What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-13 compared with 2021-02-12 · 134 added, 138 removed, 615 unchanged (31% of the section changed)

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The ultimate impact of the COVID-19 pandemic on our operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the duration and severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or us, may determine are needed.

To date, the COVID-19 pandemic has not caused significant disruption to our clinical studies.

To date, the COVID-19 pandemic has not caused significant disruption to our Phase 2 clinical studies.

Each of our ongoing Phase 2 clinical studies is being conducted at a single site which has reduced the risk of disruption.

Patient visits are currently taking place on schedule for both the MD Anderson Cancer Center study being conducted in Houston, Texas and the Sun Yat-sen University Cancer Center study being conducted in China.

Patient visits are currently taking place on schedule at the MD Anderson Cancer Center study being conducted in Houston, Texas while patient enrollment and patient treatment for our Phase 2 study being conducted at Sun Yat-sen University Cancer Center in China has been completed.

All patients in the China study are currently in the follow-up period of the Phase 2 study.

In addition, thus far, any disruptions to patient treatments have been within allowances under each study protocol.

Access to the sites by our clinical monitors has been limited during the COVID-19 pandemic but the recording of study data in both studies and patient treatments at both study sites are being conducted per protocol at this time.

We have cash available to fund planned operations into the fourth quarter of calendar 2021.

Regarding the VAL-083 study arm of the Global Coalition for Adaptive Research (“GCAR”) registrational Phase 2/3 clinical trial that is currently being conducted at multiple sites in the United States, we have not experienced any significant impacts on patient enrollment or treatment.

With respect to the REM-001 drug supply, we are currently experiencing some delays in contract manufacturing schedules and supplies which we attribute to COVID-19.

The current delays could have an impact on our REM-001 program timeline.

We have cash available to fund planned operations into the second quarter of calendar 2022.

However, the COVID-19 pandemic has created significant economic uncertainty and volatility in the credit and capital markets.

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Recent Highlights

On January 13, 2021, we announced the initiation of patient recruitment for the VAL-083 study arm of the Global Coalition for Adaptive Research (“GCAR”) registrational Phase 2/3 clinical trial for GBM.

On April 10, 2021 at the American Association for Cancer Research (“AACR”) Annual Meeting we announced positive data updates from our ongoing Phase 2 clinical studies in newly-diagnosed first-line, newly-diagnosed adjuvant, and recurrent GBM.

On February 17, 2021 we announced the final patient was enrolled in the recurrent arm of our ongoing Phase 2 clinical study of VAL-083 being conducted at the MD Anderson Cancer Center (“MD Anderson”).

The recurrent arm of the study addresses patients suffering from GBM who have been pre-treated with temozolomide (“TMZ”) prior to disease recurrence.

On January 13, 2021, we announced the initiation of patient recruitment for the VAL-083 study arm of the GCAR registrational Phase 2/3 clinical trial for GBM.

The trial, titled GBM AGILE (Glioblastoma Adaptive Global Innovative Learning Environment) Study, is a revolutionary, patient-centered, adaptive platform trial for registration evaluating multiple therapies for patients with newly-diagnosed and recurrent GBM.

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and recurrent.

On November 19, 2020 at the Society of Neuro-Oncology (“SNO”) Annual Meeting we announced positive data updates from our ongoing Phase 2 clinical studies in newly-diagnosed first-line, newly-diagnosed adjuvant, and recurrent GBM.

On October 21, 2020, we announced we had entered into a definitive agreement with GCAR to include VAL-083 in GCAR’s GBM AGILE Study.

We plan to utilize the GBM AGILE Study to serve as the basis for VAL-083’s new drug application (“NDA”) submission and registration.

On August 19, 2020, we completed our merger with Adgero and through three closings of a private placement, the first of which also closed on August 19, 2020, we raised aggregate gross proceeds of approximately $25 million, or net proceeds of approximately $21.6 million.

Private Placement of Series C Preferred Stock

In conjunction with the closing of the Merger, and through a series of three private placement closings, we issued a total of 25,028 shares of Series C Convertible Preferred Stock (the “Series C Stock”) at a purchase price of $1,000 per share for total aggregate gross proceeds of approximately $25 million, or net proceeds of approximately $21.6 million.

Each closing of the private placement was priced at-the-market under the rules of the Nasdaq Stock Market.

The Series C Stock was issued in three series (C-1, C-2, and C-3) at conversion prices equal to $1.16, $1.214 and $1.15, respectively.

As result, we issued a total of 25,028 shares of Series C Stock, which will be convertible into an aggregate of 21,516,484 shares of common stock.

As result, we issued a total of 25,028 shares of Series C Stock, which are convertible into an aggregate of 21,516,484 shares of common stock.

The Series C Stock will be entitled to receive dividends, payable in shares of common stock at a rate of 10%, 15%, 20% and 25% of the number of shares of common stock issuable upon conversion of the Series C Stock, on the 12 th , 24 th , 36 th and 48 th month, anniversary of the initial closing of the private placement which occurred on August 19, 2020;

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In connection with the private placement, we entered into a Placement Agency Agreement (the “Placement Agency Agreement”), with Aegis Capital Corp., which acted as our exclusive placement agent (the “Placement Agent”) for the private placement.

Pursuant to the terms of the Placement Agency Agreement, in connection with the three closings of the private placement, we paid the Placement Agent an aggregate cash fee of $2,502,800, a non-accountable expense allowance of approximately $650,840 and issued to the Placement Agent, or its designees, warrants to purchase 2,504 shares of Series C Stock (the “Placement Agent Warrants”).

Pursuant to the terms of the Placement Agency Agreement, in connection with the three closings of the private placement, we paid the Placement Agent an aggregate cash fee of $2 ,50 3 , a non-accountable expense allowance of approximately $65 1 a nd issued to the Placement Agent, or its designees, warrants to purchase 2,504 shares of Series C Stock (the “Placement Agent Warrants”).

The Placement Agent Warrants have an exercise price of $1,000 per share, provide for a cashless exercise feature and are exercisable for a period of four years from the date of the initial closing of the private placement.

