What changed in this filing

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Item 1. Financial Statements

2023-11-02 compared with 2023-08-14 · 92 added, 95 removed, 563 unchanged (25% of the section changed)

4 unchanged sentences

(In thousands, except share data)

September 30,

2023 December 31,

19 unchanged sentences

issued 8,140,187

and 7,866,799 shares at June 30, 2023 and December 31, 2022, respectively;

outstanding, 8,132,357 and 7,866,061 shares at June 30, 2023 and December 31, 2022,

and 7,866,799 shares at September 30, 2023 and December 31, 2022, respectively;

outstanding, 8,139,449 and 7,866,061 shares at September 30, 2023 and December 31, 2022,

Additional paid-in capital 576,474 574,548

Treasury stock, at cost;

738 shares at June 30, 2023 and December 31, 2022

738 shares at September 30, 2023 and December 31, 2022

( 708 ) ( 708 )

11 unchanged sentences

(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,

2023 2022 2023 2022

1 unchanged sentence

Research and development $ 3,380 $ 3,335 $ 9,721 $ 9,853

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

General and administrative 2,584 3,992 9,962 10,815

22 unchanged sentences

(In thousands)

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

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

2023 2022 2023 2022

21 unchanged sentences

Shares Amount

Balance at March 31, 2022 4,035 $ 4 $ 546,637 $ ( 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 )

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

Proceeds from issuance of common stock 4 — 29 — — — 29 — 29

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

Balance at June 30, 2022 4,038 $ 4 $ 547,033 $ ( 70 ) $ ( 463,868 ) $ ( 708 ) $ 82,391 $ ( 254 ) $ 82,137

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

Common Stock Additional

10 unchanged sentences

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

Balance at June 30, 2022 4,038 $ 4 $ 547,033 $ ( 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

Common Stock Additional

7 unchanged sentences

Shares Amount

Balance at March 31, 2023 7,999 $ 8 $ 575,137 $ ( 52 ) $ ( 513,428 ) $ ( 708 ) $ 60,957 $ ( 254 ) $ 60,703

Balance at June 30, 2023 8,133 $ 8 $ 576,173 $ ( 50 ) $ ( 517,455 ) $ ( 708 ) $ 57,968 $ ( 254 ) $ 57,714

Net loss — — — — ( 5,261 ) — ( 5,261 ) — ( 5,261 )

Share-based compensation 7 — 301 — — — 301 — 301

Net proceeds from issuances of common stock 76 — 297 — — — 297 — 297

Proceeds from option exercises 83 — 155 — — — 155 — 155

Foreign currency translation adjustment — — — ( 50 ) — — ( 50 ) — ( 50 )

Unrealized gain on marketable securities — — — 12 — — 12 — 12

Balance at June 30, 2023 8,133 $ 8 $ 576,173 $ ( 50 ) $ ( 517,455 ) $ ( 708 ) $ 57,968 $ ( 254 ) $ 57,714

Balance at September 30, 2023 8,140 $ 8 $ 576,474 $ ( 100 ) $ ( 522,716 ) $ ( 708 ) $ 52,958 $ ( 254 ) $ 52,704

Common Stock Additional

11 unchanged sentences

Proceeds from option exercises 83 — 155 — — — 155 — 155

Foreign currency translation adjustment — — — ( 22 ) — — ( 22 ) — ( 22 )

Unrealized gain on marketable securities — — — 1 — — 1 — 1

Balance at June 30, 2023 8,133 $ 8 $ 576,173 $ ( 50 ) $ ( 517,455 ) $ ( 708 ) $ 57,968 $ ( 254 ) $ 57,714

Foreign currency translation adjustment — — — ( 72 ) — — ( 72 ) — ( 72 )

Balance at September 30, 2023 8,140 $ 8 $ 576,474 $ ( 100 ) $ ( 522,716 ) $ ( 708 ) $ 52,958 $ ( 254 ) $ 52,704

See accompanying notes to consolidated financial statements.

3 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

4 unchanged sentences

Loss on disposal of fixed assets 3 —

Accretion on marketable securities ( 426 ) 900

In process research and development expenses — 30,393

Amortization/accretion on marketable securities ( 709 ) 893

Changes in operating assets and liabilities:

6 unchanged sentences

Sale of marketable securities 93,171 93,865

Investment in Cend Therapeutics — ( 10,000 )

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

Purchase of property and equipment — ( 259 )

6 unchanged sentences

Effect of exchange rate changes on cash 60 ( 34 )

Net (decrease) increase in cash and cash equivalents ( 8,464 ) 8,701

Net increase in cash and cash equivalents 274 6,831

Cash and cash equivalents at beginning of period 32,154 24,647

Cash and cash equivalents at end of period $ 32,428 $ 31,478

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.

