What changed in this filing

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Item 1. Financial Statements

2021-07-30 compared with 2021-05-14 · 379 added, 920 removed, 142 unchanged (90% of the section changed)

FINANCIAL STATEMENTS

The accompanying consolidated financial statements

have been prepared by the Company and are unaudited.

In the opinion of management, all adjustments (which include only normal recurring

adjustments) necessary to present fairly the financial position at March 31, 2021 and December 31, 2020, and the results of operations

and cash flows for the three months ended March 31, 2021 and 2020, respectively, have been made.

Certain information and footnote disclosures

normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of

America have been condensed or omitted.

It is suggested that these financial statements be read in conjunction with the financial statements

and notes thereto included in the Company’s audited financial statements for the year ended December 31, 2020 in the Company’s

Annual Report on Form 10-K.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the

operating results for the full year.

Actinium Pharmaceuticals, Inc.

Consolidated Balance Sheets

(amounts in thousands, except share and per share

accompanying consolidated financial statements have been prepared by the Company and are unaudited.

In the opinion of management, all

adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at June 30, 2021 and

December 31, 2020, and the results of operations and cash flows for the three and six months ended June 30, 2021 and 2020, respectively,

have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting

principles generally accepted in the United States of America have been condensed or omitted.

It is suggested that these financial statements

be read in conjunction with the financial statements and notes thereto included in the Company’s audited financial statements for

the year ended December 31, 2020 in the Company’s Annual Report on Form 10-K.

The results of operations for the three and six months

ended June 30, 2021 are not necessarily indicative of the operating results for the full year.

Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

in thousands, except share and per share data)

Current Assets:

Cash and cash equivalents

Restricted cash –

Restricted cash – current

Prepaid expenses and other current assets

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Restricted cash

Liabilities and Stockholders’

Liabilities and Stockholders’ Equity

Current Liabilities:

6 unchanged sentences

Total Liabilities

Commitments and contingencies

Stockholders’

Commitments and contingencies (Note 2)

Stockholders’ Equity:

Preferred stock, $ 0.001 par value;

5 unchanged sentences

Accumulated deficit

Total Stockholders’

Total Liabilities and Stockholders’

See accompanying notes to the consolidated financial

Actinium Pharmaceuticals, Inc.

Consolidated Statements of Operations

(amounts in thousands, except share and per share

Three Months Ended

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

See accompanying notes to the condensed consolidated

financial statements.

Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations

in thousands, except share and per share data)

Six Months Ended

Other revenue

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Total other income

Net loss per share of common stock –

basic and diluted

Weighted average shares of common stock outstanding –

basic and diluted

See accompanying notes to the consolidated financial

Actinium Pharmaceuticals, Inc.

Consolidated Statement of Changes in Stockholders’

For the Period from January 1, 2021 to March

(amounts in thousands, except share amounts)

Stockholders’

Deemed dividend for warrant down-round protection provision

Net loss applicable to common stockholders

Net loss per share of common stock – basic and diluted

Weighted average shares of common stock outstanding, including outstanding pre-funded warrants– basic and diluted

See accompanying notes to the condensed consolidated

financial statements.

Pharmaceuticals, Inc.

Consolidated Statement of Changes in Stockholders’ Equity

the Three and Six Months Ended June 30, 2021

in thousands, except share amounts)

Stockholders’

Balance, January 1, 2021

$ ( 230,974 )

Stock-based compensation

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Balance, March 31, 2021

See accompanying notes to the consolidated financial

Actinium Pharmaceuticals, Inc.

Consolidated Statement of Changes in Stockholders’

For the Period from January 1, 2020 to March

(amounts in thousands, except share amounts)

Stockholders’

$ ( 236,294 )

Stock-based compensation

Sale of common stock, net of costs

Issuance of shares from exercise of stock options

Balance, June 30, 2021

$ ( 241,315 )

See accompanying notes to the condensed consolidated

financial statements.

Pharmaceuticals, Inc.

Consolidated Statement of Changes in Stockholders’ Equity

the Three and Six Months Ended June 30, 2020

in thousands, except share amounts)

Stockholders’

Balance, January 1, 2020

$ ( 208,758 )

Stock-based compensation

1 unchanged sentence

Balance, March 31, 2020

See accompanying notes to the consolidated financial

Actinium Pharmaceuticals, Inc.

$ ( 214,428 )

Stock-based compensation

Issuance of common stock from exercise of pre-funded warrants

Sale of common stock and pre-funded warrants, net of costs

Deemed dividend for warrant down-round protection provision

Balance, June 30, 2020

$ ( 219,054 )

See accompanying notes to the condensed consolidated

financial statements.

Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

(amounts in thousands)

Three Months Ended

in thousands)

Six Months Ended

Cash Flows From Operating Activities:

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Payments on finance leases

Sales of shares of common stock and pre-funded warrants, net of costs

Sales of shares of common stock, net of costs

Proceeds from exercise of warrants

Proceeds from exercise of stock options

Proceeds from exercise of pre-funded warrants

Net Cash Provided By Financing Activities

4 unchanged sentences

Cash paid for interest on note payable

Cash paid for income taxes

See accompanying notes to the consolidated financial

Actinium Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements

Note 1 - Description of Business and Summary

of Significant Accounting Policies

Cash paid for taxes

Supplemental disclosure of non-cash flow information:

Deemed dividend for warrant down-round protection provision

See accompanying notes to the condensed consolidated

financial statements.

Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

1 - Description of Business and Summary of Significant Accounting Policies

Nature of Business

- Actinium Pharmaceuticals, Inc.

(the “Company”, “Actinium”, or “We”) is a clinical-stage,

biopharmaceutical company applying its proprietary platform technology and deep understanding of radiobiology to the development of

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CD45 and CD33, both of which are expressed in multiple hematologic cancers.

The Company’s clinical programs are focused on two

primary areas:

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combination with other therapeutic modalities.

The Company’s product development strategy is actively informed by clinical

data with its ARCs in over 500 patients, including the ongoing pivotal Phase 3 SIERRA trial for the Company’s lead asset

The clinical pipeline has emanated from its Antibody Warhead Enabling (“AWE”) technology platform, which is

protected by over 140 issued and pending patents, trade secrets and know-how and is being utilized in a collaborative research

partnership with Astellas Pharma, Inc., (“Astellas”).

The AWE technology platform is also being used to advance

Actinium’s research objectives focused on developing next-generation targeted radiotherapies.

To accelerate development efforts the Company is undertaking an expansion

of its R&D organization and research laboratories to enable it to more effectively leverage its drug development experience to advance

candidates to clinical trials.

Basis of Presentation -

Unaudited Interim Financial Information - The accompanying unaudited interim consolidated financial statements and related notes have

been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for

interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission

(the “SEC”) with respect to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the information

and footnotes required by U.S.

The Company’s product development strategy is actively informed by clinical

data with its ARCs in over 500 patients, including the ongoing pivotal Phase 3 SIERRA trial for the Company’s lead asset

The clinical pipeline has emanated from its Antibody Warhead Enabling (“AWE”) technology platform, which is

protected by over 160 issued patents and pending patent applications, trade secrets and know-how and is being utilized in a

collaborative research partnership with Astellas Pharma, Inc., (“Astellas”).

The AWE technology platform is also being

used to advance Actinium’s research objectives focused on developing next-generation targeted radiotherapies.

To accelerate

development efforts the Company is undertaking an expansion of its R&D organization and research laboratories to enable it to

more effectively leverage its drug development experience to advance candidates to clinical trials.

of Presentation - Unaudited Interim Financial Information - The accompanying unaudited interim consolidated financial statements

and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and

Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include

all of the information and footnotes required by U.S.

GAAP for complete financial statements.

The unaudited interim consolidated financial statements furnished

reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement

of the results for the interim periods presented.

Interim results are not necessarily indicative of the results for the full year.

unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and

notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2020.

Principles of Consolidation

- The consolidated financial statements include the Company’s accounts and those of the Company’s wholly owned subsidiaries.

Use of Estimates in Financial

Statement Presentation - The preparation of these consolidated financial statements in conformity with U.S.

GAAP requires management

to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial

statements and the reported amounts of expenses during the reporting period.

Actual results could differ from those estimates.

Impact of COVID–19

Pandemic on Financial Statements - In December 2019, a novel strain of COVID-19 was reported in China.

Since then, COVID-19 has spread

The spread of COVID-19 from China to other countries has resulted in the World Health Organization (“WHO”) declaring

the outbreak of COVID-19 as a “pandemic,”

or a worldwide spread of a new disease, on March 11, 2020.

Many countries around

the world have imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus and have closed non-essential

businesses, and as of the date of this report, many local jurisdictions continue to have such restrictions in place.

As local jurisdictions continue

to put restrictions in place, the Company’s ability to continue to operate its business may also be limited.

Such events may result

in a period of business, supply and drug product manufacturing disruption, and in reduced operations, any of which could materially affect

the Company’s business, financial condition and results of operations.

In response to COVID-19, the Company implemented remote working

and thus far, has not experienced a significant disruption or delay in its operations as it relates to the clinical development or drug

production of our drug candidates.

The spread of COVID-19, which

has caused a broad impact globally, may materially affect the Company economically.

While the ultimate economic impact brought by, and

the duration of, the COVID-19 pandemic may be difficult to assess or predict, including new information which may emerge concerning the

severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others, the pandemic has resulted in significant disruptions

in the general commercial activity and the global economy and caused financial market volatility and uncertainty in significant and unforeseen

ways in the recent months.

