What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-07-28 compared with 2021-08-10 · 945 added, 1810 removed, 1063 unchanged (72% of the section changed)

We are a biotechnology

company focused on developing cellular therapies for cancer and diabetes based upon a proprietary cellulose-based live cell

encapsulation technology known as “Cell-in-a-Box ®.

The Cell-in-a-Box ®

technology is

intended to be used as a platform upon which therapies for several types of cancer, including locally advanced, inoperable,

non-metastatic pancreatic cancer (“LAPC”) will be developed.

The current generation of our product candidate is referred

to as “CypCaps™”.

On September 1, 2020, we submitted an Investigational New Drug Application (“IND”) to the U.S.

and Drug Administration (“FDA”) for a planned Phase 2b clinical trial in LAPC.

On October 1, 2020, the Company received

notice from the FDA that it had placed the IND on clinical hold.

On October 30, 2020, the FDA sent a letter to us setting forth the

reasons for the clinical hold and specific guidance on what we must do to have the clinical hold lifted.

To lift the clinical hold,

the FDA has informed us that we need to conduct several additional preclinical studies and assays.

The FDA also requested additional

information regarding several topics, including DNA sequencing data, manufacturing information and product release specifications.

We are in the process of conducting these studies and assays and gathering additional information to submit to the FDA.

“Our Investigational New Drug Application and the Clinical Hold”

The Cell-in-a-Box ®

encapsulation

technology potentially enables genetically engineered live human cells to be used as a means to produce various biologically active molecules.

The technology is intended to result in the formation of pinhead sized cellulose-based porous capsules in which genetically modified

live human cells can be encapsulated and maintained.

In a laboratory setting, this proprietary live cell encapsulation technology has

been shown to create a micro-environment in which encapsulated cells survive and flourish.

Product Candidates

We are a biotechnology company focused on developing

cellular therapies for cancer, diabetes, and malignant ascites based upon a proprietary cellulose-based live cell encapsulation technology

known as “Cell-in-a-Box ®.

.” The Cell-in-a-Box ® technology is intended to be used as a platform

upon which therapies for several types of cancer, including LAPC, will be developed.

The current generation of our product candidate is

referred to as “CypCaps™.”

The Cell-in-a-Box ® encapsulation

technology potentially enables genetically engineered live human cells to be used to produce various biologically -active molecules.

technology is intended to result in the formation of pinhead -sized cellulose-based porous capsules in which genetically modified live

human cells can be encapsulated and maintained.

In a laboratory setting, this proprietary live cell encapsulation technology has been

shown to create a micro-environment in which encapsulated cells survive and flourish.

They are protected from environmental challenges,

2 unchanged sentences

The capsules are largely composed of cellulose (cotton) and are bio inert.

We are developing therapies

for pancreatic and other solid cancerous tumors by using genetically engineered live human cells that we believe are capable of converting

a cancer prodrug into its cancer-killing form.

We encapsulate those cells using the Cell-in-a-Box ®

technology and place

those capsules in the body as close as possible to the tumor.

In this way, we believe that when a cancer prodrug is administered to a

patient with a particular type of cancer that may be affected by the prodrug, the killing of the patient’s cancerous tumor may be

We have also been considering

ways to exploit the benefits of the Cell-in-a-Box ®

technology to develop therapies for cancer that involve prodrugs

based upon certain constituents of the Cannabis plant;

these constituents are of the class of compounds known as “cannabinoids”.

(i) the FDA allows us to commence a clinical

trial in LAPC described in our IND for which the FDA has placed a clinical hold, (ii) we validate our Cell-in-a-Box ®

encapsulation

technology in our planned Phase 2b clinical trial in LAPC and (iii) the availability of sufficient additional funding, we are not spending

any further resources developing this cannabinoid program.

In addition, we have been exploring

ways to delay the production and accumulation of malignant ascites fluid that results from many types of abdominal cancerous tumors.

ascites fluid is secreted by abdominal cancerous tumors into the abdomen after the tumors have reached a certain stage of growth.

fluid contains cancer cells that can seed and form new tumors throughout the abdomen.

This fluid accumulates in the abdominal cavity,

causing swelling of the abdomen, severe breathing difficulties and extreme pain.

In our pancreatic cancer development

program, our plan is to determine whether our product candidate can prevent or delay the production and accumulation of malignant

ascites fluid.

For the same reasons as those given above until:

(i) the FDA allows us to commence a clinical trial in LAPC described

in our IND for which the FDA has placed a clinical hold, (ii) we validate our Cell-in-a-Box ®

encapsulation technology

in our planned Phase 2b clinical trial in LAPC and (iii) the availability of sufficient additional funding, we are not spending any

further resources developing this malignant ascites fluid program.

We have also been developing

a potential therapy for Type 1 diabetes and insulin-dependent Type 2 diabetes.

Our product candidate for the treatment of diabetes consists

of encapsulated genetically modified insulin-producing cells.

The encapsulation will be done using the Cell-in-a-Box ®

Implanting these cells in the body is designed to function as a bio-artificial pancreas for purposes of insulin production.

The Cell-in-a-Box ®

encapsulation technology potentially enables genetically engineered live human cells to be used as miniature factories for the production

of various biologically active molecules.

The technology is intended to result in the formation of pinhead sized cellulose-based porous

capsules in which genetically modified live human cells can be encapsulated and maintained.

In a laboratory setting, this proprietary

live cell encapsulation technology has been shown to create a micro-environment in which encapsulated cells survive and flourish.

are protected from environmental challenges, such as the sheer forces associated with bioreactors, passage through catheters and needles,

etc., which we believe enables greater growth and production.

The capsules are largely composed of cellulose (cotton) and are bio inert.

As with the two previous programs, until:

the FDA allows us to commence a clinical trial in LAPC described in our IND upon which the FDA has placed a clinical hold, (ii) we validate

our Cell-in-a-Box ®

encapsulation technology in our planned Phase 2b clinical trial in LAPC and (iii) the availability of

sufficient additional funding, we are not spending any further resources developing the diabetes program.

We are developing therapies for pancreatic and

other solid cancerous tumors by using genetically engineered live human cells that we believe are capable of converting a cancer prodrug

into its cancer-killing form.

We encapsulate those cells using the Cell-in-a-Box ® technology and place those capsules in

the body as close as possible to the tumor.

In this way, we believe that when a cancer prodrug is administered to a patient with a particular

type of cancer that may be affected by the prodrug, the killing of the patient’s cancerous tumor may be optimized.

We are also developing a way to delay the production and accumulation

of malignant ascites that results from many types of abdominal cancerous tumors.

Our potential therapy for malignant ascites involves

using the same encapsulated cells we employ for pancreatic cancer but placing the encapsulated cells in the peritoneal cavity of a patient

and administering ifosfamide intravenously.

We have also been developing a potential therapy

for Type 1 diabetes and insulin-dependent Type 2 diabetes.

Our product candidate for the treatment of diabetes consists of encapsulated

genetically modified insulin-producing cells.

The encapsulation will be done using the Cell-in-a-Box ® technology.

these encapsulated cells in the body is designed to have them function as a bio-artificial pancreas for purposes of insulin production.

In addition to the two cancer programs discussed

above, we have been working on ways to exploit the benefits of the Cell-in-a-Box ® technology to develop therapies for cancer

that involve prodrugs based upon certain constituents of the Cannabis plant.

However, until the FDA allows us to commence our clinical

trial in LAPC and we are able to validate our Cell-in-a-Box ® encapsulation technology in a clinical trial, we are not spending

any further resources developing our Cannabis Program.

Cancer Therapy

Targeted Chemotherapy

Our live-cell encapsulation technology-based

potential therapies consist of encapsulated genetically modified living cells, with the type of encapsulated cell dependent on the

disease being treated.

For our lead product candidate, a therapy for pancreatic cancer, we propose that approximately 15,000-20,000

genetically modified live cells that produce an enzyme (an isoform of cytochrome P450), which we believe will convert the

chemotherapy prodrug ifosfamide into its cancer-killing form, will be encapsulated using the Cell-in-a-Box ®

In the clinical trial, if the FDA allows us to proceed, approximately 300 of these capsules will be placed in the patients’

blood supply and guided into place using interventional radiography so that they finally reside as close to the tumor in the

pancreas as possible.

Low doses (one gram per square meter of body surface area of the patient) of the chemotherapy prodrug

ifosfamide will then be given to the patient intravenously.

The prodrug ifosfamide is normally activated in

the patient’s liver.

By activating the prodrug near the tumor using the Cell-in-a-Box ®

capsules, we believe our cellular

therapy will act as a type of “bio-artificial liver.”

Using this type of “targeted chemotherapy,”

we are seeking

to create an environment that enables optimal concentrations of the “cancer-killing”

form of ifosfamide at the site of the

Because the cancer-killing form of ifosfamide has a short biological half-life, we believe that this approach will result in little

to no collateral damage to other organs in the body.

We also believe this treatment will significantly reduce tumor size with no treatment-related

side effects.

Proposed treatment for pancreatic

cancer by targeted deployment and activation of chemotherapy using Cell-in-a-Box ®

encapsulated cells.

Charts A and B are generalized graphic depictions

of the principal hypothesized mechanisms of our proposed treatment for pancreatic cancer using our product candidate, the

combination of Cell-in-a-Box ®

encapsulated cells plus low-doses of ifosfamide, under expected conditions.

combination therapy will be the subject of a clinical trial we plan to conduct, subject to FDA approval allowing us to move forward

with our clinical trial.

No regulatory authority has granted marketing approval for the Cell-in-a-Box ®

the related encapsulated cells, or Cell-in-a-Box ®

and encapsulated cells plus low-dose ifosfamide combination.

Cell-in-a-Box ®

capsules containing live ifosfamide-activating

cells (shown in white) will be implanted in the blood vessels leading to the tumor in the pancreas.

Then low dose ifosfamide will be given

intravenously.

Chart B shows the human pancreas and generalized depictions of two

pancreatic cancer tumors (shown in pink) as examples.

In this chart, ifosfamide is converted to its cancer-killing form by the encapsulated

live cells implanted near the tumors (shown in maroon).

Blue Arrows :

Ifosfamide enters capsules

Conversion to active form

White Arrows :

Activated ifosfamide targets tumors

Hypothesized mechanism of

action of treatment for pancreatic cancer by targeted deployment of the encapsulated live cells and activation of the chemotherapy

prodrug drug ifosfamide.

The immune system cells are too large to enter the capsule.

Pancreatic Cancer Therapy

Our therapy for cancer involves encapsulating genetically engineered

human cells that convert an inactive chemotherapy drug into its active or “cancer-killing” form.

For pancreatic cancer, these

encapsulated cells are implanted in the blood supply to the patient’s tumor as close as possible to the site of the tumor.

implanted, a chemotherapy drug that is normally activated in the liver (ifosfamide) is given intravenously at one-third the normal dose.

The ifosfamide is carried by the circulatory system to where the encapsulated cells have been implanted.

When the ifosfamide flows through

pores in the capsules, the live cells inside act as a “bio-artificial liver” and activate the chemotherapy drug at the site

of the cancer.

Pancreatic Cancer

We believe an unmet medical need exists for patients

with LAPC whose pancreas tumor no longer responds after 4-6 months of treatment with either Abraxane ®

plus gemcitabine

or the 4-drug combination known as FOLFIRINOX (folinic acid, fluorouracil, irinotecan and oxaliplatin).

Both combinations are the current

standards of care for pancreatic cancer.

We believe that these refractory patients have no effective treatment alternative once their

tumors no longer respond to these therapies.

Two of the most commonly used treatments for these patients are 5-fluorouiracil (“5-FU”)

or capecitabine (a prodrug of 5-FU) plus radiation (chemoradiation therapy).

We believe that both treatments are only marginally effective

in treating the tumor and both result in serious side effects.

More recently, radiation treatment alone is being used at some cancer centers

in the United States (“U.S.”).

Other treatments are being tried at various

cancer centers in the U.S.

in an attempt to address this lack of an effective treatment for many LAPC patients, but their success is

far from certain.

We are developing a therapy comprised of Cell-in-a-Box ®

encapsulated live cells implanted near the

pancreas tumor followed by the infusion of low doses of the cancer prodrug ifosfamide.

We believe that our therapy, if approved, can

serve as a “consolidation therapy”

that can be used with the current standards of care for LAPC and thus address this

critical unmet medical need.

Two previous human clinical trials of an encapsulated live cell and ifosfamide combination for LAPC

were conducted in Germany by Bavarian Nordic during 1998 –

2000, and such trials were referenced in our IND for LAPC,

submitted on September 1, 2020.

Subject to the FDA allowing us to move forward,

we plan to commence a clinical trial involving patients with LAPC whose tumors have ceased to respond to either Abraxane ®

plus gemcitabine or FOLFIRINOX after 4-6 months of either therapy.

We had a Pre-Investigational New Drug Application meeting (“Pre-IND

meeting”) with the Center for Biologics Evaluation and Research of the FDA (“CBER”) in January 2017.

At that Pre-IND

meeting, the FDA communicated its agreement with certain aspects of our clinical development plan, charged us with completing numerous

tasks and provided us with the guidance on the tasks we believed we needed to complete for a successful IND submission for LAPC, although

no assurance was given that we would be allowed to commence a Phase 2b clinical trial.

Data developed from two earlier trials conducted

by Bavarian Nordic, a fully integrated biotechnology company in Denmark, using the same technology and same cell line were included in

The results of those trials are discussed below.

Our Investigational New Drug Application and

the Clinical Hold

On September 1, 2020, we submitted an IND to the

FDA for a planned Phase 2b clinical trial in LAPC.

Shortly thereafter, we received Information Requests from the FDA related to the IND.

We timely responded to all Information Requests.

On October 1, 2020, we received notice that the

FDA had placed our IND on clinical hold.

On October 30, 2020, the FDA sent a letter to

us setting forth the reasons for the clinical hold and providing specific guidance on what we must do to have the clinical hold lifted.

In order to address the clinical hold, the FDA has requested that we:

with LAPC whose pancreas tumor no longer responds after 4-6 months of treatment with either Abraxane ® plus gemcitabine

or the 4-drug combination known as FOLFIRINOX.

Both combinations are the current standards of care for pancreatic cancer.

We believe that

these refractory patients have no effective treatment alternative once their tumors no longer respond to these therapies.

Treatments are

being tried at various cancer centers in the U.S.

in an attempt to address this lack of an effective treatment for LAPC patients, but

their success is far from certain.

Two of the most commonly used treatments for these

patients are 5-fluorouracil (“5-FU”) or capecitabine (a prodrug of 5-FU) plus radiation (chemoradiation therapy).

More recently,

radiation treatment alone is being used at some cancer centers in the U.S.

We believe that these treatments are only marginally

effective in treating the LAPC tumor and result in serious side effects.

We believe that our therapy for LAPC, if approved,

can serve as a “consolidation therapy” that can be used with the current standards of care and thus address this critical

unmet medical need.

On September 1, 2020, we submitted an Investigational New Drug Application (“IND”) to the FDA for a planned

Phase 2b clinical trial in LAPC.

Highlights of our planned clinical trial are shown below:

Clinical Hold

On October 1, 2020, we received notice from the

FDA that it had placed our IND on clinical hold.

On October 30, 2020, the FDA sent us a letter setting forth the reasons for the clinical

hold and providing specific guidance on what we must do to have the clinical hold lifted.

In order to address the clinical hold, the FDA

has requested that we:

Provide additional sequencing data and genetic stability studies;

Conduct a stability study on the final formulated drug product as well as the cells from our Master Cell Bank;

Evaluate the compatibility of the delivery devices (the prefilled syringe and the microcatheter used to implant the CypCaps ™

) with our drug product;

Provide additional detailed description of the manufacturing process;

Conduct a stability study on our final formulated product candidate as well as the cells from our Master Cell Bank (“MCB”);

Evaluate the compatibility of the delivery devices (the prefilled syringe and the microcatheter used to implant the CypCaps ™ ) with our product candidate for pancreatic cancer;

Provide additional detailed description of the manufacturing process of our product candidate for pancreatic cancer;

Provide additional product release specifications for our encapsulated cells;

Demonstrate comparability between the 1 st and 2 nd generation products and ensure adequate and consistent product performance and safety between the two generations of product;

Conduct a biocompatibility assessment using the final finished capsules after the entire drug product manufacturing process (but without cells);

Address insufficiencies in Chemistry, Manufacturing and Controls information in the cross-referenced Drug Master File;

Conduct an additional

nonclinical study in a large animal (such as a pig) to assess the safety, activity and distribution of the drug product;

Revise the Investigators Brochure to include any additional preclinical studies conducted in response to the clinical hold and remove any statements not supported by the data.

Demonstrate comparability between the 1 st and 2 nd generation of our product candidate for pancreatic cancer and ensure adequate and consistent product performance and safety between the two generations;

Conduct a biocompatibility assessment using the capsules material;

Address specified insufficiencies in the Chemistry, Manufacturing and Controls information in the cross-referenced Drug Master File;

Conduct an additional nonclinical study in a large animal (such as a pig) to assess the safety, activity, and distribution of the product candidate for pancreatic cancer;

Revise the Investigators Brochure to include any additional preclinical studies conducted in response to the clinical hold and remove any statements not supported by the data we generated.

The FDA also requested that we address the following

issues as an amendment to the IND:

issues as an amendment to our IND:

Provide a Certificate of Analysis for pc3/2B1 plasmid that includes tests for assessing purity, safety, and potency;

Perform qualification studies for the drug substance filling step to ensure that the product remains sterile and stable during the filling process;

Submit an updated batch analysis for the drug product for the specific lot that will be used for manufacturing all future drug product;

Perform qualification studies for the drug substance filling step to ensure that the product candidate for pancreatic cancer remains sterile and stable during the filling process;

Submit an updated batch analysis for the product candidate for the specific lot that will be used for manufacturing all future product candidates;

Provide additional details for the methodology for the Resorufin (CYP2B1) potency and the PrestoBlue cell metabolic assays;

Provide a few examples of common microcatheters that fit the specifications in our Angiography Procedure Manual;

Clarify the language in the Pharmacy Manual regarding proper use of the syringe fill with the drug product;

Provide a discussion with

data for trial of the potential for cellular and humoral immune reactivity against the heterologous rat CYP2B1 protein and potential

for induction of autoimmune-mediated toxicities in our study population in the LAPC.

We have assembled a scientific and regulatory

team of experts to address the FDA requests.

That team is working to complete the items requested by the FDA.

We are in varying stages

of addressing the studies and acquiring the information requested by the FDA.

