As filed with the Securities and ExchangeCommission on August 15, 2017

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Biostage, Inc.

(Exact name of registrant as specified inits Charter)

84 October Hill Road, Suite 11, Holliston,Massachusetts 01746

(774) 233-7300

(Address, including zip code, and telephonenumber, including area code, of registrant’s principal executive office)

James McGorry
Chief Executive Officer
Biostage, Inc.
84 October Hill Road, Suite 11, Holliston, Massachusetts 01746
(774) 233-7300

(Name, address, including zip code, and telephonenumber, including area code, of agent for service)

With copies to:

Josef B. Volman, Esq.

Chad J. Porter, Esq.

Burns & Levinson LLP
125 Summer Street
Boston, MA 02110
(617) 345-3000

Approximate date of commencement of proposed sale to the public:As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to beoffered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  x

If this Form is filed to register additional securities for an offeringpursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement numberof the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earliereffective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earliereffective registration statement for the same offering.  ¨

Indicate by check mark whether the registrant is a large acceleratedfiler, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large acceleratedfiler,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”in Rule 12b-2 of the Exchange Act. (check one)

If an emerging growth company, indicate by check mark if the registranthas elected not to use the extended transition period for complying with any new or revised financial accounting standards providedpursuant to Section 7(a)(2)(B) of the Securities Act . ¨

Calculation of Registration Fee

(1) The shares are being offered and sold pursuant to subscriptionrights distributed without consideration to the holders of the Company’s common stock as of the effective date.

(2) Includes an indeterminate number of shares per Rule 416.

(3) The over-subscription privileges described herein may be deemednot to be exempt from registration under Section 3(a)(9).

SUBJECT TO COMPLETION, DATEDAUGUST 15, 2017

The information in this preliminaryprospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with theSecurities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offerto buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBSCRIPTION RIGHTS TO PURCHASE SHARES OFCOMMON STOCK

We are conducting a rights offering in which we are distributingat no charge to the holders of our common stock and holders of warrants to purchase our common stock rights to purchase up to                  sharesof our common stock, par value $0.01 per share. Holders of our common stock and warrants to purchase our common stock will receiveone right for each share of our common stock owned (and each share of common stock underlying such holder’s warrant) at theeffective date of the close of business on          , 2017, or the basic subscriptionprivilege.

The cash exercise price of each basic subscription privilege is$       , which we refer to as the subscription price. Rights holders who fully exercise theirbasic subscription privilege will be entitled to subscribe for additional shares of our common stock that remain unsubscribed asa result of any unexercised basic subscription privileges on a pro rata basis, which we refer to as the over-subscription privilege.We refer to the basic subscription privilege and over-subscription privilege collectively as rights. A rights holder may only exerciserights in the aggregate for book-entry of whole numbers of shares of our common stock; no fractional shares of our common stockwill be issued in this offering.

The rights are exercisable beginning on the date of this prospectusand will expire if they are not exercised by        , Eastern time, on          ,2017, the expiration date, unless we extend the offering period. You should carefully consider whether to exercise your rightsbefore the expiration date. Rights that are not exercised by the expiration date will expire and will have no value. All exercisesof basic subscription privileges and over-subscription privileges are irrevocable.

We have also entered into abackstop agreement, or the Backstop Agreement, with First Pecos, LLC. Pursuant to the Backstop Agreement, First Pecos, LLCand its affiliates, whom we sometimes collectively refer to as the backstop provider, has agreed to purchase, an aggregatenumber of shares of our common stock equal to (i) 10.0 million, minus(ii) the aggregate proceeds of this offering, at the subscription price, subject to the terms and conditions of theBackstop Agreement.

Our common stock is listed on the NASDAQ CapitalMarket under the symbol “BSTG.” On August 14, 2017, the closing price for our common stock, as reported on the NASDAQCapital Market, was $0.42 per share.

The exercise of your rights and investment in our shares involvesa high degree of risk. You should carefully read the Risk Factors beginning on page 7, as well as the risk factors in anydocument we incorporate by reference into this prospectus before you make a decision as to the exercise of your rights.

None of our board of directors or officers is making any recommendationregarding whether you should exercise your rights.

NEITHER THE SECURITIES AND EXCHANGE COMMISSIONNOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE,TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

It is anticipated that delivery of the common stock purchased inthis offering will be made on or about           , 2017.

The date of this prospectus is             ,2017.

TABLE OF CONTENTS

We have not authorized anyone to provide anyinformation or to make any representations other than those contained in this prospectus or in any prospectus supplement or freewriting prospectuses prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provideno assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell onlythe shares offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. The information containedin this prospectus or in any applicable prospectus supplement or free writing prospectus is current only as of its date, regardlessof its time of delivery or any sale of our securities. Our business, financial condition, results of operations and prospects mayhave changed since that date.

For investors outside the United States: Wehave not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction whereaction for that purpose is required, other than in the United States. Persons outside the United States who come into possessionof this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities and thedistribution of this prospectus outside the United States.

ABOUT THIS PROSPECTUS

You should rely only on the information containedin this prospectus and any prospectus supplement or free writing prospectus authorized by us. We have not authorized any otherperson to provide you with different information. If anyone provides you with different or inconsistent information, you shouldnot rely on it. The information in this prospectus is accurate only as of the date it is presented. You should read this prospectusand any prospectus supplement or free writing prospectus that we have authorized for use in connection with this offering, in theirentirety before investing in our securities.

We are offering to sell, and seeking offers to buy, the securitiesoffered by this prospectus only in jurisdictions where offers and sales are permitted. The distribution of this prospectus andthe offering of the securities offered by this prospectus in certain jurisdictions may be restricted by law. This prospectus doesnot constitute, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, any securitiesoffered by this prospectus in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation.

QUESTIONS AND ANSWERS RELATING TO THE RIGHTSOFFERING

The following are examples of what we anticipatewill be common questions about this offering. The following questions and answers do not contain all of the information that maybe important to you and may not address all of the questions that you may have about this offering. This prospectus and the documentswe incorporate by reference contain more detailed descriptions of the terms and conditions of this offering and provide additionalinformation about us and our business, including potential risks related to our business, this offering and our common stock.

What are we offering you?

We are issuing to the holders of our commonstock and holders of warrants to purchase our common stock as of the close of business on                  ,2017, which we refer to as the effective date, rights to subscribe for an aggregate of up to                sharesof our common stock. Each holder, who we refer to as a rights holder or you, is being issued one right for each share ofour common stock owned (and each share of common stock underlying such holder’s warrant) on the effective date (1 for 1),which we refer to as the basic subscription privilege. Each basic subscription privilege entitles you to purchase          sharesof our common stock at a cash price of $      per whole share, which we refer to as the subscriptionprice. Your basic subscription privilege may only be exercised in the aggregate for whole numbers of shares of our common stock;no fractional shares of our common stock will be issued in this offering. Any fractional shares will be rounded down to the nearestwhole share of common stock and any excess subscription payments will be returned by the subscription agent.

What is the over-subscription privilege?

If you purchase all of the shares ofour common stock available to you pursuant to your basic subscription privilege, you may also choose to purchase your pro-ratashare of any shares of our common stock that our other stockholders and warrant holders do not purchase through the full exerciseof their basic subscription privileges, which we refer to as the over-subscription privilege. You should indicate on yourrights certificate, or the form provided by your nominee if your shares are held in the name of a nominee, how many additionalshares of our common stock you would like to purchase pursuant to your over-subscription privilege.

The over-subscription privilege allows youto subscribe for additional shares of our common stock. If sufficient shares of our common stock are available, we will seek tohonor your over-subscription request in full, so long as it does not exceed your pro rata share and the other ownership thresholdsdescribed in this prospectus are not exceeded.

To properly exercise your over-subscriptionprivilege, you must deliver the subscription payment related to your over-subscription privilege before this offering expires.Because we will not know the total number of unsubscribed shares of our common stock before this offering expires, if you wishto maximize the number of shares you purchase pursuant to your over-subscription privilege, you will need to deliver payment inan amount equal to the aggregate subscription price for the maximum number of shares that may be available to you (i.e., theaggregate payment for both your basic subscription privilege and for any additional shares you desire to purchase pursuant to yourover-subscription request). Any excess subscription payments received by the subscription agent will be returned, without interestor penalty, as soon as practicable.

We refer to the basic subscription privilegeand the over-subscription privilege collectively as the rights.

Why are we conducting this offering?

We are conducting this offering in order toraise additional capital and to improve and strengthen our balance sheet and liquidity position. We intend to use the net proceedsof this offering and the commitment of one of our investors to purchase up to $10.0 million of our common stock, or the BackstopCommitment, for research and development, including funding pre-clinical and clinical trials relating to the Cellframe™technology, business development, sales and marketing, capital expenditures, working capital and other general corporate purposes.

Our board of directors considered and evaluateda number of factors relating to this offering, including:

How was the subscription price determined?

The $            subscriptionprice was set by our board of directors as a result of negotiations with First Pecos, LLC as the participant in the backstop. Thesubscription price represents a       % discount to the volume weighted average price of our commonstock on Nasdaq over the                  trading days ending on and including the effective date. The factors considered by our board of directors and the process our boardof directors undertook to review, consider and approve the subscription price are discussed in “The Rights Offering—Reasonsfor the Rights Offering” and “Determination of the Offering Price.”

Am I required to exercise the rights I receivein this offering?

No. You may exercise any number of your rightsor you may choose not to exercise any of your rights. However, if you choose not to exercise your rights or you exercise less thanyour full amount of rights and other stockholders and warrant holders fully exercise their rights, the percentage of our commonstock owned by other stockholders and warrant holders will increase relative to your ownership percentage, and your voting andother rights in Biostage will likewise be diluted.

What are the rights?

The rights give holders of our common stockand holders of warrants to purchase our common stock as of the effective date the opportunity to purchase             sharesof our common stock for every right held at a subscription price of $           perwhole share, however (a) rights may be exercised in aggregate only to purchase whole book-entry shares of our common stockand (b) the total subscription price payable upon any exercise of rights will be rounded to the nearest whole cent. 

You will receive one right for each one ofour shares of common stock you owned (and each share of common stock underlying warrants you owned) as of the effective date. Forexample, if you owned 100 shares of our common stock as of the effective date and no warrants to purchase common stock, your rightswould entitle you to purchase a total of        shares of our common stock for a totalsubscription price of $          (after rounding to the nearest whole cent andnot including any over-subscription privileges). Subject to the limitations described in this prospectus, you may exercise someor all of your rights, or you may choose not to exercise any rights at all.

May I transfer my rights if I do not wantto purchase any shares?

No. You may not sell, transfer, or assign yourrights to anyone. Rights will not be listed on NASDAQ or any other stock exchange or market. Rights certificates may be completedonly by the stockholder or warrant holder who receives the certificate. The shares of our common stock issuable upon exercise ofthe rights will be listed on NASDAQ.

How do I exercise my rights if my sharesof common stock are held in the name of a broker, dealer, custodian bank or other nominee?

If you hold your shares of our common stockin the name of a broker, dealer, custodian bank or other nominee who uses the services of The Depository Trust Company, or DTC,DTC will credit one right to your nominee record holder for each share of our common stock that you beneficially owned as of theeffective date. If you are not contacted by your nominee, you should contact your nominee as soon as possible.

