What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-11 · 344 added, 177 removed, 175 unchanged (75% of the section changed)

1 unchanged sentence

You should read this discussion together with the unaudited interim condensed consolidated financial statements, related notes, and other financial information

included elsewhere in this Quarterly Report on Form 10-Q together with our audited consolidated financial statements, related notes, and other information contained in the Form 10-K/A filed with the Securities

and Exchange Commission (the “SEC”) on June 30, 2022 (the “10-K/A”), as well as the information contained in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “Original 10-K”), filed

with the SEC on April 15, 2022, to the extent the information contained in the Original 10-K was not superseded by the information contained in the 10-K/A.

The following discussion contains assumptions, estimates and other forward-looking

statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors,” in Part I, Item 1A of the 10-K/A and as described from time to time in our other filings with the SEC.

These risks could cause our actual

results to differ materially from those anticipated in these forward-looking statements.

We are a biopharmaceutical company utilizing our mRNA technology platform, including mRNA-based cell reprogramming and gene editing technologies, to create next generation mRNA, gene-editing and

cell therapies, including iPSC therapies for multiple therapeutic indications.

Our mRNA technology platform, which includes novel lipid nanoparticles (“LNPs”) for mRNA delivery and targeted transgene insertion, was acquired through a license with

Factor Bioscience Limited, or Factor, and through our acquisition of Novellus, Inc.

included elsewhere in this Quarterly Report on Form 10-Q together with our audited consolidated financial statements, related notes, and other information contained in our Annual Report on Form 10-K/A filed with the Securities and Exchange Commission (the “SEC”) on June 30, 2022 (the “10-K/A”), as well as the information contained in our Annual Report on Form 10-K for the year ended December 31, 2021 (the

“Original 10-K”), filed with the SEC on April 15, 2022, to the extent the information contained in the Original 10-K was not superseded by the information contained in the 10-K/A.

The following discussion contains or is based on assumptions,

estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors,” in Part I, Item 1A of the 10-K/A and as described from time to time in our other filings with the

These risks could cause our actual results to differ materially from those anticipated in these forward-looking statements.

We are a biopharmaceutical company using our mRNA technology platform, including mRNA-based cell reprogramming and gene editing

technologies, to create next generation mRNA, gene-editing and cell therapies, including iPSC therapies for multiple therapeutic indications.

We plan to develop and advance a pipeline of therapeutic products both internally and through strategic

partnerships.

Our mRNA technology platform, which includes novel lipid nanoparticles (“LNPs”) for mRNA delivery and targeted transgene insertion, was acquired through a license with Factor Bioscience Limited (“Factor Limited”) and through our

acquisition of Novellus, Inc.

and Novellus, Ltd.

in July 2021, which we refer to as the Acquisition.

in July 2021, which we refer to as the Novellus Acquisition.

Name Change and Ticker Symbol Change

Effective October 17, 2022, we changed our name from Brooklyn ImmunoTherapeutics, Inc.

to Eterna Therapeutics Inc.

pursuant to an amendment to our Certificate of Incorporation, as

amended (the “Name Change”).

The Name Change did not require approval of our stockholders and did not affect the rights of our security holders.

In connection with the Name Change, the trading symbol of our common stock on The Nasdaq Global

Market changed from “BTX” to “ERNA.”

Merger with NTN Buzztime, Inc.

On March 25, 2021, we completed the Merger with NTN Buzztime, Inc.

In accordance with the Merger Agreement, on March 25, 2021, Brooklyn amended its restated certificate of incorporation in order to

• prior to the Merger, a reverse stock split of its common stock, par value $0.005 per share, at a ratio of one-for-two;

• following the Merger, a change in its corporate name from “NTN Buzztime, Inc.” to “Brooklyn ImmunoTherapeutics, Inc.”

On March 26, 2021, we sold the rights, title and interest in and to the assets relating to the business operated under the name “NTN Buzztime, Inc.” prior to the Merger to eGames.com Holdings LLC,

or eGames.com, in exchange for eGames.com’s payment of a purchase price of $2.0 million and assumption of specified liabilities relating to such pre-Merger business.

On March 25, 2021, we completed the Merger with NTN Buzztime, Inc., changed our name from “NTN Buzztime, Inc.” to “Brooklyn ImmunoTherapeutics, Inc.” and consummated a one-for-two reverse split

of our common stock.

On March 26, 2021, we sold the rights, title and interest in and to the assets relating to the business operated under the name “NTN Buzztime, Inc.” prior to the Merger to eGames.com Holdings

LLC, or eGames.com, in exchange for eGames.com’s payment of a purchase price of $2.0 million and assumption of specified liabilities relating to such pre-Merger business.

This transaction, which we refer to as the Disposition, was completed in

3 unchanged sentences

Under this method of accounting, Brooklyn LLC was deemed the

“acquiring” company and Brooklyn (then known as NTN Buzztime, Inc.) was treated as the “acquired” company for financial reporting purposes.

Operations prior to the Merger are those of Brooklyn LLC, and the historical financial statements of

Brooklyn LLC became the historical financial statements of Brooklyn with respect to periods prior to the completion of the Merger.

“acquiring” company and Eterna (then known as NTN Buzztime, Inc.) was treated as the “acquired” company for financial reporting purposes.

Operations prior to the Merger are those of Brooklyn ImmunoTherapeutics, LLC (“Brooklyn LLC”), and the

historical financial statements of Brooklyn LLC became the historical financial statements of Eterna with respect to periods prior to the completion of the Merger.

Acquisition of Novellus

1 unchanged sentence

and Novellus, Inc.’s wholly owned subsidiary, Novellus, Ltd.

Brooklyn also acquired 25.0% of the total outstanding equity interests of NoveCite, Inc.

As consideration for the Acquisition, we paid $22.9 million in cash and delivered 7,022,000 shares of common stock, which under the terms of the Acquisition Agreement, were valued at a total of $102.0 million based on an agreed upon price of

$14.5253 per share.

