failure to secure such registrations could adversely affect Chondrial’s business, financial condition and results of operations.

Chondrial has not yet registered trademarks for a commercial trade name for CTI-1601 or other potential product candidates. Any future trademark applications may be rejected during trademark registration proceedings. Although Chondrial would be given an opportunity to respond to those rejections, Chondrial may be unable to overcome such rejections. In addition, the U.S. PTO and comparable agencies in many foreign jurisdictions give third parties an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against Chondrial’s trademarks, and Chondrial’s trademarks may not survive such proceedings. Moreover, any name Chondrial proposes to use with its product candidates in the United States must be approved by the FDA, regardless of whether Chondrial has registered it, or applied to register it, as a trademark. The FDA typically conducts a review of proposed product names, including an evaluation of potential for confusion with other product names. If the FDA objects to any of Chondrial’s proposed proprietary product names, Chondrial may be required to expend significant additional resources in an effort to identify a suitable substitute name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA.

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If Chondrial does not obtain additional protection under the Hatch-Waxman Amendments and similar foreign legislation by extending the patent terms and obtaining data exclusivity for CTI-1601, Chondrial’s business may be materially harmed.

Depending upon the timing, duration and specifics of development and FDA marketing approval of CTI-1601 or Chondrial’s other potential product candidates, one or more of Chondrial’s U.S. patents may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. However, Chondrial may not be granted an extension because of, for example, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than Chondrial requests. If Chondrial is unable to obtain patent term extension or restoration or the term of any such extension is less than Chondrial requests, Chondrial’s competitors may obtain approval of competing products following Chondrial’s patent expiration, and its ability to generate revenues, business, financial condition and results of operations could be materially adversely affected.

Chondrial’s proprietary rights may not adequately protect its technologies, which may adversely affect its position in the market, business, financial condition and results of operations.

Chondrial relies on unpatented trade secrets, know-how, and technology, which are difficult to protect, especially in the pharmaceutical industry, where much of the information about a product must be made public during the regulatory approval process. Chondrial seeks to protect trade secrets, in part, by entering into confidentiality agreements with employees, consultants and others. These parties may breach or terminate these agreements or may refuse to enter into such agreements with Chondrial, and Chondrial may not have adequate remedies for such breaches. Furthermore, these agreements may not provide meaningful protection for Chondrial’s trade secrets or other proprietary information or result in the effective assignment to Chondrial of intellectual property and may not provide an adequate remedy in the event of unauthorized use or disclosure of confidential information or other breaches of the agreements. Despite Chondrial’s efforts to protect its trade secrets, Chondrial or its board members, employees, consultants, contractors or scientific and other advisors may unintentionally or willfully disclose Chondrial’s proprietary information to competitors.

If Chondrial fails to maintain trade secret protection, its competitive position may be adversely affected. Competitors may also independently discover Chondrial’s trade secrets. Enforcement of claims that a third party has illegally obtained and is using trade secrets is expensive, time consuming and uncertain. If Chondrial’s competitors independently develop equivalent knowledge, methods and know-how, Chondrial would not be able to assert its trade secrets against them and its business, financial condition and results of operations could be harmed.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing Chondrial’s ability to protect its products.

As is the case with other biopharmaceutical companies, Chondrial’s success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity and is therefore costly, time consuming and inherently uncertain. Changes in either the patent laws or interpretation of the patent laws in the United States could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. Patent reform legislation in the United States and other countries, including the Leahy-Smith America Invents Act (referred to as the “Leahy-Smith Act”) signed into law in September 2011, could increase those uncertainties and costs. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art and provide more efficient and cost-effective avenues for competitors to challenge the validity of patents. For

