What changed in this filing

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Item 1. Financial Statements

2024-05-09 compared with 2023-11-02 · 139 added, 259 removed, 396 unchanged (50% of the section changed)

4 unchanged sentences

(In thousands, except share data)

September 30,

2024 December 31,

6 unchanged sentences

Property and equipment, net 146 175

Acquired license - intangible 281 334

Acquired license - intangible, net 245 263

Other assets 290 332

Total assets $ 48,240 $ 54,694

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES, NON-CONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY

Accounts payable $ 1,263 $ 2,421

7 unchanged sentences

issued 8,308,171

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,

and 8,150,635 shares at March 31, 2024 and December 31, 2023, respectively;

outstanding, 8,307,433 and 8,149,897 shares at March 31, 2024 and December 31, 2023,

Additional paid-in capital 577,283 576,971

Treasury stock, at cost;

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

738 shares at March 31, 2024 and December 31, 2023

( 708 ) ( 708 )

4 unchanged sentences

Non-controlling interests ( 254 ) ( 254 )

Total stockholders' equity 52,704 66,324

Total equity 42,743 47,894

Total liabilities, non-controlling interests and stockholders' equity $ 48,240 $ 54,694

4 unchanged sentences

(In thousands, except per share data)

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

2023 2022 2023 2022

Three Months Ended March 31,

Operating Expenses:

Research and development $ 3,241 $ 3,179

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

General and administrative 3,360 3,665

4 unchanged sentences

Other expense, net ( 187 ) ( 13 )

Total other income (expense) 703 337 1,878 347

Total other income 402 657

Net loss before benefit from income taxes and noncontrolling interests ( 6,199 ) ( 6,187 )

1 unchanged sentence

Net loss $ ( 5,401 ) $ ( 6,187 )

Less - net income attributable to noncontrolling interests

Less - net income (loss) attributable to noncontrolling interests — —

Net loss attributable to Lisata Therapeutics, Inc.

5 unchanged sentences

Basic and diluted shares

8,141 4,747 8,050 4,276

See accompanying notes to consolidated financial statements.

3 unchanged sentences

(In thousands)

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

2023 2022 2023 2022

Three Months Ended March 31,

Net loss $ ( 5,401 ) $ ( 6,187 )

Other comprehensive loss:

Available for sale securities - net unrealized gain — 5 1 5

Available for sale securities - net unrealized loss ( 13 ) ( 11 )

Cumulative translation adjustment arising during the period ( 49 ) ( 12 )

17 unchanged sentences

Shares Amount

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

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

Capital Accumulated

Comprehensive Loss Accumulated

Deficit Treasury

Lisata Therapeutics,

Stockholders'

Subsidiary Total

Shares Amount

Balance at December 31, 2022 7,867 $ 8 $ 574,548 $ ( 29 ) $ ( 507,241 ) $ ( 708 ) $ 66,578 $ ( 254 ) $ 66,324

1 unchanged sentence

Share-based compensation 132 — 589 — — — 589 — 589

Net proceeds from issuances 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

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

Capital Accumulated

Comprehensive

Loss Accumulated

Deficit Treasury

Lisata Therapeutics,

Stockholders'

Subsidiary Total

Shares Amount

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

Unrealized loss on marketable securities — — — ( 11 ) — — ( 11 ) — ( 11 )

Foreign currency translation adjustment — — — ( 12 ) — — ( 12 ) — ( 12 )

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

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

Common Stock Additional

9 unchanged sentences

Share-based compensation 157 — 312 — — — 312 — 312

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

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

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

Unrealized loss on marketable securities — — — ( 13 ) — — ( 13 ) — ( 13 )

Foreign currency translation adjustment — — — ( 49 ) — — ( 49 ) — ( 49 )

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

Balance at March 31, 2024 8,308 $ 8 $ 577,283 $ ( 104 ) $ ( 533,482 ) $ ( 708 ) $ 42,997 $ ( 254 ) $ 42,743

See accompanying notes to consolidated financial statements.

3 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

4 unchanged sentences

Loss on disposal of fixed assets — 3

In process research and development expenses — 30,393

Loss from equity method investment 100 —

Amortization/accretion on marketable securities ( 152 ) ( 167 )

7 unchanged sentences

Sale of marketable securities 25,360 34,410

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

Purchase of property and equipment — ( 259 )

Investment in Impilo Therapeutics ( 100 ) —

Net cash provided by investing activities 6,436 4,289

Cash flows from financing activities:

Proceeds from exercise of options 155 —

Tax withholding payments on net share settlement equity awards ( 142 ) ( 85 )

Net proceeds from issuance of common stock 297 29

Net cash provided by (used in) financing activities 361 ( 238 )

Net cash used in financing activities ( 142 ) ( 85 )

Effect of exchange rate changes on cash ( 55 ) ( 7 )

Net increase in cash and cash equivalents 274 6,831

Net decrease in cash and cash equivalents ( 788 ) ( 3,999 )

Cash and cash equivalents at beginning of period 22,593 32,154

Cash and cash equivalents at end of period $ 21,805 $ 28,155

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 (i.e., molecularly bound) 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 unlikely to be affected.

