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Item 7. Management’s Discussion and Analysis

2024-04-01 compared with 2023-03-31 · 129 added, 115 removed, 97 unchanged (72% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis

of our financial condition and results of operations in conjunction with the financial statements and the related notes appearing elsewhere

in this Form 10-K.

This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties,

including those set forth under “Cautionary Statement About Forward-Looking Statements.” Actual results and experience could

differ materially from the anticipated results and other expectations expressed in our forward-looking statements as a result of a number

of factors, including but not limited to those discussed in this Item and in Item 1A - “Risk Factors.” 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-K.

We are a clinical stage pharmaceutical company organized

as a Nevada corporation in July 2017 to focus on the development of anti-cancer drug candidates for the treatment of brain and central

nervous system tumors, based on intellectual property that we license under license agreements with HPI and UTMDACC and own pursuant to

a collaboration and asset purchase agreement with Reata.

We believe our lead drug candidate, Berubicin, may

be a significant development in the treatment of Glioblastoma and other CNS malignancies, and if approved by the FDA could give Glioblastoma

You should read the following discussion and

analysis of our financial condition and results of operations in conjunction with the financial statements and the related notes appearing

elsewhere in this Form 10-K.

This discussion contains forward-looking statements reflecting our current expectations that involve risks

and uncertainties, including those set forth under “Cautionary Statement About Forward-Looking Statements.” Actual results

and experience could differ materially from the anticipated results and other expectations expressed in our forward-looking statements

as a result of a number of factors, including but not limited to those discussed in this Item and in Item 1A - “Risk Factors.”

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-K.

We are a clinical stage pharmaceutical company

organized as a Nevada corporation in July 2017 to focus on the development of anti-cancer drug candidates for the treatment of brain and

central nervous system tumors, based on intellectual property that we license under license agreements with HPI and UTMDACC and own pursuant

to a collaboration and asset purchase agreement with Reata.

We believe our lead drug candidate, Berubicin,

may be a significant development in the treatment of Glioblastoma and other CNS malignancies, and if approved by the FDA could give Glioblastoma

patients an important new therapeutic alternative to the current standard of care.

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can be shown relative to a randomized control arm.

We do not have manufacturing facilities and all manufacturing

activities are contracted out to third parties.

We do not have manufacturing facilities and all

manufacturing activities are contracted out to third parties.

Additionally, we do not have a sales organization.

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intellectual property rights.

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

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:

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:

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

(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

an NDA for Berubicin;

(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 NDA for Berubicin;

and (v) 6,667 shares of our common stock.

The patents we licensed from HPI expired in March 2020.

With the Reata Agreement and the HPI License, we believe

we have obtained all rights and intellectual property necessary to develop Berubicin.

As stated earlier, it is our plan to obtain additional

intellectual property covering other compounds which, subject to the receipt of additional financing, may be developed into drugs for

brain and other cancers.

With the Reata Agreement and the HPI License, we

believe we have obtained all rights and intellectual property necessary to develop Berubicin.

As stated earlier, it is our plan to obtain

additional intellectual property covering other compounds which, subject to the receipt of additional financing, may be developed into

drugs for brain and other cancers.

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

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novel anticancer agents targeting CNS malignancies.

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

paid and recorded $334,000 in 2020 related to this agreement in research and development expenses in the Company’s Statements of

The remaining $800,000 was paid in 2021.

The principal investigator for this agreement is Dr.

The work conducted under

this Sponsored Research Agreement has produced a new mesylate salt of WP1244 termed WP1874.

We believe the enhanced solubility of this

salt may increase its ability to be formulated for use in an IV infusion, while maintaining similar potency and toxicity characteristics.

As such, WP1874 will be the primary focus in our development efforts of the WP1244 portfolio.

This agreement was extended and expired

on March 31, 2023.

The Company agreed to fund approximately $1,134,000 over a two-year period, which

has been fully paid by the Company in 2021.

This agreement was extended and expired on March 31, 2023.

The principal investigator for

this agreement is Dr.

Waldemar Priebe, our founder.

Results of Operations for the Year Ended December 31, 2023 Compared

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General and Administrative Expense

General and administrative expense was $5,967,052 for

the year ended December 31, 2022 compared to $4,680,840 for 2021.

The change is attributable to an increase of approximately $1,096,000

in professional expenses, $315,000 in employee compensation, $334,000 related to the write off of deferred offering costs and $84,000

in other general and administrative expenses.

These changes were offset by decreases of $502,000 in stock-based compensation and advertising

and marketing of $41,000.

General and administrative expense was approximately

$4,770,000 for the year ended December 31, 2023 compared to approximately $5,967,000 for 2022.

The decrease in general and administrative

expense was mainly attributable to decreases of approximately $792,000 in professional expenses, $488,000 in employee compensation,

$141,000 in stock-based compensation and $92,000 in insurance expenses.

These changes were offset by increases of approximately $145,000

in travel expenses, board of director compensation of $96,000, advertising and marketing of $68,000 and other general and administrative

expenses of $7,000.

Research and Development Expense

Research and development expense was $9,300,055 for

the year ended December 31, 2022 compared to $9,805,075 for 2021.

The decrease in research and development expenses during the period

was mainly attributed to the timing of drug development expenses (significant manufacturing activity occurred in the prior year period

with much less occurring in the current year, and this lower level of manufacturing activity is expected to continue throughout this year),

as well as a credit to research and development expense for the funds collected from WPD Pharmaceuticals related to their purchase of

Berubicin drug product for their clinical trials, partially offset by an increase in contract research organization (CRO) expenses related

to continued progress with our Berubicin clinical trial.

Our CRO expenditures are primarily for labor related to activating selected trial

sites, managing patient enrollment processes, collecting and managing data from patient treatments throughout the trial, processing reimbursement

to the sites for patient treatment, and assisting with necessary submissions to amend the IND.

CRO expenditures are expected to remain

relatively consistent with the year-to-date run-rate throughout the remainder of the trial as site activation efforts and the associated

costs thereof transition into reimbursing clinical trial sites for patient treatment costs as site and patient enrollment increases.

expect to incur increased research and development costs in the future as we continue our clinical trial.

Interest Expense

Interest expense was $7,027 and $9,285 for the years

ended December 31, 2022 and 2021, respectively.

The net loss for the year ended December 31, 2022 was

$15,274,134 compared to $14,495,200 for 2021.

The change in net loss is primarily attributable to decreased research and development costs.

Research and development expense was approximately

$14,096,000 for the year ended December 31, 2023 compared to approximately $9,300,000 for 2022.

The increase in research and development

expenses during the period was mainly attributed to the timing of research organization (CRO) expenses and patient treatment costs related

to continued progress with our clinical trial for Berubicin.

Our CRO expenditures are primarily for labor related to activating selected

trial sites, managing patient enrollment processes, collecting and managing data from patient treatments throughout the trial, processing

reimbursement to the sites for patient treatment, and assisting with necessary submissions to amend the IND.

CRO expenditures are expected

to begin to taper off throughout the remainder of the trial as we are no longer activating sites and no longer enrolling patients after

January 2024.

We expect our research and development costs to taper off in the future as we move toward completion of our clinical trial

for Berubicin primarily due to patients moving from active treatment to follow-up leading to decreasing costs of treating and following

these patients as more patients eventually succumb to their disease.

Other income (expense)

Interest income was approximately $28,000 and $0

for the years ended December 31, 2023 and 2022, respectively.

Interest expense was approximately $14,000 and $7,000 for the years ended

December 31, 2023 and 2022, respectively.

The net loss for the year ended December 31, 2023

was approximately $18,851,000 compared to approximately $15,274,000 for 2022.

The change in net loss is primarily attributable to increased

research and development costs.

Liquidity and Capital Resources

On December 31, 2022, we had cash of $10,055,407 and

we had working capital of $7,644,386.

We have historically funded our operations from proceeds from debt and equity sales.

On December 31, 2023, we had cash of approximately

$549,000 and we had a working capital deficit of approximately $4,542,000.

We have historically funded our operations from proceeds from

debt and equity sales.

In January 2022, we completed a financing with

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private placement were approximately $11.5 million, before deducting the placement agent’s fees and other offering expenses.

In November 2022, we completed a financing with

an institutional investor for the sale of (i) 147,000 shares of common stock, (ii) pre-funded warrants to purchase up to an aggregate

In November 2022, we completed a financing

with an institutional investor for the sale of (i) 147,000 shares of common stock, (ii) pre-funded warrants to purchase up to an aggregate

of 1,742,764 shares of common stock and (iii) warrants to purchase up to an aggregate of 1,889,764 shares of common stock.

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from the offering were approximately $5.98 million, before deducting the placement agent’s fees and other offering expenses.

We believe that our cash on hand is sufficient to fund

our planned operations into, but not beyond, the third quarter of 2023.

Our plan of operations is primarily

focused on completing a clinical trial for Berubicin.

We estimate that we will require additional financing of approximately $8 to $12

million to complete the Phase 2 trial for Berubicin (taking into account our cash on hand as of December 31, 2022 of approximately $10.1

million), approximately $5.0 million to support near-term WP1244/WP1874 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 is sufficient to fund our operations

into the third quarter of 2023.

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 to meet our obligations and execute our business plan.

If we are unable to raise sufficient funds, we will be required

to develop and implement an alternative plan to further extend payables, reduce overhead or scale back our business plan until sufficient

additional capital is raised to support further operations.

There can be no assurance that such a plan will be successful.

On January 29, 2024, we entered into a placement

agency agreement with A.G.P./Alliance Global Partners (“AGP”) and Maxim Group LLC (“Maxim”) for the public offering

of (i) 2,215,667 shares of our common stock;

(ii) pre-funded warrants to purchase 11,117,667 shares of common stock;

(iii) Series A Warrants

to purchase up to an aggregate of 13,333,334 shares of common stock;

and (iv) Series B Warrants to purchase up to an aggregate of 13,333,334

shares of common stock.

The combined purchase price of one share of common stock and accompanying Series A & B common warrants was

$0.30 and the combined purchase price of one pre-funded warrant and accompanying Series A & B common warrants was $0.299 (with the

pre-funded warrants having an exercise price of $0.001).

The closing of the sales of these securities occurred on February 1, 2024.

gross proceeds from the offering were approximately $4.0 million, before deducting the placement agent’s fees and other offering

Our plan of operations is

primarily focused on completing a clinical trial for Berubicin.

We estimate that we will require additional financing of approximately

$15 to $17 million to complete the potentially pivotal Phase 2 trial for Berubicin (taking into account our cash on hand as of December

31, 2023 of approximately $0.5 million) plus such additional working capital to fund our operations during the pendency of the trial (with

such operations estimated at $4.5 to $5.0 million per annum).

If capital is available to fund WP1244/WP1874 preclinical work to prepare

for a Phase 1 trial, we would need to raise an additional $5.0 million to support near-term development of that program.

Our current expectation

is that our cash on hand, combined with capital raised subsequent to December 31, 2023, is sufficient to fund our operations into the

latter half of the second quarter of 2024.

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 very

significant additional capital in the near term in order to meet our past due and future obligations and execute our business plan.

we are unable to raise sufficient funds, we will be required to develop and implement an alternative plan to further extend payables,

reduce overhead or scale back our business plan until sufficient additional capital is raised to support further operations.

be no assurance that such a plan will be successful and if it is not successful we may need to cease operations entirely.

Summary of Cash Flows

Cash used in operating activities

Net cash used in operating activities was $10,557,815

and $13,538,309 for the years ended December 31, 2022 and 2021, respectively, and mainly included payments made for drug development (including

the cost of our potentially pivotal trial of Berubicin), contract labor, officer compensation, marketing and professional fees to our

consultants, attorneys and accountants.

Net cash used in operating activities was approximately

$14,140,000 and $10,558,000 for the years ended December 31, 2023 and 2022, respectively, and mainly included payments made for drug development

(including the cost of our potentially pivotal trial of Berubicin), contract labor, officer compensation, marketing and professional fees

to our consultants, attorneys and accountants.

Cash used in investing activities

Net cash used in investing activities

was $4,422 and $5,748 for the years ended December 31, 2022 and 2021 and included payments for furniture and equipment.

Net cash used in investing activities was approximately

$4,000 and $4,000 for the years ended December 31, 2023 and 2022 and included payments for furniture and equipment.

Cash provided by financing activities

Net cash provided by financing activities was $15,613,127

and $4,509,081 for the years ended December 31, 2022 and 2021.

We received net proceeds of $16,038,093 from the issuance of common

stock during the year ended December 31, 2022.

Net cash provided by financing activities was approximately

$4,637,000 and $15,613,000 for the years ended December 31, 2023 and 2022, respectively.

We received net proceeds of approximately

$2,318,000 from the issuance of common stock and $2,961,000 from the exercise of warrants during the year ended December 31, 2023.

Off-balance Sheet Arrangements

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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 as described in the section “Overview” above.

expenditures, although we are required to pay certain milestone fees and royalties to HPI and Reata 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

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

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

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be those that require more significant judgments and estimates in the preparation of our financial statements.

relies on historical experience and other assumptions believed to be reasonable in making its judgment and estimates.

Actual results could

differ materially from those estimates.

Management believes its application of accounting policies,

and the estimates inherently required therein, are reasonable.

These accounting policies and estimates are periodically reevaluated, and

adjustments are made when facts and circumstances dictate a change.

Management relies on historical

experience and other assumptions believed to be reasonable in making its judgment and estimates.

Actual results could differ materially

from those estimates.

Management believes its application of accounting

policies, and the estimates inherently required therein, are reasonable.

These accounting policies and estimates are periodically reevaluated,

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

Quantitative and Qualitative Disclosure About Market Risk.

We are a smaller reporting company as defined by Rule

12b-2 of the Exchange Act and are not required to provide the information required under this item.

We are a smaller reporting company as defined by

Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

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-K

Item 7. Management’s Discussion and Analysis