The following provides a summary of the activities

in which we are engaged to have the clinical hold lifted:

We have completed a 3, 6, 9, and

12-month product stability study of our clinical trial product (CypCaps ™

), including container closure integrity testing

for certain timepoints;

the next time point in this ongoing study will be at 18 months of product stability.

We have designed and commenced

various additional studies required by the FDA.

These include ( i)

a stability study on the cells from our Master Cell Bank (“MCB”) used to make the CypCaps ™

, which are already

at the 3-year stability timepoint;

(ii) further sequence analysis of the DNA encoding of the Cyp2B1 gene in the cells in the CypCaps ™

and (iii) collated existing information on the reproducibility and quality of the filling of the MCB cells into vials ready for CypCaps ™

manufacturing.

We have designed and commenced biocompatibility

studies such as (i) a Subchronic and Chronic Toxicity study;

(ii) a Skin Sensitization study;

(iii) an Acute Systematic Toxicity study;

(iv) an Ames test (Genotoxicity Bacteria and Reverse Mutation tests);

(v) an Intracutaneous test;

(vi) a Complement Activation test;

a Hemolysis test;

(viii) an In Vitro Cytotoxicity test;

and (ix) an In Vivo Micronucleus assay.

Some of the data being generated by these

studies will also be used to demonstrate comparability with the CypCaps ™

that were successfully used in the two earlier

German clinical trials over twenty years ago for pancreatic cancer discussed below.

To enable the biocompatibility studies to be

performed, we had Austrianova manufacture and deliver an additional 400 syringes of empty capsules.

We designed and commenced studies designed to

show that CypCaps ™

are not in any way adversely affected by the catheters used by interventional radiologists to deliver

them, nor by the contract media used to visualize the blood vessels during implantation of the CypCaps ™

We designed and commenced studies to demonstrate

how robust the CypCaps ™

are during delivery and use as well as to document that the syringes used to deliver the CypCaps ™

will allow delivery consistently, smoothly and safely.

With our support, Austrianova will provide additional

detailed confidential information to the FDA on the manufacturing process, including information on the improvements made to the live

cell encapsulated product since the last clinical trials with respect to reproducibility and safety of the CypCaps ™

We are in the process of updating our IND submission

documents to include:

(i) more pre-clinical data as discussed above, (ii) some additional parameters for release of the CypCaps ™

(iii) a recommendation of the catheters and contrast medium to be used to deliver the CypCaps ™

and (iv) an extensive

discussion of the potential for cellular and humoral immune reactivity against the heterologous rat CYP2B1 protein and potential for induction

of autoimmune-mediated toxicities in our study population in the LAPC .

We have designed an abbreviated study in pigs

to address biocompatibility and long-term implantation of the capsules.

This animal study will complement the positive data already available

from the previous human clinical trials conducted by Bavarian Nordic showing the safety of CypCaps ™

implantation for

up to two years in humans.

Summary of the Company’s Activities During

the Period of this Report

During the first half of the fiscal year 2021,

we focused our R&D efforts on completing the IND and submitting it to the FDA.

The balance of the fiscal year 2021 was spent on our

R&D efforts focused on taking the necessary steps to have the clinical hold lifted.

These include:

(i) assembling a team of scientific

and regulatory experts to handle the tasks we must undertake to have the clinical hold lifted;

(ii) going through a selection process

of consultants and laboratories that will conduct the studies and assays required by the FDA;

(iii) designing and documenting most of

the studies and assays required by the FDA;

and (iv) conducting the studies and assays we have designed and documented.

The fruit of those

efforts are summarized above in section entitled, “Our Investigational New Drug Application and the Clinical Hold.”

The major activities accomplished during the fiscal

year 2021 include the following:

Reconfirmed that Dr.

Manuel Hidalgo Will

Be the Principal Investigator for our Clinical Trial in LAPC

Manuel Hidalgo reconfirmed that he will

be the Principal Investigator for our planned clinical trial in LAPC, should the FDA lift the clinical hold.

Hidalgo is a leading

physician-scientist who specializes in pancreatic cancer and drug development.

He currently serves as Chief of the Division of

Hematology and Medical Oncology at Weill Cornell Medicine and New York-Presbyterian/Weill Cornell Medical Center.

Previously, Dr.

Hidalgo was a Professor of Medicine at the Harvard Medical School and the Chief of the Division of Hematology Oncology and Director

of the Rosenberg Clinical Cancer Center at the Beth Israel Deaconess Medical Center.

Completed a Medical Manual that is Pivotal

to Our IND Submission

We completed a medical manual that was included

in our IND submission.

The manual entitled, “Angiography Manual –

Transarterial Chemoinfusion of the Pancreas”

(“Angiography

Manual”), will be used to guide Interventional Radiologists on the placement of a catheter that begins at the femoral artery in

the leg and ends as close to the pancreatic tumor as possible in patients participating in our planned clinical trial in LAPC should the

FDA lift the clinical hold.

By following the directions in this manual, Interventional Radiologists will be able to place the CypCaps ™

inside patients in a precise location.

The Angiography Manual was prepared by a team

of medical professionals.

The initial version was prepared by Dr.

O’Leary, an Interventional Radiologist and Senior Vice

President of the Medical Department at Medpace (PharmaCyte’s Contract Research Organization (“CRO”)).

O’Leary’s

version was then reviewed by Dr.

Manuel Hidalgo (“Dr.

Hidalgo”), the Principal Investigator (“PI”) for our planned

clinical trial in LAPC, and later by Dr.

Matthias Löhr (“Dr.

Löhr”), who was the PI for the first two clinical trials

using our treatment for LAPC.

Jens-Christian Kröeger (“Dr.

Kröeger”),

who was the Interventional Radiologist during the two earlier clinical trials using our technology, provided valuable assistance in the

preparation of the Angiography Manual.

A final review of the Angiography Manual was performed by Dr.

Bradley Pua, an Interventional Radiologist

with Weill Cornell Medicine and a colleague of Dr.

A Paper Audit of the Austrianova Manufacturing Facility was Conducted

after Batch Records Deemed cGMP Compliant

We had cGMP Validation, our cGMP regulatory consultant,

conduct a paper audit of the manufacturing facility in Thailand where CypCaps ™

are produced by Austrianova.

In addition, Austrianova and cGMP Validation completed

their work together to achieve what has been deemed cGMP compliant batch records for the two manufacturing runs produced by Austrianova.

Both worked closely together to revise the batch records that were generated during the two manufacturing runs that produced our clinical

trial product for our planned clinical trial in LAPC.

batch record is a detailed written document of a manufactured batch of product prepared during a

pharmaceutical manufacturing process.

A batch record contains data and the step-by-step process for manufacturing

each batch of our CypCaps ™

The completed

manufacturing batch records indicate that the two batches were properly made and checked by quality control

personnel at Austrianova according to cGMP standards.

This was necessary so that the batches comply with the standards

required by the FDA for a batch record for each manufacturing run.

Began the FDA Required Two-Year Stability

Study on Our Clinical Trial Product

We began the FDA required Stability Study of our

clinical trial product.

This is a rolling two-year study to demonstrate how the frozen clinical trial product performs over time after

being frozen for certain periods of time and then thawed and tested for functionality.

While the study will continue for 2 years, the

FDA required at least 3 months of stability data to be included in the IND for its submission.

The tests for the Stability Study started approximately

3 months (the first time point in the 2-year study) from the issuance of the Certificate of Analysis for the second manufacturing

run and will continue for 24 months.

Data from the balance of the Stability Study will be provided to the FDA as the data becomes available.

The Stability Study consists of many of the same

tests that were performed as “release testing”

that enabled Austrianova to issue to us a Certificate of Analysis for the second

manufacturing run of the two back-to-back manufacturing runs.

Various tests are taken at one or more of the

following time points:

months 0, 3, 6, 9, 12, 18 and 24.

Month 0 represents the “release testing”

for the Certificate of Analysis

for the second manufacturing run that we previously announced earlier last year.

The parameters for testing are:

(i) Identity ( Assay :

label integrity, polymerase chain reaction and sequencing for a transgene marker);

(ii) Purity ( Assay :

appearance post thaw, pH,

capsule integrity post-thaw and cultured 3 days);

(iii) Viable Cell Number ( Assay :

determined by cell size);

(iv) Potency ( Assay :

resorufin enzymatic activity);

and (v) Integrity ( Assay :

container-closure integrity).

A Change History of the Manufacturing Process

Was Developed for Inclusion in the IND

With our support, Austrianova completed the “change

history”

information and data for CypCaps™

(2 nd generation product) compared to CapCells™

generation product).

The history of the changes to the manufacturing of the two generations of product was a critical component of our

IND submission.

The first generation of product was referred to

as “CapCells™”, and the current generation of product is referred to as “CypCaps™.”

Although the cellulose

material is basically the same, a material of improved quality is used in the 2nd generation product.

The differences relate to control

of impurities with heavy metal content and microbial and endotoxin levels being below the limits in the relevant literature for powdered

In addition, the production process for the cellulose is more closely controlled in the 2 nd generation product.

The original cell line used is also now better characterized at the genetic level.

Lastly, the encapsulated cells undergo a maturation

process in the 2nd generation product and are stored frozen for a longer shelf life.

The FDA requires that all relevant information

and data from different generations of the same manufactured medicinal product be compared to each other to ensure that the original manufactured

product is essentially the same as the current one.

There can be improvements to the product, but to use the data from the two clinical

trials in the 1990s to support our clinical trial in LAPC, it was imperative to develop information and data to support that the two generations

of the products are essentially the same –

the only difference being improvement to the overall product using the same manufacturing

Austrianova also had to gather the data for the

release specifications for each generation of encapsulated cells and explain why changes were made and how the changes made for an improved

product using the same manufacturing process.

Information and data about the capsule maturation and storage were also developed.

In addition, the quality control release assay

information and supporting data had to be assembled.

This involved capsule diameter;

viability of encapsulated cells;

pyrogenicity;

cell identity;

enzymatic activity;

capsule count;

Accelerated the Development of the FDA Required

Container Closure Integrity Test

We accelerated the development of our Container

Closure Integrity (“CCI”) test, which is an essential component of the Stability Test mentioned above.

The company we selected

to develop our CCI test was able to complete the development phase of the test much sooner than we anticipated given the test had to be

developed anew because it is specific to our clinical trial product.

The FDA specifically requires a CCI test be run

on pre-filled syringes containing 300 cellulose sulphate microcapsules in 2mls of freezing medium, and then the data from the CCI test

is included in our IND submission.

The first developmental phase of the CCI test

was to develop a High Voltage Leak Detection (“HVLD”) program setup and feasibility study.

The objective was to develop a

preliminary leak test method with the capability of differentiation of our syringe system with 5μm defects

and those without 5μm defects.

These parameters were utilized for performance qualification and functioned to verify the use of our

system with a HVLD instrument.

The second developmental phase of the CCI was

to develop the method for such a HVLD system.

The method development included using a PTI E-Scan HVLD leak test instrument with a sample

set of laser-drilled defects (small manually created holes on the sides of several syringes) and use of syringes with no known defects

Certain parameters were used for optimization.

The method was developed using our filled syringes.

A representative placebo was

also utilized.

The final product was verified in development prior to the validation with the optimized parameters.

The third developmental phase was to validate

a leak test method using HVLD technology.

All work was completed using a PTI E-Scan HVLD leak test instrument.

Validation included three

test series across multiple days and operators.

Completed the Three-Month Product Stability

Testing Required by the FDA

We completed the three-month product

stability testing that is required by the FDA for our CypCaps ™

Our Cell-in-a-Box ®

encapsulated cell product CypCaps ™

passed all the FDA-required tests for the first three-months of the 24-month stability

As based in the “

International

Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use”

(“ICH”) guidelines,

regulatory agencies around the world, including the FDA, require a shelf-life determination for all medical products.

Living products,

like cell therapies such as CypCaps™, as well as live vaccines etc., are particularly sensitive and more prone to inactivation over

time, so it is especially important to determine the shelf-life for these products.

A battery of tests was performed on the CypCap™

that had been frozen post-production for three months of storage at -80 degrees C.

Samples were thawed to show that the cells inside the

CypCaps™

were still alive and functional as well as free of infectious agents.

Some of these tests were performed by Austrianova

(cell count, biological activity of the cells, capsule integrity, label integrity), whereas others (sterility, pH measurement) were performed

by contract laboratories.

Completed the Container

Closure Integrity Testing Required by the FDA

We completed the Container

Closure Integrity testing the FDA requires be conducted on our CypCaps™.

This CCI test is a component of the 24-month stability

The CCI test is part of the ongoing study to determine the shelf life of the CypCaps™

final product that the FDA requires

for all medical products.

The data from the CCI test was included in our IND.

All future longer-term shelf-life analyses, such as the

next CCI test at the one-year post-production time period, will be reported to the FDA but was not required for our IND submission.

explained above, regulatory agencies around the world, including the FDA, require a shelf-life determination for all medical products.

Living products, like cell therapies such as CypCaps™, as well as live vaccines, are particularly sensitive and more prone to inactivation

over time, so it is particularly important to determine the shelf-life for our clinical trial product.

Submitted Drug Master File to the FDA

With the support of the Company, Austrianova submitted

a Drug Master File (“DMF”) to the FDA in connection with of our IND submission.

The DMF provides all confidential and detailed

information covering the production of the CypCaps™

final product, which was produced by Austrianova and will be used in our planned

clinical trial in LAPC.

A DMF is submitted to the FDA to provide detailed

information about facilities, processes and materials used in the manufacturing, processing and packaging of human drugs and biologics.

It is a prerequisite to securing approval and commercialization and ensures confidentiality of proprietary information related to the

Active Pharmaceutical Ingredient (“API”) used in the manufacture of CypCaps™.

The DMF requirements are complex and specific,

encompassing every detail involved with the manufacture of the API –

from raw materials to analytical methods, process development

and optimization.

The scrutiny goes all the way back to the starting materials used in the API.

Appointed Dr.

Iglesias as Consulting Chief Medical

Officer for the Clinical Trial in Pancreatic Cancer

We appointed Dr.

consulting Chief Medical Officer for our planned clinical trial in LAPC, should the FDA lift the clinical hold.

Iglesias brings a

wealth of experience to PharmaCyte in developing and testing a variety of cancer chemotherapeutic agents, including key positions

with many prominent biotechnology companies such as Eli Lilly, Amgen, Abraxis, and Celgene.

We believe Dr.

Iglesias’s body of

work is ideally suited to guide us through our planned clinical trial in LAPC.

As the global Vice-President of Clinical Development

at Celgene, Dr.

Iglesias led the team that obtained FDA approval for Abraxane ®

(the nab-paclitaxel/gemcitabine combination), which is a first-line therapy in pancreatic cancer.

Iglesias is familiar with the treatment of

various abdominal cancers and is experienced with the use of gemcitabine in patients.

He designed the Phase 2 clinical trial for the development

of nab-paclitaxel for use against metastatic breast cancer while at Celgene.

Iglesias has also been awarded numerous prestigious fellowships

and he is the co-author of 68 publications in scientific journals.

Submitted IND to the FDA for Clinical Trial in Locally Advanced

Inoperable Pancreatic Cancer

We submitted our IND to the FDA for a planned

Phase 2b clinical trial in locally advanced inoperable pancreatic cancer.

As noted above, on October 1, 2020, the FDA placed the IND on

clinical hold.

See “Our Investigational New Drug Application and the Clinical Hold”.

Should the FDA lift the clinical hold, the

proposed multicenter, randomized, open-label Phase 2b clinical trial is intended to evaluate the efficacy and safety of

CypCaps™

(genetically engineered human cells encapsulated using the Cell-in-a-Box ®

technology) in combination

with low doses of the chemotherapy prodrug, ifosfamide, as compared to chemoradiation therapy with capecitabine plus external beam

radiation therapy (“EBRT”) or stereotactic body radiation therapy (“SBRT”) alone.

The study population will

consist of approximately 100 patients.

Patients will be randomized in a 1:1 ratio to either treatment with the study therapy or a

The randomization will be stratified by previous treatment (Abraxane ®

plus gemcitabine or FOLFIRINOX) and

the control arm choice (capecitabine/EBRT or SBRT alone).

The primary objective will be determined by progression

free survival.

The secondary objectives for this study are to determine if CypCaps ™

plus low dose ifosfamide will:

increase overall survival;

(ii) increase the objective response rate;

(iii) increase the rate of conversion of the pancreatic tumor from

inoperable to operable;

(iv) decrease the pancreatic cancer tumor marker CA 19-9;

and (v) improve a patient’s quality of life.

addition, this clinical trial will assess the safety and tolerability of CypCaps ™

plus low dose ifosfamide.

Completed Second Container

Closure Integrity Test

We completed the second Container

Closure Integrity test that the FDA required for our CypCaps™

This test is a component of the 24-month stability study

of our CypCaps™.

As explained above, the CCI test is part of the ongoing study to determine the shelf life of the CypCaps™

final product.

The data from the second CCI test was submitted to the FDA as part of our IND submission.

Completed Six-Month Stability Study

We completed the six-month product stability

testing that is required by the FDA for our CypCaps™.

We intend for this product to be used, if not previously consumed in

pre-clinical testing and not expired, in the Company’s planned clinical trial in LAPC for which we submitted our IND to the

FDA and the FDA placed the IND on clinical hold.

I ndependent of

the IND, we are working on our ongoing storage stability study to determine the shelf life of the Cell-in-a-Box ®

encapsulated cell product.

The product will be kept stored frozen at -180 o C throughout the

entire duration of the 24-month stability study.

The six-month time point of the study was reached, and CypCaps™

passed all the FDA-required tests.

With each time point reached, we believe this means our final product has proven that

it can remain functional when frozen and stored up to that time point.

This six-month stability study is a continuation

of the ongoing 24-month stability study to demonstrate the shelf life of our final clinical trial product that the FDA requires for all

medicinal products.

These six-month data, as well as all future longer-term shelf-life analyses, such as the next twelve months post-production

shelf-life evaluation, was reported to the FDA and became part of our IND submission.

ICH guidelines, as well as regulatory agencies

around the world, including the FDA, require that shelf-life data needs to be determined and provided for any new medicinal product.

functionality of cell-based therapies such as CypCaps™, as well as live vaccines, are particularly prone to loss of viability and

thus activity during storage.

This necessitates detailed shelf-life determination studies for such products.

A whole range of predefined and agreed tests have

been performed on our CypCaps™

that were unfrozen after six months of storage at -80 o C.

These studies include determinations

of the number of cells, cell viability, biological activity of the cells, integrity of the capsules, sterility and pH.

It also includes

verifying that the labels are still securely adhering to the frozen syringes and are still legible.