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

Certepetide 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 expected to be unaffected.

Certepetide also has been shown 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.

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

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

In addition, the Company has development programs based on its autologous CD34+ cell therapy technology platform that it is seeking to partner while incurring no additional capital outlay.

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

The Company is exploring certepetide as a means to enable a variety of treatment modalities to treat a range of solid tumors more effectively.

Currently, certepetide, is the subject of several Phase 2 clinical studies being conducted globally in a variety of solid tumor types, including metastatic pancreatic ductal adenocarcinoma (mPDAC), cholangiocarcinoma, appendiceal cancer, colon cancer and glioblastoma multiforme in combination with a variety of anti-cancer regimens.

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.

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) 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.

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., 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 , after taking into account the Reverse Stock Split (the “Exchange Ratio”).

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 provided a vast majority of the individuals on the management team and holds the chief executive officer (“CEO”), chief medical officer (“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.

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.

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.

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.

The Company's goal is to develop and commercialize products that address important unmet medical needs.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC for interim financial information.

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC for interim financial information.

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 September 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 March 31, 2024, 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, 2023 and 2022 included in our 2023 Form 10-K.

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.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Use of Estimates

3 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 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”).

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

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

69 unchanged sentences

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

(“Qilu”) acquired in the Company's acquisition of Cend Therapeutics, Inc (the “Cend 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 $ 18 thousand for the three months ended September 30, 2023 and $ 53 thousand for the nine months ended September 30, 2023.

Amortization expense was $ 17 thousand for the three months ended March 31, 2024 and $ 18 thousand for the three months ended March 31, 2023.

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.

The projected amortization expense is $ 71 thousand per year for the next 3.5 years.

Revenue Recognition

13 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 nine months ended September 30, 2023 and 2022.

There was no revenue recognized for the three months ended March 31, 2024 and 2023.

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

For the three months ended March 31, 2024 and March 31, 2023, 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).

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 3 – 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):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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

2 unchanged sentences

Money market funds 5,242 — — 5,242 4,268 — — 4,268

Agency bonds 1,987 — ( 1 ) 1,986 — — — —

Treasury bills 3,996 — — 3,996 — — — —

Municipal debt securities 247 — — 247 622 — — 622

1 unchanged sentence

Estimated fair values of available-for-sale securities are generally based on prices obtained from commercial pricing services.

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

September 30, 2023 December 31, 2022

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

March 31, 2024 December 31, 2023

Cash equivalents $ 17,677 $ 16,715

2 unchanged sentences

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

September 30, 2023

March 31, 2024

Amortized Cost Estimated Fair Value

4 unchanged sentences

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

September 30, 2023 December 31, 2022

Furniture and fixtures $ — $ 25

March 31, 2024 December 31, 2023

Computer equipment 589 589

3 unchanged sentences

Property and equipment, net $ 146 $ 175

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.

The Company’s results included depreciation expense of approximately $ 29 thousand and $ 30 thousand for the three months ended March 31, 2024 and 2023, respectively.

Note 5 – Income (Loss) Per Share

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):

For the three months ended March 31, 2024 and 2023, 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 in the periods presented.

At March 31, 2024 and 2023, the Company excluded the following potentially dilutive securities (in thousands):

Stock options 1,454 1,493

2 unchanged sentences

Note 6 – Fair Value Measurements

The fair value of financial assets and liabilities that are being measured and reported are defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market at the measurement date (exit price).

Fair value of financial assets and liabilities that are being measured and reported are defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market at the measurement date (exit price).

The Company is required to classify fair value measurements in one of the following categories:

3 unchanged sentences

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.

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 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

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 Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 were as follows (in thousands):

March 31, 2024 December 31, 2023

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

2 unchanged sentences

$ 17,677 $ 21,544 $ — $ 39,221 $ 16,715 $ 27,942 $ — $ 44,657

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.

The carrying values of accounts payable and accrued expenses approximate fair value as of March 31, 2024 and December 31, 2023, due to the short maturity nature of these items.

