What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-08 compared with 2024-11-12 · 72 added, 67 removed, 92 unchanged (60% of the section changed)

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Certepetide has also been shown to modify the tumor microenvironment (“TME”) by reducing T-regulatory cells and augmenting cytotoxic T cells, thereby making tumors more susceptible to immunotherapies while also inhibiting the metastatic cascade (i.e., the spread of cancer to other parts of the body).

We and our 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.

We, our collaborators and other researchers have amassed and continue to amass 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, 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.

We are exploring certepetide as a means to enable a variety of treatment modalities to treat a range of solid tumors more effectively.

We are exploring certepetide as a means to enable a variety of therapeutic 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.

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Many solid tumor cancers, including, for example, pancreatic ductal adenocarcinoma (“PDAC”) and cholangiocarcinoma, are surrounded by dense fibrotic tissue, known as the tumor stroma.

This stroma often limits the efficacy of current chemotherapies for these cancers.

This stroma often limits the penetration of anti-cancer therapies including chemotherapy into the tumor and thus limits their efficacy.

Emerging immunotherapies, including but not limited to checkpoint inhibitors and adoptive cell therapies (e.g., chimeric antigen receptor T cells (CAR-Ts)), also face challenges in effectively treating solid tumors.

Many tumors exhibit an immunosuppressive TME, which suppresses a patient's immune system and can thus limit the effectiveness of immunotherapies and/or contribute to metastases.

These factors, i.e., the combination of a dense stroma and an immunosuppressive TME, negatively impact the ability of many therapeutic agents to effectively treat these cancers.

These factors, i.e., the combination of a dense stroma and an immunosuppressive TME, negatively impact the ability of many therapeutic agents to optimally treat these cancers.

To address the tumor stroma’s role as a key impediment to effective treatment, our approach is to activate the C-end rule (“CendR”), or CendR active transport mechanism, a naturally occurring transport system.

Our investigational drug, certepetide (a specific internalizing R-G-D or iRGD peptide), activates this transport system in a tumor-specific manner (Sugahara, Science, 2010).

Our investigational drug, certepetide (a specific, proprietary internalizing R-G-D or iRGD peptide), activates this transport system in a tumor-specific manner (Sugahara, Science, 2010).

Certepetide enables more selective and efficient uptake of systemically administered anti-cancer drugs resulting in more intratumoral drug accumulation.

The overall expected result is enhanced anticancer activity without an increase in adverse side effects.

The overall expected result is enhanced anticancer activity without an increase in systemic adverse side effects.

While it is possible to couple/tether or conjugate some anticancer drugs to certepetide, we believe that our initial approach of co-administration of certepetide with anti-cancer therapies is advantageous.

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That said, an attractive life-cycle management strategy for certepetide would be to molecularly bind it to a variety of anti-cancer agents (as an alternative to co-administration), thereby creating new NCEs with the potential for distinct patent protection, compositionally or otherwise.

Certepetide has demonstrated favorable safety, tolerability, and activity to date in clinical trials enhancing the delivery of standard-of-care chemotherapies for mPDAC.

Certepetide’s cancer-targeted delivery may also enable emerging solid tumor treatment modalities to prove more effective.

For example, preliminary results of the combination of certepetide with immunotherapy and chemotherapy are promising.

Certepetide has demonstrated favorable safety, tolerability, and activity to date in clinical trials enhancing the selective delivery of standard-of-care chemotherapies for mPDAC.

Certepetide’s cancer targeting characteristics may also enable

emerging solid tumor treatment modalities to prove more effective.

For example, preliminary results of certepetide in combination with both immunotherapy and chemotherapy are promising.

Certepetide as a treatment for solid tumor cancers in combination with other anti-cancer agents

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Certepetide has been shown to modify the TME, making it less immunosuppressive and thereby making the tumor more susceptible to attack by the immune system while also inhibiting the metastatic cascade.

It targets tumor vasculature, endothelial cells, tumor cells and some intratumoral immunosuppressive cells by its selective affinity for alpha-v beta-3 and beta-5 integrins that are upregulated on these cells.

Certepetide is a nine amino acid cyclic internalizing RGD (“iRGD”) peptide that, once bound to these integrins, undergoes proteolytic cleavage to release a linear peptide fragment, called a CendR peptide fragment.

The CendR peptide fragment then binds with high selectivity and affinity to an adjacent receptor, called neuropilin-1, also upregulated in solid tumors, to activate a novel uptake pathway that allows circulating anticancer drugs to more selectively and effectively penetrate solid tumors.

