ROCK CREEK PHARMACEUTICALS, INC.

As announced on October 15, 2015, the Company successfully completed its three- part Phase I trial. The study was designed to achieve several goals. An exploratory objective of the UK Phase I study was to evaluate pro-inflammatory mediators from stimulated peripheral blood mononuclear cells (PBMC). The pharmacodynamics (PD) report generated as a result of this exploratory objective highlighted that Anatabine Citrate produced significant reductions in a key marker of inflammation, STAT 3 (Signal Transducer and Activator of Transcription 3) in two of the dosing regimens in the Company's Phase I trial when activated STAT 3 values were appropriately normalized by the amount of a reference protein (GAPDH) that is unaffected by LPS stimulation in the blood samples. The PD assay examined the effect of the drug on inflammatory responses induced in PBMC samples taken from human volunteers. The PBMC samples were taken prior to ingestion of the drug and then taken at various times after ingestion. The PBMC samples were then stimulated with a bacterial inflammatory molecule called lipopolysaccharide (LPS) and two markers of inflammation were examined. These two inflammation markers are the transcription factors STAT 3 and NF-kB (Nuclear Factor Kapp B). One of the oral dosing regimens within the study also showed a reduction in NF-kB activity, when data was normalized via this newly developed PD assay, although observations for NF-kB activity were generally less consistent than the STAT 3 results. This was attributed to the novel PD assay not being optimized for NF-kB and that in future studies, the incubation period for the NF-kB samples should be changed to account for this finding. Analyses of the remaining regimens is ongoing.

The Phase Ib psoriasis study is being designed to achieve several goals. The primary goal of this study will be to determine the safety and tolerability of the topical cream and/or ointment Anatabine Citrate formulations under the dosing regimens of the study. The secondary goal of the Phase Ib study is to determine if there is an efficacy signal from the treatment of psoriasis plaques with Anatabine Citrate topical drug products. The standard evaluation of efficacy is visual inspection and scoring of the psoriatic plaques by experts. These observations will be supplemented in our study with ultrasonography and histopathological evaluations of skin biopsies. These will allow assessment of the impact of our drug on the infiltrate thickness of the psoriatic lesions and the degree of infiltration of inflammatory cells, among other parameters. Finally, the Company will be collecting biomarker data from the skin biopsies. In particular, we will measure the activity of NF-kB and STAT3 which have been previously identified as critical regulators of inflammation in psoriasis. A great deal of scientific and clinical work performed by the Company and others suggests that the Company's drug will suppress inflammation by inhibiting the activation of these regulators of gene activity. Verification of the relationship between reduced activation of these transcription factors and reduced psoriatic pathology will be regarded as further evidence of anatabine’ s mechanism of action. Further, if the overall results are positive, this study will provide the proof of concept that the mechanism of action of our compound can potentially be therapeutic, not only in dermatological disorders, but in other inflammation driven human diseases as well.

The Phase Ib psoriasis study is being designed to achieve several goals. The primary goal of this study will be to determine the safety and tolerability of the topical cream and/or ointment Anatabine Citrate formulations under the dosing regimens of the study. The secondary goal of the Phase Ib study is to determine if there is an efficacy signal from the treatment of psoriasis plaques with Anatabine Citrate topical drug products. The standard evaluation of efficacy is visual inspection and scoring of the psoriatic plaques by experts. These observations will be supplemented in our study with ultrasonography and histopathological evaluations of skin biopsies. These will allow assessment of the impact of our drug on the infiltrate thickness of the psoriatic lesions and the degree of infiltration of inflammatory cells, among other parameters. Finally, we will be collecting biomarker data from the skin biopsies. In particular, we will measure the activity of NF-kB and STAT3, which have been previously identified as critical regulators of inflammation in psoriasis. A great deal of scientific and clinical work performed by us and others suggests that our drug will suppress inflammation by inhibiting the activation of these regulators of gene activity. Verification of the relationship between reduced activation of these transcription factors and reduced psoriatic pathology will be regarded as further evidence of anatabine’ s mechanism of action. Further, if the overall results are positive, this study will provide the proof of concept that the mechanism of action of our compound can potentially be therapeutic, not only in dermatological disorders, but in other inflammation driven human diseases as well.

The Notes are convertible, either at the option or the Holders or in satisfaction of mandatory monthly installment payments, into shares of our common stock generally at a conversion price equal to 80% of the trading price of our common stock at or prior to the time of conversion. On the last trading day of each month beginning on January 26, 2016, (each an “Installment Date”) we are obligated to pay to each Holder an amount equal to (1) one-twentieth (1/20th) of the original principal amount of such Holder’s Note, plus (2) the accrued and unpaid interest with respect to such principal, plus (3) a “make-whole” amount equal to the amount of interest that would have accrued under the Note through the maturity date in the absence of such payment, plus (4) the accrued and unpaid late charges (if any) with respect to such principal and interest. Each monthly payment may be made in cash, in shares of our common stock, or in a combination of cash and shares of our common stock. Our ability to make such payments with shares of our common stock is subject to satisfaction of various conditions during the 30 calendar day period before the date the we provide notice to the holders of the Notes that we will pay a monthly payment with shares, including the existence of an effective registration statement covering the resale of the shares issued in payment or the eligibility of the shares issuable pursuant to the Notes to be sold under SEC Rule 144. Although we are not expected to satisfy these conditions as of each Installment Date, the Holders have waived such conditions from time to time to enable us to satisfy an installment payment in shares.

General and Administrative Expenses. General and administrative expenses were approximately $3.1 million for the six months ended June 30, 2016, a decrease of approximately $1.9 million, or 38.4%, from approximately $5.0 million for the same period in 2015. For the six months ended June 30, 2016, our legal expenses declined $900 thousand from the same period last year due to the settlement of two lawsuits, which were active last year – the derivative suit and the Baldwin suit. Executive salaries, and related expenses were $418 thousand lower than the same period in 2015. We reduced our executive headcount from last year which resulted in lower salary and related costs and we reduced our travel and other executive related expenses from 2015. We had a $370 thousand reduction in director fees and Directors & Officers insurance premiums in the first six months of 2016 as compared to the same period in 2015 as a result of fewer board meetings and a reduction in the insurance coverage amount. Shareholder expenses decreased by $245 thousand dollars due to the delayed timing of the annual stockholders meeting from the second quarter in 2015 to the third quarter in 2016 as well as lower expenses due to the change from the NASDAQ to the OTCQB and lower costs due to the expenses of the reverse stock split in 2015. We had a decline of $227 thousand in overall general and administrative costs for the six months ended June 30, 2016, compared to the six months ended June 30, 2015 as a continued result of the restructuring completed in December 2014. Accounting fees declined by $100 thousand due to fewer equity transactions requiring independent accounting reviews and various other expense reductions of $24 thousand for the six months ended June 30, 2016 compared to the six months ended June 30, 2015. Partially offsetting these declines, stock compensation expense increased by approximately $397 thousand. We had a one-time reversal in 2015 of stock compensation expense related to Dr. Chapman’ unvested options.