What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-10 compared with 2021-08-10 · 80 added, 80 removed, 211 unchanged (43% of the section changed)

19 unchanged sentences

In addition, adults undergoing chemotherapy for several common malignancies, including ovarian cancer, testicular cancer, and particularly head and neck cancer and brain cancer, often receive intensive platinum-based therapy and may experience severe, irreversible hearing loss, particularly in the high frequencies.

We estimate i n the U.S.

and Europe that annually over 10,000 children with solid tumors are treated with platinum agents.

The vast majority of these newly diagnosed tumors are localized and classified as low to intermediate risk in nature.

These localized cancers may have overall survival rates of greater than 80%, further emphasizing the importance of quality of life after treatment.

The incidence of hearing loss in these children depends upon the dose and duration of

chemotherapy, and many of these children require lifelong hearing aids.

and Europe, it is estimated that, annually, over 10,000 children may receive platinum-based chemotherapy.

The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these children require lifelong hearing aids.

There is currently no established preventive agent for this hearing loss and only expensive, technically difficult and sub-optimal cochlear (inner ear) implants have been shown to provide some benefit.

Infants and young children at critical stages of development lack speech language development and literacy, and older children and adolescents lack speech language development and literacy, and older children and adolescents lack social-emotional development and educational achievement.

Infants and young children that suffer ototoxicity at critical stages of development lack speech language development and literacy, and older children and adolescents lack social-emotional development and educational achievement.

In March 2018, PEDMARK TM received Breakthrough Therapy and Fast Track designations from the U.S.

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In the fourth quarter of 2020, we engaged in a Type A meeting with the FDA concerning the CRL that we believe was constructive and collaborative.

In May 2021, we announced the resubmission of our NDA for PEDMARK and in June 2021 we further announced that the FDA accepted for filing the resubmission of our NDA and set a PDUFA target action date of November 27, 2021.

In May 2021, we announced the resubmission of our NDA for PEDMARK TM and in June 2021 we further announced that the FDA accepted for filing the resubmission of our NDA and set a PDUFA target action date of November 27, 2021.

In August 2018, the Pediatric Committee (“PDCO”) of the European Medicines Agency (“EMA”) accepted our pediatric investigation plan (“PIP”) for sodium thiosulfate with the trade name Pedmarqsi for the condition of the prevention of platinum-induced hearing loss.

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52 sites from 11 countries enrolled 109 evaluable patients.

Under the terms of our agreement, SIOPEL conducted and funded

all clinical activities and we provided drug, drug distribution and pharmacovigilance, or safety monitoring, for the study.

Under the terms of our agreement, SIOPEL conducted and funded all clinical activities and we provided drug, drug distribution and pharmacovigilance, or safety monitoring, for the study.

SIOPEL 6 was completed in December 2014 and the final results of SIOPEL 6 were published in The New England Journal of Medicine in June 2018.

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STS has been shown to reduce cisplatin induced hearing loss.

SIOPEL 6 was a Phase 3 randomized trial to assess the efficacy of STS in reducing ototoxicity in young children treated with cisplatin (Cis) for Standard Risk Hepatoblastoma (SR-HB).

SIOPEL 6 was a Phase 3 randomized trial to assess the efficacy of STS in reducing ototoxicity in young children treated with cisplatin (Cis) for SR-HB.

Design / Methods:

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We have not received and do not expect to have significant revenues from our product candidate until we are either able to sell our product candidate after obtaining applicable regulatory approvals or we establish collaborations that provide us with up-front payments, licensing fees, milestone payments, royalties or other revenue.

We generated a net loss of approximately $8.7 million for the six months ended June 30, 2021, and a net loss of $8.7 million for the six months ended June 30, 2020.

As of June 30, 2021, our accumulated deficit was approximately $170.9 million ($162.1 million at December 31, 2020).

We believe that our cash and cash equivalents as of June 30, 2021, which totaled $27.3 million, plus the Bridge Bank Loan and Security Agreement, will be sufficient to meet our cash requirements through at least the next twelve months, including anticipated NDA approval and, if approved, the first commercial launch of PEDMARK TM in the United States.

We generated a net loss of approximately $12.9 million for the nine months ended September 30, 2021, and a net loss of $14.9 million for the nine months ended September 30, 2020.

As of September 30, 2021, our accumulated deficit was approximately $175.1 million ($162.1 million at December 31, 2020).

We believe that our cash and cash equivalents as of September 30, 2021, which totaled $24.3 million, plus the Bridge Bank Loan and Security Agreement, will be sufficient to meet our cash requirements through at least the next twelve months, including anticipated NDA approval and, if approved, the first commercial launch of PEDMARK TM in the United States.

Our projections of our capital requirements are subject to substantial uncertainty, and more capital than we currently anticipate may be required thereafter.

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Results of Operations

Three months ended June 30, 2021 versus three months ended June 30, 2020:

Three months ended September 30, 2021 versus three months ended September 30, 2020:

Three Months Ended

1 unchanged sentence

In thousands of U.S.

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

Operating expenses:

3 unchanged sentences

Loss from operations

Unrealized loss on securities

Unrealized gain on securities

Amortization expense

Other gains/losses

Interest income and other, net

Research and development expenses decreased by $321 for the three months ended June 30, 2021 compared to the same period in 2020 as the Company’s development activities shifted back to product launch readiness and pre-commercial development of PEDMARK TM .

General and administrative expenses decreased by $604 compared to same period in 2020.

On June 30, 2020, the Company was relatively much closer to the anticipated launch date than it is in 2021.

We would anticipate the same increase in pre commercialization activities as we near the 2021 launch date.

The reduction in general and administrative expenses was slightly offset by higher expenses associated with additional employees and the increase in non-cash equity remuneration expense for employees and board members related to the vesting of new and existing grants.

The Company holds shares of Processa (PCSA) which are marked to market each balance sheet date and unrealized gains or losses are recognized at that time.

The unrealized loss on those shares for the three months ended on June 30, 2021 was $84.

Other loss was driven mainly by fluctuations in the Company’s foreign currency transactions and is a non-cash expense.

Research and development expenses decreased by $126 for the three months ended September 30, 2021 compared to the same period in 2020 as the Company’s development activities shifted back to product launch readiness and pre-commercial development of PEDMARK TM .

General and administrative expenses decreased by $1,560 compared to same period in 2020 due to the timing to NDA approval of the comparative periods.

The three months ended September 30, 2020 was the

same quarter as the initial NDA approval and the three months ended September 30, 2021 is one quarter prior to our current potential NDA approval.

The reduction in general and administrative expenses was slightly offset by higher expenses associated with additional employees.

The Company holds shares of Processa (NASDAQ:

PCSA), which are marked to market each balance sheet date and unrealized gains or losses are recognized at that time.

The unrealized gain on those shares for the three months ended on September 30, 2021, was $39.

Other losses were driven mainly by interest expense and unrealized losses related to the Company’s foreign currency transactions.

The Company has vendors that transact in Euros, Great British Pounds and Canadian Dollars.

There was a decrease of $22 in other gain/(loss) for the three months ended June 30, 2021, compared to the same period in 2020.

Amortization expense is also a non-cash expense and relates to amortization of the deferred issuance cost of the loan facilities with Bridge Bank.

Amortization expense decreased by $30 for the three months ended June 30, 2021 compared to the same period in 2020.

There was virtually no amortization expense for the three months ended June 30, 2021.

Interest income was $5 lower for the three months ended June 30, 2021, compared to the same period in 2020.

This was driven mainly by lower average cash balance despite the slightly higher interest rates for the three months ended June 30, 2021 compared to the same period in 2020.

Six months ended June 30, 2021 versus six months ended June 30, 2020:

Six Months Ended

There was an increase of $48 in other losses for the three months ended September 30, 2021, compared to the same period in 2020.

Amortization expense is a non-cash expense and relates to amortization of the deferred issuance cost of the loan facilities with Bridge Bank.

Amortization expense decreased by $347 for the three months ended September 30, 2021 compared to the same period in 2020.

In 2021, the Company is amortizing the capitalized costs associated with the renegotiated Bridge Bank loan facility.

During the same period in 2020, the Company wrote off the remaining capitalized cost associated with the former facility after it received the CRL from the FDA in August 2020.

Interest income was $9 lower for the three months ended September 30, 2021, compared to the same period in 2020.

This was driven by lower average cash balance for the three months ended September 30, 2021 compared to the same period in 2020.

Nine months ended September 30, 2021 versus nine months ended September 30, 2020:

Nine Months Ended

In thousands of U.S.

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

Operating expenses:

4 unchanged sentences

Unrealized gain on securities

Other gains/losses

Amortization expense

Interest income and other

Research and development expenses increased by $702 for the six months ended June 30, 2021, compared to the same period in 2020.

The Company’s research and development activities for the first six months of 2021 increased as the Company prepared for the NDA resubmission.

Interest income

Research and development expenses increased by $576 for the nine months ended September 30, 2021, compared to the same period in 2020.

The Company’s research and development activities for the first nine months of 2021 increased as the Company prepared for the NDA resubmission.

General and administrative expenses decreased by $2,099 over same period in 2020 as expenses associated with pre-commercialization activities decreased on a year over year basis.

The Company holds shares of Processa (PCSA) which are marked to market each balance sheet date and unrealized gains or losses are recognized at that time.

The unrealized gain on those shares for the six months ended on June 30, 2021 was $98.

Other loss was driven mainly by fluctuations in the Company’s foreign currency transactions and is a non-cash expense.

This relates to the planned timing and the fact that many pre-commercialization activities were performed in 2020.

The Company holds shares of Processa (NASDAQ:

PCSA) which are marked to market each balance sheet date and unrealized gains or losses are recognized at that time.

The unrealized gain on those shares for the nine months ended on September 30, 2021 was $137.

Other losses were driven mainly by interest expense and unrealized losses related to the Company’s foreign currency transactions.

The Company has vendors that transact in Euros, Great British Pounds and Canadian Dollars.

There was a decrease of $21 in other gain/(loss) for the six months ended June 30, 2021 compared to the same period in 2020.

There was an increase of $69 in other losses for the nine months ended September 30, 2021, compared to the same period in 2020.

Amortization expense is also a non-cash expense and relates to amortization of the deferred issuance cost of the loan facilities with Bridge Bank.

Amortization expense decreased by $47 for the six months ended June 30, 2021 compared to the same period in 2020 due to the deferred issuance cost of the loan facility being fully expensed in the fourth quarter of 2020.

Interest income was $24 lower for the six months ended June 30, 2021, compared to the same period in 2020.

was driven mainly by a sharp decrease in interest rates and lower average cash balance for the six months ended June 30, 2021 compared to the same period in 2020.

Amortization expense decreased by $394 for the nine months ended September 30, 2021 compared to the same period in 2020.

In 2021, the Company is amortizing the capitalized costs associated with the renegotiated Bridge Bank loan facility.

During the same period in 2020, the Company wrote off the remaining capitalized cost associated with the former facility after it received the CRL from the FDA in August 2020.

Interest income was $33 lower for the nine months ended September 30, 2021, compared to the same period in 2020.

This was driven mainly by a sharp decrease in interest rates and lower average cash balance for the nine months ended September 30, 2021 compared to the same period in 2020.

Quarterly Information

The following table presents selected condensed financial data for each of the last eight quarters through June 30, 2021, as prepared under US GAAP (U.S.

The following table presents selected condensed financial data for each of the last eight quarters through September 30, 2021, as prepared under U.S.

dollars in thousands, except per share information):

2 unchanged sentences

Diluted Net (Loss)/Income per

September 30, 2019

December 31, 2019

5 unchanged sentences

June 30, 2021

September 30, 2021

Liquidity and Capital Resources

Selected Asset and Liability Data (thousands):

June 30, 2021

September 30, 2021

December 31, 2020

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Shareholders’ equity

Cash and cash equivalents were $27,293 at June 30,2021 and $30,344 at December 31, 2020.

The decrease in cash and cash equivalents between June 30, 2021 and December 31, 2020 is the result of expenses related to the development and preparation of the NDA resubmission of PEDMARK TM and general and administrative expenses, which was offset by a draw of $5,000 from the Bridge Bank Loan and Security Agreement.

There was a decrease of $292 in other current assets between June 30, 2021 and December 31, 2020.

This relates largely to a $388 reduction in the value of prepaid expenses almost entirely offset by an increase in the valuation of the Company’s holdings of Processa shares.

Current liabilities decreased sharply, primarily due to the completion of manufacturing and pre-commercialization activities and regulatory expenses associated with the PEDMARK TM NDA resubmission.

Working capital decreased between December 31, 2020, and June 30, 2021 by $1,800.

The decrease relates to cash expenditures for operating activities for the six months ended June 30, 2021, offset by the $5,000 draw from the Bridge Bank Loan and Security Agreement.

The Company expects increases in cash outflows related to pre commercialization and product launch activities in the coming months.

The following table illustrates a summary of cash flow data for the three and six-month periods of June 30, 2021 and 2020:

Cash and cash equivalents were $24,335 at September 30, 2021 and $30,344 at December 31, 2020.

The decrease in cash and cash equivalents between September 30, 2021, and December 31, 2020 is the result of expenses related to the development and preparation of the NDA resubmission of PEDMARK TM and general and administrative expenses, which was offset by a draw of $5,000 from the Bridge Bank Loan and Security Agreement.

There was an increase of $571 in other current assets between September 30, 2021 and December 31, 2020.

This is a result of a $242 increase in deferred charges related to the financing of the director and officer’s insurance policy, a $137 increase in the value of Processa shares and an increase in prepaid expenses of $192.

Current liabilities decreased primarily due to the reduction in manufacturing and regulatory expenses associated with the PEDMARK TM NDA resubmission.

Working capital decreased between December 31, 2020 and September 30, 2021 by $5,105.

The decrease relates to cash expenditures for operating activities for the nine months ended September 30, 2021, offset by the $5,000 draw from the Bridge Bank Loan and Security Agreement.

The Company expects increases in cash outflows related to pre commercialization and commercialization activities in the coming quarters upon potential NDA approval.

The following table illustrates a summary of cash flow data for the three and nine-month periods of September 30, 2021 and 2020:

Selected Cash Flow Data

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars and shares in thousands)

1 unchanged sentence

Net cash provided by investing activities

Net cash provided by financing activities

Net cash (used in)/provided by financing activities

Net cash flow

Net cash used in operating activities for the three and six months ended June 30, 2021, primarily reflected a net loss of $4,001 and $8,734, respectively.

These three and six month losses were adjusted for the add back of non-cash items consisting of $1,326 and $1,913, respectively in stock-based compensation expense, with a loss of $84 added back for the three months ended June 30, 2021, less $98 for the six month period ended June 30, 2021, in unrealized loss/gain on securities.

For the three and six months ended June 30, 2021, there was a net change in prepaid and other assets of $209 and $390, respectively;

coupled with a net decrease in current liabilities of $2,044 and $1,499, respectively.

Three and six month cash flows from operating activities were negative $4,426 and $8,019, respectively;

for the period ended June 30, 2021.

Net cash provided by financing activities for the three and six months ended June 30, 2021 was $4,968, respectively.

Financing activities consisting of $5,000 gross proceeds from the Loan Security Agreement, $24 from the exercise of options, netted against $56 in capitalized deferred loan cost.

Net cash flows from the three and six month period ended June 30, 2021 were $542 and ($3,051), respectively.

Net cash used in operating activities for the three and nine months ended September 30, 2021 primarily reflected a net loss of $4,185 and $12,919, respectively.

These three- and nine-month losses were adjusted for the add back of non-cash items consisting of $917 and $2,839, respectively, in stock-based compensation expense, with unrealized gains on securities of $39 and $137 added back for the three and nine months ended September 30, 2021, respectively.

For the three and nine months ended September 30, 2021, there was a net change in prepaid and other assets of $824 and $434, respectively;

coupled with a net increase in current liabilities of $1,166 for the three months ended September 30, 2021, and a net decrease of $333 for the nine months ended September 30, 2021.

Three- and nine-month cash flows from operating activities were negative $2,958 and $10,977, respectively, for the period ended September 30, 2021.

Net cash provided by financing activities for the three and nine months ended September 30, 2021 was $0 and $4,968, respectively.

Financing activities consisted of $5,000 gross proceeds from the Bridge Bank Loan Security Agreement, $24 from the exercise of options, netted against $56 in capitalized deferred loan costs.

Net cash flows from the three and nine month period ended September 30, 2021 were negative $2,958 and $6,009, respectively.

We continue to pursue various strategic alternatives including collaborations with other pharmaceutical and biotechnology companies.

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progress or lack of progress in our preclinical studies or clinical trials;

unfavorable toxicology in our clinical programs, our drug substance requirements to support clinical programs;

unfavorable toxicology in our clinical programs;

our drug substance requirements to support clinical programs;

change in the focus, direction, or costs of our research and development programs;

8 unchanged sentences

Outstanding Share Information

Our outstanding share data as of June 30, 2021 and December 31, 2020 was as follows (in thousands):

Our outstanding share data as of September 30, 2021 and December 31, 2020 was as follows (in thousands):

September 30,

Outstanding Share Type

3 unchanged sentences

We invest excess cash and cash equivalents in high credit quality investments held by financial institutions in accordance with our investment policy designed to protect the principal investment.

At June 30, 2021, we had approximately $400 million in our cash accounts and $26,900 in savings and money market accounts.

At September 30, 2021, we had approximately $428 in our cash accounts and $23,907 in savings and money market accounts.

While we have never experienced any loss or write down of our money market investments since our inception, the amounts we hold in money market accounts are substantially above the $250,000 amount insured by the FDIC and may lose value.

1 unchanged sentence

Investments may be made in U.S.

or Canadian obligations

and bank securities, commercial paper of U.S.

or Canadian obligations and bank securities, commercial paper of U.S.

or Canadian industrial companies, utilities, financial institutions and consumer loan companies, and securities of foreign banks provided the obligations are guaranteed or carry ratings appropriate to the policy.

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Research and development issues are reviewed internally by our executive management and supporting scientific team.

Research and development expenses for the three months ended June 30, 2021 and 2020 were $800 and $1,121, respectively, and for the six-months ended June 30, 2021 and 2020 were $3,216, and $2,514 , respectively.

Research and development expenses for the three months ended September 30, 2021, and 2020 were $1,242 and $1,368, respectively, and for the nine-months ended September 30, 2021, and 2020 were $4,458 and $3,882 , respectively.

We have decreased our research and development expenses related to PEDMARK TM as our efforts have shifted to pre-commercialization activities after the NDA resubmission in May 2021.

7 unchanged sentences

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

These estimates are based on assumptions and judgments that may be affected by commercial, economic and other factors.

2 unchanged sentences

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