It targets tumor vasculature, endothelial cells, tumor cells and some intratumoral immunosuppressive cells by its selective affinity for alpha-v beta-3 and alpha-v beta-5 integrins that are upregulated on these cells.

Certepetide is a nine amino acid cyclic proprietary internalizing RGD (“iRGD”) peptide that, once bound to these integrins, undergoes proteolytic cleavage to release a linear peptide fragment, called a CendR peptide fragment.

After dissociation from the integrin receptor, the CendR peptide fragment then binds with high selectivity and affinity to an adjacent receptor, called neuropilin-1, also upregulated in solid tumors, to activate the novel uptake pathway that allows circulating anticancer drugs to more selectively and effectively penetrate solid tumors.

The ability of certepetide and iRGD peptides to modify the TME to enhance delivery and efficacy of co-administered drugs has been demonstrated in many preclinical models in a range of solid tumors.

Lisata, its collaborators, and research groups around the world have published over 350 related scientific papers in this regard.

Lisata, its collaborators, and research groups around the world have published more than 370 scientific papers related to the benefits of internalizing RGD peptides and the CendR pathway.

Clinically, certepetide was the subject of a completed Phase 1b/2a trial inclusive of 31 first-line mPDAC patients, of which 29 were evaluable.

Results from the trial showed that the safety profile of the certepetide combination regimen was similar to standard of care (“SoC”) alone with certepetide being well-tolerated with no-dose limiting toxicities.

An Objective Response Rate (“ORR”) of 59% was observed, compared to the 23% ORR observed in the “MPACT” clinical trial that served as the basis for approval of nab-paclitaxel for use in combination with gemcitabine for the treatment of first line mPDAC (Von Hoff, et al.

Results from the trial showed that the safety profile of the certepetide combination regimen was similar to standard of care (“SoC”) chemotherapy alone, with certepetide being well-tolerated with no dose limiting toxicities.

An Objective Response Rate (“ORR”) of 59% was observed, compared to the 23% ORR observed in the “MPACT” clinical trial that served as the basis for approval of the chemotherapy combination nab-paclitaxel and gemcitabine for the treatment of first line mPDAC (Von Hoff, et al.

A Disease Control Rate (“DCR”) (partial and complete responses plus stable disease) of over 79% was also observed in comparison to a DCR of 48% observed in the MPACT trial.

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These results have been published in The Lancet Gastroenterology and Hepatology (Dean, et al.

Certepetide was also examined in another Phase 1b/2a study in first line mPDAC patients.

Study CEND1-201 was conducted in China by our development partner, Qilu Pharmaceutical.

Two dose levels of certepetide (1.6 and 3.2 mg/kg) were combined with SoC chemotherapy (gemcitabine and nab-paclitaxel).

There were 55 patients in the study, 53 of whom were evaluable for efficacy.

Twenty-five (25) patients were treated with 1.6 mg/kg certepetide, and 28 patients with 3.2 mg/kg certepetide.

In the 1.6 mg/kg certepetide group, partial response occurred in 11/25 (44.0%) patients, and stable disease occurred in 12/25 (48%) patients.

In the 3.2 mg/kg certepetide group, partial response occurred in 11/28 (39.3%) patients, and stable disease occurred in 12/28 (42.9%) patients.

The ORR was 41.5% for all doses.

The ORR was 44.0% and 39.3% in 1.6 mg/kg group and in 3.2 mg/kg group, respectively.

The DCR was 86.8% for all doses.

The DCR in 1.6 and 3.2 mg/kg groups was 92.0% and 82.1%, respectively.

The median PFS was 5.82 months for all doses combined.

The median PFS was 7.36 months and 5.75 months in 1.6 mg/kg group and in 3.2 mg/kg group, respectively.

The median OS was 11.10 months for all doses combined.

The median OS was 10.35 months and 11.10 months in 1.6 mg/kg group and in 3.2 mg/kg group, respectively.

The adverse event profile at both dose levels was similar to that for SoC alone.

Qilu has completed Phase 2 enrollment (n=96) in first line mPDAC in combination with SoC gemcitabine and nab-paclitaxel.

Finally, certepetide is also the subject of a Phase 2 trial in first-line mPDAC patients, the ASCEND trial.

ASCEND is being conducted in collaboration with the Australasian Gastrointestinal Clinical Trials Group (AGITG) and the University of Sydney at 25 sites in Australia and New Zealand.

