What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-12 compared with 2021-08-13 · 64 added, 59 removed, 222 unchanged (36% of the section changed)

104 unchanged sentences

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

to the current standard of care, with 2 to 1 randomization of the 243 patients to Berubicin or Lomustine.

Subjects receiving Berubicin

will be administered a 2-hour IV infusion of 7.5 mg/m2 berubicin hydrochloride daily for three consecutive days followed by 18 days off

(21-day cycle).

Lomustine is administered orally.

The trial will include an interim analysis that will evaluate the comparative effectiveness

of these treatments.

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.

Phase II trial, which was open for enrollment during the second quarter of 2021 and treated 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 to the current standard

of care, with 2 to 1 randomization of the 243 patients to Berubicin or Lomustine.

Subjects receiving Berubicin will be administered a

2-hour IV infusion of 7.5 mg/m2 berubicin hydrochloride daily for three consecutive days followed by 18 days off (21-day cycle).

is administered orally.

The trial will include an interim analysis that will evaluate the comparative effectiveness of these treatments.

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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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, 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:

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

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

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 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.

(ii) a 2% 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 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

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

During the six months ended June

During the nine months ended September

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

Results of Operations for the Three Months Ended September 30, 2021

Compared to the Three Months Ended September 30, 2020

General and Administrative Expense

General and administrative expense was approximately

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

$1,235,000 for the three months ended September 30, 2021 compared to approximately $969,000 for the comparable period in 2020.

in general and administrative expense was mainly attributable to an increase of approximately $127,000 for stock-based compensation, $59,000

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

in insurance, $32,000 in employee compensation and taxes, $29,000 in Scientific Advisory Board compensation and $19,000 in other expenses.

Research and Development Expense

Research and development expense was approximately

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

$2,578,000 for the three months ended September 30, 2021 compared to approximately $1,042,000 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 June 30,

2021 was approximately $3,814,000 compared to approximately $2,474,000 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.

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

to the Six Months Ended June 30, 2020

net loss for the three months ended September 30, 2021 was approximately $3,813,000 compared to approximately $2,011,000 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.

Results of Operations for the Nine Months Ended September 30, 2021

Compared to the Nine Months Ended September 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 .

General and administrative expense was $3,785,000

for the nine months ended September 30, 2021 compared to $3,305,000 for the comparable period in 2020.

The increase in general and administrative

expense, was mainly attributable to an increase of approximately $432,000 for stock-based compensation, $168,000 in employee compensation

and taxes, $71,000 in professional fees, $63,000 in insurance and $29,000 in Scientific Advisory Board compensation which were offset

by decreases in advertising and marketing of $231,000, travel expenses of $44,000 and $8,000 in other expenses.

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.

$7,450,000 for the nine months ended September 30, 2021 compared to $3,148,000 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,

The net loss for the nine months ended September

30, 2021 was $11,241,000 compared to $6,453,000 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.

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 June 30, 2021, we had cash of approximately

On September 30, 2021, we had cash of approximately

$8,326,000 and we had working capital of approximately $8,748,000.

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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 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

Our current expectation is that our cash on hand is sufficient to fund our operations into the second quarter of 2022.

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

$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.

$10,302,000 and $5,871,000 for the nine months ended September 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 $18,000 for the six months ended June 30, 2021 and 2020, respectively.

The amount used in 2020 and 2021 are related to the

purchase of furniture and equipment.

$4,000 and $18,000 for the nine months ended September 30, 2021 and 2020, respectively.

The amount used in 2020 and 2021 are related to

the purchase of furniture and equipment.

Cash provided by financing activities

Net cash provided by financing activities was $4,592,000

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.

for the nine months ended September 30, 2021 related to the sale of common stock and exercise of warrants, offset by the repayment of

notes payable.

Net cash used in financing activities was $45,000 for the nine months ended September 30, 2020 related payment of deferred

offering costs.

Off-balance Sheet Arrangements

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

As of September 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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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