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example, the Leahy-Smith Act allows third-party submission of prior art to the U.S. PTO during patent prosecution and additional procedures to attack the validity of a patent by U.S. PTO administered post-grant proceedings, including post-grant review, inter partes review, and derivation proceedings. In addition, the Leahy-Smith Act has transformed the U.S. patent system from a “first-to-invent” system to a “first-to-file” system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention. The first-to-file provisions, however, only became effective on March 16, 2013. Accordingly, it is not yet clear what, if any, impact the Leahy-Smith Act will have on the operation of Chondrial’s business. However, the Leahy-Smith Act and its implementation could make it more difficult to obtain patent protection for Chondrial’s inventions and increase the uncertainties and costs surrounding the prosecution of Chondrial’s or Chondrial’s collaboration partners’ patent applications and the enforcement or defense of Chondrial’s issued patents, all of which could harm Chondrial’s business, results of operations, financial condition and prospects.

The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. Additionally, there have been recent proposals for additional changes to the patent laws of the United States and other countries that, if adopted, could impact Chondrial’s ability to enforce Chondrial’s proprietary technology. Depending on future actions by the U.S. Congress, the U.S. courts, the U.S. PTO and the relevant law-making bodies in other countries, the laws and regulations governing patents could change in unpredictable ways that would weaken Chondrial’s ability to obtain new patents or to enforce Chondrial’s existing patents and patents that Chondrial might obtain in the future.

Chondrial may be subject to damages resulting from claims that Chondrial or Chondrial’s employees have wrongfully used or disclosed alleged trade secrets of their former employers.

Chondrial’s employees have been previously employed at other biotechnology or pharmaceutical companies, including Chondrial’s competitors or potential competitors. Although Chondrial is not aware of any claims currently pending against it, it may be subject to claims that Chondrial or Chondrial’s employees inadvertently or otherwise used or disclosed the trade secrets or other proprietary information of Chondrial’s employees’ former employers. Litigation may be necessary to defend against these claims. Even if Chondrial is successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. If Chondrial fails in defending such claims, in addition to paying money claims, Chondrial may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent Chondrial’s ability to develop and commercialize CTI-1601 or Chondrial’s other potential product candidates, which would materially adversely affect Chondrial’s business, financial condition and results of operations.

Risks Related to the Combined Company

The combined company will incur losses for the foreseeable future and might never achieve profitability.

The combined company may never become profitable, even if the combined company is able to complete clinical development for one or more product candidates and eventually commercialize such product candidates. The combined company will need to successfully complete significant research, development, testing and regulatory compliance activities that, together with projected general and administrative expenses, is expected to result in substantial increased operating losses for at least the next several years. Even if the combined company does achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis and may not continue as a going concern.

The combined company’s stock price is expected to be volatile, and the market price of its common stock may drop following the merger.

The market price of the combined company’s common stock following the merger could be subject to significant fluctuations. Market prices for securities of early-stage pharmaceutical, biotechnology, and other life

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sciences companies have historically been particularly volatile. Some of the factors that may cause the market price of the combined company’s common stock to fluctuate following the merger include:

Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies or the biotechnology sector. These broad market fluctuations may also adversely affect the trading price of the combined company’s common stock.

In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs and diversion of management’s attention and resources, which could significantly harm the combined company’s profitability and reputation.

The combined company must maintain effective internal controls over financial reporting, and if the combined company is unable to do so, the accuracy and timeliness of the combined company’s financial reporting may be adversely affected, which could have a material adverse effect on the combined company’s business and stock price.

Until December 31, 2019, Zafgen was an “emerging growth company,” as defined in the Jumpstart Our

Business Startups Act, and took advantage of certain exemptions from various reporting requirements that are applicable to other companies that are not “emerging growth companies” including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

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The combined company must maintain effective internal control over financial reporting in order to accurately and timely report its results of operations and financial condition. In addition, as a public company, the Sarbanes-Oxley Act requires, among other things, that the combined company assess the effectiveness of its disclosure controls and procedures quarterly and the effectiveness of the combined company’s internal control over financial reporting at the end of each fiscal year.

