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Item 2. Management’s Discussion and Analysis

2023-05-12 compared with 2022-11-14 · 132 added, 134 removed, 81 unchanged (77% of the section changed)

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

CAUTIONARY STATEMENT

This section and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties.

Caution Concerning Forward-Looking Statements

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 29, 2023 (the “Annual Report”) and our unaudited interim condensed consolidated financial statements and related notes appearing in this Quarterly Report on Form 10-Q (the “Quarterly Report”).

Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to the Company’s plans and strategy for its business, includes forward looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties.

Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact.

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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 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.

As a result of many factors, including those factors set forth in Part I, Item 1A of the Annual Report under the heading “Risk Factors”, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.

The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022 and the condensed consolidated financial statements and accompanying notes included elsewhere in this report.

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

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

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

Further, we have 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.

We received Orphan Drug Exclusivity for PEMARK in January 2023, which provides seven years of market exclusivity from its FDA approval on September 20, 2022 until September 20, 2029.

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

In March 2020, the United States Patent and Trademark Office (“USPTO”) allowed Patent No.

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

11,291,728 (the “US ‘728 Patent”), in December 2022, the USPTO issued Patent No.

11,510,984 (“US ‘984 Patent”) and in April 2023, the USPTO issued Patent No.

11,671,793 (“US ‘793 Patent”) that covers PEDMARK ® pharmaceutical formulation.

The US ‘728 Patent, US ‘984 Patent and US ‘793 Patent will expire in 2039 and the US ‘190 Patent will expire in 2038.

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.

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.

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.

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.

PEDMARK ® Product Overview

PEDMARK ® is the first and only therapy approved by the U.S.

Food and Drug Administration (“FDA”) indicated to reduce the risk of ototoxicity associated with cisplatin treatment in pediatric patients with localized, non-metastatic, solid tumors.

It is a unique formulation of sodium thiosulfate in single-dose, ready-to-use vials for intravenous use in pediatric patients.

PEDMARK ® is also the only therapeutic agent with proven efficacy and safety data with an established dosing paradigm, across two open-label, randomized Phase 3 clinical studies, the Clinical Oncology Group (“COG”) Protocol ACCL0431 and SIOPEL 6.

and Europe, it is estimated that more than 10,000 children annually 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 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.

PEDMARK ® has been studied by co-operative 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 childhood cancers typically treated with intensive cisplatin therapy for localized and disseminated disease, including newly diagnosed hepatoblastoma, germ cell tumor, osteosarcoma, neuroblastoma, medulloblastoma, and other solid tumors.

SIOPEL 6 enrolled only hepatoblastoma patients with localized tumors.

Cisplatin Induced Ototoxicity

Cisplatin and other platinum compounds are essential chemotherapeutic agents for the treatment of many pediatric malignancies.

Unfortunately, platinum-based therapies can cause ototoxicity, or hearing loss, which is permanent, irreversible, and particularly harmful to the survivors of pediatric cancer.

The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these children require lifelong hearing aids or cochlear implants, which can be helpful for some, but do not reverse the hearing loss and can be costly over time.

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

European Marketing Authorization Application

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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No deferred clinical studies were required in the positive opinion given by PDCO.

We were also advised that sodium thiosulfate (tradename to be determined) is eligible for submission of an application for a Pediatric Use Marketing Authorization (“PUMA”).

A PUMA is a dedicated marketing authorization covering the indication and appropriate formulation for medicines developed exclusively for use in the pediatric population and provides data and market protection up to 10 years.

We were also advised that Pedmarqsi is eligible for submission of an application for a Pediatric Use Marketing Authorization (“PUMA”).

Therefore, this decision allows us to proceed with the submission of a PUMA in the European Union (“EU”) with incentives of automatic access to the centralized procedure and up to 10 years of data and market protection.

In February 2020, we announced that we had submitted a MAA for the prevention of ototoxicity induced by cisplatin chemotherapy patients 1 month to < 18 years of age with localized, non-metastatic, solid tumors.

The EMA continues its review of our MAA.

Capital Funding

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.

In February 2020, we announced that we had submitted a MAA for the prevention of ototoxicity induced by cisplatin chemotherapy patients one month to < 18 years of age with localized, non-metastatic, solid tumors.

In March 2023, the CHMP issued a positive opinion and recommended granting a Marketing Authorization for Pedmarqsi for the prevention of ototoxicity (hearing loss) induced by cisplatin chemotherapy in patients one month to <18 years of age with localized, non-metastatic, solid tumors.

When formally approved by the European Commission, Pedmarqsi will be the first and only treatment approved in the European Union

EU to address this area of significant unmet medical need.

The CHMP’s recommendation will now be reviewed by the European Commission and ratification of the CHMP recommendation is expected by early June 2023.

Now that we have obtained applicable regulatory approval to sell PEDMARK ® in the United States and a positive CHMP opinion in the EU, 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 $6.1 million for the three months ended March 31, 2023, and a net loss of $3.7 million for the same period in 2022.

As of March 31, 2023, our accumulated deficit was approximately $209.3 million ($203.2 million at December 31, 2022).

We believe that our cash and cash equivalents as of March 31, 2023, which totaled $18.4 million, cash from product sales, plus the remaining Petrichor Financing of $20 million in convertible notes subject to mutual agreement between the Company and Petrichor (see Note 1 and Note 7 to our unaudited interim condensed consolidated financial statements contained elsewhere in this Quarterly Report), will be sufficient to meet our cash requirements through at least the next twelve months.

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

To finance our continuing operations, we may need to raise substantial additional funds through either the sale of additional equity, the issuance of debt, the establishment of collaborations that provide us with funding, the out-license or sale of certain aspects of our intellectual property portfolio or from other sources.

We may not be able to raise the necessary capital, or such funding may not be available on financially acceptable terms if at all.

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 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.

To finance our continuing operations, we may need to raise substantial additional funds through either the sale of additional equity, the issuance of debt, the establishment of collaborations, the out-license or sale of certain aspects of our intellectual property portfolio or from other sources.

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

Results of Operations

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

Three months ended March 31, 2023 versus three months ended March 31, 2022:

Three Months Ended

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In thousands of U.S.

September 30, 2022

September 30, 2021

March 31, 2023

March 31, 2022

PEDMARK product sales, net

Cost of product sales

Operating expenses:

Research and development

Selling and marketing

General and administration

Total operating expense

Total operating expenses

Loss from operations

Unrealized (loss)/gain on securities

Foreign currency transaction loss

Unrealized loss on securities

Other gain/(losses)

Amortization expense

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Interest income

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 commercialization readiness activities increased.

Research and development expenses decreased by $1,433 for the three months ended March 31, 2023, compared to the same period in 2022.

The Company’s research and development activities for the first three months of 2023 consisted of costs associated with investigator initiated clinical trials.

During the same period in 2022 and prior to approval of PEDMARK, manufacturing costs pertaining to PEDMARK were expensed to R&D expense in the period incurred, and following approval are reflected in inventory.

Selling and marketing expenses were $2,531 for the three months ended March 31, 2023.

Selling and marketing expenses include remuneration of our sales and marketing employees, dollars spent on marketing campaigns (sponsorships, trade shows, presentations, etc.), and any activities to support marketing and sales activities.

General and administrative expenses increased by $2,208 compared to the same period in 2022, which was primarily driven by an increase of non-cash employee remuneration of $656, an increase of ongoing product support such as quality control and assurance of $482, an increase of professional and legal expenses of $488, and an increase of salaries and benefits of $432.

Interest expense was up $740 compared to the same period in 2022.

This increase is associated with higher interest rates and $20,000 more in funded debt than in the same period in 2022.

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 September 30, 2022 was $27.

The unrealized loss on those shares for the three months ended March 31, 2023 was $30.

Other losses were driven mainly by 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 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.

There was an decrease of $70 in other losses for the three months ended March 31, 2023, compared to the same period in 2022.

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

Amortization expense increased by $65 for the three months ended March 31, 2023 compared to the same period in 2022.

Interest income was up $100 for the three months ended March 31, 2023, compared to the same period in 2022.

This was driven mainly by higher interest rates for the three months ended March 31, 2023 compared to the same period in 2022.

Quarterly Information

The following table presents selected condensed financial data for each of the last eight quarters through March 31, 2023, as prepared under U.S.

dollars in thousands, except per share information):

Net (Loss)/Income for the

Basic Net (Loss)/Income per

Diluted Net (Loss)/Income per

June 30, 2021

September 30, 2021

December 31, 2021

March 31, 2022

June 30, 2022

September 30, 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 $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 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.

December 31, 2022

March 31, 2023

Liquidity and Capital Resources

Selected Asset and Liability Data (thousands):

September 30, 2022

March 31, 2023

December 31, 2022

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Accumulated deficit

Shareholders’ equity

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:

Stockholders’ deficit

Cash and cash equivalents were $18,390 at March 31, 2023 and $23,774 at December 31, 2022.

The decrease in cash and cash equivalents between March 31, 2023, and December 31, 2022, is the result of cash outlays for operating expenses related to the promotion of our product, small amounts of research and development and general and administrative expenses, which were offset by cash inflows from product sales of $1,220 and cash inflows of $213 from various option exercises.

There was an increase of $318 in other current assets between March 31, 2023, and December 31, 2022, and a decrease in current liabilities of $589.

The overall result was a reduction in working capital of $4,478.

The following table illustrates a summary of cash flow data for the three month periods of March 31, 2023 and 2022:

Selected Cash Flow Data

Nine Months Ended September 30,

(dollars in thousands)

Three Months Ended

(dollars and shares in thousands)

March 31, 2023

March 31, 2022

Net cash used in operating activities

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Net cash flow

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.

Net cash used in operating activities for the three months ended March 31, 2023 primarily reflected a net loss of $6,052.

The three month loss was adjusted for the add back of non-cash items consisting of $1,089 in stock-based compensation expense, with unrealized loss on securities of $30 and amortization expense of $72 for the three months ended March 31, 2023.

For the three months ended March 31, 2023, there was a net change in prepaid and other assets of $318;

coupled with a net decrease in current liabilities of $589.

Three month negative cash flows from operating activities were $5,799 and $2,856, respectively, for the periods ended March 31, 2023 and 2022.

Net cash provided by financing activities for the three months ended March 31, 2023 was $193.

During the same period in 2022, there was various option exercises resulting in cash inflows from financing activities of $15.

Net cash flows from the three month-periods ended March 31, 2023 and 2022, were negative $5,384 and $2,841, respectively.

We continue to pursue various strategic alternatives including 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:

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

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 potential expanded commercialization activities.

and commercialization activities, if any.

Outstanding Share Information

Our outstanding share data as of March 31, 2023 and December 31, 2022 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 September 30, 2022, we had approximately $438 in our cash accounts and $29,314 in savings and money market accounts.

At March 31, 2023, we had approximately $5.7 million in our cash accounts and $12.7 million 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.

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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 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.

Until we are cash flow positive from operations, we have chosen to avoid investments of a trading or speculative nature.

We classify fixed income investments with original maturities at the date of purchase greater than three months which mature at or less than twelve months as current.

We carry investments at their fair value with unrealized gains and losses included in other comprehensive income (loss);

however, we have not held any instruments that were classified as short-term investments during the periods presented in this Quarterly Report.

Off-Balance Sheet Arrangements

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

In addition, we do not engage in trading activities involving non-exchange traded contracts.

As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such activities.

Research and Development

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.

Where possible, we have sought to include leading scientific investigators and advisors to enhance our internal capabilities.

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

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 ® 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 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.

As a result of these factors, we are unable to accurately estimate the nature, timing and future costs necessary to complete the development of this product candidate.

In addition, we are unable to reasonably estimate the period when material net cash inflows could commence from the sale, licensing or commercialization of such product candidate, if ever.

Critical Accounting Policies and Use of Estimates

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 nine months ended September 30, 2022.

Contractual Obligations and Commitments

None, other than the OHSU royalty agreement mentioned in the financial statements, and the severance amounts as disclosed in our 2022 annual report (10-K) published March 29, 2023.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and use of estimates during the three months ended March 31, 2023.

Controls and Procedures .

(a) Evaluation of Disclosure Controls and Procedures .

We maintain "disclosure controls and procedures,"

as such term is defined in Rule 13a-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.

Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

Based on this evaluation at the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and our Chief Financial Officer, have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2023.

(b) Changes in Internal Control over Financial Reporting.

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

OTHER INFORMATION

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