If I hold my shares in the name of a broker,dealer, custodian bank or other nominee, how do I pay the subscription price for my rights?

You must have sufficient funds in your account,and your broker, dealer, custodian bank or other nominee will charge your account for your subscription price.  Yourbroker will then pay money on your account to DTC.  After the offering, DTC will credit funds to our transfer agent whowill ultimately wire the proceeds of this offering to us.

How do I exercise my rights if my sharesof common stock and/or warrants are held in my name?

If you hold your shares of our common stockand/or warrants in your name and you wish to participate in this offering, you must deliver a properly completed and duly executedrights certificate to the subscription agent and deliver all other required subscription documents, together with payment of thefull subscription price, to the subscription agent before          Eastern time on                     ,2017, which we refer to as the expiration date.

If you send an uncertified check, payment willnot be deemed to have been delivered to the subscription agent until the check has cleared. In certain cases, you may be requiredto provide signature guarantees.

Please follow the delivery instructions onthe rights certificate. Do not deliver documents to us. You are solely responsible for completing delivery to the subscriptionagent of your rights certificate, all other required subscription documents and subscription payment. You should allow sufficienttime for delivery of your subscription materials to the subscription agent so that the subscription agent receives them by theexpiration date. See “To whom should I send my forms and payment?” below.

If you send a payment that is insufficientto purchase the number of shares of our common stock you requested, or if the number of shares of our common stock you requestedis not specified in the forms, the payment received will be applied to exercise your rights to the fullest extent possible basedon the amount of the payment received pursuant to your rights. Any payment that is received but not so applied will be refundedto you without interest (subject to the rounding of the amount so applied to the nearest whole cent).

If I hold my shares and/or warrants in myown name and not through a broker, dealer, custodian bank or other nominee, what form of payment is required to purchase sharesof common stock?

As described in the instructions accompanyingthe rights certificate, payments submitted to the subscription agent must be made in U.S. currency. Checks or bank drafts drawnon U.S. banks should be payable to                           .

Payments will be deemed to have been receivedupon clearance of any uncertified check. Please note that funds paid by uncertified check may take five or more business days toclear. Accordingly, rights holders who wish to pay the subscription price by means of uncertified check are urged to make paymentsufficiently in advance of the expiration time to ensure that such payment is received and clears by such date.

How soon must I act to exercise my rights?

If your shares of our common stock are registeredin your name and you elect to exercise any or all of your rights, the subscription agent must receive your properly completed andduly executed rights certificate or the transfer of your rights by DTC, as applicable, all other required subscription documentsand full subscription payment, including final clearance of any uncertified check, before the expiration date. If you hold yourshares in the name of a broker, dealer, custodian bank or other nominee, your nominee may establish an earlier deadline beforethe expiration date by which time you must provide the nominee with your instructions and payment to exercise your rights. Althoughour board of directors, or a committee thereof, may extend the expiration date, it currently does not intend to do so.

Although we will make reasonable attempts toprovide this prospectus to our stockholders and warrant holders to whom rights are distributed, this offering and all rights willexpire at the expiration date, whether or not we have been able to locate and deliver this prospectus to all such stockholdersand warrant holders.

After I exercise my rights, can I changemy mind?

No. Once you have exercised your rights, youmay not revoke such exercise in whole or in part. Accordingly, any exercise of rights will constitute a binding commitment to purchaseand pay for the shares of our common stock issuable upon such exercise, regardless of any changes in the value of such shares,in our business, financial condition, results of operations or future prospects or in your individual circumstances.

Can this offering be cancelled or extended?

Yes. We reserve the right to withdraw or terminatethis offering at any time prior to the expiration date and for any reason. If we withdraw or terminate this offering, neither wenor the subscription agent will have any obligation with respect to rights that have been exercised except to return, without interestor deduction, any subscription payments the subscription agent received from you. If we were to cancel this offering, any moneyreceived from subscribing stockholders and warrant holders would be returned promptly, without interest or penalty, and we wouldnot be obligated to issue shares of our common stock to holders who have exercised their rights prior to termination. In addition,we may extend the period for exercising the rights.

Has our board of directors made a recommendationto our stockholders and warrant holders regarding the exercise of rights under this offering?

No. Our board of directors has not made, norwill they make, any recommendation to you regarding the exercise of rights in this offering. We cannot predict the price at whichour shares of common stock will trade after this offering. You should make an independent investment decision about whether ornot to exercise your rights. Stockholders and warrant holders who exercise rights risk losing the new money invested. We cannotassure you that the market price for our common stock will remain above the subscription price or that anyone purchasing sharesat the subscription price will be able to sell those shares in the future at the same price or a higher price. If you do not exerciseor sell your rights, you will lose any value represented by your rights, and if you do not exercise your rights in full, your percentageownership interest and related rights in Biostage will be diluted.

Are there any risks associated with thisoffering?

Stockholders and warrant holders who exercisetheir rights will incur investment risk on new money invested. The stock market and, in particular, our common stock price, hasexperienced significant volatility recently. As a result, the market price for our common stock may be volatile. This offeringwill increase the number of outstanding shares of our common stock (assuming the exercise of the rights in full) by approximately    %and the trading volume in our common stock may fluctuate more than usual and cause significant price variations to occur. The marketprice of our common stock will depend on many factors, which may change from time to time, including our financial condition, performance,creditworthiness and prospects, future sales of our securities and other factors. Volatility in the market price of our commonstock may prevent you from being able to sell our common stock when you want or at prices you find attractive. You should makeyour decision based on your assessment of our business and financial condition, our prospects for the future, the terms of thisoffering and the information contained in, or incorporated by reference into, this prospectus or any free writing prospectus. Youshould carefully consider the risks, among other things, described under the heading “Risk Factors” and in the documentsincorporated by reference into this prospectus before exercising your rights and investing in shares of our common stock.

When will I receive my shares of commonstock purchased in this offering?

Stockholders whose shares are held of recordby Cede & Co., or Cede, the nominee of DTC, or by any other depository or nominee on their behalf or theirbroker-dealers’ behalf will have any shares that they acquire credited to the account of Cede or such other depository ornominee. With respect to all other stockholders and warrant holders, you must provide a brokerage account for your shares acquiredin this offering, as we will not issue physical certificates for shares purchased in this offering, unless required to do so bylaw. Whether your shares are held through DTC or directly with our transfer agent Computershare, shares of common stock acquiredin this offering will be issued as soon as possible following the conclusion of the offering.

Is there a backstop purchaser?

Yes.On             , 2017, we entered into a Backstop Agreement withFirst Pecos, LLC and certain of its affiliates, whom we collectively refer to as the backstop provider, pursuant towhich we have agreed to issue and sell to the backstop provider, and the backstop provider agreed to purchase, an aggregatenumber of shares of our common stock equal to (i) $10.0 million, minus (ii) the aggregate proceeds of this offering,subject to the terms and conditions of the Backstop Agreement. See “Backstop Agreement” for additional details onthe Backstop Commitment, including the fees to be paid by us and our expense reimbursement obligation.

Why is there a backstop provider?

We obtained the commitment of thebackstop provider to act as the backstop purchaser under the Backstop Agreement to increase the likelihood that we wouldreceive $10.0 million of gross proceeds, less fees and expenses of this offering and the Backstop Commitment.

Is the backstop provider receiving any compensationfor its participation in the Backstop Commitment?

No. The backstop provider is not receiving compensation for itsparticipation in the Backstop Commitment.

What effects will this offering have onour outstanding common stock?

After giving effect to this offering, assumingthat it is fully subscribed, we will have approximately              sharesof common stock outstanding, representing an increase of approximately     % in our outstanding sharesas of the effective date. If you fully exercise the rights that we distribute to you, your proportional interest in us (assumingthe exercise of all outstanding warrants) will remain the same. If you do not exercise any rights, or you exercise less than allof your rights, your interest in us will be diluted, as you will own a smaller proportional interest in us compared to your interestprior to this offering.

If all of our stockholders and warrant holdersexercise the rights issued to them, and this offering is therefore fully subscribed, the beneficial ownership percentage of ourstockholders will not change. Assuming that no holders exercise their rights in this offering, the backstop providers would acquireapproximately                shares of our commonstock, following which (1) the backstop providers would beneficially own approximately   % of our outstandingcommon stock and (2) all other holders would beneficially own approximately    % of our outstanding commonstock. All ownership percentages described in this paragraph are based upon our outstanding common stock and the beneficial ownershipof our holders as of the effective date.

The number of shares of our common stock outstandinglisted in each case above assumes that (1) all of the other shares of our common stock issued and outstanding on the effectivedate will remain issued and outstanding and owned by the same persons as of the closing of this offering and (2) we will notissue any shares of common stock in the period between the effective date and the closing of this offering.

Are there any conditions to the backstopproviders’ obligations under the Backstop Agreement?

Yes. The obligations of the backstop providersto consummate the transactions under the Backstop Agreement are subject to the satisfaction or waiver of specified conditions,including, but not limited to, compliance with covenants and the accuracy of representations and warranties provided in the BackstopAgreement, consummation of this offering, the receipt of all required regulatory approvals, and no material adverse effect withrespect to our financial condition, business, properties, assets, liabilities or results of operations.

When do the backstop providers’ obligationsunder the Backstop Agreement expire?

The Backstop Agreement may be terminated byus, on the one hand, or the backstop providers, on the other hand, if the transactions contemplated by the Backstop Agreement havenot been consummated by                  ,2017.

How much will we receive from this offeringand how will such proceeds be used?

We estimate that the net proceeds from thisoffering and the Backstop Commitment will be approximately $                  million,after deducting expenses related to this offering.

We intend to use the net proceeds for researchand development, including funding pre-clinical and clinical trials relating to the Cellframe™ technology, business development,sales and marketing, capital expenditures, working capital and other general corporate purposes.

If my exercise of rights is not valid orif this offering is not completed, will my subscription payment be refunded to me?

Yes. The subscription agent will hold all fundsit receives in a segregated bank account until the completion of this offering. If your exercise of rights is deemed not to bevalid or this offering is not completed, all subscription payments received by the subscription agent will be returned as soonas practicable following the expiration of this offering, without interest or penalty. If you own shares through a nominee, itmay take longer for you to receive your subscription payments because the subscription agent will return payments through the recordholder of your shares.

What fees or charges apply if I purchaseshares in this offering?

We are not charging any fee or sales commissionto issue rights to you or to issue shares of our common stock to you if you exercise your rights. If you exercise your rights througha broker, dealer, custodian bank or other nominee, you are responsible for paying any fees your nominee may charge you.

What are the U.S. federal income tax considerationsof exercising my rights?

U.S. Holders (as defined herein) generallywill not recognize gain or loss on the receipt, exercise or expiration of rights. See “U.S. Federal Income Tax Considerations”for a more complete discussion, including additional qualifications and limitations. In addition, you should consult your own taxadvisor as to the tax consequences to you of the receipt, exercise and expiration of the rights in light of your particular circumstances.

To whom should I send my forms and payment?

If your shares of our common stock and/or warrantsare held in the name of a broker, dealer, custodian bank or other nominee, then you should deliver all required subscription documentsand subscription payments pursuant to the instructions provided by your nominee.