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(calendar quarters)

Below are our planned, or expected, milestones for the respective time periods noted:

Commence Enrollment – GCAR GBM AGILE Registration Study

American Association for Cancer Research Posters – Data Updates for Phase 2 GBM Studies

Top Line Results – Phase 2 Recurrent/Adjuvant GBM Study

First patient enrolled – CMBC lead-in study

Top Line Results – CMBC lead-in study

Below are our completed, planned, or expected milestones for the respective time periods noted:

Commenced Enrollment – GCAR GBM AGILE Registration Study

American Association for Cancer Research Posters – Provided Data Updates for Phase 2 GBM Studies

Top Line Results – Phase 2 Recurrent GBM Study

Top Line Results – Phase 2 Adjuvant GBM Study

Q4 2021/Q1 2022

Enroll first patient – CMBC lead-in study

First Half 2022

Graduation from Stage 1 to Stage 2 in the GCAR GBM AGILE Registration Study

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As part of our business strategy, we leverage and build upon these prior NCI investments and data from more than 40 NCI- Phase 1 and Phase 2 clinical studies, which includes an estimated 1,100 patient safety database.

Prior studies of VAL-083 have shown increased median overall survival benefits versus radiation alone validating the tumor affecting properties of VAL-083.

Our recent research has highlighted the opportunities afforded by VAL-083’s unique mechanism of action and its potential to address unmet medical needs in a well-defined and acknowledged biomarker selected population within the larger GBM population.

We are thus focusing our initial development efforts on patients whose tumors exhibit biological features that make them resistant to, or unlikely to respond to, currently available therapies as identified by the National Comprehensive Cancer Network (“NCCN”).

For example, our research demonstrating VAL-083’s activity in GBM independent of the O6-methyl guanine methyltransferase (“MGMT”) methylation status allows us to focus patient selection based on this important biomarker and thus improve the probability of success in our current and future clinical studies.

Prior studies of VAL-083 have shown increased median overall survival benefits versus radiation alone validating the positive tumor affecting properties of VAL-083.

Our research has highlighted the opportunities afforded by VAL-083’s unique mechanism of action and its potential to address unmet medical needs in a well-defined and acknowledged biomarker selected population within the larger GBM population.

Historically, we have focused our development efforts on patients whose tumors exhibit biological features that make them resistant to, or unlikely to respond to, currently available therapies as identified by the National Comprehensive Cancer Network (“NCCN”).

For example, our research demonstrating VAL-083’s activity in GBM independent of the O6-methyl guanine methyltransferase (“MGMT”) methylation status has allowed us to focus our Phase 2 study patient selection based on this important biomarker and thus improve the probability of success in our current and future clinical studies.

We are currently conducting two open-label, biomarker-driven, Phase 2 studies in MGMT-unmethylated GBM.

MGMT is a DNA-repair enzyme that is associated with resistance to temozolomide (“TMZ”), the current standard-of-care chemotherapy used in the treatment of GBM.

MGMT is a DNA-repair enzyme that is associated with resistance to TMZ, the current standard-of-care chemotherapy used in the treatment of GBM.

Greater than 60% of GBM patients have MGMT-unmethylated tumors and exhibit a high expression of MGMT, which is correlated with TMZ treatment failure and poor patient outcomes as indicated in the NCCN guidelines for GBM treatment published in September 2017.

Our research to-date demonstrates that VAL-083’s anti-tumor activity is independent of MGMT expression.

Our research demonstrates that VAL-083’s anti-tumor activity is independent of MGMT expression.

In our current Phase 2 studies we are using MGMT as a biomarker to identify patients for treatment with VAL-083 in three distinct GBM patient populations:

MGMT-unmethylated GBM, currently comprising two ongoing, separate Phase 2 clinical studies for:

GBM patients in two study arms at MD Anderson Cancer Center (“MDACC”):

as adjuvant therapy immediately following concomitant TMZ treatment with chemoradiation;

GBM patients in two study arms at MD Anderson:

as adjuvant therapy immediately following concomitant TMZ treatment with chemoradiation in newly-diagnosed GBM patients;

in Avastin ® -naïve recurrent GBM patients;

Newly-diagnosed GBM patients at Sun Yat-sen University Cancer Center (“SYSUCC”).

As first-line therapy in newly-diagnosed GBM patients at Sun Yat-sen University Cancer Center (“SYSUCC”).

On June 4, 2020, we accepted an invitation from GCAR to include VAL-083 in GCAR’s GBM AGILE Study, an adaptive clinical study platform for patients with GBM.

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and recurrent.

We plan to utilize the GBM AGILE Study to serve as the basis for VAL-083’s NDA submission and registration.

The GBM AGILE Study employs a cost-efficient, adaptive trial design with a Stage 1 (Phase 2) learning and adapting phase and a Stage 2 (Phase 3) expansion and confirmation phase.

GBM AGILE is an international, innovative platform trial designed to more rapidly identify and confirm effective therapies for patients with glioblastoma through response adaptive randomization and a seamless phase 2/3 design.

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GCAR is the sponsor of GBM AGILE.

Key strategic partners for the GBM AGILE trial effort include the National Brain Tumor Society, National Foundation for Cancer Research, and Asian Fund for Cancer Research.

Key strategic partners for the GBM AGILE trial effort include the National Brain Tumor Society (“NBTS”), National Foundation for Cancer Research, and Asian Fund for Cancer Research.

We have also undertaken research in ovarian cancer.

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We are in the process of evaluating the best path forward in ovarian cancer including the potential combination of VAL-083 with PARP inhibitors.

The FDA granted orphan drug designation for the use of VAL-083 in the treatment of ovarian cancer in 2016.

The FDA granted orphan drug designation for the use of VAL-083 in the treatment of ovarian cancer.

In addition to our clinical development activities in the United States, pursuant to our collaboration with Guangxi Wuzhou Pharmaceutical (Group) Co.

(“Guangxi Wuzhou Pharmaceutical Company”), we have provided Guangxi Wuzhou Pharmaceutical Company certain commercial rights to VAL-083 in China where it is approved as a chemotherapy for the treatment of chronic

myelogenous leukemia (“CML”) and lung cancer.