A continuation or worsening of the levels of market disruption and volatility seen in the recent past could

have an adverse effect on the Company’s ability to access capital, which could in the future negatively affect the Company’s

In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect the Company’s

business and the value of the Company’s common stock.

Additionally, COVID-19 may

result in delays in receiving approvals from local and foreign regulatory authorities, delays in necessary interactions with IRB’s

or Institutional Review Boards, local and foreign regulators, ethics committees and other important agencies and contractors due to limitations

in employee resources or forced furlough of government employees.

The unaudited interim consolidated financial

statements furnished reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary

for a fair statement of the results for the interim periods presented.

Interim results are not necessarily indicative of the results

for the full year.

These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated

financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2020.

of Consolidation - The consolidated financial statements include the Company’s accounts and those of the Company’s wholly

owned subsidiaries.

of Estimates in Financial Statement Presentation - The preparation of these consolidated financial statements in conformity with

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date

of the consolidated financial statements and the reported amounts of expenses during the reporting period.

Actual results could differ

from those estimates.

of COVID–19 Pandemic on Financial Statements - The global health crisis caused by the novel coronavirus (“COVID-19”)

pandemic and its resurgences has and may continue to negatively impact global economic activity, which, despite progress in vaccination

efforts, remains uncertain and cannot be predicted with confidence.

In addition, a new Delta variant of COVID-19, which appears to be

the most transmissible variant to date, has begun to spread globally.

The impact of the Delta variant cannot be predicted at this time,

and could depend on numerous factors, including vaccination rates among the population, the effectiveness of COVID-19 vaccines against

the Delta variant and the response by governmental bodies and regulators.

Many countries around the

world have continued to impose quarantines and restrictions on travel and mass gatherings to slow the spread of the virus.

the Company’s ability to continue to operate its business may also be limited.

Such events may result in a period of business, supply

and drug product manufacturing disruption, and in reduced operations, any of which could materially affect the Company’s business,

financial condition and results of operations.

In response to COVID-19, the Company implemented remote working and thus far, has not experienced

a significant disruption or delay in its operations as it relates to the clinical development or drug production of our drug candidates.

continuation or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on the

Company’s ability to access capital, which could in the future negatively affect the Company’s liquidity.

In addition, a recession

or market correction resulting from the spread of COVID-19 could materially affect the Company’s business and the value of the Company’s

common stock.

Additionally,

COVID-19 may result in delays in receiving approvals from local and foreign regulatory authorities, delays in necessary interactions

with IRB’s or Institutional Review Boards, local and foreign regulators, ethics committees and other important agencies and contractors

due to limitations in employee resources or forced furlough of government employees.

To date, COVID-19 has not

had a financial impact on the Company.

However, COVID-19 has caused severe disruptions in transportation and limited access to the Company’s

facility, resulting in limited support from its staff and professional advisors.

The Company continues to monitor the impacts of COVID-19

on the global economy and on its business operations.

However, at this time, it is difficult to predict how long the potential operational

impacts of COVID-19 will last or to what degree further disruption might impact the Company’s operations and financial results.

Cash, Cash Equivalents

and Restricted Cash - The Company considers all highly liquid accounts with original maturities of three months or less to be cash

Balances held by the Company are typically in excess of Federal Deposit Insurance Corporation insured limits.

The following is a summary

of cash, cash equivalents and restricted cash at March 31, 2021 and December 31, 2020:

The Company continues to monitor the impacts of COVID-19 on the global economy and on its business

However, at this time, it is difficult to predict how long the potential operational impacts of COVID-19 will last or to what

degree further disruption might impact the Company’s operations and financial results.

Cash Equivalents and Restricted Cash - The Company considers all highly liquid accounts with original maturities of three months

or less to be cash equivalents.

Balances held by the Company are typically in excess of Federal Deposit Insurance Corporation insured

following is a summary of cash, cash equivalents and restricted cash at June 30, 2021 and December 31, 2020:

(in thousands)

Cash and cash equivalents

Restricted cash –

Restricted cash – current

Restricted cash – long-term

Cash, cash equivalents and restricted cash

Current restricted cash relates

to credit card accounts, while long-term restricted cash relates to a certificate of deposit held as collateral for a letter of credit

issued in connection with the Company’s lease for corporate office space.

Leases –

Company has operating and finance leases for corporate office space, office equipment and furniture located at the corporate office space.

restricted cash relates to credit card accounts, while long-term restricted cash relates to a certificate of deposit held as collateral

for a letter of credit issued in connection with the Company’s lease for corporate office space.

- The Company has operating and finance leases for corporate office space, office equipment and furniture located at the corporate

office space.

Leases with an initial term of 12 months or less are not recorded on the balance sheet;

lease expense for these leases is recognized on

a straight-line basis over the lease term.

Fair Value of Financial

Instruments - Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly

transaction between market participants.

A fair value hierarchy has been established for valuation inputs that gives the highest priority

to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

Revenue Recognition -

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue From Contracts With Customers

(“ASC 606”).

Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services,

in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services.

revenue recognition for arrangements within the scope of ASC 606, the entity performs the following five steps:

(i) identify the contract(s)

with a customer;

lease expense for these leases

is recognized on a straight-line basis over the lease term.

See Note 3 for additional information.

Value of Financial Instruments - Fair value is defined as the price that would be received to sell an asset, or paid to transfer

a liability, in an orderly transaction between market participants.

A fair value hierarchy has been established for valuation inputs

that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable

Recognition - The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue From

Contracts With Customers (“ASC 606”).

Under ASC 606, an entity recognizes revenue when its customer obtains control of

promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods

To determine revenue recognition for arrangements within the scope of ASC 606, the entity performs the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price, including variable

consideration, if any;

(iii) determine the transaction

price, including variable consideration, if any;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue as

the entity satisfies a performance obligation.

The Company only applies the five-step model to contracts when it is probable that the

entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer.

At contract inception,

once the contract is determined to be within the scope of ASC 606, the Company assesses whether the promised goods or services promised

within each contract are distinct and, therefore, represent a separate performance obligation.

Goods and services that are determined

not to be distinct are combined with other promised goods and services until a distinct bundle is identified.

In determining whether goods

or services are distinct, the Company evaluates certain criteria, including whether (i) the customer can benefit from the good or

service either on its own or together with other resources that are readily available to the customer (capable of being distinct) and

(ii) the good or service is separately identifiable from other goods or services in the contract (distinct in the context of the

The Company then determines

the transaction price, which is the amount of consideration it expects to be entitled from a customer in exchange for the promised goods

or services for each performance obligation and recognizes the associated revenue as each performance obligation is satisfied.

The Company’s

estimate of the transaction price for each contract includes all variable consideration to which it expects to be entitled.

Variable consideration

includes payments in the form of collaboration milestone payments.

If an arrangement includes collaboration milestone payments, the Company

evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price

using the most likely amount method.

If it is probable that a significant revenue reversal would not occur, the associated milestone value

is included in the transaction price.

ASC 606 requires the

Company to allocate the arrangement consideration on a relative standalone selling price basis for each performance obligation after determining

the transaction price of the contract and identifying the performance obligations to which that amount should be allocated.

standalone selling price is defined in the revenue standard as the price at which an entity would sell a promised good or service separately

to a customer.

The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance

obligation as each performance obligation is satisfied, either at a point in time or over time, and if over time, recognition is based

on the use of an output or input method.

Collaborative Arrangements

- The Company follows the accounting guidance for collaboration agreements with third parties, which requires that certain transactions

between the Company and collaborators be recorded in its consolidated statements of operations and comprehensive loss on either a gross

basis or net basis, depending on the characteristics of the collaborative relationship, and requires enhanced disclosure of collaborative

relationships.

The Company evaluates its collaboration agreements for proper classification in its consolidated statements of operations

and comprehensive loss based on the nature of the underlying activity.

When the Company has concluded that it has a customer relationship

with one of its collaborators, the Company follows the guidance of ASC 606 .

Research and Development

Costs - Research and development costs are expensed as incurred.

These costs include the costs of manufacturing drug product, the

costs of clinical trials, costs of employees and associated overhead, and depreciation and amortization costs related to facilities and

Research and development reimbursements are recorded by the Company as a reduction of research and development costs.

Share-Based Payments -

The Company estimates the fair value of each stock option award at the grant date by using the Black-Scholes option pricing model.

fair value determined represents the cost for the award and is recognized over the vesting period during which an employee is required

to provide service in exchange for the award.

and (v) recognize revenue as the entity satisfies a performance obligation.

The Company only applies the five-step model to contracts

when it is probable that the entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers

to the customer.

contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses whether the promised goods

or services promised within each contract are distinct and, therefore, represent a separate performance obligation.

Goods and services

that are determined not to be distinct are combined with other promised goods and services until a distinct bundle is identified.

determining whether goods or services are distinct, the Company evaluates certain criteria, including whether (i) the customer can

benefit from the good or service either on its own or together with other resources that are readily available to the customer (capable

of being distinct) and (ii) the good or service is separately identifiable from other goods or services in the contract (distinct

in the context of the contract).

Company then determines the transaction price, which is the amount of consideration it expects to be entitled from a customer in exchange

for the promised goods or services for each performance obligation and recognizes the associated revenue as each performance obligation

is satisfied.

The Company’s estimate of the transaction price for each contract includes all variable consideration to which it

expects to be entitled.

Variable consideration includes payments in the form of collaboration milestone payments.

If an arrangement includes

collaboration milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates

the amount to be included in the transaction price using the most likely amount method.