These tests were performed either

by Austrianova (cell count, biological activity of the cells, capsule integrity, label integrity) or by its affiliated subcontractor (sterility,

pH measurement).

We believe the recently reported Container Closure

Integrity test demonstrates the syringes are properly sealed and that the contents of the syringes have not been contaminated is

also formally part of the product stability testing.

Thus, the CypCaps™

product passed all of the required tests at this six-month

Completed 9-Month Stability

We completed the nine-months product

stability testing that is required by the FDA for our CypCaps™

final product, which will be used in the Company’s planned

clinical trial in LAPC should the FDA lift its clinical hold.

The ongoing stability

study is designed to determine the shelf life of the Cell-in-a-Box ®

encapsulated cell product, CypCaps™, frozen

Once the nine-month time point was reached, the CypCaps™

passed all of the necessary tests, including

cell viability, enzyme activity and cell potency, pH, label check, capsule appearance and integrity.

This nine-month data, as well as

all future longer-term time points of the shelf life analyses, such as the next milestone, the 12-month time point, will be reported to

the FDA as an update to our submitted IND.

Began Physical Testing of the CypCaps ™

We commenced additional physical parameter testing

of our CypCaps ™

product for pancreatic cancer, in line with the recommendations provided by the FDA following our IND

The FDA asked that two additional methods be developed to determine the strength of the encapsulated cells we plan to use

in our planned clinical trial in LAPC should the FDA lift its clinical hold.

The first method involves pressing down on the

capsule and measuring either the pressure required for it to burst, or for it to deform.

Since the CypCaps ™

small, special machinery that can measure such tiny changes has to be used to demonstrate this.

The second method involves letting water flow

into the CypCaps ™

, effectively “blowing them up.”

The point at which the capsules explode will be used as

a quality control parameter.

Previous work has shown the pressures and water

conditions used in these tests to be well outside of the normal conditions encountered by the capsules inside the human body, so these

tests are designed to simulate hypothetical conditions.

Earlier studies have also shown that the capsules

do not burst even when placed under very high pressure.

Further, even in the very unlikely event that the capsule could break open, the

cells inside will be recognized as foreign bodies by the immune system.

Also, the encapsulated cells are primed for their suicide since

they express the cytochrome P450 gene and thus would be killed by the low dose ifosfamide given as part of the treatment for LAPC.

Began DNA Sequence Encoding and Stability Testing of the DNA

We commenced additional studies to determine the

exact sequence of the DNA encoding of the enzyme in the cells of our CypCaps ™

product for pancreatic cancer and the stability

of the sequences, in accordance with the requests provided by the FDA following our IND submission.

The cell clone used to produce the CypCaps ™

product has been augmented to produce the cytochrome P450 enzyme.

This enzyme converts ifosfamide from its inactive form to its cancer-killing

form and is the basis for how CypCaps ™

We have already shown that the enzyme is produced, that the expression

of the enzyme is stable over time, and that the enzyme is functional.

The FDA has now asked PharmaCyte to provide the exact DNA sequence

and configuration of the genetic augmentation responsible for the production of cytochrome P450 in the cells.

This requires additional

studies that necessitates a multi-pronged approach, including the employment of a new, state of the art, technique.

The information provided by these analyses will

also strengthen and extend the already existing data that we have already presented to the FDA on:

(i) the site of integration of the

DNA encoding of the cytochrome P450 enzyme;

and (ii) the data on the stability of the cells, even before they are encapsulated using the

Cell-in-a-Box ®

technology to produce the CypCaps ™

These new studies will add to the data that

we already have on the long-term stability and shelf life of the final CypCaps ™

Thus, while the data generated

will not change the fact that the CypCaps ™

product is functional, biologically active and effective, it will generate

further data on the exact configuration of the DNA that gives rise to the therapeutic effects of CypCaps ™

Completed 12-Month Stability Study

We completed the twelve-months product

stability testing required by the FDA for our CypCaps™

final clinical trial product.

Our CypCaps™

product passed

all the required stability tests.

The product has now shown itself to be stable and active after being stored for 12 months at -180 o C.

The study will continue to determine the maximum shelf life of the CypCaps™

As explained above,

the ongoing stability study is designed to determine the shelf life of the Cell-in-a-Box ®

encapsulated cell product,

CypCaps™, stored frozen at -180 o C.

Upon analysis after 12 months in storage at -180 o C,

the unfrozen CypCaps™

product passed all of the specified tests, including cell viability, enzyme activity and cell potency

as well as pH, label check, capsule appearance, and integrity.

This twelve-month data, as well as all future longer-term time points of

the shelf life analyses, such as the next time point to be evaluated after 18-months of storage at -80 o C,

will be reported to the FDA.

This ongoing stability study was initiated prior to the submission of our IND

submission to the FDA.

Cannabinoids to Treat Cancer

Numerous studies have demonstrated the

therapeutic potential of certain cannabinoids (constituents of Cannabis ) in patients with cancer.

Two of the most widely

studied cannabinoids in this regard are tetrahydrocannabinol (“THC”) and cannabidiol (“CBD”).

are potentially:

(i) anti-proliferative (slow tumor growth);

(ii) anti-metastatic (slow tumor spread);

(iii) anti-angiogenic

(slowing blood vessel development);

and (iv) pro-apoptotic initiate programed cell death).

In in vitro and in vivo

models, the therapeutic potential of cannabinoids is broad.

Results support the therapeutic potential in lung, brain, thyroid,

lymphoma, liver, skin, pancreas, uterus breast and prostate cancers.

In a review of 51 scientific studies, among other properties,

it was observed that cannabinoids can regulate cellular signaling pathways critical for cell growth and survival.

These properties

indicate that cannabinoids could be useful in the treatment of cancer.

We have many competitors that are developing Cannabis -based

treatments for cancer.

Jazz Pharmaceuticals has acquired GW Pharmaceuticals, PLC who had an approved cannabinoid product for the treatment

of multiple sclerosis spasticity and was developing a product portfolio to treat a variety of illnesses, including glioblastoma (brain

Cannabis Science, Inc.

has been developing topical cannabinoid treatments for basal and squamous cell skin cancers and Kaposi’s

sarcoma, and is exploring pre-clinical development of cannabinoid-based anti-cancer drugs in a collaborative agreement with other entities.

OWC Pharmaceutical Research Corp.

is developing Cannabis -based products targeting a variety of indications and has a collaborative

agreement with an academic medical center in Israel to study the effects of cannabinoids on multiple myeloma (a cancer of plasma cells).

Cannabis Pharmaceuticals, Inc.

is developing personalized anti-cancer and palliative Cannabis -based treatments aimed mainly at

improving the cachexia, anorexia syndrome and quality-of-life issues that are often characteristic of patients with devastating diseases

In contrast to the work being done by these

companies, we plan to focus on developing specific therapies based on chosen molecules rather than using complex Cannabis

We intend to use the Cell-in-a-Box ®

technology in combination with genetically modified cell lines designed

to activate cannabinoid molecules for the treatment of diseases and their related symptoms.

Our initial target will be glioblastoma

a very difficult-to treat form of brain cancer.

In May 2014, we entered into a research

agreement with the University of Northern Colorado (“UNC”).

The goal of the original research was to develop methods for

the identification, separation and quantification of constituents of Cannabis , some of which are prodrugs, which could potentially be

used in combination with the Cell-in-a-Box ®

technology to treat cancer.

In January 2017, we entered into a second research

agreement with UNC.

The goal of this research is to assess the synthesis of the patG gene and its incorporation into a vector, transfection

of human embryonic kidney cells using this vector and assessment of cannabinoic acid decarboxylase activity.

During 2017, UNC identified an organism

whose genome contains the genetic code for production of an enzyme capable of activating a cannabinoid prodrug into its active

cancer-killing form.

Our Cannabis program now has two primary areas of focus.

The first is evaluating the therapeutic

potential of cannabinoids, such as THC and CBD, particularly in our main “target”

tumor –

glioblastoma.

UNC’s laboratory research has confirmed that a purified cannabinoid showed a potent dose-dependent decrease in cell viability

for various cancers, suggesting that this cannabinoid exhibits significant anti-proliferative effects (stops the growth and

multiplication of cancer cells).

This activity has been demonstrated in brain (glioblastoma), pancreas, breast, lung, colon and

melanoma cancer cells.

The second area of focus is in finding an enzyme capable of converting an inactive, side-effect-free,

cannabinoid prodrug into its active cancer-killing form.

Clinically, targeted cannabinoid-based

chemotherapy would be accomplished by implanting the encapsulated bio-engineered cells near the site of a tumor, along with

administration of a cannabinoid prodrug which would become activated at the site of the tumor by an enzyme produced by the

encapsulated cells.

We believe this could lead to better efficacy than existing therapies with minimal

treatment related adverse events.

(i) the FDA allows us to commence a clinical

trial in LAPC described in our IND for which the FDA has placed a clinical hold;

(ii) we validate our Cell-in-a-Box ®

encapsulation

technology in our planned Phase 2b clinical trial in LAPC and (iii) the availability of sufficient additional funding occurs, we are not

spending any further resources developing this program.

Malignant Ascites Fluid Therapy

We have been exploring ways to delay the

production and accumulation of malignant ascites fluid that results from many types of abdominal tumors.

Malignant ascites fluid is

secreted by an abdominal tumor into the abdomen after the tumor reaches a certain stage of growth.

This fluid contains cancer cells

that can seed and form new tumors throughout the abdomen.

As this ascites fluid accumulates in the abdominal cavity, it can cause

Clarify the language in our Pharmacy Manual regarding proper use of the syringe fill with the product candidate for pancreatic cancer;

Provide a discussion with data for trial of the potential for cellular and humoral immune reactivity against the heterologous rat CYP2B1 protein and potential for induction of autoimmune-mediated toxicities in our study population.

We assembled a scientific and regulatory team

of experts to address the FDA requests.

That team has been working diligently to complete the items requested by the FDA.

To date we believe

we have made significant progress in fulfilling the FDA requests needed to lift the clinical hold.

The following provides a detailed summary of our

activities to have the clinical hold lifted:

Additional Regulatory Expertise Added to IND Team .

In addition to ‌our existing team of regulatory experts, we retained Biologics Consulting to perform a regulatory “Gap Analysis” and to assist us with our resubmission of the IND.

Biologics Consulting is a full-service regulatory and product development consulting firm for biologics, pharmaceuticals and medical devices and has personnel with extensive FDA experience.

Stability Studies on Our Clinical Trial Product Candidate for Pancreatic Cancer .

We have successfully completed the required product stability studies.

The timepoints were 3, 6, 9, 12, 18 and 24-months of our product candidate for pancreatic cancer being stored frozen at -80C.

These studies included container closure integrity testing for certain timepoints.

Additional Studies Requested by the FDA .

We have successfully completed various additional studies requested by the FDA, including a stability study on the cells from our MCB used to make our CypCaps™.

We are already at the 36-month stability timepoint for the cells from our MCB.

We are also collating existing information on the reproducibility and quality of the filling of the MCB cells into vials ready for CypCaps™ manufacturing.

Determination of the Exact Sequence of the Cytochrome P450 2B1 Gene .

We have completed the determination of the exact sequence of the cytochrome P450 2B1 gene inserted at the site previously identified on chromosome 9 using state-of-the-art nanopore sequencing.

This is a cutting edge, unique and scalable technology that permits real-time analysis of long DNA fragments.

The result of this analysis of the sequence data confirmed that the genes are intact.

Confirmation of the Exact Sequence of the Cytochrome P450 2B1 Gene Insert .

An additional, more ‌finely detailed, analysis of the integration site of the cytochrome P450 2B1 gene from the augmented HEK293 cell clone that is used in our CypCaps™ was found to be intact.

In this new study, we were able to confirm the previously determined structure of the integrated transgene sequence using more data points.

These studies also set the stage for a next step analysis to determine the genetic stability of the cytochrome P450 2B1 gene at the DNA level after multiple rounds of cell growth.

This new study has been completed in which our original Research Cell Bank (“RCB”) cells were compared with cells from the MCB.

The analysis confirmed that the cytochrome P450 2B1 and the surrounding sequence has remained stable with no changes detected at the DNA level.

Biocompatibility Studies .

We have been involved with 10 biocompatibility

studies requested by the FDA, 8 of which have been completed successfully.

The remaining studies are underway or about to start.

Systemic Toxicity Study of Empty Cellulose Sulphate Capsules in Mice is underway.

The Skin Sensitization Study of Empty Cellulose Sulphate

Capsules in Guinea Pigs is about to start.

These last two studies ‌should be completed well before the pig study (see below) is completed.

To enable the biocompatibility studies to be performed, we had Austrianova

Singapore Pte.

(“Austrianova”) manufacture an additional 400 syringes of empty capsules.

Systemic Toxicity Testing .

We evaluated the potential toxicity

of the capsule component of our product candidate for pancreatic cancer‌ and determined there is no evidence of toxicity in any of

the parameters examined.

The study also confirmed previous data that shows our capsule material is bioinert.

Micro-Compression and Swelling Testing .

This testing is underway.

We are developing and optimizing two reproducible methods for testing and confirming the physical stability and integrity of our CypCaps™ under extreme pressure.

These studies required the acquisition of new equipment by Austrianova as well as validation and integration into Austrianova’s Quality Control laboratory.

Break Force and Glide Testing .

We are in the process of developing a protocol to measure whether the syringe, attached to the catheter when used to expel the capsules, will still have a break and glide force that is within the specifications we have established.

We are setting the specifications based on the syringe/plunger manufacturer’s measured break and glide forces, or alternatively, accepted ranges for glide forces routinely used in the clinic.

Capsules Compatibility with the Syringe and Other Components of the Microcatheter Delivery System .

We are in the process of showing that CypCaps™ are not in any way adversely affected by the catheters used by interventional radiologists to deliver them into a patient.

Compatibility data is being generated to demonstrate that the quality of the CypCaps™ is maintained after passage through the planned microcatheter systems.

CypCaps Capsules and Cell Viability after Exposure to Contrast Medium .

We have commenced testing to show that exposure of CypCaps™ to the contrast medium interventional radiologists ‌used to implant the CypCaps™ in a patient has no adverse effect on CypCaps™.

Contrast medium is used to visualize the blood vessels during implantation.

Master Drug File Information .

Austrianova is providing additional detailed confidential information on the manufacturing process, including information on the improvements and advancements made to our product candidate for pancreatic cancer since the last clinical trials were conducted with respect to reproducibility and safety.

However, Austrianova has not changed the overall physical characteristics of CypCaps™ between the 1 st and 2 nd generations.

We are supporting Austrianova financially with this work.

Additional Documentation Requested by the FDA .

We are in the process of updating our IND submission documentation, including our discussion on immunological aspects of our treatment for LAPC.

We have commenced a study in pigs to address biocompatibility and long-term implantation and dispersion of

The study has two phases:

(i) a pilot study with 2 pigs;

and (ii) a 90-pig study.

‌The first phase has

We believe this study should complement the positive data already available from the previous human clinical trials

showing the safety of CypCaps™ implantation in human patients.

On July 21, 2022, the first phase of the pig study

The second phase of the pig study may be delayed as a result of supply chain problems, including production delays at

Austrianova possibly related to their financial condition.

Malignant Ascites

We have been exploring ways to delay the production and

accumulation of malignant ascites that results from several types of abdominal tumors.

Malignant ascites is a fluid that is secreted

by an abdominal tumor into the abdomen after the tumor reaches a certain stage of growth.

This fluid contains cancer cells that can

seed and form new tumors throughout the abdomen.

As this malignant ascites fluid accumulates in the abdominal cavity, it can cause

gross swelling of the abdomen, severe breathing difficulties and extreme pain.

Once an abdominal tumor reaches a certain

stage of development, the tumor secretes malignant ascites fluid into the abdominal cavity.

When that occurs, malignant ascites

fluid must be removed by paracentesis on a periodic basis.

Accumulated malignant ascites must be removed by

paracentesis on a periodic basis.

This procedure is painful and costly.

We know of no available therapy

that prevents or delays the production and accumulation of malignant ascites fluid.

Preclinical studies were conducted by

Translational Drug Development (“TD2”), an early-stage Clinical Research Organization (“CRO”) specializing

in oncology, to examine whether the combination of Cell-in-a-Box ®

encapsulated cells plus low doses of

ifosfamide can delay the production and accumulation of malignant ascites fluid.

We believe the data from these studies support our

plans to further explore whether the treatment might play a role in malignant ascites fluid production and accumulation.

the conclusions were difficult to interpret with certainty.

As a result, we plan to conduct another preclinical study in Germany to

determine if our conclusions from the TD2 studies are valid.

If this is successful, and subject to discussions with the FDA, we plan

to submit an IND to seek approval from the FDA to conduct a Phase 1 clinical trial in the U.S.

to determine if our drug

product candidate can delay the production and accumulation of malignant ascites fluid.

(i) the FDA allows us to commence a clinical

trial in LAPC described in our IND for which the FDA has placed a clinical hold, (ii) we validate our Cell-in-a-Box ®

encapsulation

technology in our planned Phase 2b clinical trial in LAPC and (iii) the availability of sufficient additional funding occurs, we are not

spending any further resources developing this program.

We know of no available therapy that prevents or delays the

production and accumulation of malignant ascites.

Seven preclinical studies were conducted by Translational Drug Development

(“TD2”), an early-stage clinical research organization (“CRO”) specializing in oncology, to determine

whether the combination of Cell-in-a-Box ® encapsulated cells plus low doses of ifosfamide could delay the production

and accumulation of malignant ascites.

The data from these studies suggested that our cancer therapy might play a role in malignant

ascites fluid production and accumulation.

However, the data were difficult to interpret with certainty.

On May 23, 2022, we initiated the first in a new series of studies

to test the ability of our pancreatic cancer therapy to treat malignant ascites.

This is the eighth and final preclinical study that may

lead to a Phase 1 clinical trial.

Such a clinical trial may allow us to validate the Cell-in-a-Box ® technology much faster

than our planned Phase 2b clinical trial in LAPC.

If this new series of studies is successful, we

plan to submit an IND to seek approval from the FDA to conduct a Phase 1 clinical trial to determine if our product candidate for pancreatic

cancer can delay the production and accumulation of malignant ascites.

Diabetes Therapy

1 unchanged sentence

We are developing a therapy for Type 1 diabetes

and insulin-dependent Type 2 diabetes based upon the encapsulation of a human liver cell line genetically engineered to produce, store

and secrete insulin at levels in proportion to the levels of blood sugar in the human body.

We are also considering an alternative route

to bringing a biological treatment for diabetes into the clinic.

We are exploring the possibility of encapsulating human insulin-producing

stem cells and then transplanting them into a diabetic patient.