Guangxi Wuzhou Pharmaceutical Company is the only manufacturer presently licensed by the China Food and Drug Administration (“CFDA”) to produce the product for the China market.

We have a broad patent portfolio to protect our intellectual property.

Our patent applications claim composition of matter and methods of use of VAL-083 and related compounds, synthetic methods, and quality controls for the manufacturing process of VAL-083.

Our patents and patent applications claim methods of use of VAL-083 and related compounds, synthetic methods, and quality controls for the manufacturing process of VAL-083.

We believe that our portfolio of intellectual property rights provides a defensible market position for the commercialization of VAL-083.

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Approximately 13,000 new cases of GBM were diagnosed in the United States and 16,000 in Europe during 2017.

Within the GBM patient population, approximately two-thirds of patients are unmethylated with respect to their MGMT status.

Within the GBM patient population, over 60% of patients are unmethylated with respect to their MGMT status.

Measurement of MGMT (O6-methyl guanine methyltransferase) methylation status has become routine in clinical practice as a biomarker that correlates with resistance to the standard-of-care chemotherapy with TMZ (Temodar ® ), and patient outcomes in GBM.

Approximately two-thirds of GBM patients’ tumors are characterized as “MGMT-unmethylated” and exhibit a high expression of MGMT, a naturally occurring DNA-repair enzyme, the activity of which nullifies the chemotherapeutic activity of TMZ.

Over 60% of GBM patients’ tumors are characterized as “MGMT-unmethylated” and exhibit a high expression of MGMT, a naturally occurring DNA-repair enzyme, the activity of which nullifies the chemotherapeutic activity of TMZ.

The lack of specific therapies for MGMT-unmethylated GBM is a significant unmet medical need.

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We have demonstrated that VAL-083’s anti-tumor mechanism is active independent from the MGMT status in vitro .

We believe this suggests the potential of VAL-083 as a replacement for the current standard-of-care chemotherapy, temozolomide, in MGMT-unmethylated GBM.

We are therefore utilizing MGMT-methylation status to identify GBM patients who are unlikely to respond to temozolomide and including only MGMT-unmethylated patients in our current clinical studies of VAL-083.

We believe that our research, in the context of the 2017 update to the NCCN guidelines, highlights this unmet need and the opportunity for VAL-083 as a potential new standard-of-care in the treatment of MGMT-unmethylated GBM.

We believe this distinct mechanism of action suggests the potential of VAL-083 as a replacement for the current standard-of-care chemotherapy, temozolomide, in both MGMT methylated and MGMT-unmethylated GBM.

We have utilized MGMT-methylation status to identify GBM patients who are unlikely to respond to TMZ and have included only MGMT-unmethylated patients in our current Phase 2 clinical studies of VAL-083.

We have recently received approval to treat newly-diagnosed methylated, newly-diagnosed unmethylated, and recurrent GBM patients as part of our treatment arm in the GCAR GBM AGILE study.

We believe that our research, highlights the opportunity for VAL-083 as a potential new standard-of-care in the treatment of both MGMT methylated and MGMT-unmethylated GBM.

VAL-083 Clinical Studies

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The goals of the study are to confirm the safety of the three-day VAL-083 dosing regimen in combination with radiotherapy and to investigate efficacy outcomes of the combination of VAL-083 and radiotherapy in MGMT-unmethylated GBM patients.

We have completed enrollment of this study with a total of 29 newly-diagnosed, MGMT-unmethylated GBM patients.

We have completed enrollment of this study with a total of 29 newly-diagnosed, MGMT-unmethylated GBM patients and we have also completed treatment of the patients on this study.

The efficacy endpoints of the study include tumor response, as assessed by the Response Assessment in NeuroOncology (“RANO”), and progression-free survival (“PFS”), progression-free survival at six months (“PFS6”), and overall survival (“OS”), compared to historical results in the target population.

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This study is fully enrolled at 29 patients.

On November 19, 2020 at the virtual SNO Annual Meeting, we provided an update on patient data as follows:

For the 29 patients who had completed at least their first efficacy assessment as of the October 21, 2020 cut-off date, median PFS with VAL-083 is currently 9.3 months (95% confidence interval (“CI”) 6.4-12.0 months).

Additionally, for the 25 patients initially receiving the treatment dose that will be carried forward into the GBM AGILE pivotal Phase 3 study of 30 mg/m 2 /day on days 1, 2 and 3 of a 21-day cycle, median PFS was reported to be 8.7 months (CI 6.4-12.5 months).

On April 10, 2021 at the virtual AACR Annual Meeting, we provided an update on patient data as follows:

For the 29 patients as of the March 11, 2021 cut-off date, median PFS with VAL-083 is currently 9.3 months (95% confidence interval (“CI”) 6.4-12.0 months).

Additionally, for the 25 patients initially receiving the treatment dose that is being carried forward into the GBM AGILE pivotal Phase 3 study of 30 mg/m 2 /day on days 1, 2 and 3 of a 21-day cycle, median PFS was reported to be 8.7 months (CI 6.4-12.5 months).

While this is not a head-to-head study, this PFS data compares favorably to historical TMZ control data.

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Phase 2 Study in MGMT-unmethylated GBM in Collaboration with University of Texas MD Anderson Cancer Center

In February 2017, we initiated a biomarker driven, open-label, single-arm Phase 2 study in collaboration with MDACC.

This biomarker-driven study (testing for MGMT methylation status) has been amended to enroll up to 83 patients (35 with a starting dose of 40 mg/m 2 /day and 48 with a starting dose of 30 mg/m 2 /day) to determine the potential of VAL-083 treatment to improve overall survival in GBM patients whose tumors have recurred following treatment with temozolomide.

In February 2017, we initiated a biomarker driven, open-label, single-arm Phase 2 study in collaboration with MD Anderson This biomarker-driven study (testing for MGMT methylation status) has been amended to enroll up to 83 patients (35 with a starting dose of 40 mg/m 2 /day and 48 with a starting dose of 30 mg/m 2 /day) to determine the potential of VAL-083 treatment to improve overall survival in GBM patients whose tumors have recurred following treatment with temozolomide.

These patients will not have been treated previously with Avastin ® .

