What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-12 compared with 2022-05-12 · 83 added, 65 removed, 194 unchanged (43% of the section changed)

5 unchanged sentences

Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements.

Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of the our Annual Report on Form 10-K for the year ended December 31, 2021 under the heading “Risk Factors.” We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021 under the heading “Risk Factors.” We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021 and the condensed consolidated financial statements and accompanying notes included elsewhere in this report.

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The combination of Cis+STS was generally well tolerated.

With a patient follow-up time of 52 months, the three-year Event Free Survival ("EFS") for Cis was 78.8% Cisplatin and 82.1% for the Cis + STS.

With a patient follow-up time of 52 months, the three-year Event Free Survival ("EFS") for Cis was 78.8% and 82.1% for the Cis + STS.

The three-year Overall Survival ("OS") is 92.3% for Cis and 98.2% for Cis + STS.

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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 $3.7 million for the three months ended March 31, 2022, and a net loss of $4.7 million for the three months ended March 31, 2021.

As of March 31, 2022, our accumulated deficit was approximately $183.2 million ($179.5 million at December 31, 2021).

We believe that our cash and cash equivalents as of March 31, 2022, which totaled $18.3 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 $8.8 million for the six months ended June 30, 2022, and a net loss of $8.7 million for the six months ended June 30, 2021.

As of June 30, 2022, our accumulated deficit was approximately $188.3 million ($179.5 million at December 31, 2021).

We believe that our cash and cash equivalents as of June 30, 2022, which totaled $14.9 million, plus the Bridge Bank Loan and Security Agreement or Petrichor 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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Our operating expenses will depend on many factors, including the progress of our drug development efforts and efficiency of our operations and current resources.

Our research and development expenses, which include expenses associated with our clinical trials, drug manufacturing to support clinical programs, stock-based compensation, consulting fees, sponsored research costs, toxicology studies, license fees, milestone payments, and other fees and costs related to the development of our product candidate, will depend on the availability of financial resources, the results of our clinical trials, and any directives from regulatory agencies, which are difficult to predict.

Our general and administration expenses include

expenses associated with the compensation of employees, stock-based compensation, professional fees, consulting fees, insurance and other administrative matters associated in support of our drug development programs.

Our research and development expenses, which include expenses associated with our clinical trials, drug manufacturing to support clinical programs, consulting fees, sponsored research costs, toxicology studies, license fees, milestone payments, and other fees and costs related to the development of our product candidate, will depend on the availability of financial resources, the results of our clinical trials, and any directives from regulatory agencies, which are difficult to predict.

Our general and administration expenses include expenses associated with the

compensation of employees, stock-based compensation, professional fees, consulting fees, insurance and other administrative matters associated in support of our drug development programs.

Results of Operations

Three months ended March 31, 2022 versus three months ended March 31, 2021:

Three months ended June 30, 2022 versus three months ended June 30, 2021:

Three Months Ended

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In thousands of U.S.

March 31, 2022

March 31, 2021

June 30, 2022

June 30, 2021

Operating expenses:

1 unchanged sentence

General and administration

Total operating expenses

Total operating expense

Loss from operations

Unrealized (loss)/gain on securities

Foreign currency transaction gain/(loss)

Amortization expense

Interest expense

Interest income

Research and development expenses decreased by $979 for the three months ended March 31, 2022, compared to the same period in 2021.

The Company’s research and development activities for the first three months of 2022 decreased as the Company’s efforts on a year over year basis were less focused on development and shifted towards pre-commercialization activities.

General and administrative expenses decreased by $398 over same period in 2021 as select expenses associated with pre-commercialization activities were previously done in 2021.

Research and development expenses increased by $331 for the three months ended June 30, 2022, compared to the same period in 2021.

The Company’s research and development activities during these three months increased as the Company’s efforts on a year over year basis were more focused on ongoing development and regulatory activities.

The difference is mainly due to the timing of the NDA resubmission over the same period in 2021.

General and administrative expenses increased by $758 over same period in 2021.

Legal expenses increased $367 over same period in the prior year primarily as a result of the class action suits and patent defense.

Sales and marketing activities increased by $620 over the same period in prior year as pre-commercialization activities increased.

There was a decrease in non-cash equity compensation of $290 for the three months ended June 30, 2022 over the same period in 2021.

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 loss on those shares for the three months ended March 31, 2022 was $91.

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

The unrealized loss on those shares for the three months ended June 30, 2022 was $8.

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

There was an increase of $52 in other losses for the three months ended March 31, 2022, compared to the same period in 2021.

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 increased by $7 for the three months ended March 31, 2022 compared to the same period in 2021.

In 2022, the Company is amortizing the capitalized costs associated with the renegotiated Bridge Bank loan facility.

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

Interest income was $7 lower for the three months ended March 31, 2022, compared to the same period in 2021.

This was driven mainly by lower average cash balances for the three months ended March 31, 2022 compared to the same period in 2021.

Quarterly Information

The following table presents selected condensed financial data for each of the last eight quarters through March 31, 2022, as prepared under U.S.

dollars in thousands, except per share information):

Net Loss for the

Basic Net Loss per

Diluted Net Loss per

There was a foreign currency transaction gain of $1 for the three months ended June 30, 2022, compared to zero for the same period in 2021.

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 increased by $8 for the three months ended June 30, 2022 compared to the same period in 2021.

Interest expense increased by $48 for the three months ended June 30 2022, over the same period in 2021.

The increase relates to the interest being paid on the Bridge Bank loan facility.

Interest income was $3 lower for the three months ended June 30, 2022, compared to the same period in 2021.

This was driven mainly by lower average cash balances for the three months ended June 30, 2022 compared to the same period in 2021.

Six months ended June 30, 2022 versus six months ended June 30, 2021:

Six Months Ended

In thousands of U.S.

June 30, 2022

September 30, 2020

December 31, 2020

March 31, 2021

June 30, 2021

September 30, 2021

December 31, 2021

March 31, 2022

Operating expenses:

Research and development

General and administration

Total operating expenses

Loss from operations

Unrealized (loss)/gain on securities

Foreign currency transaction gain/(loss)

Amortization expense

Interest expense

Interest income

Research and development expenses decreased by $648 for the six months ended June 30, 2022, compared to the same period in 2021.

The main drivers of this decrease were a decline in manuafacturing activities ($384), and a decline in regulatory expense ($165).

General and administrative expenses increased by $360 over same period in 2021 primarily related to legal expenses.

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 loss on those shares for the six months ended on June 30, 2022 was $99, which is in contrast to the $98 gain for the same period in 2021.

Foreign currency transaction loss was $2 for the six months ended June 30, 2022 ($8 loss for same period in 2021).

Amortization expense was $15 for the six months ended June 30, 2022 compared to $0 for the same period in 2021.

In 2022, the Company is amortizing the capitalized costs associated with the renegotiated Bridge Bank loan facility.

Interest expense increased $106 for the six months ended June 30, 2022 over same period in 2021.

The expense relates to interest on the Bridge Bank loan facility.

Interest income was $10 lower for the six months ended June 30, 2022, compared to the same period in 2021.

This was driven mainly by lower average cash balances for the six months ended June 30, 2022 compared to the same period in 2021.

Liquidity and Capital Resources

Selected Asset and Liability Data (thousands):

March 31, 2022

June 30, 2022

December 31, 2021

8 unchanged sentences

Shareholders’ equity

Cash and cash equivalents were $18,259 at March 31, 2022 and $21,100 at December 31, 2021.

The decrease in cash and cash equivalents between March 31, 2022 and December 31, 2021 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 minimal cash inflows of $15 from various option exercises.

There was a decrease of $418 in other current assets between March 31, 2022 and December 31, 2021.

This is a result of a $249 decrease in deferred charges related to the financing of our director and officer’s insurance policy, a $91 decrease in the value of Processa shares and an decrease in prepaid expenses of $78.

Current liabilities increased primarily due to timing of select manufacturing and regulatory expenses associated with the PEDMARK TM NDA resubmission.

Working capital decreased between December 31, 2021 and March 31, 2022 by $3,741.

The decrease relates to cash expenditures for operating activities for the three months ended March 31, 2022, the recognition of $500 reclassification of long-term debt to current liability, offset by the $15 cash inflow from option exercises.

Cash and cash equivalents were $14,915 at June 30, 2022 and $21,100 at December 31, 2021.

The decrease in cash and cash equivalents between June 30, 2022 and December 31, 2021 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 minimal cash inflows of $61 from various option exercises.

There was a decrease of $648 in other current assets between June 30, 2022 and December 31, 2021.

This is a result of a $463 decrease in deferred charges related to the financing of

our director and officer’s insurance policy, a $99 decrease in the value of Processa shares and a decrease in prepaid expenses of $544.

Current liabilities increased by $1,383 between June 30, 2022 and December 31, 2021.

The increase was driven mainly by the re-classification of $1,000 from long to short-term debt.

Payables and accrued expenses increased $361 due to timing of select manufacturing and expenses associated with the PEDMARK TM pre-commercialization effort.

Working capital decreased between December 31, 2021 and June 30, 2022 by $8,216.

The decrease relates to cash expenditures for operating activities for the six months ended June 30, 2022, the $1,000 reclassification of long-term debt to current liability, offset by the $61 cash inflow from option exercises.

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-month periods of March 31, 2022 and 2021:

The following table illustrates a summary of cash flow data for the three and six month periods ended June 30, 2022 and 2021:

Selected Cash Flow Data

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(dollars and shares in thousands)

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Net cash flow

Net cash used in operating activities for the three months ended March 31, 2022 primarily reflected a net loss of $3,696.

The three month loss was adjusted for the add back of non-cash items consisting of $433 in stock-based compensation expense, with unrealized loss on securities of $91 and amortization expense of $7 for the three months ended March 31, 2022.

For the three months ended March 31, 2022, there was a net change in prepaid and other assets of $326;

coupled with a net decrease in current liabilities of $18 for the three months ended March 31, 2022.

Three month cash flows from operating activities were $2,856 and $3,593, respectively, for the periods ended March 31, 2022 and 2021.

Net cash provided by financing activities for the three months ended March 31, 2022 was $15.

There was no financing activity cash flows for the same period in 2021.

Net cash flows from the three month-periods ended March 31, 2022 and 2021, were negative $2,841 and $3,593, respectively.

Net cash used in operating activities for the three and six months ended June 30, 2022 primarily reflected a net loss of $5,072 and $8,768, respectively.

These three and six month losses were adjusted for the add back of non-cash items consisting of $1,043 and $1,476, respectively, in stock-based compensation expense, with unrealized loss on securities of $8 and $99 added back for the three and six months ended June 30, 2022, respectively.

For the three and six months ended June 30, 2022, there was a net change in prepaid and other assets of $221 and $548, respectively;

coupled with a net increase in current liabilities for the three and six month periods ended June 30, 2022 of $401 and $383, respectively.

Three and six month cash flows from operating activities were negative $3,390 and $6,246, respectively, for the period ended June 30, 2022.

Net cash provided by financing activities for the three and six months ended June 30, 2022 was $46 and $61, respectively.

Financing activities consisted of proceeds from the exercises of various options.

Net cash flows from the three and six month period ended June 30, 2022 were negative $3,344 and $6,185, respectively.

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

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and commercialization activities, if any.

Outstanding Share Information

Our outstanding share data as of March 31, 2022 and December 31, 2021 was as follows (in thousands):

Outstanding Share Type

Common shares

Stock options

Financial Instruments

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 March 31, 2022, we had approximately $131 in our cash accounts and $18,128 in savings and money market accounts.

At June 30, 2022, we had approximately $278 in our cash accounts and $14,637 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 amount insured by the FDIC and may lose value.

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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.

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.

Securities must have a minimum Dun & Bradstreet rating of A for bonds or R1 low for commercial paper.

11 unchanged sentences

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

Research and development expenses for the three months ended March 31, 2022 was $1,437.

For the same period in 2021 research and development expense was $2,416.

Research and development expenses for the three and six months ended June 30, 2022 was $1,131 and $2,568, respectively.

For the same periods in 2021, research and development expense was $800 and $3,216, 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 March 2022.

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A summary of our critical accounting policies and use of estimates are presented in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operation” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (filed February 28, 2022).

There have been no material changes to our critical accounting policies and use of estimates during the three months ended March 31, 2022.

There have been no material changes to our critical accounting policies and use of estimates during the six months ended June 30, 2022.

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