The rules governing the standards that must be met for the combined company management to assess the combined company’s internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act are complex and require significant documentation, testing and possible remediation. These stringent standards require that the combined company’s audit committee be advised and regularly updated on management’s review of internal control over financial reporting.

Chondrial has identified material weaknesses in its internal control over financial reporting. See “Risk Factors—Risks Related to Chondrial—Chondrial has identified material weaknesses in its internal control over financial reporting. If Chondrial is unable to remediate these material weaknesses, or if Chondrial identifies additional material weaknesses in the future or otherwise fails to maintain an effective system of internal controls, Chondrial may not be able to accurately or timely report its financial condition or results of operations, which may adversely affect Chondrial’s business.” Chondrial is in the process of implementing measures designed to improve its internal control over financial reporting and remediate the control deficiencies that led to this material weakness, including hiring additional finance and accounting personnel and initiating design and implementation of its financial control environment, including the establishment of formal accounting policies and procedures and period-end financial reporting controls. The combined company will continue this process.

The combined company’s management may not be able to effectively and timely implement controls and procedures that adequately remediate Chondrial’s material weaknesses and respond to the increased regulatory compliance and reporting requirements that are applicable to the combined company as a public company. If the combined company fails to staff the combined company’s accounting, finance and information technology functions adequately or maintain internal control over financial reporting adequate to meet the demands that will be placed upon the combined company as a public company, including the requirements of the Sarbanes-Oxley Act, or to otherwise remediate Chondrial’s existing or any future material weaknesses in internal control over financial reporting, or identify any additional material weaknesses the combined company’s business and reputation may be harmed and its stock price may decline. Furthermore, investor perceptions of the combined company may be adversely affected, which could cause a decline in the market price of its common stock.

Financial reporting obligations of being a public company in the United States are expensive and time-consuming, and the combined company’s management will be required to devote substantial time to compliance matters.

As a publicly-traded company, the combined company will incur significant additional legal, accounting and other expenses that Chondrial did not incur as a privately-held company. The obligations of being a public company in the United States requires significant expenditures and will place significant demands on the combined company’s management and other personnel, including costs resulting from public company reporting obligations under the Exchange Act and the rules and regulations regarding corporate governance practices, including those under the Sarbanes-Oxley Act of 2002 (referred to as the “Sarbanes-Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act (referred to as the “Dodd-Frank Act”) and the listing requirements of the stock exchange on which the combined company’s securities are listed. These rules require the establishment and maintenance of effective disclosure and financial controls and procedures, internal control over financial reporting and changes in corporate governance practices, among many other complex rules that are often difficult to implement, monitor and maintain compliance with. Moreover, despite recent reforms made possible by the Tax Act, the reporting requirements, rules, and regulations will make some activities more time-consuming and costly. In addition, the combined company expects these rules and regulations to make it more difficult and more expensive for the combined company to obtain director and officer liability insurance and the

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combined company may be required to incur substantial costs to maintain the same or similar coverage that Chondrial had as a privately-held company. For example, Chondrial’s management has identified material weaknesses in Chondrial’s internal control over financial reporting. The combined company’s management and other personnel will need to devote a substantial amount of time to remedy the identified material weaknesses and otherwise ensure that the combined company comply with all of these requirements and to keep pace with new regulations, otherwise the combined company may fall out of compliance and risk becoming subject to litigation or being delisted, among other potential problems.

The sale or availability for sale of a substantial number of shares of common stock of the combined company after the merger and after expiration of applicable lock-up periods could adversely affect the market price of such shares after the merger.

Sales of a substantial number of shares of common stock of the combined company in the public market after the merger or after expiration of applicable lock-up periods and other legal restrictions on resale, or the perception that these sales could occur, could adversely affect the market price of such shares and could materially impair the combined company’s ability to raise capital through equity offerings in the future. Zafgen and Chondrial are unable to predict what effect, if any, market sales of securities held by significant stockholders, directors or officers of the combined company or the availability of these securities for future sale will have on the market price of the combined company’s common stock after the merger.

