What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-23 compared with 2022-03-23 · 288 added, 250 removed, 206 unchanged (72% of the section changed)

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Factors” discussed in Item 1A of Part I of this Annual Report.

are a clinical-stage biotechnology company seeking to extend the lives of cancer patients by pursing an integrated therapeutic (Rx) and

companion diagnostic (CDx) strategy.

Our therapeutic efforts are focused on developing potential first-in-class or best-in-class molecularly

targeted therapies that address the same cancer driver a CELsignia companion diagnostic can identify.

CELsignia is uniquely able to analyze

live patient tumor cells to identify new groups of cancer patients likely to benefit from targeted therapies.

This enables a CELsignia

CDx to support advancement of new indications for already approved targeted therapies.

We believe this integrated Rx and CDx strategy

will maximize the impact our drug development efforts have on the treatment landscape for cancer patients.

first drug candidate we are developing internally is gedatolisib, a potent, well-tolerated, small molecule dual inhibitor, administered

intravenously, that selectively targets all class I isoforms of PI3K and mammalian target of rapamycin (mTOR).

In April 2021,

we obtained exclusive global development and commercialization rights to gedatolisib under a license agreement with Pfizer, Inc.

gedatolisib’s unique mechanism of action, favorable pharmacokinetic properties, and intravenous formulation offer distinct advantages

over currently approved and investigational therapies that target PI3K or mTOR alone or together.

limitations of therapies that only inhibit a single class I PI3K isoform or only one

mTOR kinase complex

is a clinical-stage biotechnology company focused on development of targeted therapies for treatment of multiple solid tumor indications.

The Company’s lead therapeutic candidate is gedatolisib, a pan-PI3K/mTOR inhibitor.

Its mechanism of action and pharmacokinetic

properties are highly differentiated from other currently approved and investigational therapies that target PI3K or mTOR alone or together.

The Company initiated VIKTORIA-1, a Phase 3 study evaluating gedatolisib in patients with HR+/HER2- advanced breast cancer in 2022 and

is currently enrolling patients.

Its CELsignia companion diagnostic platform is uniquely able to analyze live patient tumor cells to

identify new groups of cancer patients likely to benefit from already approved targeted therapies.

is a potent, well-tolerated, small molecule reversible dual inhibitor, administered intravenously, that selectively targets all Class I isoforms of PI3K and mammalian target of rapamycin (mTOR).

In April 2021, we obtained exclusive global

development and commercialization rights to gedatolisib under a license agreement with Pfizer, Inc.

We believe gedatolisib’s

unique mechanism of action, differentiated chemical structure, favorable pharmacokinetic properties, and intravenous formulation

offer distinct advantages over currently approved and investigational therapies that target PI3K or mTOR alone or

limitations of therapies that only inhibit a single Class I PI3K isoform or only one mTOR kinase complex.

is a pan-class I isoform PI3K inhibitor with low nanomolar potency for the p110α, p110β, p110γ, and p110δ isoforms

Each isoform is known to preferentially affect different signal transduction events that involve tumor cell survival, depending upon

the aberrations associated with the linked pathway.

When a therapy only inhibits a single class I isoforms (e.g., alpelisib,

a PI3K-α inhibitor ) or only one mTOR kinase complex (e.g., everolimus, an mTORC1 inhibitor), numerous feedforward and feedback

loops between the PI3K isoforms and mTOR cross-activates the uninhibited sub-units.

This, in turn, induces compensatory resistance that

reduces the efficacy of isoform specific PI3K or single mTOR kinase complex inhibitors.

Inhibiting all four PI3K isoforms and both mTOR

complexes, as gedatolisib does, thus prevents the confounding effect of isoform interaction that may occur with isoform-specific PI3K

inhibitors and the confounding interaction between PI3K isoforms and mTOR.

and mTORC1 and mTORC2 complexes.

Each PI3K isoform and mTOR complex is known to preferentially affect different signal transduction events

that involve tumor cell survival, depending upon the aberrations associated with the linked pathway.

When a therapy only inhibits a single

Class I isoforms (e.g., alpelisib, a PI3K-α inhibitor ) or only one mTOR kinase complex (e.g., everolimus, an mTORC1 inhibitor),

numerous feedforward and feedback loops between the PI3K isoforms and mTOR complexes cross-activates the uninhibited sub-units.

in turn, induces compensatory resistance that reduces the efficacy of isoform specific PI3K or single mTOR kinase complex inhibitors.

Inhibiting all four PI3K isoforms and both mTOR complexes, as gedatolisib does, thus prevents the confounding effect of isoform interaction

that may occur with isoform-specific PI3K inhibitors and the confounding interaction between PI3K isoforms and mTOR.

tolerated by patients than oral PI3K and mTOR drugs.

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anti-cancer agents in nine investigator sponsored clinical trials.

Phase 1b trial (B2151009) evaluating patients with HR+/HER2- metastatic breast cancer was initiated in 2016 and subsequently

enrolled 138 patients.

Twelve patients from this study continue to receive study treatment, as of December 31, 2021, ten of whom

have received study treatment for more than three years.

