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Item 2. Management’s Discussion and Analysis

2022-05-20 compared with 2021-11-15 · 68 added, 77 removed, 87 unchanged (63% of the section changed)

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assessment of our management.

We are a biopharmaceutical

company that is developing GP2, an immunotherapy designed to prevent the recurrence of breast cancer following surgery.

amino acid transmembrane peptide of the HER2/ neu protein, a cell surface receptor protein that is expressed in a variety of

common cancers, including expression in 75% of breast cancers at low (1+), intermediate (2+), and high (3+ or over-expressor)

In a completed Phase IIb clinical trial led by MD Anderson Cancer Center, no recurrences were observed in the

HER2/ neu 3+ adjuvant setting after median 5 years of follow-up, if the patient received the 6 primary intradermal injections

over the first 6 months.

We are planning to commence a Phase III clinical trial shortly and are currently completing the last

steps to release GP2 drug product and to open clinical sites.

are a clinical-stage biopharmaceutical company focused on the development of GP2, an immunotherapy to prevent breast cancer recurrences

in patients who have previously undergone surgery.

GP2 is a 9 amino acid transmembrane peptide of the HER2/ neu protein, a cell

surface receptor protein that is expressed in a variety of common cancers, including expression in 75% of breast cancers at low (1+),

intermediate (2+), and high (3+ or over-expressor) levels.

The combination of GP2 + GM-CSF is called GLSI-100.

In a completed randomized,

single-blinded, placebo-controlled, multi-center Phase IIb clinical trial led by MD Anderson Cancer Center, no recurrences were observed

in patients treated with GLSI-100 in the HER2/ neu 3+ adjuvant setting after median 5 years of follow-up, if the patients were

treated, followed, and remained disease free over the first 6 months, which is the time required to reach peak immunity and thus maximum

efficacy and protection (p = 0.0338).

For the 146 patients who have been treated with GLSI-100 to date over 4 clinical trials, treatment

was well tolerated and no serious adverse events were observed related to the immunotherapy.

are planning to commence Flamingo-01, a Phase III clinical trial with Baylor College of Medicine as the global primary investigator site.

Flamingo-01 is designed to evaluate the safety and efficacy of GLSI-100 in HER2 /neu positive patients with residual disease or

high-risk pathologic complete response at surgery and who have completed both neoadjuvant and postoperative adjuvant trastuzumab based

The Phase III clinical trial protocol including the patient population, trial size, statistical analysis plan, interim analysis,

adaptive features, and manufacturing information are still under discussion with the FDA and therefore subject to change.

have completed the last steps of manufacturing GP2 and released 3 clinical lots of GP2 drug product that we believe have met all release

specifications and are awaiting review of the manufacturing data by the FDA.

The third lot was manufactured in a commercial facility

on an automated filling line.

We are also scheduling site initiation visits to do the final training of the clinicians, nurses, coordinators,

and pharmacists to activate and open clinical sites.

The FDA previously informally asked us not to start the Phase III trial until we

submitted updated manufacturing information as our manufacturing information for the final drug product was incomplete and lots were

being tested for the first time.

The FDA formally asked us through a clinical hold letter not to start the trial until we provided such

manufacturing information.

As soon as the information was available, we provided it to the FDA and we are currently awaiting comments.

All hold issues were associated with manufacturing.

We along with our CRO continue to actively recruit and prepare sites for site initiation.

Please refer to related risk factors disclosed in our Form 10-K for the year ended December 31, 2021.

date, we have not generated any revenue and we have incurred net losses.

Our net losses were approximately $4.6 million and $1.9 million

for the years ended December 31, 2020 and 2019, respectively and $2.2 million and $0.7 million for the nine months ended September 30,

2021 and 2020.

for the years ended December 31, 2021 and 2020, respectively and $1.9 million and $0.6 million for the three months ended March 31, 2022

and 2021, respectively.

net losses have resulted from costs incurred in developing the drug in our pipeline, planning and preparing for clinical trials and general

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We will also experience increased costs associated with operating as a public company.

of Operations for the Three Months Ended September 30, 2021 and 2020

and Development Expenses

and development expenses increased by $499,065, or 316%, to $657,096 for the three months ended September 30, 2021 from $158,031 for

the three months ended September 30, 2020.

The increase was primarily the result of an increase in compensation and manufacturing and

clinical expenses.

and Administrative Expenses

and administrative expenses increased by $110,756, or 112%, to $209,590 for the three months ended September 30, 2021 from $98,834 for

the three months ended September 30, 2020.

The increase was primarily the result of an increase in costs for raising capital.

of Operations for the Nine Months Ended September 30, 2021 and 2020

of Operations for the Three Months Ended March 31, 2022 and 2021

and Development Expenses

and development expenses increased by $1,036,881, or 226%, to $1,495,607 for the nine months ended September 30, 2021 from $458,726 for

the nine months ended September 30, 2020.

The increase was primarily the result of an increase in compensation and manufacturing and

clinical expenses.

and development expenses increased by $1,378,844, or 489%, to $1,660,821 for the three months ended March 31, 2022 from $281,977 for

the three months ended March 31, 2021.

The increase was primarily the result of an increase in cash compensation, clinical, and manufacturing

and Administrative Expenses

and administrative expenses increased by $471,920, or 186%, to $725,130 for the nine months ended September 30, 2021 from $253,210 for

the nine months ended September 30, 2020.

The increase was primarily the result of an increase in costs for raising capital.

and administrative expenses increased by $9,753, or 3%, to $328,382 for the three months ended March 31, 2022 from $318,629 for

the three months ended March 31, 2021.

and Capital Resources

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may require us to raise additional capital.

As of September 30, 2021 and December 31, 2020, our principal source of liquidity was our

cash, which totaled $28,905,993 and $28,660,375, respectively, and additional loans and accrued unreimbursed expenses from related parties.

As of March 31, 2022 and December 31, 2021, our principal source of liquidity was our cash,

which totaled $19,743,096 and $27,204,269, respectively, and additional loans and accrued unreimbursed expenses from related parties.

Historically, our principal sources of cash have included proceeds from the sale of common stock and preferred stock and related party

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be for continuing operations, funding of research and development, including our clinical trials, and general working capital requirements.

Flow Activities for the Nine Months Ended September 30, 2021 and 2020

incurred net losses of $2,209,871 and $711,936 during the nine month periods ended September 30, 2021 and 2020, respectively.

The increase was primarily the result of an increase in compensation, manufacturing and clinical trial expenses, and costs for raising

cash used in operating activities was $2,027,228 for the nine months ended September 30, 2021 and $0 for the nine months ended September

did not use or generate cash from investing activities during the nine months ended September 30, 2021 and September 30, 2020.

used and generated cash netting a total of $2,272,846 from financing activities during the nine months ended September 30, 2021 and $6,207,502

from financing activities during the nine months ended September 30, 2020.

Flow Activities for the Three Months Ended March 31, 2022 and 2021

incurred net losses of $1,969,628 and $597,008 during the three month periods ended March 31, 2022 and 2021, respectively.

was primarily the result of an increase in cash compensation, clinical, and manufacturing expenses.

cash used in operating activities was $1,947,462 for the three months ended March 31, 2022 and $528,270 for the three months ended March

did not use or generate cash from investing activities during the three months ended March 31, 2022 and March 31, 2021.

used a total of $5,513,711 cash for the stock buy back program, net of costs, during the three months ended March 31, 2022 and

used and generated cash netting a total of $2,272,846 from financing activities during the three months ended March 31, 2021.

Obligations and Commitments

of March 31, 2022, we did not have any material contractual obligations, other than employment and shareholder agreements, license for

GP2 from HJF, and manufacturing and clinical trial obligations related to the planned Phase III clinical trial.

Sheet Arrangements

of September 30, 2021, we did not have any off-balance sheet arrangements as described by Item 303(a)(4) of Regulation S-K.

Accounting Policies

expense related to warrants and stock granted to employees and non-employees is measured at the grant date based on the estimated fair

value of the award and is recognized on a straight-line basis over the requisite service period.

Forfeitures are recognized as a reduction

of stock-based compensation expense as they occur.

Stock-based compensation expense for an award with a performance condition is recognized

when the achievement of such performance condition is determined to be probable.

If the outcome of such performance condition is not

determined to be probable or is not met, no compensation expense is recognized and any previously recognized compensation expense is

of March 31, 2022, we did not have any off-balance sheet arrangements as described by Item 303(a)(4) of Regulation S-K.

Accounting Policies and Estimates

financial statements are prepared in conformity with U.S.

GAAP, which require the use of estimates, judgments and assumptions that affect

the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements, and

the reported amounts of expenses in the periods presented.

an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses and stock-based compensation.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances,

the results of which form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts

of expenses that are not readily apparent from other sources.

Actual results could differ from those estimates, particularly given the

significant social and economic disruptions and uncertainties associated with the ongoing coronavirus pandemic and the COVID-19 control

Accounting Pronouncements

have evaluated the following recent accounting pronouncements through the date the financial statements were issued and filed with the

SEC and believe that none of them will have a material effect on our financial statements:

February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-02, “Leases:

Topic 842” (“ASU 2016-02”), to supersede nearly all existing lease guidance under GAAP.

guidance would require lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use

ASU 2016-02 is effective for the Company in the first quarter of its fiscal year ending December 31, 2019 using a modified retrospective

approach with the option to elect certain practical expedients.

The Company has no material leases, thus the adoption of ASU 2016-02

will have no material impact on the Company’s financial statements.

May 2016, the FASB issued ASU 2016-12, Revenue from Contracts from Customers (Topic 606):

Narrow-Scope Improvements and Practical Expedients.

The amendments in this update affect the guidance in ASU 2014-09.

The core principle of the guidance in Topic 606 is that an entity should

recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which

the entity expects to be entitled in exchange for those goods or services.

The amendments in ASU 2016-12 do not change the core principle

of the guidance in Topic 606, but instead affect only the narrow aspects noted in Topic 606.

Topic 606 became effective for the Company

on December 1, 2018.

The Company has no revenue, thus the adoption of ASU 2016-12 will have no material impact on the Company’s

financial statements.

June 2018, the FASB issued ASU 2018-07, “Compensation-Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment

Accounting,” which modifies the accounting for share-based payment awards issued to nonemployees to largely align it with the accounting

for share-based payment awards issued to employees.

ASU 2018-07 is effective for us for annual periods beginning January 1, 2019.

Company evaluated ASU 2018-07 and determined that the adoption of this new accounting standard did not have a material impact on the

Company’s financial statements.

of December 31, 2021, there were no recent accounting pronouncements applicable to our business.

April 5, 2012, the JOBS Act was enacted.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

are a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to

provide the information required under this Item 3.

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