Ownership of the combined company’s common stock may be highly concentrated, and it may prevent other stockholders from influencing significant corporate decisions.

Upon completion of the merger, Holdings’ members are estimated to beneficially own or control approximately 60% of the combined company, on a fully-diluted basis. Accordingly Holdings’ members will have substantial influence over the outcome of a corporate action of the combined company requiring stockholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of the combined company’s assets or any other significant corporate transaction. These stockholders also may exert influence in delaying or preventing a change in control of the combined company, even if such change in control would benefit the other stockholders of the combined company.

The combined company will continue to be a smaller reporting company. The combined company cannot be certain whether the reduced disclosure requirements applicable to smaller reporting companies will make the combined company’s common shares less attractive to investors or otherwise limit the combined company’s ability to raise additional funds.

Zafgen is currently, and the combined company will continue to be upon completion of the merger, a “smaller reporting company” under applicable securities regulations. A smaller reporting company is a company that, as of the last business day of its most recently completed second fiscal quarter, has an aggregate market value of the company’s voting stock held by non-affiliates, or public float, of less than $250 million, or has less than $100 million in annual revenues and either no public float or public float of less than $700 million. SEC rules provide that companies with a non-affiliate public float of less than $75 million may only sell shares under a Form S-3 shelf registration statement, during any 12-month period, in an amount less than or equal to one-third of the public float. If the combined company does not meet this public float requirement, any offering by the combined company under a Form S-3 will be limited to raising an aggregate of one-third of the combined company’s public float in any 12-month period. In addition, a smaller reporting company is able to provide simplified executive compensation disclosures in its filings, is exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that an independent registered public accounting firm provide an attestation report on the effectiveness of internal control over financial reporting if its public float is less than $75 million, and has certain other reduced disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Reduced disclosure in the combined company’s SEC filings due to its status as a smaller reporting company may make it harder for investors to analyze its results of operations and financial prospects.

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Anti-takeover provisions in the combined company’s charter documents and under Delaware law could make an acquisition of the combined company more difficult and may prevent attempts by the combined company’s stockholders to replace or remove the combined company’s management.

Provisions in the combined company’s certificate of incorporation and bylaws may delay or prevent an acquisition or a change in management. These provisions include a classified board of directors, a prohibition on actions by written consent of the combined company’s stockholders, and the ability of the board of directors to issue preferred stock without stockholder approval. In addition, because the combined company will be incorporated in Delaware, it is governed by the provisions of Section 203 of the Delaware General Corporations Law (referred to as the “DGCL”), which prohibits stockholders owning in excess of 15% of the outstanding combined company’s voting stock from merging or combining with the combined company. Although Zafgen and Chondrial believe these provisions collectively will provide for an opportunity to receive higher bids by requiring potential acquirers to negotiate with the combined company’s board of directors, they would apply even if the offer may be considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by the combined company’s stockholders to replace or remove then current management by making it more difficult for stockholders to replace members of the board of directors, which is responsible for appointing the members of management.

Zafgen and Chondrial do not anticipate that the combined company will pay any cash dividends in the foreseeable future.

The current expectation is the combined company will retain its future earnings to fund the development and growth of the combined company’s business. As a result, capital appreciation, if any, of the combined company’s common stock will be stockholders’ sole source of gain, if any, for the foreseeable future.

The combined company’s employees may engage in misconduct or other improper activities, including violating applicable regulatory standards and requirements or engaging in insider trading, which could significantly harm the combined company’s business.