In addition, this study has been amended to add a new adjuvant patient arm.

In addition, this study has been amended to add an adjuvant patient arm.

This arm will include up to 36 patients previously treated with TMZ in combination with radiation who, rather than being treated with additional cycles of TMZ, will begin treatment with VAL-083.

Recurrent Study Arm

On November 19, 2020 at the virtual SNO Annual Meeting, we provided an update on patient data as follows:

For patients in the recurrent group receiving second-line therapy with VAL-083 following first-line TMZ failure, 84 patients have been enrolled as of the data cut-off of October 23, 2020 with 35 patients (34 efficacy evaluable) having received an initial dose of 40 mg/m 2 /day and 49 (43 efficacy evaluable) having received the planned Phase 3 initial dose of 30 mg/ m2 /day (on days 1, 2 and 3 of a 21-day cycle).

For the 43 patients initially receiving the intended treatment dose that will be carried forward in the GBM AGILE pivotal study (30 mg/m 2 /day on days 1, 2 and 3 of a 21-day cycle), median overall survival (mOS) is currently 8.5 months (CI 6.8-13.7 months) as of the October 23, 2020 cut-off date.

mOS for the 77 patients who have completed at least one cycle of treatment was 7.6 months (CI 6.4-10.6 months).

On April 10, 2021 at the virtual AACR Annual Meeting, we provided an update on patient data as follows:

For patients in the fully-enrolled recurrent group receiving second-line therapy with VAL-083 following first-line TMZ failure, 89 patients have been enrolled as of the data cut-off of March 12, 2021 with 35 patients (35 efficacy evaluable) having received an initial dose of 40 mg/m 2 /day and 54 (48 efficacy evaluable) having received the planned Phase 3 initial dose of 30 mg/m 2 /day (on days 1, 2 and 3 of a 21-day cycle).

The median overall survival (“mOS”) for the 83 efficacy evaluable patients who have completed at least one cycle of treatment was 7.5 months (CI 6.0-9.0 months).

For the 48 efficacy evaluable patients initially receiving the intended treatment dose that is being carried forward in the GBM AGILE pivotal study (30 mg/m 2 /day on days 1, 2 and 3 of a 21-day cycle), mOS is currently 7.9 months (CI 5.9-9.9 months) as of the March 12, 2021 cut-off date.

While this is not a head-to-head study, historically, lomustine, which is the most commonly used chemotherapy for these patients, has demonstrated mOS of 7.2 months as indicated by published data from Wick et al.

(2017 – New England Journal of Medicine).

The safety profile in this study has been well within the existing safety monitoring guidelines described in the study protocol.

However, in consultation with the principal investigator at MDACC, we have amended the protocol for this clinical study to modify the starting dose of VAL-083 to 30 mg/m 2 /day on days 1, 2 and 3, of a 21-day cycle.

This modification may improve tolerance in this patient population and thereby potentially increase overall exposure to VAL-083 by increasing the number of cycles of drug patients may be able to receive.

We have modified the patient screening platelet count, from 100,000/µL to 125,000/µL, for the same reasons.

Safety data from this study will become part of the overall safety dossier to support future filings with the FDA and other regulatory agencies.

It is important for this GBM patient population, which has been heavily pre-treated with temozolomide, to be able to be treated with multiple cycles of VAL-083 without significant hematological toxicities.

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Newly-Diagnosed Adjuvant Study Arm

On July 24, 2019, we announced the enrollment of the first patient in the newly-diagnosed adjuvant arm of the Phase 2 study being conducted at MDACC.

The newly-diagnosed adjuvant arm was originally planned for 24 patients, but based on encouraging outcomes, we plan to increase the newly-diagnosed adjuvant arm enrollment from the originally planned 24 patients to include up to 12 additional patients.

On July 24, 2019, we announced the enrollment of the first patient in the newly-diagnosed adjuvant arm of the Phase 2 study being conducted at MD Anderson.

The newly-diagnosed adjuvant arm was originally planned for 24 patients, but based on encouraging outcomes, we increased the newly-diagnosed adjuvant arm enrollment from the originally planned 24 patients to include up to 12 additional patients.

These patients will have had initial cycles of temozolomide concomitant with radiation but will not have yet started subsequent cycles of TMZ (i.e., maintenance stage TMZ patients).

On November 19, 2020 at the virtual SNO Annual Meeting, we provided an update on patient data as follows:

As of the data cut-off date of October 23, 2020, for the 27 efficacy evaluable patients (of a planned up to 36 patients) median PFS is currently 10.0 months (CI 7.6-10.8).

On April 10, 2021 at the virtual AACR Annual Meeting, we provided an update on patient data as follows:

As of the data cut-off date of March 12, 2021, for the 33 efficacy evaluable patients (of a planned up to 36 patients) median PFS is currently 10.0 months (CI 8.2-10.8).

While this is not a head-to-head study, this PFS data compares favorably to historical TMZ control data of 5.3 months and 6.9 months as indicated by published data from Hegi et al.

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(2017 – NeuroOncology), respectively.

As noted above, patients in the recurrent arm of the MDACC clinical study have been heavily pre-treated with temozolomide.

Based on published data from our MDACC and SYSUCC clinical studies, we believe there is a significant opportunity to treat GBM patients in the pre-temozolomide maintenance stage (i.e., adjuvant).

At the AACR’s annual meeting in April 2019, we reported that myelosuppression (thrombocytopenia and neutropenia) is the most common adverse event associated with VAL-083.

As noted above, patients in the recurrent arm of the MD Anderson clinical study have been heavily pre-treated with temozolomide.

Based on published data from our MD Anderson and SYSUCC clinical studies, we believe there is a significant opportunity to treat GBM patients in the pre-temozolomide maintenance stage (i.e., adjuvant).

We have previously reported that myelosuppression (thrombocytopenia and neutropenia) is the most common adverse event associated with VAL-083.

A detailed description of this study can be found at clinicatrials.gov, Identifier Number:

Safety Across Studies

Consistent with prior studies, myelosuppression is the most common adverse event with VAL-083 in both the recurrent GBM and adjuvant treatment setting.

In the 30 mg/m 2 /day starting dose cohort (the planned dose for the GBM AGILE Study) three subjects have experienced a serious adverse event (SAE) possibly related to VAL-083 in the recurrent group and one patient has experienced a possibly drug-related SAE in the adjuvant group as of the relevant data cut-off dates.

Consistent with prior studies, myelosuppression is the most common adverse event with VAL-083 in both the recurrent GBM and adjuvant treatment setting at MD Anderson.

In the 30 mg/m 2 /day starting dose cohort (the dose being studied in the GBM AGILE Study) seven subjects have experienced a serious adverse event (“SAE”) possibly related to VAL-083 in the recurrent group and one patient has experienced a possibly drug-related SAE in the adjuvant group as of the relevant data cut-off dates.

In the newly-diagnosed study being conducted at SYSUCC, three subjects have experienced an SAE possibly related to VAL-083.

Multiple treatment cycles of VAL-083 at the 30 mg/m 2 /day dose in combination with standard radiation treatment (2 Gy/day, 5 days/week) were shown to be generally safe and well-tolerated.

This study has been fully enrolled, and all patients have completed treatment with VAL-083 and are currently in follow-up.

VAL-083 Fast Track Designation

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Common symptoms of GBM include headaches, seizures, nausea, weakness, paralysis and personality or cognitive changes such as loss of speech or difficulty in thinking clearly.

GBM progresses quickly and patients’ conditions deteriorate rapidly

progressing to death.

GBM progresses quickly and patients’ conditions deteriorate rapidly progressing to death.

The outlook for GBM patients is generally poor.

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This led to late-stage clinical studies in CMBC and also in an aspect of “wet” age-related macular degeneration (“AMD”).

Of these two indications, AMD represented a much larger market, and in 1998, for what we believe were primarily business reasons, Miravant discontinued its CMBC program and, together with, or through its corporate partners, ultimately focused its REM-001 development efforts on

In 2004, Miravant submitted a n NDA to the FDA for the use of REM-001 to treat an aspect of AMD.

In 2004, Miravant submitted an NDA to the FDA for the use of REM-001 to treat an aspect of AMD.

The FDA reviewed this submission and granted Miravant an approvable letter for REM-001 in the treatment of AMD, with final approval contingent on, among other things, the successful completion of a Phase 3 study.

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In these interactions, the FDA provided guidance on a number of clinical parameters it would like us to measure in the planned clinical study, and on the associated CMC and device plans.

Based on the FDA’s responses, we plan to conduct a Phase 3 clinical study in CMBC to test the safety and efficacy of REM-001 Therapy for marketing approval.

Based on the FDA’s responses, we plan to conduct an initial open-label 15 patient study in CMBC to confirm the planned dose and optimized trial design followed by a Phase 3 clinical study to test the safety and efficacy of REM-001 Therapy for marketing approval.

In June 2018, we submitted to the FDA a Phase 3 protocol and statistical analysis plan incorporating feedback received from FDA at the October 2017 meeting.

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Since our May 2018 meeting, we have engaged a contract manufacturer who has manufactured the starting material for our API and manufactured two API lots under GMP.

We are currently planning to undertake GMP manufacturing of finished drug product for use in the planned clinical study.

We are currently planning to undertake GMP manufacturing of finished drug product for use in the initial planned clinical study.

Drug substance and drug product manufacturing, and associated analytical methods, are currently being optimized for Phase 3.

We also believe REM-001 Therapy holds promise as a treatment for cutaneous metastatic cancers other than CMBC, as well as locally-advanced basal cell cancer such as often occurs in patients with Basal Cell Carcinoma Nevus Syndrome (“BCCNS”) and cutaneously recurrent basal cell cancer.

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REM-001 has been shown to induce apoptosis and, in treating an aspect of AMD, to have anti-angiogenesis properties.

REM-001 is a second-generation photosensitizer drug designed with the following attributes to overcome several of the shortcomings of earlier, first generation photosensitizer drugs such as Photofrin:

REM-001 is a second-generation photosensitizer drug designed with the following attributes to overcome several of the shortcomings of earlier, first generation photosensitizer drugs:

It is activated with longer wavelength, deeper penetrating light;

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Also, the fact that CMBC tumors continue to develop following these therapies is a signal that the tumor cells may have developed a resistance to some of these approaches.

Based on our discussions with clinicians and literature reviews, and its March 3, 2017 response from FDA, we believe that treatment of unresectable CMBC tumors is a largely unmet medical need, particularly in patients who have already received extensive radiation and chemotherapy.

Based on our discussions with clinicians and literature reviews, and the March 3, 2017 response from FDA, we believe that treatment of unresectable CMBC tumors is a largely unmet medical need, particularly in patients who have already received extensive radiation and chemotherapy.

Clinical Results in CMBC

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A Phase 1 dose escalation clinical study was initially conducted by Miravant to establish the REM-001 dosimetry to be used in subsequent safety and efficacy studies.

The study was initiated in 1993 and enrolled 22 patients with a variety of types of cutaneous

cancer lesions.

The study was initiated in 1993 and enrolled 22 patients with a variety of types of cutaneous cancer lesions.

Of these, 213 cutaneous cancer lesions were treated using escalating REM-001 drug and light doses.

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Of the 17 SAE’s, eight were related to necrosis of the treated lesions, three were related to treatment field infection, 4 were treatment related pain, one was a photosensitivity skin reaction and one was an allergic reaction.

We believe that the data from these studies show that REM-001 Treatment is a promising therapy for CMBC.

We believe that the data from these studies show that REM-001 Therapy is promising for the treatment of CMBC.

However, because there are no approved therapies for CMBC, we have no basis for comparing these results to existing therapies.

Based on the FDA’s March 3, 2017 response, we believe the FDA will view these results as supportive data and our plan is to conduct a new pivotal Phase 3 study to support an NDA.

Based on the FDA’s March 3, 2017 response, we believe the FDA will view these results as supportive data and our plan is to conduct an initial open-label 15 patient study in CMBC to confirm planned dose and optimized trial design, followed by a pivotal Phase 3 study to support an NDA.