Our plans are subject to discussions with the FDA.

The cell line we select will be encapsulated

using the Cell-in-a-Box ®

encapsulation technology.

If appropriate animal testing is completed successfully, and

subject to discussions with the FDA, we intend to submit an IND to seek the FDA’s approval to transplant encapsulated

insulin-producing cells into diabetic patients.

The goal for these approaches is to develop a bio-artificial pancreas for purposes

of insulin production for diabetics who are insulin-dependent.

Our diabetes program began with two of the

most critical components of a biological diabetes therapy - a line of human cells which release insulin in response to the blood

glucose level in their environment and a technology to protect the cells from an attack by the immune system once they are

transplanted into a patient’s body to replace his or her own destroyed insulin-producing cells.

This technology is the

Cell-in-a-Box ®

encapsulation technology.

The cells used are called Melligen cells.

They are patent-protected and have

been licensed to us by University of Technology Sydney (“UTS”).

Regulations for the use of living cells as a

medical product require that the potential of the cells to grow and form a tumor in a patient be assessed.

This so-called

“tumorigenicity study”

has been completed by the University of Veterinary Medicine Vienna (“VetMed”).

Melligen cells showed very low tumorigenicity –

at a level we believe would expect to pass regulatory scrutiny, although this

is subject to discussions with the FDA.

Putting Melligen cells and the Cell-in-a-Box ®

and insulin-dependent Type 2 diabetes based upon the encapsulation of a human cell line genetically engineered to produce, store and release

insulin at levels in proportion to the levels of blood sugar in the human body.

The cell line we select will be encapsulated using

the Cell-in-a-Box ® encapsulation technology.

If appropriate animal testing is completed successfully,

we intend to submit an IND to the FDA to seek its approval to transplant encapsulated insulin-producing cells into diabetic patients.

The goal for this approach is to develop a bio-artificial pancreas for purposes of insulin production for diabetic patients who are insulin-dependent.

Our diabetes program began with two of the most

critical components of a biological diabetes therapy - a line of human cells which release insulin in response to the blood glucose level

in their environment and a technology to protect the cells from an attack by the immune system once they are transplanted into a patient

to replace his or her own destroyed insulin-producing cells.

This technology is the Cell-in-a-Box ® encapsulation technology.

The cells we initially used are Melligen cells.

They are patent-protected and have been licensed to us by University of Technology Sydney

Putting Melligen cells and the Cell-in-a-Box ®

technology together, we conducted the first functional study in diabetic mice.

5 unchanged sentences

properties over time.

We entered into a new research agreement

with UTS to create an advanced version of the Melligen cells for the treatment of diabetes.

Under the new research agreement,

improvements will be made to the Melligen cells that we believe will increase their stability, increase their insulin production and

increase the bioactivity of the produced insulin.

Ann Simpson, who created the Melligen cells,

and her team of research scientists at UTS have been conducting this research project.

The work is being funded by the Company and UTS.

We entered into a research agreement with UTS

to create an advanced version of the Melligen cells for the treatment of diabetes.

Under this agreement, improvements are to be made to

the Melligen cells that we believe will increase their stability, increase their insulin production and increase the bioactivity of the

produced insulin.

Until recently, UTS has been conducting this research.

The work is being funded by us and UTS.

Our portion of the funding was previously paid to UTS.

The research to date has not produced

the results we had anticipated and is taking longer than we anticipated.

It remains to be seen whether the Melligen cells are capable

of producing the required insulin to be a viable cell line for the treatment of diabetes.

(i) the FDA allows us to commence a clinical

trial in LAPC described in our IND for which the FDA has placed a clinical hold, (ii) we validate our Cell-in-a-Box ®

encapsulation

technology in our planned Phase 2b clinical trial in LAPC and (iii) the availability of sufficient additional funding occurs, we are not

spending any further resources developing this program.

Impact of the COVID-19 Pandemic on the Company’s Operations

The coronavirus SARS-Cov2 pandemic (“COVID-19”)

is causing significant, industry-wide delays in clinical trials.

Although we are not yet in a clinical trial, we have filed an IND with

the FDA to commence a clinical trial in LAPC.

While the IND has been placed on clinical hold by the FDA, we have assessed the impact of

COVID-19 on our operations.

As of the date of this Report, we believe the COVID-19 pandemic has had an impact upon our operations, primarily

relating to delays in tasks associated with the preparation of the Company’s responses to the FDA’s clinical hold, including

all requested preclinical studies and assays.

There may be further delays in generating responses to the requests from the FDA related

to the clinical hold.

Many of these delays are due to the impact of the COVID-19 pandemic in foreign countries where we are conducting

these preclinical studies and assays, including India, Europe, Singapore and Thailand.

There have also been supply chain interruptions

due to the COVID-19 pandemic.

Further, many clinical trials

have been delayed due to COVID-19.

There are numerous reasons for these delays.

The research to date has not produced the

results we had anticipated and is taking longer than we anticipated.

It remains to be seen whether the Melligen cells are capable of producing

the required insulin to be a viable cell line for the treatment of diabetes.

Further research is requied.

Meanwhile, we have been working with two internationally

renowned academic institutions to develop a cell line that will form the backbone of our Diabetes Program.

These institutions are developing

a stem-cell derived beta islet cell that we plan to encapsulate to treat Type 1 and insulin-dependent Type 2 diabetes.

We are currently

negotiating agreements with these institutions, although no assurance can be give that the negotiations will be successful.

Cannabinoids to Treat Cancer

Numerous studies have demonstrated the therapeutic

potential of certain cannabinoids in patients with cancer.

Studies have shown that cannabinoids are potentially:

(i) anti-proliferative

(slow tumor growth);

(ii) anti-metastatic (slow tumor spread);

(iii) anti-angiogenic (slowing blood vessel development);

and (iv) pro-apoptotic

initiate programed cell death).

In in vitro and in vivo models, the therapeutic potential of cannabinoids is broad.

support the therapeutic potential in lung, brain, thyroid, lymphoma, liver, skin, pancreas, uterus breast and prostate cancers.

We intend to use the Cell-in-a-Box ®

technology in combination with genetically modified cell lines designed to activate cannabinoid molecules for the treatment of diseases

and their related symptoms.

Our initial target will be glioblastoma – a very difficult-to treat form of brain cancer.

However, until

the FDA allows us to commence our clinical trial in LAPC and we are able to validate our Cell-in-a-Box ® encapsulation technology

in a clinical trial, we are not spending any further resources developing our Cannabis Program.

The goal of the original research was to develop

methods for the identification, separation and quantification of constituents of Cannabis , some of which are prodrugs, which could

potentially be used in combination with the Cell-in-a-Box ® technology to treat cancer.

After achieving this milestone,

we then went on to assess the synthesis of the patG gene and its incorporation into a vector, transfection of human embryonic kidney cells

using this vector and assessment of cannabinoic acid decarboxylase activity.

We later identified an organism whose genome contains the

genetic code for production of an enzyme capable of activating a cannabinoid prodrug into its active cancer-killing form.

Our Cannabis Program now has two primary areas

The first is evaluating the therapeutic potential of cannabinoids in our main “target” tumor – glioblastoma.

In laboratory research, we have confirmed that a purified cannabinoid showed a potent dose-dependent decrease in cell viability for various

cancers, suggesting that this cannabinoid exhibits significant anti-proliferative effects (stops the growth and multiplication of cancer

This activity has been demonstrated in brain, pancreas, breast, lung, colon and melanoma cancer cells.

The second area of focus

is in finding an enzyme capable of converting an inactive, side-effect-free, cannabinoid prodrug into its active cancer-killing form.

Clinically, targeted cannabinoid-based chemotherapy

would be accomplished by implanting the encapsulated bio-engineered cells near the site of a tumor, along with administration of a cannabinoid

prodrug which would become activated at the site of the tumor by an enzyme produced by the encapsulated cells.

We believe this could lead

to better efficacy than existing therapies with minimal treatment related adverse events.

Impact of the COVID-19 Pandemic on Operations

The coronavirus SARS-Cov2 pandemic (“COVID-19”)

continues to cause uncertainty and significant, industry-wide delays in clinical trials.

The availability of vaccines holds promise for

however, new variants of the virus and potential waning immunity from vaccines may result in continued impact from COVID-19

in the future, which could adversely impact our operations.

Although we are not yet in a clinical trial, we have filed an IND with the

FDA to commence a clinical trial in LAPC.

While the IND has been placed on clinical hold by the FDA, we have assessed the impact of COVID-19

on our operations.

As of the date of this Report, COVID-19 has had

an impact upon our operations and that impact is increasing.

The impact relates to, among other things, delays in (i) completing studies

required by the FDA;

(ii) manufacturing a new batch of CypCap™ for our planned clinical trial in LAPC;

(iii) manufacturing syringes

of CypCaps™ for use in our Malignant Ascites Program;

(iv) securing third party contractors to conduct various research and development

and (v) disruptions in our supply chain.

As a result of COVID-19, commencement of our planned

clinical trial to treat LAPC may be delayed beyond lifting of the clinical hold by the FDA should that occur.

Also, enrollment may be

difficult for the reasons discussed above.

In addition, after enrollment in the trial, if a patient contracts COVID-19 during his or her

participation in the trial or is subject to isolation or shelter in place restrictions, this may cause him or her to drop out of our clinical

trial, miss scheduled therapy appointments or follow-up visits or otherwise fail to follow the clinical trial protocol.

If a patient is

unable to follow the clinical trial protocol or if the trial results are otherwise affected by the consequences of COVID-19 on patient

participation or actions taken to mitigate COVID-19 spread, the integrity of data from the clinical trial may be compromised or not be

accepted by the FDA.

This could further adversely impact or delay our clinical development program if the FDA allows it to proceed.

Clinical trials in the biopharma industry may

be delayed due to COVID-19.

There are numerous reasons for these potential delays.

For example, patients have shown a reluctance to enroll

or continue in a clinical trial due to fear of exposure to COVID-19 when they are in a hospital or doctor’s office.

There are local,

1 unchanged sentence

These discourage and interfere with patient

visits to a doctor’s office if the visit is not COVID-19 related.

Healthcare providers and health systems have shifted their resources

visits to a doctor’s office if the visit is not COVID-19 related.

Healthcare providers and health systems are shifting their resources

away from clinical trials toward the care of COVID-19 patients.

1 unchanged sentence

the treatment of COVID-19 a priority over product candidates unrelated to COVID-19.

As a result of COVID-19 and

the mitigation efforts to address it, we may experience additional disruptions that could adversely impact our business and clinical trial,

(i) delays or difficulties in enrolling patients in our Phase 2b clinical trial if the FDA allows us to go forward with the

(ii) delays or difficulties in clinical site activation, including difficulties in recruiting clinical site investigators and clinical

site personnel;

(iii) delays in clinical sites receiving the supplies and materials needed to conduct our clinical trial, including interruption

in global shipping that may affect the transport of our clinical trial product;

(iv) changes in local regulations as part of a response

to the COVID-19 pandemic which may require us to change the ways in which our clinical trial is to be conducted, which may result in unexpected

costs, or to discontinue the clinical trial altogether;

(v) diversion of healthcare resources away from the conduct of clinical trials,

including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trial;

(vi) interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended

by federal or state governments, employers and others, or interruption of clinical trial subject visits and study procedures, the occurrence

of which could affect the integrity of clinical trial data;

(vii) risk that participants enrolled in our clinical trials will acquire

COVID-19 while the clinical trial is ongoing, which could impact the results of the clinical trial, including by increasing the number

of observed adverse events;

(viii) delays in necessary interactions with local regulators, ethics committees, and other important agencies

and contractors due to limitations in employee resources or forced furlough of government employees;

(ix) limitations in employee resources

that would otherwise be focused on the conduct of our clinical trial because of sickness of employees or their families or the desire

of employees to avoid contact with large groups of people;

(x) refusal of the FDA to accept data from clinical trials in affected geographies;

and (xi) interruption or delays to our clinical trial activities.

As a result of the COVID-19

pandemic, commencement of our planned clinical trial to treat LAPC may be delayed beyond the lifting of the clinical hold by the FDA should

Also, enrollment may be difficult for the reasons discussed above.

In addition, after enrollment in the trial, if patients

contract COVID-19 during their participation in the trial or are subject to isolation or shelter in place restrictions, this may cause

them to drop out of our clinical trial, miss scheduled therapy appointments or follow-up visits or otherwise fail to follow the clinical

trial protocol.

If patients are unable to follow the clinical trial protocol or if the trial results are otherwise affected by the consequences

of the COVID-19 pandemic on patient participation or actions taken to mitigate COVID-19 spread, the integrity of data from the clinical

trial may be compromised or not be accepted by the FDA.

This could further adversely impact or delay our clinical development program

if the FDA allows it to proceed.

It is highly speculative in

projecting the effects of COVID-19 on our proposed clinical development program and the Company generally.

Moreover, the various precautionary

measures taken by many governmental authorities around the world in order to limit the spread of COVID-19 has had and may continue to

have an adverse effect on the global markets and global economy, including on the availability and pricing of employees, resources, materials,

manufacturing and delivery efforts and other aspects of the global economy.

The continuation of the COVID-19 pandemic could materially

disrupt our business and operations, hamper our ability to raise additional funds or sell or securities, continue to slow down the overall

economy, curtail consumer spending, interrupt our sources of supply, and make it hard to adequately staff our operations.

of COVID-19 quickly and dramatically change over time.

Its evolution is difficult to predict, and no one is able to say with certainty

when the pandemic will cease to have an impact on our operations.

Relationship between PharmaCyte,

Austria and Austrianova

The principal developers of the Cell-in-a-Box ®

technology are Prof.

Günzburg (“Prof.

Günzburg”) and Dr.

Brian Salmons (“Dr.

Salmons”).

Both are officers of SG Austria Pte.

(“SG Austria”) and its wholly owned subsidiary Austrianova.

The success of SG Austria

and Austrianova, on the one hand, and our success, on the other hand, are co-dependent in almost every respect.

SG Austria and Austrianova

benefit from our success.

If we commercialize or sublicense our encapsulation technology for the development of therapies for cancer and

diabetes, payments are owed by us to SG Austria or Austrianova.

In turn, we are dependent upon SG Austria and Austrianova because of the

knowledge and expertise of Prof.

Günzburg and Dr.

Salmons concerning the Cell-in-a-Box ®

technology and the actual

process of cell encapsulation.

This technology serves as the basis for all our efforts in developing treatments for both cancer and diabetes.

In addition, we own a 14.5% equity interest in SG Austria and have contractual relationships, including license agreements, with SG Austria

and Austrianova.

Key Consultants

Günzburg and Dr.

Salmons are involved

in numerous aspects of the scientific endeavors relating to our Cancer and Diabetes Programs, having initially commenced work for us as

consultants at the beginning of 2014 under an oral agreement.

They provide services to us as consultants through their consulting company,

Vin-de-Bona Trading Company Pte Ltd (“Vin-de-Bona”).

This arrangement was formalized in writing as of April 1, 2014, when

we entered a Consulting Agreement with Vin-de-Bona (“Vin-de-Bona Consulting Agreement”).

The Vin-de-Bona Consulting Agreement

had an initial term of 12 months, with additional terms of 12 months automatically renewing unless either party terminates an additional

term upon 30 days’

prior written notice.

The professional services rendered to us by Prof.

Günzburg and Dr.

Salmons are charged

at a negotiated and confidential hourly rate.

In September 2014, Prof.

Günzburg was appointed

as our Chief Scientific Officer.

He served in that capacity through 2019.

Günzburg was compensated for being our Chief Scientific

Officer (“CSO”) by our issuing Vin-de-Bona 334 restricted shares of our common stock each year in which he served as our Chief

Scientific Officer.

Günzburg together with Dr.

Salmons continue to provide professional services along the lines that were

provided while Prof.

Günzburg was our CSO.

They provide these services pursuant to the Vin-de-Bona Consulting Agreement.

Löhr, a noted European oncologist and

gastroenterologist, also participates in the development of our cancer program.

Löhr, currently with the Karolinska Institute

in Stockholm, Sweden, served as the Principal Investigation (PI) of the earlier Phase 1/2 and Phase 2 clinical trials (discussed below)

of the combination of CapCells ®

with low dose ifosfamide in patients with advanced, inoperable pancreatic cancer.

CapCells ®

are now known as CypCaps ™

denoting encapsulated cells using the Cell-in-a-Box ®

technology that will

be used in our LAPC trial, subject to the FDA lifting the clinical hold and approving us to move forward with our clinical trial in LAPC.

Günzburg and Dr.

Löhr is involved in planning and overseeing much of our planned clinical trial in LAPC.

Löhr is the Chairman of our Medical and Scientific Advisory Board and a consultant to us.

Löhr receives annually 334

shares of our restricted common stock to serve as the Chairman of our Medical and Scientific Advisory Board.

Since April 15, 2014, Dr.

Löhr also receives fees to provide professional consulting services to us through his consulting company based upon a confidential

It is highly speculative in projecting the effects

of COVID-19 on our proposed clinical development program and our company generally.

The effects of COVID-19 may quickly and dramatically

change over time.

Its evolution is difficult to predict, and no one can say with certainty when the pandemic will fully subside.

History of the Business

1 unchanged sentence

on biotechnology.

On January 6, 2015, we changed our name from “Nuvilex, Inc.”

to “PharmaCyte Biotech, Inc.”

On January 6, 2015, we changed our name from “Nuvilex, Inc.” to “PharmaCyte Biotech, Inc.” to

reflect the nature of our business.

We are a biotechnology company focused on developing

and preparing to commercialize cellular therapies for cancer and diabetes using our live cell encapsulation technology.

This resulted

from entering into the following agreements.

and preparing to commercialize cellular therapies for cancer, diabetes, and malignant ascites using our live cell encapsulation technology.

This resulted from entering into the following agreements.

Commencing in May 2011, we entered into a series

of agreements and amendments with SG Austria to acquire certain assets from SG Austria as well as an exclusive, worldwide license to use,

with a right to sublicense, the Cell-in-a-Box ®

technology and trademark for the development of therapies for cancer (“SG

Austria APA”).

of agreements and amendments with SG Austria Pte.

(“SG Austria”) to acquire certain assets from SG Austria as well as

an exclusive, worldwide license to use, with a right to sublicense, the Cell-in-a-Box ® technology and trademark for the

development of therapies for cancer (“SG Austria APA”).

In June 2013, we and SG Austria entered a Third

Addendum to the SG Austria APA (“Third Addendum”).

The Third Addendum materially changed the transaction contemplated by the

8 unchanged sentences

Effective as of the same date we entered the Third

Addendum, we and SG Austria also entered a Clarification Agreement to the Third Addendum (“Clarification Agreement”) to clarify

and include certain language that was inadvertently left out of the Third Addendum.

Among other things, the Clarification Agreement confirmed

that the Third Addendum granted us an exclusive, worldwide license to use, with a right to sublicense, the Cell-in-a-Box ®

technology and trademark for the development of therapies for cancer.

With respect to Bio Blue Bird, Bavarian Nordic

A/S (“Bavarian Nordic”) and GSF-Forschungszentrum für Umwelt u.

Gesundheit GmbH (collectively, “Bavarian Nordic/GSF”)

and Bio Blue Bird entered into a non-exclusive License Agreement (“Bavarian Nordic/GSF License Agreement”) in July 2005, whereby

A/S (“Bavarian Nordic”) and GSF-Forschungszentrum für Umwelt u.

Gesundheit GmbH (collectively, “Bavarian Nordic/GSF”)

and Bio Blue Bird entered into a non-exclusive License Agreement (“Bavarian Nordic/GSF License Agreement”) in July 2005, whereby

Bio Blue Bird was granted a non-exclusive license to further develop, make, have made (including services under contract for Bio Blue

1 unchanged sentence

others), obtain marketing approval, sell and offer for sale the clinical data generated from the pancreatic cancer clinical trials that

used the cells and capsules developed by Bavarian Nordic/GSF (then known as “CapCells”) or otherwise use the licensed patent

rights related thereto in the countries in which patents had been granted.

Bio Blue Bird was required to pay Bavarian Nordic a royalty

of 3% of the net sales value of each licensed product sold by Bio Blue Bird and/or its Affiliates and/or its sub-licensees to a buyer.

The term of the Bavarian Nordic/GSF License Agreement continued on a country-by-country basis until the expiration of the last valid claim

of the licensed patent rights.

used the cells and capsules developed by Bavarian Nordic/GSF (then known as “CapCells™”) or otherwise use the licensed

patent rights related thereto in the countries in which patents had been granted.

Bio Blue Bird was required to pay Bavarian Nordic a

royalty of 3% of the net sales value of each licensed product sold by Bio Blue Bird and/or its Affiliates and/or its sub-licensees to

The term of the Bavarian Nordic/GSF License Agreement continued on a country-by-country basis until the expiration of the last

valid claim of the licensed patent rights.

Bavarian Nordic/GSF and Bio Blue Bird amended

the Bavarian Nordic License Agreement in December 2006 (“First Amendment to Bavarian Nordic/GSF License Agreement”) to reflect

(i) the license granted was exclusive;

5 unchanged sentences

In June 2013, we acquired from Austrianova an

exclusive, worldwide license to use the Cell-in-a-Box ®

technology and trademark for the development of a therapy for Type

1 and insulin-dependent Type 2 diabetes (“Diabetes Licensing Agreement”).

exclusive, worldwide license to use the Cell-in-a-Box ® technology and trademark for the development of a therapy for Type

1 and insulin-dependent Type 2 diabetes (“Diabetes Licensing Agreement”).

This allows us to develop a therapy to treat diabetes

2 unchanged sentences

In October 2014, we entered into an exclusive,

worldwide license agreement with the UTS (“Melligen Cell License Agreement”) in Australia to use insulin-producing genetically

engineered human liver cells developed by UTS to treat Type 1 diabetes and insulin-dependent Type 2 diabetes.

These cells, named “Melligen”,

These cells, named “Melligen,”

were tested by UTS in mice and shown to produce insulin in direct proportion to the amount of glucose in their surroundings.

2 unchanged sentences

In December 2014, we acquired from Austrianova

an exclusive, worldwide license to use the Cell-in-a-Box ®

technology and trademark in combination with genetically modified

an exclusive, worldwide license to use the Cell-in-a-Box ® technology and trademark in combination with genetically modified

non-stem cell lines which are designed to activate cannabinoid prodrug molecules for development of therapies for diseases and their related

symptoms using of the Cell-in-a-Box ®

technology and trademark (“Cannabis Licensing Agreement”).

symptoms using of the Cell-in-a-Box ® technology and trademark (“Cannabis Licensing Agreement”).

us to develop a therapy to treat cancer and other diseases and symptoms through encapsulation of genetically modified cells designed to

convert cannabinoids to their active form using the Cell-in-a-Box ®

technology and trademark.

convert cannabinoids to their active form using the Cell-in-a-Box ® technology and trademark.

In July 2016, we entered into a Binding Memorandum

of Understanding with Austrianova (“Austrianova MOU”).

Pursuant to the Austrianova MOU, Austrianova will actively work with

3 unchanged sentences

In October 2016, Bavarian Nordic/GSF and Bio Blue

Bird further amended the Bavarian Nordic License Agreement (“Second Amendment to Bavarian Nordic/GSF License Agreement”) in

(i) include the right to import in the scope of the license;

5 unchanged sentences

In May 2018, the Company entered into a series

of binding term sheet amendments (“Binding Term Sheet Amendments”).

The Binding Term Sheet Amendments provide that our obligation

11 unchanged sentences

provides that we will have a 5-year right of first refusal from August 30, 2017 in the event that Austrianova chooses to sell, transfer

or assign at any time during this period the Cell-in-a-Box ®

technology, tradename and Associated Technologies (defined

or assign at any time during this period the Cell-in-a-Box ® technology, tradename and Associated Technologies (defined

below), intellectual property, trade secrets and know-how, which includes the right to purchase any manufacturing facility used for the

Cell-in-a-Box ®

encapsulation process and a non-exclusive license to use the special cellulose sulfate utilized with the

Cell-in-a-Box ®

encapsulation process (collectively, “Associated Technologies”);

Cell-in-a-Box ® encapsulation process and a non-exclusive license to use the special cellulose sulfate utilized with the

Cell-in-a-Box ® encapsulation process (collectively, “Associated Technologies”);

provided, however, that the

Associated Technologies subject to the right of first refusal do not include Bac-in-a-Box ®

(which is used to encapsulate

Associated Technologies subject to the right of first refusal do not include Bac-in-a-Box ® (which is used to encapsulate

Additionally, for a period of one year from August 30, 2017 one of the Binding Term Sheet Amendments provides that Austrianova

will not solicit, negotiate or entertain any inquiry regarding the potential acquisition of the Cell-in-a-Box ®

will not solicit, negotiate or entertain any inquiry regarding the potential acquisition of the Cell-in-a-Box ® and its

Associated Technologies.

2 unchanged sentences

Agreement are changed to 4%;

and (ii) the royalty payments on amounts received by us from sublicensees on sublicensees’

and (ii) the royalty payments on amounts received by us from sublicensees on sublicensees’ gross sales

under the same agreements are changed to 20% of the amount received us from our sublicensees, provided, however , that in the event

the amounts received by us from sublicensees is 4% or less of sublicensees’

gross sales, Austrianova will receive 50% of what we

the amounts received by us from sublicensees is 4% or less of sublicensees’ gross sales, Austrianova will receive 50% of what we

receive (up to 2%) and then additionally 20% of any amount we receive over that 4%.

5 unchanged sentences

The Binding Term Sheet Amendments also provide that Austrianova receives 50% of any other financial and non-financial consideration

received from our sublicensees of the Cell-in-a-Box ®

received from our sublicensees of the Cell-in-a-Box ® technology.

Goal and Strategies to Implement

Our goal is to become an industry-leading biotechnology

company using the Cell-in-a-Box ®

technology as a platform upon which therapies for cancer and diabetes are developed and

obtain marketing approval for these therapies from regulatory agencies in the U.S., the European Union, Australia and Canada.

company using the Cell-in-a-Box ® technology as a platform upon which therapies for cancer, malignant ascites and diabetes

are developed and obtain marketing approval for these therapies from regulatory agencies in the U.S., the European Union, Australia and

Our strategies to implement our goal consist of

the following:

Submission of our response to the FDA’s clinical hold and for the FDA to allow us to commence a clinical trial in LAPC;

Completion of preclinical

studies and clinical trials that demonstrate the effectiveness of our product candidate in reducing the production and accumulation

of malignant ascites fluid in the abdomen that is characteristic of pancreatic and other abdominal cancers;

Completion of preclinical studies and clinical trials that involve the encapsulation of the Melligen cells and genetically modified stem cells using the Cell-in-a-Box®

technology to develop a therapy for Type 1 and insulin-dependent Type 2 diabetes;

Submission of our response to the FDA’s clinical hold and for the FDA to allow us to commence a clinical trial in LAPC;

Completion of preclinical studies and clinical trials that demonstrate the effectiveness of our product candidate in reducing the production and accumulation of malignant ascites fluid in the abdomen that is characteristic of pancreatic and other abdominal cancers;

Completion of preclinical studies and clinical trials that involve the encapsulation of the Melligen cells and genetically modified stem cells using the Cell-in-a-Box® technology to develop a therapy for Type 1 and insulin-dependent Type 2 diabetes;

Acquisition of contracts that generate revenue or provide research and development capital utilizing our sublicensing rights;

Further development of uses of the Cell-in-a-Box ®

technology platform through contracts, licensing agreements and joint ventures with other companies;

Further development of uses of the Cell-in-a-Box ® technology platform through contracts, licensing agreements and joint ventures with other companies;

Completion of testing, expansion and marketing of existing and newly derived product candidates.

Market Opportunity and the Competitive Landscape

The two areas we are developing for live cell

encapsulation-based therapies are cancer and diabetes.

The Cell-in-a-Box ®

comprised of cotton’s natural component - cellulose.

Other materials used by competitors include alginate, collagen, chitosan,

gelatin and agarose.

Market Opportunity and Competitive Landscape

The three areas we are developing for live cell

encapsulation-based therapies are cancer, diabetes and malignant ascites.

The Cell-in-a-Box ® capsules are

comprised of cotton’s natural component - cellulose.

Other materials used by competitors include alginate, collagen, chitosan, gelatin

Alginate appears to be the most widely used of these.

8 unchanged sentences

has also been reported to occur over time when other types of encapsulation materials begin to degrade.

The cells encapsulated using the Cell-in-a-Box ®

technology can be frozen for extended periods of time.

3 unchanged sentences

The implications of this

property of the Cell-in-a-Box ®

technology are obvious - long-term storage of encapsulated cells and shipment of encapsulated

property of the Cell-in-a-Box ® technology are obvious - long-term storage of encapsulated cells and shipment of encapsulated

cells over long distances.

2 unchanged sentences

Cancerous diseases may be treated by placing encapsulated drug-converting cells that convert a chemotherapy prodrug near the cancerous tumor;

Confinement and maintenance of therapeutic cells that activate a chemotherapy prodrug may be placed at the site of implantation in a blood vessel near the cancerous tumor results in “targeted chemotherapy;”

Increased efficacy of a chemotherapy prodrug may allow for lower doses of the prodrug to be given to a patient, significantly reducing or even eliminating side effects from the chemotherapy;

1 unchanged sentence

Multi-layered trade secret protection and marketing exclusivity for our technology exists and is being expanded;

Cell-in-a-Box ®

capsules can prevent immune system attack of functional cells inside them without the need for immunosuppressive drug therapy;

data with the Cell-in-a-Box ®

technology and the cells used with our technology from animal and initial human

clinical trials.

The field of diabetes cell therapy development

is competitive.

There are numerous companies developing cell-based therapies for diabetes.

These competitors include companies such as

Viacyte, Inc.

in collaboration with CRISPR Therapeutics and W.L.

Gore and Associates which have developed a PEC-Direct, a stem cell-based

treatment for type 1 diabetes.

Because of the acquisition of Semma Therapeutics, Inc., Vertex is now active in the diabetes field.

Diabetes Research Institute Foundation, Beta-O2 Technologies Ltd., Diatranz Otsuka Ltd., Sernova Corp.

and Bthe 4=drugetaCell NV are all

developing some form of encapsulation-based disease therapies.

Although such competition exists, we believe these other companies are

developing encapsulation-based therapies using encapsulation materials and methodologies that produce capsules or devices that are far

less robust than ours or that are associated with other problems, such as extremely short shelf-life of the product and/or fibrotic overgrowth

of their encapsulation products when implanted in the body.

We believe these properties are not characteristic of the Cell-in-a-Box ®

Cell-in-a-Box ® capsules can prevent immune system attack of functional cells inside them without the need for immunosuppressive drug therapy;

Promising data with the Cell-in-a-Box ® technology and the cells used with our technology from animal and initial human clinical trials.

Pancreatic cancer is increasing in most industrialized

5 unchanged sentences

Our goal is to satisfy a clear unmet medical need

for patients with LAPC whose tumors no longer respond after 4-6 months of treatment with the chemotherapy combination of Abraxane ®

plus gemcitabine or the four-drug combination known as FOLFIRINOX.

For these patients, there is currently no effective therapy.

We believe there will be no therapy comparable to our Cell-in-a-Box ®

plus low dose of ifosfamide combination therapy when

We believe there will be no therapy comparable to our Cell-in-a-Box ® plus low dose of ifosfamide combination therapy when

it is used in these patients.

1 unchanged sentence

pancreatic cancer.

In addition to commercial entities such as Halozyme, Inc., OncoMed Pharmaceuticals, Inc.

and Boston Biomedical, Inc.,

to name a few of the smaller companies, several academic institutions and cancer centers are trying to improve the outcome for pancreatic

cancer patients.

There are several drugs already available and in the pipelines of pharmaceutical companies worldwide, not the least of

which is the combination of the drugs of Abraxane ®

and gemcitabine.

This is the primary FDA-approved combination of drugs

for treating advanced pancreatic cancer.

In Europe and in the U.S., the 4-drug combination FOLFIRINOX has also found use as a first-line

treatment for advanced pancreatic cancer.

Some of our competitive strengths include the Orphan Drug Designation we have been granted by

the FDA and the European Medicines Agency (“EMA”) for our pancreatic cancer therapy, our trade secrets, the patents we are

seeking and the licensing agreements we have that are described in this Report.

Yet many of our competitors have substantially greater

financial and marketing resources than we do.

They also have stronger name recognition, better brand loyalty and long-standing relationships

with customers and suppliers.

Our future success will be dependent upon our ability to compete.

We believe our product candidate for

pancreatic cancer has already shown promise through the completion of a Phase 1/2 and a Phase 2 clinical trial in advanced,

inoperable pancreatic cancer carried out in Europe by Bavarian Nordic in 1998 –

1999 and 2000, respectively.

candidate for diabetes has also shown promise.

Completed research studies have resulted in positive responses in animal models using

the Melligen cells.

We believe we are in a strong competitive position considering our unique encapsulation technology and the

genetically modified cells that we have the exclusive worldwide license to use in most industrialized countries.

As discussed above in the section on cannabinoids,

PharmaCyte has several major competitors developing Cannabis -based therapies for cancer.

Previous Clinical Trials Using Our Encapsulation

There are dozens of startups, smaller biotech companies, big pharma, and several academic institutions and cancer centers

all trying to improve the outcome for pancreatic cancer patients.

For example, in a single patient case report published June 2022 in

the New England Journal of Medicine, a study funded by the Providence Portland Medical Foundation in conjunction with the Earle A.

Research Institute reported objective regression of metastatic pancreatic cancer using genetically-engineered autologous T cells.

are several drugs already available and in the pipelines of pharmaceutical companies worldwide, not the least of which is the combination

of the drugs of Abraxane ® and gemcitabine.

This is the primary FDA-approved combination of drugs for treating advanced

pancreatic cancer.

In Europe and in the U.S., the 4-drug combination FOLFIRINOX has also found use as a first-line treatment for advanced

pancreatic cancer.

Some of our competitive strengths include the Orphan Drug Designation we have been granted by the FDA and the European

Medicines Agency for our pancreatic cancer therapy, our trade secrets, the patents we are seeking and the licensing agreements we have

that are described in this Report.

Yet many of our competitors have substantially greater financial and marketing resources than we do.

They also have stronger name recognition, better brand loyalty and long-standing relationships with customers and suppliers.

success will be dependent upon our ability to compete.

We believe our product candidate for pancreatic

cancer has already shown promise through the completion of a Phase 1/2 and a Phase 2 clinical trial in advanced, inoperable pancreatic

cancer carried out in Europe by Bavarian Nordic in 1998 – 1999 and 2000, respectively.

We have a number of competitors developing Cannabis -based

treatments for cancer.

In February 2021, Jazz Pharmaceuticals Public Limited Company (“Jazz”), a neuroscience and oncology

focused company, acquired GW Pharmaceuticals, PLC for $7.2 billion.

Jazz now has two approved cannabinoid extract-based products:

(CBD) oral solution for the treatment of seizures associated with Lennox-Gastaut syndrome, Dravet syndrome or tuberous sclerosis complex,

and Sativex ® (THC/CBD) oromucosal spray for the treatment of severe multiple sclerosis spasticity.

is currently being studied in conjunction with the Brain Tumour Charity and the UK National Health Service to examine effectiveness in

the treatment of recurrent glioblastoma brain tumor when used alongside the chemotherapeutic agent temozolomide.

Jazz’s pipeline

indications include:

neonatal hypoxic-ischemic encephalopathy, neuropsychiatry targets, autism spectrum disorders, epilepsy, spasticity

and undisclosed targets.

Cannabis Science, Inc.

(“CBIS”) has a number of indications in its product development pipeline,

all pre-clinical, the most advanced being for the treatment of oxidative stress, psychosis/anxiety, PTSD, and sleep deprivation.

also has plans to develop treatments for Stage 4 lung cancer and pancreatic cancer.

CNBX Pharmaceuticals Inc.

(previously Cannabics Pharmaceuticals,

Inc.) (“CNBX”) has a primary research focus on the development of cannabinoid therapies for the treatment of cancer, mainly

cancers of the gastrointestinal tract, skin, breast and prostate.

CNBX’s other Cannabis -based areas of research include Alzheimer’s

disease, mental health conditions, and auto-immune diseases.

Cannabotech Ltd.

(“Cannabotech”), an Israeli company, in collaboration

with Haifa University, is studying an improved method for killing pancreatic and colon cancer cells using a botanical drug based on an

extract of the Cyathus striatus fungus and a cannabinoid extract.

Cannabotech is also developing therapies for breast, lung and

prostate cancers.

In contrast to the work being done by these companies, we plan to focus

on developing specific therapies based on chosen molecules rather than using Cannabis extracts.

We intend to use the Cell-in-a-Box ®

technology in combination with genetically -modified cell lines designed to activate cannabinoid molecules for the targeted treatment

of diseases and their related symptoms.

The Centers for Disease Control and Prevention

estimates that in 2022 a total of 37.3 million people in the U.S.

have been diagnosed with diabetes (11.3% of the U.S.

population) and

another 8.5 million people (23.0% of adults) are undiagnosed.

The diabetes market is estimated in the tens of billions of dollars, and

it continues to grow.

The field of diabetes cell therapy development

is very competitive.

There are numerous companies developing cell-based therapies for diabetes.

These competitors include companies such

as ViaCyte, Inc.

which has two stem cell-based product candidates in Phase 1/2 clinical trials for type 1 diabetes:

PEC-Direct, which

is a pouch that is “open” to the surrounding vasculature and requires the use of immunosuppressive drugs, and PEC-Encap, which

is a pouch that contains the implanted cells and prevents contact with the vasculature and immune cells but still allows passage of nutrients

and proteins to travel between the cells inside the device and blood vessels which grow along the outside of the device.

reported to generally prevent immune rejection and immune sensitization.

Conceptually, PEC-Encap has similarities with Cell-in-a-Box®.

Other companies developing some form of encapsulation-based diabetes therapy include Vertex Pharmaceuticals Inc., Defymed, Diatranz Otsuka

Limited, Seraxis, Inc., Unicyte AG, Sernova Corp., Betalin Therapeutics Ltd., Novo Nordisk, Beta-O2 Technologies Ltd., Eli Lilly &

in collaboration with Sigilon Therapeutics, Inc.

and the Diabetes Research Institute Foundation.

Although such competition exists in the diabetes

space, we believe these other companies are developing encapsulation-based therapies using materials and methodologies that produce capsules

or devices that are far less robust than ours or that are associated with other problems, such as extremely short shelf-life of the product

and/or fibrotic overgrowth of their encapsulation products when implanted in the body.

We believe these properties are not characteristic

of the Cell-in-a-Box ® capsules.

Our product candidate for diabetes has shown promise.

Completed research studies have resulted

in positive responses in animal models using the Melligen cells.

We believe we are in a strong competitive position considering our unique

encapsulation technology and the genetically modified cells that we have the exclusive worldwide license to use in most industrialized

Malignant ascites occurs when cancer cells irritate the peritoneum

causing an overproduction of ascitic fluid which causes the abdomen to swell as fluid accumulates.

It is more likely to develop in patients

who have ovarian, uterine, cervical, colorectal, stomach, pancreatic, breast and liver cancers.

In most patients, development of malignant

ascites is a sign of advanced disease and poor prognosis.

Malignant ascites can result in impairment to the quality of life of a cancer

In addition to abdominal distention, pain and difficulty breathing, it may also cause nausea, vomiting, early satiety, lower

extremity edema, weight gain and reduced mobility.

These symptoms can interfere with a patient’s ability to eat, to walk and to

perform daily activities.

They also reduce a patient’s ability to withstand anti-cancer therapies, potentially reducing survival.

We are developing a therapy to delay the production

and accumulation of malignant ascites using our cancer therapy (i.e., ifosfamide converting encapsulated live cells).

Preclinical studies

are underway in Germany, and, if successful, we plan to seek FDA approval to conduct a Phase 1 study.

Typical treatments for malignant

ascites include paracentesis, percutaneously implanted catheters, peritoneal ports and peritoneovenous shunts.

These treatments can be

painful, ineffective and expensive.

There is currently no available treatment that delays the production and accumulation of malignant

ascites fluid, and we know of no competitors in this area.

Previous Clinical Trials Using Encapsulation

Two previous clinical trials using what is now

29 unchanged sentences

in the clinical trial included inoperable pancreatic adenocarcinoma Stage 3-4 (according to IUCC criteria) as determined by histology

and measured by computerized tomography (“CT”) scan and the patients must not have had any prior chemotherapy for their disease.

Duration of Treatment and Dosage Information :

3 unchanged sentences

The cells overexpressed CYP2B1 (a cytochrome P450 isoform), which catalyzed the conversion of the anticancer prodrug ifosfamide

into its “cancer-killing”

into its “cancer-killing” form.

On day 1, patients were monitored for evidence

12 unchanged sentences

Observational Metrics Utilized and Actual Results

Standard National Cancer Institute (“NCI”) criteria for evaluating tumor growth were used to assess results:

stable disease (tumors 50-125% of initial size) (“SD”);

partial remission (more than 50% reduction in tumor volume) (“PR”);

minor response (tumor reduction of between 25% and 50%) (“MR”).

Standard National Cancer Institute (“NCI”) criteria for evaluating tumor growth were used to assess results:

stable disease (tumors 50-125% of initial size) (“SD”);

partial remission (more than 50% reduction in tumor volume) (“PR”);

minor response (tumor reduction of between 25% and 50%) (“MR”).

Effects of the treatment on tumor size were measured

9 unchanged sentences

Toxicity was measured based on World Health Organization

(“WHO”)/NCI guidelines on common toxicity criteria.

The WHO and the NCI use standardized classifications of the adverse events

1 unchanged sentence

In cancer clinical trials, these are used to determine if a drug or treatment causes unwanted

side effects (“Adverse Events”) when used under specific conditions.

For example, the most commonly used classification is

known as the “Common Terminology Criteria for Adverse Events”

developed by the NCI in the U.S.

known as the “Common Terminology Criteria for Adverse Events” developed by the NCI in the U.S.

Most clinical trials carried

4 unchanged sentences

4 = life-threatening;

In the studies reported for Cell-in-a-Box ®

plus low-dose ifosfamide combination

in pancreatic cancer patients, the study investigators noted 11 Serious Adverse Events (“SAEs”) in 7 patients, none of which

In the studies reported for Cell-in-a-Box ® plus low-dose ifosfamide combination

in pancreatic cancer patients, the study investigators noted 11 Serious Adverse Events (“SAEs”) in 7 patients, none of which

were believed to be treatment-related.

Each patient’s need for pain medication

and the quality of life (“QOL”) was monitored using a questionnaire established for diseases of the pancreas.

Each patient’s need for pain medication

and the quality of life (“QOL”) was monitored using a questionnaire established for diseases of the pancreas.

A QOL questionnaire

7 unchanged sentences

QOL questionnaires were analyzed according to

the criteria developed by the European Organization for Research and Treatment of Cancer (“EORTC”).

As used in the description

of the QOL results discussed in the published report of the Phase 1/2 trial of the Cell-in-a-Box ®

plus low-dose ifosfamide

of the QOL results discussed in the published report of the Phase 1/2 trial of the Cell-in-a-Box ® plus low-dose ifosfamide

combination in pancreatic cancer patients, the questionnaire was used to assess the QOL of patients undergoing treatment.

4 unchanged sentences

A clinical benefit score based on variables, including

the “Karnofsky Score”

and body weight, was determined.

the “Karnofsky Score” and body weight, was determined.

Pain and analgesic consumption were calculated from the QOL questionnaires.

The Karnofsky Score is a scale that is used to attempt to quantify a cancer patient’s general well-being and activities of daily

It is often used to judge the suitability of patients for inclusion into clinical trials.

As a clinical trial progresses, a patient’s

Karnofsky Score can change.

It is also used to assess a patient’s QOL as a clinical trial progresses.

The scale starts at 100 (normal,

31 unchanged sentences

In accordance with the report of the study, only

one Adverse Event (increased lipase activity on day 15 after installation of the capsules), which was a Grade 1 Adverse Event, “may”

have been linked to implanting the capsules.

Ten of 14 patients experienced a “clinical

benefit”

which means either no increase or a decrease in pain intensity.

Ten of 14 patients experienced a “clinical

benefit” which means either no increase or a decrease in pain intensity.

For 7 of the patients, this was confirmed by their analgesic

None of these “benefited”

patients registered an increased analgesic usage either in terms of dosage or WHO levels.

None of these “benefited” patients registered an increased analgesic usage either in terms of dosage or WHO levels.

None of the patients showed an increased Karnofsky

3 unchanged sentences

indices were still stable at the week 20 assessment.

One patient’s body weight increased at both

weeks 10 and 20 and another patient showed increased weight at week 10 (this patient withdrew from the clinical trial and no week 20 weight

6 unchanged sentences

the relevant week 0 values.

The “worst case scenario”

The “worst case scenario” required

a pain relief score of 20 points or more to be judged an improvement and a decrease in the Karnofsky Score of 10 points or more to indicate

5 unchanged sentences

survival time.

In the “best case scenario,”

In the “best case scenario,” a pain

relief score of 10 points or more was an improvement.

11 unchanged sentences

The percentage of one-year survivors was approximately 18%.

In a Phase 3 clinical trial of Celgene’s Abraxane ®

plus gemcitabine combination that was approved by the FDA in September 2013, the median survival time for patients was about 8.5 months

17 unchanged sentences

Conclusions :

In the opinion of the trial’s

investigators, in this Phase 1/2 clinical trial the use of the combination of Cell-in-a-Box ®

capsules plus low-dose ifosfamide

In the opinion of the trial’s

investigators, in this Phase 1/2 clinical trial the use of the combination of Cell-in-a-Box ® capsules plus low-dose ifosfamide

was both safe and effective.

1 unchanged sentence

that this assessment will be maintained in any late-phase clinical trial or that any drug regulatory authority will ultimately determine

that the Cell-in-a-Box ®

plus low-dose ifosfamide combination is safe and effective for the purposes of granting marketing

In the Phase 1/2 clinical trial only a small

number of patients were evaluated.

Statistical parameters were not used in the published reports of the Phase 1/2 trial to validate

the anticancer efficacy of the Cell-in-a-Box ®

plus low-dose ifosfamide combination in patients with advanced,

inoperable pancreatic cancer.

that the Cell-in-a-Box ® plus low-dose ifosfamide combination is safe and effective for the purposes of granting marketing

In the Phase 1/2 clinical trial only a small number

of patients were evaluated.

Statistical parameters were not used in the published reports of the Phase 1/2 trial to validate the anticancer

efficacy of the Cell-in-a-Box ® plus low-dose ifosfamide combination in patients with advanced, inoperable pancreatic cancer.

In the opinion of the investigators, the results indicate a trend towards efficacy;

accordingly, the

results should not be viewed as absolute numbers.

It should be noted, however, that because the results were not statistically

significant, any observations of efficacy must be weighed against the possibility that the results were due to chance alone.

purpose of the clinical trial was not to obtain data so that marketing approval could be obtained from regulatory authorities.

Rather, the clinical trial allowed the investigators to determine whether the Cell-in-a- Box ®

capsules plus low-dose

ifosfamide combination holds promise as a therapy for advanced pancreatic cancer.

In the cancer arena, Phase 1/2 clinical trials are

accordingly, the results should not be viewed as absolute

It should be noted, however, that because the results were not statistically significant, any observations of efficacy must be

weighed against the possibility that the results were due to chance alone.

The purpose of the clinical trial was not to obtain data so

that marketing approval could be obtained from regulatory authorities.

Rather, the clinical trial allowed the investigators to determine

whether the Cell-in-a- Box ® capsules plus low-dose ifosfamide combination holds promise as a therapy for advanced pancreatic

In the cancer arena, Phase 1/2 clinical trials are intended to:

(i) establish the safety of the drug or treatment being investigated;

and (ii) determine if a trend towards efficacy

In accordance with FDA regulations and guidance, as well as similar regulations and guidance from other regulatory

authorities in countries other than the U.S., we realize that a large, multicenter, randomized, comparative study needs to be

conducted and the results from such a trial would have to confirm the results from this previous Phase 1/2 trial before an

application for marketing approval could be filed with the FDA or EMA.

If our product candidate is approved by the

regulatory agencies, we believe it could provide a significant benefit to those with this devastating and deadly disease, not only

in terms of lifespan but also in terms of increased quality of life.

Also, we believe that success of the live cell encapsulation

technology in the pancreatic cancer setting may lead to its successful use in developing therapies for other forms of solid

cancerous tumors after preclinical studies and clinical trials have been completed.

and (ii) determine if a trend towards efficacy exists.

In accordance with FDA regulations and guidance, as well as similar regulations

and guidance from other regulatory authorities in countries other than the U.S., we realize that a large, multicenter, randomized, comparative

study needs to be conducted and the results from such a trial would have to confirm the results from this previous Phase 1/2 trial before

an application for marketing approval could be filed with the FDA or EMA.

If our product candidate is approved by the regulatory

agencies, we believe it could provide a significant benefit to those with this devastating and deadly disease, not only in terms of lifespan

but also in terms of increased quality of life.

Also, we believe that success of the live cell encapsulation technology in the pancreatic

cancer setting may lead to its successful use in developing therapies for other forms of solid cancerous tumors after preclinical studies

and clinical trials have been completed.

Phase 2 Clinical Trial

66 unchanged sentences

SAEs were alopecia, anemia, leucopenia, nausea and vomiting or encephalopathy.

Other SAEs were new or worse symptoms of the patients’

underlying disease.

A total of 65 events met the NCI’s common toxicity criteria.

Of these, 46.2% had Grade 1, 40% had Grade 2, 9.2%

4 unchanged sentences

No PRs were observed, but 4 patients exhibited tumor size reductions, 4 patients showed tumor growth and the remaining

5 patients had SD over the “follow-up”

period after chemotherapy.

5 patients had SD over the “follow-up” period after chemotherapy.

The median survival of patients was 40 weeks.

13 unchanged sentences

QOL assessment, although pain during the night decreased, patients felt themselves to be less attractive and lost interest in sex.

additional improvements in patients’

quality of life were observed.

additional improvements in patients’ quality of life were observed.

Conclusions :

1 unchanged sentence

were as follows:

(i) the lack of “problems”

associated with the implanted encapsulated cells was noted as in the Phase 1/2

(i) the lack of “problems” associated with the implanted encapsulated cells was noted as in the Phase 1/2

(ii) administering more than two courses of treatment with ifosfamide might have beneficial effects on survival;

4 unchanged sentences

Manufacturing

We are outsourcing all cell growth,

processing and encapsulation services needed for our future proposed clinical trials of the encapsulated cell-based cancer and

diabetes product candidates.

The Cell-in-a-Box ®

encapsulation will be done by Austrianova at its cGMP-compliant manufacturing

facility in Bangkok, Thailand.

In March 2014, we entered a Manufacturing

Framework Agreement with Austrianova (“Manufacturing Framework Agreement”) pursuant to which Austrianova will

encapsulate the genetically engineered live cells that will be used for our product candidate for the treatment of cancer.

contracted with Austrianova to provide encapsulated insulin-producing cells for our preclinical studies in diabetes.

appropriate time, we intend to enter into a similar manufacturing framework agreement with Austrianova for the encapsulated cells we

will need for our product candidate for the treatment of diabetes.

We are outsourcing all cell growth, processing

and encapsulation services needed for our future proposed clinical trials of the encapsulated cell-based cancer and diabetes product candidates.

The Cell-in-a-Box ® encapsulation will be done by Austrianova at its cGMP-compliant manufacturing facility in Bangkok, Thailand.

The encapsulation process is proprietary to Austrianova.

Austrianova is experiencing significant supply chain disruptions.

it may also be experiencing liquidity issues.

If Austrianova is unwilling or unable to perform such manufacturing for us, we are not aware

of any replacement manufacturer for the Cell-in-a-Box ® technology.

In March 2014, we entered a Manufacturing Framework

Agreement with Austrianova (“Manufacturing Framework Agreement”) pursuant to which Austrianova will encapsulate the genetically

-engineered live cells that will be used for our product candidate for the treatment of cancer.

We have also contracted with Austrianova

to provide encapsulated insulin-producing cells for our preclinical studies in diabetes.

At the appropriate time, we intend to enter into

a similar manufacturing framework agreement with Austrianova for the encapsulated cells we will need for our product candidate for the

treatment of diabetes.

Government Regulation and Product Approval

As a development stage biotechnology company that

operates in the U.S., we are subject to extensive regulation by the FDA and other federal, state, and local regulatory agencies.

Food, Drug, and Cosmetic Act (“FDCA”) and its implementing regulations set forth, among other things, requirements for the

research, testing, development, manufacture, quality control, safety, effectiveness, approval, labeling, storage, record keeping, reporting,

distribution, import, export, advertising, promotion, marketing and sale of our product candidates.

Although the discussion below focuses

on regulation in the U.S., we anticipate seeking approval for, and marketing of, our product candidates in other countries.

Our activities

in other countries will also be the subject of extensive regulation, although there can be important differences with the U.S.

of obtaining regulatory marketing approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes

and regulations will require the expenditure of substantial time and financial resources and may not be successful.

As a development -stage biotechnology company

that operates in the U.S., we are subject to extensive regulation by the FDA and other federal, state, and local regulatory agencies.

The federal Food, Drug, and Cosmetic Act (“FDCA”) and its implementing regulations set forth, among other things, requirements

for the research, testing, development, manufacture, quality control, safety, effectiveness, approval, labeling, storage, record keeping,

reporting, distribution, import, export, advertising, promotion, marketing and sale of our product candidates.

Although the discussion

below focuses on regulation in the U.S., we anticipate seeking approval for, and marketing of, our product candidates in other countries.

Our activities in other countries will also be the subject of extensive regulation, although there can be important differences with the

The process of obtaining regulatory marketing approvals and the subsequent compliance with appropriate federal, state, local and

foreign statutes and regulations will require the expenditure of substantial time and financial resources and may not be successful.

Regulatory approval, when obtained, may be limited

8 unchanged sentences

For more information,

“Risk Factors.”

Government Regulation

7 unchanged sentences

These sanctions

could include the imposition by the FDA or by an Institutional Review Board (“IRB”) of a hold on clinical trials, refusal

to approve pending marketing applications or supplements, withdrawal of approval, warning letters, product recalls, product seizures,

3 unchanged sentences

generally include:

completion of preclinical studies and formulation studies in compliance with the FDA’s Good Laboratory Practices (“GLP”), protocols and regulations;

satisfactory completion of an FDA inspection of the manufacturing facilities at which the investigational product candidate is produced to assess compliance with cGMP and proof that the facilities, methods and controls are adequate;

1 unchanged sentence

approval by an IRB at each clinical site before a trial may be initiated at that site;

performance of adequate and well-controlled clinical trials in accordance with federal regulations and with Good Clinical Practices (“GCP”) to establish the safety and efficacy of the investigational product candidate for each target indication;

Submission to the FDA of a New Drug Application (“NDA”) or a drug or Biologics License Application (“BLA”) for a biologic such as the therapies we are developing;

satisfactory completion of an FDA Advisory Committee review, if applicable;

3 unchanged sentences

to humans, it must undergo preclinical testing.

Preclinical tests include laboratory evaluation of a product candidate’s chemical

and biological activities and animal studies to assess potential safety and efficacy in humans.