The Phase 2 double-blind, randomized (2:1), placebo-controlled, multi-center ASCEND trial is evaluating certepetide in combination with SoC chemotherapy (gemcitabine and nab-paclitaxel) for the treatment of mPDAC.

The original ASCEND protocol included one dosing scheme for certepetide.

Following the acquisition of Cend Therapeutics and, by extension, certepetide in September 2022, Lisata collaborated with AGITG to amend the protocol to ensure it respected international regulatory standards.

Thus, endpoints typically recognized by regulators as primary in registration studies and more effective in guiding next stages of clinical development (e.g., overall survival), were added.

The amended protocol was designed to assess the efficacy of two different dosing regimens of certepetide in two separate cohorts:

Cohort A, with 95 patients receiving a single intravenous (IV) dose of certepetide 3.2 mg/kg or placebo in combination with SoC, and Cohort B, with 63 patients receiving two IV doses of certepetide 3.2 mg/kg or placebo administered 4 hours apart in combination with SoC.

The preliminary data from Cohort A were reported at the ASCO GI meeting on January 24, 2025, demonstrating a median overall survival (mOS) of 12.68 months for the certepetide treated group, compared to 9.72 months for the placebo treated group.

Despite a numerical trend in 6-month PFS favoring the certepetide treatment group, no significant improvement in median PFS was observed (mPFS of 5.5 months in both groups).

However, the objective response rate (ORR) benefit are positive with 4/65 (6.2%) complete responses in the certepetide treated group, compared to 0/28 (0%) the placebo

treated group.

The adverse event profile of Cohort A was similar in subjects treated with certepetide and placebo confirming previous observations of certepetide’s benign safety profile.

Preliminary data from Cohort B will be presented at the ESMO-GI meeting in July 2025 with a final analysis of both cohorts available thereafter.

Additionally, certepetide is currently the subject of multiple ongoing and planned clinical trials being conducted globally in a variety of solid tumor types and in combination with several chemotherapy and immunotherapy anti-cancer regimens.

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Results of Operations

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

The following table summarizes our results of operations for the three months ended September 30, 2024 and September 30, 2023 (in thousands):

Three Months Ended September 30,

2024 2023 Change

Operating Expenses:

Research and development $ 2,542 $ 3,380 $ (838)

General and administrative 2,794 2,584 210

Total operating expenses 5,336 5,964 (628)

Loss from operations (5,336) (5,964) 628

Total other income 406 703 (297)

Benefit from income taxes — — —

Net loss $ (4,930) $ (5,261) $ 331

Overall, net losses were $4.9 million for the three months ended September 30, 2024, compared to $5.3 million for the three months ended September 30, 2023.

Operating Expenses

For the three months ended September 30, 2024, operating expenses totaled $5.3 million, compared to $6.0 million for the three months ended September 30, 2023, representing a decrease of $0.6 million or 10.5%.

Operating expenses are comprised of the following:

• Research and development expenses were approximately $2.5 million for the three months ended September 30, 2024, compared to $3.4 million for the three months ended September 30, 2023, representing a decrease of $0.8 million or 24.8%.

This was primarily due to a reduction in clinical research organization (“CRO”) expenses associated with our Phase 2a proof-of-concept Bolster trial as a result of trial protocol modifications and lower equity expense.

In addition, there were start up expenses in the prior year related to our Glioblastoma Multiforme (“GBM”) study.

• General and administrative expenses were approximately $2.8 million for the three months ended September 30, 2024, compared to $2.6 million for the three months ended September 30, 2023, representing an increase of $0.2 million or 8.1%.

This was primarily due to higher consulting expenses.

Historically, to minimize our use of cash, we have used a variety of equity instruments to compensate employees, consultants and other service providers.

The use of these instruments has resulted in charges to the results of operations, which have been significant in the past.

Other Income (Expense)

Total other income (expense) is comprised primarily of investment income from cash, cash equivalents and marketable securities for the three months ended September 30, 2024 and 2023 and an investment in Impilo which was fully expensed under the equity method of accounting within the current year period.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

The following table summarizes our results of operations for the nine months ended September 30, 2024 and September 30, 2023:

Nine Months Ended September 30,

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

The following table summarizes our results of operations for the three months ended March 31, 2025 and March 31, 2024 (in thousands):

Three Months Ended March 31,

2025 2024 Change

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Net loss $ (4,724) $ (5,401) $ 677

Overall, net losses were $15.4 million for the nine months ended September 30, 2024, compared to $15.5 million for the nine months ended September 30, 2023.