Eterna also acquired 25.0% of the total outstanding equity interests of NoveCite, Inc.

As consideration for the Novellus Acquisition, we paid $22.9 million in cash and delivered 351,000 shares of common stock, which under the terms of the Novellus Acquisition Agreement, were valued at a total of $102.0 million based on an agreed

upon price of $290.5060 per share.

At the date of issuance, the fair value of the shares was approximately $58.7 million.

mRNA, Gene-Editing, and Cellular Medicines

We are advancing the technology that we obtained through a license with Factor and through the Acquisition of Novellus, Inc.

and Novellus, Ltd.

in July 2021 to evaluate and develop mRNA,

gene-editing, and cellular medicines, with an initial focus on hematologic and solid tumors.

We expect that the first-generation product candidates will include gene-editing mRNA for in vivo cell engineering and induced pluripotent stem cell

(“iPSC”)-derived cytotoxic lymphocytes (“iCLs”) and immune-modulating cells (“iIMCs”).

We expect to begin preclinical development, including manufacturing process development, of iCLs and iIMCs for clinical indications including hematologic and

solid tumors, as well as other indications that require overcoming molecular cues of the tissue microenvironment.

The prior work of Novellus and NoveCite shows evidence for preclinical efficacy of iPSC-derived cells in inflammatory conditions (for

example, acute respiratory distress syndrome, or ARDS).

Interactions with the FDA provided guidance on Chemistry, Manufacturing and Controls (“CMC”), and manufacturing plans, which will be undertaken in a similar manner for additional applications.

We expect that second generation products will involve more complex gene editing, for which we anticipate using the stepwise addition of genes provided by the in-licensed Factor Bioscience gene editing machinery, NoveSlice, to efficiently place

genes and regulatory sequences into safe harbor locations.

Development of processes to advance CMC and manufacturing will follow the experience from first generation products.

We are also exploring opportunities to advance in vivo mRNA cell

engineering therapies for hematologic and solid tumors by combining the NoveSlice gene editing technology with ToRNAdo TM , the in-licensed LNP technology.

We are advancing the technology that we obtained through a license with Factor Limited and through the Novellus Acquisition in

July 2021 to evaluate and develop mRNA, gene-editing, and cellular medicines, with an initial focus on hematologic and solid tumors.

We expect that the first-generation product candidates will include gene-editing mRNA for in vivo cell

engineering and induced pluripotent stem cell (“iPSC”)-derived cytotoxic lymphocytes (“iCLs”) and immune-modulating cells (“iIMCs”).

We expect to begin preclinical development, including manufacturing process development, of iCLs and iIMCs for

clinical indications including hematologic and solid tumors, as well as other indications that require overcoming molecular cues of the tissue microenvironment.

The prior work of Novellus, Inc.

and NoveCite shows evidence for preclinical

efficacy of iPSC-derived cells in inflammatory conditions (for example, acute respiratory distress syndrome, or ARDS).

Interactions with the FDA provided guidance on Chemistry, Manufacturing and Controls (“CMC”), and manufacturing plans, which

will be undertaken in a similar manner for additional applications.

We expect that second generation products will involve more complex gene editing, for which we anticipate using the stepwise addition of genes provided by the in-licensed

Factor Limited gene editing machinery, NoveSlice, to efficiently place genes and regulatory sequences into safe harbor locations.

Development of processes to advance CMC and manufacturing will follow the experience from first generation

We are also exploring opportunities to advance in vivo mRNA cell engineering therapies for hematologic and solid tumors by combining the NoveSlice gene editing technology with ToRNAdo TM , the in-licensed LNP technology.

In conjunction with our internal efforts, we are actively seeking strategic partners to license and advance our technology.

IRX-2 is a mixed, human-derived cytokine product with multiple active constituents including Interleukin-2, or IL2, and other key cytokines.

15 unchanged sentences

rates as defined by the Kaplan-Meier estimate at two years of follow-up in patients with later stage (III and IV) disease were 57.2 (40.3, 70.9) vs 49.4 (28.3, 67.4) in favor of IRX-2.

In patients that did not receive chemotherapy (radiation only)

as part of adjuvant treatment, the EFS Kaplan-Meier estimate at two years of follow-up was 76.4 (52.2, 89.4) vs 60.6 (29.4, 81.4) in favor of IRX-2.

In patients that did not receive chemotherapy (radiation

only) as part of adjuvant treatment, the EFS Kaplan-Meier estimate at two years of follow-up was 76.4 (52.2, 89.4) vs 60.6 (29.4, 81.4) in favor of IRX-2.

There were no new safety signals observed with IRX-2.

We currently do not have plans to further

develop the IRX-2 product candidate.

We currently do not have plans to

further develop the IRX-2 product candidate.

The INSPIRE trial was the only Company-sponsored study of IRX-2.

IRX-2 has been studied externally in other clinical settings outside of head and neck cancer in the form of investigator

sponsored trials, which have either ended or are not currently active.

Based on the totality of available information, the Company currently does not have plans to further develop the IRX-2 product candidate.

As such, the Company determined that

the carrying value of the IPR&D asset was impaired and recognized a non-cash impairment charge of approximately $6.0 million on the condensed consolidated statement of operations during the second quarter of 2022, which reduced the value of

the asset to zero.

Impact of COVID-19 Pandemic

The development of our product candidates has been, and could continue to be, disrupted and materially adversely affected by past and continuing impacts of the COVID-19 pandemic.

This is largely a

result of measures imposed by the governments and hospitals in affected regions, businesses and schools were suspended due to quarantines intended to contain this outbreak.

This is largely

a result of measures imposed by the governments and hospitals in affected regions, businesses and schools were suspended due to quarantines intended to contain this outbreak.

The spread of COVID-19 from China to other countries resulted in the

6 unchanged sentences

COVID-19 may also affect our employees and employees and operations at suppliers that may result in delays or disruptions in supply.

In addition, a recession

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

Additionally, if the COVID-19 pandemic has a significant impact on our business and financial results for an extended

period of time, our liquidity and cash resources could be negatively impacted.

The extent to which the COVID-19 pandemic and ongoing global efforts to contain its spread will impact our operations will depend on future developments, which are

highly uncertain, and include the duration, severity and scope of the pandemic and the actions taken to contain or treat the COVID-19 pandemic.

Further, the specific clinical outcomes, or future pandemic related impacts of emerging COVID-19

variants cannot be reliably predicted.

In addition, a

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

Additionally, if the COVID-19 pandemic has a significant impact on our business and financial results for

an extended period of time, our liquidity and cash resources could be negatively impacted.

The extent to which the COVID-19 pandemic and ongoing global efforts to contain its spread will impact our operations will depend on future developments,

which are highly uncertain, and include the duration, severity and scope of the pandemic and the actions taken to contain or treat the COVID-19 pandemic.

Further, the specific clinical outcomes, or future pandemic related impacts of emerging

COVID-19 variants cannot be reliably predicted.

Recent Developments

Reverse Stock Split

Effective at 11:59 p.m.

Eastern time on October 16, 2022, we effected a reverse stock split at a ratio of 1-for-20 (the “Reverse Stock Split”).

Upon the effectiveness of the

Reverse Stock Split, every twenty shares of the issued and outstanding common stock were automatically combined and reclassified into one issued and outstanding share of common stock.

The Reverse Stock Split did not affect any stockholder’s

ownership percentage of the common stock, alter the par value of the common stock or modify any voting rights or other terms of the common stock.

The number of authorized shares of common stock under our Charter remains unchanged.

No fractional

shares were issued in connection with the Reverse Stock Split.

In lieu of any fractional shares to which a stockholder would otherwise be entitled, we paid an amount of cash equal to the product of (i) the fractional share to which the holder

would otherwise be entitled and (ii) the then fair value of a share as determined in good faith by the Board.

We paid an aggregate of $719 for a total of 175 fractional shares.

All share and per share data in this Quarterly Report on Form 10-Q have been adjusted for all periods presented to reflect the Reverse Stock Split.

Facility Sublease

On October 18, 2022, we entered into a sublease agreement (the “Sublease”) with E.R.

Squibb & Sons, L.L.C., a Delaware limited liability company and subsidiary of

Bristol-Myers Squibb Company (“Sublessor”), for office, laboratory and research and development space (the “Premises”).

The Premises consists of approximately 45,500 square feet on the ninth floor of the building currently under construction

located at 250 Water Street, Somerville, Massachusetts 02141.

The Sublease rent commences on the date that is the earlier of (i) the date that the Company commences business operations from the Premises and (ii) the date that is the

one-year anniversary of the later to occur of (A) October 18, 2022 and (B) the date that Sublessor obtains the primary landlord’s consent for the Sublease (such applicable date, the “Rent Commencement Date”).

The Sublease has a term of 10 years

from the Rent Commencement Date (the “Term”), subject to a five-year extension in accordance with the terms of the Sublease.

Pursuant to the Sublease, we were required to deliver to the Sublessor a security deposit in the form of a letter of credit in

the amount of $4.1 million.

Provided there are no events of default by us under the Sublease, the letter of credit will be reduced on an incremental basis throughout the Term.

The letter of credit was issued by our commercial bank, which

required that we cash collateralize the letter of credit by depositing $4.1 million of restricted cash in a separate account maintained by such bank.

The amount of restricted cash that we are required to maintain in such account will decline

during the Term in parallel with the reduction of the amount of the letter of credit.

This restricted cash requirement reduced the amount of working capital we have to fund our operations.

Pursuant to the Sublease, we have agreed to pay base rent of $0.4 million per month during the first year of the Term, increasing on an incremental basis each subsequent year of

the Term, as well as traditional lease expenses including, certain taxes, operating expenses and utilities.

Certain Related Party Transactions

On September 9, 2022, we entered into a Master Services Agreement (the “MSA”) with Factor Bioscience Inc.

(“Factor”), pursuant to which Factor has agreed to provide services to

us as agreed between us and Factor and set forth in one or more work orders under the MSA, including the first work order included in the MSA.

Factor has agreed to provide us with mRNA cell engineering research support services, including

access to certain facilities, equipment, materials and training, and we have agreed to pay Factor an initial fee of $5.0 million, payable in twelve equal monthly installments of approximately $0.4 million.

Following the initial 12-month period,

we have agreed to pay Factor a monthly fee of $0.4 million until such time as the first work order under the MSA is terminated.

We may terminate the first work under the MSA on or after the second anniversary of the date of the MSA, subject to providing Factor with 120 days’ prior notice.

terminate such work order only on and after the fourth anniversary of the date of the MSA, subject to providing us with 120 days’ prior notice.

In connection with entering into the MSA, on September 9, 2022, Factor’s subsidiary, Factor

Limited, entered into a waiver agreement with Brooklyn LLC, pursuant to which Factor Limited agreed to waive payment of $3.5 million otherwise payable to it in October 2022 by Brooklyn LLC under its license agreement with Factor Limited.

As a result of entering into the Waiver Agreement and the MSA during third quarter of 2022, we recognized $3.5 million in

research and development expense and a corresponding liability for the committed obligation in the License Agreement that is being paid through the MSA.

On September 6, 2022, we entered into an assignment and assumption of contracts agreement (the “Assignment and Assumption Agreement”) with Factor, pursuant to which we assumed

certain contracts with third parties that Factor had previously entered into in anticipation of entering into a sublease for premises in Somerville, Massachusetts.

In October 2022, we entered into the sublease for the premises.

See Note 15 to

our unaudited interim financial statements included in this Quarterly Report on Form 10-Q for more information on this subsequent event.

Under the Assignment and Assumption Agreement, we agreed to reimburse Factor for costs already incurred and

paid by Factor under the assumed contracts in the amount of approximately $0.1 million, and we assumed the future obligations under these contracts, which relate to the design and build-out of the subleased space.

The foregoing have been deemed related party transactions, as our Interim Chief Executive Officer, Dr.

Matthew Angel, is also the Chairman and Chief Executive Officer of Factor

and the Director of Factor Limited.

For more information please see Note 8 and Note 15 to our unaudited interim financial statements included in this Quarterly Report on Form 10-Q.

Exacis Option Agreement

On October 8, 2022, we entered into an option agreement (the “Option Agreement”) with Exacis Biotherapeutics, Inc., a Delaware corporation (“Exacis”), pursuant to which Exacis

granted us the option to negotiate and enter into an exclusive worldwide license to certain of the technology licensed by Exacis for the treatment of cancer in humans (the “Option”).

The Option Agreement provides that we will pay Exacis a fee

of $0.3 million for the Option, which would be creditable against the fees or purchase price payable under any such license if entered into by us in accordance with Option Agreement.

The Option Agreement provides for certain payments upon the

execution of a definitive license agreement, which would become payable only upon execution, and in accordance with the terms, of the applicable license agreement, if any.

The Option Agreement has been deemed a related party transaction, as one of our Board members, Dr.

Gregory Fiore, is the Chief Executive Officer of Exacis.

Additionally, our

Interim Chief Executive Office, Dr.

Matthew Angel, is Chairman of Exacis’ scientific advisory board.

Angel is also the Chairman and Chief Executive Officer of Factor, which is the majority shareholder of Exacis.

For more information please

see Note 15 to our unaudited interim financial statements included in this Quarterly Report on Form 10-Q.

PIPE Transaction

3 unchanged sentences

The PIPE Transaction closed on March 9, 2022.

We incurred fees of $1.0 million through June 30,

We incurred fees of $1.0 million through September

30, 2022 related to the PIPE Transaction.

2 unchanged sentences

The Pre-Funded Warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 9.99% immediately after exercise thereof.

On July 12, 2022, the PIPE Investor exercised its 68,000 Pre-Funded Warrants at an exercise price of $0.10 per share for an aggregate exercise price of $6,786, in cash.

We issued 68,000 shares

of common stock to the PIPE Investor on July 14, 2022 upon receipt of the cash proceeds.

Following the exercise, no Pre-Funded Warrants remained outstanding.

Each Common Warrant has an exercise price of $38.20 per share, becomes exercisable six months following the closing of the PIPE Transaction, expires five-and-one-half years from the date of

issuance, and is subject to customary adjustments.

The Common Warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99% immediately after exercise thereof, subject

to increase to 9.99% at the option of the holder.

The Common Warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99% immediately after exercise thereof,

subject to increase to 9.99% at the option of the holder.

The Common Warrants and Pre-Funded Warrants were accounted for as liabilities under ASC 815-40, Derivatives and Hedging, Contracts in Entity’s Own Equity,

2 unchanged sentences

value presented within the statement of operations.

Upon exercise of the Common Warrants and Pre-Funded Warrants, the fair value on the exercise date is reclassified from warrant liabilities to equity.

The fair values of the Common Warrants and the Pre-Funded Warrants at the issuance date totaled $12.6 million in the aggregate, which was $0.6 million more than the Subscription Amount.

1 unchanged sentence

In connection with the PIPE Transaction, we and the PIPE Investor also entered into a registration rights agreement, dated March 6, 2022, pursuant to which we agreed to prepare and file a

registration statement with the Securities and Exchange Commission (the “SEC”) to register the resale of the shares of common stock included in the Units and the shares of common stock issuable upon exercise of the Pre-Funded Warrants and the

Common Warrants.

We agreed to use our best efforts to have such registration statement declared effective as promptly as possible after the filing thereof, subject to certain specified penalties if timely effectiveness is not achieved.

such registration statement on April 29, 2022, which became effective on May 11, 2022.

registration statement with the SEC to register the resale of the shares of common stock included in the Units and the shares of common stock issuable upon exercise of the Pre-Funded Warrants and the Common Warrants.

We agreed to use our best

efforts to have such registration statement declared effective as promptly as possible after the filing thereof, subject to certain specified penalties if timely effectiveness is not achieved.

We filed such registration statement on April 29,

2022, which became effective on May 11, 2022.

Pursuant to the registration rights agreement, we are obligated to pay the PIPE Investor liquidated damages equal to 2% of the Subscription Amount per month, with a maximum

aggregate payment of 12% of the Subscription Amount, in the event the PIPE Investor is not permitted to use the registration statement to resell the related securities for more than 10 consecutive calendar days or more than an aggregate of fifteen

calendar days (which need not be consecutive calendar days) during any 12-month period.

fifteen calendar days (which need not be consecutive calendar days) during any 12-month period.

On May 24, 2022, we provided the PIPE Investor with notice that it was not able to resell the securities under the registration agreement because we did not timely file our

Quarterly Report on Form 10-Q (the “Q1 2022 10-Q”) with the SEC, and that the PIPE Investor could not use the registration statement to resell the related securities until we filed the Q1 2022 10-Q.

Because the PIPE Investor was unable to use the

resale registration statement for at least 10 consecutive calendar days, we accrued $0.2 million during the first quarter of 2022 for the estimated contingent loss we expect to incur as a result of the late Q1 2022 10Q filing, which is recorded in

other expense, net for the six months ended June 30, 2022 in the accompanying condensed consolidated statements of operations.

Because the PIPE Investor was unable to use

the resale registration statement for at least 10 consecutive calendar days, we accrued $0.2 million during the first quarter of 2022 for the estimated contingent loss we expect to incur as a result of the late Q1 2022 10Q filing, which is

recorded in other expense, net for the nine months ended September 30, 2022 in the accompanying condensed consolidated statements of operations.

We paid the $0.2 million liquidated damages payment in June 2022.

2 unchanged sentences

Basis of Presentation

Reverse Stock Split

All share and per share data in this Quarterly Report on Form 10-Q have been adjusted for all periods presented to

reflect the Reverse Stock Split.

We are a development stage company and have had no revenues from product sales to date.

We will not have revenues from product sales until such time as we receive regulatory approval of our product

candidates, successfully commercialize our products or enter into a licensing agreement which may include up-front licensing fees, of which there can be no assurance.

We will not have revenues from product sales until such time as we receive regulatory approval of our

product candidates, successfully commercialize our products or enter into a licensing agreement which may include up-front licensing fees, of which there can be no assurance.

Research and Development Expenses

4 unchanged sentences

have any alternative future uses other than the specific research and development project for which it was intended.

In-Process Research and Development (“IPR&D”) that is acquired through an asset acquisition and has no alternative future uses

and, therefore, no separate economic values, is expensed to research and development costs at the time the costs are incurred.

In-Process Research and Development (“IPR&D”) that is acquired through an asset acquisition and has no alternative future

uses and, therefore, no separate economic values, is expensed to research and development costs at the time the costs are incurred.

The major components of research and development costs include preclinical study costs, clinical manufacturing costs, clinical study and trial expenses, insurance coverage for clinical trials,

1 unchanged sentence

development efforts.

We also have a Master Services Agreement with Factor under which Factor provides us with mRNA cell engineering research support services, including access to certain facilities, equipment,

materials and training.

In the normal course of our business, we contract with third parties to perform various clinical study and trial activities in the on-going development and testing of potential products.

7 unchanged sentences

General and Administrative Expenses

Our general and administrative expenses consist primarily of salaries, benefits and other costs, including equity-based compensation, for our executive and administrative personnel, legal and other

professional fees, travel, insurance, and other corporate costs.

Our general and administrative expenses consist primarily of salaries, benefits and other costs, including equity-based compensation, for our executive and administrative personnel, legal and

other professional fees, travel, insurance, other costs of being a publicly traded company and other corporate costs.

Results of Operations

Comparison of the Three and Six Months Ended June 30, 2022 and 2021

Three months ended June 30,

Six months ended June 30,

Comparison of the Three and Nine Months Ended September 30, 2022 and 2021

Three months ended September 30,

(in thousands)

1 unchanged sentence

Research and development

In-process research and development

General and administrative

Impairment of in-process research and

Total operating expenses

Loss from operations

Other income, net:

Change in fair value of warrant liabilities

Loss on non-controlling investment

Other (expense) income, net

Total income, net

Loss before income taxes

Provision for income taxes

Nine months ended September 30,

(in thousands)

Operating expenses:

Research and development

In-process research and development

General and administrative

Transaction costs

5 unchanged sentences

Loss on non-controlling investment

Other expense, net

Other (expense) income, net

Total other income (expense), net

Loss before income taxes

Provision for income taxes

Research and Development Expenses

Three months ended June 30,

Three months ended September 30,

(in thousands)

1 unchanged sentence

Payroll-related

Clinical trials

Professional fees

Other expenses, net

Total research and development expenses

Six months ended June 30,

Nine months ended September 30,

(in thousands)

Clinical trials

Payroll-related

Stock-based compensation

Clinical trials

Professional fees

Other expenses, net

Total research and development expenses

For the three and six months ended June 30, 2022, our research and development expenses decreased primarily due to a $4.0 million license fee paid in 2021 to Factor and Novellus, Ltd.

“Licensors”) under the exclusive license agreement with the Licensors, as well as due to a decrease in clinical trial and other miscellaneous expense, offset by increased stock compensation expense due to increased equity awards granted during

2022, as compared to equity awards granted in 2021, and increased payroll expense due to increased headcount, as well as increased severance expense when compared to the same periods in 2021.

For the three months ended September 30, 2022, our total research and development expenses increased compared to the prior year

period, which was primarily the result MSA expenses recognized during the three months ended September 30, 2022.

There were no comparable MSA expense in the prior year period.

This increase in expense was offset by a decrease in stock-based

compensation expense for the three months ended September 30, 2022, resulting from stock option and restricted stock unit forfeitures.

For the nine months ended September 30, 2022, our research and development expenses decreased primarily due to a $4.0 million

license fee paid in 2021 to Factor Limited and Novellus, Ltd.

(the “Licensors”) under the License Agreement with the Licensors, as well as due to a decrease in clinical trial and other miscellaneous expense, offset by increased expenses related

to the MSA, increased payroll due to severance expense and stock compensation expense related to an increase in equity awards granted during 2022 when compared to the same period in 2021.

In January 2022, we completed a reduction in our workforce involving eight research and development employees.

1 unchanged sentence

termination-related costs, which we recorded during the first quarter of 2022.

In June 2022, we made the decision to consolidated our research and development in Cambridge, Massachusetts, and as a result, we accrued approximately $0.1 million for

In June 2022, we made the decision to consolidate our research and development in Cambridge, Massachusetts, and as a result, we accrued approximately $0.1 million for

severance and termination-related costs for certain employees in the San Diego, California location.

In August 2022, we recognized approximately $0.3 million in severance expense related to the resignation of a San Diego executive.

Impairment of In-Process Research and Development

Three months ended September 30,

(in thousands)

Impairment of in-process research and development

Nine months ended September 30,

(in thousands)

Impairment of in-process research and development

As discussed above, in June 2022, we received the results from the INSPIRE phase 2 trial of IRX-2.

The IRX-2 multi-cytokine biologic immunotherapy represents substantially all the fair value

assigned to the technologies of IRX that we acquired in 2018.

Despite outcomes that favored IRX-2 in certain predefined subgroups, the INSPIRE trial did not meet the primary endpoint of Event-Free Survival (EFS) at two years of follow up.

Significant additional clinical development work will be required to advance IRX-2 in the form of additional Phase 2 and 3 studies to further evaluate the treatment effect of IRX-2 in patient subgroups and in combination with checkpoint inhibitor

The INSPIRE trial is the only company sponsored study of IRX-2.

IRX-2 has been studied externally in other clinical settings outside of head and neck cancer in the form of investigator sponsored trials, which have either ended or are

not currently active.

Based on the totality of available information, we currently do not have plans to further develop the IRX-2 product candidate.

As such, we determined that the carrying value of the IPR&D asset was impaired and recognized

a non-cash impairment charge of approximately $6.0 million for the nine months ended September 30, 2022.

During the three and nine months ended September 30, 2021, we expensed the $80.5 million fair value of IPR&D acquired in the Novellus Acquisition because there was no future alternative use

for the IPR&D other than for its intended purpose.

General and Administrative Expenses

Three months ended June 30,

Three months ended September 30,

(in thousands)

Payroll-related

Impairment of ROU asset

Professional fees

Stock-based compensation

Payroll-related

Occupancy expense

Loss on disposal of assets

Other expenses, net

Total general and administrative expenses

Six months ended June 30,

Nine months ended September 30,

(in thousands)

1 unchanged sentence

Impairment of ROU asset

Loss on disposal of fixed assets

Occupancy expense

Professional fees

Stock-based compensation

Occupancy expense

Loss on disposal of fixed assets

Other expenses, net

Total general and administrative expenses

The increase in general and administrative expense for the three and six months ended June 30, 2022 was primarily related to increased headcount as well as severance expense for certain employees,

Our general and administrative expenses decreased for the three months ended September 30, 2022, as compared to the same period in 2021, primarily due to a decrease in professional fees for

accounting services, decreased stock-based compensation expense from the forfeitures of stock-options and restricted stock units, and decreased payroll-related expense due to a decrease in headcount, which was offset by an increase in severance

expense when compared to the same period in 2021.

These decreases were further offset by increases for the three months ended September 30, 2022 in insurance premiums, the disposal of certain assets related to consolidating our research and

development activities in Cambridge, Massachusetts, and other expenses due to legal-related matters, as compared to the same period in 2021.

The increase in general and administrative expense for the nine months ended September 30, 2022 was primarily related to increased headcount as well as severance expense for certain employees,

including our former Chief Executive Officer, who resigned effective May 26, 2022.

We also recognized a non-cash impairment charge on our San Diego, California right-of-use (“ROU”) operating lease asset due to our intent to consolidate our

research and development activities in Cambridge, Massachusetts and to sublease the San Diego, California facility.

Other increases include premiums for public company insurance policies, non-cash stock-based compensation expense due to increased

equity awards, increased other expenses, net, primarily due to legal-related matters, and losses on the disposal of fixed assets when compared to the same periods in 2021.

Impairment of In-Process Research and Development

As discussed above, in June 2022, we received the results from the INSPIRE phase 2 trial of IRX-2.

The IRX-2 multi-cytokine biologic immunotherapy represents substantially all the fair value

assigned to the technologies of IRX that we acquired in 2018.

Despite outcomes that favored IRX-2 in certain predefined subgroups, the INSPIRE trial did not meet the primary endpoint of Event-Free Survival (EFS) at two years of follow up.

The INSPIRE trial is the only company sponsored study of IRX-2.

IRX-2 has been studied externally in other clinical settings outside of head and neck cancer in the form of investigator sponsored trials, which have either ended or are

not currently active.

Based on the totality of available information, we currently do not have plans to further develop the IRX-2 product candidate.

As such, we determined that the carrying value of the IPR&D asset was impaired and recognized a

non-cash impairment charge of approximately $6.0 million on the condensed consolidated balance sheet as of June 30, 2022, which reduced the value of this asset to zero.

We also recognized a non-cash impairment charge on our San Diego, California right-of-use (“ROU”) operating lease asset due to consolidating our research and

development activities in Cambridge, Massachusetts and our intention to sublease the San Diego, California facility.

Other increases included premiums for public company insurance policies, losses on the disposal of fixed assets and other fees

primarily due to legal-related matters, as compared to the same period in 2021.

These increases were offset by decreased professional fees for accounting and legal services and decreased stock-based compensation expense due to primarily to

forfeitures of stock options and restricted stock units when compared to the same periods in 2021.

Transaction Costs

The $5.8 million in transaction costs during the six months ended June 30, 2021 related to the issuance of common stock to Brooklyn LLC’s financial advisor upon consummation of the Merger, and

there were no comparable transaction costs for same periods in 2022.

The $5.8 million in transaction costs incurred for the nine months ended September 30, 2021 related to the issuance of common stock to Brooklyn LLC’s financial advisor upon consummation of the

Merger, and there were no comparable transaction costs for same period in 2022.

Loss on Sales of NTN Assets

A $0.1 million and $9.6 million loss on the sale of NTN assets for the three and six months ended June 30, 2021, respectively, were incurred when we completed the Disposition, and there were no

comparable losses on sale for the three and six months ended June 30, 2022.

We incurred a $9.6 million loss on the sale of NTN assets for the nine months ended September 30, 2021 in connection with the Disposition, and there were no comparable transaction costs for

either the three or nine-month periods ended September 30, 2022.

Warrant Liabilities Expense

For the three months ended June 30, 2022, we recognized a credit of $10.8 million for the change in the fair value of warrant liabilities due to a decrease in the market price of our common stock

during the quarter.

For the six months ended June 30, 2022, we recognized a credit of $10.1 million for the change in the fair value of warrant liabilities, which was offset by $0.6 million in expense related to the excess fair value of the

Common Warrants and Pre-Funded Warrant issued in connection with the PIPE Transaction over the $12.0 million gross proceeds received.

There were no comparable expenses for the three and six months ended June 30, 2021.

For the three months ended September 30, 2022, we recognized a credit of $1.0 million for the change in the fair value of warrant liabilities due to a decrease in the market price of our common

stock during the quarter.

For the nine months ended September 30, 2022, we recognized a credit of $11.1 million for the change in the fair value of warrant liabilities, which was offset by $0.6 million in expense related to the excess fair

value of the Common Warrants and Pre-Funded Warrant issued in connection with the PIPE Transaction over the $12.0 million gross proceeds received.

There were no comparable expenses for same periods in 2021.

Loss on Non-Controlling Investment

During the three and six months ended June 30, 2022, we recognized $0.3 million and $0.9 million of loss on our 25% non-controlling investment in NoveCite, respectively.

Of the $0.9 million loss

for the six months ended June 30, 2022, $0.5 million relates to the prior year.

We account for our investment in NoveCite under the equity method.

There were no comparable expenses for the three and six months ended June 30, 2021.

During the three and nine months ended September 30, 2022,

we recognized approximately $21,000 and $0.9 million of loss, respectively, on our 25% non-controlling investment in NoveCite, respectively.

Of the $0.9 million loss for the nine months ended September 30, 2022, $0.5 million relates to the

We do not have guaranteed obligation of NoveCite nor are we otherwise committed to providing further financial support for NoveCite.

Therefore, we will record losses only up to our investment carrying amount.

There were no

comparable expenses for same periods in 2021.

Other Expense, Net

Three months ended June 30,

Three months ended September 30,

(in thousands)

PIPE transaction fees

Interest expense, net

Other (expense) income , net

Total other expense, net

Six months ended June 30,

Income from PPP loan forgiveness

Total other (expense), income net

Six months ended September 30,

(in thousands)

2 unchanged sentences

Interest expense, net

Other (expense) income , net

Total other expense, net

For the three months ended June 30, 2022, we recognized an immaterial decrease in other expense, net when compared to the same period in 2021.

During the six months ended June 30, 2022, our

increase in other expense, net was primarily due to fees related to the PIPE Transaction, which was allocated to the warrants issued in connection with the transaction.

Additionally, we incurred a loss related to the liquidated damages we incurred

as a result of not timely filing the Q1 2022 10Q with the SEC.

These increases in expense were offset by a decrease in interest expense and an increase in other income for the six months ended June 30, 2022 when compared to the same period in

Income from PPP loan forgiveness

Other income, net

Total other (expense), income net

We recognized a change from other income, net of $0.3 million for the three months ended September 30, 2021 to other expense, net of $10,000 for the three months ended September 30, 2022.

change was primarily related to income we recognized in 2021 for the forgiveness of Brooklyn LLC’s loan under the Payment Protection Program (“PPP”).

We did not have such income for the same period in 2022.

We recognized a change from other income, net of $0.3 million for the nine months ended September 30, 2021 to other expense, net of approximately $1.2 million for the nine months ended September

During the nine months ended September 30, 2022, our increase in other expense, net was primarily due to fees related to the PIPE Transaction, which was allocated to the warrants issued in connection with the transaction.

Additionally,

we recorded a loss related to the liquidated damages we incurred under our registration rights agreement with the PIPE Investor as a result of not timely filing with the SEC our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.

During the nine months ended September 30, 2021, we recognized income from the forgiveness of our PPP loan.

We did not have such income for the same period in 2022.

These increases in expense were offset by income from the sale of certain fixed

assets and a decrease in interest expense when compared to the same period in 2021.

Provision for Income Taxes

During 2022, we expect to incur state income tax liabilities related to our operations.

We have established a full valuation allowance for all deferred tax assets, including our

net operating loss carryforwards, since we could not conclude that we were more likely than not able to generate future taxable income to realize these assets.

The effective tax rate differs from the statutory tax rate due primarily to our full

valuation allowance.

Liquidity and Capital Resources

At June 30, 2022, we had cash and cash equivalents of approximately $19.4 million.

On March 9, 2022, we issued 5,500,000 shares of common stock and Pre-Funded Warrants representing approximately

1,357,000 shares of common stock for net proceeds of approximately $11.0 million in connection with the PIPE Transaction.

Pursuant to the purchase agreement entered into in respect of the PIPE Transaction, we are prohibited from issuing equity in

variable rate transactions for a period of one-year following consummation of the PIPE Transaction, including issuing equity under the Second Purchase Agreement.

At September 30, 2022, we had cash and cash equivalents of approximately $13.3 million.

On March 9, 2022, we issued 275,000 shares of common stock and Pre-Funded Warrants representing approximately 68,000 shares of common stock for net proceeds of approximately $11.0 million in

connection with the PIPE Transaction.

The 68,000 shares Pre-Funded Warrants were exercised on July 12, 2022 at an exercise price of $0.10 per share for total proceeds of approximately $7,000.

Pursuant to the purchase agreement entered into in

respect of the PIPE Transaction, we are prohibited from issuing equity in variable rate transactions for a period of one-year following consummation of the PIPE Transaction, including issuing equity under the Second Purchase Agreement.

On October 18, 2022, we entered into the Sublease for approximately 45,500 square feet of office and laboratory space in

Somerville, Massachusetts.

As part of the Sublease, we delivered a security deposit in the form of a letter of credit in the amount of $4.1 million, which will be reduced on an incremental basis throughout the term of the lease.

The letter of

credit was issued by our commercial bank, which required that we cash collateralize the letter of credit with $4.1 million of cash deposited in a restricted account maintained by such bank.

The amount of required restricted cash collateral will

decline in parallel with the reduction in the amount of the letter of credit over the term of the sublease.

The required restricted cash reduced the amount of working capital we have to fund our operations.

We have to date incurred operating losses, and we expect these losses to continue in the future as we further develop our product development programs and operate as a publicly traded company.

3 unchanged sentences

Based on our current financial condition and forecasts of available cash, including as mentioned above, we believe we do not have sufficient funds to fund our

operations for the next twelve months from the filing of the financial statements contained in this Quarterly Report on Form 10-Q for the period ended June 30, 2022 (the “Q2 2022 10-Q”).

There can be no assurance that we will ever be in a position

to commercialize IRX-2 or any other product candidate we may acquire, or that we will obtain any additional financing that we require in the future or, even if such financing is available, that it will be obtainable on terms acceptable to us.

operations for the next twelve months from the filing of the financial statements contained in this Quarterly Report on Form 10-Q for the period ended September 30, 2022 (the “Q3 2022 10-Q”).

There can be no assurance that we will ever be in a

position to commercialize IRX-2 or any other product candidate we may acquire, or that we will obtain any additional financing that we require in the future or, even if such financing is available, that it will be obtainable on terms acceptable

In that regard, our future funding requirements will depend on many factors, including:

8 unchanged sentences

We plan to raise additional funds to support our product development activities and working capital requirements through the remaining availability under the Second Purchase Agreement (to the

extent we are permitted to use such agreement), public or private equity offerings, debt financings, corporate collaborations or other means.

We may also seek governmental grants to support our clinical trials and preclinical trials.

may seek to raise capital to fund additional product development efforts even if we have sufficient funds for our planned operations.

Any sale by us of additional equity or convertible debt securities could result in dilution to our stockholders.

extent we are permitted to use such agreement), public or private equity offerings, debt financings, strategic partnerships, out-license collaborations or other means.

We may also seek governmental grants to support our clinical trials and

preclinical trials.

Further, we may seek to raise capital to fund additional product development efforts even if we have sufficient funds for our planned operations.

Any sale by us of additional equity or convertible debt securities could result

in dilution to our stockholders.

There can be no assurance that any such required additional funding will be available to us at all or available on terms acceptable to us.

4 unchanged sentences

Cash flows from operating, investing and financing activities, as reflected in the accompanying consolidated statements of cash flows, are summarized as follows:

For the six months ended

For the nine months ended

September 30,

(in thousands)

Cash provided by (used in):

Cash (used in) provided by:

Operating activities

1 unchanged sentence

Financing activities

Net increase in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Net Cash Used in Operating Activities

The decrease in cash used in operating activities was due to a decrease in net loss of $0.6 million, after giving effect to adjustments made for non-cash transactions, offset by an

increase in cash provided by operating assets and liabilities of $1.4 million during the six months ended June 30, 2022 compared to the same period in 2021.

The increase in cash provided by operating assets and liabilities was primarily driven by

increased accrued compensation due to higher headcount and severance as well as accrued costs for litigation matters, offset by a decrease in prepaid expenses and other current assets during the six months ended June 30, 2022 compared to the same

period in 2021.

Net Cash (Used in) Provided by Investing Activities

The increase in net cash used in investing activities was primarily due to purchases of capital equipment of $0.2 million offset by proceeds from the sale of fixed assets of $0.1 million during the

six months ended June 30, 2022 compared to the same period in 2021.

Also, the six months ended June 30, 2021 included proceeds of approximately $0.3 million from the Merger and the Disposition transactions.

There were no similar transactions

during the six months ended June 30, 2022.

The decrease in cash used in operating activities was due to a decrease in net loss of $4.3 million, after giving effect to

adjustments made for non-cash transactions, offset by an increase in cash provided by operating assets and liabilities of $5.4 million during the nine months ended September 30, 2022 compared to the same period in 2021.

The increase in cash

provided by operating assets and liabilities was primarily driven by increased accrued compensation due to higher headcount and severance, accrued costs for litigation matters, increased liabilities related to the MSA and increased insurance

Net Cash Used in Investing Activities

The decrease in net cash used in investing activities was primarily due to cash used to purchase Novellus of $22.9 million during the nine months ended September 30, 2022 compared to the same

period in 2021, which was offset by proceeds of approximately $0.3 million from the Merger and the Disposition transactions.

There were no similar transactions during the nine months ended September 30, 2022.

Net Cash Provided by Financing Activities

The decrease in net cash provided by financing activities was primarily the result of a decrease in net proceeds from capital raises of approximately $51 million, net, offset by a

decrease in principal payments made for long-term debt arrangements of $0.5 million during the six months ended June 30, 2022 compared to the same period in 2021.

Critical Accounting Policies and Estimates

There were no significant changes in our critical accounting estimates during the three and six months ended June 30, 2022 from those described in “Management’s Discussion and Analysis of Financial

Condition and Results of Operations” section of the 10-K/A.

decrease in principal payments made for long-term debt arrangements of $0.5 million during the nine months ended September 30, 2022 compared to the same period in 2021.

Critical Accounting Estimates

There were no significant changes in our critical accounting estimates during the three and nine months ended September 30, 2022 from those described in “Management’s Discussion and Analysis of

Financial Condition and Results of Operations” section of the 10-K/A.

Recent Accounting Pronouncements

In June 2022, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

In September 2022, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2022-04, Liabilities—Supplier

Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations (“ASU 2022-04”).

ASU 2022-04 requires a buyer that uses supplier finance programs to make annual disclosures about the program’s key terms, the

balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period, and associated roll-forward information.

ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, including interim

periods within those fiscal years, except for the requirement to disclose roll-forward information, which is effective for fiscal years beginning after December 15, 2023.

We do not expect a material impact on our financial statements as a result

of adopting this amendment.

In June 2022, FASB issued ASU No.

2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”).

The FASB issued ASU 2022-03 to (1) clarify the

guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce

new disclosure requirements for equity related securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820.

ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security

is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal

years with early adoption permitted.

We are evaluating when to adopt the amendments in ASU 2022-02.

We do not expect a material impact as a result of adopting this amendment.

Fair Value Measurement of

Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”).

The FASB issued ASU 2022-03 to (1) clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value

of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity related securities subject to

contractual sale restrictions that are measured at fair value in accordance with Topic 820.

ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity

security and, therefore, is not considered in measuring fair value.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years with early adoption permitted.

We are evaluating when

to adopt the amendments in ASU 2022-02.

We do not expect a material impact on our financial statements as a result of adopting this amendment.

Quantitative and Qualitative Disclosures About Market Risk.

1 unchanged sentence

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