The figure below shows the results of our initial preliminary analysis of Miravant clinical data and depicts the percentage of evaluable lesions in each Miravant CMBC Study for which there was a complete response;

where all visible clinical evidence of the tumor is gone after treatment with REM-001 Therapy.

i.e., where all visible clinical evidence of the tumor is gone after treatment with REM-001 Therapy.

Clinical Development Plans

Based on the FDA’s guidance, our plan is to conduct a Phase 3 clinical study in CMBC.

Our plan is to include a first confirmatory element to test the safety and efficacy of REM-001 Therapy for marketing approval.

In June 2018, we submitted to FDA a Phase 3 protocol and statistical analysis plan incorporating feedback received from the FDA at our October 2017 meeting.

At this time, we estimate the necessary study design will be a pivotal Phase 3 multi-center study that would enroll approximately 100-150 CMBC patients who have received prior radiation therapy and chemotherapy.

This study has been designed with input from the FDA with the goal of gaining expedited development and review through one or more of the FDA’s expedited programs.

Our plan is to conduct an initial open-label, 15 patient study in CMBC to confirm planned dose and optimized trial design followed by a Phase 3 clinical study in CMBC.

In June 2018, we submitted to the FDA a Phase 3 protocol and statistical analysis plan incorporating feedback received from the FDA at our October 2017 meeting.

At this time, we estimate the necessary pivotal study design will be a Phase 3 multi-center study that would enroll approximately 100-150 CMBC patients who have received prior radiation therapy and chemotherapy.

This study design incorporates input from the FDA with the goal of gaining expedited development and review through one or more of the FDA’s expedited programs.

Following our meeting with the FDA, we undertook further analysis of the original Miravant study data and concluded that the data may support use of a lower dose than Miravant used in its original study design.

Use of such a lower dose may have potential benefits including faster post-treatment healing and response assessment and lower drug exposure.

Based on this analysis and discussions with regulatory and clinical consultants, including prior FDA employees or consultants, and clinical research organizations, we plan to add a preliminary confirmatory element to our Phase 3 study.

This confirmatory element anticipates treating up to 15 patients at a lower dose than used by Miravant .

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Outstanding Securities

As of February 10, 2021, we had 30,626,018 shares of common stock issued and outstanding, outstanding warrants to purchase 9,048,971 shares of common stock, warrants to purchase 2,504 Series C Preferred Stock that upon exercise are convertible into 2,152,701 shares of common stock, outstanding stock options to purchase 6,452,959 shares of common stock, 603,998 outstanding shares of Series B Preferred Stock that are convertible into 151,017 shares of common stock, 21,093 outstanding shares of Series C Preferred Stock that are convertible into 18,161,050 shares of common stock.

As of May 11, 2021, we had 32,618 shares of common stock issued and outstanding, outstanding warrants to purchase 7,021 shares of common stock, warrants to purchase 2,449 shares of our Series C Preferred Stock that upon exercise are convertible into 2,104 shares of common stock, outstanding stock options to purchase 6,528 shares of common stock, 20,092 outstanding shares of Series C Preferred Stock that are convertible into 17,296 shares of common stock.

All common stock warrants and stock options are convertible, or exercisable into, one share of common stock.

Each Series B convertible preferred share is convertible into 0.25 shares of common stock.

The Series C Preferred Stock (issued in three series) is convertible into shares of common stock at $1.16 per share (Series C-1), $1.214 per share (Series C-2) or $1.15 per share (Series C-3), respectively.

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The financial information reported herein has been prepared in accordance with accounting principles generally accepted in the United States.

Our functional currency at December 31, 2020 and June 30, 2020 is the US$.

Our functional currency at March 31, 2021 and June 30, 2020 is the US$.

The following tables represent selected financial information for us for the periods presented.

All amounts in the remainder of this MD&A are expressed in thousands, except par value and per share amounts, unless otherwise noted.

Selected Balance Sheet Data

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Other (income) loss

Foreign exchange loss

Foreign exchange

Amortization of deferred loan costs

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Basic and fully diluted loss per share

For the six months ended

For the nine months ended

(in thousands, except per share data)

3 unchanged sentences

Other (income) loss

Foreign exchange loss

Foreign exchange

Amortization of deferred loan costs

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share-based, compensation expense –

For the six months ended

For the nine months ended

(in thousands)

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Results of Operations

Comparison of the three months ended December 31, 2020 and December 31, 2019

Comparison of the three months ended March 31, 2021 and March 31, 2020

Three months ended

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Other (income) loss

Foreign exchange loss

Foreign exchange

Amortization of deferred loan costs

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Research and Development

Research and development expenses increased to $2,584 for the three months ended December 31, 2020 from $712 for the three months ended December 31, 2019.

The increase was largely attributable to higher clinical development, non-cash, share-based compensation expenses and personnel costs incurred during the three months ended December 31, 2020 compared to the three months ended December 31, 2019.

Research and development expenses increased to $3,843 for the three months ended March 31, 2021 from $899 for the three months ended March 31, 2020.

The increase was largely attributable to higher clinical development, non-cash, share-based compensation expenses, and personnel costs incurred during the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Clinical development costs have increased in the current quarter compared to the prior quarter largely due to costs related to the GCAR GBM AGILE Study.

Patient recruitment commenced in January 2021 so there were costs incurred in order prepare the study for recruitment.

In addition, with the acquisition of the REM-001 technology as part of the Adgero merger that closed in August 2020, costs relating to clinical development and drug manufacturing activity have been incurred.

Patient recruitment for this study commenced in January 2021, so ongoing study costs, including patient enrollment, were incurred during the three months ended March 31, 2021 but were not incurred during the three months ended March 31, 2020.

We expect our research and development costs to be higher in fiscal year 2021 than fiscal year 2020 as our GCAR GBM AGILE Study continues and we incur costs related to the development of REM-001.

Further, as a result of our acquisition of the REM-001 technology during the quarter ended September 30, 2020 costs were incurred in the current quarter for that technology that were not incurred in the corresponding quarter in the prior period.

Non-cash, share-based compensation expense increased for the three months ended December 31, 2020 compared to the three months ended December 31, 2019, due to the recognition of compensation expense for stock options granted in September 2020.

Non-cash, share-based compensation expense increased for the three months ended March 31, 2021 compared to the three months ended March 31, 2020, due to the recognition of compensation expense for stock options granted in September 2020.

Personnel costs have increased in the current quarter compared to the prior quarter due to the addition of staff from the Adgero transaction.

General and Administrative

General and administrative expenses were $2,794 for the three months ended December 31, 2020 compared to $1,054 for the three months ended December 31, 2019.

A significant portion of the increase was due to higher non-cash, share-based compensation expenses and personnel costs incurred in the current three months compared to the prior three months.

In addition, non-cash, share-based compensation expense increased due to the issuance of warrants for professional services.

General and administrative expenses were $2,762 for the three months ended March 31, 2021 compared to $1,077 for the three months ended March 31, 2020.

A significant portion of the increase was due to higher non-cash, share-based compensation expenses, personnel, and office and sundry costs incurred in the current three months compared to the prior three months.

Personnel costs have increased in the current quarter compared to the prior quarter due to the addition of staff from the Adgero transaction.

Office and sundry expenses have increased in the three months ended March 31, 2021 compared to the three months ended March 31, 2020 largely due to higher directors’ and officers’ liability insurance.

Preferred Share Dividends

For each of the three months ended December 31, 2020 and 2019, we recorded $2 related to the dividend payable to Valent on the Series A preferred stock.

For each of the three months ended March 31, 2021 and 2020, we recorded $2 related to the dividend payable to Valent on the Series A preferred stock.

The dividend has been recorded as a direct increase in accumulated deficit for both periods.

During the three months ended December 31, 2020, we issued 3,479 (2019 – 3,700) shares of common stock as a dividend on the Series B Preferred stock and recognized $4 (2019 - $3) as a direct increase in accumulated deficit.

Comparison of the six months ended December 31, 2020 and December 31, 2019

Six months ended

During the three months ended March 31, 2021, we issued 3 (2020 – 4) shares of common stock as a dividend on the Series B Preferred stock and recognized $6 (2020 - $1) as a direct increase in accumulated deficit.

Comparison of the nine months ended March 31, 2021 and March 31, 2020

Nine months ended

(in thousands)

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Other (income) loss

Foreign exchange loss

Foreign exchange

Amortization of deferred loan costs

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Research and Development

Research and development expenses increased to $3,941 for the six months ended December 31, 2020 from $1,434 for the six months ended December 31, 2019.

The increase was largely attributable to higher clinical development, non-cash, share-based compensation expenses, personnel, and intellectual property costs incurred during the six months ended December 31, 2020 compared to the six months ended December 31, 2019.

Clinical development costs have increased in the current period compared to the prior period largely due to the start-up and recruitment costs related to the GCAR GBM AGILE Study.

Patient recruitment commenced in January 2021 so there were costs incurred in order prepare the study for recruitment.

In addition, with the acquisition of the REM-001 technology as part of the Adgero merger, costs relating to clinical development and drug manufacturing activity have been incurred.

Research and development expenses increased to $7,784 for the nine months ended March 31, 2021 from $2,332 for the nine months ended March 31, 2020.

The increase was largely attributable to higher clinical development, non-cash, share-based compensation expenses, and personnel costs incurred during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020.

Clinical development costs have increased in the current period compared to the prior period largely due to the start-up and patient enrollment costs related to the GCAR GBM AGILE Study.

Patient recruitment commenced in January 2021 so there were costs incurred in order to prepare the study for commencement as well as patient recruitment and enrollment.

In addition, with the acquisition of the REM-001 technology as part of the Adgero merger, costs relating to clinical development and drug manufacturing activity have been incurred during the nine months ended March 31, 2021 that were not incurred during the nine months ended March 31, 2020.

We expect our research and development costs to be higher in fiscal year 2021 than fiscal year 2020 as our GCAR GBM AGILE Study continues and we incur costs related to the development of REM-001.

Further, as a result of our acquisition of the REM-001 technology during the quarter ended September 30, 2020, costs were incurred for that technology in the six months ended December 31, 2020 that were not incurred in the corresponding prior period.

Personnel costs have increased in the current quarter compared to the prior quarter due to the addition of staff from the Adgero transaction.

Intellectual property costs increased in the six months ended December 31, 2020 compared to the six months ended December 31, 2019 as we have incurred more foreign office actions in the current period than the prior period.

Patent costs can vary considerably depending on the filing of new patents, conversion of the provisional applications to PCT applications, foreign office actions, and actual filing costs.

Non-cash, share-based compensation expense increased for the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020, due to the recognition of compensation expense for stock options granted in September 2020.

Personnel costs have increased in the current period compared to the prior period due to the addition of staff from the Adgero transaction.

General and Administrative

General and administrative expenses were $4,329 for the six months ended December 31, 2020 compared to $1,967 for the six months ended December 31, 2019.

A significant portion of the increase was due to higher non-cash, share-based compensation expense, office and sundry expenses, personnel, and professional fees incurred in the current six months compared to the prior six months.

General and administrative expenses were $7,091 for the nine months ended March 31, 2021 compared to $3,045 for the nine months ended March 31, 2020.

A significant portion of the increase was due to higher non-cash, share-based compensation expense, personnel, office and sundry expenses, and professional fees incurred in the current nine months compared to the prior nine months.

In addition, non-cash, share-based compensation expense increased due to the issuance of warrants for professional services.

Office and sundry increased in the six months ended December 31, 2020 compared to the six months ended December 31, 2019 due primarily to costs of higher directors’ and officers’ liability insurance.

Professional fees increased during the six months ended December 31, 2020 compared to the six months ended December 31, 2019 primarily due to higher legal and accounting fees in the current period.

Personnel costs have increased in the current quarter compared to the prior quarter due to the addition of staff from the Ad g ero transaction.

Personnel costs have increased in the current period compared to the prior period due to the addition of staff from the Adgero transaction.

Office and sundry increased in the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020 due primarily to costs of higher directors’ and officers’ liability insurance.

Professional fees increased during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020 primarily due to higher legal and accounting fees in the current period.

Merger costs of $500 relate to expenditures with respect to the Adgero transaction and have been expensed.

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We acquired in-process research and development assets in connection with our merger with Adgero.

As the acquired in-process research and development assets were deemed to have no current or alternative future use, an expense of $16.1 million was recognized in the condensed consolidated interim statements of operations for the six month period ended December 31, 2020.

As the acquired in-process research and development assets were deemed to have no current or alternative future use, an expense of $16,094 was recognized in the condensed consolidated interim statements of operations for the nine month period ended March 31, 2021.

Preferred Share Dividends

For each of the six months ended December 31, 2020 and 2019, we recorded $4 related to the dividend payable to Valent on the Series A preferred stock.

For each of the nine months ended March 31, 2021 and 2020, we recorded $6 related to the dividend payable to Valent on the Series A preferred stock.

The dividend has been recorded as a direct increase in accumulated deficit for both periods.

During the six months ended December 31, 2020, we issued 7,179 (2019 – 7,400) shares of common stock as a dividend on the Series B Preferred stock and recognized $9 (2019 - $5) as a direct increase in accumulated deficit.

During the nine months ended March 31, 2021, we issued 10 (2020 – 12) shares of common stock as a dividend on the Series B Preferred stock and recognized $15 (2020 - $6) as a direct increase in accumulated deficit.

Liquidity and Capital Resources

Six months ended December 31, 2020 compared to the six months ended December 31, 2019

Nine months ended March 31, 2021 compared to the nine months ended March 31, 2020

(in thousands)

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Operating Activities

Net cash used in operating activities increased to $9,541 for the six months ended December 31, 2020 from $3,977 for the six months ended December 31, 2019.

During the six months ended December 31, 2020 and 2019, we reported net losses of $24,931 and $3,346, respectively.

Net cash used in operating activities increased to $14,171 for the nine months ended March 31, 2021 from $5,350 for the nine months ended March 31, 2020.

During the nine months ended March 31, 2021 and 2020, we reported net losses of $31,566 and $5,303, respectively.

Partially offsetting the higher loss in the current period compared to the prior period was the recognition of $16,094 of acquired in-process research and development expense related to the Adgero merger.

Additional changes in adjustments to reconcile net loss to net cash used in operating activities for the six months ended December 31, 2020 included stock option expense of $2,530 being recognized during the current period compared to $211 in the prior period.

The most significant change in working capital for the six months ended December 31, 2020 was from a use of cash due to an increase prepaid expenses and deposits related to a $2,600 payment to GCAR for study initiation and patient recruitment.

The most significant change in working capital for the six months ended December 31, 2019 was cash used as a reduction in accounts payable and accrued liabilities of $994.

Additional changes in adjustments to reconcile net loss to net cash used in operating activities for the nine months ended March 31, 2021 included stock option expense of $4,248 being recognized during the current period compared to $307 in the prior period.

The most significant change in working capital for the nine months ended March 31, 2021 was from a use of cash due to an increase prepaid expenses and deposits related primarily to a $2,600 payment to GCAR for study initiation and patient recruitment.

The most significant change in working capital for the nine months ended March 31, 2020 was cash used as a reduction in accounts payable and accrued liabilities of $659.

Investing Activities

As part of the Adgero merger that closed on August 19, 2020, we acquired $969 in cash.

There were no investing activities during the six months ended December 31, 2019.

There were no investing activities during the nine months ended March 31, 2020.

Financing Activities

During the six months ended December 31, 2020, we received approximately $21,600 in net proceeds from the completion of a private placement of Series C Preferred stock and $1,180 from the cash exercise of stock purchase warrants.

Also, during the six months ended December 31, 2020, we received proceeds from the NBTS Loan of $500.

During the six months ended December 31, 2019, we received $6,583 in net proceeds from the completion of an underwritten public offering by us of common stock, pre-funded warrants, and common stock purchase warrants.

During the nine months ended March 31, 2021, we received approximately $21,600 in net proceeds from the completion of a private placement of Series C Preferred stock and $4,399 from the cash exercise of stock purchase warrants.

Also, during the nine months ended March 31, 2021, we received proceeds from the NBTS Loan of $500.

During the nine months ended March 31, 2020, we received $6,583 in net proceeds from the completion of an underwritten public offering by us of common stock, pre-funded warrants, and common stock purchase warrants.

Additionally, we received $27 pursuant to the exercise of warrants in the current period.

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The condensed consolidated interim financial statements have been prepared on a going concern basis, which assumes that we will continue our operations for the foreseeable future and contemplates the realization of assets and the settlement of liabilities in the normal course of business .

For the six months ended December 31, 2020, we reported a loss of $24.9 million, and a negative cash flow from operations of $9.5 million.

We had an accumulated deficit of $97.8 million and had cash and cash equivalents of $17.2 million as of December 31, 2020.

For the nine months ended March 31, 2021, we reported a loss of $31,566 and a negative cash flow from operations of $14,171.

We had an accumulated deficit of $104,489 and had cash and cash equivalents of $15,718 as of March 31, 2021.

We are in the clinical stage and have not generated any revenues to-date.

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Prior to our adoption of ASU 2018-07, Compensation-Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”), stock options granted to non-employee consultants were revalued at the end of each reporting period until vested using the Black-Scholes option-pricing model and the changes in their fair value were recorded as adjustments to expense over the related vesting period.

For the six-months ended December 31, 2020 and 2019, the determination of grant-date fair value for stock option awards was estimated using the Black-Scholes model, which includes variables such as the expected volatility of our share price, the anticipated exercise behavior of its grantee, interest rates, and dividend yields.

For the six-months ended December 31, 2020 and 2019, we utilized the plain vanilla method to determine the expected life of stock options.

For the nine-months ended March 31, 2021 and 2020, the determination of grant-date fair value for stock option awards was estimated using the Black-Scholes model, which includes variables such as the expected volatility of our share price, the anticipated exercise behavior of its grantee, interest rates, and dividend yields.

For the nine-months ended March 31, 2021 and 2020, we utilized the plain vanilla method to determine the expected life of stock options.

These variables are projected based on our historical data, experience, and other factors.

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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-Q

Item 2. Management’s Discussion and Analysis