Overall, net losses were $4.7 million for the three months ended March 31, 2025, compared to $5.4 million for the three months ended March 31, 2024.

Operating Expenses

For the nine months ended September 30, 2024, operating expenses totaled $17.5 million compared to $19.7 million for the nine months ended September 30, 2023, representing a decrease of $2.2 million or 11.3%.

For the three months ended March 31, 2025, operating expenses totaled $5.8 million, compared to $6.6 million for the three months ended March 31, 2024, representing a decrease of $0.8 million or 11.4%.

Operating expenses are comprised of the following:

• Research and development expenses were approximately $8.4 million for the nine months ended September 30, 2024, compared to $9.7 million for the nine months ended September 30, 2023, representing a decrease of $1.3 million or 13.8%.

This was primarily due to a reduction in expenses associated with the Phase 2b ASCEND trial which completed enrollment in the prior year and lower equity expense.

In addition, there were start up expenses in the current year related to our FORTIFIDE study that were offset by start up expenses in the prior year for our GBM study.

• General and administrative expenses were approximately $9.1 million for the nine months ended September 30, 2024, compared to $10.0 million for the nine months ended September 30, 2023, representing a decrease of $0.9 million or 8.9%.

This was primarily due to one-off related severance costs in the prior year associated with the elimination of the Chief Business Officer position on May 1, 2023, a reduction in equity expense, a decrease in directors and officers insurance premiums, and a reduction in spend on legal fees partially offset by one-off settlement related costs and an increase in consulting expenses.

• Research and development expenses were approximately $2.6 million for the three months ended March 31, 2025, compared to $3.2 million for the three months ended March 31, 2024, representing a decrease of $0.6 million or 19.7%.

This was primarily due to a reduction in clinical research organization (“CRO”) expenses and site expenses associated with our Phase 2a proof-of-concept Bolster trial and lower spend on chemistry, manufacturing and controls (“CMC”).

• General and administrative expenses were approximately $3.2 million for the three months ended March 31, 2025, compared to $3.4 million for the three months ended March 31, 2024, representing a decrease of $0.1 million or 3.4%.

This was primarily due to one off settlement costs in the prior year partially offset by an increase in consulting expenses and severance costs in the current year.

Historically, to minimize our use of cash, we have used a variety of equity instruments to compensate employees, consultants and other service providers.

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Other Income (Expense)

Total other income (expense) is comprised primarily of investment income from cash, cash equivalents and marketable securities and losses on sales related to the sales of our New Jersey net operating losses (“NJ NOLs”) for the nine months ended

September 30, 2024 and 2023 and investments in Impilo which were fully expensed under the equity method of accounting within the current year period.

Total other income (expense) is comprised primarily of investment income from cash, cash equivalents and marketable securities and losses on sales of our New Jersey net operating losses for the three months ended March 31, 2025 and 2024.

Income Tax Benefit

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

The $0.8 million of our NJ NOL tax benefits have been recorded as a benefit from income taxes and the loss on sale of $0.1 million recorded in other income (expense).

In April 2023, we received final approval from the NJEDA under the Program to sell a percentage of our NJ NOLs, which were subsequently sold to a qualifying and approved buyer pursuant to the Program for net proceeds of $2.2 million.

In January 2025, we received final approval from the New Jersey Economic Development Authority (“NJEDA”) under the Technology Business Tax Certificate Transfer Program (the “Program”) to sell a percentage of our NJ NOLs, which were subsequently sold to a qualifying and approved buyer pursuant to the Program for net proceeds of $0.9 million.

million of our NJ NOL tax benefits have been recorded as a benefit from income taxes and the loss on sale of $0.1 million recorded in other income (expense).

In March 2024, we received final approval from the NJEDA under the Program to sell a percentage of our NJ NOLs, which were subsequently sold to a qualifying and approved buyer pursuant to the Program for net proceeds of $0.7 million.

The $0.8 million of NJ NOLs related tax benefits have been recorded as a benefit from income taxes and the loss on sale of $0.1 million recorded in other income (expense).

Analysis of Liquidity and Capital Resources

As of September 30, 2024, we had cash, cash equivalents and marketable securities of approximately $35.9 million, working capital of approximately $33.0 million, and stockholders’ equity of approximately $33.7 million.

During the nine months ended September 30, 2024, we met our immediate cash requirements through existing cash balances.

