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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-12 · 98 added, 160 removed, 117 unchanged (69% of the section changed)

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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.

Product Candidate - PEDMARK TM

Our only product candidate in the clinical stage of development is:

PEDMARK TM (a unique formulation of sodium thiosulfate (“STS”)).

We have announced results of two Phase 3 clinical trials for the prevention of cisplatin induced hearing loss, or ototoxicity in children, including the pivotal Phase 3 study SIOPEL 6, “A Multicentre Open Label Randomised Phase 3 Trial of the Efficacy of Sodium Thiosulfate in Reducing Ototoxicity in Patients Receiving Cisplatin Chemotherapy for Standard Risk Hepatoblastoma,” and the proof of concept Phase 3 study in collaboration with the Children’s Oncology Group (“COG ACCL0431”) “A Randomized Phase 3 Study of Sodium Thiosulfate for the Prevention of Cisplatin-Induced Ototoxicity in Children”.

COG ACCL0431 final results were published in the Lancet Oncology in 2016.

SIOPEL 6 final results were published in the New England Journal of Medicine in June 2018.

We continue to focus our resources on the development of PEDMARK TM .

We have licensed from Oregon Health & Science University (“OHSU”) intellectual property rights for the use of PEDMARK TM as a chemoprotectant and are developing PEDMARK TM as a protectant against the hearing loss often caused by platinum-based anti-cancer agents in children.

Preclinical and clinical studies conducted by OHSU and others have indicated that PEDMARK TM can effectively reduce the incidence of hearing loss caused by platinum-based anti-cancer agents.

We are a commercial-stage biopharmaceutical company focused on our only product PEDMARK ® .

On September 20, 2022 we received approval from the FDA for PEDMARK ® (sodium thiosulfate injection) to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors.

This approval makes PEDMARK ® the first and only treatment approved by the FDA in this area of significant unmet medical need.

On October 17, 2022 we announced commercial availability of PEDMARK ® in the United States.

We sell our product through an experienced field force including Regional Pediatric Oncology Specialists and medical science liaisons who are helping to educate the medical communities and patients about cisplatin induced ototoxicity and our programs supporting patient access to PEDMARK ® .

Further, the Company has established Fennec HEARS™, a comprehensive single source program designed to connect PEDMARK patients to both patient financial and product access support.

The program offers assistance and resources, regardless of insurance type, that can address co-pays or lack of coverage when certain eligibility requirements are met.

Fennec HEARS also provides access to care coordinators that can answer insurance questions about coverage for PEDMARK and provide tips and resources for managing treatment.

We currently have two patents listed for PEDMARK ® in the FDA’s Orange Book.

In March 2020, the United States Patent and Trademark Office, or USPTO, allowed Patent No.

10,596,190 (“US ‘190”), which is exclusively in-licensed from Oregon Health & Science University (“OHSU”) and relates to a method of using our PEDMARK ® product.

In September 2022, the USPTO issued Patent No.

11,291,728 (“728”) which is a formulation patent.

The “190” and “728” patents will expire in 2038 and 2039, respectively, unless held invalid or unenforceable by a court or final jurisdiction.

Further, on September 14, 2022, the USPTO issued Notices of Allowance to us for two additional patent applications that cover the PEDMARK ® pharmaceutical formulation.

We expect these two additional U.S.

patents to issue in Q4 of 2022 or Q1 of 2023.

These patents will expire in 2039, unless held invalid or unenforceable by a court of final jurisdiction.

We are also pursuing additional patent applications in both the U.S.

and internationally for PEDMARK ® .

Hearing loss among children receiving platinum-based chemotherapy is frequent, permanent and often severely disabling.

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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 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.

Food and Drug Administration (“FDA”).

Further, PEDMARK TM has received Orphan Drug Designation in the U.S.

in this setting.

We initiated our rolling New Drug Application (“NDA”) for PEDMARK TM for the prevention of ototoxicity induced by cisplatin chemotherapy patients 1 month to < 18 years of age with localized, non-metastatic, solid tumors with the FDA in December 2018.

We announced that we had submitted full completion of the NDA in February 2020.

The FDA set a Prescription Drug User Fee Act (“PDUFA”) target action date of August 10, 2020 for the completion of the FDA’s review.

On August 10, 2020, we announced that we received a Complete Response Letter (“CRL”) from the FDA regarding our NDA for PEDMARK TM , which identified deficiencies in the third-party manufacturing facility that manufactures PEDMARK TM on our behalf.

Importantly, no clinical safety or efficacy issues were identified during the review and there was no requirement for further clinical data.

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.

On November 29, 2021, we announced that we received a CRL from the FDA regarding our NDA for PEDMARK TM , which identified deficiencies in the third-party manufacturing facility that manufactures PEDMARK TM on our behalf.

In March 2022, we announced the resubmission of our NDA for PEDMARK TM , and in April 2022, we further announced that the FDA accepted for filing the resubmission of our NDA and set a PDUFA target action date of September 23, 2022.

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 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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The EMA continues its review of our MAA.

Clinical Studies

PEDMARK TM has been studied by cooperative groups in two Phase 3 clinical studies of survival and reduction of ototoxicity, COG ACCL0431 and SIOPEL 6.

Both studies have been completed.

The COG ACCL0431 protocol enrolled one of five childhood cancers typically treated with intensive cisplatin therapy for localized and disseminated disease, including newly diagnosed hepatoblastoma, germ cell tumor, osteosarcoma, neuroblastoma, and medulloblastoma.

SIOPEL 6 enrolled only hepatoblastoma patients with localized tumors.

In October 2007, we announced that our collaborative partner, the International Childhood Liver Tumour Strategy Group, known as SIOPEL, a multi-disciplinary group of specialists under the umbrella of the International Society of Pediatric Oncology, had launched a randomized Phase 3 clinical trial SIOPEL 6 to investigate whether STS reduces hearing loss in standard risk hepatoblastoma (liver) cancer patients receiving cisplatin as a monotherapy.

The study was initiated in October 2007 initially in the United Kingdom and completed enrollment at the end of 2014.

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.

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.

The primary objectives of SIOPEL 6 were:

● To assess the efficacy of STS to reduce the hearing impairment caused by cisplatin.

● To carefully monitor any potential impact of STS on response to cisplatin and survival.

SIOPEL 6 - Results

Background / Objectives:

Bilateral high-frequency hearing loss is a serious permanent side-effect of cisplatin therapy, particularly debilitating when occurring in young children.

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 SR-HB.

Design / Methods:

Newly diagnosed patients with SR-HB, defined as tumor limited to PRETEXT I, II or III, no portal or hepatic vein involvement, no intra-abdominal extrahepatic disease, AFP >100ng/ml and no metastases, were randomized to Cis or Cis+STS for 4 preoperative and 2 postoperative courses.

Cisplatin 80mg/m2 was administered over 6 hours, STS 20g/m2 was administered intravenously over 15 minutes exactly 6 hours after stopping cisplatin.

Tumor response was assessed after 2 and 4 preoperative cycles with serum AFP and liver imaging.

In case of progressive disease (PD), STS was to be stopped and doxorubicin 60mg/m2 combined with cisplatin.

The primary endpoint was centrally reviewed absolute hearing threshold, at the age of ≥3.5 years by pure tone audiometry.

109 randomized patients (52 Cisplatin only ("Cis") and 57 Cis+STS) were evaluable.

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% and 82.1% for the Cis + STS.

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

Treatment failure defined as Progressive Disease ("PD") at 4 cycles was equivalent in both arms.

Among the first 101 evaluable patients, hearing loss occurred in 29/46=63.0% under Cis and in 18/55=32.7% under Cis +STS, corresponding to a relative risk of 0.52(P=0.002).

This randomized Phase 3 trial in SR-HB of cisplatin versus cisplatin plus STS shows that the addition of STS significantly reduces the incidence of cisplatin-induced hearing loss without any evidence of tumor protection.

In March 2008, we announced the activation of a Phase 3 trial with STS to prevent hearing loss in children receiving cisplatin-based chemotherapy in collaboration with the Children’s Oncology Group.

The goal of this Phase 3 study was to evaluate in a multi-centered, randomized trial whether STS is an effective and safe means of preventing hearing loss in children receiving cisplatin-based chemotherapy for newly diagnosed germ cell, liver (hepatoblastoma), brain (medulloblastoma), nerve tissue (neuroblastoma) or bone (osteosarcoma) cancers.

Eligible children, one to eighteen years of age, were to receive cisplatin according to their disease-specific regimen and, upon enrollment in this study, were randomized to receive STS or not.

Efficacy of STS was determined through comparison of hearing sensitivity at follow-up relative to baseline measurements using standard audiometric techniques.

The Children’s Oncology Group was responsible for funding the clinical activities for the study and we were responsible for providing the drug, drug distribution and pharmacovigilance, or safety monitoring, for the study.

The trial completed enrollment of 131 pediatric patients in the first quarter of 2012.

The final results of COG ACCL0431 were published in Lancet Oncology in December 2016.

COG ACCL0431 - Results

COG Study ACCL0431, “A Randomized Phase 3 Study of Sodium Thiosulfate for the Prevention of Cisplatin-Induced Ototoxicity in Children,” finished enrollment of 131 patients of which 125 were eligible patients.

The patients had been previously diagnosed with childhood cancers.

The primary endpoint was to evaluate the efficacy of STS for prevention of hearing loss in children receiving cisplatin chemotherapy (hypothesis:

50% relative reduction in hearing loss).

Secondary endpoints included:

● Compare change in mean hearing thresholds.

● Compare incidence of other Grade 3/4 toxicities (renal and hematological).

● Monitor Event Free Survival (EFS) and Overall Survival (OS) in two groups.

125 eligible subjects were enrolled with germ cell tumor (32), osteosarcoma (29), neuroblastoma (26), medulloblastoma/pnet (26), hepatoblastoma (7), or other (5).

Of these, 104 subjects (64 male and 29 <5 years old) were evaluable for the primary endpoint.

Subjects were randomized either to no treatment (control) or treatment with STS 16 grams/m2 IV over 15 minutes, 6 hours after each cisplatin dose.

Hearing was measured using standard audiometry for age and data was reviewed centrally using American Speech-Language-Hearing Association criteria.

The proportion of subjects with hearing loss assessed at 4 weeks post the final cisplatin dose (primary endpoint):

● The proportion of hearing loss for STS vs.

Control was 28.6% (14/49) vs.

56.4% (31/55), respectively (p=0.004).

● In a predefined subgroup of patients less than 5 years old with 29 eligible subjects:

Control was 21.4% (3/14) vs.

73.3% (11/15), respectively (p=0.005).

● STS protects against cisplatin-induced hearing loss in children across a heterogeneous range of tumor types, with even stronger efficacy in the protocol predefined subgroup of patients under five years old, and is not associated with serious adverse events attributed to its use.

● Further potential clinical use will be informed by the final results of SIOPEL 6 study.

Capital Funding

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 $8.8 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.

We have not received revenues from the sale of PEDMARK ® as of September 30, 2022.

Now that we have obtained applicable regulatory approval to sell PEDMARK ® , we recognize there may still be a need to establish collaborations that provide us with up-front payments, licensing fees, milestone payments, royalties or other revenue.

We generated a net loss of approximately $16.9 million for the nine months ended September 30, 2022, and a net loss of $12.9 million for the nine months ended September 30, 2021.

As of September 30, 2022, our accumulated deficit was approximately $196.3 million ($179.5 million at December 31, 2021).

We believe that our cash and cash equivalents as of September 30, 2022, which totaled $29.8 million, plus the remaining available Petrichor Financing of $20 million in convertible notes (see Note 1 and Note 7 to condensed consolidated financial statements contained elsewhere in this report), will be sufficient to meet our cash requirements through at least the next twelve months, including commercial launch of PEDMARK ® 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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If we cannot obtain adequate funding in the future, we might be required to further delay, scale back or eliminate certain research and development studies, consider business combinations, or even shut down some, or all, of our operations.

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 operating expenses will depend on many factors, including the progress of our commercialization 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, 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 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 primarily of our commercialization of PEDMARK ® .

Results of Operations

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

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

Three Months Ended

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In thousands of U.S.

June 30, 2022

June 30, 2021

September 30, 2022

September 30, 2021

Operating expenses:

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Unrealized (loss)/gain on securities

Foreign currency transaction gain/(loss)

Foreign currency transaction loss

Amortization expense

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Interest income

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.

Research and development expenses decreased by $396 for the three months ended September 30, 2022, compared to the same period in 2021.

The Company’s research and development activities during three months ended September 30, 2022 decreased as the Company’s efforts on a year over year basis were more focused on commercial readiness for the launch of PEDMARK rather than development and regulatory activities.

General and administrative expenses increased by $4,122 over same period in 2021.

There was an increase in non-cash equity compensation of $970 for the three months ended September 30, 2022, over the same period in 2021.

This increase is attributable to grants to new employees and the expense associated with equity awards which vested upon FDA approval of PEDMARK ® .

Salaries and wage expense increased by $1,212 for the three months ended September 30, 2022 over the same period in 2021.

This increase was a result of increased headcount primarily related to the commercial team.

Legal expenses increased $341 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.

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

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 June 30, 2022 was $8.

The unrealized loss on those shares for the three months ended September 30, 2022 was $27.

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

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

There was a foreign currency transaction loss of $4 for the three months ended September 30, 2022, compared to a $1 loss 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 and Petrichor.

Amortization expense increased by $56 for the three months ended September 30, 2022, compared to the same period in 2021.

Interest expense increased by $64 for the three months ended September 30, 2022, over the same period in 2021.

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

Interest income was $11 higher for the three months ended September 30, 2022, compared to the same period in 2021.

This was driven mainly by higher average cash balances and higher interest rates, for the three months ended September 30, 2022 compared to the same period in 2021.

Nine months ended September 30, 2022 versus nine months ended September 30, 2021:

Nine Months Ended

In thousands of U.S.

June 30, 2022

June 30, 2021

September 30, 2022

September 30, 2021

Operating expenses:

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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.

Research and development expenses decreased by $1,044 for the nine months ended September 30, 2022, compared to the same period in 2021.

The main drivers of this decrease were a decline in manufacturing activities and regulatory expenses.

General and administrative expenses increased by $4,482 over the same period in 2021 primarily related to legal expenses, non-cash equity compensation and higher wages from increased headcount.

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.

The unrealized loss on those shares for the nine months ended on September 30, 2022 was $126, which is in contrast to the $137 gain for the same period in 2021.

Foreign currency transaction loss was $6 for the nine months ended September 30, 2022 ($9 loss for same period in 2021).

Amortization expense was $79 for the nine months ended September 30, 2022 compared to $8 for the same period in 2021.

In 2022, the Company wrote off the remaining unamortized balance associated with the Bridge Bank facility after it was paid off.

At the same time, the Company started to amortize the debt issuance costs associated with the Petrichor notes.

Interest expense increased $170 for the nine months ended September 30, 2022 over same period in 2021.

The expense relates to interest on the Bridge Bank loan facility and the Petrichor convertible notes.

Interest income was $1 higher for the nine months ended September 30, 2022, compared to the same period in 2021.

This was driven mainly by higher interest rates for the nine months ended September 30, 2022 compared to the same period in 2021.

Liquidity and Capital Resources

Selected Asset and Liability Data (thousands):

June 30, 2022

September 30, 2022

December 31, 2021

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Shareholders’ equity

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 and six month periods ended June 30, 2022 and 2021:

Cash and cash equivalents were $29,752 at September 30, 2022 and $21,100 at December 31, 2021.

The increase in cash and cash equivalents between September 30, 2022 and December 31, 2021 is the result of expenses related to the development and preparation of the NDA resubmission of PEDMARK ® and general and administrative expenses, which

was offset by inflows from the Petrichor notes and modest cash inflows of $249 from various option exercises.

There was a decrease of $886 in other current assets between September 30, 2022 and December 31, 2021.

Current liabilities increased by $1,273 between September 30, 2022 and December 31, 2021.

The increase was driven mainly by increased expenses as we neared the anticipated PEDMARK ® commercialization.

Working capital increased between December 31, 2021 and September 30, 2022 by $6,493.

The increase relates to a net cash inflow from the Petrichor notes and various option exercises, offset by expenditures for operating activities for the nine months ended September 30, 2022.

The Company expects increases in cash outflows related to commercialization activities in the coming quarters as the Company expands its commercialization efforts related to PEDMARK ® .

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

Selected Cash Flow Data

Three Months Ended June 30,

Six Months Ended June 30,

(dollars and shares in thousands)

Nine Months Ended September 30,

(dollars in thousands)

Net cash used in operating activities

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Net cash flow

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.

Net cash used in operating activities for the nine months ended September 30, 2022 primarily reflected a net loss of $16,857.

The nine month losses were adjusted for the add back of non-cash items consisting of $3,363 in stock-based compensation expense, amortization expense of $79, and unrealized loss on securities of $126 added back for the nine months ended September 30, 2022.

For the nine months ended September 30, 2022, there was a net change in prepaid and other assets of $756, coupled with a net increase in current liabilities of $1,273.

Nine month cash flows from operating activities were negative $11,256 for the period ended September 30, 2022.

Net cash provided by financing activities for the nine months ended September 30, 2022, was $19,908.

Financing activities consisted of proceeds from the Petrichor notes, net of capitalized costs, cash paid for taxes on restricted share releases and exercises of various options.

Net cash flows from the nine month period ended September 30, 2022 were $8,652.

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

Our projections of further capital requirements are subject to substantial uncertainty.

Our working capital requirements may fluctuate in future periods depending upon numerous factors, including:

our ability to obtain additional financial resources;

sales volume of our product, our ability to obtain additional financial resources;

our ability to enter into collaborations that provide us with up-front payments, milestones or other payments;

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the timing and outcome of any regulatory review process;

and commercialization activities, if any.

and potential expanded commercialization activities.

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 June 30, 2022, we had approximately $278 in our cash accounts and $14,637 in savings and money market accounts.

At September 30, 2022, we had approximately $438 in our cash accounts and $29,314 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.

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The policy risks are primarily the opportunity cost of the conservative nature of the allowable investments.

As our main purpose is research and development, we have chosen to avoid investments of a trading or speculative nature.

As our main purpose is preservation of capital while we endeavor to become cash flow positive through the sale of our product, we have chosen to avoid investments of a trading or speculative nature.

Since our inception, we have not had any material off-balance sheet arrangements.

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Research and Development

Our research and development efforts have been focused on the development of PEDMARK TM since 2013.

Our research and development efforts have been focused on the development of PEDMARK since 2013.

We have established relationships with contract research organizations, universities and other institutions, which we utilize to perform many of the day-to-day activities associated with our drug development.

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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 and six months ended June 30, 2022 was $1,131 and $2,568, respectively.

Research and development expenses for the three and nine months ended September 30, 2022 was $846 and $3,414, respectively.

For the same periods in 2021, research and development expense was $1,242 and $4,458, 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.

Our product candidate still requires significant, time-consuming and costly research and development, testing and regulatory clearances.

In developing our product candidate, we are subject to risks of failure that are inherent in the development of products based on innovative technologies.

We have decreased our research and development expenses related to PEDMARK ® as our efforts have shifted to commercial readiness activities.

PEDMARK ® still requires significant, time-consuming and costly research and development, testing and regulatory clearances.

In developing PEDMARK ® , we are subject to risks of failure that are inherent in the development of products based on innovative technologies.

For example, it is possible that our product candidate will be ineffective or toxic, or will otherwise fail to receive the necessary regulatory clearances.

There is a risk that our product candidate will be uneconomical to manufacture or market or will not achieve market acceptance.

There is a risk that PEDMARK ® will be uneconomical to manufacture or market or will not achieve market acceptance.

There is also a risk that third parties may hold proprietary rights that preclude us from marketing our product candidate or that others will market a superior or equivalent product.

3 unchanged sentences

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 six months ended June 30, 2022.

There have been no material changes to our critical accounting policies and use of estimates during the nine months ended September 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