ALPN Alpine Immune Sciences Inc

RISK FACTORS

The combined organization will be faced with a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. In addition to the other information contained in this proxy statement/prospectus/information statement, you should carefully consider the material risks described below before deciding how to vote your shares of stock. In addition, you should read and consider the risks associated with Nivalis’ business because these risks may also affect the combined organization — these risks can be found under the heading “Risk Factors — Risks Related to Nivalis” in this proxy statement/prospectus/information statement and in Nivalis’ Annual Report on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, and other documents Nivalis has filed with the SEC and incorporated by reference into this proxy statement/prospectus/information statement. You should also read and consider the other information in this proxy statement/prospectus/information statement and the other documents incorporated by reference into this proxy statement/prospectus/information statement. Please see the section entitled “Where You Can Find More Information” in this proxy statement/prospectus/information statement.

Risks Related to the Merger

The exchange ratio is not adjustable based on the market price of Nivalis common stock, so the merger consideration at the closing may have a greater or lesser value than at the time the Merger Agreement was signed.

The Merger Agreement has set the exchange ratio for the Alpine capital stock, and the exchange ratio is based on the outstanding capital stock of Alpine and the outstanding common stock of Nivalis, in each case immediately prior to the closing of the merger as described under the heading “The Merger—Merger Consideration.” Any changes in the market price of Nivalis common stock before the completion of the merger will not affect the number of shares of Nivalis’ common stock issuable to Alpine’s stockholders pursuant to the Merger Agreement. Therefore, if before the completion of the merger the market price of Nivalis’ common stock declines from the market price on the date of the Merger Agreement, then Alpine’s stockholders 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 Nivalis’ common stock increases from the market price of Nivalis’ common stock on the date of the Merger Agreement, then Alpine’s stockholders 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 Nivalis’ common stock, for each one percentage point change in the market price of Nivalis’ common stock, there is a corresponding one percentage point rise or decline, respectively, in the value of the total merger consideration payable to Alpine’s stockholders pursuant to the Merger Agreement.

Failure to complete the merger may result in Nivalis and Alpine paying a termination fee or expenses to the other party and could significantly harm the market price of Nivalis’ common stock and negatively affect the future business and operations of each company.

If the merger is not completed and the Merger Agreement is terminated under certain circumstances, Nivalis or Alpine may be required to pay the other party a termination fee of $2.5 million or reimburse the transaction expenses of the other party, up to a maximum of $1.0 million. Even if a termination fee is not payable or transaction expenses are not reimbursable in connection with a termination of the Merger Agreement, each of Nivalis and Alpine will have incurred significant fees and expenses, such as legal and accounting fees which Nivalis and Alpine estimate will total approximately $1.3 million and $1.4 million, respectively, 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 Nivalis’ common stock.

In addition, if the Merger Agreement is terminated and the board of directors of Nivalis or Alpine determines to seek another business combination, there can be no assurance that either Nivalis or Alpine will be able to find a partner and close an alternative transaction on terms that are as favorable or more favorable than the terms set forth in the Merger Agreement.

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The merger may be completed even though certain events occur prior to the closing that materially and adversely affect Nivalis or Alpine.

The Merger Agreement provides that either Nivalis or Alpine can refuse to complete the merger if there is a material adverse change affecting the other party between April 18, 2017, the date of the Merger Agreement, and the closing of the merger. However, certain types of changes do not permit either party to refuse to complete the merger, even if such change could be said to have a material adverse effect on Nivalis or Alpine, including:

If adverse changes occur and Nivalis and Alpine still complete the merger, the market price of the combined organization’s common stock may suffer. This in turn may reduce the value of the merger to the stockholders of Nivalis, Alpine or both.

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

Certain officers and directors of Nivalis and Alpine participate in arrangements that provide them with interests in the merger that are different from yours, including, among others, the continued service as an officer or director of the combined organization, severance benefits, the acceleration of stock option vesting, continued indemnification and the potential ability to sell an increased number of shares of common stock of the combined organization in accordance with Rule 144 under the Securities Act of 1933, as amended (“Securities Act”).

For example, Nivalis has entered into certain employment and severance benefits agreements with certain of its executive officers that may result in the receipt by such executive officers of cash severance payments and other benefits in the event of a covered termination of employment of each executive officer’s employment. The

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closing of the merger will also result in the acceleration of vesting of options to purchase shares of Nivalis’ common stock held by Nivalis’ executive officers and directors, whether or not there is a covered termination of such officer’s employment. For more information concerning the treatment of Nivalis’ stock options in connection with the merger, see the section entitled “The Merger Agreement—Treatment of Nivalis Stock Options” in this proxy statement/prospectus/information statement. In addition, and for example, certain of Alpine’s directors and executive officers have options, subject to vesting, to purchase shares of Alpine’s common stock which, at the closing of the merger, shall be converted into and become options to purchase shares of Nivalis’ common stock, certain of Alpine’s directors and executive officers are expected to become directors and executive officers of Nivalis upon the closing of the merger, and all of Alpine’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement. These interests, among others, may influence the officers and directors of Nivalis and Alpine to support or approve the merger. For more information concerning the interests of Nivalis’ and Alpine’s executive officers and directors, see the sections entitled “The Merger—Interests of Nivalis Directors and Executive Officers in the Merger” and “The Merger—Interests of Alpine Directors and Executive Officers in the Merger” in this proxy statement/prospectus/information statement.

The market price of Nivalis’ common stock following the merger may decline as a result of the merger.

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

Nivalis and Alpine stockholders may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger.

If the combined organization is unable to realize the strategic and financial benefits currently anticipated from the merger, Nivalis’ and Alpine’s stockholders will have experienced substantial dilution of their ownership interests in their respective companies without receiving the expected commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined organization is able to realize only part of the expected strategic and financial benefits currently anticipated from the merger.

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

Covenants in the Merger Agreement impede the ability of Nivalis and Alpine to make acquisitions, subject to certain exceptions relating to fiduciary duties, as set forth below, or to 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 during such period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, initiating, encouraging or entering into certain extraordinary transactions, such as a merger, sale of assets, or other business combination outside the ordinary course of business with any third party, subject to certain exceptions relating to fiduciary duties, as set forth below. Any such transactions could be favorable to such party’s stockholders.

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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 Nivalis and Alpine from soliciting alternative takeover proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances when such party’s board of directors 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 board’s fiduciary duties. Moreover, even if a party receives what the party’s board of directors determines is a superior proposal, the Merger Agreement does not permit either party to terminate the Merger Agreement to enter into a superior proposal.

Because the lack of a public market for Alpine’s capital stock makes it difficult to evaluate the value of Alpine’s capital stock, the stockholders of Alpine may receive shares of Nivalis’ common stock in the merger that have a value that is less than, or greater than, the fair market value of Alpine’s capital stock.

The outstanding capital stock of Alpine 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 Alpine. Because the percentage of Nivalis’ common stock to be issued to Alpine’s stockholders was determined based on negotiations between the parties, it is possible that the value of Nivalis’ common stock to be received by Alpine’s stockholders will be less than the fair market value of Alpine, or Nivalis may pay more than the aggregate fair market value for Alpine.

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

Even if the merger is approved by the stockholders of Nivalis and Alpine, 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” in this proxy statement/prospectus/information statement. Nivalis and Alpine 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 Nivalis and Alpine each may lose some or all of the intended benefits of the merger.

Risks Related to Nivalis

Risks Related to Nivalis’ Capital Requirements, Finances and Operations

Nivalis is a clinical-stage company with no drug products approved for commercial sale, Nivalis has incurred net losses since Nivalis’ inception, Nivalis anticipates that it will continue to incur significant losses for the foreseeable future, and Nivalis has had a limited operating history that may make it difficult for investors to evaluate the potential success of its business.

Nivalis is a clinical-stage pharmaceutical company and has not generated sustainable revenue from operations or been profitable since its inception in 2007, and it may never achieve profitability. Nivalis has devoted its resources to discovering and developing proprietary product candidates, but such product candidates cannot be marketed until clinical development and governmental approvals have been obtained. None of its product candidates have been approved for sale by any regulatory agency or are available for commercial sale and each will require significant additional capital to advance their development toward regulatory approval for commercial sale.

Nivalis has incurred significant net losses in each year since its inception, including net losses of $8.9 million for the three months ended March 31, 2017 and $31.5 million, $22.8 million, and $15.0 million for the years ended December 31, 2016, 2015, and 2014, respectively. As of March 31, 2017, Nivalis had an accumulated deficit of $189.2 million. Nivalis expects to continue to incur operating expenses and anticipates that it will continue to have losses in the foreseeable future.

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Nivalis’ future funding requirements, both near- and long-term, will depend on many factors, including, but not limited to:

Nivalis’ losses and expected future losses have had and will continue to have an adverse effect on its stockholders’ equity and working capital. Further, because of uncertainties relating to the outcome of the merger and the risks and uncertainties inherent in the biotechnology industry, Nivalis is unable to predict the extent of any future losses or whether it will become profitable.

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

The consummation of the proposed merger between Nivalis and Alpine is subject to a number of closing conditions, including approval by Nivalis’ and Alpine’s stockholders and other customary closing conditions. The parties are targeting a closing of the transaction in the third quarter of 2017, however, there can be no assurance that the proposed merger will be consummated within their desired timeframe, or at all.

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

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

To date, Nivalis has not generated any revenue from product sales, and its assets currently consist primarily of cash, cash equivalents and marketable securities, its patent portfolio, Nivalis’ listing on NASDAQ and the

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Merger Agreement with Alpine. While Nivalis has entered into the Merger Agreement with Alpine, the consummation of the merger with Alpine may be delayed or may not occur at all. If the merger is not completed, Nivalis’ board of directors may elect to pursue an alternative strategic transaction similar to the proposed merger with Alpine. Attempting to complete an alternative transaction will be costly and time consuming. If the merger with Alpine is not completed and Nivalis’ board of directors determines to pursue an alternative transaction, the terms of any such alternative transaction may not be as favorable to Nivalis and its stockholders as the terms of the proposed merger with Alpine, and Nivalis can make no assurances that such an alternative transaction would occur at all. Further, if the merger with Alpine is not completed, given the failure of the two Phase 2 trials of cavosonstat to achieve their primary endpoints, the discontinuation of Nivalis’ research and development efforts commencing in January 2017 and the cost to engage in further development activities, it is unlikely that Nivalis would be able to obtain the funding required to recommence its drug development activities.