As of March 31, 2025, we had cash, cash equivalents and marketable securities of approximately $25.8 million, working capital of approximately $24.8 million, and stockholders’ equity of approximately $25.4 million.

During the three months ended March 31, 2025, we met our immediate cash requirements through existing cash balances.

Additionally, we used equity and equity-linked instruments to pay for services and compensation.

Net cash (used in) or provided by, operating, investing and financing activities were as follows (in thousands):

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash used in operating activities $ (5,402) $ (7,027)

Net cash provided by investing activities 9,431 6,436

Net cash (used in) provided by financing activities (110) 361

Net cash used in financing activities (23) (142)

Operating Activities

Our cash used in operating activities during the nine months ended September 30, 2024 was $14.8 million, which is comprised of (i) our net loss of $15.4 million, adjusted for non-cash expenses totaling $0.9 million (which includes adjustments for equity-based compensation, depreciation and amortization, loss from equity method investment, and amortization/accretion of marketable securities), and (ii) changes in operating assets and liabilities using approximately $0.4 million.

Our cash used in operating activities during the nine months ended September 30, 2023 was $16.0 million, which is comprised of (i) our net loss of $15.5 million, adjusted for non-cash expenses totaling $1.0 million (which includes adjustments for equity-based compensation, depreciation and amortization, a loss on disposal of fixed assets, and amortization/accretion of marketable securities) and (ii) changes in operating assets and liabilities using approximately $1.5 million.

Our cash used in operating activities during the three months ended March 31, 2025 was $5.4 million, which is comprised of (i) our net loss of $4.7 million, adjusted for non-cash expenses totaling $0.5 million (which includes adjustments for equity-based compensation, depreciation and amortization, and amortization/accretion of marketable securities), and (ii) changes in operating assets and liabilities using approximately $1.2 million.

Our cash used in operating activities during the three months ended March 31, 2024 was $7.0 million, which is comprised of (i) our net loss of $5.4 million, adjusted for non-cash expenses totaling $0.4 million (which includes adjustments for equity-based compensation, depreciation and amortization, loss from equity method investment, and amortization/accretion of marketable securities) and (ii) changes in operating assets and liabilities using approximately $2.1 million.

Investing Activities

Our cash provided by investing activities during the nine months ended September 30, 2024 totaled $11.8 million and was primarily due to net sales of marketable securities (net of purchases of marketable securities) partially offset by an investment of $0.1 million in Impilo.

Our cash provided by investing activities during the nine months ended September 30, 2023 totaled $15.8 million and was primarily due to net sales of marketable securities (net of purchases of marketable securities).

Our cash provided by investing activities during the three months ended March 31, 2025 totaled $9.4 million and was primarily due to net sales of marketable securities (net of purchases of marketable securities).

Our cash provided by investing activities during the three months ended March 31, 2024 totaled $6.4 million and was primarily due to net sales of marketable securities (net of purchases of marketable securities) partially offset by an investment of $0.1 million in Impilo Therapeutics.

Financing Activities

Our cash used in financing activities during the nine months ended September 30, 2024 totaled $0.1 million and consisted primarily of tax withholding-related payments on net share settlement equity awards to employees.

Our cash provided by financing activities during the nine months ended September 30, 2023 totaled $0.4 million and consisted of proceeds from the issuance of shares through our ATM Agreement of $0.3 million and option exercise proceeds of $0.2 million partially offset by tax withholding-related payments of $0.1 million on net share settlement equity awards to employees.

Our cash used in financing activities during the three months ended March 31, 2025 totaled $23.0 thousand and consisted primarily of tax withholding-related payments on net share settlement equity awards to employees of $0.2 million partially offset by $0.2 million in proceeds from the issuance of shares through our ATM Agreement (as defined below).

Our cash used in financing activities during the three months ended March 31, 2024 totaled $0.1 million and consisted of tax withholding-related payments on net share settlement equity awards to employees.

Liquidity and Capital Requirements Outlook

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

There were no issuances of common stock under the ATM Agreement for the three and nine months ended September 30, 2024.

During the three months ended March 31, 2025, we issued 55,578 shares of common stock under the ATM Agreement for net proceeds of $211,369.

Since inception, we have issued 123,751 shares of common stock under the ATM Agreement for net proceeds of $492,216.

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Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies and estimates during the three and nine months ended September 30, 2024, compared to those reported in our 2023 Form 10-K.

There have been no material changes in our critical accounting policies and estimates during the three months ended March 31, 2025, compared to those reported in our 2024 Form 10-K.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis