What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-10 compared with 2022-08-04 · 335 added, 177 removed, 319 unchanged (62% of the section changed)

FINANCIAL STATEMENTS

CALADRIUS BIOSCIENCES, INC.

LISATA THERAPEUTICS, INC.

AND SUBSIDIARIES

1 unchanged sentence

(In thousands, except share data)

September 30,

2022 December 31,

6 unchanged sentences

Property and equipment, net 299 62

Investment in Cend Therapeutics 10,000 —

Acquired license - intangible 352 —

Other assets 588 764

6 unchanged sentences

Total liabilities 6,758 5,008

Commitments and Contingencies

Commitments and Contingencies (Note 13)

Stockholders' Equity

Preferred stock, authorized, 20,000,000 shares

Series B convertible redeemable preferred stock liquidation value, 0.001 share of common stock,

$ 0.01 par value;

Preferred stock, authorized, 20,000,000 shares Series B convertible redeemable preferred stock

liquidation value, 0.000067 share of common stock, $ 0.01 par value;

825,000 shares designated;

issued and outstanding, 10,000 shares at

June 30, 2022 and December 31, 2021, respectively

issued and outstanding, 10,000 shares at September 30, 2022 and December 31, 2021, respectively

Common stock, $ 0.001 par value, authorized 33,333,333 shares;

issued 7,863,340

and 59,800,792 shares at June 30, 2022 and December 31, 2021, respectively;

outstanding, 60,583,249 and 59,789,712 shares at June 30, 2022 and December 31, 2021,

and 3,986,719 shares at September 30, 2022 and December 31, 2021, respectively;

outstanding, 7,862,602 and 3,985,981 shares at September 30, 2022 and December 31, 2021,

Additional paid-in capital 574,066 546,044

Treasury stock, at cost;

11,080 shares at June 30, 2022 and December 31, 2021

738 shares at September 30, 2022 and December 31, 2021

( 708 ) ( 708 )

1 unchanged sentence

Accumulated other comprehensive loss ( 90 ) ( 70 )

Total Caladrius Biosciences, Inc.

Total Lisata Therapeutics, Inc.

stockholders' equity 72,025 92,254

3 unchanged sentences

See accompanying notes to consolidated financial statements.

CALADRIUS BIOSCIENCES, INC.

LISATA THERAPEUTICS, INC.

AND SUBSIDIARIES

1 unchanged sentence

(In thousands, except per share data)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

1 unchanged sentence

Research and development $ 3,380 $ 4,125 $ 9,898 $ 13,530

In-process research and development 30,393 — 30,393 —

General and administrative 3,947 2,843 10,770 8,671

7 unchanged sentences

Benefit from income taxes — — ( 2,479 ) ( 1,508 )

Net loss attributable to Caladrius Biosciences, Inc.

Net loss attributable to Lisata Therapeutics, Inc.

common stockholders $ ( 37,383 ) $ ( 6,927 ) $ ( 48,235 ) $ ( 20,672 )

Basic and diluted loss per share

Caladrius Biosciences, Inc.

Lisata Therapeutics, Inc.

common stockholders $ ( 7.88 ) $ ( 1.74 ) $ ( 11.28 ) $ ( 5.76 )

$ ( 0.11 ) $ ( 0.10 ) $ ( 0.18 ) $ ( 0.27 )

Weighted average common shares outstanding

2 unchanged sentences

See accompanying notes to consolidated financial statements.

CALADRIUS BIOSCIENCES, INC.

LISATA THERAPEUTICS, INC.

AND SUBSIDIARIES

1 unchanged sentence

(In thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

2 unchanged sentences

Available for sale securities - net unrealized gain (loss) 5 ( 47 ) 5 ( 51 )

Total other comprehensive gain (loss) 126 ( 4 ) — ( 4 )

Comprehensive loss attributable to Caladrius Biosciences, Inc.

Cumulative translation adjustment arising during the period ( 25 ) — ( 25 ) —

Total other comprehensive loss ( 20 ) ( 47 ) ( 20 ) ( 51 )

Comprehensive loss attributable to Lisata Therapeutics, Inc.

common stockholders

1 unchanged sentence

See accompanying notes to consolidated financial statements.

CALADRIUS BIOSCIENCES, INC.

LISATA THERAPEUTICS, INC.

AND SUBSIDIARIES

7 unchanged sentences

Deficit Treasury

Caladrius Biosciences,

Lisata Therapeutics,

Stockholders'

1 unchanged sentence

Shares Amount Shares Amount

Balance at Mar 31, 2022 10 $ — 60,544 $ 61 $ 546,580 $ ( 196 ) $ ( 457,242 ) $ ( 708 ) $ 88,495 $ ( 254 ) $ 88,241

Balance at June 30, 2022 — $ — 4,038 $ 4 $ 547,032 $ ( 70 ) $ ( 463,868 ) $ ( 708 ) $ 82,391 $ ( 254 ) $ 82,137

Net loss — — — — — — ( 37,383 ) — ( 37,383 ) — ( 37,383 )

Unrealized gain on marketable securities — — — — — 126 — — 126 — 126

Share-based compensation — — 52 — 940 — — — 939 — 939

Net proceeds from issuance of common stock — 65 — 29 — — — 29 — 29

Balance at June 30, 2022 10 $ — 60,594 $ 61 $ 546,976 $ ( 70 ) $ ( 463,868 ) $ ( 708 ) $ 82,391 $ ( 254 ) $ 82,137

Issuance of common stock in connection with merger — — 3,773 4 26,094 — — — 26,098 — 26,098

Unrealized gain on marketable securities — — — — — 5 — — 5 — 5

Foreign currency translation adjustment — — — — — ( 25 ) — — ( 25 ) — ( 25 )

Balance at September 30, 2022 — $ — 7,863 $ 8 $ 574,066 $ ( 90 ) $ ( 501,251 ) $ ( 708 ) $ 72,025 $ ( 254 ) $ 71,771

Series B Convertible

4 unchanged sentences

Deficit Treasury

Caladrius Biosciences,

Lisata Therapeutics,

Stockholders'

5 unchanged sentences

Net proceeds from issuances of common stock — — 4 — 29 — — — 29 — 29

Balance at June 30, 2022 10 $ — 60,594 $ 61 $ 546,976 $ ( 70 ) $ ( 463,868 ) $ ( 708 ) $ 82,391 $ ( 254 ) $ 82,137

Issuance of common stock in connection with merger — — 3,773 4 26,094 — — — 26,098 — 26,098

Unrealized gain on marketable securities — — — — — 5 — — 5 — 5

Foreign currency translation adjustment — — — — — ( 25 ) — — ( 25 ) — ( 25 )

Balance at September 30, 2022 — $ — 7,863 $ 8 $ 574,066 $ ( 90 ) $ ( 501,251 ) $ ( 708 ) $ 72,025 $ ( 254 ) $ 71,771

Series B Convertible

4 unchanged sentences

Deficit Treasury

Caladrius Biosciences,

Lisata Therapeutics,

Stockholders'

1 unchanged sentence

Shares Amount Shares Amount

Balance at Mar 31, 2021 10 $ — 59,510 $ 60 $ 544,601 $ ( 72 ) $ ( 433,613 ) $ ( 708 ) $ 110,268 $ ( 254 ) $ 110,014

Balance at June 30, 2021 — $ — 3,967 $ 4 $ 544,949 $ ( 17 ) $ ( 439,295 ) $ ( 708 ) $ 104,933 $ ( 254 ) $ 104,679

Net loss — — — — — — ( 6,927 ) — ( 6,927 ) — ( 6,927 )

Unrealized gain on marketable securities — — — — — 55 — — 55 — 55

Share-based compensation — — 19 — 708 — — — 708 — 708

Net proceeds from issuances of common stock — — 19 — 22 — — — 22 — 22

Balance at June 30, 2021 10 $ — 59,529 $ 60 $ 544,893 $ ( 17 ) $ ( 439,295 ) $ ( 708 ) $ 104,933 $ ( 254 ) $ 104,679

