What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-13 compared with 2021-05-13 · 92 added, 105 removed, 189 unchanged (51% of the section changed)

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and uncertainties.

“Risk Factors”

of our Form 10-K for the year ended December 31, 2020, available on the Security

and Exchange Commission's (“SEC”) EDGAR website at www.sec.gov, for a discussion of the uncertainties, risks and assumptions

“Risk Factors” of our Form 10-K for the year ended December 31, 2020, available on the Security

and Exchange Commission's (“SEC”) EDGAR website at www.sec.gov, for a discussion of the uncertainties, risks and assumptions

associated with these statements.

Actual results and the timing of events could differ materially from those discussed in our forward-looking

statements as a result of many factors, including those set forth under “Risk Factors”

and elsewhere in this Form 10-Q.

statements as a result of many factors, including those set forth under “Risk Factors” and elsewhere in this Form 10-Q.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We make forward-looking statements under the “Management’s

Discussion and Analysis of Financial Condition and Results of Operations”

and in other sections of this Form 10-Q.

We make forward-looking statements under the “Management’s

Discussion and Analysis of Financial Condition and Results of Operations” and in other sections of this Form 10-Q.

In some cases,

you can identify these statements by forward-looking words such as “may,”

“might,”

“should,”

“would,”

“could,”

“expect,”

“plan,”

“anticipate,”

“intend,”

“believe,”

“estimate,”

“predict,”

“potential”

or “continue,”

and the negative of these terms and

you can identify these statements by forward-looking words such as “may,” “might,” “should,” “would,”

“could,” “expect,” “plan,” “anticipate,” “intend,” “believe,”

“estimate,” “predict,” “potential” or “continue,” and the negative of these terms and

other comparable terminology.

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and uncertainties described under Item 1A.

“Risk Factors”

of our Form 10-K for the year ended December 31, 2020 and in other

“Risk Factors” of our Form 10-K for the year ended December 31, 2020 and in other

filings made by us from time to time with the SEC.

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the success of our clinical trials through all phases of clinical development;

compliance with obligations under intellectual property licenses with third

any delays in regulatory review and approval of product candidates in clinical

compliance with obligations under intellectual property licenses with third parties;

any delays in regulatory review and approval of product candidates in clinical development;

our ability to commercialize our product candidates;

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potential product liability claims;

our dependency on third-party manufacturers to supply or manufacture our

our dependency on third-party manufacturers to supply or manufacture our products;

our ability to establish or maintain collaborations, licensing or other arrangements;

our ability and third parties’

abilities to protect intellectual property

our ability and third parties’ abilities to protect intellectual property rights;

our ability to adequately support future growth;

our ability to attract and retain key personnel to manage

our business effectively.

our ability to attract and retain key personnel to manage our business effectively.

We caution you not to place undue reliance on the

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nervous system tumors, based on intellectual property that we license under license agreements with Houston Pharmaceuticals, Inc.

(“HPI”)

and The University of Texas M.D.

Anderson Cancer Center (“UTMDACC”) and own pursuant to a collaboration and asset purchase

agreement with Reata Pharmaceuticals, Inc.

(“Reata”).

We believe our lead drug candidate, Berubicin,

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that may be developed into drugs to treat cancers.

Berubicin was discovered at MD Anderson by Dr.

Waldemar Priebe, the founder of the Company.

Through a series of transactions, Berubicin was initially licensed to Reata.

Reata conducted

a Phase I clinical trial on Berubicin but subsequently allowed their IND with the FDA to lapse for strategic reasons.

This required us

to obtain a new IND for Berubicin before beginning further clinical trials.

On December 17, 2020, we announced that our IND application

with the FDA for Berubicin for the treatment of Glioblastoma Multiforme was in effect.

We intend to initiate our trial during the second

quarter of 2021 to investigate the efficacy of Berubicin in adults with Glioblastoma Multiforme who have failed first-line therapy.

correspondence between us and the FDA resulted in modifications to our previously disclosed trial design, including designating overall

survival (OS) as the primary endpoint of the study.

OS is a rigorous endpoint that the FDA has recognized as a basis for approval of oncology

drugs when a statistically significant improvement can be shown relative to a randomized control arm.

The planned Phase 2 trial will evaluate the efficacy

Berubicin was discovered by our founder, Dr.

Priebe, Professor of Medicinal Chemistry at The University of Texas MD Anderson Cancer Center.

Through a series of transactions, Berubicin

was initially licensed to Reata.

Reata conducted a Phase I clinical trial on Berubicin but subsequently allowed their IND with the FDA

to lapse for strategic reasons.

This required us to obtain a new IND for Berubicin before beginning further clinical trials.

17, 2020, we announced that our IND application with the FDA for Berubicin for the treatment of Glioblastoma Multiforme was in effect.

We intend to initiate our trial during the third quarter of 2021 to investigate the efficacy of Berubicin in adults with Glioblastoma

Multiforme who have failed first-line therapy.

Recent correspondence between us and the FDA resulted in modifications to our previously

disclosed trial design, including designating overall survival (OS) as the primary endpoint of the study.

OS is a rigorous endpoint that

the FDA has recognized as a basis for approval of oncology drugs when a statistically significant improvement can be shown relative to

a randomized control arm.

The Phase II trial, which was open for enrollment

during the second quarter of 2021 and is planned to treat the first patient during the third quarter of 2021, will evaluate the efficacy

of Berubicin in patients with Glioblastoma Multiforme who have failed primary treatment for their disease, and results will be compared

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of these treatments.

The trial's adaptive design is intended to allow this interim analysis of the data to demonstrate meaningful differences

in efficacy between treatments and then to allow an adjustment to the size of the patient population in the trial for maximum efficiency

in terms of time in development.

Even if Berubicin is approved, there is no assurance that patients will choose an infusion treatment,

as compared to the current standard of care, which requires oral administration.

Even if Berubicin is approved, there is no assurance that patients will choose an infusion treatment, as compared

to the current standard of care, which requires oral administration.

We do not have manufacturing facilities and all

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On November 21, 2017, we entered into a Collaboration

and Asset Purchase Agreement with Reata (the “Reata Agreement”).

Pursuant to the Reata Agreement we purchased all of Reata’s

and Asset Purchase Agreement with Reata (the “Reata Agreement”).

Pursuant to the Reata Agreement we purchased all of Reata’s

intellectual property and development data regarding Berubicin, including all trade secrets, knowhow, confidential information and other

intellectual property rights, which we refer to as the Reata Data.

On December 28, 2017, we obtained the rights to

a worldwide, exclusive royalty-bearing, license to the chemical compound commonly known as Berubicin from HPI in an agreement we refer

to as the HPI License.

On December 28, 2017, we obtained the rights

to a worldwide, exclusive royalty-bearing, license to the chemical compound commonly known as Berubicin from HPI in an agreement we

refer to as the HPI License.

HPI is affiliated with Dr.

Priebe, who controls a majority of our shares.

Under the HPI License we obtained the

exclusive right to develop certain chemical compounds for use in the treatment of cancer anywhere in the world.

In the HPI License we

agreed to pay HPI:

Priebe, our founder and largest shareholder.

Under the HPI License we

obtained the exclusive right to develop certain chemical compounds for use in the treatment of cancer anywhere in the world.

HPI License we agreed to pay HPI:

(i) development fees of $750,000 over a three-year period beginning November 2019;

(ii) a 2% royalty on net sales;

royalty on net sales;

(iii) a $50,000 per year license fee;

(iv) milestone payments of $100,000 upon the commencement of a Phase II trial and $1.0 million upon

the approval of an New Drug Application (“NDA”) for Berubicin;

and (v) 200,000 shares of our common stock.

The patents we

licensed from HPI expired in March 2020.

(iv) milestone payments of $100,000 upon the commencement of a Phase II

trial and $1.0 million upon the approval of a New Drug Application (“NDA”) for Berubicin;

and (v) 200,000 shares of our

common stock.

The patents we licensed from HPI expired in March 2020.

On June 10, 2020, the FDA granted Orphan Drug Designation

(“ODD”) for Berubicin for the treatment of malignant gliomas.

ODD from the FDA is available for drugs targeting diseases with

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On January 10, 2020, we entered into a Patent and

Technology License Agreement (the “1244 Agreement”) with The Board of Regents of The University of Texas System, an agency

of the State of Texas, on behalf of the UTMDACC.

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We agreed to fund approximately $1,134,000 over a two-year period.

We paid and recorded $334,000 in

2020 related to this agreement in research and development expenses in our Statements of Operations.

The principal investigator for this

agreement is Dr.

Results of Operations for the Three Months Ended March 31, 2021

Compared to the Three Months Ended March 31, 2020

During the six months ended June

30, 2021, we paid $200,000 and accrued $400,000 related to this agreement in research and development expenses in our Statements of Operations.

The principal investigator for this agreement is Dr.

Results of Operations for the Three Months Ended June 30, 2021 Compared

to the Three Months Ended June 30, 2020

General and Administrative Expense

General and administrative expense was approximately

$1,403,000 for the three months ended March 31, 2021 compared to approximately $1,355,000 for the comparable period in 2020.

$1,146,000 for the three months ended June 30, 2021 compared to approximately $981,000 for the comparable period in 2020.

in general and administrative expense was mainly attributable to an increase of approximately $157,000 for stock-based compensation, $29,000

$107,000 in employee compensation and taxes, $47,000 for professional fees which were offset by decreases in advertising and marketing

of $187,000, $58,000 in travel expenses and $9,000 in other general and administrative expenses.

in employee compensation and taxes and $35,000 for professional fees which were offset by decreases in advertising and marketing of $60,000.

Research and Development Expense

Research and development expense was approximately

$2,207,000 for the three months ended March 31, 2021 compared to approximately $613,000 for the comparable period in 2020.

$2,665,000 for the three months ended June 30, 2021 compared to approximately $1,492,000 for the comparable period in 2020.

incurred during the period were related to drug manufacturing and labor related to the preparation of our Phase II study.

incur increased research and development costs in the future as our product development activities expand.

The net loss for the three months ended March 31,

The net loss for the three months ended June 30,

2021 was approximately $3,814,000 compared to approximately $2,474,000 for the comparable period in 2020.

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to increased personnel and activity associated with preparing for our clinical trials in 2021.

Results of Operations for the Six Months Ended June 30, 2021 Compared

to the Six Months Ended June 30, 2020

General and Administrative Expense

and administrative expense was $2,549,000 for the six months ended June 30, 2021 compared to $2,337,000 for the comparable period in 2020.

The increase in general and administrative expense, was mainly attributable to an increase of approximately $305,000 for stock-based compensation,

an increase of $136,000 in employee compensation and taxes, an increase of $82,000 in professional fees which were offset by decreases

in advertising and marketing of $246,000 and travel expenses of $61,000 .

Research and Development Expense

Research and development expense was approximately

$4,872,000 for the six months ended June 30, 2021 compared to $2,105,000 for the comparable period in 2020.

The expenses incurred during

the period were related to drug manufacturing and labor related to the preparation of our Phase II study.

We expect to incur increased

research and development costs in the future as our product development activities expand.

The net loss for the six months ended June 30,

2021 was $7,427,000 compared to $4,442,000 for the comparable period in 2020.

The change in net loss is attributable to increased personnel

and activity associated with preparing for our clinical trials in 2021.

Liquidity and Capital Resources

On March 31, 2021, we had cash of approximately

On June 30, 2021, we had cash of approximately

$6,886,000 and we had working capital of approximately $12,053,000.

We fund our operations from proceeds from equity sales.

Our plan of operations is primarily focused on

completing a Phase II clinical trial for Berubicin.

We estimate that we will require additional financing of approximately $18 million

to complete the trial, approximately $2.0 million to support near-term WP1244 preclinical work, plus such additional working capital to

fund our operations during the pendency of the trial.

The timing and costs of clinical trials are difficult to predict and as such the

foregoing estimates may prove to be inaccurate.

Our plan of operations is primarily focused on completing a Phase II clinical trial for Berubicin.

We estimate that we will require additional financing of approximately $16 million to complete the trial, approximately $2.0 million to support near-term WP1244 preclinical work, plus such additional working capital to fund our operations during the pendency of the trial.

Our current expectation is that our cash on hand (including the subscription receivable collected in full on July 1, 2021) is sufficient to fund our operations into the second quarter of 2022.

The timing and costs of clinical trials are difficult to predict and trial plans may change in response to evolving circumstances and as such the foregoing estimates may prove to be inaccurate.

We will need to raise additional capital in order

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Net cash used in operating activities was approximately

$3,308,000 and $1,855,000 for the three months ended March 31, 2021 and 2020, respectively, and mainly included payments made for clinical

trial preparation, officer compensation, stock based compensation, insurance, marketing and professional fees to our consultants, attorneys

and accountants.

$8,306,000 and $4,598,000 for the six months ended June 30, 2021 and 2020, respectively, and mainly included payments made for clinical

trial preparation, officer compensation, insurance, marketing and professional fees to our consultants, attorneys and accountants.

Cash used in investing activities

Net cash used by investing activities was approximately

$4,000 and $6,000 for the three months ended March 31, 2021 and 2020, respectively.

$4,000 and $18,000 for the six months ended June 30, 2021 and 2020, respectively.

The amount used in 2020 and 2021 are related to the

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Net cash provided by financing activities was $1,156,000

for the three months ended March 31, 2021 related to the sale of common stock and exercise of warrants, offset by the repayment

of notes payable.

We had no financing activities for the three months ended March 31, 2020.

for the six months ended June 30, 2021 related to the sale of common stock and exercise of warrants, offset by the repayment of notes

We had no financing activities for the six months ended June 30, 2020.

Off-balance Sheet Arrangements

As of March 31, 2021, we did not have any relationships

As of June 30, 2021, we did not have any relationships

with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities,

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We do not have any material commitments for capital

expenditures, although we are required to pay certain development fees to HPI and WPD as described in the section “Overview”

JOBS Act Accounting Election

The Jumpstart Our Business Startups Act of 2012,

or the JOBS Act, exempts an “emerging growth company”

such as us from being required to comply with new or revised financial

or the JOBS Act, exempts an “emerging growth company” such as us from being required to comply with new or revised financial

accounting standards until private companies are required to comply with the new or revised financial accounting standards.

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and adjustments are made when facts and circumstances dictate a change.

Stock-based Compensation –

Stock-based Compensation – Employee

and non-employee share-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an

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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 2. Management’s Discussion and Analysis