If your shares of our common stock and/or warrantsare held in your name, then you should send your rights certificate to the subscription agent, and send all other required subscriptiondocuments and subscription payments by mail or overnight courier to the appropriate address listed below:

You and, if applicable, your nominee are solelyresponsible for instructing DTC to transfer your rights to the subscription agent or completing delivery to the subscription agentof your rights certificate, as applicable, as well as completing delivery of all other required subscription documents and subscriptionpayments. You should allow sufficient time for delivery of your subscription materials to the subscription agent and clearanceof payments before the expiration of this offering. If you hold your shares of our common stock and/or warrants through a broker,dealer, custodian bank or other nominee, your nominee may establish an earlier deadline before the expiration date.

Whom should I contact if I have other questions?

If you have any questions regarding this offering,completion of the rights certificate or any other subscription documents or submitting payment in this offering, please contact                  at                     .

RISK FACTORS

Investing in our common stock involves a highdegree of risk. You should carefully consider the risks described herein and in the documents incorporated by reference in thisprospectus, as well as other information we include or incorporate by reference into this prospectus, before making an investmentdecision. In particular, you should consider the risk factors under the heading “Risk Factors” included in our mostrecent Annual Report on Form 10-K, as may be revised or supplemented by our subsequent Quarterly Reports on Form 10-Q or CurrentReports on Form 8-K, each of which are on file with the SEC and are incorporated herein by reference, and which may be amended,supplemented or superseded from time to time by other reports we file with the SEC in the future. Our business, financial conditionor results of operations could be materially adversely affected by the materialization of any of these risks. The trading priceof our common stock could decline due to the materialization of any of these risks, and you may lose all or part of your investment.This prospectus and the documents incorporated herein by reference also contain forward-looking statements that involve risks anduncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result ofcertain factors, including the risks described herein and in the documents incorporated herein by reference.

Risks Related to this Offering

This offering may cause the price of our common stock to declineand it may not recover for a substantial period of time or at all.

The subscription price represents a    % discountto the closing price of our common stock on             , the effective date. The subscription price, together with the number of sharesof our common stock we propose to issue and ultimately will issue if this offering and the Backstop Commitment are completed, mayresult in an immediate decrease in the market value of our common stock. If the market price of our common stock falls below thesubscription price, participants in this offering will have committed to buy shares of our common stock in this offering at a pricegreater than the prevailing market price. Further, if a substantial number of rights are exercised and the holders of the sharesreceived upon exercise of those rights choose to sell some or all of those shares, the resulting sales could depress the marketprice of our common stock. We cannot assure you that the market price of our shares of common stock will not decline prior to theexpiration of this offering or that, after shares of our common stock are issued upon exercise of rights, a subscribing rightsholder will be able to sell shares of our common stock purchased in this offering at a price greater than or equal to the subscriptionprice.

The subscription price determined for this offering and thepurchase price under the Backstop Agreement may not be indicative of the fair value of our common stock.

The subscription price was set by our board of directors and youshould not consider the subscription price as an indication of the value of our common stock. The subscription price does not necessarilybear any relationship to the book value of our assets, net worth, expected cash flows, losses, financial condition or any otherestablished criteria for fair value. The market price of our common stock could decline during or after this offering, and youmay not be able to sell shares of our common stock purchased in this offering at a price equal to or greater than the subscriptionprice, or at all.

Our common stock price may be volatile.

The trading price of our common stock may fluctuate substantially.The price of our common stock that will prevail in the market after this offering may be higher or lower than the subscriptionprice, depending on many factors, some of which are beyond our control and may not be directly related to our operating performance.These factors include, but are not limited to, the following:

Your interest in us may be diluted as a result of this offering.

Stockholders who do not fully exercise their rights should expectthat they will, at the completion of this offering and the Backstop Commitment, own a smaller proportional interest in us thanwould otherwise be the case had they fully exercised their rights. After giving effect to this offering, assuming that it is fullysubscribed, we would have approximately           shares of common stockoutstanding, representing an increase in outstanding shares of approximately        .

There can be no guarantee that the stock purchase contemplatedby the Backstop Agreement will be consummated if this offering is not fully subscribed.

The closing of the transactions contemplated by the Backstop Agreementis subject to satisfaction or waiver of conditions, including compliance with covenants and the accuracy of representations andwarranties provided in the Backstop Agreement and consummation of this offering. As a result, we cannot guarantee that the transactionscontemplated by the Backstop Agreement will be consummated if this offering is not fully subscribed. Failure to consummate thetransactions contemplated by the Backstop Agreement could have adverse effects on our business and results of operations and financialcondition.

You may not revoke your exercise of rights.

Once you have exercised your rights, you may not revoke such exercisein whole or in part. Accordingly, any exercise of rights will constitute a binding commitment to purchase and pay for the sharesof our common stock issuable upon such exercise, regardless of any changes in the value of such shares, in our business, financialcondition, results of operations or future prospects or in your individual circumstances.

You may not be able to resell any shares of our common stockthat you purchase upon the exercise of rights immediately upon expiration of this offering.

If you exercise your rights, you may not be able to resell the commonstock purchased by exercising your rights until you (or your broker or other nominee) have received a stock certificate or book-entryrepresenting those shares. Although we will endeavor to issue the appropriate certificates and book-entries as soon as practicableafter completion of this offering, there may be some delay between the expiration date and the time that we issue the new stockcertificates and book-entries.

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

We will have broad discretion in determining how the net proceedsof this offering will be used. While our board of directors believes the flexibility in application of the net proceeds is prudent,the broad discretion it affords entails increased risks to the investors in this offering. You may not agree with the manner inwhich we choose to allocate and spend the net proceeds.

If we cancel this offering, neither we nor the subscriptionagent will have any obligation to you except to return your subscription payments.

We may withdraw or terminate this offering at any time and for anyreason. If we withdraw or terminate this offering, neither we nor the subscription agent will have any obligation with respectto rights that have been exercised except to return, without interest or deduction, any subscription payments the subscriptionagent received from you.

If you do not act on a timely basis and follow subscriptioninstructions, your exercise of rights may be rejected.

Holders of shares of our common stock and holders of warrants topurchase our common stock who desire to purchase shares of our common stock in this offering must act on a timely basis to ensurethat all required forms and payments are actually received by the subscription agent prior to the expiration date, unless extended.If you are a beneficial owner of shares of our common stock and/or warrants to purchase our common stock and you wish to exerciseyour rights, you must act promptly to ensure that your broker, custodian bank or other nominee acts for you and that all requiredforms and payments are actually received by your broker, custodian bank or other nominee in sufficient time to deliver such formsand payments to the subscription agent to exercise the rights granted in this offering that you beneficially own prior to the expirationdate, unless extended. We will not be responsible if your broker, custodian or nominee fails to ensure that all required formsand payments are actually received by the subscription agent prior to the expiration date, unless extended.

If you fail to complete and sign the required subscription forms,send an incorrect payment amount, or otherwise fail to follow the subscription procedures that apply to your exercise in this offering,the subscription agent may, depending on the circumstances, reject your subscription or accept it only to the extent of the paymentreceived. Neither we nor the subscription agent undertakes to contact you concerning an incomplete or incorrect subscription formor payment, nor are we under any obligation to correct such forms or payment. We have the sole discretion to determine whethera subscription exercise properly follows the subscription procedures.

If you make payment of the subscription price by uncertifiedcheck, your check may not clear in sufficient time to enable you to purchase shares in this offering.

Any uncertified check used to pay for shares to be issued in thisoffering must clear before the expiration date, and the clearing process may require five or more business days. If you chooseto exercise your rights, in whole or in part, and to pay for shares by uncertified check and your check has not cleared prior tothe expiration date, you will not have satisfied the conditions to exercise your right and will not receive the shares you wishto purchase.

This offering may limit our ability to use some or all ofour net operating loss carryforwards in the future.

Under Section 382 of the Code, a corporationthat undergoes an “ownership change” may be subject to limitations on its ability to utilize its pre-change net operatingloss carryforwards to offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership ofcertain stockholders (generally 5% stockholders, applying certain look-through and aggregation rules) increases by more than 50%over such stockholders’ lowest percentage ownership during the testing period (generally three years). This offering andthe issuance of shares pursuant to exercised rights may cause an ownership change. Also, even if this offering and the issuanceof shares pursuant to exercised rights do not cause an ownership change, they could increase the likelihood that we may undergoan ownership change for purposes of Section 382 of the Code in the future. Limitations imposed on our ability to utilizenet operating loss carryforwards could cause U.S. federal income taxes to be paid earlier than would be paid if such limitationswere not in effect and could cause such net operating loss carryforwards to expire unused, in each case reducing or eliminatingthe benefit of such net operating loss carryforwards.

If the rights offering is not fully subscribed, the backstopprovider will increase its ownership percentage and may become a majority owner of Biostage.

On August 14, 2017, the last practicable date before the filingof this prospectus, the backstop provider and its affiliates owned approximately 19.99% of our outstanding shares of common stock(excluding 1,638,095 shares of common stock underlying shares of our Series C Convertible Preferred Stock held by the backstopprovider and its affiliates and warrants to purchase 9,700,000 shares of our common stock or common stock equivalents, which aresubject to certain conversion and exercise limitations). As a stockholder and warrant holder as of the record date, the backstopprovider will have the right to subscribe for and purchase shares of our common stock under the rights offering. To the extentthe backstop provider participates in the rights offering and other stockholders and warrant holders do not, the backstop providerwill increase its percentage of ownership and may become the owner of a majority of our shares of common stock.

We have received notices from NASDAQof non-compliance with its continuing listing rules, and have not regained compliance.

On July 16, 2015, we received a notice fromNASDAQ of non-compliance with its continuing listing rules, namely that the audit committee of our Board of Directors had two membersfollowing James McGorry’s appointment as our President and Chief Executive Officer instead of the required minimum of threemembers. In accordance with NASDAQ continued listing rules, we were given until the earlier of our next annual shareholders’meeting or July 6, 2016 to add a third audit committee member. On March 10, 2016, Blaine McKee, Ph.D. was appointed as a memberof the Board of Directors and its audit committee, and we regained compliance with that requirement.

On November 10, 2015, we received a noticefrom NASDAQ of non-compliance with its listing rules regarding the requirement that the listed securities maintain a minimum bidprice of $1 per share. Based upon the closing bid price for the 30 consecutive business days preceding the notice, the Companyno longer met this requirement. However, the NASDAQ rules also provide the Company a period of 180 calendar days in which to regaincompliance and, in some circumstances, a second 180-day compliance period. On November 25, 2015, we regained compliance with theminimum bid price requirement when the closing price of our common stock was at least $1 per share for ten consecutive businessdays.

On November 18, 2016, we received a noticefrom NASDAQ of non-compliance with its listing rules regarding the minimum bid price requirement. On May 18, 2017, NASDAQ notifiedus that, based upon our continued non-compliance with the minimum bid price requirement as of May 17, 2017, as well as our non-compliancewith the minimum $2.5 million stockholders’ equity requirement for continued listing on The Nasdaq Capital Market as of March31, 2017, our common stock would be subject to delisting from Nasdaq unless we timely requested a hearing before the Nasdaq HearingsPanel, which we refer to as the Panel. We timely requested such a hearing.