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

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

There is substantial doubt as to Nivalis’ ability to continue as a going concern if the merger is not completed.

Nivalis has had recurring losses from operations since inception and will likely not generate revenue for the foreseeable future. Nivalis believes that its existing cash, cash equivalents and marketable securities and interest thereon will be sufficient to fund its projected operating requirements under its current operating plan. However, if the merger is not completed and Nivalis’ operating plans change and its projected operating requirements increase, Nivalis may be unable to continue as a going concern. In this event, the perception that Nivalis may not be able to continue as a going concern may have an adverse impact on its business due to concerns about its ability to meet its future contractual obligations. Further, if Nivalis is unable to continue as a going concern, Nivalis may have to liquidate its assets, and the values it receives for its assets in liquidation and dissolution could be significantly lower than the values reflected in its financial statements and an investor could lose all or part of its investment in Nivalis.

Although Nivalis has ceased all further development of cavosonstat and its other potential product candidates, if it were to resume research and development activities, it would require substantial additional funding. Raising additional capital may cause dilution to its existing stockholders, restrict its operations or require it to relinquish rights to its technologies or to a product candidate.

Nivalis currently does not have any committed external source of funds and does not expect to generate any revenue in the foreseeable future. Nivalis believes that its existing cash, cash equivalents and marketable

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securities and interest thereon will be sufficient to fund its projected operating requirements under its current operating plan. Nivalis has based its estimates on assumptions that may prove to be wrong, and it may use its available capital resources sooner than it currently expects if its operating plans change. If the merger is not completed and Nivalis’ current operating plans change and it determines to pursue further research and development activities, it will require substantial additional funding to operate, and would expect to finance these cash needs through a combination of equity offerings, debt financings, government or other third-party funding and licensing or collaboration arrangements.

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

Additional funds may not be available when Nivalis needs them on terms that are acceptable to Nivalis, or at all. If adequate funds are not available to Nivalis on a timely basis, it may be required to curtail or cease its operations or it may have to relinquish rights to its technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to Nivalis.

If the merger is not completed, raising additional funding through debt or equity financing is likely to be difficult, could be dilutive and may cause the market price of Nivalis’ common stock to decline further.

To the extent that Nivalis raises additional capital through the sale of equity or convertible debt securities, the issuance of those securities could result in substantial dilution for Nivalis’ current stockholders and the terms may include liquidation or other preferences that adversely affect the rights of its current stockholders. Furthermore, the issuance of additional securities, whether equity or debt, by Nivalis, or the possibility of such issuance, may cause the market price of its common stock to decline further and existing stockholders may not agree with its financing plans or the terms of such financings.

The issuance of shares of Nivalis’ common stock to Alpine’s stockholders in the pending merger will dilute substantially the voting power of Nivalis’ current stockholders.

If the pending merger is completed, each outstanding share of Alpine capital stock will be converted into the right to receive approximately 1.9878 shares of Nivalis’ common stock, subject to adjustment to account for the Nivalis Reverse Stock Split. Immediately following the merger, Nivalis’ stockholders, optionholders and warrantholders are expected to own, or hold rights to acquire, approximately 26% of the Fully-Diluted Common Stock of Nivalis, and Alpine’s stockholders, optionholders and warrantholders are expected to own, or hold rights to acquire, approximately 74% of the Fully-Diluted Common Stock of Nivalis. Accordingly, the issuance of shares of Nivalis’ common stock to Alpine’s stockholders in the merger will reduce significantly the relative voting power of each share of Nivalis’ common stock held by its current stockholders. Consequently, Nivalis’ stockholders as a group will have significantly less influence over the management and polices of the combined organization after the merger than prior to the merger.

Nivalis has incurred and will continue to incur significant transaction costs in connection with the merger.

Nivalis has incurred and will continue to incur significant transaction costs in connection with the merger. Nivalis estimates that it will incur aggregate direct transaction costs of approximately $2.9 million associated with the merger and approximately $100,000 for its portion of shared transaction expenses, as well as additional costs associated with the commencement of the combined organization’s operation as a public company, which cannot be estimated accurately at this time.

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If Nivalis fails to continue to meet all applicable NASDAQ requirements and NASDAQ determines to delist Nivalis’ common stock, the delisting could adversely affect the value of the merger, market liquidity of Nivalis’ common stock and the market price of its common stock could decrease.

Nivalis’ common stock is listed on NASDAQ. In order to maintain the listing, Nivalis must meet minimum financial and other requirements, including requirements for a minimum amount of capital, a minimum price per share and continued business operations so that it is not characterized as a “public shell company.” If Nivalis is unable to comply with NASDAQ’s listing standards, NASDAQ may determine to delist its common stock from NASDAQ. If its common stock is delisted for any reason, it could reduce the value of its common stock and its liquidity. Delisting would prevent Nivalis from satisfying a closing condition for the merger, and, in such event, Alpine may elect not to consummate the merger. If the merger is not completed and Nivalis chooses to reestablish a viable operating business, delisting could adversely affect Nivalis’ ability to obtain financing for the continuation of Nivalis’ operations or use its common stock in another strategic transaction. In addition, the combined organization must submit a new application for listing on NASDAQ pursuant to the reverse merger rules, and the combined organization will need to meet NASDAQ’s minimum listing requirements conditions.

Nivalis’ inability to utilize its net operating loss carryforwards before they expire may adversely affect its results of operations and financial condition.

In general, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating loss carryforwards (“NOLs”), to offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership of certain stockholders, generally stockholders beneficially owning five percent or more of Nivalis’ common stock, applying certain look-through and aggregation rules, increases by more than 50 percentage points over such stockholders’ lowest percentage ownership during the testing period, generally three years. Nivalis may have experienced ownership changes in the past and may experience ownership changes in the future. In addition, the closing of the merger may result in an ownership change. Limitations imposed on Nivalis’ ability to utilize NOLs as a result of ownership changes could cause it to pay U.S. federal and state income taxes earlier than it would otherwise be required if such limitations were not in effect and could cause such NOLs to expire unused.

Development and Regulatory Risks Related to Nivalis’ Business

Cavosonstat did not achieve its primary endpoint in two Phase 2 trials with CF patients, and Nivalis’ previous findings from preclinical studies in other potential disease areas may not be predictive of a benefit for cavosonstat or any other of Nivalis’ GSNOR inhibitors.

Nivalis has ceased all research and development activities for cavosonstat and all of its GSNOR inhibitors and it currently has no plans to pursue such development itself as it pursues closing of the merger. If, however, Nivalis’ operating plans change, and, whether or not it is successful in completing the merger, it resumes further development of cavosonstat or Nivalis’ other GSNOR inhibitors, these development activities may not result in drugs that are approved by regulatory authorities. Regulatory agencies, including the FDA, ultimately must approve any product candidate before it can be promoted, marketed or commercially distributed. Cavosonstat and any other potential product candidate Nivalis may develop will be subject to extensive and rigorous review and regulation by governmental authorities. Nivalis has never obtained approval for or commercialized a product candidate, and its portfolio of GSNOR inhibitors outside of CF is at an early stage of development and unproven. The timing of the drug development process is lengthy and can be unpredictable and may include post-marketing studies and surveillance. Any such development of Nivalis’ GSNOR inhibitors would require the expenditure of additional resources beyond Nivalis’ existing cash, cash equivalents or marketable securities. Of the large number of drugs in development for approval in the U.S., only a small percentage successfully complete the regulatory approval process and are commercialized. The success of any of Nivalis’ potential product candidates depends on, among other things:

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If Nivalis were to resume development of one or more of its drug product candidates and is not successful with respect to one or more of these factors either in a timely manner or at all, significant delays in obtaining regulatory approval, including, but not limited to, denial of a new drug application (“NDA”), could result. Nivalis has never applied for, and has never received, regulatory approval for a drug. If Nivalis were to resume development of one or more of its drug product candidates and is unable to successfully complete the clinical development of a product candidate and meet other related regulatory requirements, it will be unable to obtain approval of an NDA from the FDA. It is possible that, even if Nivalis successfully completes clinical development, the FDA may refuse to accept Nivalis’ NDA for substantive review or may conclude after review of Nivalis’ data that Nivalis’ application is insufficient. If the FDA does not accept or approve Nivalis’ NDA, it may require that Nivalis conducts additional clinical, nonclinical or manufacturing studies or analyses and submit that data to it before it will reconsider Nivalis’ application. Depending on the extent of these or any other FDA requirements, approval of any NDA or application that Nivalis submits may be delayed by several years, or may require Nivalis to expend more resources than Nivalis has available. It is also possible that additional studies, if performed and completed, may not be considered sufficient by the FDA to approve Nivalis’ NDA.

In addition, the regulatory agencies may not complete their review processes in a timely manner, or additional delays may result if a potential drug candidate is brought before an FDA advisory committee, which could recommend restrictions on approval or recommend non-approval of the product candidate. In addition, delays or rejections could result based upon additional government regulation from future legislation or administrative action, or changes in regulatory agency policy during the period of product development, clinical studies and the review process. As a result, Nivalis cannot predict when, if at all, it will receive regulatory approval of any product candidate if Nivalis were to resume development of one or more of its drug product candidates.

Any delay in obtaining, or an inability to obtain, regulatory approvals would prevent Nivalis from commercializing a product candidate, generating revenue and achieving and sustaining profitability. If any of these outcomes occur, it could have a material adverse effect on Nivalis’ business and could potentially cause it to cease operations. These factors could materially harm Nivalis’ business, and the value of its common stock would likely decline.

The regulatory approval processes of the FDA, the European Medicines Agency (“EMA”), and comparable foreign regulatory authorities are lengthy, time-consuming and inherently unpredictable.