If it is probable that a significant revenue

reversal would not occur, the associated milestone value is included in the transaction price.

606 requires the Company to allocate the arrangement consideration on a relative standalone selling price basis for each performance

obligation after determining the transaction price of the contract and identifying the performance obligations to which that amount should

be allocated.

The relative standalone selling price is defined in the revenue standard as the price at which an entity would sell a promised

good or service separately to a customer.

The Company then recognizes as revenue the amount of the transaction price that is allocated

to the respective performance obligation as each performance obligation is satisfied, either at a point in time or over time, and if

over time, recognition is based on the use of an output or input method.

Collaborative

Arrangements - The Company follows the accounting guidance for collaboration agreements with third parties, which requires that certain

transactions between the Company and collaborators be recorded in its consolidated statements of operations and comprehensive loss on

either a gross basis or net basis, depending on the characteristics of the collaborative relationship, and requires enhanced disclosure

of collaborative relationships.

The Company evaluates its collaboration agreements for proper classification in its consolidated statements

of operations and comprehensive loss based on the nature of the underlying activity.

When the Company has concluded that it has a customer

relationship with one of its collaborators, the Company follows the guidance of ASC 606 .

and Development Costs - Research and development costs are expensed as incurred.

These costs include the costs of manufacturing drug

product, the costs of clinical trials, costs of employees and associated overhead, and depreciation and amortization costs related to

facilities and equipment.

Research and development reimbursements are recorded by the Company as a reduction of research and development

Payments - The Company estimates the fair value of each stock option award at the grant date by using the Black-Scholes option pricing

The fair value determined represents the cost for the award and is recognized over the vesting period during which an employee

is required to provide service in exchange for the award.

The Company accounts for forfeitures of stock options as they occur.

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and warrants using the treasury stock method.

For periods of net loss, diluted loss per share is calculated similarly to basic loss per

share because the impact of all potential dilutive common shares is anti-dilutive.

For the three months ended March 31, 2021 and 2020,

the Company’s potentially dilutive shares, which include outstanding common stock options and warrants have not been included in

the computation of diluted net loss per share as the result would have been anti-dilutive.

The Company issued pre-funded warrants in April 2020 and June 2020 that were considered

outstanding shares for the purposes of calculating net loss per common share for the three months and six months ended June 30, 2020,

see Note 5 for additional information.

As of December 31, 2020, all of the pre-funded warrants were exercised and there were no pre-funded

warrants outstanding during the six months ended June 30, 2021.

periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all potential dilutive

common shares is anti-dilutive.

For the three months and six months ended June 30, 2021 and 2020, the Company’s potentially dilutive

shares, which include outstanding common stock options and warrants have not been included in the computation of diluted net loss per

share as the result would have been anti-dilutive.

As of June 30, 2021 and 2020, outstanding options and warrants are as follows:

(in thousands)

Accounting Standards Recently

Adopted - In August 2020, FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an

Entity’s Own Equity , which, among other things, provides guidance on how to account for contracts on an entity’s own equity.

This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity.

Specifically, the

ASU eliminated the need for the Company to assess whether a contract on the entity’s own equity (1) permits settlement in unregistered

shares, (2) whether counterparty rights rank higher than shareholder’s rights, and (3) whether collateral is required.

the ASU requires incremental disclosure related to contracts on the entity’s own equity and clarifies the treatment of certain financial

instruments accounted for under this ASU on earnings per share.

This ASU may be applied on a full retrospective of modified retrospective

This ASU is effective January 1, 2022 and interim periods presented, although early adoption of this ASU was permitted effective

January 1, 2021.

The Company early adopted this standard effective January 1, 2021 and the standard did not have a significant impact

on the Company’s financial statements.

Note 2 - Commitments and Contingencies

The Company has entered

into agreements with third parties for the rights to certain intellectual property, manufacturing and clinical trial services under

which the Company may incur obligations to make payments including upfront payments as well as milestone and royalty payments.

notable inclusion in this category is:

On June 15, 2012, the Company entered into a license and sponsored research agreement with Fred Hutchinson Cancer Research Center (“FHCRC”) to build upon previous and ongoing clinical trials with BC8 (licensed antibody).

Standards Recently Adopted - In August 2020, FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic

470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments

and Contracts in an Entity’s Own Equity , which, among other things, provides guidance on how to account for contracts on an

entity’s own equity.

This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and

Specifically, the ASU eliminated the need for the Company to assess whether a contract on the entity’s own equity (1) permits

settlement in unregistered shares, (2) whether counterparty rights rank higher than shareholder’s rights, and (3) whether collateral

In addition, the ASU requires incremental disclosure related to contracts on the entity’s own equity and clarifies

the treatment of certain financial instruments accounted for under this ASU on earnings per share.

This ASU may be applied on a full

retrospective of modified retrospective basis.

This ASU is effective January 1, 2022 and interim periods presented, although early adoption

of this ASU was permitted effective January 1, 2021.

The Company early adopted this standard effective January 1, 2021 and the standard

did not have a significant impact on the Company’s financial statements.

Standards Recently Issued - In May 2021, FASB issued ASU 2021-04, Earnings Per Share (topic 260), Debt — Modifications and

Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718) and Derivatives and Hedging – Contracts

in an Entity’s Own Equity (Subtopic 815-40) – Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding

Equity-Classified Written Call Options , which provides guidance of a modification or an exchange of a freestanding equity-classified

written call option that remains equity classified after modification or exchange as (1) an adjustment to equity and, if so, the related

earnings per share (EPS) effects, if any, or (2) an expense and, if so, the manner and pattern of recognition.

The amendments in this

ASU are effective January 1, 2022, including interim periods.

Early adoption is permitted.

The Company will apply the amendments prospectively

to modifications or exchanges occurring on or after January 1, 2022.

The Company will evaluate the impact of ASU 2017-09 on any future

changes to the terms and conditions of its warrants.

2 - Commitments and Contingencies

Company has entered into agreements with third parties for the rights to certain intellectual property, manufacturing and clinical

trial services under which the Company may incur obligations to make payments including upfront payments as well as milestone

and royalty payments.

A notable inclusion in this category is:

On June 15, 2012, the Company entered

into a license and sponsored research agreement with Fred Hutchinson Cancer Research Center (“FHCRC”) to build upon previous

and ongoing clinical trials with BC8 (licensed antibody).

FHCRC has completed both a Phase 1 and Phase 2 clinical trial with BC8.

The Company has been granted exclusive rights to the BC8 antibody and related master cell bank developed by FHCRC.

A milestone payment of $1 million will be due to FHCRC upon FDA approval of the first drug utilizing the licensed BC 8 antibody.

Upon commercial sale of the drug, royalty payments of 2% of net sales will be due to FHCRC.

Note 3 - Leases

The Company determines if

an arrangement is a lease at inception.

This determination generally depends on whether the arrangement conveys to the Company the right

to control the use of a fixed asset for a period of time in exchange for consideration.

Control of an underlying asset is conveyed to

the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using

the underlying asset.

The Company has lease agreements which include lease and non-lease components, which the Company has elected to

account for as a single lease component for all classes of underlying assets.

Lease expense for variable lease components are recognized

when the obligation is probable.

Right-of-use assets and liabilities

are recognized at commencement date based on the present value of lease payments over the lease term.

ASC 842 requires a lessee to discount

its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental

borrowing rate.

As an implicit interest rate is not readily determinable in the Company’s leases, the incremental borrowing rate

is used based on the information available at commencement date in determining the present value of lease payments.

The lease term for all of

the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option

to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate)

the lease controlled by the lessor.

Options for lease renewals have been excluded from the lease term (and lease liability) for the majority

of the Company’s leases as the reasonably certain threshold is not met.

At March 31, 2021, the Company

has an operating lease for corporate office space and two finance leases for office equipment and furniture located in the corporate office

In addition, the Company has auxiliary corporate office space that it rents on a month-to-month basis;

this rental is accounted

for as an operating lease with the same term as the Company’s main office in the same building.

The components of lease expense are as follows:

Company has been granted exclusive rights to the BC8 antibody and related master cell bank developed by FHCRC.

A milestone payment of

$ 1 million will be due to FHCRC upon FDA approval of the first drug utilizing the licensed BC 8 antibody.

Upon commercial sale of the

drug, royalty payments of 2% of net sales will be due to FHCRC.

Company determines if an arrangement is a lease at inception.

This determination generally depends on whether the arrangement conveys

to the Company the right to control the use of a fixed asset for a period of time in exchange for consideration.

Control of an underlying

asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic

benefits from using the underlying asset.

The Company has lease agreements which include lease and non-lease components, which the Company

has elected to account for as a single lease component for all classes of underlying assets.

Lease expense for variable lease components

are recognized when the obligation is probable.

assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily

determined, its incremental borrowing rate.

As an implicit interest rate is not readily determinable in the Company’s leases, the

incremental borrowing rate is used based on the information available at commencement date in determining the present value of lease

lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered

by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option

to extend (or not to terminate) the lease controlled by the lessor.

Options for lease renewals have been excluded from the lease term

(and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met.

June 30, 2021, the Company has an operating lease for corporate office space and two finance leases for office equipment and furniture

located in the corporate office space.

In addition, the Company has auxiliary corporate office space that it rents on a month-to-month

this rental is accounted for as an operating lease with the same term as the Company’s main office in the same building.

components of lease expense are as follows:

Three months ended

Six months ended

(in thousands)

4 unchanged sentences

Total finance lease cost

Supplemental cash flow information related to leases

are as follows:

cash flow information related to leases are as follows:

Cash flow information:

Three months ended

Six months ended

(in thousands)

7 unchanged sentences

Finance Leases

Weighted average remaining lease terms are as follows

at March 31, 2021:

average remaining lease terms are as follows at June 30, 2021:

Weighted average remaining lease term:

1 unchanged sentence

Finance Leases

As the Company’s leases

did not provide an implicit rate, the Company used its incremental borrowing rate based on the information available in determining the

present value of lease payments.

The Company’s incremental borrowing rate was based on the term of the lease, the economic environment

of the lease and reflect the rate the Company would have had to pay to borrow on a secured basis.

Below is information on the weighted

average discount rates used at the time that the leases were evaluated:

the Company’s leases did not provide an implicit rate, the Company used its incremental borrowing rate based on the information

available in determining the present value of lease payments.

The Company’s incremental borrowing rate was based on the term of

the lease, the economic environment of the lease and reflect the rate the Company would have had to pay to borrow on a secured basis.

Below is information on the weighted average discount rates used at the time that the leases were evaluated:

Weighted average discount rates:

1 unchanged sentence

Finance Leases

Maturities of lease liabilities

are as follows:

of lease liabilities are as follows:

(in thousands)

Year ending December 31,

Operating Leases

Finance Leases

2021 (excluding three months ended March 31, 2021)

2021 (excluding six months ended June 30, 2021)

Total lease payments

1 unchanged sentence

Present value of lease liabilities

Note 4 –

4 - Other revenue

The Company determined that certain

collaborations with a third-party are within the scope of ASC 606.

The collaboration agreement is made up of multiple modules related

to various research activities.

While the Company identified a single performance obligation to provide research services within each

module for which the Company receives monetary consideration, as the promises included in each module are similar in nature, the third-party

can choose to proceed with each module or can terminate the agreement at any time.

The consideration is recognized to revenue over each

module and revenue recognized during the three months ended March 31, 2021 of $0.6 million was due to the recognition of revenue from

nonrefundable payments received from the third-party.

Note 5 - Equity

The Company determined that

certain collaborations with a third-party are within the scope of ASC 606.

The collaboration agreement is made up of multiple modules

related to various research activities.

The Company identified a single performance obligation to provide research services within each

module for which the Company receives monetary consideration.

The third-party can choose to proceed with each module or can terminate

the agreement at any time.

The Company recognizes revenue for each module on a straight-line basis over the expected module period.

for succeeding modules is not recognized until all contingencies are resolved, inclusive of the third-party’s ability to terminate

The consideration is recognized to revenue over each module and revenue recognized during the three months and six months

ended June 30, 2021 was $ 0.3 million and $ 0.9 million, respectively.

In August 2020, the Company

entered into the Capital on Demand™

Sales Agreement with JonesTrading Institutional Services LLC (“JonesTrading”), pursuant

entered into the Capital on Demand™ Sales Agreement with JonesTrading Institutional Services LLC (“JonesTrading”), pursuant

to which the Company may sell, from time to time, through or to JonesTrading, up to an aggregate of $ 200 million of its common stock.

Shares of common stock are offered pursuant to the Company’s shelf registration statement on Form S-3 filed with the SEC on August

As of December 31, 2020, the Company had sold 2.1 million shares of common stock, resulting in gross proceeds of $ 22.6 million

and net proceeds of $ 21.7 million.

For the three months ended March 31, 2021, the Company sold 1.7 million shares of common stock, resulting

For the six months ended June 30, 2021, the Company sold 3.5 million shares of common stock, resulting

in gross proceeds of $ 29.6 million and net proceeds of $ 28.7 million.

In December 2018, the Company

entered into the Amended and Restated At Market Issuance Sales Agreement with B.

Riley FBR, Inc.

and JonesTrading, pursuant to which the

Company conducted its at-the market program.

During the three months ended March 31, 2020, the Company sold 0.3 million shares of common

stock through its at-the-market program, resulting in net proceeds of $2.5 million.

In October 2018, the Company

and Lincoln Park Capital Fund, LLC (“Lincoln Park”) entered into a purchase agreement and a registration rights agreement,

pursuant to which the Company has the right to sell to Lincoln Park shares of the Company’s common stock having an aggregate value

of up to $32.5 million, subject to certain limitations and conditions set forth in the agreement.

During the three months ended March

31, 2020, the Company elected to sell to Lincoln Park 27 thousand shares and received $0.2 million.

Stock Options

The following is a summary

of stock option activity for the three months ended March 31, 2021:

April 24, 2020, the Company issued and sold 4.3 million shares of common stock and 2.8 million pre-funded warrants to purchase shares

of common stock.

The price to the public in this offering for each share of common stock was $ 4.50 and for each pre-funded warrant was

Each pre-funded warrant has an exercise price of $ 0.003 per share and was exercisable immediately upon issuance.

Gross proceeds

from this offering to Actinium were $ 31.6 million, before deducting underwriting discounts and commissions and other offering expenses

payable by the Company.

Net proceeds from this offering were $ 29.1 million.

June 2020, holders of 1.2 million pre-funded April 2020 warrants exercised their warrants at $ 0.003 per share and received 1.2 million

shares of common stock.

June 19, 2020, the Company issued and sold 1.9 million shares of common stock and 0.7 million pre-funded warrants to purchase shares

of common stock.

The price to the public in this offering for each share of common stock was $ 9.75 and for each pre-funded warrant was

Each pre-funded warrant has an exercise price of $ 0.003 per share and was exercisable immediately upon issuance.

Gross proceeds

from this offering to Actinium were $ 25.0 million, before deducting underwriting discounts and commissions and other offering expenses

payable by the Company.

Net proceeds from this offering were $ 23.0 million.

following is a summary of stock option activity for the six months ended June 30, 2021:

(in thousands, except for per-share amounts)

1 unchanged sentence

Outstanding, January 1, 2021

Outstanding, March 31, 2021

Exercisable, March 31, 2021

The fair values of all options

issued and outstanding are being amortized over their respective vesting periods.

The unrecognized compensation expense at March 31, 2021

was $3.8 million related to unvested options, which is expected to be expensed over a weighted average of 3.2 years.

During the three

months ended March 31, 2021 and 2020, the Company recorded compensation expense related to stock options of $0.4 million and $0.4 million,

respectively.

Following is a summary of

warrant activity for the three months ended March 31, 2021:

Outstanding, June 30, 2021

Exercisable, June 30, 2021

the six months ended June 30, 2021, the Company granted new employees options to purchase 95 thousand shares of the Company’s

common stock with an exercise price ranging from $ 7.32 to $ 9.25 per share, a term of 10 years, and a vesting period of 4 years.

The options have an aggregated fair value of $ 0.6 million that was calculated using the Black-Scholes option-pricing model.

used in the Black-Scholes option-pricing model include:

(1) discount rate range from 0.65% to 1.07% (2) expected life of 6 years,

(3) expected volatility range from 83.1% to 85.1%, and (4) no expected dividends.

During the six months ended June 30, 2021, options

to purchase 1 thousand shares were exercised and options to purchase 50 thousand shares were cancelled upon the termination of

employment for several employees.

fair values of all options issued and outstanding are being amortized over their respective vesting periods.

The unrecognized compensation

expense at June 30, 2021 was $ 3.6 million related to unvested options, which is expected to be expensed over a weighted average of 3.0

During the six months ended June 30, 2021 and 2020, the Company recorded compensation expense related to stock options of $ 0.7

million and $ 0.5 million, respectively.

part of the April 2020 offering and the June 2020 offering, the Company issued pre-funded warrants.

Each pre-funded warrant had an exercise

price of $ 0.003 per share and was exercisable immediately upon issuance.

Management determined that the pre-funded warrants were freestanding

instruments and that the pre-funded warrants should be classified as permanent equity.

As of December 31, 2020, all of the pre-funded

warrants were exercised and there were no pre-funded warrants outstanding during the six months ended June 30, 2021.

As of June 30, 2020,

there were 2.3 million pre-funded warrants outstanding.

is a summary of warrant activity for the six months ended June 30, 2021:

(in thousands, except for per-share amounts)

2 unchanged sentences

Cancelled/Expired

Outstanding, March 31, 2021

Exercisable, March 31, 2021

Subsequent Event

Since March 31, 2021, the

Company has sold 0.9 million shares of common stock under its Capital on Demand™

Sales Agreement with JonesTrading, resulting in

net proceeds of $7.2 million.

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

FORWARD-LOOKING STATEMENT NOTICE

This Form 10-Q contains certain

forward-looking statements.

For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may

be deemed to be forward-looking statements.

Without limiting the foregoing, words such as “may,”

“will,”

“expect,”

“believe,”

“anticipate,”

“estimate”

or “continue”

or comparable

terminology are intended to identify forward-looking statements.

These statements by their nature involve substantial risks and

uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control.

factors include but are not limited to economic conditions generally and in the industries in which we may participate;

competition within

our chosen industry, including competition from much larger competitors;

technological advances and failure to successfully develop business

relationships.

Description of Business

Pharmaceuticals, Inc.

is a clinical-stage, biopharmaceutical company applying its proprietary platform technology and deep

understanding of radiobiology to the development of novel targeted therapies known as Antibody Radiation-Conjugates

(“ARCs”).

ARCs combine the cell-killing ability of radiation via a radioisotope payload with a targeting agent, such as

a monoclonal antibody, to deliver radiation in a precise manner inside the body to specific, targeted cells, to potentially achieve

greater efficacy with lower toxicity than with external beam radiation.