Note 7 – Accrued Liabilities

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

September 30, 2023 December 31, 2022

Accrued liabilities as of March 31, 2024 and December 31, 2023 were as follows (in thousands):

March 31, 2024 December 31, 2023

Salaries, employee benefits and related taxes $ 1,324 $ 2,665

1 unchanged sentence

Accounting & tax consulting liabilities 92 57

Legal settlement 500 —

Operating lease liabilities — current 172 168

2 unchanged sentences

Note 8 – Operating Leases

The Company adopted ASU No.

2016-02, Leases (Topic 842) on January 1, 2019 and recognized leases with duration greater than 12 months on the balance sheet using the modified retrospective approach.

The Company has an operating lease for one office which expires in 2025.

4 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Right-of-Use Assets:

5 unchanged sentences

Total Operating Lease Liabilities $ 264 $ 305

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 March 31, 2024, the weighted average remaining lease term for our operating lease was 1.5 years, and the weighted average discount rate for our operating lease was 9.625 %.

As of December 31, 2023, the weighted average remaining lease term for our operating leases was 1.75 years, and the weighted average discount rate for our operating leases was 9.625 %.

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

Future minimum lease payments under the lease agreement as of March 31, 2024 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

2 unchanged sentences

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.

Subsequent to the filing of our Form 10-K on March 22, 2022, the aggregate market value of our outstanding common stock held by non-affiliates was approximately $ 43.6 million.

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 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 .

As of the date of this filing and so long as the Company’s public float remains below $75.0 million, the Company is subject to limitations pursuant to General Instruction I.B.6 of Form S-3 (the “Baby Shelf Limitation”), which limits the amount the Company can offer to up to one-third of its public float during any trailing 12-month period.

Subsequent to the filing of the Company's Registration Statement on Form S-3 (File No.

333-279034) on May 1, 2024, the aggregate market value of its outstanding common stock held by non-affiliates was approximately $ 26.7 million.

Pursuant to the Baby Shelf Limitation, since the aggregate market value of the Company's outstanding common stock held by non-affiliates was below $ 75.0 million at the time of such S-3 filing, the aggregate amount of securities that the Company is permitted to offer and sell is now $ 8,915,094 , which is equal to one-third of the aggregate market value of our common stock held by non-affiliates as of March 21, 2024.

If the Company’s public float exceeds $75.0 million on a future measurement date, it will no longer be subject to the Baby Shelf Limitation.

There were no issuances of common stock under the ATM Agreement for the three months ended March 31, 2024.

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

In connection with the Merger closing on September 15, 2022, 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.

Stock Options and Warrants

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

The options granted under 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, 2023:

The following table summarizes the activity for stock options and warrants for the three months ended March 31, 2024:

Stock Options Warrants

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Expired ( 1,163 ) 1,165.50 — —

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

Outstanding at March 31, 2024 1,453,913 $ 9.18 6.18 $ 232.1 1,421,744 $ 42.51 2.00 $ —

Vested at March 31, 2024

or expected to vest in the future 1,443,689 $ 9.22 6.16 $ 231.5 1,421,744 $ 42.51 2.00 $ —

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

Vested at March 31, 2024 1,285,911 $ 9.92 5.75 $ 215.9 1,421,744 $ 42.51 2.00 $ —

Restricted Stock

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,

During the three months ended March 31, 2024 and 2023, the Company issued restricted stock for services as follows (in thousands, except share data):

Three Months Ended March 31,

Number of restricted stock issued 203,800 159,950

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

The following is a summary of the changes in non-vested restricted stock for the three months ended March 31, 2024:

Restricted Stock Shares Weighted Average Grant-Date Fair Value

Non-vested at December 31, 2023 125,775 $ 5.86

Changes during the Year:

Granted 203,800 $ 3.08

Vested ( 99,686 ) $ 5.22

Forfeited — $ —

Non-vested at March 31, 2024 229,889 $ 3.67

Restricted Stock Units

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,

During the three months ended March 31, 2024 and 2023, the Company issued restricted stock units for services as follows (in thousands, except share data):

Three Months Ended March 31,

Number of restricted stock units issued 205,300 188,850

Value of restricted stock units issued $ 632 $ 567

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 weighted average estimated fair value of restricted stock units issued for services in the three months ended March 31, 2024 and 2023 was $ 3.08 and $ 3.00 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.

The vesting terms of restricted stock unit issuances are generally one year , or upon the achievement of performance-based milestones.