The B2151009 clinical was an open label, multiple arm Phase 1b study that

evaluated gedatolisib in combination with palbociclib (CDK4/6 inhibitor) and fulvestrant or letrozole in patients with HR+/HER2-

advanced breast cancer.

Thirty-five patients were enrolled in two dose escalation arms to evaluate the safety and tolerability and

to determine the maximum tolerated dose (MTD) of gedatolisib when used in combination with the standard doses of palbociclib and

endocrine therapy (letrozole or fulvestrant).

Phase 1b trial (B2151009) evaluating patients with ER+/HER2- metastatic breast cancer was initiated in 2016 and subsequently enrolled

138 patients.

Seven patients from this study continue to receive study treatment, as of December 31, 2022, each of which have received

study treatment for more than four years.

The B2151009 clinical trial was an open label, multiple arm Phase 1b study that evaluated

gedatolisib in combination with palbociclib (CDK4/6 inhibitor) and fulvestrant or letrozole in patients with HR+/HER2- advanced breast

Thirty-five patients were enrolled in two dose escalation arms to evaluate the safety and tolerability and to determine the maximum

tolerated dose (MTD) of gedatolisib when used in combination with the standard doses of palbociclib and endocrine therapy (letrozole

or fulvestrant).

The MTD was determined to be 180 mg administered intravenously once weekly.

103 patients were subsequently enrolled in one of four expansion arms (A, B, C, D).

A total of 103 patients were subsequently

enrolled in one of four expansion arms (A, B, C, D).

objective overall response rates were observed in all four expansion arms and were comparable in each arm for PIK3CA WT and PIK3CA MT

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benefit rate (CBR) of ≥79% was observed.

Median progression-free survival (PFS) was 31.1 months for patients receiving first-line

treatment (Arm A) and 12.9 months for patients who received a prior CDK4/6 inhibitor and were treated in the study with the Phase 3 dosing

Median progression-free survival (PFS) was 12.9 months for patients who received a prior CDK4/6 inhibitor and were treated with the Phase 3 dosing

schedule (Arm D).

For the Arm A patients that were treatment naive in the advanced setting, median PFS had not yet been reached.

combined with palbociclib and endocrine therapy demonstrated a favorable safety profile with manageable toxicity.

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No grade 5 events were reported in this study.

We are preparing to initiate VIKTORIA-1, a Phase 3, open-label, randomized clinical trial to evaluate the efficacy and safety of two regimens in adults

with HR+/HER2- advanced breast cancer whose disease has progressed after prior CDK4/6 therapy in combination with an aromatase

activated VIKTORIA-1, a Phase 3, open-label, randomized clinical trial to evaluate the efficacy and safety of two regimens in adults

with HR+/HER2- advanced breast cancer whose disease has progressed after prior CDK4/6 therapy in combination with an aromatase inhibitor:

1) gedatolisib in combination with palbociclib and fulvestrant:

and 2) gedatolisib in combination with fulvestrant.

expect to initiate the VIKTORIA-1 study in the first half of 2022.

The clinical trial will

enable separate evaluation of subjects according to their PIK3CA status.

Subjects who meet eligibility criteria and are PIK3CA WT will

be randomly assigned (1:1:1) to receive a regimen of either gedatolisib, palbociclib, and fulvestrant (Arm A), gedatolisib

Two hundred clinical

sites in North America, Europe, South America, Asia, and Australia have been selected to participate in the study.

The first clinical

site was activated in the third quarter.

The first dosage of a patient in the trial occurred in December 2022.

clinical trial will enable separate evaluation of subjects according to their PIK3CA status.

Subjects who meet eligibility criteria and

are PIK3CA WT will be randomly assigned (1:1:1) to receive a regimen of either gedatolisib, palbociclib, and fulvestrant (Arm A), gedatolisib

and fulvestrant (Arm B), or fulvestrant (Arm C).

Subjects who meet eligibility criteria and are PIK3CA MT will be randomly assigned (3:3:1)

to receive a regimen of either gedatolisib, palbociclib, and fulvestrant (Arm D) or alpelisib and fulvestrant (Arm E).

January 13, 2022, gedatolisib was granted Fast Track designation for the treatment of patients with ER+/HER2- metastatic breast cancer

after progression on CDK4/6 therapy.

Fast Track designation is granted by the FDA for products that are intended for the treatment of

serious or life-threatening disease or conditions and which demonstrate the potential to address an unmet medical need.

The designation

offers the opportunity for frequent interactions with the FDA to discuss the drug’s development plan and to ensure collection of

appropriate data needed to support drug approval, as well as eligibility for rolling submission of a New Drug Application.

to receive a regimen of either gedatolisib, palbociclib, and fulvestrant (Arm D), alpelisib and fulvestrant (Arm E), or gedatolisib and

fulvestrant (Arm F).

proprietary CELsignia diagnostic platform is the only commercially ready technology we are aware of that uses a patient’s living

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companies, that would rely on a CELsignia CDx to select patients.

Five Phase 2 trials are underway to evaluate the efficacy and safety

Four Phase 2 trials are underway to evaluate the efficacy and safety

of these therapies in CELsignia selected patients.

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the probability of getting regulatory approval to market the targeted therapy indication

December 22, 2022, Celcuity closed on a $20.0 million term loan (the “Term B Loan”) with an affiliate of Innovatus Capital

Partners, LLC (“Innovatus”), pursuant to a Loan and Security Agreement, dated April 8, 2021 (the “Loan Agreement”),

as amended by that First Amendment to Loan and Security Agreement, dated August 9, 2022 (the “Amendment and collectively with the

Loan Agreement, the “Amended Loan Agreement”).

The Company became eligible to draw down the Term B Loan upon the closing

of the Company’s previously disclosed $100 million private placement on December 9, 2022.

As previously disclosed, the Amended

Loan Agreement may provide the Company with up to $75.0 million through funding of up to five term loans.

Funding of the first $15.0

million term loan occurred on April 8, 2021 in connection with entering into the original Loan Agreement.

As of December 31, 2022, term

loans totaling $35 million are outstanding under the Amended Loan Agreement.

Celcuity will be able to draw on two additional tranches

of $10 million each and one additional tranche of $20 million upon achievement of certain clinical trial milestones and satisfaction

of certain financial covenants determined on a pro forma as-funded basis.

Funding of these additional tranches is also subject to other

customary conditions and limits on when the Company can request funding for such tranches.

Celcuity is entitled to make interest only

payments for the 48-month period from the original agreement date or for the 60-month period from the original agreement date if certain

conditions are met.

The loans will mature on April 8, 2027, the sixth anniversary of the initial funding date.

Innovatus has the right

to convert outstanding principal into shares of Celcuity common stock until the third anniversary of the loan amendment date, with such

amount limited to an aggregate of up to $6.6 million assuming all tranches are funded.

The loan is secured by all of Celcuity’s

December 9, 2022, Celcuity closed on a private placement of common stock and preferred stock, resulting in gross proceeds of approximately

$100 million, before deducting placement agent fees and other expenses.

Celcuity issued 6,182,574 shares of common stock, 1,120,873 shares

of Series A Preferred Stock and warrants exercisable for 6,956,450 shares of common stock to certain institutional and other accredited

investors pursuant to a securities purchase agreement entered into on May 15, 2022.

Pursuant to the securities purchase agreement, the

closing (funding) of the private placement followed dosage of the first patient in Celcuity’s Phase 3 clinical trial, VIKTORIA-1,

evaluating gedatolisib, Celcuity’s lead therapeutic candidate.

Investors purchased shares of common stock and Series A Preferred

Stock at a price of $5.75 per share (on an as converted to common stock basis), with forty percent (40%) warrant coverage (on an as converted

to common stock basis) and customary resale registration rights.

The warrants have an exercise price of $8.05 per share.

December 7, 2022, Celcuity announced that the first patient was dosed in it Phase 3 VIKTORIA-1 clinical trial.

Operational activities

continue to focus on facilitating activation of sites and enrolling patients.

The clinical trial protocol was updated to include an additional

study arm (Arm F) to evaluate gedatolisib plus fulvestrant in 50 patients who have PIK3CA mutations.

This update was made in response

to a recommendation from the European Medicines Agency (EMA) that the study arms for PIK3CA mutated patients mirror the same study arms

for PIK3CA non-mutated patients.

No changes were made to the primary endpoints.

VIKTORIA-1 will evaluate the safety and efficacy of gedatolisib

in combination with fulvestrant with or without palbociclib in adults with HR+/HER2- advanced breast cancer whose disease progressed

while receiving prior CDK4/6 therapy.

Further details about the study are available at ClinicalTrials.gov .

have not generated any revenue from sales to date, and we continue to incur significant research and development and other expenses related

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$29.6 million, respectively.

As of December 31, 2021, our cash and cash equivalents were approximately $84.3 million, and we had an accumulated

deficit of approximately $55.9 million.

As of December 31, 2022, our cash and cash equivalents and short-term investments were approximately $168.6

million, and we had an accumulated deficit of approximately $96.3 million.

of COVID-19 on our Business

novel strain of coronavirus (COVID-19) was first identified in Wuhan, China in December 2019, and subsequently declared a pandemic by

the World Health Organization.

The impact of the COVID-19 pandemic on our business is discussed in further detail below:

help protect the health and safety of our employees, suppliers and collaborators, we took proactive, aggressive action from the earliest

signs of the outbreak.

We enacted rigorous safety measures in our laboratory and administrative offices, including implementing social

distancing protocols, allowing working from home for those employees that do not need to be physically present in a lab to perform their

work, suspending travel, implementing temperature checks at the entrances to our facilities, extensively and frequently disinfecting

our workspaces and providing masks to those employees who must be physically present.

We expect to continue with these measures until

the COVID-19 pandemic is contained and we may take further actions as government authorities require or recommend or as we determine

to be in the best interests of our employees, suppliers, and collaborators.

Trials and Collaborations

a result of the COVID-19 pandemic, governmental authorities have implemented and are continuing to implement numerous and constantly

evolving measures to try to contain the virus, such as travel bans and restrictions, limits on gatherings, quarantines, shelter-in-place

orders, and business shutdowns.