Nivalis is not permitted to market any of its potential product candidates in the U.S. or outside the U.S. until it receives approval of an NDA from the FDA or approval of a marketing application from the comparable regulatory authority in other countries. Should Nivalis determine to resume development of any of its GSNOR inhibitors, prior to submitting an NDA to the FDA for approval, Nivalis will need to complete its preclinical studies in the applicable indication, as well as all necessary clinical trials. Successfully initiating and completing clinical programs and obtaining approval of an NDA is a complex, lengthy, expensive and uncertain process, and FDA and other comparable foreign regulatory authorities may delay, limit or deny approval of a potential product candidate for many reasons, including, among others:

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Any of these factors, many of which are beyond Nivalis’ control, could jeopardize Nivalis’ ability to obtain regulatory approval for and successfully market any of its potential product candidates, which would have a material adverse effect on Nivalis’ business and prospects.

If Nivalis were to resume research and development activities on its potential product candidates, Nivalis would depend on the successful completion of clinical trials for any potential product candidate. The positive clinical results, if any, obtained by Nivalis in future clinical trials may not be repeated in later-stage clinical trials.

Before obtaining regulatory approval for the sale of a potential product candidate, extensive clinical trials are required to demonstrate safety and efficacy in humans. Nivalis has not completed the clinical trials necessary to support an application for approval to market cavosonstat or any other potential product candidate. Successful completion of such clinical trials is a prerequisite to submitting an NDA to the FDA and, consequently, the ultimate approval and commercial marketing of any of Nivalis’ potential product candidates. A failure of one or more clinical trials can occur at any stage of testing. Further, the outcome of preclinical testing and early clinical trials may not be predictive of the success of later preclinical testing or clinical trials, and interim results of a clinical trial do not necessarily predict final results. For example, despite positive preclinical and early stage clinical results, cavosonstat did not achieve the primary endpoint in two recently completed Phase 2 clinical trials in CF that were announced in November 2016 and February 2017, respectively. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed

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their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval for their products.

Should Nivalis choose to resume development of any of its potential candidates, Nivalis may experience a number of unforeseen events during, or as a result of, any future clinical trials that may be conducted on any of its potential product candidates that could adversely affect the completion of those clinical trials, including:

Negative or inconclusive results of any future clinical trials of Nivalis’ potential product candidates could mandate repeated or additional clinical studies. Despite the safety results reported in earlier clinical trials for cavosonstat, Nivalis does not know whether any other clinical trials it may conduct will demonstrate adequate efficacy and safety to result in regulatory approval to market cavosonstat in any other indications or any other potential product candidate. If later stage clinical trials do not produce favorable results, Nivalis’ ability to obtain regulatory approval for a potential product candidate may be adversely impacted.

Should Nivalis resume research and development activities, delays in clinical trials are common and have many causes, and any delay could have a material adverse effect on Nivalis’ business, such as increased costs and delays in Nivalis’ ability to obtain regulatory approval and commence product sales. In this event, Nivalis may be required to suspend, repeat or terminate its clinical trials if they are not conducted in accordance with regulatory requirements, the results are negative or inconclusive or the trials are not well designed.

Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. Clinical trials must be conducted in accordance with FDA regulations or other applicable foreign government regulations, and are subject to oversight by the FDA or other foreign regulatory authorities and institutional review boards at the medical institutions where the clinical trials are conducted. In addition, clinical trials must be conducted with product candidates produced under cGMP and may require large numbers of test subjects.

If Nivalis resumes research and development activities relating to its GSNOR inhibitors, Nivalis may experience delays in clinical trials at any stage of development and testing of any such potential product

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candidate. Events which may result in a delay or unsuccessful completion of clinical trials for any of Nivalis’ GSNOR inhibitors include:

If initiation or completion of any of Nivalis’ clinical trials are delayed for any of the above reasons, Nivalis’ development may be arrested, development costs may increase, the approval process could be delayed, any periods during which Nivalis may have the exclusive right to commercialize a potential product candidate may be reduced and Nivalis’ competitors may have more time to bring products to market before Nivalis does or otherwise delay Nivalis. Any of these events could impair Nivalis’ ability to generate revenue from product sales and impair its ability to generate regulatory and commercialization milestones and royalties, all of which could have a material adverse effect on Nivalis’ business.

Nivalis’ potential product candidates may cause adverse events or have other properties that could delay or prevent their regulatory approval or limit the scope of any approved label or market acceptance.

If Nivalis were to resume research and development activities relating to its GSNOR inhibitors, undesirable adverse events caused by the potential product candidates could cause Nivalis or regulatory authorities to interrupt, delay, halt or terminate clinical trials and could result in the denial of regulatory approval by the FDA or other comparable foreign regulatory authorities for any or all targeted indications. It is possible that during the course of the clinical development of a potential product candidate, results of Nivalis’ clinical trials could reveal an unacceptable severity and prevalence of adverse events. In addition, Nivalis’ remaining preclinical testing may produce inconclusive or negative safety results, which may require it to conduct additional preclinical testing or to abandon a potential product candidate. Also, a potential product candidate may have unfavorable pharmacology or toxicity characteristics, or cause undesirable side effects.

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Undesirable adverse events caused by a potential product candidate could affect patient recruitment or the ability of enrolled patients to complete a clinical trial or result in potential product liability claims. In addition, adverse events that occur in Nivalis’ trials as a consequence of the serious disease that is being studied may negatively affect the profile of the potential product candidate. The FDA or other regulatory authorities may determine that additional safety testing is required for a potential product candidate, which would cause a delay in Nivalis’ clinical development of such product candidate.

Additionally, if any potential product candidate receives marketing approval, and Nivalis or others later identify undesirable adverse events caused by such products, a number of potentially significant negative consequences could result, including:

Any of these events could prevent Nivalis from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm Nivalis’ business, results of operations and prospects. Any such events would increase Nivalis’ costs and could delay or prevent Nivalis’ ability to commercialize its product candidates should Nivalis resume development activities, which could adversely impact Nivalis’ business, financial condition and results of operations.

Cavosonstat and any other potential product candidate based on Nivalis’ GSNOR inhibitor portfolio are based on a novel technology, which may raise development issues Nivalis may not anticipate or be able to resolve, and regulatory issues that could delay or prevent approval.

Cavosonstat and any other potential product candidate based on Nivalis’ GSNOR inhibitor technology platform are based on a novel technology, and there can be no assurance that unforeseen development problems related to the novel technology will not arise in the future and cause significant delays should Nivalis determine to resume research and development activities relating to its GSNOR inhibitors. In this event, Nivalis may be unable to resolve any such unforeseen problems.

Regulatory approval of novel product candidates can be more expensive and take longer than other, more well-known or extensively studied pharmaceutical product candidates due to Nivalis’ and regulatory agencies’ lack of experience with them. There are no GSNOR inhibitors that Nivalis knows of in clinical development and none have been approved to date. Should Nivalis resume research and development activities relating to its GSNOR inhibitors, the novelty of Nivalis’ platform may lengthen the regulatory review process, require Nivalis to conduct additional studies or clinical trials, increase Nivalis’ development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of cavosonstat or any other potential product candidate based on its GSNOR inhibitor technology platform or lead to significant post-approval limitations or restrictions. For example, the FDA could require additional studies or characterization that may be difficult or impossible to perform.

Even if Nivalis obtains regulatory approval for a potential product candidate, Nivalis will still face extensive ongoing regulatory requirements.

If Nivalis were to resume research and development activities relating to its GSNOR inhibitors, even if Nivalis obtains regulatory approval in the U.S., the FDA may still impose significant future restrictions on the

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indicated uses or marketing of a potential product candidate, or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance, including Phase 4 clinical trials. Should Nivalis obtain regulatory approval, it will be subject to ongoing FDA requirements governing the labeling, manufacturing, packaging, storage, distribution, safety surveillance, advertising, promotion, record-keeping and reporting of safety and other post-market information. The holder of an approved NDA is obligated to monitor and report adverse events and any failure of a product to meet the specifications in the NDA. The holder of an approved NDA must also 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, manufacturers of drug products 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 cGMPs, and adherence to commitments made in the NDA. If Nivalis or a regulatory agency discover previously unknown problems with a product, such as quality issues or adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions relative to that product or the manufacturing facility, including necessitating recall or withdrawal of the product from the market or suspension of manufacturing.

If Nivalis fails to comply with applicable ongoing regulatory requirements following approval of a product candidate, a regulatory agency may:

Any government investigation of alleged violations of law could require Nivalis to expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit the commercialization of any potential product candidate and inhibit Nivalis’ ability to generate revenue.

The approval of a potential product candidate in any given market does not ensure approval in any other market.

If Nivalis were to resume research and development activities relating to its GSNOR inhibitors, in order to market any product candidate, Nivalis must establish and comply with numerous and varying regulatory requirements on a country-by-country basis regarding safety and efficacy. Approval in the U.S. by the FDA or by a regulatory agency in another country does not ensure approval by the regulatory authorities in other countries or jurisdictions or ensure approval for the same conditions of use. In addition, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory approval in any other country. Approval processes vary among countries and can involve additional product testing and validation and additional administrative review periods. Seeking foreign regulatory approval could result in difficulties and costs for Nivalis and require additional preclinical studies or clinical trials which could be costly and time-consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of Nivalis’ product candidates in those countries. Nivalis does not have any product candidates approved for sale in any jurisdiction, including international markets, and Nivalis does not have experience in obtaining regulatory approval in international markets. If Nivalis fails to

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comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, Nivalis’ target market will be reduced and its ability to realize the full market potential of its product candidates will be unrealized.

Risks Related to Nivalis’ Reliance on Third Parties

If Nivalis attempts to form strategic alliances or collaborations in the future with third parties for the development and commercialization of any of its product candidates, Nivalis may not be successful in establishing these alliances or collaborations.

Nivalis may seek to form strategic alliances or collaborations for the development and potential commercialization of its product candidates. Nivalis may not be successful in entering into any such transaction on favorable terms or at all. Nivalis’ potential product candidates may be considered to be too early in development for a collaborative effort or may be perceived as being too risky or without sufficient market potential or otherwise as insufficient for clinical, market or other reasons. If Nivalis were successful in entering into a strategic alliance or collaboration, its ability to generate revenue from the alliance or collaboration will depend on its collaborators’ abilities to establish the safety and efficacy of its product candidates, to obtain regulatory approvals and to achieve market acceptance. Strategic alliances and collaborations involving Nivalis product candidates pose many risks to Nivalis, including:

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Nivalis employees, consultants or CROs may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on Nivalis’ business.