The combined company is exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with the regulations of the FDA and applicable non-U.S. regulators, provide accurate information to the FDA and applicable non-U.S. regulators, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to the combined company. Employees may also unintentionally or willfully disclose the combined company’s proprietary and/or confidential information to competitors. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of, including trading on, information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to the combined company’s reputation. The combined company is expected to adopt a code of conduct, but it is not always possible to identify and deter employee misconduct, and the precautions the combined company takes to detect and prevent this activity may be ineffective in controlling unknown or unmanaged risks or losses or in protecting the combined company from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against the combined company, and the combined company is not successful in defending itself or asserting its rights, those actions could have a significant impact on the combined company’s business, including the imposition of significant fines or other sanctions.

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Unfavorable global economic conditions could adversely affect the combined company’s business, financial condition or results of operations.

The combined company’s results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. A severe or prolonged economic downturn could result in a variety of risks to the combined company’s business, including, weakened demand for the combined company’s product candidates and the combined company’s ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also strain the combined company’s suppliers, possibly resulting in supply disruption, or cause the combined company’s customers to delay making payments for its services. Any of the foregoing could harm the combined company’s business and the combined company cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact its business.

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CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement, and the documents incorporated by reference into this proxy statement, contains “forward-looking” statements within the meaning of Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. These statements, as they relate to Zafgen or Chondrial, the management of either such company or the proposed transaction between Zafgen and Chondrial, involve risks and uncertainties that may cause results to differ materially from those set forth in the statements. These statements are based on current plans, estimates and projections, and therefore, you are cautioned not to place undue reliance on them. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of the management of Zafgen, as well as assumptions made by, and information currently available to management. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. Zafgen and Chondrial undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by law. Forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about the business and future financial results of the pharmaceutical industry, and other legal, regulatory and economic developments. We use words such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “will,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including, but not limited to, those described in the documents Zafgen has filed with the SEC as well as the possibility that (1) the parties may be unable to obtain stockholder or regulatory approvals required for the proposed transaction or may be required to accept conditions that could reduce the anticipated benefits of the merger as a condition to obtaining regulatory approvals; (2) the length of time necessary to consummate the proposed transaction may be longer than anticipated; (3) the parties may not be able to satisfy the conditions precedent to consummate the proposed transaction; (4) the proposed transaction may divert management’s attention from Zafgen’s ongoing business operations; (5) the anticipated benefits of the proposed transaction might not be achieved; (6) Chondrial’s clinical programs and nonclinical studies may not be successful or completed on time; (7) Chondrial may not be able to successfully demonstrate safety and efficacy of its clinical programs or nonclinical studies; (8) Chondrial’s expectations regarding the future development of its clinical programs and nonclinical studies may not materialize; (9) Chondrial’s clinical programs may not obtain necessary regulatory or other approvals; (10) Chondrial may not be able to raise the necessary capital to conduct Chondrial’s clinical programs and nonclinical studies or such capital may not be available; (11) the proposed transaction may involve unexpected costs; (12) risk that as a result of adjustments to the exchange ratio, Zafgen stockholders and Chondrial’s stockholder could own more or less of the combined company than is currently anticipated; (13) risks related to the market price of Zafgen common stock relative to the exchange ratio; (14) the parties may be unable to meet expectations regarding the timing, completion and accounting and tax treatments of the transaction; (15) the parties may be subject to risks related to the proposed transaction, including any legal proceedings related to the proposed transaction and the general risks associated with the respective businesses of Zafgen and Chondrial, including the general volatility of the capital markets, terms and deployment of capital, volatility of Zafgen share prices, changes in the biotechnology industry, interest rates or the general economy, underperformance of Zafgen’s or Chondrial’s assets and investments, decreased ability to raise funds and the degree and nature of Zafgen’s and Chondrial’s competition, as well as the risk that unexpected reductions in Zafgen’s cash balance could adversely affect the portion of the combined company that the Zafgen stockholders retain; or (16) activist investors might not approve of the proposed transaction. Additionally, forward-looking statements related to Chondrial’s future expectations are subject to numerous risks and uncertainties, including risks that planned development milestones and timelines will not be met. Neither Zafgen nor Chondrial gives any assurance that either Zafgen or Chondrial will achieve its expectations.