Unrealized loss on marketable securities — — — — — ( 47 ) — — ( 47 ) — ( 47 )

Balance at September 30, 2021 — $ — 3,986 $ 4 $ 545,657 $ ( 64 ) $ ( 446,222 ) $ ( 708 ) $ 98,667 $ ( 254 ) $ 98,413

Series B Convertible

4 unchanged sentences

Deficit Treasury

Caladrius Biosciences,

Lisata Therapeutics,

Stockholders'

3 unchanged sentences

Net loss — — — — — — ( 20,672 ) — ( 20,672 ) — ( 20,672 )

Unrealized loss on marketable securities — — — — — ( 4 ) — — ( 4 ) — ( 4 )

Share-based compensation — — 36 — 1,391 — — — 1,391 — 1,391

1 unchanged sentence

Proceeds from option exercises — — — — 24 — — — 24 — 24

Balance at June 30, 2021 10 $ — 59,529 $ 60 $ 544,893 $ ( 17 ) $ ( 439,295 ) $ ( 708 ) $ 104,933 $ ( 254 ) $ 104,679

Unrealized loss on marketable securities — — — — — ( 51 ) — — ( 51 ) — ( 51 )

Balance at September 30, 2021 — $ — 3,986 $ 4 $ 545,657 $ ( 64 ) $ ( 446,222 ) $ ( 708 ) $ 98,667 $ ( 254 ) $ 98,413

See accompanying notes to consolidated financial statements.

CALADRIUS BIOSCIENCES, INC.

LISATA THERAPEUTICS, INC.

AND SUBSIDIARIES

1 unchanged sentence

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

3 unchanged sentences

Depreciation and amortization 22 47

In process research and development expenses 30,393 —

Accretion on marketable securities 893 1,925

7 unchanged sentences

Sale of marketable securities 93,865 66,035

Asset acquisition costs, net of cash acquired related to merger with Cend ( 3,320 ) —

Purchase of property and equipment ( 259 ) ( 60 )

Investment in Cend Therapeutics ( 10,000 ) —

Net cash provided by (used in) investing activities 21,805 ( 71,354 )

4 unchanged sentences

Net cash (used in) provided by financing activities ( 238 ) 85,255

Effect of exchange rate changes on cash ( 34 ) —

Net increase (decrease) in cash and cash equivalents 6,831 ( 3,740 )

1 unchanged sentence

Cash and cash equivalents at end of period $ 31,478 $ 12,772

Supplemental disclosure of noncash investing activities:

Issuance of common stock in connection with merger $ 23,580 $ —

Incremental fair value of Cend's fully vested stock options assumed $ 2,136 $ —

See accompanying notes to consolidated financial statements.

CALADRIUS BIOSCIENCES, INC.

LISATA THERAPEUTICS, INC.

AND SUBSIDIARIES

1 unchanged sentence

Note 1 – The Business

Caladrius Biosciences, Inc.

(“we,” “us,” “our,” “Caladrius” or the “Company”) is a clinical-stage biopharmaceutical company dedicated to the development of treatments and reversal of severe diseases.

The Company is developing what are intended to be first-in-class therapeutics based on the characteristics of naturally occurring CD34+ cells and their ability to stimulate the growth of new microvasculature.

Its technology is intended to leverage these cells to enable the body's natural repair mechanisms using formulations unique to each medical indication.

The Company's leadership team has decades of collective biopharmaceutical product development experience in a variety of therapeutic categories.

Lisata Therapeutics, Inc.

(together with its subsidiaries, “we,” “us,” “our,” “Lisata” or the “Company”) is a clinical-stage pharmaceutical company dedicated to the discovery, development and commercialization of innovative therapies for the treatment of solid tumors and other major diseases.

Lisata’s lead investigational product candidate, LSTA1 (formerly known as CEND-1), is designed to activate a novel uptake pathway that allows anti-cancer drugs to penetrate solid tumors more effectively.

LSTA1 actuates this active transport system in a tumor-specific manner, resulting in systemically co-administered anti-cancer drugs more efficiently penetrating and accumulating in the tumor, while normal tissues are not affected.

LSTA1 also has the potential to modify the tumor microenvironment (“TME”), making tumors more susceptible to immunotherapies.

LSTA1 has demonstrated favorable safety, tolerability, and activity to date in completed and ongoing clinical trials to enhance delivery of standard-of-care chemotherapy for pancreatic cancer.

Lisata and its collaborators have also amassed significant non-clinical data demonstrating enhanced delivery of a range of emerging anti-cancer therapies, including immunotherapies and RNA-based therapeutics.

Lisata is exploring the potential of LSTA1 to enable a variety of treatment modalities to treat a range of solid tumors more effectively.

In addition, Lisata also has clinical development programs based on its autologous CD34+ cell therapy technology platform.

The Company's leadership team has decades of collective biopharmaceutical and pharmaceutical product development experience across a variety of therapeutic categories and at all stages of development from preclinical through to product registration and launch.

Its goal is to develop and commercialize products that address important unmet medical needs based on a broad and versatile portfolio of candidates.

The Company’s current product candidates include:

• XOWNA ® (CLBS16), the subject of both a completed positive Phase 2a study (ESCaPE-CMD) and an ongoing follow on Phase 2b study (FREEDOM Trial) in the United States for the treatment of coronary microvascular dysfunction (“CMD”);

• HONEDRA ® (CLBS12), recipient of SAKIGAKE designation pursuant to which early conditional approval in Japan for the treatment of critical limb ischemia (“CLI”) and Buerger’s disease is being sought based on the current results of a clinical trial executed in Japan.

• LSTA1, the subject of phase 1b/2a and 2b clinical studies being conducted globally in a variety of solid tumor types, including metastatic pancreatic ductal adenocarcinoma (mPDAC), in combination with a variety of anti-cancer regimens;

• XOWNA ® (LSTA16 formerly CLBS16), the subject of both a completed positive Phase 2a study (ESCaPE-CMD) and follow on Phase 2b study (FREEDOM Trial) in the United States for the treatment of coronary microvascular dysfunction (“CMD”);

• HONEDRA ® (LSTA12 formerly CLBS12), recipient of SAKIGAKE designation, pursuant to which early conditional approval in Japan for the treatment of critical limb ischemia (“CLI”) and Buerger’s disease is being sought based on the current results of a clinical trial executed in Japan.

HONEDRA ® was the recipient of orphan drug designation in March 2021 from the U.S.

Food and Drug Administration (“FDA”) for Buerger's disease;

• CLBS201, the subject of a study designed to assess the safety and efficacy of CD34+ cell therapy as a treatment for patients with chronic kidney disease related to type 2 diabetes (diabetic kidney disease or “DKD”).

• On April 26, 2022, the Company and Cend Therapeutics, Inc., a Delaware corporation (“Cend”), entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, a wholly-owned subsidiary of Caladrius will merge with and into Cend, with Cend surviving as a wholly-owned subsidiary of the Company (the “Merger”), subject to the terms of the Merger Agreement and stockholder approval of the transaction.

Under the exchange ratio formula, as of immediately after the Merger, the former Cend stockholders are expected to own approximately 50 % of the outstanding shares of Caladrius Common Stock and the Company’s stockholders as of immediately prior to the Merger are expected to own approximately 50 % of the outstanding shares of Caladrius Common Stock.

The actual allocation will be subject to adjustment based on our net cash balance at the time of closing and the amount of any transaction expenses of Cend in excess of $ 250 thousand at the time of closing.

Ischemic Repair (CD34+ Cell Technology)

The CD34+ cell was discovered as a result of the deliberate search for a cell capable of stimulating the development and/or repair of blood vessels.

All tissues in the body maintain their function by replacing cells over time.

In addition to the maintenance function, the body must also be capable of building new blood vessels after injury.

A CD34+ cell is an endothelial progenitor cell that has the ability to stimulate new blood vessel formation at the level of the microvasculature.

No other native cell discovered to date has demonstrated this same capability.

The Company's proprietary cell technology using autologous (a patient’s own naturally occurring) CD34+ cells has led to the development of therapeutic product candidates designed to address diseases and conditions caused by ischemia.