Nivalis is exposed to the risk of fraud or other misconduct by its employees, consultants and other third parties, such as principal investigators, CROs and vendors, if any. Misconduct by these parties could include intentional, reckless or negligent conduct, and/or failures to comply with FDA regulations, provide accurate information to the FDA, comply with manufacturing standards Nivalis has established, comply with federal and state healthcare fraud and abuse laws and regulations, report financial information or data accurately or disclose unauthorized activities to Nivalis. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Misconduct by these parties could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to Nivalis’ reputation. Nivalis has adopted a Code of Business Conduct and Ethics, but it is not always possible to identify and deter misconduct, and the precautions Nivalis takes to detect and prevent misconduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting Nivalis from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against Nivalis, and Nivalis is not successful in defending itself or asserting its rights, those actions could have a significant impact on Nivalis’ business and results of operations, including the imposition of significant fines or other sanctions.

Intellectual Property Risks Related to Nivalis’ Business

It is difficult and expensive to protect Nivalis’ intellectual property rights and Nivalis cannot ensure that the protections used will prevent third parties from competing against Nivalis.

If Nivalis were to resume research and development activities relating to its GSNOR inhibitors, Nivalis’ success will depend, in part, on its ability to obtain and maintain intellectual property rights, both in the U.S. and other countries, successfully defend this intellectual property against third-party challenges and successfully enforce this intellectual property to prevent third-party infringement. Nivalis relies upon a combination of patents, trade secret protection and confidentiality agreements.

Nivalis’ ability to protect any of its product candidates and technologies from unauthorized or infringing use by third parties depends in substantial part on its ability to obtain and maintain valid and enforceable patents in both the U.S. and other countries. Patent matters in the biotechnology and pharmaceutical industries can be highly uncertain and involve complex legal and factual questions. Changes in either the patent laws, implementing regulations or in interpretations of patent laws may diminish the value of Nivalis patent rights.

There can be no assurance that Nivalis will discover or develop patentable products or processes or that patents will issue from any pending patent applications owned or licensed by Nivalis or any patent applications Nivalis may own or license in the future, or if issued, that the breadth of such patent coverage will be sufficient. Nivalis cannot guarantee that claims of issued patents owned or licensed to Nivalis, either now or in the future, are or will be held valid or enforceable by the courts or, even if unchallenged, will provide Nivalis with exclusivity or commercial value for its product candidates or technology or any significant protection against competitive products or prevent others from designing around Nivalis’ claims. Further, if Nivalis encounters delays in regulatory approvals, the period of time during which Nivalis could market its product candidates under patent protection could be reduced. Nivalis’ patent rights also depend on Nivalis’ compliance with technology and patent licenses upon which Nivalis’ patent rights are based and upon the validity of assignments of patent rights from consultants and other inventors that were, or are, not employed by Nivalis.

Patent applications are generally maintained in confidence until publication. In the U.S., for example, patent applications are maintained in secrecy for up to 18 months after their filing. Similarly, publication of discoveries

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in scientific or patent literature often lag behind actual discoveries. Consequently, Nivalis cannot be certain that it was the first to invent, or the first to file patent applications on its product candidates. There is also no assurance that all of the potentially relevant prior art relating to Nivalis’ patents and patent applications has been found, which could be used by a third party to challenge the validity of Nivalis’ patents or prevent a patent from issuing from a pending patent application.

In addition, even if patents do successfully issue, third parties may challenge any patent Nivalis owns or licenses through adversarial proceedings in the issuing offices, which could result in the invalidation or unenforceability of some or all of the relevant patent claims. If a third party asserts a substantial new question of patentability against any claim of a U.S. patent Nivalis owns or licenses, the USPTO may grant a request for reexamination, which may result in a loss of scope of some claims or a loss of the entire patent. The adoption of the Leahy-Smith America Invents Act (the “Leahy-Smith Act”) has established additional opportunities for third parties to invalidate U.S. patent claims, including inter partes review and post-grant review, on the basis of a lower legal standards than reexamination and additional grounds.

Nivalis will incur significant ongoing expenses in maintaining its patent portfolio. Should Nivalis lack the funds to maintain its patent portfolio or to enforce its rights against infringers, Nivalis could be adversely impacted. Even if claims of infringement are without merit, any such action could divert the time and attention of management and impair Nivalis’ ability to access additional capital and/or cost Nivalis significant funds to defend.

Nivalis may not be able to protect its intellectual property rights throughout the world.

Filing, prosecuting and defending patents on all of Nivalis’ product candidates throughout the world would be prohibitively expensive. Competitors may manufacture and sell Nivalis’ potential products in those foreign countries where Nivalis has not filed for patent protection or where patent protection may be unavailable, not obtainable or ultimately not enforceable. Nivalis’ competitors might conduct research and development activities in countries where Nivalis does not have patent rights and then use the information learned from such activities to develop competitive products for sale in Nivalis’ major commercial markets and, further, may be able to export otherwise infringing products to territories where Nivalis has patent protection but where enforcement is not as strong as that in the U.S. These products may compete with Nivalis’ products in jurisdictions where Nivalis does not have any issued patents and Nivalis’ patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

Nivalis’ patent portfolio includes patents and patent applications in countries outside of the U.S., including Europe, Canada, Japan and Australia. The scope of coverage provided by these patents varies from country to country. Moreover, the laws of some foreign jurisdictions do not provide intellectual property rights to the same extent as in the U.S. and many companies have encountered significant difficulties in obtaining such rights in foreign jurisdictions. Outside of the U.S., patents Nivalis owns or licenses may become subject to patent opposition in the European Patent Office or similar proceedings, which may result in loss of scope of some claims or loss of the entire patent. Participation in adversarial proceedings is very complex, expensive, and may divert Nivalis’ management’s attention from the core business and may result in unfavorable outcomes that could adversely affect Nivalis’ ability to prevent third parties from competing with Nivalis.

Many companies have also encountered significant problems in protecting and defending intellectual property rights in certain 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 pharmaceuticals, which could make it difficult for Nivalis to stop the infringement of its patents or marketing of competing products in violation of Nivalis’ 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.

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If Nivalis encounters difficulties in protecting Nivalis’ intellectual property rights in foreign jurisdictions, the value of Nivalis’ proprietary technology could be substantially harmed. Proceedings to enforce Nivalis’ patent rights in certain foreign jurisdictions could result in substantial cost and divert Nivalis’ efforts and attention from other aspects of Nivalis’ business.

Intellectual property rights do not necessarily address all potential threats to Nivalis’ competitive advantage.

The degree of future protection afforded by Nivalis’ intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect Nivalis’ business, or permit Nivalis to maintain its competitive advantage. The following examples are illustrative:

Should any of these events occur, they could significantly harm Nivalis’ business, results of operations and prospects.

Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of Nivalis’ patent applications and the enforcement or defense of Nivalis’ issued patents.

On September 16, 2011, the Leahy-Smith Act was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications will be prosecuted and may also affect patent litigation. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of Nivalis’ business, its current and pending patent portfolio and future intellectual property strategy. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of Nivalis’ patent applications and the enforcement or defense of Nivalis’ issued patents, all of which could have a material adverse effect on Nivalis’ business and financial condition.

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

Periodic maintenance fees on any issued patent are due to be paid to the U.S. Patent and Trademark Office (“USPTO”), the European Patent Office (“EPO”), and other foreign patent agencies in several stages over the

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lifetime of the patent. The USPTO and various foreign national or international patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of patent rights include, but are not limited to, failure to timely file national and regional stage patent applications based on Nivalis’ international patent application, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If Nivalis or its licensors fail to maintain the patents and patent applications covering Nivalis’ product candidates, Nivalis’ competitors might be able to enter the market, which would have a material adverse effect on Nivalis’ business.

Some of Nivalis’ intellectual property is licensed to it by a third party. If Nivalis fails to comply with its obligations in the agreement under which it licenses intellectual property rights from that third party, or otherwise experience disruptions to Nivalis’ business relationships with its licensor, Nivalis could lose license rights that are important to its business.

Nivalis has a license under certain patents and/or know-how to develop and commercialize certain of its potential product candidates. Nivalis’ existing license agreements impose, and Nivalis expects that any future license agreements will impose on Nivalis, various obligations. If Nivalis fails to comply with its obligations under these agreements, the licensor may have the right to terminate the license. If any of Nivalis’ licenses are terminated and Nivalis is not able to negotiate other agreements for use of the intellectual property protections underlying these product candidates, Nivalis would not be able to manufacture and market these potential products, which would adversely affect its business prospects and financial condition.

The patent protection and patent prosecution for some of Nivalis’ potential product candidates is dependent or may be dependent in the future on third parties.

While Nivalis normally seeks and gains the right to fully prosecute the patents relating to its potential product candidates, there may be times when platform technology patents or product-specific patents that relate to its potential product candidates are controlled by Nivalis’ licensors. In addition, Nivalis’ licensors and/or licensees may have back-up rights to prosecute patent applications in the event that Nivalis does not do so or chooses not to do so, and Nivalis’ licensees may have the right to assume patent prosecution rights after certain milestones are reached. If any of Nivalis’ licensing partners fail to appropriately prosecute and maintain patent protection for patents covering any of Nivalis’ potential product candidates, Nivalis’ ability to develop and commercialize those potential product candidates may be adversely affected and Nivalis may not be able to prevent competitors from making, using and selling competing products.

Nivalis may be subject to litigation alleging that Nivalis is infringing the intellectual property rights of third parties or litigation or other adversarial proceedings seeking to invalidate its patents or other proprietary rights, and Nivalis may need to resort to litigation to protect or enforce its patents or other proprietary rights, all of which will be costly to defend or pursue and uncertain in outcome and may prevent or delay any future development and commercialization efforts or otherwise affect its business.