On July 6, 2017, the Panel granted our requestfor continued listing on NASDAQ and accepted our plan to regain compliance with the continued listing requirements. Our continuedlisting is subject to a number of conditions, with the Panel’s decision ultimately requiring that we evidence full compliancewith all requirements for continued listing on The Nasdaq Capital Market, including the minimum bid price and million stockholders’equity requirements, by no later than November 13, 2017.

While we believe that the consummation of thisoffering will result in the Company regaining compliance with the stockholders’ equity requirement, there can be no assurancesthat we will be able to evidence compliance with all applicable requirements for continued listing on The Nasdaq Capital Marketwithin the extension of time that was granted by the Panel. The failure to meet continuing compliance standards subjects our commonstock to a possible delisting. A delisting of our common stock would have an adverse effect on the market liquidity of our commonstock and, as a result, the market price for our common stock could become more volatile. Further, a delisting also could makeit more difficult for us to raise additional capital.

NOTE REGARDING FORWARD-LOOKING STATEMENTS¹

This prospectus (including any related prospectussupplement or free writing prospectus and documents incorporated by reference herein and therein) contains statements with respectto us which constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the“safe harbor” created by those sections. These statements relate to future events or to our future financial performanceand involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievementsto be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements.Forward-looking statements may include, but are not limited to, statements relating to the regulatory approval of our Cellspan^TMproduct candidates for the esophagus and airways or any other product candidates, by the FDA, EMA, MHRA or otherwise, which suchapprovals may not be obtained on a timely basis or at all; anticipated future earnings or other financial measures; success withrespect to any clinical trials and other regulatory approval efforts and the number of patients who can be treated with our productsor product candidates; commercialization efforts and marketing approvals of our products as well as the success thereof, includingour Cellspan product candidates for the esophagus and airways; the continued availability of a market for our securities; our abilityto raise sufficient capital to finance our planned operations, and our estimates concerning capital requirements and need for additionalfinancing; our ability to continue as a going concern; the amount and timing of costs associated with our development of bioreactors,scaffolds and other devices and products; our failure to comply with regulations and any changes in regulations; our ability toaccess debt and equity markets; unpredictable difficulties or delays in the development of new technology; our collaborators notdevoting sufficient time and resources to successfully carry out their duties or meet expected deadlines; our ability to attractand retain qualified personnel and key employees and retain senior management; the availability and price of acceptable raw materialsand components from third-party suppliers; difficulties in obtaining or retaining the management and other human resource competenciesthat we need to achieve our business objectives; increased competition in the field of regenerative medicine and the financialresources of our competitors; our ability to obtain and maintain intellectual property protection for our device and product candidates;our inability to implement our growth strategy; and our liquidity.

In some cases, you can identify forward-lookingstatements by terms such as “believe,” “may,” “estimate,” “continue,” “anticipate,”“intend,” “should,” “could,” “would,” “target,” “seek,”“aim,” “believe,” “predicts,” “think,” “objectives,” “optimistic,”“new,” “goal,” “strategy,” “potential,” “is likely,” “will,”“expect,” “plan” “project,” “permit” and similar expressions intended to identifyforward-looking statements. These statements reflect our current views with respect to future events, are based on assumptionsand are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-lookingstatements. We discuss many of these risks in greater detail under the heading “Risk Factors” in our SEC filings, andunder the caption “Risk Factors” in this prospectus.

You should read this prospectus and anyrelated prospectus supplement and free writing prospectus and the documents that we incorporate by reference herein and thereinand have filed as exhibits to the registration statement, of which this prospectus is part, completely and with the understandingthat our actual future results may be materially different from what we expect. You should assume that the information appearingin this prospectus is accurate as of the date on the cover of this prospectus or prospectus supplement only. Our business, financialcondition, results of operations and prospects may change. We may not update these forward-looking statements, even though oursituation may change in the future, unless we have obligations under the federal securities laws to update and disclose materialdevelopments related to previously disclosed information. We qualify all of the information presented in this prospectus and anyrelated prospectus supplement or free writing prospectus, and particularly our forward-looking statements, by these cautionarystatements.

¹NTD: To update following update of business section

USE OF PROCEEDS

We estimate that the net proceeds from thisoffering and the Backstop Commitment will be approximately $        million, after deductingexpenses related to this offering.

We intend to use the net proceeds from thisoffering, together with other available funds, for research and development, including funding pre-clinical and clinical trialsrelating to the Cellframe™ technology, business development, sales and marketing, capital expenditures, working capital andother general corporate purposes.

Pending these uses, we intend to invest thenet proceeds to us from this offering in a variety of capital preservation investments, including short-term, investment-gradeand interest-bearing instruments. The precise amounts and timing of the application of proceeds will depend upon our funding requirementsand the availability of other funds. We may find it necessary or advisable to use the net proceeds for other purposes, and we willhave broad discretion in the application of the net proceeds and investors will be relying on the judgment of our management regardingthe application of the net proceeds from this offering.

Based upon our historical and anticipated futuregrowth and our financial needs, we may engage in additional financings of a character and amount that we determine as the needarises. We may raise additional capital through additional public or private financings, the incurrence of debt and other availablesources.

PRICE RANGE OF OUR COMMON EQUITY

Our common stock trades on The NASDAQ CapitalMarket under the symbol “BSTG.” Prior to April 1, 2016, in connection with our name change, our common stock tradedon The NASDAQ Capital Market under the symbol “HART” since October 21, 2013. The following table sets forth, for thequarters shown, the range of high and low sales prices of our common stock on the NASDAQ Capital Market.

The closing price of our common stock on theNASDAQ Capital Market on August 14, 2017 was $0.42 per share. Immediately prior to this offering, we had 39,033,865 shares of commonstock outstanding, which were held by approximately 181 stockholders of record as of August 14, 2017.

DIVIDEND POLICY

We have never declared or paid cash dividendson our common stock in the past and do not intend to pay cash dividends on our common stock in the foreseeable future. Any futuredetermination to pay cash dividends will be at the discretion of our board of directors and will depend on our financial condition,results of operations, capital requirements and other factors our board of directors deems relevant.

THE RIGHTS OFFERING

Before deciding whether to exercise your subscription rights,you should carefully read this prospectus, including the information set forth under the heading “Risk Factors” andthe information that is incorporated by reference into this prospectus.

Reasons for the Rights Offering

We believe that our existingcash resources will be sufficient to fund our planned operations into the fourth quarter of 2017, and consequently we requireadditional funding to continue our anticipated operations and support our capital needs. This offering would allow us toraise equity capital in a cost-effective manner that allows all of our stockholders and warrant holders the opportunity toparticipate in the transaction on a pro-rata basis, and if all stockholders exercise their rights, our stockholders may avoiddilution of their ownership interest in us, subject to the treatment of fractional shares.

Our board of directors considered various factorsin evaluating this offering and related transactions, including:

The terms of the Backstop Commitment were reviewed,negotiated and approved by our board of directors, with advice from legal counsel.

The Backstop Agreement (and this offering)may be terminated by us at any time prior to the expiration date and for any reason.

Terms of the Offer

We are issuing to our stockholders and warrantholders as of the effective date rights to subscribe for an aggregate of up to                 sharesof our common stock. Each rights holder is being issued one basic subscription privilege for each share of our common stock owned(and each share of common stock underlying such holder’s warrant) as of the close of business, on                  , 2017, the effective date (1 for 1).

Each basic subscription privilege entitlesthe rights holder to purchase           shares of our common stock, at acash price of $            per whole share, which represents a    %discount to the closing price of our common stock on the effective date. Rights may only be exercised in the aggregate for wholenumbers of shares of our common stock; no fractional shares of our common stock will be issued in this offering. Any fractionalshares will be rounded down to the nearest whole share of common stock and any excess subscription payments will be returned bythe subscription agent.

Rights holders who fully exercise their basicsubscription privilege will be entitled to the over-subscription privilege which enables such rights holders to subscribe for additionalshares of our common stock that remain unsubscribed as a result of any unexercised basic subscription privileges. If sufficientremaining shares are available, all over-subscription requests will be honored so long as no rights holder receives more than therights holder’s pro rata share of the shares not purchased by other rights holders through exercises of their basic subscriptionprivileges and other ownership thresholds described herein are not exceeded.

Rights may be exercised at any time duringthe subscription period, which commences on                        , 2017, and ends at         , Eastern time, on                     ,2017, or the expiration date, unless extended by us.

The rights will be evidenced by subscriptioncertificates which will be mailed to stockholders and warrant holders, except as discussed below under “Foreign Stockholders.”

For purposes of determining the number of sharesa rights holder may acquire in this offering, broker-dealers, trust companies, banks or others whose shares are held of recordby Cede or by any other depository or nominee will be deemed to be the holders of the rights that are issued to Cede or the otherdepository or nominee on their behalf.

There is no minimum number of rights whichmust be exercised in order for this offering to close.

Over-Subscription Privilege

The over-subscription privilege allows rightsholders that fully exercise their basic subscription privilege to purchase additional shares of our common stock that remain unsubscribedas a result of any unexercised basic subscription privileges. You should indicate on your subscription certificate that you submitwith respect to the exercise of your rights how many additional shares of our common stock you are willing to acquire pursuantto the over-subscription privilege. If sufficient remaining shares are available, we will seek to honor over-subscription requestsin full so long as no rights holder receives more than the rights holder’s pro rata share of the shares not purchased byother rights holders through exercises of their basic subscription privileges and other ownership thresholds described herein arenot exceeded.

Banks, brokers, trustees and other nomineeholders of rights will be required to certify to the subscription agent, before any over-subscription privileges may be exercisedwith respect to any particular beneficial owner, as to the aggregate number of rights exercised pursuant to the subscription rightand the number of shares subscribed for pursuant to the over-subscription privileges by such beneficial owner.

We will not offer or sell in connection withthis offering any shares of common stock that are not subscribed for pursuant to the basic subscription privileges or the over-subscriptionprivileges. The backstop provider, however, has agreed to backstop this offering pursuant to the Backstop Commitment.

Expiration of this Offer

This offering will expire at      , Eastern time, on               , 2017, unless extendedby us, and rights may not be exercised thereafter.

Subject to the terms of the Backstop Agreement,our board of directors may determine to extend the subscription period, and thereby postpone the expiration date, to the extentour board of directors determines that doing so is in the best interest of our stockholders.

Any extension of this offering will be followedas promptly as practicable by announcement thereof, and in no event later than 9:00 a.m., New York City time, on the nextbusiness day following the previously scheduled expiration date. Without limiting the manner in which we may choose to make suchannouncement, we will not, unless otherwise required by law, have any obligation to publish, advertise or otherwise communicateany such announcement other than by issuing a press release or such other means of announcement as we deem appropriate.

Transferability

The rights granted to you are non-transferableand, therefore, you may not sell, transfer, or assign your rights to anyone. The rights will not be listed on NASDAQ or any otherstock exchange or market. The shares of our common stock issuable upon exercise of the rights will be listed on NASDAQ.

Determination of the Subscription Price

The $             subscriptionprice was set by our board of directors using the formula negotiated with the backstop provider in the Backstop Agreement. In approvingthe subscription price, our board of directors considered, among other things, the following factors:

Subscription Agent

                              willact as the subscription agent in connection with this offering.                     willreceive for their administrative, processing, invoicing and other services fees estimated to be approximately $         , plus reimbursement for all out-of-pocket expenses related to this offering.