5 unchanged sentences

(together with its subsidiaries, 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.

The Company's lead investigational product candidate, LSTA1, is designed to activate a novel uptake pathway that allows co-administered or tethered 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 expected to be affected.

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

The Company's lead investigational product candidate, LSTA1, is designed to activate a novel uptake pathway that allows co-administered or tethered (i.e., molecularly bound) anti-cancer drugs to penetrate solid tumors more effectively.

LSTA1 also has the potential to modify the tumor microenvironment (“TME”), thereby making tumors more susceptible to immunotherapies and inhibiting the metastasis cascade (i.e., the spread of cancer to other parts of the body).

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

5 unchanged sentences

The Company’s current development pipeline includes:

• 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.

• 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) and other forms of pancreatic cancer, cholangiocarcinoma, esophageal cancer, head and neck cancer, appendiceal cancer, colon cancer and glioblastoma multiforme in combination with a variety of anti-cancer regimens.

Merger with Cend Therapeutics, Inc.

15 unchanged sentences

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.

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”).

Operating results presented in the consolidated statements of operations and comprehensive loss prior to the Merger are solely related to Caladrius Biosciences, Inc.

and subsidiaries.

Coronavirus Considerations

Lisata's Phase 2b FREEDOM Trial of XOWNA ® in the U.S.

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

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, 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.

In May 2022, the Company announced that enrollment in the FREEDOM Trial was 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.

Following this analysis along with Key Opinion Leaders’ input, the Company 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

10 unchanged sentences

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, 2023, 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, 2023, 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, 2022 and 2021 included in our 2022 Form 10-K.

Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Use of Estimates

2 unchanged sentences

Estimates also affect the reported amounts of expenses during the reporting period.

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 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”).

6 unchanged sentences

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

The functional currency of Lisata Therapeutics Australia Pty Ltd.

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

The functional currency of Lisata Therapeutics Australia Pty Ltd., which is a foreign subsidiary of the Company, is the Australian Dollar.

The assets and liabilities of Lisata Therapeutics Australia Pty Ltd.

64 unchanged sentences

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 $ 18 thousand for the three months ended June 30, 2023 and $ 35 thousand for the six months ended June 30, 2023.

Amortization expense was $ 18 thousand for the three months ended September 30, 2023 and $ 53 thousand for the nine months ended September 30, 2023.

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

15 unchanged sentences

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 six months ended June 30, 2023 and 2022.

There was no revenue recognized for the three and nine months ended September 30, 2023 and 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.

4 unchanged sentences

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 the three and six months ended June 30, 2023 and June 30, 2022, the Company has not recognized revenue related to milestones.

For the three and nine months ended September 30, 2023 and September 30, 2022, the Company has not recognized revenue related to milestones.

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).

20 unchanged sentences

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, 2023 December 31, 2022

September 30, 2023 December 31, 2022

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

8 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Cash equivalents $ 29,103 $ 27,668

2 unchanged sentences

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

June 30, 2023

September 30, 2023

Amortized Cost Estimated Fair Value

4 unchanged sentences

Property and equipment consisted of the following (in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Furniture and fixtures $ — $ 25

4 unchanged sentences

Property and equipment, net $ 204 $ 296

The Company’s results included depreciation expense of approximately $ 60 thousand and $ 13 thousand for the six months ended June 30, 2023 and 2022, respectively.

The Company’s results included depreciation expense of approximately $ 89 thousand and $ 22 thousand for the nine months ended September 30, 2023 and 2022, respectively.

Note 6 – Income (Loss) Per Share

For the six months ended June 30, 2023 and 2022, 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, 2023 and 2022, the Company excluded the following potentially dilutive securities (in thousands):

For the nine months ended September 30, 2023 and 2022, 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, 2023 and 2022, the Company excluded the following potentially dilutive securities (in thousands):

Stock options 1,321 1,399

10 unchanged sentences

judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

The Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 (in thousands):

June 30, 2023 December 31, 2022

The Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 (in thousands):

September 30, 2023 December 31, 2022

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

2 unchanged sentences

$ 29,103 $ 21,966 $ — $ 51,069 $ 27,668 $ 37,072 $ — $ 64,740

The carrying values of accounts payable and accrued expenses approximate fair value as of June 30, 2023 and December 31, 2022, due to the short maturity nature of these items.

The carrying values of accounts payable and accrued expenses approximate fair value as of September 30, 2023 and December 31, 2022, due to the short maturity nature of these items.

Note 8 – Accrued Liabilities

Accrued liabilities as of June 30, 2023 and December 31, 2022 were as follows (in thousands):

June 30, 2023 December 31, 2022

Accrued liabilities as of September 30, 2023 and December 31, 2022 were as follows (in thousands):

September 30, 2023 December 31, 2022

Salaries, employee benefits and related taxes $ 2,366 $ 2,586

13 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Right-of-Use Assets:

5 unchanged sentences

Total Operating Lease Liabilities $ 345 $ 485

As of June 30, 2023, the weighted average remaining lease term for our operating lease was 2.3 years, and the weighted average discount rate for our operating lease was 9.625 %.

As of September 30, 2023, the weighted average remaining lease term for our operating lease was 2.0 years, and the weighted average discount rate for our operating lease was 9.625 %.

As of December 31, 2022, the weighted average remaining lease term for our operating leases was 1.5 years, and the weighted average discount rate for our operating leases was 9.625 %.

Future minimum lease payments under the lease agreement as of June 30, 2023 were as follows (in thousands):

Future minimum lease payments under the lease agreement as of September 30, 2023 were as follows (in thousands):

Years ended Operating Leases

13 unchanged sentences

Pursuant to General Instruction I.B.6 of Form S-3, since the aggregate market value of our outstanding common stock held by non-affiliates was below $ 75.0 million at the time of such Form 10-K filing, the aggregate amount of securities that we are permitted to offer and sell was reduced to $ 17,698,943 , which was equal to one-third of the aggregate market value of our common stock held by non-affiliates as of September 21, 2022.

During the six months ended June 30, 2023, the Company issued 64,394 shares of common stock under the ATM Agreement for net proceeds of $ 270,774 .

During the nine months ended September 30, 2023, the Company issued 64,394 shares of common stock under the ATM Agreement for net proceeds of $ 270,774 .

Since inception, the Company has issued 64,394 shares of common stock under the ATM Agreement for net proceeds of $ 270,774 .

4 unchanged sentences

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 six months ended June 30, 2023:

The following table summarizes the activity for stock options and warrants for the nine months ended September 30, 2023:

Stock Options Warrants

6 unchanged sentences

Expired ( 24,603 ) 29.60 ( 2,000 ) 88.35

Outstanding at June 30, 2023 1,338,734 $ 10.79 6.44 $ 376.1 1,421,744 $ 42.51 3.17 $ —

Vested at June 30, 2023

Outstanding at September 30, 2023 1,320,551 $ 10.82 6.30 $ 78.7 1,421,744 $ 42.51 2.67 $ —

Vested at September 30, 2023

or expected to vest in the future 1,316,134 $ 10.84 6.29 $ 78.7 1,421,744 $ 42.51 2.67 $ —

Vested at June 30, 2023 1,222,064 $ 11.02 6.19 $ 337.7 1,421,744 $ 42.51 3.17 $ —

Vested at September 30, 2023 1,229,103 $ 11.25 6.09 $ 78.2 1,421,744 $ 42.51 2.67 $ —

Restricted Stock

During the six months ended June 30, 2023 and 2022, the Company issued restricted stock for services as follows (in thousands, except share data):

Six Months Ended June 30,

During the nine months ended September 30, 2023 and 2022, the Company issued restricted stock for services as follows (in thousands, except share data):

Nine Months Ended September 30,

Number of restricted stock issued 159,950 70,740

2 unchanged sentences

Restricted Stock Units

During the six months ended June 30, 2023 and 2022, 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, 2023 and 2022, 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 188,850 111,170

Value of restricted stock units issued $ 567 $ 1,386

The weighted average estimated fair value of restricted stock issued for services in the six months ended June 30, 2023 and 2022 was $ 3.00 and $ 13.76 per share, respectively.

The weighted average estimated fair value of restricted stock units issued for services in the nine months ended September 30, 2023 and 2022 was $ 3.00 and $ 12.46 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, 2023 and 2022 (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, 2023 and 2022 (in thousands):

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

2023 2022 2023 2022

2 unchanged sentences

Total share-based compensation expense $ 306 $ 1,040 $ 1,565 $ 2,168

Total compensation cost related to unvested awards not yet recognized and the weighted-average periods over which the awards were expected to be recognized at June 30, 2023 were as follows (in thousands):

Total compensation cost related to unvested awards not yet recognized and the weighted-average periods over which the awards were expected to be recognized at September 30, 2023 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 1.85 1.10 1.69

Total fair value of shares vested and the weighted average estimated fair values of shares granted for the six months ended June 30, 2023 and 2022 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, 2023 and 2022 were as follows (in thousands):

Stock Options

Six Months Ended June 30,

Nine Months Ended September 30,

Total fair value of shares vested $ 1,001 $ 853

15 unchanged sentences

As of December 31, 2022, the Company had approximately $ 34.0 million 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% on September 15, 2022.

As a result of the ownership change, $ 88.2 million of Federal

NOLs will expire unutilized.

The Company performed an analysis and determined that they had an

ownership change of greater than 50% on September 15, 2022.

As a result of the ownership change, $ 88.2 million of Federal NOLs will expire unutilized.

The Company wrote off that portion of the deferred tax asset and reduced the corresponding valuation allowance resulting in $ 34.0 million of remaining Federal NOLs.

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The Company will continue to evaluate its uncertain tax positions in future periods.

As of June 30, 2023, the Company does not believe there will be any material changes in its unrecognized tax positions over the next year.

As of September 30, 2023, the Company does not believe there will be any material changes in its unrecognized tax positions over the next year.

For years prior to 2019, the federal statute of limitations is closed for assessing tax.

6 unchanged sentences

Since the Company is in a net operating loss position, the capitalization of research and development costs did not have a material impact on the Company’s results of operations for the year ended December 31, 2022.

The Company will continue to monitor future impact of changes in tax legislation.

The Company will continue to monitor the future impact of changes in tax legislation.

Note 13 – Australia Research and Development Tax Incentive

The Company’s Australian subsidiary, which conducts core research and development activities, is eligible to receive a refundable tax incentive between 43.5 % to 48.5 % (depending upon the income tax rate) for qualified research and development activities.

As of the six months ended June 30, 2023, $ 1.1 million was recorded as an income tax incentive receivable in prepaid and other current assets 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.

As of the nine months ended September 30, 2023, $ 0.5 million was recorded as an income tax incentive receivable in prepaid and other current assets 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.

September 4, 2023 the Company's Australian subsidiary received a $ 0.6 million tax refund from the Australian Taxation Office related to the 2022 tax year.

Note 14 – Contingencies

9 unchanged sentences

The Company denies these allegations made by Lingmed and intends to vigorously defend itself.

Note 15 – Technology Transfer Agreement

Impilo Therapeutics

In July 2023, the Company entered into a technology transfer agreement with Impilo Therapeutics (“Impilo”) under which the Company transferred its rights to its tumor penetrating nanocomplex (TPN) platform to Impilo.

As consideration for the technology transfer, Impilo issued a total of 766,000 shares of its pre-seed preferred stock to the Company.

On October 3, 2023 in connection with the Sanford Burnham Prebys license agreement (Note 16) Impilo cancelled the original stock certificate for 766,000 shares and reissued 574,500 shares of its pre-seed preferred stock to the Company.

Note 16 – License Agreements

8 unchanged sentences

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.

Additionally, the Company is obligated to pay SBP 25 % of any sublicensing income, which, pursuant to the technology transfer agreement with Impilo, resulted in SBP receiving 191,500 shares of the Company’s pre-seed preferred stock in Impilo on October 3, 2023.

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

The agreement may be terminated in its 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 agreement may be terminated in its entirety by either 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 agreement for any reason, all rights and obligations of the Company with respect to the patents and patent applications shall terminate and revert to SBP.

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.

5 unchanged sentences

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 June 30, 2023 and is a related party.

On September 14, 2023, pursuant to the technology transfer agreement with Impilo, the license was assigned in full to Impilo.

SBP owned 382,030 shares of the Company’s common stock as of September 30, 2023 and is a related party.

University of California at San Diego

10 unchanged sentences

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

On August 2, 2023, pursuant to the technology transfer agreement with Impilo, the license was assigned in full to Impilo.

Massachusetts Institute of Technology

15 unchanged sentences

Until such date, the license remains in full force and effect.

MIT owned 43,236 shares of the Company’s common stock as of June 30, 2023 .

MIT owned 43,236 shares of the Company’s common stock as of September 30, 2023.

Note 17 – Research Collaboration and License Agreement

9 unchanged sentences

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

Note 17 – Subsequent Events

Departure of Director

On July 11, 2023, the Company announced that Erkki Ruoslahti, M.D., Ph.D., had decided to retire from its Board of Directors.

Assignment of Tumor Penetrating Nanocomplex (TPN) platform

On July 21, 2023, the Company entered into a Technology Transfer Agreement with Impilo Therapeutics, Inc.

(“Impilo”), pursuant to which the Company will, subject to the satisfaction of customary closing conditions, transfer the rights to the Tumor Penetrating Nanocomplex (TPN) platform to Impilo (the “Transfer”).

In exchange, on the closing date of the Transfer (the “Closing Date”) and pursuant to an Equity Purchase Agreement, by and between the Company and Impilo, to become effective on the Closing Date, Impilo will issue to the Company 768,500 shares of its pre-seed preferred stock.

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