Nivalis’ success also will depend, in part, on refraining from infringing patents or otherwise violating intellectual property owned or controlled by others. Numerous patents and pending applications are owned by third parties in the fields in which Nivalis may develop product candidates, both in the U.S. and elsewhere. It is difficult for industry participants, including Nivalis, to identify all third-party patent rights that may be relevant to any of its potential product candidates because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims. Moreover, because some patent applications are maintained in secrecy until the patents publish, Nivalis cannot be certain that third parties have not filed patent applications that cover Nivalis’ potential product candidates and

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technologies. Pharmaceutical companies, biotechnology companies, universities, research institutions and others may have filed patent applications or have received, or may obtain, issued patents in the U.S. or elsewhere relating to aspects of Nivalis’ technology, including its potential product candidates, processes for manufacture or methods of use, including combination therapy. It is uncertain whether the issuance of any third-party patents will require Nivalis to alter its potential product candidates or processes, obtain licenses, or cease certain activities.

If patents issued to third parties contain blocking, dominating or conflicting claims and such claims are ultimately determined to be valid, Nivalis may be required to obtain licenses to these patents or to develop or obtain alternative non-infringing technology and cease practicing those activities, including potentially manufacturing or selling any products deemed to infringe those patents. If any licenses are required, there can be no assurance that Nivalis will be able to obtain any such licenses on commercially favorable terms, if at all, and if these licenses are not obtained, Nivalis might be prevented from pursuing the development and commercialization of certain of its potential product candidates. Even if a license can be obtained on acceptable terms, the rights may be non-exclusive, which could give Nivalis’ competitors access to the same technology or intellectual property rights licensed to Nivalis. Nivalis’ failure to obtain a license to any technology that it may require to commercialize its potential product candidates on favorable terms may have a material adverse impact on its business, financial condition and results of operations.

Nivalis may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual property rights alleging that Nivalis’ technologies, including its potential product candidates, processes for manufacture or methods of use, including combination therapy, or other proprietary technologies infringe their intellectual property rights. Parties making claims against Nivalis may obtain injunctive or other equitable relief, which could effectively block Nivalis’ ability to further develop and commercialize one or more of its potential product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from the business. In the event of a successful infringement or other intellectual property claim against Nivalis, it may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign Nivalis’ affected products, which may be impossible or require substantial time and monetary expenditure. Nivalis cannot predict whether any such license would be available at all or whether it would be available on commercially reasonable terms. Parties making successful claims against Nivalis may obtain injunctive or other equitable relief, which could effectively block Nivalis’ ability to further develop and commercialize one or more of its potential product candidates. Nivalis cannot provide any assurances that third-party patents do not exist which might be enforced against Nivalis’ products or potential product candidates, resulting in either an injunction prohibiting Nivalis’ sales, or, with respect to Nivalis’ sales, an obligation on Nivalis’ part to pay royalties and/or other forms of compensation to third parties.

Litigation, which could result in substantial costs to Nivalis (even if determined in Nivalis’ favor), may also be necessary to enforce any patents issued or licensed to Nivalis. The cost to Nivalis in initiating any litigation or other proceeding relating to patent or other proprietary rights, even if resolved in Nivalis’ favor, could be substantial, and litigation would divert management’s attention. Some of Nivalis’ competitors may be able to sustain the costs of complex patent litigation more effectively than Nivalis can because they have substantially greater resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could delay Nivalis’ research and development efforts and limit its ability to continue its operations.

If Nivalis were to initiate legal proceedings against a third party to enforce a patent covering one of its potential product candidates or its technology, the defendant could counterclaim that its patent is invalid or unenforceable. In patent litigation in the U.S. and in most European countries, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, for example, lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. The

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outcome following legal assertions of invalidity and unenforceability during patent litigation is unpredictable. With respect to the validity question, for example, Nivalis cannot be certain that there is no invalidating prior art, of which Nivalis and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, Nivalis would lose at least part, and perhaps all, of the patent protection on one or more of its products or certain aspects of its platform technology. Such a loss of patent protection could have a material adverse impact on Nivalis’ business. Patents and other intellectual property rights also will not protect Nivalis’ technology if competitors design around its protected technology without legally infringing its patents or other intellectual property rights.

In addition, if a third party has filed patent applications in the U.S. prior to March 16, 2013 that claim technology also claimed by Nivalis, Nivalis may have to participate in interference proceedings in the USPTO to determine priority of invention. Such proceedings can be lengthy, are costly to defend and involve complex questions of law and fact the outcomes of which are difficult to predict. Moreover, Nivalis may have to participate in adversarial proceedings in the USPTO or foreign patent offices. An adverse decision relating to Nivalis’ patent rights could require it to cease using such technology, any of which could have a material adverse effect on its business, financial condition and results of operations. If initiated, adversarial proceedings could result in substantial costs to Nivalis, even if the eventual outcome is favorable to Nivalis.

If Nivalis is not able to adequately prevent disclosure of trade secrets and other proprietary information, the value of its technology and products could be significantly diminished.

Nivalis also relies on trade secrets to protect technology, especially where patent protection is not believed to be appropriate or obtainable or where patents have not issued. Nivalis attempts to protect its proprietary technology and processes, in part, with confidentiality agreements and assignment of invention agreements with its employees and confidentiality agreements with its consultants and certain contractors. There can be no assurance that these agreements will not be breached, that Nivalis would have adequate remedies for any breach, or that its trade secrets will not otherwise become known or be independently discovered by competitors. Nivalis may fail in certain circumstances to obtain the necessary confidentiality agreements, or their scope or term may not be sufficiently broad to protect Nivalis’ interests.

If Nivalis’ trade secrets or other intellectual property become known to its competitors, it could result in a material adverse effect on the business, financial condition and results of operations. To the extent that Nivalis or its consultants or research collaborators use intellectual property owned by others in work for Nivalis, disputes may also arise as to the rights to related or resulting know-how and inventions.

Nivalis may be subject to claims that it or its employees or consultants have wrongfully used or disclosed alleged trade secrets of its employees’ or consultants’ former employers or their clients. These claims may be costly to defend and if Nivalis does not successfully do so, Nivalis may be required to pay monetary damages and may lose valuable intellectual property rights or personnel.

Many of Nivalis’ current or former employees were previously employed at universities or biotechnology or pharmaceutical companies, including Nivalis’ competitors or potential competitors. Although no claims against Nivalis are currently pending, Nivalis may be subject to claims that these employees or Nivalis have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If Nivalis fails in defending such claims, in addition to paying monetary damages, it may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product could compromise Nivalis’ ability to commercialize, or prevent it from commercializing, its product candidates, which could severely harm the business. Even if Nivalis is successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

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Risks Related to Nivalis’ Industry

Following its recent workforce reduction, Nivalis will not have resources or the required expertise to develop any of its potential product candidates, which may impair their value.

Because of the specialized scientific nature of the business and the unique properties of the GSNOR inhibitor platform, Nivalis’ ability to develop and commercialize any of its potential product candidates is highly dependent upon Nivalis’ ability to attract and retain qualified scientific and technical personnel, consultants and advisors. Nivalis’ recent workforce reduction resulted in the departure of Mr. Jon Congleton, the CEO, Dr. David Rodman, the CMO, Dr. Steven Shoemaker, the Vice President of Clinical Research and Development, and Dr. Sherif Gabriel, the Vice President of Research and Discovery. Additionally, the workforce reduction resulted in the elimination of all of Nivalis’ research and development staff. The loss of their services will significantly delay or prevent any resumption of the research and development of the GSNOR inhibitors should Nivalis choose to resume those activities in the future.

Should Nivalis need to recruit additional personnel in order to resume research and development activities, it will need to hire additional qualified scientific personnel to perform research and development, as well as personnel with expertise in clinical testing, government regulation, manufacturing, marketing and sales, which may strain Nivalis’ existing managerial, operational, regulatory compliance, financial and other resources. Nivalis also relies on consultants and advisors to assist in formulating its research and development strategy and adhering to complex regulatory requirements. Nivalis faces competition for qualified individuals from numerous pharmaceutical and biotechnology companies, universities and other research institutions. There can be no assurance that Nivalis will be able to attract and retain such individuals in the future, on acceptable terms, if at all. Additionally, Nivalis’ operations are in Colorado, which may make attracting and retaining qualified scientific and technical personnel from outside of Colorado difficult. The failure to attract and retain qualified personnel, consultants and advisors could delay or prevent Nivalis’ ability to commercialize any of its potential product candidates based on the GSNOR inhibitor portfolio, which could have a material adverse effect on the business, financial condition and results of operations.

If research and development activities resume, Nivalis is exposed to potential product liability or similar claims, and insurance against these claims may not be available at a reasonable rate in the future or at all.

Drug development involves potential liability risks that are inherent in the testing, manufacturing and marketing of human therapeutic products. Clinical trials involve the testing of product candidates on human subjects or volunteers under a research plan, and carry a risk of liability for personal injury or death to patients due to unforeseen adverse side effects, improper administration of the product candidate, or other factors. Many of these patients are already seriously ill and are therefore particularly vulnerable to further illness or death.

Nivalis currently carries clinical trial liability insurance in the amount of $10.0 million in the aggregate, but there can be no assurance that it will be able to maintain such insurance if it were to resume drug development activities or that the amount of such insurance will be adequate to cover claims. Nivalis could be materially and adversely affected if it were required to pay damages or incur defense costs in connection with a claim outside the scope of indemnity or insurance coverage, if the indemnity is not performed or enforced in accordance with its terms, or if its liability exceeds the amount of applicable insurance. In addition, there can be no assurance that insurance will continue to be available on terms acceptable to Nivalis, if at all, or that if obtained, the insurance coverage will be sufficient to cover any potential claims or liabilities. Similar risks would exist upon the commercialization or marketing of any products by Nivalis or its collaborators.

Regardless of their merit or eventual outcome, product liability claims may result in:

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Should any of these events occur, it could have a material adverse effect on Nivalis’ business and financial condition.

Nivalis may become involved in securities class action litigation that could divert management’s attention and adversely affect the business and could subject Nivalis to significant liabilities.

The stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the common stock of pharmaceutical companies. These broad market fluctuations as well a broad range of other factors, including the realization of any of the risks described in this “Risk Factors” section of this proxy statement/prospectus/information statement and the consummation of any transaction resulting from Nivalis’ review of various strategic alternatives, may cause the market price of Nivalis’ common stock to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for Nivalis because biotechnology and pharmaceutical companies generally experience significant stock price volatility. Nivalis may become involved in this type of litigation in the future. Litigation typically is expensive and diverts management’s attention and resources, which could adversely affect the business. Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require that Nivalis make significant payments.

Risks Related to Ownership of Nivalis’ Common Stock

Nivalis’ stock price is likely to be volatile and an active, liquid and orderly trading market may not develop for its common stock. As a result, stockholders may not be able to resell shares at or above their purchase price.

Prior to its initial public offering, which was completed in June 2015, there was no public market for shares of Nivalis’ common stock. Although Nivalis’ common stock is listed on NASDAQ, an active trading market for its common stock may not develop or, if it develops, may not be sustained. The lack of an active market may impair the ability of its stockholders to sell their shares at the time they wish to sell them or at a price that they consider reasonable, which may reduce the fair market value of their shares. Further, an inactive market may also impair Nivalis’ ability to raise capital by selling its common stock should it determine additional funding is required.

The market price of Nivalis’ common stock may fluctuate substantially as a result of many factors, some of which are beyond its control. For example, shares of Nivalis’ common stock have traded as high as $20.43 and as low as $2.00 in the twenty-three month period following the effective date of Nivalis’ IPO. These fluctuations could cause an investor to lose all or part of the value of his, her or its investment in Nivalis’ common stock. Factors that could cause fluctuations in the market price of Nivalis’ common stock include the following:

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In addition, the stock market in general has experienced significant price and volume fluctuations that have often been unrelated or disproportionate to operating performance of individual companies. These broad market factors may adversely affect the market price of Nivalis’ common stock, regardless of Nivalis’ operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A securities class action suit against Nivalis could result in significant liabilities and, regardless of the outcome, could result in substantial costs and the diversion of management’s attention and resources.

Nivalis’ common stock may be delisted from NASDAQ if Nivalis is unable to maintain compliance with NASDAQ’s continued listing standards.

NASDAQ imposes, among other requirements, continued listing standards including minimum bid and public float requirements. The price of Nivalis’ common stock must trade at or above $1.00 to comply with NASDAQ’s minimum bid requirement for continued listing on NASDAQ. If Nivalis’ common stock trades at bid prices of less than $1.00 for a period in excess of 30 consecutive business days, NASDAQ could send a deficiency notice to Nivalis for not remaining in compliance with the minimum bid listing standards. Nivalis’ common stock has never traded below $1.00. However, if the closing bid price of Nivalis’ common stock fails to meet NASDAQ’s minimum closing bid price requirement, or if Nivalis otherwise fails to meet any other applicable requirements of NASDAQ and Nivalis is unable to regain compliance, NASDAQ may make a determination to delist Nivalis’ common stock. Any delisting of Nivalis’ common stock could adversely affect the market liquidity of Nivalis’ common stock and the market price of Nivalis’ common stock could decrease. Furthermore, if Nivalis’ common stock were delisted it could adversely affect Nivalis’ ability to obtain financing for the continuation of its operations and/or result in the loss of confidence by investors, customers, suppliers and employees.

Nivalis’ principal stockholders have a controlling influence over Nivalis’ business affairs and may make business decisions with which stockholders disagree and which may adversely affect the value of their investment.

Nivalis’ principal stockholders, which consist of entities affiliated with Deerfield Management Company, L.P., the Estate of Arnold H. Snider, III, and BVF Partners L.P., and certain of their affiliates, beneficially own or control, directly or indirectly, approximately 46% of the outstanding shares of Nivalis’ common stock. As a result, if some of these persons or entities act together, they will have the ability to exercise significant influence over matters submitted to the stockholders for approval, including the election and removal of directors, amendments to the certificate of incorporation and bylaws and the approval of any strategic transaction requiring the approval of the stockholders, including the approval of the Merger Agreement and the transactions contemplated by the Merger Agreement, including the merger and the issuance of shares of Nivalis’ common stock to Alpine’s stockholders in the merger. These actions may be taken even if they are opposed by other stockholders. This concentration of ownership may also have the effect of delaying or preventing a change of control of Nivalis or discouraging others from making tender offers for Nivalis shares, which could prevent Nivalis’ stockholders from receiving a premium for their shares. Some of these persons or entities who make up Nivalis’ principal stockholders may have interests different from other stockholders.

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Future sales, or the perception of future sales, of a substantial amount of Nivalis’ common stock could depress the trading price of Nivalis’ common stock.

As of April 18, 2017, Nivalis has 200,000,000 shares of common stock authorized and 15,656,251 shares of common stock outstanding. Of these shares, the 6,325,000 shares sold during Nivalis’ IPO are freely tradable and, without giving effect to the purchase of shares by entities affiliated with certain of Nivalis’ existing stockholders, approximately 5.6 million shares are freely tradable under Rule 144 under the Securities Act by non-affiliates, and approximately 3.6 million shares are eligible for resale pursuant to Rule 144 under the Securities Act, subject to the volume, manner of sale, holding period and other limitations of Rule 144. In addition, Nivalis has registered on a registration statement on Form S-3 that has been declared effective, (i) the sale of up to $125,000,000 in the aggregate of an indeterminate number of shares of common stock and preferred stock, an indeterminate principal amount of debt securities and an indeterminate number of warrants and (ii) the resale of up to 3,732,412 shares of common stock that are freely tradable by selling stockholders pursuant to a base prospectus that forms a part of the registration statement. The registration statement also registers the offering, issuance and sale of common stock having up to a maximum aggregate offering price of $20,000,000 that Nivalis may issue and sell in an at-the-market offering under a sales agreement Nivalis entered into with Cowen and Company, LLC on July 5, 2016 pursuant to a sales agreement prospectus that forms a part of the registration statement. As of March 31, 2017, approximately $19.8 million in shares of common stock remain for sale under the sales agreement.

If Nivalis or Nivalis’ stockholders sell substantial amounts of shares of Nivalis’ common stock in the public market or if the market perceives that these sales could occur, the market price of shares of Nivalis’ common stock could decline. These sales may make it more difficult for Nivalis to sell equity or equity-related securities in the future at a time and price that Nivalis deems appropriate, or to use equity as consideration for future acquisitions.

The JOBS Act allows Nivalis to postpone the date by which it must comply with certain laws and regulations intended to protect investors and to reduce the amount of information it provides in Nivalis’ reports filed with the SEC. Nivalis cannot be certain if this reduced disclosure will make Nivalis’ common stock less attractive to investors.

The JOBS Act is intended to reduce the regulatory burden on “emerging growth companies.” As defined in the JOBS Act, Nivalis qualifies as an “emerging growth company” and could remain an “emerging growth company” until as late as December 31, 2020. For so long as Nivalis is an “emerging growth company,” it will, among other things:

Nivalis has irrevocably elected not to avail itself of an extended transition period under the JOBS Act that permits an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. As a result, Nivalis will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other companies.

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Furthermore, if Nivalis takes advantage of some or all of the reduced disclosure requirements above, investors may find Nivalis’ common stock less attractive, which may result in a less active trading market for Nivalis’ common stock and greater stock price volatility.

Nivalis first became subject to rules and regulations established by the SEC and the Public Company Accounting Oversight Board (“PCAOB”) regarding Nivalis’ internal control over financial reporting in the fiscal year ended December 31, 2016. If Nivalis’ internal controls are not determined to be effective, it may adversely affect investor confidence in Nivalis and, as a result, the market price of Nivalis’ common stock and a stockholder’s investment in Nivalis’ common stock.

As a public reporting company, Nivalis is subject to the rules and regulations established from time to time by the SEC and the PCAOB. These rules and regulations require, among other things, that Nivalis establish and periodically evaluate procedures with respect to its internal controls over financial reporting. Reporting obligations as a public company place a considerable strain on Nivalis’ financial and management systems, processes and controls, as well as on Nivalis’ personnel, particularly following Nivalis’ reduction in force, which resulted in approximately five employees remaining with Nivalis after March 31, 2017.

In addition, as a public company Nivalis is required to document and test its internal control over financial reporting pursuant to Section 404 of Sarbanes-Oxley so that its management can certify as to the effectiveness of its internal control over financial reporting. Maintaining and monitoring these internal controls may be more difficult with fewer resources available to perform the necessary documentation and testing, and Nivalis’ internal controls may be found to be deficient. Likewise, Nivalis’ independent registered public accounting firm will be required to provide an attestation report on the effectiveness of Nivalis’ internal control over financial reporting at such time as Nivalis ceases to be an “emerging growth company,” as defined in the JOBS Act, although, as described in the preceding risk factor, Nivalis could potentially qualify as an “emerging growth company” until December 31, 2020. At such time, Nivalis’ independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which Nivalis’ controls are documented, designed or operating.

If Nivalis senior management is unable to conclude that it has effective internal control over financial reporting, or to certify the effectiveness of such controls, or if Nivalis’ independent registered public accounting firm cannot render an unqualified opinion on management’s assessment and the effectiveness of Nivalis’ internal control over financial reporting, or if material weaknesses in Nivalis’ internal controls are identified, Nivalis could be subject to regulatory scrutiny and a loss of public confidence, which could have a material adverse effect on the business and stock price. In addition, if Nivalis does not maintain adequate financial and management personnel, processes and controls, Nivalis may not be able to manage its business effectively or accurately report its financial performance on a timely basis, which could cause a decline in Nivalis’ common stock price and adversely affect the results of operations and financial condition.

Nivalis’ disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

Nivalis’ disclosure controls and procedures are designed to reasonably ensure that information required to be disclosed by Nivalis in reports it files or submits under the Exchange Act is accumulated and communicated to management and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Nivalis believes that any disclosure controls and procedures as well as internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are and will be met. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in Nivalis’ control system, misstatements due to error or fraud may occur and not be detected.

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Nivalis expects to continue to incur significant costs as a result of operating as a public company, and the remaining management team will be required to devote substantial time to compliance efforts.

Nivalis will continue to incur significant legal, accounting, insurance and other expenses as a result of being a public company. The Dodd-Frank Act and Sarbanes-Oxley as well as related rules implemented by the SEC and The NASDAQ Global Market, have imposed corporate governance requirements on public companies. In addition, rules that the SEC is implementing or is required to implement pursuant to the Dodd-Frank Act are expected to require additional changes. Nivalis expects that compliance with these and other similar laws, rules and regulations, including compliance with Section 404 of Sarbanes-Oxley, will substantially increase Nivalis’ expenses, including its legal and accounting costs, and make some activities more time-consuming and costly. Although the JOBS Act may for a limited period of time somewhat lessen the cost of complying with these additional regulatory and other requirements, Nivalis nonetheless expects to incur significant legal, accounting, insurance and certain other expenses in the future, which will negatively impact the business, results of operations and financial condition.