As we continue to advance our clinical trial collaborations, we are in close contact with our current

clinical sponsors, and principal investigators, as well as prospective pharmaceutical company and clinical collaborators, to assess the

impact of COVID-19 on our trial enrollment timelines and collaboration discussions.

In light of the COVID-19 pandemic, the focus of healthcare

providers and hospitals on fighting the virus, and consistent with the FDA’s updated industry guidance for conducting clinical

trials issued on March 18, 2020, we are experiencing delays in the enrollment of patients in our ongoing clinical trials.

We now expect

interim results from the FACT-1 and FACT-2 trials to be delayed until the first half of 2023 and final results approximately nine months

As the impact of COVID-19 on our industry becomes clearer, we may need to reassess the timing of our anticipated clinical milestones.

Prospective clinical trial collaborations with pharmaceutical companies and sponsors may also be delayed but the impact on the timing

of finalizing agreements is not yet known.

and Development

our facility currently remains operational, the evolving measures to try to contain the virus have impacted and may further impact our

workforce and operations, as well as those of our vendors and suppliers.

Our laboratory remains operational as of this date, but, in

response to the COVID-19 pandemic, we have implemented protective policies that reduce the number of research and development staff operating

in our laboratory at any one time.

While governmental measures may be modified or extended, we expect that our research and development

and clinical laboratory will remain operational.

However, in light of the focus of healthcare providers and hospitals on fighting the

virus, several of the clinical sites that provide us tumor tissue for research have halted this service, reducing the number of new tumor

tissue specimens we would typically expect to receive.

These various constraints may slow or diminish our research and development activities.

In addition, cancer research-related industry meetings, such as the American Association for Cancer Research (AACR), were delayed for

several months.

Our submissions to present research results at these meetings were accepted, but the release of the results was postponed

in conjunction with the delayed meeting schedules.

there is uncertainty related to the anticipated impact of the recent COVID-19 outbreak on our future results, we believe our existing

balance of cash and cash equivalents will be sufficient to meet our cash needs arising in the ordinary course of business for at least

the next twelve months.

We continue to monitor the rapidly evolving situation and guidance from federal, state and local public health

authorities and may take additional actions based on their recommendations.

In these circumstances, there may be developments outside

our control requiring us to adjust our operating plan.

In addition, see Item 1A of Part I of this Annual Report for additional information

on risks associated with pandemics in general and COVID-19 specifically and how those risks may impact our business and operations.

we have largely returned to normal operations in our facility, the COVID-19 pandemic continues and its effect on our operations and financial

condition will depend in large part on future developments which cannot be reasonably estimated at this time.

Future developments include

the duration, scope and severity of the pandemic, the emergence of new virus variants that are more contagious or harmful than prior

variants, actions taken by governmental authorities, suppliers, clinical trial sites, and other business partners to contain or mitigate

the pandemic’s impact, and the potential adverse effects on the suppliers, labor market and general economic activity.

we continue to advance our clinical trial collaborations, we remain in close contact with our current clinical sponsors, and principal

investigators, as well as prospective pharmaceutical company and clinical collaborators, to monitor the impact of COVID-19 on our trial

enrollment timelines and collaboration discussions.

We experienced delays in the enrollment of patients in our ongoing CELsignia Phase

2 clinical trials and now expect interim results from FACT-1 and FACT-2 to be delayed until the second half of 2023.

We could experience

further delays in clinical trials and collaborations with pharmaceutical companies and sponsors if new variants emerge or if the spread

of COVID-19 once again accelerates.

Due to the inherent uncertainty associated with the COVID-19 pandemic, we are unable to predict the

impact the pandemic may have on our clinical trial work and overall financial condition.

OF OPERATIONS

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date, we have not generated any revenue.

Initially, our ability to generate revenue will depend primarily upon our ability to obtain

partnership agreements with pharmaceutical companies to provide companion diagnostics for such pharmaceutical partners’ existing

or investigational targeted therapies.

We expect these partnerships to generate significant revenue from the sale of tests to identify

patients eligible for clinical trials, from milestone payments, and, potentially, from royalties on the incremental drug revenues our

tests enable.

Once a new drug indication is received that requires use of our companion diagnostic to identify eligible patients, we

expect to generate revenues from sales of tests to treating physicians.

With the execution of the Pfizer license agreement in April 2021,

whereby we acquired exclusive world-wide licensing rights to develop and commercialize gedatolisib, we expect to conduct clinical trials

to support potential regulatory approval to market gedatolisib.

If we obtain regulatory approvals to market gedatolisib, we expect to

generate revenue from sales of the drug for the treatment of breast cancer patients.

With the execution of the Pfizer license agreement in April 2021, whereby we acquired exclusive

world-wide licensing rights to develop and commercialize gedatolisib, we initiated a Phase 3 clinical trial, VIKTORIA-1, in 2022 to support

potential regulatory approval to market gedatolisib.

If we obtain regulatory approvals to market gedatolisib, we expect to generate revenue

from sales of the drug for the treatment of breast cancer patients.

Additionally, we will seek to generate revenue from partnership agreements

with pharmaceutical companies to provide companion diagnostics for such pharmaceutical partners’ existing or investigational targeted

If a new drug indication is received that requires use of our companion diagnostic to identify eligible patients, we expect

to generate revenues from sales of tests to treating physicians.

and Development

our inception, we have primarily focused on research and development of our CELsignia platform, development and validation of our CELsignia

tests, and research related to the discovery of new cancer sub-types.

Beginning in April 2021, we are also focusing on development of

gedatolisib, a PI3K/mTOR targeted therapy.

our inception, we have primarily focused on research and development of gedatolisib, a PI3K/mTOR targeted therapy and our CELsignia platform

and corresponding tests.

Research and development expenses primarily include:

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fees paid to third parties;

manufacturing

validation costs for gedatolisib

costs for gedatolisib;

costs associated with patent applications.

and external research and development costs are expensed as they are incurred.

As we initiate a Phase 3 clinical trial for gedatolisib

and continue to expand clinical trials to evaluate efficacy of targeted therapies in cancer patients selected with one of our CELsignia

tests, the proportion of research and development expenses allocated to external spending will grow at a faster rate than expenses allocated

to internal expenses.

As we continue development of gedatolisib, manage the

VIKTORIA-1 Phase 3 trial and other clinical trials to evaluate the efficacy of targeted therapies in cancer patients selected with one

of our CELsignia tests, the proportion of research and development expenses allocated to external spending will grow at a faster rate

than expenses allocated to internal expenses.

and Administrative

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Other general and administrative expenses include professional fees for auditing, tax, and legal services associated

with being a public company, director and officer insurance and travel expenses for our general and administrative personnel.

with being a public company, director and officer insurance, investor relations and travel expenses for our general and administrative

and Marketing

and marketing expenses consist primarily of professional and consulting fees related to these functions.

To date, we have incurred immaterial

sales and marketing expenses as we continue to focus primarily on the development of our first drug, gedatolisib, development of our

CELsignia platform and corresponding CELsignia tests.

We expect to begin to incur increased selling and marketing expenses in anticipation

of regulatory approval to market gedatolisib and the commercialization of our first CELsignia tests.

These increased expenses are expected

to include payroll-related costs as we add employees in the commercial departments, costs related to the initiation and operation of

our sales and distribution network and marketing related costs.

To date, we have incurred

immaterial sales and marketing expenses as we continue to focus primarily on the development of our first drug, gedatolisib,

managing the VIKTORIA-1 Phase 3 trial, and development of our CELsignia platform and corresponding CELsignia tests.

We would expect

to begin to incur increased sales and marketing expenses in anticipation of the commercialization of our first drug, gedatolisib,

and CELsignia tests.

These increased expenses are expected to include payroll-related costs as we add employees in the commercial

departments, costs related to the initiation and operation of our sales and distribution network and marketing related

expense is primarily due to a Loan Agreement and finance lease obligations.

income consists of interest income earned on our cash and cash equivalents.

income consists of interest income earned on our cash, cash equivalents and investment balances.

of Operations

of the Years Ended December 31, 2022 and 2021

of Operations Data:

and development

and administrative

Increase (Decrease)

Percent Change

Statements of Operations Data:

Operating expenses:

from operations

Research and development

General and administrative

Total operating expenses

Loss from operations

(39,391,091 )

(28,355,915 )

income (expense)

on sale of fixed assets

income (expense), net

loss before income taxes

(11,035,176 )

Other income (expense)

Interest expense

Interest income

Loss on sale of fixed assets

Other income (expense), net

Net loss before income taxes

(40,370,040 )

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(10,764,774 )

Income tax benefits

$ (40,370,040 )

$ (29,605,266 )

$ (10,764,774 )

and Development

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approximately $9.5 million, or 37%, compared to the same period in 2021.

The increase primarily resulted from a $10.0 million upfront

license fee related to the execution of the Pfizer license agreement, which included $5.0 million of non-cash expense for the issuance

of common stock.

The remaining $8.1 million increase primarily resulted from expenses related to the support and development of gedatolisib.

Employee related expenses, including consulting fees, accounted for a $3.4 million increase.

The increase of $3.4 million included an

increase of $0.6 million in non-cash stock-based compensation.

The remaining increase of $4.7 million is related to clinical trials,

costs associated with the transfer of the gedatolisib-related activities from Pfizer to Celcuity and patent legal fees.

Included in the $9.5 million increase is a $10 million reduction

in gedatolisib licensing related expenses offset by increases of $19.5 million in other research and development expenses.

period, research and development expenses included a $10.0 million upfront license fee related to the execution of the Pfizer license

agreement while there were no licensing agreement expenses for gedatolisib in 2022.

Of the $19.5 million increase in research and development

expense, $4.9 million was related to increased employee and consulting expenses, of which $0.9 million was in the form of non-cash stock-based

compensation.

The remaining $14.6 million increase of research and development costs is related to costs for existing clinical trials

and for activities supporting the initiation of the VIKTORIA-1 pivotal trial.

a significant amount of research and development is central to our business model.

We plan to increase our research and development expenses

for the foreseeable future as we seek to develop gedatolisib, discover new cancer sub-types, and develop and validate additional CELsignia

tests to diagnose such sub-types.

We also expect to incur increased expenses to support companion diagnostic business development activities

with pharmaceutical companies as we develop additional CELsignia tests and initiate a clinical trial for gedatolisib.

for the foreseeable future as we seek to develop gedatolisib, manage the VIKTORIA-1 Phase 3 trial, discover new cancer sub-types, and

develop and validate additional CELsignia tests to diagnose such sub-types.

We also expect to incur increased expenses to support companion

diagnostic business development activities with pharmaceutical companies as we develop additional CELsignia tests and manage a clinical

trial for gedatolisib.

and Administrative

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fees associated with being a public company.

the year ended December 31, 2021, interest expense was $1.3 million and represents an increase of $1.3 million compared to the same period

The increase is due to the loan agreement that was executed in April 2021 and includes $0.6 million of non-cash interest expense.

the year ended December 31, 2021, interest income decreased approximately $0.1 million compared to the same period in 2020.

was primarily the result of lower market interest rates.

the year ended December 31, 2022, interest expense was $2.1 million and represents an increase of $0.8 million compared to the same

period in 2021.

The Loan Agreement that was executed in April 2021 amended in August 2022, and includes $0.9 million of non-cash

interest expense.

The increase primarily reflects the loan being in place for the full year in 2022, while only a portion of the year in

the year ended December 31, 2022, interest income increased approximately $1.1 million compared to the same period in 2021.

increase was primarily the result of higher market interest rates and the closing of additional financing activities, leading to

higher cash, cash equivalents and short-term investment balances.

AND CAPITAL RESOURCES

our inception, we have incurred losses and cumulative negative cash flows from operations.

Through December 31, 2021, we raised capital

of approximately $13.7 million and $7.5 million through private placements of common equity and unsecured convertible notes, respectively.

On September 22, 2017, we closed on the IPO of our common stock, which generated approximately $23.3 million of additional cash after

taking into account underwriting discounts and commissions and offering expenses.

On June 5, 2020, we entered into an At Market Issuance

Sales Agreement with B.

Riley, FBR, Inc (the “ATM Agreement”).

The ATM Agreement allowed us to sell shares of common stock

up to an aggregate offering price of $10.0 million.

Through December 31, 2021, we generated approximately $0.1 million of additional

cash through sales pursuant to the ATM Agreement, after taking into account commissions and offering expenses.

On February 26, 2021,

we completed a follow-on offering of our common stock, which generated approximately $25.8 million of additional cash after taking into

account underwriting discounts and offering expenses.

In conjunction with the follow-on offering, the ATM Agreement was terminated.

April 8, 2021, we entered into a loan agreement with Innovatus Life Sciences Lending Fund I, LP (“Innovatus”), whereby Innovatus

agreed to loan up to $25 million in three tranches consisting of (i) a $15.0 million non-contingent term A loan that was funded on April

8, 2021, (ii) a $5 million term B loan to be funded upon our request no later than March 31, 2022, and (iii) a $5 million term C loan

to be funded upon our request no later than March 31, 2023.

Funding of the term B and C loan is subject to our ability to achieve certain

Net proceeds generated from the loan agreement were $14.4 million.

On July 1, 2021, we completed a follow-on offering of

our common stock, which generated approximately $52.8 million of additional cash after taking into account underwriting discounts of

and offering expenses.

from these capital raising activities has been our primary source of funds for our operations since inception.

As of December 31, 2021,

our cash and cash equivalents were approximately $84.3 million, and we had an accumulated deficit of approximately $55.9 million.

February of 2022, we entered into an Open Market Sale Agreement SM with Jefferies LLC, as agent (“Jefferies”),

pursuant to which we may offer and sell, from time to time, through Jefferies, shares of our common stock having an aggregate offering

price of up to $50,000,000.

We will pay Jefferies a commission equal to 3.0% of the aggregate gross proceeds from each sale of such shares.

To date, we have not yet made any sales under this arrangement.

expect that our research and development and general and administrative expenses will increase as we continue development of gedatolisib,

development and validation of our CELsignia platform and additional CELsignia tests, conduct research related to the discovery of new

cancer sub-types, conduct clinical trials, and pursue other business development activities.

We will also start to incur sales and marketing

expenses as we commercialize our CELsignia tests and gedatolisib.

We expect to use cash on hand to fund our research and development

expenses, capital expenditures, working capital, sales and marketing expenses, and general corporate expenses, as well as for the increased

costs associated with being a public company.

on our current business plan, we believe that our current cash on hand will provide sufficient cash to finance operations and pay obligations

when due for at least the next twelve months.

may seek to raise additional capital to expand our business, pursue strategic investments, and take advantage of financing or other opportunities

that we believe to be in the best interests of the Company and our stockholders.

Additional capital may be raised through the sale of

common or preferred equity or convertible debt securities, entry into debt facilities or other third-party funding arrangements.

sale of equity and convertible debt securities may result in dilution to our stockholders and those securities may have rights senior

to those of our common shares.

Agreements entered into in connection with such capital raising activities could contain covenants that

would restrict our operations or require us to relinquish certain rights.

Additional capital may not be available on reasonable terms,

Through December 31, 2022, we have funded

our operations primarily through private placements and registered offerings of our equity securities and unsecured convertible notes,

and borrowings under loan agreements.

From inception through December 31, 2022, we raised an aggregate of approximately $223.7 million

of net proceeds through sales of our securities, and as of December 31, 2022 had $35.0 million of borrowings under loan agreements.

of December 31, 2022, our cash and cash equivalents and short-term investments were approximately $24.6 million and $144.0 million, respectively,

and we had an accumulated deficit of approximately $96.3 million.

On December 9, 2022, we issued 6,182,574 shares of common stock, 1,120,873 shares of Series A Preferred Stock and warrants

exercisable for 6,956,450 shares of common stock to certain institutional and other accredited investors pursuant to a securities purchase

agreement entered into on May 15, 2022.

Pursuant to the securities purchase agreement, the closing (funding) of the private placement

occurred following dosage of the first patient in the Company’s Phase 3 study, VIKTORIA-1.

Investors purchased shares of common

stock and Series A Preferred Stock at a price of $5.75 per share (on an as converted to common stock basis), with forty percent (40%)

warrant coverage (on an as converted to common stock basis) and customary resale registration rights.

The warrants have an exercise price

of $8.05 per share.

The private placement generated gross proceeds of approximately $100 million before deducting placement agent fees

and other offering expenses of $4.3 million.

Market Sale Agreement SM .

On February 4, 2022, we entered into an Open Market Sale Agreement SM with Jefferies

LLC, as agent, pursuant to which we may offer and sell, from time to time, through Jefferies, shares of our common stock having an aggregate

offering price of up to $50,000,000.

On October 12, 2022, pursuant to this agreement, the Company sold 500,000 shares of common stock

in a single transaction at a price of $10.35 per share, generating gross proceeds of $5.2 million ($4.8 million net of commissions and

offering expenses).

At December 31, 2022, $44.8 million of common stock remains available for sale under the Jefferies agreement.

Loan Agreement.

On April 8, 2021, we entered into a Loan Agreement with Innovatus Life Sciences Lending Fund I, LP (“Innovatus”),

under which Innovatus agreed to loan up to $25 million in three tranches consisting of (i) a $15.0 million non-contingent Term A loan

that was funded on April 8, 2021, (ii) a $5 million Term B loan with a deadline of March 31, 2022, and (iii) a $5 million Term C loan

to be funded upon our request, subject to our ability to achieve certain milestones, no later than March 31, 2023.

On August 9, 2022,

the Company amended the Loan Agreement with Innovatus to provide for up to $75 million in term loans.

As of December 31, 2022, term loans

totaling $35 million are outstanding under the Loan Agreement, including the initial Term A loan of $15 million which was funded on April

8, 2021, and a $20 million Term B loan which was funded on December 22, 2022 following the closing of the $100 million private placement

described above.

Additionally, the Company will be able to draw on two additional tranches of $10 million and one additional tranche

of $20 million upon achievement of certain clinical trial milestones and satisfaction of certain financial covenants determined on a

pro forma as-funded basis.

Funding of these additional tranches is also subject to other customary conditions and limits on when the

Company can request funding for such tranches.

expect that our research and development and general and administrative expenses will increase as we continue to develop gedatolisib,

manage the VIKTORIA-1 Phase 3 trial, conduct research related to the discovery of new cancer sub-types, conduct clinical trials, and

pursue other business development activities.

We would also expect to incur sales and marketing expenses as we commercialize gedatolisib

and our CELsignia tests.

We expect to use cash on hand to fund our research and development expenses, clinical trial costs, capital expenditures,

working capital, sales and marketing expenses, and general corporate expenses.

on our current business plan, we believe that our current cash, cash equivalents and short-term investments together with available borrowings

under the Innovatus Loan Agreement will provide sufficient cash to finance our operations and pay obligations when due through at least

expectations as to how long our current capital resources will be sufficient to fund our operations are based on assumptions that may

not be accurate, and we could use our current capital resources sooner than we currently expect.

In addition, we may seek to raise additional

capital to finance capital expenditures and operating expenses over the next several years as we launch our integrated therapeutic and

companion diagnostic strategy and expand our infrastructure, commercial operations and research and development activities, and to take

advantage of financing or other opportunities that we believe to be in the best interests of the Company and our stockholders.

capital may be raised through the sale of common or preferred equity or convertible debt securities, entry into debt facilities or other

third-party funding arrangements.

The sale of equity and convertible debt securities may result in dilution to our stockholders and those

securities may have rights senior to those of our common shares.

Agreements entered into in connection with such capital raising activities

could contain covenants that would restrict our operations or require us to relinquish certain rights.