Completed subscription certificates must besent together with full payment of the subscription price for all whole shares subscribed for through the exercise of the subscriptionprivilege and the over-subscription privilege to the subscription agent by one of the methods described below. We will accept onlyproperly completed and duly executed subscription certificates actually received at any of the addresses listed below, at or priorto the expiration date or by the close of business on the third business day after the expiration date following timely receiptof a notice of guaranteed delivery. See “Payment for Shares” below. In this prospectus, close of business means 5:00 p.m.,New York City time, on the relevant date.

Delivery to an address other than one of theaddresses listed above may not constitute valid delivery and, accordingly, may be rejected by us.

Any questions or requests for assistance concerningthe method of subscribing for shares or for additional copies of this prospectus or subscription certificates or notices of guaranteeddelivery may be directed to                  at                     .

You may also contact your broker or nomineesfor information with respect to this offering.

Methods for Exercising Rights

Exercise of the Basic Subscription Privilege

Basic subscription privileges are evidencedby subscription certificates that, except as described below under “Foreign Stockholders,” will be mailed to rightsholders or, if a rights holder’s shares are held by a depository or nominee on his, her or its behalf, to such depositoryor nominee. Basic subscription privileges may be exercised by completing and signing the subscription certificate that accompaniesthis prospectus and mailing it in the envelope provided, or otherwise delivering the completed and duly executed subscription certificateto the subscription agent, together with payment in full for the shares at the estimated subscription price by the expiration date.Basic subscription privileges may also be exercised by contacting your broker, trustee or other nominee, who can arrange, on yourbehalf, to guarantee delivery of payment and delivery of a properly completed and duly executed subscription certificate pursuantto a notice of guaranteed delivery by the close of business on the third business day after the expiration date. A fee may be chargedby your broker, trustee or other nominee for this service. Completed subscription certificates and related payments must be receivedby the subscription agent on or before the expiration date (unless payment is effected by means of a notice of guaranteed deliveryas described below under “Payment for Shares”) at the offices of the subscription agent at the address set forth above.All exercises of basic subscription privileges are irrevocable.

Exercise of the Over-Subscription Privilege

Rights holders who fully exercise all basicsubscription privileges issued to them may participate in the over-subscription privilege by indicating on their subscription certificatethe number of shares of our common stock they are willing to acquire. If sufficient remaining shares of our common stock are availableafter the primary subscription, we will seek to honor over-subscriptions requests in full so long as no rights holder receivesmore than the rights holder’s pro rata share of the shares not purchased by other rights holders through exercises of theirbasic subscription privileges and other ownership thresholds described herein are not exceeded. All exercises of over-subscriptionprivileges are irrevocable.

Rights Holders Whose Shares are Heldby a Nominee

Rights holders whose shares are held by a nominee,such as a bank, broker-dealer or trustee, must contact that nominee to exercise their rights. In that case, the nominee will completethe subscription certificate on behalf of the rights holder and arrange for proper payment by one of the methods set forth under“Payment for Shares” below.

Nominees

Nominees, such as brokers, trustees or depositoriesfor securities, who hold shares for the account of others, should notify the respective beneficial owners of the shares as soonas possible to ascertain the beneficial owners’ intentions and to obtain instructions with respect to the rights. If thebeneficial owner so instructs, the nominee should complete the subscription certificate and submit it to the subscription agentwith the proper payment as described under “Payment for Shares” below.

General

All questions as to the validity, form, eligibility(including times of receipt and matters pertaining to beneficial ownership) and the acceptance of subscription forms and the subscriptionprice will be determined by us, which determinations will be final and binding. No alternative, conditional or contingent subscriptionswill be accepted. We reserve the right to reject any or all subscriptions not properly submitted or the acceptance of which would,in the opinion of our counsel, be unlawful.

We reserve the right to reject any exerciseof subscription rights if such exercise is not in accordance with the terms of this offering or not in proper form or if the acceptancethereof or the issuance of shares of our common stock thereto could be deemed unlawful. We reserve the right to waive any deficiencyor irregularity with respect to any subscription certificate. Subscriptions will not be deemed to have been received or accepteduntil all irregularities have been waived or cured within such time as we determine in our sole discretion. We will not be underany duty to give notification of any defect or irregularity in connection with the submission of subscription certificates or incurany liability for failure to give such notification.

Foreign Stockholders

Subscription certificates will not be mailedto foreign stockholders. Foreign stockholders will receive written notice of this offering. The subscription agent will hold therights to which those subscription certificates relate for these stockholders’ accounts until instructions are received toexercise the rights, subject to applicable law.

Payment for Shares

Participating rights holders may choose betweenthe following methods of payment:

Payments by a participating rights holder mustbe in U.S. dollars by personal check or bank draft drawn on a bank or branch located in the United States and payable to                                    . The subscription agent will deposit all funds received by it prior to the final payment date into a segregated account pendingpro-ration and distribution of the shares.

The method of delivery of subscription certificatesand payment of the subscription price to us will be at the election and risk of the participating rights holders, but, if sentby mail it is recommended that such certificates and payments be sent by registered mail, properly insured, with return receiptrequested, and that a sufficient number of days be allowed to ensure delivery to the subscription agent and clearance of paymentprior to the expiration date or the date guaranteed payments are due under a notice of guaranteed delivery (as applicable). Becauseuncertified personal checks may take at least five business days to clear, you are strongly urged to pay, or arrange for payment,by means of certified or cashier’s check or money order.

Whichever of the two methods described aboveis used, issuance of the shares purchased is subject to collection of checks and actual payment. If a participating rightsholder who subscribes for shares pursuant to the subscription privilege or over-subscription privilege does not make payment ofany amounts due by the expiration date, the date guaranteed payments are due under a notice of guaranteed delivery or within tenbusiness days of the confirmation date, as applicable, the subscription agent reserves the right to take any or all of the followingactions:

All questions concerning the timeliness, validity,form and eligibility of any exercise of rights will be determined by us, whose determinations will be final and binding. We maywaive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as we may determine, or rejectthe purported exercise of any right. Subscriptions will not be deemed to have been received or accepted until all irregularitieshave been waived or cured within such time as we determine. The subscription agent will not be under any duty to give notificationof any defect or irregularity in connection with the submission of subscription certificates or incur any liability for failureto give such notification.

Participating rights holders will have no rightto rescind their subscription after receipt of their payment for shares.

Delivery of Shares

Stockholders whose shares are held of recordby Cede or by any other depository or nominee on their behalf or their broker-dealers’ behalf will have any shares that theyacquire credited to the account of Cede or the other depository or nominee. With respect to all other stockholders, we will credityour shares by book entry and only issue stock certificates if required by law. We will not credit the shares you purchase untilyou provide the subscription agent with information for your bank, broker or other nominee.  If we are required to delivera physical certificate for shares you acquire, the certificate will be mailed after payment for all the shares subscribed for hascleared, which may take up to 15 business days from the expiration date.

Termination

We may terminate this offering in the discretionof our board of directors. If this offering is terminated, all rights will expire without value and we will promptly arrange forthe refund, without interest or penalty, of all funds received from rights holders. All monies received by the subscription agentin connection with this offering will be held by the subscription agent, on our behalf, in a segregated interest-bearing accountat a negotiated rate. All such interest shall be payable to us even if we determine to terminate this offering and return yoursubscription payment.

No Recommendation to Stockholders

Our Board of Directors has not made, nor willit make, any recommendation to stockholders and warrant holders regarding the exercise of rights under this offering. We cannotpredict the price at which our shares of common stock will trade after this offering. You should consult with your legal, tax andfinancial advisors prior to making your independent investment decision about whether or not to exercise your rights.

As of the effective date, the backstop providerand its affiliates beneficially owned approximately 19.99% of our common stock (excluding 1,638,095 shares of common stock underlyingshares of our Series C Convertible Preferred Stock held by the backstop provider and its affiliates and warrants to purchase 9,700,000shares of our common stock or common stock equivalents, which are subject to certain conversion and exercise limitations), andLeon Greenblatt III, a member of our board of directors, is a manager of the backstop provider. You should not view the intentionsof the backstop provider as a recommendation or other indication by it regarding whether the exercise of the subscription rightsis or is not in your best interests.

Stockholders and warrant holders who exerciserights risk investment loss on new money invested. We cannot assure you that the market price for our common stock will remainabove the subscription price or that anyone purchasing shares at the subscription price will be able to sell those shares in thefuture at the same price or a higher price. If you do not exercise or sell your rights, you will lose any value represented byyour rights, and if you do not exercise your rights in full, your percentage ownership interest in Biostage will be diluted. Formore information on the risks of participating in this offering, see the section of this prospectus entitled “Risk Factors.”

Effect of This Offering on Existing Stockholders;Interests of Certain Stockholders, Directors and Officers

After giving effect to this offering, assumingthat it is fully subscribed, we would have approximately               sharesof common stock outstanding, representing an increase of approximately      % in our outstandingshares as compared to the effective date. If you fully exercise the rights that we distribute to you, your proportional interestin us (assuming the exercise of all outstanding warrants) will remain the same. If you do not exercise any rights, or you exerciseless than all of your rights, your interest in us will be diluted, as you will own a smaller proportional interest in Biostagecompared to your interest prior to this offering.

By virtue of the backstop provider’sownership, it is able to exert substantial influence over us, including our business strategy and policies, mergers or other businesscombinations, acquisition or disposition of assets, future issuances of our common stock, debt or other securities, the incurrenceof debt or obtaining other sources of financing, and other matters relating to our business and operations. The backstop provider’sinterests may not always be consistent with our interests or with the interests of our other stockholders. To the extent that conflictsof interest may arise between us and the backstop provider and its affiliates, those conflicts may be resolved in a manner adverseto us or our other stockholders.

If the Backstop Commitment were fully exercised,the backstop provider would acquire            shares of our commonstock, for an aggregate purchase price of $10.0 million. In addition, the backstop provider will be entitledto registration rights with respect to any shares of our common stock it acquires under the Backstop Commitment. See “TheBackstop Agreement—Registration Rights” for more information.

U.S. Federal Income Tax Considerations ofthe Rights Offering

U.S. Holders (as defined herein) generallywill not recognize gain or loss on the receipt, exercise or expiration of the rights. See “U.S. Federal Income Tax Considerations”for a more complete discussion, including additional qualifications and limitations. In addition, you should consult your own taxadvisors as to the tax consequences to you of the receipt, exercise and expiration of the rights in light of their particular circumstances.

Shares of Our Common Stock Outstanding Afterthis Offering

As of the effective date,               sharesof our common stock were issued and outstanding. Assuming no additional shares of common stock have been or will be issued by usafter the effective date and prior to consummation of this offering and assuming it is fully subscribed, we expect approximately               sharesof our common stock will be outstanding immediately after completion of this offering.

Other Matters

The rights certificates are governed by Delawarelaw. We are not making this offering in any state or other jurisdiction in which it is unlawful to do so, nor are we distributingor accepting any offers to purchase any shares of our common stock from rights holders who are residents of those states or otherjurisdictions or who are otherwise prohibited by federal or state laws or regulations to accept or exercise the rights. We maydelay the commencement of this offering in those states or other jurisdictions, or change the terms of this offering, in wholeor in part, in order to comply with the securities laws or other legal requirements of those states or other jurisdictions. Subjectto state securities laws and regulations, we also have the discretion to delay allocation and distribution of any shares you mayelect to purchase by exercise of your rights in order to comply with state securities laws. We may decline to make modificationsto the terms of this offering requested by those states or other jurisdictions, in which case, if you are a resident in those statesor jurisdictions or if you are otherwise prohibited by federal or state laws or regulations from accepting or exercising the rights,you will not be eligible to participate in this offering. However, we are not currently aware of any states or jurisdictions thatwould preclude participation in this offering.

THE BACKSTOP AGREEMENT

The Backstop Commitment

On                     , 2017, we entered into a backstop agreement with the backstop provider. The backstop provider agreed to purchase from us, an aggregatenumber of shares of our common stock equal to (x) $10.0 million, minus (y) the aggregate proceeds of this offering, ata price per share equal to the subscription price, subject to the terms and conditions of the Backstop Agreement. The BackstopCommitment is scheduled to close not later than the third trading day following the expiration date.

Expense Reimbursement

Regardless of whether the transactions contemplatedby the Backstop Agreement are consummated, we have agreed to reimburse the backstop provider for all reasonable out-of-pocket feesand expenses (including attorneys’ fees and expenses) incurred by it in connection with the Backstop Agreement and the transactionscontemplated thereby, other than if the Backstop Agreement is terminated due to a breach by the backstop provider.

Closing Conditions

The closing of the transactions contemplatedby the Backstop Agreement is subject to the satisfaction or waiver of customary conditions, including:

Termination

The Backstop Agreement may be terminated atany time prior to the closing of the transactions contemplated by the Backstop Agreement as follows:

Indemnification

We agreed to indemnify the backstop providerand its affiliates and each of their respective officers, directors, partners, employees, agents and representatives for lossesarising out of this offering and the related registration statement and prospectus (other than with respect to statements madein reliance on information provided to us in writing by the backstop provider for use herein) and claims, suits or proceedingschallenging the authorization, execution, delivery, performance or termination of a rights offering, the Backstop Agreement andcertain ancillary agreements and/or any of the transactions contemplated thereby, other than losses arising out of or related toany breach by the backstop provider of the Backstop Agreement.

The backstop providers agreed to indemnifyus and our affiliates and each of our respective officers, directors, partners, employees, agents and representatives for lossesarising out of or relating to statements or omissions in the registration statement or prospectus for this offering (or any amendmentor supplement thereto) made in reliance on or in conformity with written information relating to the backstop provider furnishedto us by or on behalf of the backstop provider expressly for use therein.

Registration Rights

The purchase of shares of our common stockby the backstop provider pursuant to the Backstop Agreement would be effected in a transaction exempt from the registration requirementsof the Securities Act and would not be registered pursuant to the registration statement of which this prospectus forms apart. Under the Backstop Agreement, with respect to the shares of our common stock acquired by the backstop provider in this offeringor in the Backstop Commitment, we agreed to file a resale registration statement, at our own expense, promptly following the saleof shares to the backstop provider pursuant to the Backstop Agreement (but in any event within ninety days thereafter), to registerthe resale of those shares by the backstop provider. In the event the number of shares available under the resale registrationstatement is insufficient, we will, to the extent necessary and permissible, amend the registration statement or file a new registrationstatement, so as to cover all registrable securities as soon as is practicable and permissible. We will use reasonable best effortsto keep the resale registration statement or a replacement registration statement effective pursuant to Rule 415 under the SecuritiesAct and available for sales of all of the shares subject thereto at all times until the earlier of (i) the date as of which thebackstop party may sell all of the registrable securities without restriction or limitation pursuant to Rule 144 under the SecuritiesAct (or successor thereto) and (ii) the date on which the backstop party has sold all the registrable securities.

U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following summary describes United Statesfederal income tax considerations to U.S. Holders (defined below) relating to the receipt, exercise and expiration of the rightsreceived by such U.S. Holders in this offering. It addresses only U.S. Holders that hold our common stock as capital assets withinthe meaning of Section 1221 of the Code. The following summary does not purport to be a complete analysis of all of the potentialU.S. federal income tax considerations that may be relevant to particular holders of rights in light of their particular circumstancesnor does it deal with persons that are subject to special tax rules, such as brokers, dealers in securities or currencies, financialinstitutions, insurance companies, tax-exempt entities or qualified retirement plans, holders of 4.99% or more of a class of ourstock by vote or value (whether such stock is actually or constructively owned), regulated investment companies, common trust funds,holders subject to the alternative minimum tax, persons holding rights or shares of our common stock as part of a straddle, hedgeor conversion transaction or as part of a synthetic security or other integrated transaction, traders in securities that electto use a mark-to-market method of accounting for their securities holdings, holders that have a “functional currency”other than the United States dollar, U.S. expatriates, and persons that are not U.S. Holders. In addition, the discussion belowdoes not address persons who hold an interest in a partnership or other entity that holds rights, tax consequences arising underthe laws of any state, local or non-U.S. jurisdiction or other U.S. federal tax consequences (e.g., estate or gift tax) otherthan those pertaining to the income tax, or the consequences of the Medicare tax on net investment income.

The following is based on the Code, the Treasuryregulations promulgated thereunder (the Treasury Regulations) and administrative rulings and court decisions, in each caseas in effect on the date hereof, all of which are subject to change, possibly with retroactive effect.

As used herein, the term “U.S. Holder”means a beneficial holder of rights that is:

The tax treatment of a partner in a partnership,or other entity treated as a partnership for U.S. federal tax purposes, may depend on both the partnership’s and the partner’sstatus. Partnerships that are beneficial owners of rights, and partners in such partnerships, are urged to consult their own taxadvisors regarding the U.S. federal, state, local and non-U.S. tax consequences to them of the receipt, exercise and expirationof the rights.

This summary is of a general nature only.It is not intended to constitute, and should not be construed to constitute, legal or tax advice to any particular holder. Holdersshould consult their own tax advisors as to the tax consequences in their particular circumstances.

U.S. Federal Income Tax Characterizationof the Rights Offering

We believe that the receipt of rights in thisoffering will be treated as a non-taxable transaction and not as a taxable distribution of property for U.S. federal income taxpurposes. However, holders of our common stock should be aware that we can provide no assurance that the IRS will take a similarview or would agree with the tax consequences described in this summary.

Receipt of the Rights

A U.S. Holder generally will not recognizeincome, gain, deduction or loss on the receipt of rights in this offering. A U.S. Holder’s tax basis in its rights will dependon the relative fair market value of the rights received by such U.S. Holder and such U.S. Holder’s shares of our commonstock at the time the rights are distributed. If the rights received by a U.S. Holder have a fair market value equal to at least15% of the fair market value of such U.S. Holder’s shares of our common stock on the date of the distribution, the U.S. Holdermust allocate its adjusted tax basis in its shares of our common stock between its common stock and the rights in proportion totheir then relative fair market values. If the rights received by a U.S. Holder have a fair market value that is less than 15%of the fair market value of such U.S. Holder’s shares of our common stock on the date of distribution, the U.S. Holder’stax basis in its rights will be zero unless the U.S. Holder elects to allocate its adjusted tax basis in its shares of our commonstock in the manner described in the previous sentence. A U.S. Holder makes this election by attaching a statement to its U.S.federal income tax return for the year in which rights are received. The election, once made, is irrevocable. A U.S. Holder makingthis election must retain a copy of the election and the tax return with which it was filed to substantiate the gain or loss, ifany, recognized on any later disposition of shares of our common stock received upon exercise of its rights. The holding periodfor the rights received by a U.S. Holder in this offering will include the U.S. Holder’s holding period for its shares ofour common stock with respect to which the rights are received.

Exercise of the Rights

A U.S. Holder will not recognize gain or losson the exercise of a right. The U.S. Holder’s tax basis in the shares of our common stock received as a result of the exerciseof a right will equal the sum of the exercise price paid for the shares of our common stock and the U.S. Holder’s tax basisin the right determined as described under “Receipt of the Rights” above. The holding period for the shares of ourcommon stock received as a result of the exercise of the right will begin on the exercise date.

A U.S. Holder that exercises rights shouldbe aware that the exercise of such rights could result in a loss that would otherwise be recognized with respect to such U.S. Holder’sother shares of our common stock to be disallowed under the “wash sale” rules. If the “wash sale” rulesapply to a U.S. Holder’s loss with respect to its other shares of our common stock, the U.S. Holder’s tax basis inany shares of our common stock received as a result of the exercise of rights would be increased to reflect the amount of the disallowedloss. U.S. Holders are urged to consult their tax advisors regarding how the “wash sale” rules apply to them in lightof their particular circumstances.

Expiration of the Rights

A U.S. Holder that allows a right to expirewill not recognize gain or loss and will not allocate any tax basis to the right as described under “Receipt of the Rights”above.

The above summary is not intended to constitutea complete analysis of all tax consequences relating to the receipt, exercise and expiration of the rights. You should consultyour own tax advisor concerning the tax consequences of your particular situation.

DESCRIPTION OF OUR CAPITAL STOCK

The following description of our common stocksummarizes the material terms and provisions of the common stock we may offer under this prospectus. The following descriptionof our capital stock does not purport to be complete and is subject to, and qualified in its entirety by, our amended and restatedcertificate of incorporation, or our Charter, and our second amended and restated bylaws, or our Bylaws, which are exhibits tothe registration statement of which this prospectus forms a part, and by applicable law. The terms of our common stock and warrantsto purchase our common stock may also be affected by Delaware law.

Authorized Capital Stock

Our authorized capital stock consists of 120,000,000shares of common stock, par value $0.01 per share, and 2,000,000 shares of undesignated preferred stock, par value $0.01 per share,of which 1,000,000 shares were designated as Series B Convertible Preferred Stock and 4,000 shares were designated as Series CConvertible Preferred Stock. As of August 14, 2017, there were 39,033,865 shares of common stock outstanding and 516 sharesof preferred stock outstanding, all of which were shares of Series Convertible Preferred Stock.

Common Stock

Holders of our common stock are entitled toone vote for each share held of record on all matters submitted to a vote of shareholders; provided, that, except as otherwiserequired by law, holders of common stock are not entitled to vote on any amendment to the Charter that changes the powers, preferences,rights or other terms of one or more series of undesignated preferred stock if the holders of the affected series are entitledto vote, separately or together, with the holders of one or more other such series, on such amendment pursuant to our Charter orDelaware General Corporation Law. Our Charter provides that our Board of Directors shall be divided into three classes, each consistingas nearly as reasonably may be possible of one-third of the total number of directors constituting the entire Board of Directors,with each class’s term expiring on a staggered basis. Newly-created directorships and vacancies on our Board of Directorsmay only be filled by a majority of the members of the incumbent board then in office, though less than a quorum, and not by ourstockholders. Directors may be removed from office only for cause by the affirmative vote of the holders of at least seventy-fivepercent (75%) of the outstanding shares entitled to be cast on the election of directors by the then-outstanding shares of allclasses and series of capital stock, voting together as a single class. Holders of common stock have no preemptive, redemptionor conversion rights and are not subject to future calls or assessments. No sinking fund provisions apply to our common stock.All outstanding shares are fully-paid and non-assessable. In the event of our liquidation, dissolution or winding up, after thesatisfaction in full of the liquidation preferences of holders of any preferred stock, holders of common stock are entitled toratable distribution of the remaining assets available for distribution to stockholders. Holders of common stock are entitled toreceive proportionately any such dividends declared by our Board of Directors, out of legally available funds for dividends, subjectto any preferences that may be applicable to any shares of preferred stock that may be outstanding at that time. The rights, preferencesand privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of sharesof any series of preferred stock that we may designate and issue in the future. To the extent our Shareholder Rights Agreementremains in effect at the time we sell any shares of common stock under this prospectus, such shares of common stock would alsobe accompanied by certain preferred stock purchase rights. See “Description of Capital Stock – Provisions of our Certificateof Incorporation and Bylaws and Delaware Anti-Takeover Law” for additional details regarding our Shareholder Rights Agreement.

Listing

Our common stock is listed on theNASDAQ Capital Market under the symbol “BSTG.” On August 14, 2017, the closing price for our common stock, asreported on the NASDAQ Capital Market, was $0.42 per share. As of the close of business on August 14, 2017, there wereapproximately 181 stockholders of record of our common stock. Prior to our name change on March 31, 2016 from HarvardApparatus Regenerative Technology, Inc. to Biostage, Inc., our common stock was listed on the NASDAQ Capital Market under thesymbol “HART.”

On July 16, 2015, we received a notice fromNASDAQ of non-compliance with its continuing listing rules, namely that the audit committee of our Board of Directors had two membersfollowing James McGorry’s appointment as our President and Chief Executive Officer, instead of the required minimum of threemembers. In accordance with NASDAQ continued listing rules, we were given until the earlier of our next annual shareholders’meeting or July 6, 2016 to add a third audit committee member. On March 10, 2016, Blaine McKee, Ph.D. was appointed as a memberof the Board of Directors and its audit committee, and we regained compliance with that requirement.

On November 10, 2015, we received a noticefrom NASDAQ of non-compliance with its listing rules regarding the requirement that the listed securities maintain a minimum bidprice of $1 per share. Based upon the closing bid price for the 30 consecutive business days preceding the notice, the Companyno longer met this requirement. However, the NASDAQ rules also provide the Company a period of 180 calendar days in which to regaincompliance and, in some circumstances, a second 180-day compliance period. On November 25, 2015, we regained compliance with theminimum bid price requirement when the closing price of our common stock was at least $1 per share for ten consecutive businessdays.

On November 18, 2016, we received a noticefrom NASDAQ of non-compliance with its listing rules regarding the minimum bid price requirement. We subsequently obtained stockholderapproval to effect a reverse stock split at the discretion of our board of directors. On May 18, 2017, we received a letter fromNASDAQ stating that that based upon our continued non-compliance with the minimum bid price requirement as of May 17, 2017, aswell as our non-compliance with the minimum $2.5 million stockholders equity requirement for continued listing on The Nasdaq CapitalMarket as of March 31, 2017, our common stock would be subject to delisting from NASDAQ unless the we timely requested a hearingbefore the Nasdaq Hearings Panel (the “Panel”).

We timely requested a hearing before the Panel,and as a result of that hearing, NASDAQ granted our request for continued listing. Our continued listing is subject to a numberof conditions, with the Panel’s decision ultimately requiring that we evidence full compliance with all requirements forcontinued listing on The Nasdaq Capital Market, including the $1.00 bid price and $2.5 million stockholders’ equity requirements,by no later than November 13, 2017. We must also complete this rights offering prior to that date, and must submit updated financialprojections to NASDAQ. There can be no assurances that the Company will be able to evidence compliance with all applicable requirementsfor continued listing on The Nasdaq Capital Market within the extension of time granted by the Panel.

Transfer Agent and Registrar

The transfer agent and registrar for our commonstock is Computershare.

2013 Equity Incentive Plan

Under our 2013 Equity Incentive Plan, we cangrant stock options to employees, directors and consultants. The 2013 Equity Incentive Plan also permits us to make grants of incentivestock options, non-qualified stock options, stock appreciation rights, deferred stock awards, restricted stock awards, unrestrictedstock awards, performance shares and dividend equivalent rights. We currently have reserved 9,960,000 shares of common stock forthe issuance of awards under the 2013 Equity Incentive Plan.

Employee Stock Purchase Plan

Under our employee stock purchase plan, participatingemployees can authorize us to withhold a portion of their base pay during consecutive six-month payment periods for the purchaseof shares of our common stock. At the conclusion of the period, participating employees can purchase shares of our common stockat eight-five percent (85%) of the lower of the fair market value of our common stock at the beginning or end of the period. Sharesare issued under the plan for the six-month periods ending June 30 and December 31. Under this plan, 150,000 sharesof common stock are authorized for issuance of which 89,947 were issued as of August 14, 2017.

Provisions of our Certificate of Incorporationand Bylaws and Delaware Anti-Takeover Law

Certain provisions of the Delaware GeneralCorporation Law and of our Charter and Bylaws could have the effect of delaying, deferring or discouraging another party from acquiringcontrol of us. These provisions, which are summarized below, are expected to discourage certain types of coercive takeover practicesand inadequate takeover bids and, as a consequence, they might also inhibit temporary fluctuations in the market price of our commonstock that often result from actual or rumored hostile takeover attempts. These provisions are also designed in part to encourageanyone seeking to acquire control of us to first negotiate with our Board of Directors. These provisions might also have the effectof preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish transactionsthat stockholders might otherwise deem to be in their best interests. However, we believe that the advantages gained by protectingour ability to negotiate with any unsolicited and potentially unfriendly acquirer outweigh the disadvantages of discouraging suchproposals, including those priced above the then-current market value of our common stock, because, among other reasons, the negotiationof such proposals could improve their terms.

Provisions of our Certificate of Incorporationand Bylaws

Our Charter, our Bylaws and Delaware law containprovisions that could discourage, delay or prevent a third party from acquiring us, even if doing so may be beneficial to our stockholders.In addition, these provisions could limit the price investors would be willing to pay in the future for shares of our common stock.The following are examples of such provisions in our Charter and Bylaws:

We implemented a Stockholder Rights Plan (the“Rights Plan”) on October 31, 2013. In general terms, the Rights Plan worked by imposing a significant penaltyupon any person or group that acquires twenty percent (20%) or more of our outstanding common stock, without the approval of ourBoard of Directors. In connection with the August 2017 Private Placement, our Board of Directors voted to terminate the RightsPlan.

Additionally, as required by the Delaware GeneralCorporation Law, any amendment of our Charter must first be approved by a majority of our Board of Directors and, as required byour Charter, thereafter be approved by a majority of the outstanding shares entitled to vote on the amendment, and a majority ofthe outstanding shares of each class entitled to vote thereon, voting together as a single class, except that the amendment ofthe provisions relating to stockholder action, directors, limitation of liability, the amendment of our Bylaws and Charter, forumand transactions with Harvard Bioscience must be approved by not less than seventy-five percent (75%) of the outstanding sharesentitled to vote on the amendment, and not less than seventy-five percent (75%) of the outstanding shares of each class entitledto vote thereon as a class. Our Bylaws may be amended by either (i) a vote of at least a majority of our entire Board of Directorsor (ii) a vote of the holders of at least seventy-five percent (75%) of the combined voting power of the outstanding shares ofall classes and series of our capital stock entitled to vote on such amendment, voting together as a single class.

Delaware Anti-Takeover Law

We are subject to the provisions of Section 203of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly-held Delaware corporation from engagingin a “business combination” with an “interested stockholder” for a three-year period following the timethat this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. A“business combination” includes, among other things, a merger, asset or stock sale or other transaction resulting ina financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliatesand associates, owns, or did own within three years prior to the determination of interested stockholder status, fifteen percent(15%) or more of the corporation’s voting stock. Under Section 203, a business combination between a corporation andan interested stockholder is prohibited unless it satisfies one of the following conditions:

Disclosure of SEC Position on Indemnificationfor Securities Act Liabilities

Insofar as indemnification for liabilities arising under the SecuritiesAct may be permitted for directors, officers and persons controlling our company, we have been informed that in the opinion ofthe SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

PLAN OF DISTRIBUTION

We are making this offering directly to the holders of our commonstock and holders of warrants to purchase our common stock on the effective date. We have not employed any brokers, dealers orunderwriters in connection with this offering and will not pay any underwriting commissions, fees or discounts in connection withthis offering. Some of our directors or officers may assist in this offering. These individuals will not receive any commissionsor compensation other than their normal directors’ fees or employment compensation.

We will bear all costs, expenses and fees in connection with thisoffering. We will pay the subscription agent a fee of $          and reimburse thesubscription agent for certain expenses incurred in connection with this offering. We estimate that our total expenses in connectionwith this offering, including fees to the subscription agent, will be approximately $            .

LEGAL MATTERS

Certain legal matters with respect to the validityof the securities offered by this prospectus will be passed upon for us by Burns & Levinson LLP, Boston, MA.

EXPERTS

The consolidated financial statements of Biostage,Inc. as of December 31, 2016 and 2015, and for each of the years in the two-year period ended December 31, 2016, have been incorporatedby reference herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accountingfirm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.

The audit report covering the December 31,2016 consolidated financial statements contains an explanatory paragraph that states that the Company has suffered recurring lossesfrom operations and will require additional financing to fund future operations which raise substantial doubt about its abilityto continue as a going concern. The consolidated financial statements do not include any adjustments that might result from theoutcome of that uncertainty.

WHERE YOU CAN FIND MORE INFORMATION

We are subject to the information requirementsof the Exchange Act and, in accordance therewith, file annual, quarterly and special reports, proxy statements and other informationwith the SEC. You may read and copy any document we file at the SEC’s Public Reference Room at 100 F Street, Washington,D.C. 20549. You may call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. Thesedocuments also may be accessed through the SEC’s electronic data gathering, analysis and retrieval system, or EDGAR, viaelectronic means, including the SEC’s home page on the Internet (www.sec.gov).

We post on our public website (http://www.biostage.com)our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to thosereports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicableafter we electronically file such material with, or furnish it to, the SEC. Our website and the information contained on that site,or connected to that site, are not incorporated into and are not a part of this prospectus.

We have the authority to designate and issuemore than one class or series of stock having various preferences, conversion and other rights, voting powers, restrictions, limitationsas to dividends, qualifications, and terms and conditions of redemption. See “Description of Capital Stock.” We willfurnish a full statement of the relative rights and preferences of each class or series of our stock which has been so designatedand any restrictions on the ownership or transfer of our stock to any shareholder upon request and without charge. Written requestsfor such copies should be directed to Biostage, Inc., 84 October Hill Road, Suite 11, Holliston, Massachusetts 01746-1371, or bytelephone request to (774) 233-7300.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The SEC allows us to incorporate by referencethe information and reports we file with them under File No. 001-35853, which means that we can disclose important informationto you by referring you to those publicly available documents. The information incorporated by reference is an important part ofthis prospectus, and information that we file later with the SEC will automatically update and supersede the information alreadyincorporated by reference. We are incorporating by reference the documents listed below, which we have already filed with the SEC,and all documents subsequently filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, except as to anyportion of any future report or document that is not deemed filed under such provisions, prior to the termination of the offering:

Any statement contained in a document incorporatedor deemed to be incorporated by reference in this prospectus is modified or superseded for purposes of the prospectus to the extentthat a statement contained in this prospectus or in any other subsequently filed document that also is or is deemed to be incorporatedby reference herein modifies or supersedes such statement.

Upon request, we will provide, without charge,to each person, including any beneficial owner, to whom a copy of this prospectus is delivered a copy of the documents incorporatedby reference into this prospectus. You may request a copy of these filings, and any exhibits we have specifically incorporatedby reference as an exhibit in this prospectus, at no cost by writing or telephoning us at the following address:

Biostage, Inc.

84 October Hill Road, Suite 11

Holliston, Massachusetts 01746-1371

Telephone: (774) 233-7300.

This prospectus is part of a registration statementwe filed with the SEC. We have incorporated exhibits into this registration statement. You should read the exhibits carefully forprovisions that may be important to you.

We also incorporate by reference any futurefilings, other than current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such form that arerelated to such items, made with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, in each case, otherthan those documents or the portions of those documents deemed to be furnished and not filed in accordance with SEC rules, untilthe offering of the securities under the registration statement of which this prospectus forms a part is terminated or completed.

Information in such future filings updatesand supplements the information provided in this prospectus. Any statements in any such future filings will be deemed to modifyand supersede any information in any document we previously filed with the SEC that is incorporated or deemed to be incorporatedherein by reference to the extent that statements in the later filed document modify or replace such earlier statements.

Because we are incorporating by reference future filings with theSEC, this prospectus is continually updated and later information filed with the SEC may update and supersede some of the informationincluded or incorporated by reference in this prospectus. This means that you must look at all of the SEC filings that we incorporateby reference to determine if any of the statements in this prospectus or in any document previously incorporated by referencehave been modified or superseded.

You should rely only on the information incorporatedby reference or provided in this prospectus or any prospectus supplement. We have not authorized anyone to provide you with differentinformation. We are not making an offer of these securities in any state where the offer is not permitted. You should not assumethat the information in this prospectus or in the documents incorporated by reference is accurate as of any date other than thedate on the front of this prospectus or those documents.

Up to                  Sharesof Common Stock

Issuable Upon Exercise ofRights to Subscribe for Such Shares at $      per Share

PROSPECTUS

                      ,2017

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

The expenses payable by Biostage, Inc. (the“Registrant” or the “Company”) in connection with the issuance and distribution of the securities beingregistered are set forth below. Each item listed is estimated, except for the Securities and Exchange Commission (the “SEC”)registration fee.

As permitted by Section 102 of the DelawareGeneral Corporation Law, we have adopted provisions in our Amended and Restated Certificate of Incorporation, or our Charter, andSecond Amended and Restated Bylaws, or our Bylaws, that limit or eliminate the personal liability of our directors for a breachof their fiduciary duty of care as a director. The duty of care generally requires that, when acting on behalf of the corporation,directors exercise an informed business judgment based on all material information reasonably available to them. Consequently,a director will not be personally liable to us or our stockholders for monetary damages or breach of fiduciary duty as a director,except for liability for:

These limitations of liability do not affectthe availability of equitable remedies such as injunctive relief or rescission. Our Charter also authorizes us to indemnify ourofficers, directors and other agents to the fullest extent permitted under Delaware law.

As permitted by Section 145 of the DelawareGeneral Corporation Law, our Charter and Bylaws provide that we will indemnify any person who was or is a party or is threatenedto be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that such person, ora person of whom he or she is the legal representative, is or was our director or officer, or by reason of the fact that our directoror officer is or was serving, at our request, as a director, officer, employee or agent of another corporation or of a partnership,joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by us.We will indemnify such persons against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlementactually and reasonably incurred in connection with such action if such person acted in good faith and in a manner reasonably believedto be in our best interests and, with respect to any criminal proceeding, had no reason to believe such person’s conductwas unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses(including attorneys’ fees) incurred in connection with the defense or settlement of such actions, and court approval isrequired before there can be any indemnification where the person seeking indemnification has been found liable to us. Any amendmentof this provision will not reduce our indemnification obligations relating to actions taken before an amendment.

Our Charter, filed as an exhibit to our RegistrationStatement on Form 10-12B filed with the SEC on July 31, 2013, and our Bylaws, filed as an exhibit to our Current Report on Form8-K filed with the SEC on March 31, 2016, provide for the indemnification provisions described above and elsewhere herein. In addition,we have entered into separate indemnification agreements, a form of which is attached as Exhibit 10.7 to our Registration Statementon Form 10-12B, filed with the Securities and Exchange Commission on July 31, 2013, with our directors and officers which may bebroader than the specific indemnification provisions contained in the Delaware General Corporation Law.

These indemnification agreements generallyrequire us, among other things, to indemnify our officers and directors against liabilities that may arise by reason of their statusor service as directors or officers, subject to certain exceptions and limitations. These indemnification agreements also requireus to advance any expenses incurred by the directors or officers as a result of any proceeding against them as to which they couldbe indemnified. In addition, we have obtained policies that insure our directors and officers and those of our subsidiaries againstcertain liabilities they may incur in their capacity as directors and officers. Under these policies, the insurer, on our behalf,may also pay amounts for which we have granted indemnification to the directors or officers. These indemnification provisions andthe indemnification agreements may be sufficiently broad to permit indemnification of our officers and directors for liabilities,including reimbursement of expenses incurred, arising under the Securities Act.

Set forth below is information regarding theshares of common stock and preferred stock and the warrants issued, and options granted, by us in the three years preceding thefiling of this registration statement that were not registered under the Securities Act. The offers, sales and issuances of thesecurities described below were exempt from registration under the Securities Act by virtue of Section 4(a)(2) of the SecuritiesAct.

Aspire Capital, LLCTransaction

On December 15, 2015, we entered into a CommonStock Purchase Agreement (the “Purchase Agreement”) with Aspire Capital Fund, LLC, an Illinois limited liability company(“Aspire Capital”), which provided that, upon the terms and subject to the conditions and limitations set forth therein,Aspire Capital was committed to purchase up to an aggregate of $15.0 million of shares of our common stock (the “PurchaseShares”) over the 30-month term set forth in the Purchase Agreement.

On December 15, 2015, we issued 150,000 sharesof our common stock to Aspire Capital in consideration for entering into the Purchase Agreement (the “Commitment Shares”)and sold 500,000 shares to Aspire Capital for an aggregate purchase price of $1,000,000 (the “Initial Purchase Shares”).Under the Purchase Agreement, the Purchase Shares could be sold by us to Aspire Capital on any business day in two ways: (1) througha regular purchase of up to 150,000 shares at a known price based on the market price of our common stock prior to the time ofeach sale, and (2) through a VWAP purchase of a number of shares up to 30% of the volume traded on the purchase date at a priceequal to the lessor of the closing sale price or 97% of the volume weighted average price for such purchase date.

On May 12, 2016, we issued 150,000 shares ofcommon stock under this arrangement in exchange for gross proceeds of approximately $371,000. We terminated the Aspire PurchaseAgreement effective as of May 17, 2016.

May 2016 Offering

On May 15, 2016, we entered into a SecuritiesPurchase Agreement (the “Purchase Agreement”) with certain investors (the “Investors”) for the sale byus of 2,836,880 registered shares of our common stock at a purchase price of $1.7625 per share. Concurrently with the sale of theshares of our common stock, pursuant to the Purchase Agreement we also sold unregistered warrants to purchase 1,418,440 sharesof our common stock. The aggregate gross proceeds for the sale of the shares of common stock and the warrants was approximately$5.0 million.  Subject to certain ownership limitations, the warrants will be initially exercisable commencing six monthsfrom the issuance date at an exercise price equal to $1.7625 per share of common stock, subject to adjustments as provided underthe terms of the warrants. The warrants are exercisable for five years from the initial exercise date. The closing of the salesof these securities under the Purchase Agreement occurred on May 19, 2016.

We entered into an engagement letter (the “EngagementLetter”) H.C. Wainwright & Co., LLC (“Wainwright”), pursuant to which Wainwright agreed to serve as exclusiveplacement agent for the issuance and sale of our shares of common stock and the warrants. Pursuant to the Engagement Letter, wegranted to Wainwright unregistered warrants to purchase up to 5% of the aggregate number of shares sold in the transactions (the“Wainwright Warrants”). The Wainwright Warrants have substantially the same terms as the warrants.

August 2017 PrivatePlacement

On August 11, 2017, we entered intoa Securities Purchase Agreement (the “Purchase Agreement”) with the backstop party forthe sale by us of 8,061,905 shares of our common stock at a purchase price of $0.315 per share and 516 shares of our Series C ConvertiblePreferred Stock at a purchase price of $1,000 per share for aggregate gross proceeds of approximately $3.05 million. The sharesof Series C Convertible Preferred Stock are subject to conversion limitations so that so that the holders thereof may not effectany conversion to the extent that following the conversion, the holders, together with their affiliates, would own more than 19.99%of our outstanding shares of common stock.

Backstop Agreement

The offer and sale of securities issuable underthe Backstop Agreement was, and will be, made in a transaction exempt from the registration requirements of the Securities Actby virtue of the exemption in Section 4(2) of the Securities Act.

A list of exhibits filed with this RegistrationStatement on Form S-1 is set forth on the Exhibit Index and is incorporated herein by reference.

(a) The undersigned Registrant hereby undertakes:

provided, however, that paragraphs (1)(i),(1)(ii) and (1)(iii) above do not apply if the information required to be included in a post-effective amendment by thoseparagraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d)of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are incorporated by reference in theregistration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registrationstatement.

(b) The undersigned registrant herebyundertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annualreport pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’sannual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statementshall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securitiesat that time shall be deemed to be the initial bona fide offering thereof.

(c) Insofar as indemnification for liabilitiesarising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant tothe foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnificationis against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnificationagainst such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controllingperson of the registrant in the successful defense of any action, suit or proceeding) is asserted against the registrant by suchdirector, officer or controlling person in connection with the securities being registered, the registrant will, unless in theopinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction thequestion of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governedby the final adjudication of such issue.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, theregistrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized,in the Town of Holliston, Commonwealth of Massachusetts, on this 15th day of August, 2017.

KNOW ALL BE THESE PRESENTS, that each personwhose signature appears below hereby constitutes and appoints James McGorry and Thomas McNaughton, and each of them singly (withfull power to each of them to act alone), as such person’s true and lawful attorney-in-fact and agent, with full power ofsubstitution and resubstitution, for such person and in such person’s name, place and stead, in any and all capacities, tosign any or all amendments (including, without limitation, post-effective amendments) to this registration statement (or any registrationstatement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933),and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission,granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisiteand necessary to be done in and about the premises, as fully to all intents and purposes as such person might or could do in person,hereby ratifying and confirming all that said attorney-in-fact and agent, or any substitute or substitutes of them, may lawfullydo or cause to be done by virtue hereof.

Pursuant to the requirements of the SecuritiesAct of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

EXHIBIT INDEX