Anti-takeover provisions in Nivalis’ charter documents could discourage, delay or prevent a change in control of Nivalis and may affect the trading price of Nivalis’ common stock.

Nivalis’ corporate documents and the General Corporation Law of the State of Delaware (“DGCL”) contain provisions that may enable Nivalis’ board of directors to resist a change in control of Nivalis even if a change in control were to be considered favorable by Nivalis’ stockholders. These provisions:

These provisions could discourage, delay or prevent a transaction involving a change in control of Nivalis. These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and cause Nivalis to take other corporate actions Nivalis’ stockholders desire.

Claims for indemnification by Nivalis’ directors and officers may reduce Nivalis’ available funds to satisfy successful third-party claims against Nivalis and may reduce the amount of available cash.

Nivalis’ amended and restated certificate of incorporation provides that Nivalis will indemnify its directors to the fullest extent permitted by Delaware law.

In addition, as permitted by Section 145 of the DGCL, Nivalis’ amended and restated bylaws and Nivalis’ indemnification agreements that it has entered into with its directors and officers provide that:

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As a result, if Nivalis is required to indemnify one or more of its directors or officers, it may reduce its available funds to satisfy successful third-party claims against it, may reduce the amount of available cash and may have a material adverse effect on the business and financial condition.

Nivalis’ amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by Nivalis’ stockholders, which could limit Nivalis’ stockholders’ ability to obtain a favorable judicial forum for disputes with Nivalis or Nivalis’ directors, officers, employees or agents.

Nivalis’ amended and restated certificate of incorporation provides that, unless Nivalis consents in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any derivative action or proceeding brought on Nivalis’ behalf, any action asserting a claim of breach of a fiduciary duty owed by any of Nivalis’ directors, officers, employees or agents to Nivalis or Nivalis’ stockholders, any action asserting a claim arising pursuant to any provision of the DGCL, Nivalis’ amended and restated certificate of incorporation or Nivalis’ amended and restated bylaws or any action asserting a claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein and the claim not being one which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery or for which the Court of Chancery does not have subject matter jurisdiction. Any person purchasing or otherwise acquiring any interest in any shares of Nivalis’ common stock shall be deemed to have notice of and to have consented to this provision of Nivalis’ amended and restated certificate of incorporation. This choice of forum provision may limit Nivalis’ stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes with Nivalis or Nivalis’ directors, officers, employees or agents, which may discourage such lawsuits against Nivalis and Nivalis’ directors, officers, employees and agents even though an action, if successful, might benefit Nivalis’ stockholders. Stockholders who do bring a claim in the Court of Chancery could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware. The Court of Chancery may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments or results may be more favorable to Nivalis than to Nivalis’ stockholders. Alternatively, if a court were to find this provision of Nivalis’ amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of

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the specified types of actions or proceedings, Nivalis may incur additional costs associated with resolving such matters in other jurisdictions, which could have a material adverse effect on Nivalis’ business, financial condition or results of operations.

Nivalis does not expect to pay any dividends on its common stock for the foreseeable future.

Nivalis currently expects to retain all future earnings, if any, for future operations and expansion, and has no current plans to pay any cash dividends to holders of Nivalis’ common stock for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of Nivalis’ board of directors and will depend on, among other things, Nivalis’ results of operations, financial condition, cash requirements, contractual restrictions and other factors that Nivalis’ board of directors may deem relevant. As a result, stockholders may not receive any return on an investment in Nivalis’ common stock unless stockholders sell Nivalis’ common stock for a price greater than that which they paid for it.

Risks Related to Alpine

Alpine will need to raise substantial additional funds to advance development of its therapeutic candidates, and it cannot guarantee it will have sufficient funds available in the future to develop and commercialize its current or future therapeutic candidates.

Alpine will need to raise substantial additional funds to expand Alpine’s development, regulatory, manufacturing, marketing, and sales capabilities or contract with other organizations to provide these capabilities to Alpine. Alpine has used substantial funds to develop its therapeutic candidates and will require significant funds to conduct further research and development, preclinical testing, and clinical trials of its therapeutic candidates, to seek regulatory approvals for its therapeutic candidates, and to manufacture and market products, if any are approved for commercial sale. As of March 31, 2017, Alpine had $13.6 million in cash and cash equivalents. Based on Alpine’s current operating plan, and assuming consummation of the merger, Alpine believes its available cash and cash equivalents, will be sufficient to fund its planned level of operations for at least the next 12 months. Alpine’s future capital requirements and the period for which it expects its existing resources to support its operations may vary significantly from what it expects. Alpine’s monthly spending levels vary based on new and ongoing development and corporate activities. Because the length of time and activities associated with successful development of Alpine’s therapeutic candidates are highly uncertain, Alpine is unable to estimate the actual funds it will require for development and any approved marketing and commercialization activities. To execute Alpine’s business plan, Alpine will need, among other things:

If Alpine is unable to obtain necessary funding on a timely basis or on acceptable terms, Alpine may have to delay, reduce, or terminate its research and development programs, preclinical studies, or clinical trials, if any,

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limit strategic opportunities, or undergo reductions in Alpine’s workforce or other corporate restructuring activities. Alpine also could be required to seek funds through arrangements with collaborators or others requiring Alpine to relinquish rights to some of its technologies or therapeutic candidates Alpine would otherwise pursue on its own. Alpine does not expect to realize revenue from product sales, milestone payments, or royalties in the foreseeable future, if at all. Alpine’s revenue sources are, and will remain, extremely limited unless and until Alpine’s therapeutic candidates are clinically tested, approved for commercialization, and successfully marketed.

To date, Alpine has financed its operations primarily through the sale of equity securities and payments received under Alpine’s license and research agreement with Kite. Alpine will be required to seek additional funding in the future and intends to do so through a combination of public or private equity offerings, debt financings, credit and loan facilities, research collaborations, and license agreements. Alpine’s ability to raise additional funds from these or other sources will depend on financial, economic, and other factors, many of which are beyond its control. Additional funds may not be available to Alpine on acceptable terms or at all.

If Alpine raises additional funds by issuing equity securities, its stockholders will suffer dilution, and the terms of any financing may adversely affect the rights of its stockholders. In addition, as a condition to providing additional funds to Alpine, future investors may demand, and may be granted, rights superior to those of existing stockholders. Debt financing, if available, may involve restrictive covenants limiting Alpine’s flexibility in conducting future business activities, and, in the event of a liquidation or insolvency, debt holders would be repaid before holders of equity securities receive any distribution of corporate assets. Alpine’s failure to raise capital or enter into such other arrangements within a reasonable timeframe would have a negative impact on its financial condition, and Alpine may have to delay, reduce, or terminate its research and development programs, preclinical or clinical trials, or undergo reductions in its workforce or other corporate restructuring activities.

Alpine is a biopharmaceutical company with a history of losses, expects to continue to incur significant losses for the foreseeable future, and may never achieve or maintain profitability.

Alpine is a biopharmaceutical company with a limited operating history, focused on the discovery and development of treatments based on protein-based immunotherapies. Since Alpine’s inception in 2014, Alpine has devoted its resources to developing novel protein-based immunotherapies using Alpine’s proprietary vIgD platform technology. Alpine has had significant operating losses since inception. As of March 31, 2017, Alpine had an accumulated deficit of $3.6 million. For the three months ended March 31, 2017 and for the years ended December 31, 2016 and 2015, Alpine’s net loss was $2.0 million, $1.2 million, and $0.4 million, respectively. Substantially all of Alpine’s losses have resulted from expenses incurred in connection with Alpine’s research programs and from general and administrative costs associated with Alpine’s operations. Alpine’s technologies and therapeutic candidates are in early stages of development, and Alpine is subject to the risks of failure inherent in the development of therapeutic candidates based on novel technologies.

To date, Alpine has generated revenue primarily from the receipt of research funding and upfront payments under Alpine’s license and research agreement with Kite. Alpine has not generated, and does not expect to generate, any revenue from product sales for the foreseeable future, and Alpine expects to continue to incur significant operating losses for the foreseeable future due to the cost of research and development, preclinical studies, clinical trials, and the regulatory approval process for therapeutic candidates. The amount of future losses is uncertain. Alpine’s ability to achieve profitability, if ever, will depend on, among other things, Alpine’s or Alpine’s existing collaborators, or any future collaborators, successfully developing therapeutic candidates, obtaining regulatory approvals to market and commercialize therapeutic candidates, manufacturing any approved products on commercially reasonable terms, establishing a sales and marketing organization or suitable third party alternatives for any approved product, and raising sufficient funds to finance business activities. If Alpine or Alpine’s existing collaborators, or any future collaborators, are unable to develop and commercialize one or more of Alpine’s therapeutic candidates or if sales revenue from any therapeutic candidate receiving approval is insufficient, Alpine will not achieve profitability, which could have a material adverse effect on Alpine’s business, financial condition, results of operations, and prospects.

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Alpine’s approach to the discovery and development of innovative therapeutic treatments based on Alpine’s technology is unproven and may not result in marketable products.

Alpine plans to develop novel protein-based immunotherapies using its proprietary vIgD platform technology for the treatment of cancer and inflammatory diseases. The potential to create therapies capable of working within an immune synapse, forcing a synapse to occur, or preventing a synapse from occurring is an important, novel attribute of Alpine’s vIgD platform. However, the scientific research forming the basis of Alpine’s efforts to develop therapeutic candidates based on Alpine’s vIgD platform is relatively new. Further, the scientific evidence to support the feasibility of developing therapeutic treatments based on Alpine’s vIgD platform is both preliminary and limited.

Relatively few therapeutic candidates based on immunoglobulin superfamily (“IgSF”) domains have been tested in animals or humans, and a number of clinical trials conducted by other companies using IgSF domains technologies have not been successful. Alpine may discover the therapeutic candidates Alpine develops using its vIgD platform do not possess certain properties required for the therapeutic to be effective, such as the ability to remain stable in the human body for the period of time required for the therapeutic to reach the target tissue or the ability to cross the cell wall and enter into cells within the target tissue for effective delivery. Alpine currently has only limited data, and no conclusive evidence, to suggest it can introduce these necessary therapeutic properties into vIgDs. Alpine may spend substantial funds attempting to introduce these properties and may never succeed in doing so. In addition, vIgDs may demonstrate different chemical and pharmacological properties in patients than they do in laboratory studies. Even if Alpine’s programs, such as the ALPN-101 program, have successful results in animal studies, they may not demonstrate the same chemical and pharmacological properties in humans and may interact with human biological systems in unforeseen, ineffective, or harmful ways. For example, in the context of immunotherapies, in a Phase I clinical trial of TeGenero AG’s product candidate TGN1412, healthy volunteer subjects receiving the product candidate experienced cytokine release syndrome resulting in acute renal failure and acute respiratory distress syndrome requiring interventions such as dialysis and critical care support. Following this experience, regulatory agencies now ask for evaluation of immunomodulatory antibodies with a number of in vitro assays with human cells. While Alpine is currently performing in vitro proof of concept studies for several of its vIgDs, the risk profile in humans has yet to be assessed. As a result of all this, Alpine may never succeed in developing a marketable therapeutic, Alpine may not become profitable and the value of Alpine will decline.

Further, the FDA has relatively limited experience with vIgDs. No regulatory authority has granted approval to any person or entity, including Alpine, to market and commercialize therapeutics using vIgDs, which may increase the complexity, uncertainty, and length of the regulatory approval process for Alpine’s therapeutic candidates. Alpine and its current collaborators, or any future collaborators, may never receive approval to market and commercialize any therapeutic candidate. Even if Alpine or a collaborator obtains regulatory approval, the approval may be for disease indications or patient populations not as broad as Alpine intended or desired or may require labeling, including significant use or distribution restrictions or safety warnings. Alpine or a collaborator may be required to perform additional or unanticipated clinical trials to obtain approval or be subject to post-marketing testing requirements to maintain regulatory approval. If therapeutic candidates Alpine develops using Alpine’s vIgD platform prove to be ineffective, unsafe or commercially unviable, Alpine’s entire platform and pipeline would have little, if any, value, which could have a material adverse effect on Alpine’s business, financial condition, results of operations, and prospects.

The market may not be receptive to Alpine’s therapeutic products based on a novel therapeutic modality, and Alpine may not generate any future revenue from the sale or licensing of therapeutic products.

Even if approval is obtained for a therapeutic candidate, Alpine may not generate or sustain revenue from sales of the therapeutic product due to factors such as whether the therapeutic product can be sold at a competitive price and otherwise accepted in the market, and therefore any revenue from sales of the therapeutic product may not offset the cost of development. The therapeutic candidates Alpine is developing are based on

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new technologies and therapeutic approaches. Market participants with significant influence over acceptance of new treatments, such as physicians and third-party payors, may not adopt a treatment based on Alpine’s vIgDs, and Alpine may not be able to convince the medical community and third-party payors to accept and use, or to provide favorable coverage or reimbursement for, any therapeutic products developed by Alpine or Alpine’s existing collaborator or any future collaborators. Market acceptance of Alpine’s therapeutic products will depend on, among other factors:

With Alpine’s focus on protein engineering wild-type IgSFs, these risks may increase to the extent this field becomes more competitive or less favored in the commercial marketplace. Additional risks apply in relation to any disease indications Alpine pursues which are classified as rare diseases and allow for orphan drug designation by regulatory agencies in major commercial markets, such as the U.S., EU and Japan. Because of the small patient population for a rare disease, if pricing is not approved or accepted in the market at an appropriate level for an approved therapeutic product with orphan drug designation, such drug may not generate enough revenue to offset costs of development, manufacturing, marketing, and commercialization despite any benefits received from the orphan drug designation, such as market exclusivity, assistance in clinical trial design, or a reduction in user fees or tax credits related to development expense. Market size is also a variable in disease indications not classified as rare. Alpine’s estimates regarding potential market size for any rare indication may be materially different from what Alpine discovers to exist at the time Alpine commences commercialization, if any, for a therapeutic product, which could result in significant changes in Alpine’s business plan and have a material adverse effect on Alpine’s business, financial condition, results of operations, and prospects.

If a therapeutic product with orphan drug designation subsequently receives the first FDA approval for the indication for which it has such designation, the therapeutic product is entitled to orphan product exclusivity, which means the FDA may not approve any other applications to market the same therapeutic product for the same indication, except in very limited circumstances, for seven years. Orphan drug exclusivity, however, could also block the approval of one of Alpine’s therapeutic products for seven years if a competitor obtains approval of the same therapeutic product as defined by the FDA or if Alpine’s therapeutic product is determined to be within the same class as the competitor’s therapeutic product for the same indication or disease.

As in the U.S., Alpine may apply for designation of a therapeutic product as an orphan drug for the treatment of a specific indication in the EU before the application for marketing authorization is made. Sponsors of orphan drugs in the EU can enjoy economic and marketing benefits, including up to ten years of market exclusivity for the approved indication unless another applicant can show its therapeutic product is safer, more

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effective, or otherwise clinically superior to the orphan-designated therapeutic product. The respective orphan designation and exclusivity frameworks in the U.S. and in the EU are subject to change, and any such changes may affect Alpine’s ability to obtain EU or U.S. orphan designations in the future.

Alpine’s therapeutic candidates are in early stages of development and may fail in development or suffer delays that materially and adversely affect their commercial viability.

Alpine has no products on the market and all of Alpine’s therapeutic candidates are in early stages of development. Alpine’s ability to achieve and sustain profitability depends on obtaining regulatory approvals, Institutional Review Board (“IRB”) approval to conduct clinical trials at particular sites, and successfully commercializing Alpine’s therapeutic candidates, either alone or with third parties, such as its collaborator Kite. Before obtaining regulatory approval for the commercial distribution of Alpine’s therapeutic candidates, Alpine or a collaborator must conduct extensive preclinical tests and clinical trials to demonstrate the safety and efficacy in humans of Alpine’s therapeutic candidates. Preclinical testing and clinical trials are expensive, difficult to design and implement, can take many years to complete, and are uncertain as to outcome. The start or end of a clinical study is often delayed or halted due to changing regulatory requirements, manufacturing challenges, required clinical trial administrative actions, slower than anticipated patient enrollment, changing standards of care, availability or prevalence of use of a comparative therapeutic or required prior therapy, clinical outcomes, or financial constraints. For instance, delays or difficulties in patient enrollment or difficulties in retaining trial participants can result in increased costs, longer development times, or termination of a clinical trial. Clinical trials of a new therapeutic candidate require the enrollment of a sufficient number of patients, including patients who are suffering from the disease the therapeutic candidate is intended to treat and who meet other eligibility criteria. Rates of patient enrollment are affected by many factors, including the size of the patient population, the eligibility criteria for the clinical trial, the age and condition of the patients, the stage and severity of disease, the nature of the protocol, the proximity of patients to clinical sites, and the availability of effective treatments for the relevant disease.

A therapeutic candidate can unexpectedly fail at any stage of preclinical and clinical development. The historical failure rate for therapeutic candidates is high due to scientific feasibility, safety, efficacy, changing standards of medical care, and other variables. The novelty of Alpine’s platform may mean that Alpine’s failure rates are higher than historical norms. The results from preclinical testing or early clinical trials of a therapeutic candidate may not predict the outcome of later phase clinical trials of the therapeutic candidate, particularly in immuno-oncology and inflammatory disorders. Alpine, the FDA, an IRB, an independent ethics committee, or other applicable regulatory authorities may suspend clinical trials of a therapeutic candidate at any time for various reasons, including a belief that subjects participating in such trials are being exposed to unacceptable health risks or adverse side effects. Similarly, an IRB or ethics committee may suspend a clinical trial at a particular trial site. Alpine may not have the financial resources to continue development of, or to enter into collaborations for, a therapeutic candidate if Alpine experiences any problems or other unforeseen events delaying or preventing regulatory approval of, or Alpine’s ability to commercialize, therapeutic candidates, including:

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Product development involves a lengthy and expensive process with an uncertain outcome, and results of earlier pre-clinical and clinical trials may not be predictive of future clinical trial results.

Clinical testing is expensive and generally takes many years to complete, and the outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of pre-clinical trials and early clinical trials of Alpine’s product candidates may not be predictive of the results of larger, later-stage controlled clinical trials. Product candidates that have shown promising results in early-stage clinical trials may still suffer significant setbacks in subsequent clinical trials. Alpine has conducted no clinical trials to date. Alpine will have to conduct trials in its proposed indications to verify the results obtained to date and to support any regulatory submissions for further clinical development. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles despite promising results in earlier, smaller clinical trials. Moreover, clinical data are often susceptible to varying interpretations and analyses. Alpine does not know whether Phase 1, Phase 2, Phase 3, or other clinical trials Alpine may conduct will demonstrate consistent or adequate efficacy and safety with respect to the proposed indication for use sufficient to receive regulatory approval or market its therapeutic candidates.

To date, Alpine’s revenue has been primarily derived from Alpine’s license and research agreement with Kite, and Alpine is dependent on Kite for the successful development of therapeutic candidates in the collaboration.

In October 2015, Alpine entered into an exclusive, worldwide license and research agreement with Kite to research, develop, and commercialize engineered autologous T cell therapies incorporating two programs from Alpine’s technology. Under the terms of the license and research agreement, Alpine will conduct initial research to deliver two program TIPs with certain pre-defined characteristics. Kite will then conduct further research on the program TIPs with the goal of demonstrating proof-of-concept. If successful, Kite would further engineer the program TIPs into certain CAR-T and TCR product candidates potentially enhancing anti-tumor response. Pursuant to the license and research agreement, Kite paid Alpine a $5.0 million upfront payment. Kite also paid $0.5 million in additional payments to support Alpine’s research. Alpine will be potentially eligible to receive up to $530.0 million in total milestone payments upon the successful completion of research, clinical, and regulatory milestones relating to both program TIPs. At Kite’s option, a portion of the milestone payments may be paid in shares of Kite’s common stock. Alpine will also potentially be eligible to receive a low single digit royalty for

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