The following is a summary of the changes in non-vested restricted stock units for the three months ended March 31, 2024:

Restricted Stock Units Weighted Average Grant-Date Fair Value

Non-vested at December 31, 2023 112,800 $ 3.37

Changes during the Year:

Granted 97,400 $ 3.08

Vested ( 100,000 ) $ 3.00

Forfeited — $ —

Non-vested at March 31, 2024 110,200 $ 3.45

Note 10 – Share-Based Compensation

Share-Based Compensation

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 nine months ended September 30, 2023 and 2022 (in thousands):

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

2023 2022 2023 2022

The Company utilizes 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 months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,

Research and development $ 86 $ 187

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Total share-based compensation expense $ 454 $ 675

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):

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 March 31, 2024 were as follows (in thousands):

Stock Options Restricted Stock Units Restricted Stock

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Expected weighted-average period in years of compensation cost to be recognized 2.28 0.92 2.17

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):

Total fair value of shares vested and the weighted average estimated fair values of shares granted for the three months ended March 31, 2024 and 2023 were as follows (in thousands):

Stock Options

Nine Months Ended September 30,

Three Months Ended March 31,

Total fair value of shares vested $ 199 $ 324

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Based on its assessment, the Company has provided a full valuation allowance against its net deferred tax assets as their future utilization remains uncertain at this time.

As of December 31, 2021, the Company had approximately $ 281.0 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% over a 3-year testing period on January 25, 2021.

As a result, $ 168.8 million of the $ 281.0 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 $ 112.3 million of remaining Federal NOLs.

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 $173 thousand under Internal Revenue Code Section 382.

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 of December 31, 2023 and 2022, the Company had approximately $ 43.7 million and $ 33.7 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% 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.

The Company wrote off that portion of the deferred tax asset and reduced the corresponding valuation allowance resulting in approximately $ 34.0 million of remaining Federal NOLs as of December 31, 2022.

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 September 15, 2022 will be subject to an annual limitation of zero while losses incurred after September 15, 2022 will not be subject to limitations.

As of December 31, 2022, Cend Therapeutics had approximately $ 10.9 million of Federal NOLs available to offset future taxable income.

As of December 31, 2022, Cend Therapeutics, Inc.

(“Cend”) had approximately $ 3.6 million of Federal NOLs available to offset future taxable income.

The Company performed an analysis and determined that there was an ownership change of greater than 50% on September 15, 2022.

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The Federal NOL of $ 459 thousand incurred in the post-acquisition period September 15, 2022 to December 31, 2022 is not subject to limitation and does not expire.

Cend’s wholly owned Australian subsidiary has $ 1.8 million of NOLs which will be carried forward and do not expire.

As of December 31, 2023 and 2022, Cend’s wholly owned Australian subsidiary had approximately $ 2.4 million and $ 1.8 million, respectively, of NOLs which will be carried forward and do not expire.

There is a full valuation allowance against the NOLs.

As of December 31, 2023, the Company had federal research and development credit carryforwards of $ 0.5 million expiring from 2027 through 2034 if unutilized, and state research and development credit carryforwards of $ 0.1 million, which carryforward indefinitely.

Utilization of these credits may be subject to an annual limitation based on changes in ownership.

As of December 31, 2023 and 2022, the Company had State NOLs available in New Jersey of $ 19.4 million and $ 35.5 million, respectively, California of $ 9.2 million and $ 9.2 million, respectively, and New York City of $ 1.9 million and $ 1.9 million, respectively, to offset future taxable income expiring from 2032 through 2043.

In accordance with Section 382 of the Internal Revenue code, the usage of the Company’s NOLs is limited given the change in ownership.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period when those temporary differences become deductible.

The usage of the Company’s NOLs is limited given the change in ownership.

The Company applies the FASB’s provisions for uncertain tax positions.

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.

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

As of December 31, 2022 and 2021, the Company’s uncertain tax positions were $ 344 thousand and $ 0 , respectively.

Due to the acquisition of Cend, the Company’s uncertain tax positions increased by $ 344 thousand related to Federal and state credits and certain state NOLs.

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

As of December 31, 2023 and 2022, the Company’s uncertain tax positions were $ 344 thousand and $ 344 thousand, respectively.

The uncertain tax positions are due to the acquisition of Cend related to Federal and state credits and certain state

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

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.

The Company does not believe there will be any material changes in its unrecognized tax positions over the next year.

For years prior to 2020, the federal statute of limitations is closed for assessing tax.

The Company’s state tax returns remain open to examination for a period of three to four years from the date of filing.

On April 5, 2023, the Company received final approval from the New Jersey Economic Development Authority (“NJEDA”) under the Technology Business Tax Certificate Transfer Program (“Program”) to sell a percentage of its New Jersey net operating losses (“NJ NOLs”), which were subsequently sold to a qualifying and approved buyer pursuant to the Program for net proceeds of $ 2.2 million.

The $ 2.3 million of NJ NOLs related tax benefits has been recorded as a benefit from income taxes and the loss on sale of $ 0.1 million recorded in other income (expense).

The Company’s state tax returns remain open to examination for a period of three to four years from the date of the tax return filing.

On March 4, 2024, the Company received final approval from the New Jersey Economic Development Authority (“NJEDA”) under the Technology Business Tax Certificate Transfer Program (“Program”) to sell $ 8.9 million of its New Jersey net operating losses (“NJ NOLs”), which were subsequently sold to a qualifying and approved buyer pursuant to the Program for net proceeds of $ 0.7 million.

The sale of NJ NOLs resulted in a $ 0.8 million deferred income tax benefit and a loss on sale of $ 0.1 million recorded in other income (expense) in the consolidated financial statements.

On August 16, 2022, the Inflation Reduction Act was signed into law.

2 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, 2023.

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

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

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 refundable tax incentive between 43.5 % to 48.5 % (depending upon the income tax rate) for qualified research and development activities.

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.

As of the three months ended March 31, 2024 and 2023, the Company had $ 1.0 million and $ 1.0 million, respectively, 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.

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.

The Company has elected to recognize expense for legal fees as incurred when the legal services are provided.

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.

1 unchanged sentence

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.

At a Case Management Conference held on August 4, 2023, the Court set a trial date in the matter for August 2, 2024.

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

Cend’s response to the complaint was filed on June 6, 2022 and denied all of Lingmed’s material allegations.

Lingmed filed an answer to Cend’s response on July 11, 2022, denying all of the Company’s material allegations.

On March 25, 2024 the Company entered into a settlement agreement whereby the Company is required to pay Lingmed $ 0.5 million within 30 days of the effective date and the Company effected payment on April 4, 2024.

Lingmed is also entitled to 5.0 % of any future milestone payments received by the Company under the license agreement with Qilu in addition to a sum of $ 250 thousand with respect to the first future milestone received by the Company.

On April 9, 2024, pursuant to the parties’ joint request, the Court entered a dismissal with prejudice of the entire action as to all parties and all claims and the matter was settled.

Note 14 – Technology Transfer Agreement

2 unchanged sentences

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.

On October 3, 2023

in connection with the Sanford Burnham Prebys license agreement (Note 15) Impilo cancelled the original stock certificate for 766,000 shares and reissued 574,500 shares of its pre-seed preferred stock to the Company.

On March 15, 2024, the Company purchased a Simple Agreement for Future Equity ("SAFE") from Impilo for $ 100,000 .

As of March 31, 2024 and December 31, 2023 the Company owned 38.6 % of Impilo.

This investment was expensed under the equity method of accounting for the three months ended March 31, 2024 in other expense,net in the accompanying statement of operations.

The SAFE has a valuation cap of $ 30.0 million and an 80 % discount rate.

Note 15 – 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 LSTA1.

At the time the license agreement was entered into, Cend’s founding shareholder was an executive at SBP.

11 unchanged sentences

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.

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.

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

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.

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

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.

As consideration for the license, Cend issued a total of 43,236 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 $ 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 %, depending 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.

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

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

The agreement may also 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.

On June 30, 2023, in accordance with the provisions of the license agreement, the Company provided notice to MIT that the license agreement would terminate effective December 30, 2023.

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

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

SBP did no t own shares of the Company’s common stock as of March 31, 2024.

Note 16 – 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 LSTA1 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 LSTA1 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.

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 certepetide 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 certepetide in its Territory.

In consideration for the license, Qilu made an upfront payment of $ 10.0 million to Cend, which was recognized as revenue by Cend prior to the Company's acquisition of Cend on September 15, 2022 (the “Cend Merger”).

In addition, Cend received and recognized as revenue a $ 5.0 million development milestone prior to the Cend Merger.

The Company is eligible to receive additional developmental and commercial milestone payments up to $ 96.0 million and $ 125.0 million, respectively, tiered royalties on net sales ranging from 10 % to 15 %, and tiered sublicensing revenues ranging from 12 % to 35 %.

On March 25, 2024 the Company entered into a settlement agreement with Lingmed whereby Lingmed is entitled to 5.0 % of any future milestone payments received by the Company under the Qilu Agreement, in addition, Lingmed is also entitled to a sum of $ 250 thousand with respect to the first future milestone received by the Company.

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.

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

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

Note 17 – Subsequent Events

On April 15, 2024, the Company’s Board of Directors appointed James Nisco as the Company’s Senior Vice President, Finance and Treasury and Chief Accounting Officer, effective immediately.

Effective as of April 15, 2024, Mr.

Nisco shall serve as the Company’s principal financial officer and principal accounting officer.

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