Ischemia occurs when the supply of oxygenated blood to healthy tissue is restricted or reduced.

Through the administration of CD34+ cells, Caladrius seeks to promote the development and formation of new microvasculature and thereby increase blood flow to the impacted area.

The Company believes that a number of conditions caused by underlying ischemic injury can be improved through its CD34+ cell technology including but not limited to Buerger's disease, CLI, CMD, and DKD.

XOWNA ® for Treatment of Coronary Microvascular Dysfunction

In 2017, with the assistance of a $ 1.9 million grant from the National Institutes of Health (Award Number R44HL135889), the Company initiated its program for XOWNA ® for the treatment of CMD, a disease that afflicts as many as 1.6 million patients in the United States alone, with no current targeted treatment options.

That study, the ESCaPE-CMD Trial, was a Phase 2a proof-of-concept, open label study that enrolled patients at the Mayo Clinic in Rochester, MN and Cedars-Sinai Medical Center in Los Angeles, CA.

Those data showed a positive therapeutic effect with a statistically significant improvement in

angina frequency, coronary flow reserve, Canadian Cardiovascular Society Angina Class and Seattle Angina Questionnaire scores, as well as an acceptable safety profile.

The full data set from that study was presented at the SCAI 2020 Scientific Sessions Virtual Conference on May 14, 2020 by Dr.

Timothy Henry, FACC, of the Christ Hospital in Cincinnati, Ohio.

In December 2020, the Company commenced enrollment in its Phase 2b FREEDOM Trial of XOWNA ® , a double-blind, randomized, placebo-controlled clinical trial designed to further evaluate the efficacy and safety of intracoronary artery delivery of autologous CD34+ cells in subjects with CMD and without obstructive coronary artery disease and was expected to complete enrollment in approximately 12 months.

While early enrollment proceeded to plan with the first patient treated in January 2021, the impact of the COVID-19 pandemic contributed to a general slowing of enrollment, including supply chain disruptions affecting the availability of qualified catheters used in the diagnosis of CMD and/or administration of XOWNA ® as well as with a contrast agent typically used in many catheter laboratories.

Protocol amendments to the initial FREEDOM Trial protocol, as agreed to by the FDA, were implemented with the goal of enhancing breadth and speed of subject enrollment.

In May 2022, the Company announced that enrollment in the FREEDOM Trial had been suspended and that it intends to conduct an interim analysis of the data from not less than the first 20 patients enrolled using the 6-month follow-up data to evaluate the efficacy and safety of XOWNA ® in subjects with CMD and corroborate the ESCaPE-CMD study results.

The interim analysis is expected to be completed in the third quarter of 2022, and the next steps in development of XOWNA ® will subsequently be determined after appropriate regulatory and business review, expected to be announced prior to year-end 2022.

HONEDRA ® for Treatment of Critical Limb Ischemia

The Company's randomized, open-label, registration-eligible study of HONEDRA ® in Japan for the treatment of CLI and Buerger's disease has, to date, demonstrated positive trends in both safety and efficacy.

The HONEDRA ® study's enrollment, however, has been significantly curtailed by the COVID-19 pandemic's impact in Japan, including the States of Emergency in Japan that have persisted for much of 2020, 2021, and 2022.

Due to the significant and continued operational and financial burden incurred as a result of these COVID-19 delays, coupled with the unpredictability of the timing of site enrollment re-initiation, Caladrius suspended further enrollment in the fourth quarter of 2021.

Following study suspension, the Company completed all protocol-defined patient observations and is preparing the clinical study report.

HONEDRA ® is now in the pre-consultation phase of the registration process with the Pharmaceuticals and Medical Devices Agency (“PMDA”) in Japan.

Data from the follow-up of all patients completed in the registration-eligible clinical trial in Japan has been compiled and is expected to be reviewed by PMDA during the third quarter of 2022 after which the PMDA is expected to provide important perspective to be considered in preparation for the formal consultation meetings which precede the Japanese new drug application.

The Company is focusing its efforts on consummating a partnership for the product in Japan.

Such a partnership may become the basis for the completion of development and registration of HONEDRA ® in Japan.

This may include the completion of enrollment of the four-remaining no-option CLI subjects stipulated in the original protocol, if necessary, and/or exploration of the possibility of submitting the existing data to Japan's PMDA under Japan's regenerative medicine regulations, which allow for conditional approval of innovative regenerative medicine products.

Despite receipt of orphan designation from FDA in March 2021 in the U.S.

for CLBS12 as a potential treatment for Buerger's disease, based on a response from the FDA in October 2021 regarding a development plan for U.S.

registration the Company decided not to pursue U.S.

development in Buerger's disease at this time.

CLBS201 for Treatment of Diabetic Kidney Disease

Progressive kidney failure is associated with attrition of the microcirculation of the kidney.

Pre-clinical studies in kidney disease and injury models have demonstrated that protection or replenishment of the microcirculation results in improved kidney function.

Based on these observations, the Company elected to move forward with a Phase 1b, open-label, proof-of-concept trial evaluating CLBS201 dosed via intra-renal artery injections in subjects with DKD.

This protocol includes six subjects in total with the first two subjects sequentially dosed and followed for a two-week safety observation period.

Clearance by the independent Data Safety Monitoring Board (“DSMB”) overseeing the study then permitted the treatment of the next four patients, with all patients being followed for safety and therapeutic effect.

A read-out of data will occur after at the six-month follow-up visit for all patients.

A key criterion for continued development of CLBS201 will be its ability to demonstrate a therapeutic effect that will make it competitive in the field of DKD treatment, i.e., kidney function regeneration, as indicated by increased glomerular filtration rate.

The Company treated the first patient in the CLBS201 proof-of-concept study in April 2022 and completed treatment for all six subjects during the third quarter of 2022.

Top-line data is anticipated from all subjects by the first quarter of 2023.

Additional Out-licensing Opportunities

The Company's broad intellectual property portfolio of cell therapy assets includes notable programs available for out-licensing in order to continue their clinical development.

The Company's current long-term strategy focuses on advancing its therapies through development with the ultimate objective of obtaining market authorizations and entering commercialization, either alone or with partners, to provide treatment options to patients suffering from life-threatening medical conditions.

The Company believes that it is well-positioned to realize potentially meaningful value increases within its own proprietary pipeline if it is successful in advancing its product candidates to their next significant development milestones.

C end Merger Agreement

On April 26, 2022, the Company and Cend entered into the Merger Agreement.

Consummation of the Merger is subject to certain closing conditions, including, among other things, approval by the stockholders of the Company and Cend and the Company’s satisfaction of a minimum net cash threshold at closing, expected to be approximately $ 64.9 million assuming a closing at the end of the third quarter of 2022, and as described further in the Merger Agreement.

The Merger Agreement contains certain termination rights for both the Company and Cend, and further provides that, upon termination of the Merger Agreement under specified circumstances, the Company may be required to pay Cend a termination fee of $ 1.0 million, Cend may be required to pay the Company a termination fee of $ 4.0 million, or in some circumstances reimburse the other party’s expenses up to a maximum of $ 1.0 million.

At the effective time of the Merger, the Company’s Board of Directors is expected to consist of nine members, four of whom will be designated by the Company, four of whom will be designated by Cend and one member who will be mutually agreed between the Company and Cend.

Stock Purchase Agreement

In order to provide Cend with capital for its development programs prior to the closing of the Merger, the Company and Cend entered into a Series D Preferred Stock Purchase Agreement (the “Purchase Agreement”), pursuant to which the Company purchased from Cend 1,135,628 shares of Series D Preferred Stock, $ 0.00001 par value per share (the “Series D Preferred Stock”), of Cend at a purchase price per share equal to $ 8.8057 per share (the “Series D Original Issue Price”), or approximately $ 10 million in the aggregate.

The Series D Preferred Stock ranks senior to Cend’s common stock and the other series of preferred stock with respect to rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of Cend.

The Series D Preferred Stock has a liquidation preference equal to the Series D Original Issue Price plus an amount equal to any accrued and unpaid dividends to the date of payment and will participate with Cend’s common stockholders and other preferred stockholders thereafter on an as-converted basis.

The Series D Preferred Stock shall vote with the common stock on an as-converted basis on any matters presented to the stockholders of Cend.

Each share of Series D Preferred Stock is convertible, at the option of the holder thereof, into such number of shares of Cend common stock as is determined by dividing the Original Issue Price by the conversion price in effect at the time of conversion, which conversion price shall be the Original Issue Price as appropriately adjusted for stock splits, stock dividends, combinations, and subdivisions of Cend common stock, and as adjusted pursuant to a weighted-average antidilution adjustment.

The Series D Preferred Stock will automatically convert into shares of Cend common stock upon the closing of a firm-commitment underwritten initial public offering implying a pre-equity offering value of at least $ 250 million, resulting in at least $ 50 million of gross proceeds to Cend.

Collaboration Agreement

In connection with such Purchase Agreement, Cend entered into a Collaboration Agreement (the “Collaboration Agreement”), pursuant to which the Company agreed to collaborate with Cend on certain developmental and clinical activities prior to the closing of the Merger.

Pursuant to the Collaboration Agreement, the Company and Cend have formed a joint steering committee (the “Committee”) comprised of individuals from both entities.

The Committee meets regularly and is responsible for monitoring ongoing studies and making recommendations for development activity and trial planning.

Cend has agreed to pay each member of the Committee from the Company an hourly consulting fee for such service.

As of June 30, 2022 the cumulative services provided under the agreement totaled $ 0.2 million.

• LSTA201 (formerly CLBS201), the subject of a study designed to assess the safety and efficacy of CD34+ cell therapy as a regenerative treatment for patients with chronic kidney disease related to type 2 diabetes (diabetic kidney disease or “DKD”).

Merger with Cend Therapeutics, Inc.

and Name Change

On September 15, 2022, the Company, then operating as Caladrius Biosciences, Inc.

(“Caladrius"), completed its acquisition of Cend Therapeutics, Inc.

(“Cend”), a Delaware corporation (the “Merger”), in accordance with the terms of the Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), dated as of April 26, 2022, by and among Caladrius, Cend and CS Cedar Merger Sub, Inc.

(“Merger Sub”).

Pursuant to the terms set forth in the Merger Agreement and effective September 15, 2022 (the “Effective Time”):

(i) Merger Sub merged with and into Cend, with Cend surviving as a wholly owned subsidiary of Caladrius, (ii) Caladrius changed its name to Lisata Therapeutics, Inc.

in connection with and immediately following to the Effective Time, and (iii) Caladrius effected a 1:15 reverse stock split of its common stock (“Reverse Stock Split”) prior to the Effective Time.

At the Effective Time, each share of Cend's common stock outstanding immediately prior to the Effective Time was converted into the right to receive shares of Lisata’s common stock based on an exchange ratio of 0.5338 (the “Exchange Ratio”), after taking into account the Reverse Stock Split.

In connection with the Merger close, the Company issued an aggregate of 3,772,768 shares of common stock, based on the Exchange Ratio, to holders of Cend, in exchange for all of the Cend capital stock outstanding immediately prior to the closing of the Merger.

Pursuant to the Merger Agreement, Lisata assumed all of the outstanding and unexercised options to purchase shares of Cend capital stock under the 2016 Equity Incentive Plan (the “Cend Plan”), and, in connection with the Merger, such options were converted into options to purchase shares of Lisata’s common stock based on the Exchange Ratio.

At the closing of the Merger at the Effective Time, the Company assumed Cend's stock options to purchase an aggregate of 1,227,776 shares of the Company's common stock.

Caladrius was considered to be the accounting acquirer based on the terms of the Merger Agreement and certain factors including:

(i) Caladrius owned approximately 52% of the Company's outstanding shares of common stock immediately following the close of the Merger;

(ii) although both entities contributed to the new management team of Lisata, the Caladrius team has more individuals on the management team and will hold the CEO, CMO and other senior management roles;

(iii) Caladrius paid a premium to acquire Cend’s assets;

and (iv) Caladrius was significantly larger than Cend regarding total assets, operations, and research and development activities.

The Merger was accounted for as an asset acquisition as substantially all of the fair value is concentrated in in-process research and development (“IPR&D”).

Cend’s assets (except for cash and working capital) were measured and recognized as an allocation of the transaction price based on their relative fair values as of the transaction date with any value associated with IPR&D with no alternative future use being expensed as reported in the consolidated statement of operations.

The prior reported operating results prior to the Merger close are those of Caladrius alone.

Coronavirus Considerations

7 unchanged sentences

has also experienced delays in enrolling patients as a result of COVID-19.

agent typically used in many catheter laboratories.

In May 2022, the Company announced that enrollment in the FREEDOM Trial had been suspended and that it intended to conduct an interim analysis of the data from not less than the first 20 patients enrolled using the 6-month follow-up data to evaluate the efficacy and safety of XOWNA ® in subjects with CMD and corroborate the ESCaPE-CMD study results.

Following the analysis of results of the FREEDOM Trial subjects completing 6-month follow-up along with Key Opinion Leaders’ input, the Company’s board of directors determined that execution of a redesigned FREEDOM-like trial would be the appropriate next step, but the cost of such a trial would be prohibitively expensive to undergo without a strategic partner.

Accordingly, the Company’s board of directors concluded that XOWNA ® development will only be continued if a strategic partner that can contribute the necessary capital for a redesigned trial is identified and secured.

There can be no assurance that we will be able to identify such a partner and enter into an agreement with such partner on acceptable terms or at all.

Reverse Stock Split

On September 14, 2022, in connection with the Merger, the Company implemented the Reverse Stock Split, as authorized at the annual meeting of stockholders on September 13, 2022.

The Reverse Stock Split became effective on September 14, 2022 at 5:00 pm and the Company's common stock began trading on The Nasdaq Capital Market on a post-split basis at the open of business on September 15, 2022.

As of September 14, 2022, every fifteen shares of the Company’s issued and outstanding common stock (and such shares held in treasury) were automatically converted into one share of common stock, without any change in the par value per share.

In addition, proportionate adjustments were made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options, stock appreciation rights, convertible notes and warrants to purchase shares of common stock, the number of shares issuable upon the vesting of all restricted stock awards, and the number of shares of common stock reserved for issuance pursuant to the Company’s equity incentive compensation plans.

Any stockholder who would otherwise be entitled to a fractional share of common stock created as a result of the Reverse Stock Split received a cash payment equal to the product of such resulting fractional interest in one share of common stock multiplied by the closing trading price of the common stock on September 15, 2022.

The Reverse Stock Split was effectuated in order to

increase the per share trading price of our common stock to satisfy the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market.

All share and per share amounts of common stock, options and warrants in the accompanying financial statements have been restated for all periods presented to give retroactive effect to the Reverse Stock Split.

Accordingly, the consolidated statements of equity reflect the impact of the Reverse Stock Split by reclassifying from “common stock” to “additional paid-in capital” in an amount equal to the par value of the decreased shares resulting from the Reverse Stock Split.

Basis of Presentation

1 unchanged sentence

Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, the accompanying Consolidated Financial Statements of the Company and its subsidiaries, which are unaudited, include all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of June 30, 2022, and the results of its operations and its cash flows for the periods presented.

In the opinion of management, the accompanying Consolidated Financial Statements of the Company and its subsidiaries, which are unaudited, include all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of September 30, 2022, and the results of its operations and its cash flows for the periods presented.

The unaudited consolidated financial statements herein should be read together with the historical consolidated financial statements of the Company for the years ended December 31, 2021 and 2020 included in our 2021 Form 10-K.

Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Use of Estimates

2 unchanged sentences

The Company bases its estimates on historical experience and other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

The Company makes critical estimates and assumptions in determining stock-based awards values.

The Company makes critical estimates and assumptions in determining stock-based awards values and the valuation of the Merger which was accounted for as an asset acquisition as substantially all of the fair value is concentrated in in-process research and development (“IPR&D”).

Accordingly, actual results could differ from those estimates and assumptions.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of Caladrius Biosciences, Inc.

and its wholly owned and majority owned subsidiaries and affiliates.

The Consolidated Financial Statements include the accounts of Lisata and its wholly owned and majority owned subsidiaries and affiliates.

All intercompany activities have been eliminated in consolidation .

Foreign Currency Remeasurement

The Company’s reporting currency is the U.S.

The functional currency of DrugCendR Australia PTY Ltd.

which is a foreign subsidiary of the Company is the Australian Dollar.

The assets and liabilities of DrugCendR Australia PTY Ltd.

are translated into U.S.

Dollars at the exchange rates in effect at each balance sheet date, and the results of operations are translated using the average exchange rates prevailing throughout the reporting period.

Adjustments resulting from translating foreign functional currency financial statements into U.S.

Dollars are included in the foreign currency translation adjustment, a component of accumulated other comprehensive income (loss) in stockholders' equity.

Note 2 – Summary of Significant Accounting Policies

In addition to the policies below, the Company's significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements included in its 2021 Form 10-K.

There were no changes to these policies during the three and six months ended June 30, 2022.

Cash and Cash Equivalents

Cash and cash equivalents include short-term, highly liquid, investments with maturities of ninety days or less when purchased.

Concentration of Risks

1 unchanged sentence

Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S.

Cash is held at major banks in the United States.

Cash is held at major banks in the United States and Australia.

Therefore, the Company is not exposed to any significant concentrations of credit risk from these financial instruments.

The goals of the Company's investment policy, in order of priority, are as follows:

safety and preservation of principal and diversification of risk, liquidity of investments sufficient to meet cash flow requirements, and a competitive after-tax rate of return.

safety and preservation

of principal and diversification of risk, liquidity of investments sufficient to meet cash flow requirements, and a competitive after-tax rate of return.

Marketable Securities

The Company determines the appropriate classification of its marketable securities at the time of purchase and reevaluates such designation at each balance sheet date.

All of the Company's marketable securities are considered as available-for-sale and carried at estimated fair values and reported in cash equivalents and marketable securities.

Unrealized gains and losses on available-for-sale securities are excluded from net income and reported in accumulated other comprehensive income (loss) as a separate component of stockholders' equity.

Other income (expense), net includes interest, dividends, amortization of purchase premiums and discounts, realized gains and losses on sales of securities and other-than-temporary declines in the fair value of securities, if any.

The cost of securities sold is based on the specific identification method.

The Company regularly reviews all of its investments for other-than-temporary declines in fair value.

The Company's review includes the consideration of the cause of the impairment, including the creditworthiness of the security issuers, the number of securities in an unrealized loss position, the severity and duration of the unrealized losses, whether the Company has the intent to sell the securities and whether it is more likely than not that it will be required to sell the securities before the recovery of their amortized cost basis.

When the Company determines that the decline in fair value of an investment is below its accounting basis and this decline is other-than-temporary, it reduces the carrying value of the security it holds and records a loss for the amount of such decline.

Property and Equipment

The cost of property and equipment is depreciated over the estimated useful lives of the related assets.

Depreciation is computed on the straight-line method.

Repairs and maintenance expenditures that do not extend original asset lives are charged to expense as incurred.

The estimated useful lives of property and equipment are as follows:

Furniture and fixtures 10 years

Computer equipment 3 years

Software 3 years

Leasehold improvements Life of lease

Long-lived Assets

Long-lived assets consist of property and equipment and intangibles.

The assets are amortized on a straight line basis over their respective useful lives.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds the fair value of the asset.

If other events or changes in circumstances indicate that the carrying amount of an asset that the Company expects to hold and use may not be recoverable, the Company will estimate the undiscounted future cash flows expected to result from the use of the asset and/or its eventual disposition, and recognize an impairment loss, if any.

The impairment loss, if determined to be necessary, would be measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Share-Based Compensation

3 unchanged sentences

The Company determines the fair value of option awards using the Black-Scholes option-pricing model which uses both historical and current market data to estimate the fair value.

This method incorporates various assumptions such as the risk-free interest rate, expected volatility, expected dividend yield and expected life of the options or

This method incorporates various assumptions such as the risk-free interest rate, expected volatility, expected dividend yield and expected life of the options or warrants.

Stock based compensation expense also includes an estimate, which is made at the time of the grant, of the number of awards that are expected to be forfeited.

The fair value of the Company’s restricted stock and restricted stock units is based on the closing market price of the Company’s common stock on the date of grant.

Investment in Cend Therapeutics

Investments in which the Company has no significant influence (generally less than a 20% ownership interest) or does not have the ability to exercise significant influence are accounted for under the measurement alternative method pursuant to ASC 321, Investments — Equity Securities (“ASC 321”) as these investments do not have readily determinable fair values.

Under the measurement alternative method, the Company records the investment at cost less impairment losses, if any, unless it identifies observable price changes in orderly transactions for the identical or a similar investment of the same issuer, in which case the Company will measure its investments at fair value as of the date that the observable transaction occurred.

Such investments are presented as investments on the consolidated balance sheets and any impairment recognized related to these investments are presented in other income (expense), on the consolidated statements of operations (see Note 5, “Fair Value Measurements”).

Loss Per Share

Basic loss per share is based on the weighted effect of all common shares issued and outstanding and is calculated by dividing net loss attributable to common stockholders by the weighted average shares outstanding during the period.

Diluted loss per share is calculated by dividing net loss attributable to common stockholders by the weighted average number of common shares used in the basic loss per share calculation plus the number of common shares that would be issued assuming conversion of all potentially dilutive securities outstanding.

Diluted loss per share is not presented as such potentially dilutive securities are anti-dilutive to losses incurred in all periods presented.

Treasury Stock

Treasury stock purchases are accounted for under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock.

Gains or losses on the subsequent reissuance of shares are credited or charged to additional paid in capital.

Research and Development Costs

Research and development (“R&D”) expenses include salaries, benefits, and other headcount related costs, clinical trial and related clinical manufacturing costs, contract and other outside service fees including sponsored research agreements, and facilities and overhead costs.

The Company expenses the costs associated with research and development activities when incurred.

To further drive the Company’s initiatives, the Company will continue targeting key governmental agencies, congressional committees and not-for-profit organizations to contribute funds for the Company’s research and development programs.

The Company accounts for such grants as a deduction to the related expense in research and development operating expenses when earned.

In-process Research and Development Expense

Upfront payments that relate to the acquisition of a new drug compound, as well as pre-commercial milestone payments, are immediately expensed as IPR&D in the period in which they are incurred, provided that the new drug compound did not also include processes or activities that would constitute a “business” as defined under GAAP, the drug has not achieved regulatory approval for marketing and, absent obtaining such approval, has no established alternative future use.

The Company accounts for contingent consideration payable upon achievement of certain regulatory, development or sales milestones in such asset acquisitions when the underlying contingency is probable and estimable.

Milestone payments made to third parties subsequent to regulatory approval will be capitalized as intangible assets and amortized over the estimated remaining useful life of the related product.

Intangible Asset

The Company’s intangible asset consists of a single asset, Cend’s license agreement with Qilu Pharmaceutical, Co., Ltd.

(“Qilu”) acquired in the Merger, with a value of $0.4 million.

The intangible asset is stated at fair value and is amortized using the straight-line method over its estimated useful life of 5 years.

Amortization expense was $3 thousand for the three and nine months ended September 30, 2022.

The intangible asset is reviewed for potential impairment when events or circumstances indicate that carrying amounts may not be recoverable.

The projected amortization expense is $71 thousand per year for the next five years.

Revenue Recognition

The Company evaluates license and collaboration arrangements to determine whether units of account within the arrangement exhibit the characteristics of a vendor and customer relationship.

For arrangements and units of account where a customer relationship exists, the Company applies the revenue recognition guidance.

The Company recognizes revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

To determine revenue recognition for contracts with customers the Company performs the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue when (or as) the Company satisfies the performance obligations.

At contract inception, the Company assesses the goods or services promised within each contract and assesses whether each promised good or service is distinct and determines those that are performance obligations.

The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Taxes imposed by governmental authorities on the Company's revenue, such as sales taxes and withholding taxes, are excluded from net revenue.

If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from non-refundable, upfront fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license.

If licenses are bundled with other performance obligations, the Company would utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue.

There was no revenue recognized for the three and nine months ended September 30, 2022.

At the inception of each arrangement that includes milestone payments (variable consideration), the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method.

If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.

Milestone payments that are not within the Company or the Company’s collaboration partner’s control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received.

The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.

At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such milestones and any related constraint, and if necessary, adjusts the Company’s estimate of the overall transaction price.

Any such adjustments are allocated on a cumulative catch-up basis to satisfied and partially satisfied performance obligations, with the consideration allocated to an ongoing performance obligation being recognized over the period of performance.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and for which the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

To date, the Company has not recognized any royalty revenue from any collaborative arrangement.

Note 3 – Merger

The Merger was accounted for as an asset acquisition as substantially all of the fair value was concentrated in IPR&D.

The fair value of total consideration was $ 36.1 million.

The following table is a summary of the purchase price calculation (in thousands except per share data).

Number of common shares of the combined company owned by Cend stockholders 3,772,768

Multiplied by the fair value per share of Lisata common stock on September 15, 2022 $ 6.25

Total $ 23,580

Carrying value of Lisata's cost method investment in Cend 10,000

Incremental fair value of Cend's fully vested stock options 2,136

Lisata transaction costs 382

Total purchase price $ 36,098

The allocation of the purchase price was as follows (amounts in thousands):

Cash and cash equivalents $ 7,062

Net working capital (excluding cash) ( 1,690 )

Other liabilities ( 22 )

Acquired in-process research and development 30,393

Net assets acquired $ 36,098

Note 4 – Available-for-Sale-Securities

The following table is a summary of available-for-sale securities recorded in cash and cash equivalents or marketable securities in our Consolidated Balance Sheets (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value

6 unchanged sentences

The following table summarizes the classification of the available-for-sale securities in our Consolidated Balance Sheets (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Cash equivalents $ 23,280 $ 21,129

2 unchanged sentences

The following table summarizes our portfolio of available-for-sale securities by contractual maturity (in thousands):

June 30, 2022

September 30, 2022

Amortized Cost Estimated Fair Value

3 unchanged sentences

Note 5 – Income (Loss) Per Share

For the six months ended June 30, 2022 and 2021, the Company incurred net losses and therefore no common stock equivalents were utilized in the calculation of diluted loss per share as they are anti-dilutive.

At June 30, 2022 and 2021, the Company excluded the following potentially dilutive securities (in thousands):

For the nine months ended September 30, 2022 and 2021, the Company incurred net losses and therefore no common stock equivalents were utilized in the calculation of diluted loss per share as they are anti-dilutive.

At September 30, 2022 and 2021, the Company excluded the following potentially dilutive securities (in thousands):

September 30,

Stock Options 1,399 142

9 unchanged sentences

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

The following table sets forth by level within the fair value hierarchy the Company's financial assets that were accounted for at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 (in thousands).

June 30, 2022 December 31, 2021

The following table sets forth by level within the fair value hierarchy the Company's financial assets that were accounted for at fair value on a recurring basis as of September 30, 2022 and December 31, 2021 (in thousands).

September 30, 2022 December 31, 2021

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Marketable securities - available for sale $ — $ 44,052 $ — $ 44,052 $ — $ 70,323 $ — $ 70,323

Investment in Cend Therapeutics $ — $ — $ 10,000 $ 10,000 $ — $ — $ — $ —

$ — $ 44,052 $ — $ 44,052 $ — $ 70,323 $ — $ 70,323

Note 7 – Accrued Liabilities

Accrued liabilities as of June 30, 2022 and December 31, 2021 were as follows (in thousands):

June 30, 2022 December 31, 2021

Accrued liabilities as of September 30, 2022 and December 31, 2021 were as follows (in thousands):

September 30, 2022 December 31, 2021

Salaries, employee benefits and related taxes $ 2,147 $ 2,034

Operating lease liabilities — current 203 229

Clinical and R&D related liabilities 2,338 —

Other 729 326

7 unchanged sentences

Operating lease liabilities and right-of-use assets were recorded in the following captions of our balance sheet were as follows (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Right-of Use Assets:

5 unchanged sentences

Total Operating Lease Liabilities $ 548 $ 714

As of June 30, 2022, the weighted average remaining lease term for our operating leases was 2.0 years, and the weighted average discount rate for our operating leases was 9.625 %.

Future minimum lease payments under the lease agreements as of June 30, 2022 were as follows (in thousands):

As of September 30, 2022, the weighted average remaining lease term for our operating leases was 1.8 years, and the weighted average discount rate for our operating leases was 9.625 %.

Future minimum lease payments under the lease agreements as of September 30, 2022 were as follows (in thousands):

Years ended Operating Leases

3 unchanged sentences

Note 9 – Stockholders' Equity

Reverse Stock Split

On September 14, 2022, in connection with the merger, we implemented the Reverse Stock Split, as described in Note 1.

Equity Issuances

5 unchanged sentences

provided Lincoln Park’s obligation under any single such purchase will not exceed $ 2.5 million, unless the Company and Lincoln Park mutually agree to increase the maximum amount of such single purchase (each, a “Regular Purchase”).

If the Company directs Lincoln Park to purchase the maximum number of shares of common stock it then may sell in a Regular Purchase, then in addition to such Regular Purchase, and subject to certain conditions and limitations in the Purchase Agreement, the Company may direct Lincoln Park in an “accelerated purchase” to purchase an additional amount of common stock that may not exceed the lesser of (i) 300 % the number of shares purchased pursuant to the corresponding Regular Purchase or (ii) 30 % of the total number of shares of the Company’s common stock traded during a specified period on the applicable purchase date as set forth in the Purchase Agreement.

of common stock that may not exceed the lesser of (i) 300 % the number of shares purchased pursuant to the corresponding Regular Purchase or (ii) 30 % of the total number of shares of the Company’s common stock traded during a specified period on the applicable purchase date as set forth in the Purchase Agreement.

Under certain circumstances and in accordance with the Purchase Agreement, the Company may direct Lincoln Park to purchase shares in multiple accelerated purchases on the same trading day.

4 unchanged sentences

The Company has the right to terminate the Purchase Agreement at any time, at no cost to the Company.

As of June 30, 2022, the Company had not made any sales of common stock to Lincoln Park under the Purchase Agreement other than the Initial Purchase.

As of September 30, 2022, the Company had not made any sales of common stock to Lincoln Park under the Purchase Agreement other than the Initial Purchase.

The agreement expired on April 1, 2022.

At The Market Offering Agreement

On June 4, 2021, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with HCW, as sales agent, in connection with an “at the market offering” under which the Company from time to time may offer and sell shares of its common stock, having an aggregate offering price of up to $ 50.0 million.

During the six months ended June 30, 2022 and since inception the Company had no t issued any shares under the ATM Agreement.

Having received a listing deficiency notice from Nasdaq on February 18, 2022 after the Company’s shares traded below $1.00 for 30 consecutive trading days, the Company will not be permitted to sell additional shares under the ATM Agreement until it re-establishes timely compliance.

Compliance may be reestablished by various mechanisms, including stock price appreciation at or above $1.00 for a requisite period of time and reverse stock split.

On June 4, 2021, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C.

Wainwright & Co., LLC, as sales agent, in connection with an “at the market offering” under which the Company from time to time may offer and sell shares of its common stock, having an aggregate offering price of up to $ 50.0 million.

During the nine months ended September 30, 2022 and since inception, the Company has no t issued any shares under the ATM Agreement.

Stock Options and Warrants

The following table summarizes the activity for stock options and warrants for the six months ended June 30, 2022:

In connection with the Merger and after giving effect to the Reverse Stock Split, the Company assumed 1,227,776 options outstanding from Cend.

The options granted from the Cend Plan are exercisable at various dates as determined upon grant and will expire no more than ten years from their original date of grant.

The Cend Plan stock options generally vest over a four-year term.

The following table summarizes the activity for stock options and warrants for the nine months ended September 30, 2022:

Stock Options Warrants

3 unchanged sentences

Granted 37,458 13.49 — —

Assumed through merger 1,227,776 3.77 — —

Exercised — — — —

1 unchanged sentence

Expired ( 5,388 ) 352.31 — —

Outstanding at June 30, 2022 2,612,285 $ 4.26 7.63 $ — 21,356,600 $ 2.84 3.88 $ —

Vested at June 30, 2022

Outstanding at September 30, 2022 1,398,977 $ 10.83 7.30 $ — 1,423,774 $ 42.57 3.63 $ —

Vested at September 30, 2022

or expected to vest in the future 1,396,921 $ 10.83 7.30 $ — 1,423,774 $ 42.57 3.63 $ —

Vested at June 30, 2022 1,388,935 $ 6.92 6.24 $ — 21,356,600 $ 2.84 3.88 $ —

Vested at September 30, 2022 1,110,635 $ 11.82 6.97 $ — 1,423,774 $ 42.57 3.63 $ —

Restricted Stock

During the six months ended June 30, 2022 and 2021, the Company issued restricted stock for services as follows ($ in thousands):

Six Months Ended June 30,

During the nine months ended September 30, 2022 and 2021, the Company issued restricted stock for services as follows ($ in thousands):

Nine Months Ended September 30,

Number of restricted stock issued 70,740 40,863

Value of restricted stock issued $ 973 $ 878

The vesting terms of restricted stock issuances are generally between one to four years .

The vesting terms of restricted stock issuances are generally between one and four years .

Restricted Stock Units

During the six months ended June 30, 2022 and 2021, the Company issued restricted stock units for services as follows ($ in thousands, except share data):

Six Months Ended June 30,

During the nine months ended September 30, 2022 and 2021, the Company issued restricted stock units for services as follows ($ in thousands, except share data):

Nine Months Ended September 30,

Number of restricted stock units issued 111,170 30,549

Value of restricted stock units issued $ 1,386 $ 729

The weighted average estimated fair value of restricted stock issued for services in the six months ended June 30, 2022 and 2021 was $ 0.92 and $ 1.59 per share, respectively.

The weighted average estimated fair value of restricted stock issued for services in the nine months ended September 30, 2022 and 2021 was $ 12.46 and $ 23.85 per share, respectively.

The fair value of the restricted stock units was determined using the Company’s closing stock price on the date of issuance.

3 unchanged sentences

We utilize share-based compensation in the form of stock options, restricted stock, and restricted stock units.

The following table summarizes the components of share-based compensation expense for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

The following table summarizes the components of share-based compensation expense for the three and nine months ended September 30, 2022 and 2021 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

2 unchanged sentences

Total share-based compensation expense $ 1,040 $ 773 $ 2,168 $ 1,639

Total compensation cost related to non-vested awards not yet recognized and the weighted-average periods over which the awards were expected to be recognized at June 30, 2022 were as follows (in thousands):

Total compensation cost related to non-vested awards not yet recognized and the weighted-average periods over which the awards were expected to be recognized at September 30, 2022 were as follows (in thousands):

Stock Options Restricted Stock Units Restricted Stock

1 unchanged sentence

Expected weighted-average period in years of compensation cost to be recognized 1.66 2.16 1.83

Total fair value of shares vested and the weighted average estimated fair values of shares granted for the six months ended June 30, 2022 and 2021 were as follows (in thousands):

Total fair value of shares vested and the weighted average estimated fair values of shares granted for the nine months ended September 30, 2022 and 2021 were as follows (in thousands):

Stock Options

Six Months Ended June 30,

Nine Months Ended September 30,

Total fair value of shares vested $ 853 $ 757

2 unchanged sentences

The fair value of stock options and warrants at the date of grant was estimated using the Black-Scholes option pricing model.

The expected volatility is based upon historical volatility of the Company’s stock.

The expected volatility is based upon historical volatility of the Company’s common stock.

The expected term for the options is based upon observation of actual time elapsed between date of grant and exercise of options for all employees.

4 unchanged sentences

As of December 31, 2021 and 2020, the Company had approximately $ 281 million and $ 264 million, respectively, of federal NOLs available to offset future taxable income expiring from 2030 through 2036.

The Company performed an analysis and determined that they had an ownership change of greater than 50% over a 3-year testing period on January 25, 2021.

The Company performed an analysis and determined that it had an ownership change of greater than 50% over a 3-year testing period on January 25, 2021.

As a result, $ 169 million of the $ 281 million of federal NOLs will expire unutilized.

1 unchanged sentence

The write off of the deferred tax asset and the corresponding reduction in valuation allowance has no impact to the balance sheet or income statement.

Losses incurred before the ownership change on January 25, 2021 will be subject to an annual limitation of $173k under Internal Revenue Code Section 382, while losses incurred after January 25, 2021 will not be subject to limitations.

Losses incurred before the ownership change on January 25, 2021 will be subject to an annual limitation of $173 thousand under Internal Revenue Code Section 382, while losses incurred after January 25, 2021 will not be subject to limitations.

The Company may be able to utilize additional NOLs of approximately $ 1.1 million per year for the first five years after this ownership change as a result of the application of the Net Unrealized Built-in Gain rules.

4 unchanged sentences

The Company utilizes the two-step process to determine the amount of recognized tax benefit.

For tax positions meeting the more-likely-than-not threshold, the amount

recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.

For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.

The Company recognizes interest and penalties associated with uncertain tax positions as a component of income tax expense.

As of June 30, 2022, management does not believe the Company has any material uncertain tax positions that would require it to measure and reflect the potential lack of sustainability of a position on audit in its financial statements.

As of September 30, 2022, management does not believe the Company has any material uncertain tax positions that would require it to measure and reflect the potential lack of sustainability of a position on audit in its financial statements.

The Company will continue to evaluate its uncertain tax positions in future periods to determine if measurement and recognition in its financial statements is necessary.

6 unchanged sentences

The gross proceeds of $ 2.5 million have been recorded as a benefit from income taxes and the loss on sale of NJ NOLs of $ 0.1 million recorded in other income (expense) in the consolidated financial statements.

As a result of the merger with Cend Therapeutics, Inc.

(“Cend”) on September 15, 2022, federal and state NOLs of Cend may be subject to certain annual limitations under the ownership change rules of Section 382 of the IRC.

As of December 31, 2021, Cend had state and foreign NOLs of approximately $4.3 million and $1.3 million, respectively.

The state NOLs will begin to expire in 2036 unless previously utilized.

The foreign NOLs will carry forward indefinitely.

As of December 31, 2021, Cend had state research credit carryforwards of approximately $48 thousand that will carry forward indefinitely.

Note 12 – Australia Research and Development Tax Incentive

The Company’s Australian subsidiary, which conducts core research and development activities, is eligible to receive a 43.5 % refundable tax incentive for qualified research and development activities.

As of the nine months ended September 30, 2022, $ 0.4 million was recorded as an income tax incentive receivable in the consolidated balance sheets, as the Company determined that the expenses met the eligibility criteria and the amounts claimed are expected to be received shortly after the related tax returns are filed.

Note 13 – Contingencies

2 unchanged sentences

While the outcome of pending claims cannot be predicted with certainty, the Company does not believe that the outcome of any pending claims will have a material adverse effect on the Company's financial condition or operating results.

In May 2021, Cend received a written threat of litigation on behalf of a Chinese entity called Lingmed Limited (“Lingmed”) claiming Lingmed was entitled to a success fee based on Cend’s Collaboration and License Agreement with Qilu Pharmaceuticals.

Cend responded by denying that Lingmed is entitled to a success fee under the terms of their agreement.

In May 2022, Cend was served with a complaint filed by Lingmed in the San Diego County Superior Court, alleging claims for breach of contract, fraud and declaratory relief.

Cend’s response to the complaint was filed on June 6, 2022.

Lingmed filed an

answer to Cend’s response on July 11, 2022.

The court held a case management conference on October 7, 2022, which resulted in a continuance until December 16, 2022.

Note 14 – License Agreements

Sanford Burnham Prebys

In December 2015, Cend entered into a license agreement with Sanford Burnham Prebys (“SBP”) under which Cend was granted an exclusive, worldwide, royalty-bearing license to certain patent rights and know-how controlled by SBP related to the development of CEND-1.

At the time the license agreement was entered into, Cend’s founding shareholder, now a Lisata board member, was an executive at SBP.

The agreement provides the Company with the rights to grant and authorize sublicenses to use, sell, and otherwise exploit the patent rights.

As consideration for the license, Cend issued a total of 382,030 shares of common stock, as adjusted for the Reverse Stock Split and Exchange Ratio.

The Company is required to pay an annual license maintenance fee of $ 10,000 increasing to $ 20,000 on year seven of the agreement.

The Company could also be required to make milestone payments to SBP upon completion of certain regulatory and commercial milestones.

The aggregate potential milestone payments are approximately $ 10.6 million.

The Company has also agreed to pay SBP royalties of 4 % of net sales of products sold by the Company, or through a sublicense, subject to certain reductions.

Additionally, the Company is obligated to pay SBP 25 % of any sublicensing income.

In October 2021, Cend entered into a license agreement with SBP under which Cend was granted an exclusive, royalty-bearing license to certain patent rights and know-how controlled by SBP.

The agreement provides Cend with the rights to grant and authorize sublicenses to use, sell, and otherwise exploit the patent rights.

The Company is required to pay an annual license maintenance fee of $ 20,000 , increasing to $ 30,000 on year four of the agreement.

Further, the Company could be required to make milestone payments to SBP upon completion of certain regulatory and commercial milestones.

The aggregate potential milestone payments are approximately $ 23.2 million.

The Company is obligated to pay SBP royalties of 4 % of net sales of products sold by the Company or through a sublicense, subject to certain reductions.

Additionally, the Company is obligated to pay SBP varying sublicense fees, ranging from 10 % to 25 %, dependent on when the related milestones are reached.

The agreements will expire upon the later of (i) the final abandonment of all pending patent applications within the licensed patents or (ii) the expiration of the last to expire patent within the licensed patents.

The agreements may be terminated in their entirety by the Company at any time by giving SBP sixty days’ prior written notice.

The agreements may be terminated in their entirety by SBP if the Company, at any time, defaults in the payment of any sum when due and fails to make such payment within thirty days after receipt of written notice.

The agreements may be terminated in their entirety by SBP or the Company (i) in the event of an uncured material breach by the other party, or (ii) in the event the other party (a) files for, or is involuntarily petitioned with, bankruptcy (other than dissolution or winding up for the purposes of reconstruction or amalgamation), (b) makes an assignment of all or substantially all of its assets for the benefit of creditors, or (c) has a receiver or trustee is appointed and is unable to secure a dismissal, stay or other suspension of such proceedings within thirty days.

Upon termination of the agreements for any reason, all rights and obligations of the Company with respect to the patents and patent applications shall terminate and revert to SBP.

SBP owned 382,030 shares of the Company’s common stock as of September 30, 2022 and is a related party.

University of California at San Diego

In March 2021, Cend entered into a license agreement with the University of California at San Diego (“UCSD”) under which Cend was granted an exclusive, royalty-bearing license to certain patent rights related to the development of nano-particles to modulate immune response.

The agreement provides the Company with the rights to grant and authorize sublicenses to use, sell and otherwise exploit the patent rights.

The Company could be required to make milestone payments to UCSD upon completion of certain regulatory and commercial milestones.

The aggregate potential milestone payments are approximately $ 1.2 million.

The Company has also agreed to pay UCSD royalties of 1.5 % of net sales of products sold by the Company or through a sublicense, subject to certain reductions.

Additionally, the Company agreed to pay UCSD varying sublicense fees, ranging from 10 % to 20 %, dependent on when the related milestones are reached.

The agreement will expire upon the expiration of the longest-lived patent rights.

The agreement may be terminated in its entirety by the Company at any time by giving UCSD ninety days’ prior written notice.

The agreement may be terminated in its entirety by UCSD if the Company, at any time, (i) fails to perform or violates any term of the agreement and fails to cure the default within sixty days.

Upon termination of the agreement for any reason, UCSD may terminate a sublicensee but will allow

the Company to assign any sublicenses to UCSD provided a) that the sublicensee is in good standing upon termination of the agreement with the Company;

and b) the sublicensee is not currently involved in litigation as an adverse party to UCSD.

Massachusetts Institute of Technology

In October 2021, Cend entered into a license agreement with the Massachusetts Institute of Technology ("MIT") under which Cend was granted an exclusive, royalty-bearing license to certain patent rights related to the development of tissue specific delivery of interfering RNA.

The agreement provides the Company with the rights to grant and authorize sublicenses to use, sell, and otherwise exploit the patent rights.

The Company is required to pay an annual license maintenance fee of $ 20,000 , increasing to $ 25,000 for year two and three of the agreement, increasing to $ 50,000 on year four of the agreement and thereafter until the first commercial sale, and increasing to $ 150,000 each year of the agreement after the first sale.

Further, the Company could be required to make milestone payments to MIT upon completion of certain regulatory and commercial milestones.

The aggregate potential milestone payments are approximately $ 5.0 million.

The Company has also agreed to pay MIT royalties of 2 % of net sales of products sold by the Company or through a sublicense, subject to certain reductions.

Additionally, the Company is obligated to pay MIT varying sublicense fees, ranging from 3 % to 20 %, dependent on when the related milestones are reached.

In connection with the close of the Merger,, the Company was required to pay MIT a change of control fee of $ 0.3 million, which is included in accrued liabilities within the condensed consolidated balance sheets as of September 30, 2022.

The agreement will expire upon the expiration or abandonment of all valid claims.

The agreement may be terminated in its entirety by the Company at any time by giving MIT six months prior written notice.

The agreement may be terminated in its entirety by MIT if the Company, at any time, (i) defaults in the payment of any sum when due and fails to make such payment within thirty days after receipt of written notice, or (ii) commits a material breach of its obligations under the agreement (aside from item (i)) and fails to cure that breach within sixty days after receipt of written notice.

Upon termination of the agreement for any reason, the rights and licenses granted to the Company shall terminate and revert to MIT.

Upon termination of the agreement for any reason, MIT may terminate a sublicensee but will allow the Company to assign any sublicenses to MIT provided that the sublicensee is in good standing upon termination of the agreement with the Company.

Note 15 – Research Collaboration and License Agreement

Exclusive License and Collaboration Agreement

In February 2021, Cend entered into an Exclusive License and Collaboration Agreement (the “Qilu Agreement”) in which Cend granted an exclusive license to Qilu for the development and commercialization of CEND-1 in the Territory (defined as the Greater Area of China including China, Macau, Hong Kong, and Taiwan).

Under the terms of the agreement, Qilu is solely responsible for the development of CEND-1 in its Territory.

In consideration for the license, Qilu made an upfront payment of $ 10 million to Cend, which was recognized as revenue by Cend prior to the Merger.

In addition, Cend received and recognized as revenue a $ 5 million development milestone prior to the Merger.

The Company is eligible to receive additional developmental and commercial milestone payments up to $ 100 million and $ 125 million, respectively, tiered royalties on net sales ranging from 10 % to 15 %, and tiered sublicensing revenues ranging from 12 % to 35 %.

Unless terminated early, the Qilu Agreement will continue in effect until the expiration of all Qilu payment obligations.

Either party may terminate the Qilu Agreement if an undisputed material breach by the other party is not cured within a defined period of time, or upon notice for insolvency-related events of the other party that are not discharged within a defined time period.

Qilu may terminate the Qilu Agreement in its entirety, at any time with at least sixty days written notice.

All right and obligations of Qilu with respect to such licensed patents and patent applications would terminate.

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 1. Financial Statements