ARCs enable a broader usage of radiation than external beam

radiation as they can be used in the treatment of both solid tumors and blood cancers.

Blood or hematologic cancers are known to be

highly sensitive to radiation.

Our clinical pipeline is focused on ARCs targeting the antigens CD45 and CD33, both of which are

expressed in multiple hematologic cancers.

Our clinical programs are focused on two primary areas:

(1) targeted conditioning prior

to a bone marrow transplant (“BMT”), adoptive cell therapy (“ACT”) such as CAR-T or gene therapy and (2) ARC

therapeutic combinations with other agents.

Our product development strategy is actively informed by clinical data with our ARCs in

over 500 patients, including our ongoing Pivotal Phase 3 SIERRA trial.

Our clinical pipeline has emanated from our Antibody Warhead

Enabling (“AWE”) technology platform, which is protected by over 140 issued and pending patents, trade secrets and

know-how and is being utilized in a collaborative research partnership with Astellas Pharma, Inc.

(“Astellas”).

also utilizing our AWE technology platform to advance our research objectives focused on developing next-generation targeted

radiotherapies.

To accelerate development efforts we are undertaking an expansion of our R&D organization and research

laboratories to enable us to more effectively leverage our drug development experience to advance candidates to clinical trials.

Targeted Conditioning

To the best of our knowledge,

we are advancing the only multi-target, multi-indication, clinical-stage pipeline for targeted conditioning and the only ARC-based targeted

conditioning regimens in development.

Our ARCs for targeted conditioning are intended to potentially enable improved access and outcomes

to cell-based therapies with curative potential, including BMT, ACT, and Gene Therapy.

Conditioning in the context of BMT, ACT or Gene

Therapy is the act of depleting certain blood and immune-forming cells, including bone marrow stem cells and, in some cases, cancer cells

prior to transplanting new cells into a patient.

Currently, conditioning is accomplished using a combination of cytotoxic chemotherapeutic

agents and external radiation.

These non-targeted conditioning regimens are highly toxic and may prevent a patient from receiving a potentially

curative therapy and hinder outcomes.

ARCs have the potential to increase patient access and outcomes by way of their ability to selectively

deplete targeted cells while sparing normal healthy cells, resulting in potentially lower systemic and off-target toxicities.

ARCs both at high isotope dose levels to achieve myeloablation, which fully depletes bone marrow stem cells and at lower isotope dose

levels to achieve lymphodepletion, which spares bone marrow stem cells from depletion.

In addition, dosing may be titrated downward from

myeloablative doses to achieve partial myeloablation, which may be appropriate for certain gene therapy programs.

CD45 Targeted Conditioning Program

Our CD45 ARC is comprised

of the anti-CD45 monoclonal antibody known as apamistamab (formerly BC8) and the radioisotope Iodine-131 (“I-131”).

an antigen expressed on leukemia, lymphoma and myeloma cancer cells, as well as nucleated immune cells including bone marrow stem cells,

but is not expressed outside of the hematopoietic, or blood forming, system.

This unique expression on blood cancer and immune cells enables

simultaneous depletion of both cell types, making CD45 an optimal antigen for targeted conditioning applications.

CD45 is a cell surface

antigen with an average expression of 200,000 copies per cell, however, it only internalizes at a rate of 10-15%.

We believe our ARC approach

is the most effective method to target CD45 positive cells, as the radioisotope payload linear energy transfer can readily ablate a targeted

cell without requiring payload internalization like an antibody drug conjugate or without relying on biological effector function processes

like a naked antibody.

Furthermore, since CD45 expression level varies from low to high antigen density as the immune cells become more

terminally differentiated, we can selectively condition depending on the therapeutic application, from full myeloablation to transient

lymphodepletion, by adjusting the dose or intensity of the I-131 isotope payload.

Full myeloablation can be achieved with high doses of

I-131, as its energy pathlength and crossfire effect can penetrate into bone marrow niches to target and deplete blood and immune system

forming bone marrow stem cells.

Myeloablation is applicable to autologous or allogeneic BMT and to autologous gene-edited or modified

therapies that can reconstitute a patient’s blood and immune systems.

Alternatively, low doses of I-131 can be transiently lymphodepleting

and spare a patient’s bone marrow stem cells, which we believe is ideal for ACT applications such as CAR-T.

We intend to develop

our CD45 targeted conditioning program for BMT, ACT and Gene Therapy applications for malignant and non-malignant diseases and believe

that multiple radioisotopes beyond I-131 may be utilized including alpha and beta emitters.

Our lead CD45 targeted conditioning

product candidate is Iomab-B, which uses high doses of I-131 to achieve myeloablative conditioning prior to a BMT.

Iomab-B is currently

being studied in the pivotal Phase 3 Study of Iomab-B in Elderly Relapsed or Refractory AML (“SIERRA”), clinical trial for

targeted conditioning prior to an allogeneic BMT for patients with active, relapsed or refractory (“r/r”) Acute Myeloid Leukemia,

(“AML”), who are age 55 or older.

Patients with active, r/r AML are not normally considered eligible for BMT and the SIERRA

trial is the only randomized Phase 3 trial to offer BMT as a treatment option for this patient population.

The SIERRA trial compares outcomes

of patients randomized to receive Iomab-B and a BMT (the “study arm”) to those patients randomized to receive physician’s

choice of salvage therapy (the “control arm”).

The control arm is also defined as conventional care, as no standard of care

exists for this patient population and includes over 20 agents that may be used as single agents or in combination including venetoclax,

a targeted Bcl-2 inhibitor, Midostaurin and Sorafenib, targeted FLT3 inhibitors, hypomethylating agents and cytotoxic chemotherapies.

Patients who fail to achieve a Complete Remission (“CR”) on the control arm are ineligible to proceed to a BMT, but the trial

design permits these patients to “cross over”

to receive the study arm treatment if they meet the eligibility criteria.

primary endpoint of the SIERRA trial is durable Complete Remission (“dCR”) of 180 days and the secondary endpoint is Overall

Survival (“OS”).

When the crossover patients receive Iomab-B and BMT, they have not achieved remission with their salvage

therapy and are considered to be failures for the primary endpoint of the study.

The SIERRA trial is currently active at 24 sites in the

United States and Canada, which includes many of the leading BMT sites based on volume.

We expect to complete enrollment of the SIERRA

trial and have topline data that we believe will support the submission of a Biologics License Application (“BLA”) with the

Food and Drug Administration (“FDA”).

If approved, we expect our initial commercial launch would target the leading 50-100

BMT and medical centers that perform the vast majority of BMT’s in the United States.

In the European Union (“EU”),

we received favorable feedback from the European Medicines Agency (“EMA”) via their scientific advice program that the trial

design, primary endpoint and planned statistical analysis from the SIERRA trial are acceptable as the basis for a Marketing Authorization

Application, or MAA.

Additionally, the EMA commented that it does not anticipate the need for further standalone preclinical toxicology

or safety studies.

Overall, transplant procedures in the EU are approximately fifty percent higher than in the United States with a similar

market dynamic, with a majority of BMT volume being conducted in a concentrated number of leading medical centers.

Currently we intend

to secure a partner for Iomab-B in the EU.

The SIERRA trial is powered

to show a two-times difference in the primary endpoint of dCR of at least 180 days at complete enrollment of the planned 150 patients.

The SIERRA trial design allowed for up to two interim analyses of the primary endpoint, exercisable at our discretion and triggered by

an enrollment range of 70 to 110 patients.

In April 2020, we exercised a single ad hoc analysis on a number of patients representing less

than two thirds of full trial enrollment of 150 patients, which required a higher success threshold compared to the two-time difference

in dCR rate at full trial enrollment.

In December 2020, we announced that the independent Data Monitoring Committee (“DMC”)

completed the single ad hoc interim analysis.

Based on the DMC’s review of unblinded data, including the study’s primary endpoint

of dCR of at least 180 days, it was recommended that the study continue as planned to full enrollment of 150 patients.

We did not receive

the unblinded primary and secondary endpoint efficacy data from SIERRA.

By exercising only a single interim analysis, there was a minimal

alpha spend resulting in a p-value threshold of 0.046 for the primary endpoint evaluation at full enrollment of 150 patients.

trial reached 75% enrollment, representing 113 patients, in the third quarter of 2020.

Data from the first 113 patients

enrolled in the SIERRA trial, which represents 75% of the total of 150 patients to be enrolled in the trial, was presented in oral presentations

at the American Society of Hematology (“ASH”) Annual Meeting in December 2020 and at the Transplantation & Cellular

Therapy (“TCT”) Meetings of the American Society for Transplantation and Cellular Therapy (“ASTCT”) and Center

for International Bone & Marrow Transplant Research (“CIBMTR”) in February 2021.

It was reported that 100% of patients

(49/49) on the study arm that received a therapeutic dose of Iomab-B received a BMT, with a median time to BMT of 30 days, and all patients

achieved neutrophil and platelet engraftment in a median time of 18 days despite a high median blast count of 29%.

On the control arm,

only 18% of patients (10/57) achieved remission after salvage therapy, and then received a BMT with a median time to BMT of 67 days and

median blast count of 20%.

Of the 82% of patients failing to achieve a CR with conventional care (47/57), 30 patients were eligible to

cross over to receive Iomab-B followed by transplant.

These patients are considered as having failed the primary endpoint of the study.

All crossover patients who received the therapeutic dose of Iomab-B (30/30) received a BMT, with a median time to BMT of 24 days and they

achieved engraftment in a median time of 19 days despite high median blast count of 22% at time of crossover.

It was also reported that

100-day non-relapse transplant-related mortality (100-day TRM) of the study or Iomab-B arm was only 4% (2/45) of patients that received

a BMT compared to 20% of patients (2/10) who received a BMT after salvage therapy on the control arm.

The universal engraftment rate and

low 100-day TRM rate of the Iomab-B arm resulted in 43 patients potentially evaluable for the primary endpoint compared to 8 patients

in the control arm, a greater than five times difference.

Our Iomab-ACT program

is intended for targeted conditioning prior to ACT or Gene Therapy and uses the same I-131-apamistamab ARC construct as Iomab-B at varying

At lower doses of one-eighth to one-sixth of the myeloablative dose, it is applicable for lymphodepletion prior to CAR-T or certain

Gene Therapy applications where stem cell myeloablation is not necessary.

At higher doses it is applicable for Gene Therapy applications

where stem cell myeloablation is necessary.

We believe our Iomab-ACT program

is highly differentiated when compared to Fludarabine and Cyclophosphamide (“Flu/Cy”) or other chemotherapy-based regimens

that are used as the standard of practice today for lymphodepletion prior to CAR-T.

CD45 is an antigen expressed on certain immune cell

types that are relevant to the mechanism of CAR-T therapies including lymphocytes, regulatory T-cells and macrophages that have been associated

with clinical responses that may limit the safety, efficacy and durability of response of these CAR-T therapies including cytokine release

syndrome (“CRS”) and neurotoxicity.

Some of these limitations may be attributable to the chemotherapy-based conditioning agents

that are being used prior to CAR-T therapies.

Preclinical data supporting the rational for our Iomab-ACT program was presented at multiple

medical conferences in 2019.

Unlike chemotherapy, Iomab-ACT is targeted in nature and, due to this CD45-directed targeting, we expect

we can improve CAR-T cell expansion, potentially resulting in responses that are more durable, but also resulting in reduced CAR-T related

Importantly, we expect the Iomab-ACT program construct to enable lymphodepletion through a single-dose, outpatient administration

versus Flu/Cy or other chemotherapy-based lymphodepletion regimens that can require multiple infusion cycles over several days.

of this potentially superior profile, the Iomab-ACT construct could result in improved access to CAR-T therapy and better outcomes.

In October 2020, we announced

a clinical collaboration with Memorial Sloan Kettering Cancer Center (“MSKCC”) to use our Iomab-ACT for targeted conditioning

prior to administration of MSKCC’s 19-28z CD19 targeting CAR-T in patients with relapsed or refractory B-cell acute lymphoblastic

leukemia (“ALL”) or diffuse large B-cell lymphoma (“DLBCL”).

We received grant funding from the National Institute

of Health (“NIH”) to fund this trial with MSKCC being a co-recipient on this grant.

This is a first of its kind study to use

an ARC-based conditioning regimen with CAR-T therapy.

MSKCC received clearance from the FDA to initiate this trial and patient enrollment

in this study has commenced.

The hypothesized rationale for this study is that Iomab-ACT will exert an anti-tumor effect on the chemotherapy-refractory

B-ALL cells that are sensitive to radiation resulting in reduced disease burden and simultaneously deplete CD45 expressing immune cells

implicated in CAR-T related toxicities, resulting in an optimal homeostatic environment for the CAR-T cells.

Results with MSKCC’s

19-28z CD-19 CAR-T in 53 patients with r/r B-ALL published in the New England Journal of Medicine reported complete remissions in 83%

(44/53) of patients, which compares favorably to standard chemotherapy regimens that have complete remission rates of 18% - 45% in this

patient population.

Median event-free survival (EFS) was 6.1 months and median overall survival (OS) was 12.9 months at a median follow

up period of 29 months (range 1 –

There was a 26% (14/53) rate of Grade 3 or greater CRS and a 42% rate of Grade 3 or

4 neurotoxicity reported.

The study will evaluate the feasibility of using an ARC-based conditioning regimen with CAR-T therapy and will

evaluate safety measures including incidence of CRS and neurotoxicity and efficacy measures including responses and survival outcomes.

In March 2021, we announced that patient enrollment was initiated, and the first patient was administered Iomab-ACT followed by their

19-28z CAR-T therapy.

We expect proof of concept data from this study in the second half of 2021.

In addition, we are working

in collaboration with University of California Davis to utilize Iomab-ACT conditioning in an ongoing Phase 1/2 trial with a novel anti-HIV

autologous stem cell gene therapy for patients with HIV-related lymphoma.

We believe this would be the first Gene Therapy trial to use

an ARC-based conditioning regimen.

I-131-Apamistamab has clinical proof of concept as a targeted conditioning regimen for patients with

high-risk, relapsed or refractory lymphoma prior to an autologous stem cell transplant from a previous study, where a favorable safety

profile with no dose-limiting toxicities and minimal non-hematologic toxicities were observed and promising efficacy with median overall

survival not reached (range:

29 months to not reached) and 31% of patients in prolonged remission at a median of 36 months follow up (range:

In this study, Iomab-ACT is intended to replace the chemotherapy-based condition regimen known as BEAM (BCNU/carmustine,

etoposide, cytarabine, and melphalan) to simultaneously kill the patient’s lymphoma cells and deplete the patient’s stem cells

to make room for the transplant.

Upon engraftment, the transplanted gene-modified autologous stem cells containing three anti-HIV genes

are intended to equip the patient with a new immune system that is resistant to the HIV virus.

We continue to identify additional gene

therapies for which Iomab-ACT can be used for targeted conditioning with the goal of collaborating with multiple academic or industry

developers to establish Iomab-ACT as a non-chemotherapy universal targeted conditioning solution.

In March 2021, we announced

an Ac-225-based CD45 ARC, a next-generation targeted conditioning agent.

Dosimetry results with this Ac-225-based alpha emitting ARC showed

selective accumulation in immune cell target organs such as bone marrow, spleen, and liver with the potential for lower exposure to non-target

tissues from longer path length beta emitter radioisotopes like Iodine-131 and Lutetium-177.

Preclinical data demonstrated that conditioning

with this Ac-225-based CD45-targeting agent result in depletion of peripheral immune cells and hematopoietic progenitor cells, thereby

enabling engraftment of donor cells.

A dose dependent response was observed with low doses depleting white blood cells without affecting

hematopoietic progenitor cells, representing a lymphodepletive dose that is relevant for adoptive cell therapies such as CAR-T, while

higher doses eliminated peripheral immune cells and hematopoietic progenitor cells, which is applicable to ex vivo gene therapies and

CD33 Program:

Targeted Conditioning, Combinations

and Therapeutics

Our CD33 program is evaluating

the clinical utility of Actimab-A, an ARC comprised of the anti-CD33 mAb lintuzumab linked to the potent alpha-emitting radioisotope Actinium-225

(“Ac-225”).

CD33 is expressed in the majority of patients with AML and myelodysplastic syndrome (“MDS”) as well

as approximately one-third of patients with multiple myeloma.

Ac-225 emits four alpha particles and can kill a cell with one alpha-particle

hit, making it one of the most powerful cell-killing agents with no know resistance mechanism to the double strand DNA breaks it can cause.

We source Ac-225 from the Department of Energy’s Oak Ridge National Laboratory through an annual supply agreement, which we expect

to renew annually.

Our CD33 development program is driven by data obtained from nearly one

hundred fifty treated patients, including results from a Phase 1/2 trial that was conducted in 58 patients with newly diagnosed AML, which

was completed in 2018.

This clinical data, as well as our experience with Iomab-B, is shaping a two-pronged approach with our CD33 program,

where at high doses we are exploring its use for targeted conditioning and at low doses we are exploring its use for therapeutic combinations

with other treatment modalities.

We believe that radiation

via an ARC can be synergistic when used in combination with chemotherapy, targeted agents and immunotherapy based on mechanistic rationales

supported by our own clinical data, preclinical research and scientific and clinical evidence in the literature.

We have prioritized our

efforts and resources in favor of combination trials for our CD33 program development strategy rather than single agent trials at this

Our CD33 ARC development program encompasses the following ongoing trials:

Combination Trials :

Phase 1 investigator initiated Actimab-A + CLAG-M combination trial with the salvage chemotherapy regimen CLAG-M (cladribine, cytarabine, filgrastim and mitoxantrone) for fit patients age 18 and above with relapsed or refractory AML at the Medical College of Wisconsin (“MCW”).

The combination of Actimab-A + CLAG-M is supported by mechanistic rationale for combining inhibitors of DNA replication and/or repair processes such as mitoxantrone, a topoisomerase-II inhibitor, and radiation, as imparted by tumor-targeting of Ac-225 with Actimab-A.

In September 2020, we completed the third and planned final dose cohort of 0.75 µCi/kg of Actimab-A.

At the 2020 American Society of Hematology Annual Meeting, it was reported that 100% of patients (3/3) receiving 0.75 µCi/kg of Actimab-A, and CLAG-M achieved a complete remission, which is nearly 85% greater than the 55% remission rate observed in a study of CLAG-M alone conducted at MCW in the same r/r AML patient population.

Complete Remission or Complete Remission with Incomplete blood count recovery (“CRi”) were observed in all dose cohorts (0.25, 0.50 and 0.75 µCi/kg) with 67% of patients (10/15) achieving CR or CRi.

The 0.25 and 0.50 µCi/kg doses of Actimab-A have been shown to be subtherapeutic as a single agent.

Of the 10 patients achieving CR or Cri, 70% achieved negative minimal residual disease (“MRD) status with no detectable disease via flow cytometry, indicating that these are deep remissions.

No dose-limiting toxicities (“DLTs”) were reported in the third dose cohort of 0.75 µCi/kg and therefore maximum tolerable dose (MTD) was not reached.

As a result, MCW amended the study protocol to allow for continued dose escalation and the trial is now enrolling patients at a dose of 1.0 µCi/kg.

Upon completion of this Phase 1 trial, we will work to develop a regulatory and development pathway that can potentially support a registration for the Actimab-A + CLAG-M combination.

In addition, the Actimab-A + CLAG-M combination study has provided proof of principle that the addition of subtherapeutic doses of Actimab-A to other AML therapies can lead to well-tolerated regimens with improved responses.

Phase 1/2 Actimab-A + Ven combination trial with the BCL-2 inhibitor Venetoclax (“ven”) for fit and unfit patients age 18 and above with relapsed or refractory AML.

This multi-center trial is being led by UCLA Medical Center.

This combination is supported by mechanistic evidence in preclinical studies using ven-resistant AML tumor cell lines.

In these models, we have demonstrated that Actimab-A can deplete Mcl-1 and Bcl-XL, two proteins implicated in mediating resistance to venetoclax, in addition to causing potentially lethal double-stranded DNA breaks in these CD33 expressing cells.

Furthermore, in vivo studies in animal models of ven-resistant AML demonstrated robust tumor regression and improved survival in cohorts receiving the Actimab-A ven combination compared to ven alone.

The rationale for this clinical study is that the addition of Actimab-A will;

1) have a direct anti-tumor effect via double-stranded DNA breaks and 2) deplete Mcl-1 and BCL-XL making the AML cells more susceptible to ven.

At the 2020 ASH annual meeting, data from the first dose cohort of 0.50 µCi/kg Actimab-A in combination with ven were presented.

There was a 67% overall response rate (2/3 patients), including one CR and one partial response (“PR”) with blast count reduction of 50%.

All 3 patients were poor risk with adverse cytogenetics and each patient had an additional high-risk marker (FLT3-ITD+, antecedent JAK2+ myelofibrosis, or TP53 mutation).

The patient achieving a CR was in second relapse and a TP53 mutation as well as multiple other high-risk markers.

The trial is now active and recruiting at 4 trial sites in dose escalation cohorts.

We expect to have Phase 1 safety and preliminary proof of concept clinical data from this combination study in 2021.

In addition to these active

trials, we are working to identify additional modalities and agents that can be the basis for Actimab-A therapeutic combinations.

Antibody Warhead Enabling Technology Platform

Our proprietary AWE

technology platform is supported by intellectual property, know-how and trade secrets that cover the generation, development,

methods of use and manufacture of ARCs and certain of their components.

Our AWE technology patent portfolio includes 34 patent

families comprised of over 140 issued and pending patent applications, of which 9 are issued and 29 are pending in the United

States, and 104 are issued or pending internationally.

The effective life of the patents in our portfolio range from expirations

between 2021 and 2040.

Our technology enables the direct labeling, or conjugation and labeling, of a biomolecular targeting agent to

a radionuclide warhead and its development and use as a therapeutic regimen for the treatment of diseases such as cancer.

intellectual property covers various methods of use for ARCs in multiple diseases, including indication, dose and scheduling,

radionuclide warhead, and therapeutic combinations.

We have particular expertise in the area of ARCs utilizing the alpha emitting

isotope Ac-225 including clinical experience in treating approximately 150 patients with our alpha-emitter ARCs, “gold

standard”

linker technology and 5 issued patents in the United States and 49 patents internationally related to the

manufacturing or Ac-225 in a cyclotron, which we believe has the potential to produce higher quantities of Ac-225 then currently

utilized methods.

We have enhanced our research

and development capabilities around AWE by securing and staffing research facilities.

Our research laboratories are focused on applying

our AWE technology platform to the development of radiation conjugates and to execute on research collaborations.

Our R&D efforts

employ a multidisciplinary approach leveraging our team’s knowledge and experience in cancer cell biology, radiochemistry, radiation

sciences, immunology and oncology drug development.

We intend to focus on generating ARCs using our existing intellectual property, evaluating

assets for in-licensing to complement our existing clinical pipeline and securing collaborations and partnerships with biopharmaceutical

By adding research and development capabilities to our clinical development and clinical supply chain capabilities, we seek

to enable the rapid translation of radiotherapies.

We have formed a wholly owned research subsidiary for the purposes of advancing certain

of our R&D objectives.

In January 2021, we

announced a collaborative research agreement with Astellas and began work on this project that will utilize our AWE technology

platform with select targeting agents owned by Astellas in the development of theranostics for solid tumor

indications, which combine the ability of radioisotopes to be used for both diagnostic and therapeutic purposes.

Recent Developments

Impact of COVID–19 Pandemic

In December 2019, a novel

strain of COVID-19 was reported in China.

Since then, COVID-19 has spread globally.

The spread of COVID-19 from China to other countries

has resulted in the World Health Organization (WHO) declaring the outbreak of COVID-19 as a “pandemic,”

or a worldwide spread

of a new disease, on March 11, 2020.

Many countries around the world have imposed quarantines and restrictions on travel and mass gatherings

to slow the spread of the virus and have closed non-essential businesses, and as of the date of this report, many local jurisdictions

continue to have such restrictions in place.

As many local jurisdictions

continue to have such restrictions in place, our ability to continue to operate our business may also be limited.

Such events may result

in a period of business, supply and drug product manufacturing disruption, and in reduced operations, any of which could materially affect

our business, financial condition and results of operations.

In response to COVID-19, we implemented remote working and thus far have

not experienced a significant disruption or delay in our operations as it relates to the clinical development of our drug candidates.

Such government-imposed precautionary measures may have been relaxed in certain countries or states, but there is no assurance that more

strict measures will be put in place again due to a resurgence in COVID-19 cases, including those involving new variants of the coronavirus,

which may be more contagious and deadly than prior strains.

Therefore, the COVID-19 pandemic may continue to affect our operation, may

further divert the attention and efforts of the medical community to coping with COVID-19 and disrupt the marketplace in which we operate

and may have a material adverse effect on our operations.

The spread of COVID-19, which

has caused a broad impact globally, may materially affect us economically.

While the ultimate economic impact brought by, and the duration

of, the COVID-19 pandemic may be difficult to assess or predict, including new information which may emerge concerning the severity of

COVID-19 and the actions to contain COVID-19 or treat its impact, among others, the pandemic has resulted in significant disruptions in

the general commercial activity and the global economy and caused financial market volatility and uncertainty in significant and unforeseen

ways in the recent months.

A continuation or worsening of the levels of market disruption and volatility seen in the recent past could

have an adverse effect on our ability to access capital, which could in the future negatively affect our liquidity.

In addition, a recession

or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock.

Currently, the Phase 3 SIERRA

trial for our lead program, Iomab-B, remains active at a majority of our clinical trial sites, with investigators providing feedback that

recruitment and enrollment will remain active because of the acute nature of the disease, the high unmet needs of patients with relapsed

or refractory AML, the potentially curative nature of BMT and the differentiated profile of Iomab-B.

Certain sites that had not been actively

enrolling due to COVID-19 at the initial outbreak of the pandemic resumed recruitment and enrollment in mid-2020, and we currently do

not have any sites that are not recruiting and enrolling patients due to COVID-19.

We also believe our earlier stage CD33 clinical trials

will continue to recruit and enroll patients given the acute nature of relapsed or refractory AML.

The continuation of the pandemic could

adversely affect our planned clinical trial operations, including our ability to conduct the trials on the expected timelines and recruit

and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19

if their geography is impacted by the pandemic.

Further, the continuation and/or resurgence of the COVID-19 pandemic could result in delays

in our clinical trials due to prioritization of hospital resources toward the pandemic, restrictions in travel, potential unwillingness

of patients to enroll in trials at this time, or the inability of patients to comply with clinical trial protocols if quarantines or travel

restrictions impede patient movement or interrupt healthcare services.

In addition, we rely on independent clinical investigators, contract

research organizations and other third-party service providers to assist us in managing, monitoring and otherwise carrying out our preclinical

studies and clinical trials, and the pandemic may affect their ability to devote sufficient time and resources to our programs or to travel

to sites to perform work for us.

Additionally, COVID-19 may

result in delays in receiving approvals from local and foreign regulatory authorities, delays in necessary interactions with IRB’s

or Institutional Review Boards, local and foreign regulators, ethics committees and other important agencies and contractors due to limitations

in employee resources or forced furlough of government employees.

To date, COVID-19 has not

had a financial impact on our company.

However, COVID-19 has caused severe disruptions in transportation and limited access to our facility,

resulting in limited support from our staff and professional advisors.

We continue to monitor the

impacts of COVID-19 on the global economy and on our business operations.

Although we expect that vaccinations for COVID-19 will continue

to improve conditions, the ultimate impact from COVID-19 on our business operations and financial results during 2021 will depend on,

among other things, the ultimate severity and scope of the pandemic, the pace at which governmental and private travel restrictions and

public concerns about public gatherings will ease, the rate at which historically large increases in unemployment rates will decrease,

if at all, and whether, and the speed with which the economy recovers.

We are not able to fully quantify the impact that these factors

will have on our financial results during 2021 and beyond, but developments related to COVID-19 may materially affect us in 2021.

Results of Operations –

Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

The following table sets forth,

for the periods indicated, data derived from our statements of operations:

Three Months Ended

(in thousands)

Other revenue

Total revenue

Operating expenses:

Research and development, net of reimbursements

General and administrative

Total operating expenses

Other income:

Interest income –

Total other income

We recorded no commercial

revenue for the three months ended March 31, 2021 and March 31, 2020.

Other revenue

We determined that certain collaborations

with a third-party are within the scope of ASC 606.

The collaboration agreement is made up of multiple modules related to various research

While we identified a single performance obligation to provide research services within each module for which we receive monetary

consideration, as the promises included in each module are similar in nature, the third-party can choose to proceed with each module or

can terminate the agreement at any time.

The consideration is recognized to revenue over each module and revenue recognized during the

three months ended March 31, 2021 of $0.6 million was due to the recognition of revenue from nonrefundable payments received from the

Research and development expense

Research and development

expenses increased $0.1 million to $4.3 million for the three months ended March 31, 2021 compared to $4.2 million for the three months

ended March 31, 2020.

The increase was primarily due to higher compensation expense resulting from the hiring of additional employees,

mostly offset by lower expenses on our CD45 program.

General and administrative expense

General and administrative

expenses of $1.7 million for the three months ended March 31, 2021 increased $0.2 million compared to $1.5 million for the three months

ended March 31, 2020, primarily attributable to higher professional fees.

Other income is comprised

of net interest income in both reporting periods.

The amount for the three months ended March 31, 2021 of $52 thousand increased from

$13 thousand for the three months ended March 31, 2020, as a higher average balance of cash and cash equivalents offset a lower average

interest rate.

Net loss of $5.3 million for

the three months ended March 31, 2021 decreased by $0.4 million from $5.7 million for the three months ended March 31, 2020 primarily

due to revenue recognized during this period, partially offset by higher research and development expenses and higher general and administrative

Liquidity and Capital Resources

We have financed our operations

primarily through sales of shares of our stock.

The following tables sets forth selected cash flow information for the periods indicated:

Three Months Ended

(in thousands)

Cash used in operating activities

Cash used in investing activities

Cash provided by financing activities

Net change in cash, cash equivalents and restricted cash

Net cash used in operating

activities for the three months ended March 31, 2021 of $5.6 million decreased by $0.3 million from $5.9 million in the prior-year period,

primarily due to the earned revenue.

Net cash provided by financing

activities for the three months ended March 31, 2021 was $14.3 million, primarily from the sale of shares of our common stock.

the three months ended March 31, 2020, net cash provided by financing activities was $2.5 million, including $2.7 million from the sale

of shares of our common stock.

In August 2020 we entered into the Capital on Demand™

Sales Agreement

with JonesTrading Institutional Services LLC, or JonesTrading, pursuant to which we may sell, from time to time, through or to JonesTrading,

up to an aggregate of $200 million of our common stock.

Shares of common stock are offered pursuant to our shelf registration statement

on Form S-3 filed with the SEC on August 7, 2020.

As of December 31, 2020, we had sold 2.1 million shares of common stock, resulting in

gross proceeds of $22.6 million and net proceeds of $21.7 million.

For the three months ended March 31, 2021, we sold 1.7 million shares

of common stock, resulting in gross proceeds of $14.8 million and net proceeds of $14.4 million.

Off-Balance Sheet Arrangements

We do not have any off-balance

sheet arrangements that have, or are reasonably likely to have a current or future effect on our financial condition, changes in financial

condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies and Use of Estimates

Our management’s discussion

and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared

in accordance with accounting principles generally accepted in the United States, (“GAAP”).

The preparation of these financial

statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and the disclosure

of contingent assets and liabilities in our consolidated financial statements during the reporting periods.

These items are monitored

and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future.

our estimates on historical experience, known trends and events, and on various other factors that we believe are reasonable under the

circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not

readily apparent from other sources.

Changes in estimates are reflected in reported results for the period in which they become known.

Actual results may differ materially from these estimates under different assumptions or conditions.

Our significant accounting

policies are described in detail in the notes to our consolidated financial statements appearing in our Annual Report filed on Form 10-K

for the year ended December 31, 2020.

Fair Value of Financial Instruments

Fair value is defined as the

price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants.

A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted prices in active markets for

identical assets or liabilities and the lowest priority to unobservable inputs.

Revenue Recognition

We recognize revenue in accordance

with ASC 606.

Under ASC 606, we recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects

the consideration that we expect to receive in exchange for those goods or services.

To determine revenue recognition for arrangements

within the scope of ASC 606, we perform the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance

obligations in the contract;

(iii) determine the transaction price, including variable consideration, if any;

(iv) allocate the transaction

price to the performance obligations in the contract;

and (v) recognize revenue as we satisfy a performance obligation.

We only apply

the five-step model to contracts when it is probable that we will collect the consideration to which we are entitled in exchange for the

goods or services we transfer to the customer.

At contract inception,

once the contract is determined to be within the scope of ASC 606, we assess whether the promised goods or services promised within each

contract are distinct and, therefore, represent a separate performance obligation.

Goods and services that are determined not to

be distinct are combined with other promised goods and services until a distinct bundle is identified.

In determining whether goods or

services are distinct, we evaluate certain criteria, including whether (i) the customer can benefit from the good or service either

on its own or together with other resources that are readily available to the customer (capable of being distinct) and (ii) the good

or service is separately identifiable from other goods or services in the contract (distinct in the context of the contract).

ASC 606 requires us to

allocate the arrangement consideration on a relative standalone selling price basis for each performance obligation after determining

the transaction price of the contract and identifying the performance obligations to which that amount should be allocated.

standalone selling price is defined in the new revenue standard as the price at which an entity would sell a promised good or service

separately to a customer.

We then recognize as revenue the amount of the transaction price that is allocated to the respective performance

obligation as each performance obligation is satisfied, either at a point in time or over time, and if over time, recognition is based

on the use of an output or input method.

Collaborative Arrangements

We follow the accounting guidance

for collaboration agreements, which requires that certain transactions between us and collaborators be recorded in our consolidated statements

of operations and comprehensive loss on either a gross basis or net basis, depending on the characteristics of the collaborative relationship,

and requires enhanced disclosure of collaborative relationships.

We evaluate our collaboration agreements for proper classification in

our consolidated statements of operations and comprehensive loss based on the nature of the underlying activity.

When we conclude that

we have a customer relationship with one of our collaborators, we follow the guidance of ASC 606 .

Research and Development Costs

Research and development costs

are expensed as incurred.

These costs include the costs of manufacturing drug product, the costs of clinical trials, costs of employees

and associated overhead, and depreciation and amortization costs related to facilities and equipment.

Research and development reimbursements

are recorded by us as a reduction of research and development costs.

Share-Based Payments

We estimate the fair value

of each stock option award at the grant date by using the Black-Scholes option pricing model.

The fair value determined represents the

cost for the award and is recognized over the vesting period during which an employee is required to provide service in exchange for the

We account for forfeitures of stock options as they occur.

Accounting Standards Recently Adopted

In August 2020, FASB issued

ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s

Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which, among other

things, provides guidance on how to account for contracts on an entity’s own equity.

This ASU simplifies the accounting for certain

financial instruments with characteristics of liabilities and equity.

Specifically, the ASU eliminated the need for us to assess whether

a contract on our own equity (1) permits settlement in unregistered shares, (2) whether counterparty rights rank higher than shareholder’s

rights, and (3) whether collateral is required.

In addition, the ASU requires incremental disclosure related to contracts on our own equity

and clarifies the treatment of certain financial instruments accounted for under this ASU on earnings per share.

This ASU may be applied

on a full retrospective of modified retrospective basis.

This ASU is effective January 1, 2022 and interim periods presented, although

early adoption of this ASU was permitted effective January 1, 2021.

We early adopted this standard effective January 1, 2021 and the standard

did not have a significant impact on our financial statements.

Outstanding, June 30, 2021

Exercisable, June 30, 2021

The Company has an outstanding

warrant to purchase 1,907 shares of common stock, issued on March 14, 2017 to Sandesh Seth, the Company’s Chairman and Chief Executive

The warrant included down-round protection up until it was amended on August 11, 2020.

For warrants with down-round protection,

a deemed dividend is recorded for the change in fair value of the warrants when the down-round provision is triggered.

As a result of

the April 2020 offering and June 2020 offering, the exercise price of the warrant was reset from $ 26.40 per share to $ 15.62 per share.

The down-round protection provision in the above warrants created a deemed dividend to common stockholders of $ 1 thousand in the nine

months ended September 30, 2020 which is reflected in the accompanying consolidated statement of operations and consolidated statement

of changes in stockholders’ equity.

On August 11, 2020, the Company and Mr.

Seth agreed to amend the warrant to remove the anti-dilution

provision that had been in the warrant.

Accordingly, pursuant to the amendment, as of August 11, 2020, the exercise price of the warrant

will no longer be subject to a proportional adjustment if and when the Company issues any shares of its common stock for a consideration

less than the exercise price of the warrant.

All other terms of the warrant remained the same.

6 - Subsequent Event

Since March 31, 2021, we have

sold 0.9 million shares of common stock under our Capital on Demand™

Sales Agreement with JonesTrading, resulting in net proceeds

of $7.2 million.

June 30, 2021, the Company has sold 0.2 million shares of common stock under its Capital on Demand™ Sales Agreement with JonesTrading,

resulting in net proceeds of $ 1.8 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements