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Item 7. Management’s Discussion and Analysis

2023-03-31 compared with 2022-03-21 · 69 added, 43 removed, 84 unchanged (57% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We 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.

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

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.

We 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.

We are also currently completing the last steps to manufacture GP2 clinical drug product and to open clinical sites.

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.

have commenced Flamingo-01, a Phase III clinical trial with Baylor College of Medicine as the global primary investigator site.

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 treatment.

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

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accompanying financial statements are presented in conformity with accounting principles generally accepted in the U.S.

(“GAAP”) and pursuant to the rules and regulations of the SEC.

and pursuant to the rules and regulations of the SEC.

of Operations For the Years Ended December 31, 2022 and 2021

and Development Expenses

and development expenses increased by $2,501,909, or 237%, to $3,559,515 for the year ended December 31, 2021 from $1,057,606 for the

year ended December 31, 2020.

The increase was primarily the result of preparation of manufacturing and clinical activities for the planned

Phase III clinical trial.

and development expenses increased by $2,916,153, or approximately 82%, to $6,475,668 for the year ended December 31, 2022 from

$3,559,515 for the year ended December 31, 2021.

The increase was primarily the result of increases in manufacturing and clinical

expenses for the Phase III clinical trial.

and Administrative Expenses

and administrative expenses increased by $232,240, or 29% to $1,038,428 for the year ended December 31, 2021 from $806,188 for the year

ended December 31, 2020.

The increase was primarily due to increase in finance and corporate activities.

and administrative expenses increased by $526,158, or approximately 51% to $1,564,586 for the year ended December 31, 2022 from

$1,038,428 for the year ended December 31, 2021.

The increase was primarily the result of increases in cash and stock-based compensation expense.

and Capital Resources

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net losses for the foreseeable future.

Our financial statements have been prepared assuming that we will continue as a going concern.

will require additional capital to meet our long-term operating requirements.

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Flow Activities for the Years Ended December 31, 2022 and 2021

incurred net losses of $4,570,576 and $1,862,962 during the years ended December 31, 2021 and 2020, respectively, and the increase was

primarily due to an increase in compensation expense, license expenses, clinical trial expenses, and the GMP manufacturing of GP2.

incurred net losses of $7,825,237 and $4,570,576 during the years ended December 31, 2022 and 2021, respectively, and the increase was primarily the result of increases in manufacturing and clinical expenses for the Phase III clinical trial and increases

in cash and stock-based compensation expense.

was $13,468,026 at December 31, 2022 and $27,204,269 at December 31, 2021 and decreased due to the following reasons:

cash used in operating activities was $6,200,027 for the year ended December 31, 2022 and $4,291,548 for the year ended December 31,

The increase was primarily due to an increase in compensation expense, license expenses, clinical trial expenses, and the GMP manufacturing

The increase was primarily the result of increases in manufacturing and clinical expenses for the Phase III clinical trial and increases

in cash compensation expense.

did not use or generate cash from investing activities during the year ended December 31, 2022 and December 31, 2021.

Net cash provided by financing activities was $2,835,442

during the year ended December 31, 2021, attributable to the exercise of the underwriter’s over-allotment option from our

follow-on offering and the partial exercise of underwriter warrants.

Net cash provided by financing activities was $29,806,502 during

the year ended December 31, 2020, attributable to the completion of our initial public offering and a follow-on offering.

Contractual Obligations and Commitments

cash used in financing activities was $7,536,216 during the year ended December 31, 2022, attributable to the repurchase of common stock pursuant to the Company’s stock repurchase program.

provided by financing activities was $2,835,442 during the year ended December 31, 2021, attributable to the exercise of the

underwriter’s over-allotment option from our follow-on offering and the partial exercise of underwriter warrants.

Obligations and Commitments

of December 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.

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

Sheet Arrangements

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Accounting Pronouncements

As of December 31, 2021, there were no recent

accounting pronouncements applicable to our business.

February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) (“ASU 2016-02”), which provides guidance requiring lessees

to recognize a right-of-use asset and a lease liability on the balance sheet for substantially all leases, with the exception of short-term

Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition

in the statement of income.

The Company adopted Topic 842 effective October 1, 2019 and elected the package of transition practical expedients

for expired or existing contracts, which does not require reassessment of:

(1) whether any of the Company’s contracts are or contain

leases, (2) lease classification and (3) initial direct costs.

In July 2018, the FASB issued ASU No.

2018-11, “Targeted Improvements

- Leases (Topic 842).” The Company did not elect the hindsight practical expedient.

This update provides an optional transition

method that allows entities to elect to apply the standard using the modified retrospective approach at its effective date, versus recasting

the prior years presented.

If this adoption method is elected, an entity would recognize a cumulative-effect adjustment to the opening

balance of retained earnings in the year of adoption.

The Company elected this adoption method on October 1, 2019 and the adoption did

not result in any cumulative impact to retained earnings.

Additionally,

the Company’s adoption of Topic 842 did not have a significant impact on the recognition, measurement, or presentation of lease

expenses within the statements of operations or the statements of cash flows.

The Company’s adoption of Topic 842 did not have

a material impact on the timing or amount of the Company’s sublease agreement.

January 2021, the Company early adopted ASU 2020-06 Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging

— Contracts in Entity’s Own Equity (Subtopic 815-40).

ASU 2020-06 simplifies the accounting for convertible debt instruments

and convertible preferred stock by reducing the number of accounting models and limiting the number of embedded conversion features separately

recognized from the primary contract.

The guidance also includes targeted improvements to the disclosures for convertible instruments

and earnings per share.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within

those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020.

The adoption of

ASU 2020-06 did not have a material impact on the Company’s financial statements.

April 5, 2012, the JOBS Act was enacted.

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We 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

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 7A.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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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-K

Item 7. Management’s Discussion and Analysis