Additional capital may not be

available on reasonable terms, or not at all.

following table sets forth the primary sources and uses of cash for the years ended December 31:

cash provided by (used in):

Net cash provided by (used in):

Operating activities

$ (36,008,171 )

$ (20,311,940 )

increase (decrease) in cash and cash equivalents

Investing activities

(144,031,794 )

cash used in operating activities was approximately $20.3 million for the year ended December 31, 2021 and consisted primarily of a net

loss of approximately $29.6 million, offset by non-cash expense items of approximately $8.5 million and working capital changes

of $0.8 million.

Non-cash expense items of approximately $8.5 million primarily consisted of $5.0 million for issuance of common stock

related to a license agreement, $2.6 million of stock-based compensation expense, non-cash interest expense of $0.6 million and depreciation

expense of $0.3 million.

The approximately $0.8 million of working capital changes was primarily due to an increase in accounts payable,

slightly offset by an increase in prepaid assets.

Financing activities

Net increase (decrease) in cash and cash equivalents

$ (59,714,824 )

cash used in operating activities was approximately $36.0 million for the year ended December 31, 2022 and consisted primarily of a net

loss of approximately $9.5 million, adjusted for non-cash items of approximately $2.2 million and working capital changes of approximately

loss of approximately $40.4 million and working capital changes of $1.2 million, offset by non-cash expense items of approximately

$5.6 million.

Non-cash expense items of approximately $2.2 million consisted of stock-based compensation expense of approximately $1.8

million and of depreciation of approximately $0.4 million.

The working capital change was primarily due to approximately $0.2

million in accrued expenses.

cash used in investing activities for the years ended December 31, 2021 and December 31, 2020 were flat at approximately $0.1 million

and consisted of purchases of property and equipment.

Non-cash expense items of approximately $5.6 million primarily consisted of $4.6 million of stock-based compensation expense,

non-cash interest expense of $0.9 million and depreciation expense of $0.2 million.

The approximately $1.2 million of working capital

changes was primarily due to an increase in prepaid assets, somewhat offset by increases in accounts payable and accrued expenses.

cash used in operating activities was approximately $20.3 million for the year ended December 31, 2021 and consisted primarily of a net

loss of approximately $29.6 million, adjusted for non-cash items of approximately $8.5 million and working capital changes of

approximately $0.8 million.

Non-cash expense items of approximately $8.5 million consisted of $5.0 million for issuance of common stock

related to a license agreement, stock-based compensation expense of approximately $2.6 million, non-cash interest expense of $0.6 million

and depreciation of approximately $0.3 million.

The working capital change of approximately $0.8 million was primarily due to

an increase in accounts payable, slightly offset by an increase in prepaid assets.

cash used in investing activities for the year ended December 31, 2022 was approximately $144.0 million and consisted of approximately

$143.9 million of short-term investments in government securities (U.S.

Treasury Bills and U.S.

government agency securities) and approximately

$0.1 million in purchases of property and equipment.

cash used in investing activities for the year ended December 31, 2021 was approximately $0.1 million and consisted of purchases of property

and equipment.

cash provided by financing activities for the year ended December 31, 2022 was approximately $120.3 million.

The $120.3 million primarily

consisted of net proceeds from a private placement offering and ATM offering totaling $100.5 million and $19.5 million from net proceeds

related to the closing of a Loan Agreement.

The remaining $0.3 million was the result of proceeds from the exercise of employee stock

options and proceeds from employee stock purchases.

cash provided by financing activities for the year ended December 31, 2021 was approximately $93.0 million.

The $93.0 million primarily

consisted of net proceeds from the sale of shares of our common stock through two follow-on offerings totaling $78.5 million and $14.4

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exercise of common stock warrants and employee stock options and proceeds from employee stock purchases.

cash provided by financing activities for the year ended December 31, 2020 was approximately $0.1 million and primarily reflects net

proceeds from the sale of shares of our common stock through the ATM Agreement and employee stock purchases.

ACCOUNTING PRONOUNCEMENTS

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research and development expenses.

The Company accrues for these costs based on factors such as estimates of the work completed and in

accordance with service agreements with its third-party service providers.

The Company makes significant judgments and estimates in determining

the accrued liabilities balance in each reporting period.

As actual costs become known, the Company adjusts its prepaid assets or accrued

The Company has not experienced any material differences between accrued costs and actual costs incurred.

However, the status

and timing of actual services performed, number of patients enrolled, and the rate of patient enrollments may vary from the Company’s

estimates, resulting in an adjustment to expense in future periods.

Changes in these estimates that result in material changes to the

Company’s prepaid assets or accrued expenses could materially affect the Company’s results of operations.

The Company primarily relies on a compilation of progress reports from third-party service providers,

including the respective invoicing, to record actual expenses, along with determining changes to prepaid assets and accrued liabilities.

To date, the company believes utilization of third-party reports most accurately reflects expenses.

As the current VIKTORIA-1 Phase 3

trial ramps up site activation and patient enrollment, the Company may need to estimate expenses in future periods and actual services

performed may vary from these estimates.

Changes in these estimates that result in material changes to the Company’s prepaid assets

or accrued expenses could materially affect the Company’s results of operations.

Quantitative and Qualitative Disclosures About Market Risk

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What changed 10-K

Item 7. Management’s Discussion and Analysis