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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-08 · 69 added, 39 removed, 125 unchanged (46% of the section changed)

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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.

Our 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.

Our leadership team has amassed several 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.

Our goal is to develop and commercialize products that address important unmet medical needs.

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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 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”) 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.

Reduction in the level of circulating tumor biomarker CA19-9 was observed in 96% of patients versus 61% in the MPACT trial.

Importantly, median progression-free survival and median overall survival of nearly ten months and over thirteen months were observed versus less than six months and less than nine months, respectively, in the MPACT trial.

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.

Lisata, its collaborators, and research groups around the world have published nearly 400 scientific papers related to the benefits of internalizing RGD peptides and the CendR pathway.

Clinically, certepetide has been the subject of multiple Phase 1 and Phase 2 trials.

These recent studies include a Phase 1b/2a study in first line mPDAC patients.

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

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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.

Currently, 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.

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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.

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

The preliminary data from Cohort B were presented at the ESMO-GI meeting in July 2025, demonstrating a six-month progression-free survival (“6MPFS”) of 60.8% for the certepetide-treated group, whereas the 6MPFS in the placebo-treated group was 25%.

Median progression-free survival (“mPFS”) was 7.5 months for the certepetide-treated group and 4.7 months for the placebo-treated group.

Objective response rate (“ORR”) was 45.2% for the certepetide-treated group and 19% for the placebo-treated group.

Median overall survival (“mOS”) was 10.32 months for the certepetide-treated group compared to 9.23 months for the placebo-treated group.

A comparison of the preliminary data from Cohorts A and B indicates that the addition of two doses of certepetide (Cohort B regimen) to SoC chemotherapy resulted in a clinically meaningful improvement in both PFS and ORR for patients with mPDAC.

These clinically significant findings provide compelling support for the continued and expedited investigation of certepetide as a novel therapeutic agent for the treatment of metastatic pancreatic cancer.

The adverse event profile of Cohorts A and B has been similar in subjects treated with certepetide compared to placebo,

confirming previous observations of certepetide’s benign safety profile.

Final data and key findings from both cohorts of the ASCEND study are anticipated to be available later this year.

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 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,

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

The following table summarizes our results of operations for the three months ended June 30, 2025 and June 30, 2024 (in thousands):

Three Months Ended June 30,

2025 2024 Change

Revenue $ 70 $ — $ 70

Operating Expenses:

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Net loss $ (4,659) $ (5,044) $ 385

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.

Overall, net losses were $4.7 million for the three months ended June 30, 2025, compared to $5.0 million for the three months ended June 30, 2024.

For the three months ended June 30, 2025, revenue totaled $70 thousand in connection with an upfront license fee related to a research license agreement.

We did not have any revenue for the three months ended June 30, 2024.

Operating Expenses

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%.

For the three months ended June 30, 2025, operating expenses totaled $4.9 million, compared to $5.5 million for the three months ended June 30, 2024, representing a decrease of $0.6 million or 10.6%.

Operating expenses are comprised of the following:

• 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.

• Research and development expenses were approximately $2.3 million for the three months ended June 30, 2025, compared to $2.6 million for the three months ended June 30, 2024, representing a decrease of $0.3 million or 13.4%.

This was primarily due to a reduction in patient treatment costs and clinical research organization (“CRO”) 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 $2.7 million for the three months ended June 30, 2025, compared to $2.9 million for the three months ended June 30, 2024, representing a decrease of $0.2 million or 8.1%.

This was primarily due to savings resulting from elimination of an employee position and lower spend on consulting and travel and entertainment expenses.

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 of our New Jersey net operating losses for the three months ended March 31, 2025 and 2024.

Total other income (expense) is comprised primarily of investment income from cash, cash equivalents and marketable securities for the three months ended June 30, 2025 and 2024.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

The following table summarizes our results of operations for the six months ended June 30, 2025 and June 30, 2024 (in thousands):

Six Months Ended June 30,

2025 2024 Change

Revenue $ 70 $ — $ 70

Operating Expenses:

Research and development 4,856 5,842 (986)

General and administrative 5,930 6,282 (352)

Total operating expenses 10,786 12,124 (1,338)

Loss from operations (10,716) (12,124) 1,408

Total other income 371 881 (510)

Benefit from income taxes (962) (798) 164

Net loss $ (9,383) $ (10,445) $ 1,062

Overall, net losses were $9.4 million for the six months ended June 30, 2025, compared to $10.4 million for the six months ended June 30, 2024.

For the six months ended June 30, 2025, revenue totaled $70 thousand in connection with an upfront license fee related to a research license agreement.

We did not have any revenue for the six months ended June 30, 2024.

Operating Expenses

For the six months ended June 30, 2025, operating expenses totaled $10.8 million, compared to $12.1 million for the six months ended June 30, 2024, representing a decrease of $1.3 million or 11.0%.

Operating expenses are comprised of the following:

• Research and development expenses were approximately $4.9 million for the six months ended June 30, 2025, compared to $5.8 million for the six months ended June 30, 2024, representing a decrease of $1.0 million or 16.9%.

This was primarily due to a reduction in clinical research organization (“CRO”) expenses, patient treatment costs 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 $5.9 million for the six months ended June 30, 2025, compared to $6.3 million for the six months ended June 30, 2024, representing a decrease of $0.4 million or 5.6%.

This was primarily due to one-off settlement costs in the prior year partially offset by 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.

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

Other Income (Expense)

Income Tax Benefit

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).

The $1.0 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.

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Analysis of Liquidity and Capital Resources

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.

As of June 30, 2025, we had cash, cash equivalents and marketable securities of approximately $22.0 million, working capital of approximately $20.6 million, and stockholders’ equity of approximately $21.0 million.

During the six months ended June 30, 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):

Three Months Ended March 31,

Six Months Ended June 30,

Net cash used in operating activities $ (9,358) $ (12,310)

Net cash provided by investing activities 9,936 18,149

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

Net cash provided by (used in) financing activities 41 (110)

Operating Activities

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.

Our cash used in operating activities during the six months ended June 30, 2025 was $9.4 million, which is comprised of (i) our net loss of $9.4 million, adjusted for non-cash expenses totaling $0.8 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 $0.8 million.

Our cash used in operating activities during the six months ended June 30, 2024 was $12.3 million, which is comprised of (i) our net loss of $10.4 million, adjusted for non-cash expenses totaling $0.6 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 $2.5 million.

Investing Activities

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.

Our cash provided by investing activities during the six months ended June 30, 2025 totaled $9.9 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 six months ended June 30, 2024 totaled $18.1 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 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.

Our cash provided by financing activities during the six months ended June 30, 2025 totaled $41 thousand and consisted of $0.3 million in proceeds primarily from the issuance of shares through our ATM Agreement (as defined below) partially offset by tax withholding-related payments on net share settlement equity awards to employees of $0.3 million.

Our cash used in financing activities during the six months ended June 30, 2024 totaled $0.1 million and consisted primarily 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.

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.

During the six months ended June 30, 2025, we issued 68,496 shares of common stock under the ATM Agreement for net proceeds of $247,496.

Since inception through June 30, 2025, we have issued 136,669 shares of common stock under the ATM Agreement for net proceeds of $528,343.

While we continue to seek capital through a number of means, there can be no assurance that additional financing will be available on acceptable terms, if at all, and our negotiating position in capital generating efforts may worsen as existing resources are used.

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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 months ended March 31, 2025, compared to those reported in our 2024 Form 10-K.

There have been no material changes in our critical accounting policies and estimates during the six months ended June 30, 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