5 unchanged sentences

can commence of any new drug or biologic product destined for use in humans in the U.S.

A 30-day waiting period after the submission

of each IND is required before commencement of clinical testing in humans.

If the FDA has neither commented on nor questioned the IND

within this 30-day period after submission of the IND, the clinical trial proposed in the IND may begin.

A clinical trial involves the

administration of the investigational product candidate to patients under the supervision of qualified investigators following GCP standards.

These international standards are meant to protect the rights and health of patients and to define the roles of clinical trial sponsors,

administrators and monitors.

A clinical trial is conducted under protocols that detail the parameters to be used in monitoring safety,

and the efficacy criteria to be evaluated.

A 30-day waiting period after the submission of

each IND is required before commencement of clinical testing in humans.

If the FDA has neither commented on nor questioned the IND within

this 30-day period after submission of the IND, the clinical trial proposed in the IND may begin.

A clinical trial involves the administration

of the investigational product candidate to patients under the supervision of qualified investigators following GCP standards.

These international

standards are meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators and

A clinical trial is conducted under protocols that detail the parameters to be used in monitoring safety, and the efficacy criteria

to be evaluated.

Each protocol involving testing on U.S.

patients and subsequent protocol amendments must be

submitted to the FDA as part of the IND.

The product candidates in our pipeline are

at various stages of preclinical development.

The path to regulatory approval includes three phases of clinical trials in which we

collect data to support an application to regulatory agencies to allow us to ultimately market a product for treatment of a

specified disease.

There are many difficulties and uncertainties inherent in research and development of new products, and these can

conceivably result in a high rate of failure.

To bring a drug or biologic from the discovery phase to regulatory approval, and

ultimately to market, takes years and the costs to do so are significant.

Failure can occur at any point in the process, including

after the product is approved, based on post-marketing factors.

New product candidates that appear promising in development may fail

to reach the market or may have only limited commercial success because of efficacy or safety concerns, inability to obtain

necessary regulatory approvals, limited scope of approved uses, reimbursement challenges, difficulty or excessive costs of

manufacture, alternative therapies or infringement of the patents or intellectual property rights of others.

Uncertainties in the

approval process of the regulatory agencies can result in delays in product launches and lost market opportunities.

Consequently, it

is very difficult to predict which products will ultimately be submitted for approval, which have the highest likelihood of

obtaining approval and which will be commercially viable and generate profits.

Successful results in preclinical or clinical studies

may not be an accurate predictor of the ultimate safety or effectiveness of a product candidate.

patients and subsequent protocol amendments must be submitted to the FDA as part

The product candidates in our pipeline are at

various stages of preclinical development.

The path to regulatory approval includes three phases of clinical trials in which we collect

data to support an application to regulatory agencies to allow us to ultimately market a product for treatment of a specified disease.

There are many difficulties and uncertainties inherent in research and development of new products, and these can conceivably result in

a high rate of failure.

To bring a drug or biologic from the discovery phase to regulatory approval, and ultimately to market, takes years

and the costs to do so are significant.

Failure can occur at any point in the process, including after the product is approved, based

on post-marketing factors.

New product candidates that appear promising in development may fail to reach the market or may have only limited

commercial success because of efficacy or safety concerns, inability to obtain necessary regulatory approvals, limited scope of approved

uses, reimbursement challenges, difficulty or excessive costs of manufacture, alternative therapies or infringement of the patents or

intellectual property rights of others.

Uncertainties in the approval process of the regulatory agencies can result in delays in product

launches and lost market opportunities.

Consequently, it is exceedingly difficult to predict which products will ultimately be submitted

for approval, which have the highest likelihood of obtaining approval and which will be commercially viable and generate profits.

results in preclinical or clinical studies may not be an accurate predictor of the ultimate safety or effectiveness of a product candidate.

Phase 1 Clinical Trial :

clinical trial begins when a regulatory agency, such as the FDA, allows initiation of the clinical investigation of a new product candidate.

The clinical trial studies a product candidate’s safety profile and may include a preliminary determination of a product candidate’s

A Phase 1 clinical

trial begins when a regulatory agency, such as the FDA, allows initiation of the clinical investigation of a new product candidate.

clinical trial studies a product candidate’s safety profile and may include a preliminary determination of a product candidate’s

safe dosage range.

The Phase 1 clinical trial can also determine how a drug is absorbed, distributed, metabolized and excreted by

the body and, therefore, the potential duration of its action.

The Phase 1 clinical trial can also determine how a drug is absorbed, distributed, metabolized and excreted by the

body and, therefore, the potential duration of its action.

Phase 2 Clinical Trial :

clinical trial is conducted on a limited number of patients;

A Phase 2 clinical

trial is conducted on a limited number of patients;

these patients can have a specific targeted disease.

An initial evaluation

of the product candidate’s effectiveness on patients is performed.

Additional information on the product candidate’s safety

and dosage range is obtained.

An initial evaluation of the

product candidate’s effectiveness on patients is performed.

Additional information on the product candidate’s safety and dosage

range is obtained.

For many diseases, a Phase 2 clinical trial can include up to several hundred patients.

Phase 3 Clinical Trial :

clinical trial is typically rigorously controlled, conducted in multiple centers and involves a larger target patient population that

can consist of from several hundred to thousands of patients (depending on the disease being studied) to ensure that study results are

statistically significant.

During a Phase 3 clinical trial, physicians monitor patients to determine efficacy and to gather further

information on safety.

A Phase 3 clinical trial is designed to generate all the clinical data necessary to apply for marketing approval

to a regulatory agency.

A Phase 3 clinical

trial is typically rigorously controlled, conducted in multiple centers and involves a larger target patient population that can consist

of from several hundred to thousands of patients (depending on the disease being studied) to ensure that study results are statistically

During a Phase 3 clinical trial, physicians monitor patients to determine efficacy and to gather further information on safety.

A Phase 3 clinical trial is designed to generate all the clinical data necessary to apply for marketing approval to a regulatory agency.

The decision to terminate development of an investigational

12 unchanged sentences

A sponsor may be able to request a special protocol

assessment (“SPA”), the purpose of which is to reach agreement with the FDA on the Phase 3 clinical trial protocol design

and analysis that will form the primary basis of an efficacy claim.

21 unchanged sentences

and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating

to the product’s chemistry, manufacturing and controls, as well as the proposed labeling for the product, among other things.

can come from company-sponsored clinical trials intended to test the safety and effectiveness of a product, or from several alternative

7 unchanged sentences

The FDA has 60 days

from its receipt of an NDA or BLA to determine whether the application will be accepted for filing based on the agency’s threshold

determination that it is sufficiently complete to permit substantive review.

3 unchanged sentences

During a normal review

cycle, a product is given an FDA action or Prescription Drug User Fee Act (“PDUFA”)

date within 12 months of the submission if the submission is accepted.

The FDA can extend this review by three months to consider certain

late-submitted information or information intended to clarify information already provided in the submission.

The FDA reviews the NDA

or BLA to determine, among other things, whether the proposed product is safe and effective for its intended use, and whether the product

is being manufactured in accordance with cGMP standards.

The FDA may refer applications for novel product candidates which present difficult

questions of safety or efficacy to an advisory committee.

This is typically a panel that includes clinicians and other experts for review,

evaluation and a recommendation as to whether the application should be approved and under what conditions.

The FDA is not bound by the

recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

cycle, a product is given an FDA action or Prescription Drug User Fee Act (“PDUFA”) date within 12 months of the submission

if the submission is accepted.

The FDA can extend this review by three months to consider certain late-submitted information or information

intended to clarify information already provided in the submission.

The FDA reviews the NDA or BLA to determine, among other things, whether

the proposed product is safe and effective for its intended use, and whether the product is being manufactured in accordance with cGMP

The FDA may refer applications for novel product candidates which present difficult questions of safety or efficacy to an advisory

This is typically a panel that includes clinicians and other experts for review, evaluation and a recommendation as to whether

the application should be approved and under what conditions.

The FDA is not bound by the recommendations of an advisory committee, but

it considers such recommendations carefully when making decisions.

Before approving an NDA or a BLA, the FDA will

3 unchanged sentences

required specifications.

Manufacturers of human cellular or tissue-based biologics also must comply with the FDA’s Good Tissue Practices

(“GTP”), as applicable, and with the general biological product standards.

Manufacturers of human cellular or tissue-based biologics also must comply with the FDA’s Good Tissue Practices

(“GTP”), as applicable, and with the general biological product standards.

After the FDA evaluates the NDA or BLA and the

sponsor company’s manufacturing facilities, it issues either an approval letter or a complete response letter.

A complete response

1 unchanged sentence

to reconsider the application.

If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of

the NDA or BLA, the FDA will issue an approval letter.

1 unchanged sentence

ultimately may decide that the application does not satisfy the regulatory criteria for approval.

The time to final marketing approval can

vary from months to years, depending on several variables.

These variables can include such things as the disease type, the strength

and complexity of the data presented, the novelty of the target or compound, risk-management approval and whether multiple rounds of

review are required for the agency to evaluate the submission.

After evaluating the NDA or BLA and all related information,

including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing facilities and clinical

trial sites, the FDA may issue an approval letter, or, in some cases, a complete response letter.

A complete response letter

generally contains a statement of specific conditions that must be met in order to secure final approval of the NDA or BLA and may

require additional clinical or preclinical testing in order for FDA to reconsider the application.

Even with submission of this

additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter.

approval letter authorizes commercial marketing of the drug or biologic with specific prescribing information, which may include

contraindications, warnings or precautions, for certain indications.

After approval, some types of changes to the approved product,

such as adding new indications and additional labeling claims, are subject to further testing requirements and FDA review and

The time to final marketing approval can vary

from months to years, depending on several variables.

These variables can include such things as the disease type, the strength and complexity

of the data presented, the novelty of the target or compound, risk-management approval and whether multiple rounds of review are required

for the agency to evaluate the submission.

After evaluating the NDA or BLA and all related information, including the advisory committee

recommendation, if any, and inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval

letter, or, in some cases, a complete response letter.

A complete response letter generally contains a statement of specific conditions

that must be met in order to secure final approval of the NDA or BLA and may require additional clinical or preclinical testing in order

for FDA to reconsider the application.

Even with submission of this additional information, the FDA ultimately may decide that the application

does not satisfy the regulatory criteria for approval.

If and when those conditions have been met to the FDA’s satisfaction, the

FDA will typically issue an approval letter.

An approval letter authorizes commercial marketing of the drug or biologic with specific

prescribing information, which may include contraindications, warnings or precautions, for certain indications.

After approval, some types

of changes to the approved product, such as adding new indications and additional labeling claims, are subject to further testing requirements

and FDA review and approval.

Post Approval Regulations

3 unchanged sentences

or BLA, the FDA may require post-marketing testing, including a Phase 4 clinical trial and surveillance to further assess and monitor

the product’s safety and effectiveness after commercialization has begun.

Also, as a holder of an approved NDA or BLA, a company

26 unchanged sentences

The FDA and other federal regulatory agencies

closely regulate the marketing and promotion of drugs and biologics through, among other things, standards and regulations for direct-to-consumer

tightly regulate the marketing and promotion of drugs and biologics through, among other things, standards and regulations for direct-to-consumer

advertising, communications regarding unapproved uses, industry-sponsored scientific and educational activities and promotional activities

4 unchanged sentences

Healthcare providers

are permitted to prescribe drugs or biologics for “off-label”

uses (uses not approved by the FDA and therefore not described

in the drug’s labeling) because the FDA does not regulate the practice of medicine.

are permitted to prescribe drugs or biologics for “off-label” uses (uses not approved by the FDA and therefore not described

in the drug’s labeling) because the FDA does not regulate the practice of medicine.

However, FDA regulations impose stringent restrictions

on manufacturers’

communications regarding off label uses.

on manufacturers’ communications regarding off label uses.

Broadly speaking, a manufacturer may not promote a product for off-label

2 unchanged sentences

applicable FDA requirements and restrictions in this area may subject a company to adverse publicity and enforcement action by the FDA,

Department of Justice (“DOJ”), the Office of the Inspector General of Health & Human Services (“HHS”)

and state authorities.

3 unchanged sentences

The Biologics Price Competition and Innovation

Act (“BPCIA”) amended the PHSA to authorize the FDA to approve similar versions of innovative biologics, commonly known as

A competitor seeking approval of a biosimilar must file an application to establish its product as highly like an approved

5 unchanged sentences

patents, if granted, may be eligible for limited patent term

extension under the Drug Price Competition and Patent Term Restoration Act of 1984 (“Hatch-Waxman Act”).

The Hatch-Waxman

1 unchanged sentence

review process.

However, patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the product’s

approval date.

2 unchanged sentences

It is calculated as half of the testing phase (the time between the IND submission becoming effective and the NDA,

BLA or premarket approval (“PMA”) submission) and all the review phase (the time between NDA, BLA or PMA submission and approval)

up to a maximum extension of five years.

3 unchanged sentences

must be submitted prior to the expiration of the patent.

Patent and Trademark Office (“USPTO”), in consultation with

the FDA, reviews and approves the application for any patent term extension.

5 unchanged sentences

Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act (“FCPA”)

prohibits any U.S.

18 unchanged sentences

have a similar process to that of the FDA in

that such countries require the submission of a clinical trial application (“CTA”) much like the IND prior to the commencement

of human clinical trials.

In Europe, for example, a CTA must be submitted to each country’s national health authority and an independent

ethics committee, much like the FDA and an IRB.

Once the CTA is approved in accordance with a country’s requirements, a clinical

trial may proceed in that particular country.

In Europe, for example, a CTA must typically be submitted to each country’s national health authority

and an independent ethics committee, much like the FDA and an IRB.

Once the CTA is approved in accordance with a country’s requirements,

a clinical trial may proceed in that particular country.

In the EEA, the EU Clinical Trial Regulation (“CTR”) enables sponsors

since 31 January 2022 to submit one CTA via a single online platform, the Clinical Trials Information System (CTIS), to obtain approval

for a clinical trial in several EEA countries.

To obtain regulatory approval to commercialize

a new drug or biologic under the European Union regulatory systems, we must submit a marketing authorization application (“MAA”)

with the EMA, the European Union’s counterpart to the U.S.

It is like the NDA or the BLA, except for, among other things, country-specific

document requirements.

Outside of the European Union the requirements

governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country.

Internationally,

clinical trials are generally required to be conducted in accordance with GCP standards applicable regulatory requirements of each jurisdiction

and the medical ethics principles that have their origin in the Declaration of Helsinki.

a new drug or biologic under the European Union regulatory systems, we must submit a marketing authorization application (“MAA”)

with the European Medicines Agency, or “EMA”, the EEA authority in charge of medicinal products, or with a national drug approval

National and European Union marketing authorization procedures are similar to FDA approval procedures.

While the requirements governing the conduct of

clinical trials are broadly harmonized across the EEA, in particular due to the CTR, the regulatory regimes applicable to pricing and

reimbursement vary from country to country.

Internationally, clinical trials are generally required to be conducted in accordance with

GCP standards, applicable regulatory requirements of each jurisdiction and the medical ethics principles that have their origin in the

Declaration of Helsinki.

Orphan Drug Status

In accordance with laws and regulations

pertaining to regulatory agencies, a sponsor may request that the regulatory agencies designate a drug or biologic intended to treat

a “Rare Disease or Condition”

as an “Orphan Drug.”

For example, in the U.S., a “Rare Disease or

Condition”

is defined as one which affects less than 200,000 people in the U.S., or which affects more than 200,000 people but

for which the cost of developing and making available the product is not expected to be recovered from sales of the product in the

Upon the approval of the first NDA or BLA for a drug or biologic designated as an Orphan Drug for a specified indication, the

sponsor of that NDA or BLA is entitled to 7 years of exclusive marketing rights in the U.S.

for the drug or biologic for the

particular indication unless the sponsor cannot assure the availability of sufficient quantities to meet the needs of persons with

In accordance with laws and regulations pertaining

to regulatory agencies, a sponsor may request that the regulatory agencies designate a drug or biologic intended to treat a “Rare

Disease or Condition” as an “Orphan Drug.” For example, in the U.S., a “Rare Disease or Condition” is defined

as one which affects less than 200,000 people in the U.S., or which affects more than 200,000 people but for which the cost of developing

and making available the product is not expected to be recovered from sales of the product in the U.S.

Upon the approval of the first

NDA or BLA for a drug or biologic designated as an Orphan Drug for a specified indication, the sponsor of that NDA or BLA is entitled

to 7 years of exclusive marketing rights in the U.S.

for the drug or biologic for the particular indication unless the sponsor cannot

assure the availability of sufficient quantities to meet the needs of persons with the disease.

In Europe, this exclusivity is 10 years.

However, Orphan Drug status for an approved indication does not prevent

another company from seeking approval of a drug that has other labeled indications that are not under orphan or other exclusivities.

An Orphan Drug may also be eligible for federal income tax credits for costs associated with the disease state, the strength and

complexity of the data presented, the novelty of the target or compound, the risk-management approval and whether multiple rounds of

review are required for the agency to evaluate the submission.

There is no guarantee that a potential treatment will receive

marketing approval or that decisions on marketing approvals or treatment indications will be consistent across geographic areas.

product candidate for pancreatic cancer and received Orphan Drug status in the U.S.

and European Union.

Special FDA Expedited Review and Approval

However, Orphan Drug status for an approved indication does not prevent another company from seeking approval of a drug that has other

labeled indications that are not under orphan or other exclusivities.

An Orphan Drug may also be eligible for federal income tax credits

for costs associated with the disease state, the strength and complexity of the data presented, the novelty of the target or compound,

the risk-management approval and whether multiple rounds of review are required for the agency to evaluate the submission.

guarantee that a potential treatment will receive marketing approval or that decisions on marketing approvals or treatment indications

will be consistent across geographic areas.

Our product candidate for pancreatic cancer received Orphan Drug status in the U.S.

Unlike the U.S., in the European Union, to benefit from market exclusivity, a medicine must maintain its orphan designation at

the time of marketing authorization in addition to when the designation is applied.

Special FDA Expedited Review and Approval Programs

The FDA has various programs, including fast track

18 unchanged sentences

the goal for the FDA to review an application is six months, rather than the standard review of ten months under current PDUFA guidelines.

Under the new PDUFA agreement, these six and ten-month review periods are measured from the “filing”

date rather than the

Under the new PDUFA agreement, these six and ten-month review periods are measured from the “filing” date rather than the

receipt date for NDAs for new molecular entities, which typically adds approximately two months to the timeline for review and decision

14 unchanged sentences

Drug Administration Safety and Innovation Act, or FDASIA, passed in July 2012, a sponsor can request designation of a product candidate

as a “breakthrough therapy.”

A breakthrough therapy is defined as a drug that is intended, alone or in combination with one

as a “breakthrough therapy.” A breakthrough therapy is defined as a drug that is intended, alone or in combination with one

or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the

9 unchanged sentences

Accelerated Approval Pathway

The FDA may grant accelerated approval to a

drug for a serious or life-threatening condition that provides meaningful therapeutic advantage to patients over existing treatments

based upon a determination that the drug or biologic has an effect on a surrogate endpoint that is reasonably likely to predict

clinical benefit.

The FDA may also grant accelerated approval for such a condition when the product has an effect on an intermediate

clinical endpoint that can be measured earlier than an effect on IMM, and that is reasonably likely to predict an effect on IMM or

other clinical benefit, considering the severity, rarity or prevalence of the condition and the availability or lack of alternative

Drugs granted accelerated approval must meet the same statutory standards for safety and effectiveness as those granted

traditional approval.

The FDA may grant accelerated approval to a drug

for a serious or life-threatening condition that provides meaningful therapeutic advantage to patients over existing treatments based

upon a determination that the drug or biologic has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit.

The FDA may also grant accelerated approval for such a condition when the product has an effect on an intermediate clinical endpoint that

can be measured earlier than an effect on IMM, and that is reasonably likely to predict an effect on IMM or other clinical benefit, considering

the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments.

Drugs granted accelerated

approval must meet the same statutory standards for safety and effectiveness as those granted traditional approval.

For the purposes of accelerated approval, a surrogate

17 unchanged sentences

The accelerated approval pathway is usually contingent

on a sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe

the drug’s clinical benefit.

on a sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe

the drug’s clinical benefit.

As a result, a drug candidate approved on this basis is subject to rigorous post-marketing compliance

5 unchanged sentences

Under a centralized procedure in the European

Union, the maximum timeframe for the evaluation of a MAA is 210 days (excluding “clock stops,”

when additional written

or oral information is to be provided by the applicant in response to questions asked by the Committee for Medicinal Products for Human

Use (“CHMP”)).

Union, the maximum timeframe for the evaluation of a MAA is 210 days (excluding “clock stops,” when additional written or

oral information is to be provided by the applicant in response to questions asked by the Committee for Medicinal Products for Human Use

Accelerated evaluation might be granted by the CHMP in exceptional cases, for example, when a medicinal product

is expected to be of a major public health interest, which takes into consideration:

(i) the seriousness of the disease (e.g., heavy

disabling or life-threatening diseases) to be treated;

(i) the seriousness of the disease (e.g., heavy disabling

or life-threatening diseases) to be treated;

(ii) the absence or insufficiency of an appropriate alternative therapeutic approach;

and (iii) anticipation of high therapeutic benefit.

(iii) anticipation of high therapeutic benefit.

In this circumstance, the EMA ensures that the opinion of the CHMP is given within 150

6 unchanged sentences

prescription drugs.

In recent years, Congress has considered reductions

in Medicare reimbursement levels for drugs administered by physicians.

CMS, the agency that administers the Medicare and Medicaid programs,

also has authority to revise reimbursement rates and to implement coverage restrictions for some drugs.

Cost reduction initiatives and

changes in coverage implemented through legislation or regulation could decrease utilization of and reimbursement for any approved products.

While Medicare regulations apply only to drug benefits for Medicare beneficiaries, private payers often follow Medicare coverage policy

and payment limitations in setting their own reimbursement rates.

Therefore, any reduction in reimbursement that results from federal

legislation or regulation may result in a similar reduction in payments from private payers.

The Patient Protection and Affordable Care Act,

as amended by the Health Care and Education Affordability Reconciliation Act, or collectively the Affordable Care Act, substantially changed

the way healthcare is financed by both governmental and private insurers, and significantly impacts the pharmaceutical industry.

The Affordable

Care Act intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against

fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on pharmaceutical

and medical device manufacturers, and impose additional health policy reforms.

Among other things, the Affordable Care Act expanded manufacturers’

rebate liability under the Medicaid Drug Rebate Program by increasing the minimum Medicaid rebate for both branded and generic drugs,

expanded the 340B program, and revised the definition of AMP, which could increase the amount of Medicaid drug rebates manufacturers are

required to pay to states.

The legislation also extended Medicaid drug rebates, previously due only on fee-for-service Medicaid utilization,

to include the utilization of Medicaid managed care organizations as well and created an alternative rebate formula for certain new formulations

of certain existing products that is intended to increase the amount of rebates due on those drugs.

On February 1, 2016, CMS issued final

regulations to implement the changes to the Medicaid Drug Rebate program under the Affordable Care Act.

These regulations became effective

on April 1, 2016.

Since that time, there have been significant ongoing efforts to modify or eliminate the Affordable Care Act.

On January 20, 2017, President Trump signed an

executive order directing federal agencies to exercise existing authorities to reduce burdens associated with the Affordable Care Act

pending further action by Congress.

In October 2017, he signed an Executive Order which directed federal agencies to modify how the Affordable

Care Act is implemented.

The Tax Act, enacted on December 22, 2017, repealed the shared responsibility payment for individuals who fail

to maintain minimum essential coverage under section 5000A of the Internal Revenue Code of 1986, as amended, or the Code, commonly referred

to as the individual mandate.

Other legislative changes have been proposed and

adopted since passage of the Affordable Care Act.

The Budget Control Act of 2011, among other things, created the Joint Select Committee

on Deficit Reduction to recommend proposals in spending reductions to Congress.

The Joint Select Committee did not achieve its targeted

deficit reduction of an amount greater than $1.2 trillion for the fiscal years 2012 through 2021, triggering the legislation’s automatic

reductions to several government programs.

These reductions included aggregate reductions to Medicare payments to healthcare providers

of up to 2.0% per fiscal year, which went into effect in April 2013.

Subsequent litigation extended the 2% reduction, on average, to 2030

unless additional Congressional action is taken.

However, pursuant to the Coronavirus Aid, Relief and Economic Security Act, or CARES

Act, the 2% Medicare sequester reductions have been suspended from May 1, 2020 through March 31, 2021 due to the COVID-19 pandemic..

January 2, 2013, the American Taxpayer Relief Act was signed into law, which, among other things, reduced Medicare payments to several

types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period

for the government to recover overpayments to providers from three to five years.

Further legislative and regulatory changes under

the Affordable Care Act remain possible, although the new Administration under President Biden has signaled that it plans to build on

the Affordable Care Act and expand the number of people who are eligible for subsidies under it.

President Biden indicated that he intends

to use executive orders to undo changes to the Affordable Care Act made by the Trump administration and would advocate for legislation

to build on the Affordable Care Act.

It is unknown what form any such changes or any law would take, and how or whether it may affect

our business in the future.

We expect that changes or additions to the Affordable Care Act, the Medicare and Medicaid programs, changes

allowing the federal government to directly negotiate drug prices and changes stemming from other healthcare reform measures, especially

with regard to healthcare access, financing or other legislation in individual states, could have a material adverse effect on the healthcare

The Affordable Care Act has been subject to challenges

in the courts.

On December 14, 2018, a Texas U.S.

District Court Judge ruled that the Affordable Care Act is unconstitutional in its entirety

because the “individual mandate”

was repealed by Congress.

On December 18, 2019, the Fifth Circuit U.S.

Court of Appeals held

that the individual mandate is unconstitutional and remanded the case to the Texas District Court to reconsider its earlier invalidation

of the entire Affordable Care Act.

An appeal was taken to the U.S.

Supreme Court which heard oral arguments in the case on November 10,

On June 17, 2021, the Supreme Court ruled that the plaintiffs lacked standing to challenge the law as they had not alleged personal

injury traceable to the allegedly unlawful conduct.

As a result, the Supreme Court did not rule on the constitutionality of the

ACA or any of its provisions

The Affordable Care Act requires pharmaceutical

manufacturers of branded prescription drugs to pay a branded prescription drug fee to the federal government.

Each individual pharmaceutical

manufacturer pays a prorated share of the branded prescription drug fee, based on the dollar value of its branded prescription drug sales

to certain federal programs identified in the law.

Furthermore, the law requires manufacturers to provide a 50% discount off the negotiated

price of prescriptions filled by beneficiaries in the Medicare Part D coverage gap, referred to as the “donut hole.”

The Bipartisan

Budget Act of 2018 (the “BBA”), among other things, amended the Affordable Care Act, effective January 1, 2019, to close the

coverage gap in most Medicare drug plans, commonly referred to as the “donut hole,”

by increasing from 50 percent to 70 percent

the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D.

The Affordable Care Act also expanded the Public

Health Service’s 340B drug pricing program.

As noted above, the 340B drug pricing program requires participating manufacturers to

agree to charge statutorily defined covered entities no more than the 340B “ceiling price”

for the manufacturer’s covered

outpatient drugs.

The Affordable Care Act expanded the 340B program to include additional types of covered entities:

certain free-standing

cancer hospitals, critical access hospitals, rural referral centers and sole community hospitals, each as defined by the Affordable Care

Because the 340B ceiling price is determined based on AMP and Medicaid drug rebate data, revisions to the Medicaid rebate formula

and AMP definition could cause the required 340B discounts to increase.

Payment methodologies may be subject to changes

in healthcare legislation and regulatory initiatives as well.

For example, CMS may develop new payment and delivery models, such as bundled

payment models.

Recently, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their

marketed products.

Such scrutiny has resulted in several recent U.S.

Congressional inquiries and proposed and enacted federal and state

legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer

patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for pharmaceutical

At the state level, legislatures have increasingly

2 unchanged sentences

designed to encourage importation from other countries and bulk purchasing.

At the state level, legislatures have increasingly

passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement

constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases,

designed to encourage importation from other countries and bulk purchasing.

We expect that additional federal, state and foreign

healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will

pay for healthcare products and services, which could result in limited coverage and reimbursement and reduced demand for our products,

once approved, or additional pricing pressures.

Coverage and Reimbursement

Significant uncertainty exists as to the coverage

and reimbursement status of any drug products for which we obtain regulatory approval.

and markets in other countries, sales

of any products for which we receive regulatory approval for commercial sale will depend in part on the availability of reimbursement

from third-party payors.

Third-party payors include government health administrative authorities, managed care providers, private health

insurers and other organizations.

The process for determining whether a payor will provide coverage for a drug product may be separate

from the process for setting the price or reimbursement rate that the payor will pay for the drug product.

Third-party payors may limit

coverage to specific drug products on an approved list, or formulary, which might not include all the FDA-approved drugs for a certain

Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical

products and services, in addition to their safety and efficacy.

We may need to conduct expensive pharmacoeconomic studies in to demonstrate

the medical necessity and cost-effectiveness of our product candidates, in addition to the costs required to obtain FDA approvals.

product candidates, if approved, may not be considered medically necessary or cost-effective.

A payor’s decision to provide coverage

for a drug product does not imply that an adequate reimbursement rate will be approved.

Adequate third-party reimbursement may not be

available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.

Existing federal law requires pharmaceutical manufacturers

to pay rebates to state governments, based on a statutory formula, on covered outpatient drugs reimbursed by the Medicaid program as a

condition of having their drugs paid for by Average Manufacturer Price (“AMP”).

AMP is determined by a statutory formula that

is based on prices defined in the statute.

AMP must be calculated for all products that are covered outpatient drugs under the Medicaid

program and be the “best price.”

Best price must be calculated only for those covered outpatient drugs that are a single source

drug or innovator multiple source drug, such as biologic products.

Manufacturers are required to report AMP and best price for each of

their covered outpatient drugs to the government on a regular basis.

Additionally, some state Medicaid programs have imposed a requirement

for supplemental rebates over and above the formula set forth in federal law as a condition for coverage.

In addition to the Medicaid

rebate program, federal law also requires that if a pharmaceutical manufacturer wishes to have its outpatient drugs covered under Medicaid

as well as under Medicare Part B, it must sign a “Master Agreement”

obligating it to provide a formulaic discount of

approximately 24%, known as the federal ceiling price for drugs sold to the U.S.

Departments of Defense, Veterans Affairs, the Public

Health Service and the Coast Guard, and also provide discounts through a drug pricing agreement meeting the requirements of Section 340B

of the PHSA for outpatient drugs sold to certain specified eligible healthcare organizations.

The formula for determining the discounted

purchase price under the 340B drug pricing program is defined by statute and is based on the AMP and rebate amount for a product as calculated

under the Medicaid drug rebate program discussed above.

We expect that additional federal, state and foreign healthcare

reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare

products and services, which could result in limited coverage and reimbursement and reduced demand for our products, once approved, or

additional pricing pressures.

Coverage and Reimbursement Significant uncertainty exists as to the coverage and reimbursement status

of any drug products for which we obtain regulatory approval.

and markets in other countries, sales of any products for which

we receive regulatory approval for commercial sale will depend in part on the availability of reimbursement from third-party payors.

payors include government health administrative authorities, managed care providers, private health insurers and other organizations.

The process for determining whether a payor will provide coverage for a drug product may be separate from the process for setting the

price or reimbursement rate that the payor will pay for the drug product.

Third-party payors may limit coverage to specific drug products

on an approved list, or formulary, which might not include all the FDA-approved drugs for a certain indication.

Third-party payors are

increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition

to their safety and efficacy.

We may need to conduct expensive pharmacoeconomic studies in to demonstrate the medical necessity and cost-effectiveness

of our product candidates, in addition to the costs required to obtain FDA approvals.

Our product candidates, if approved, may not be

considered medically necessary or cost-effective.

A payor’s decision to provide coverage for a drug product does not imply that

an adequate reimbursement rate will be approved.

Adequate third-party reimbursement may not be available to enable us to maintain price

levels sufficient to realize an appropriate return on our investment in product development.

Different pricing and reimbursement schemes exist

10 unchanged sentences

more intense.

Thus, increasingly high barriers are being erected

to the entry of new products.

The European Union provides options for its member states to restrict the range of medicinal products for

which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use.

state may approve a specific price for the medicinal product, or it may instead adopt a system of direct or indirect controls on the profitability

of the company placing the medicinal product on the market.

We may face competition for our product candidates from lower-priced products

in foreign countries that have placed price controls on pharmaceutical products.

In addition, in some countries, cross-border imports

from low-priced markets exert a commercial pressure on pricing within a country.

The marketability of any product for which we

5 unchanged sentences

Coverage policies and third-party reimbursement rates may change at any time.

Even if favorable coverage and reimbursement status

is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates

may be implemented in the future.

Even if favorable coverage and reimbursement

status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement

rates may be implemented in the future.

Healthcare Laws and Compliance Requirements

1 unchanged sentence

to additional regulation by various federal, state and local authorities in addition to the FDA, including the CMS, other divisions of

the HHS and its Office of Inspector General, the Office for Civil Rights that has jurisdiction over matters relating to individuals’

privacy and protected health information, the DOJ, individual U.S.

20 unchanged sentences

of the arrangement would be evaluated on a case-by-case basis based on a consideration of all the facts and circumstances to ascertain

the parties’

Moreover, the intent standard under the Anti-Kickback

Statute was amended by the Affordable Care Act to a stricter standard such that a person or entity no longer needs to have actual knowledge

of the statute or specific intent to violate it to have committed a violation.

In addition, the Affordable Care Act codified case law

that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent

claim for purposes of the federal False Claims Act, as discussed below.

the parties’ intent.

Moreover, the intent standard under the Anti-Kickback Statute was amended by the Affordable Care Act to a stricter

standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it to have

committed a violation.

In addition, the Affordable Care Act codified

case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false

or fraudulent claim for purposes of the federal False Claims Act, as discussed below.

The federal Civil Monetary Penalties Law imposes

4 unchanged sentences

or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.

modification made to the Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand”

modification made to the Fraud Enforcement and Recovery Act of 2009, a claim includes “any request or demand” for money or

property presented to the U.S.

2 unchanged sentences

Other companies

have been prosecuted for causing false claims to be submitted because of the companies’

marketing of the product for unapproved—and

thus non-reimbursable—uses.

The Federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) created

additional federal criminal statutes that prohibit knowingly and willfully executing a scheme to defraud any healthcare benefit program,

including private third-party payors and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially

false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.

many states have additional similar fraud and abuse statutes or regulations that apply to items and services reimbursed under Medicaid

and other state programs, or, in several states, apply regardless of the type of payor.

have been prosecuted for causing false claims to be submitted because of the companies’ marketing of the product for unapproved—and

thus non-reimbursable—uses.

The Federal Health Insurance Portability and Accountability

Act of 1996 (“HIPAA”) created additional federal criminal statutes that prohibit knowingly and willfully executing a scheme

to defraud any healthcare benefit program, including private third-party payors and knowingly and willfully falsifying, concealing or

covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment

for healthcare benefits, items or services.

Also, many states have additional similar fraud and abuse statutes or regulations that apply

to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the type of payor.

In addition, we may be subject to data privacy

and security regulation by both the federal government and the states in which we conduct our business.

HIPAA, as amended by the

Health Information Technology for Economic and Clinical Health Act (“HITECH”) and its implementing regulations, imposes requirements

HIPAA, as amended by the Health

Information Technology for Economic and Clinical Health Act (“HITECH”) and its implementing regulations, imposes requirements

relating to the privacy, security and transmission of individually identifiable health information.

Among other things, HITECH makes HIPAA’s

privacy and security standards directly applicable to “business associates,”

such as independent contractors or agents of

Among other things, HITECH makes HIPAA’s

privacy and security standards directly applicable to “business associates,” such as independent contractors or agents of

covered entities that receive or obtain protected health information with providing a service on behalf of a covered entity.

1 unchanged sentence

It also gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal

HIPAA laws and seek attorney’s fees and costs associated with pursuing these actions.

In addition, state laws govern the privacy

5 unchanged sentences

information to maintain safeguards and to take certain actions in response to a data breach.

EU member states, the United Kingdom, Switzerland

EEA countries, the United Kingdom, Switzerland

and other jurisdictions have also adopted data protection laws and regulations, which impose significant compliance obligations.

EEA and the United Kingdom, the collection and use of personal data, including clinical trial data, is governed by the provisions of the

General Data Protection Regulation (“GDPR”.

The GDPR became effective on May 25, 2018, repealing its predecessor directive

and increasing responsibility and liability of pharmaceutical and medical device companies in relation to the processing of personal data

of EU data subjects.

The GDPR, together with national legislation, regulations and guidelines of the EU member states and the United Kingdom

governing the processing of personal data, impose strict obligations and restrictions on the ability to collect, analyze and transfer

personal data, including health data from clinical trials and adverse event reporting.

In particular, these obligations and restrictions

concern the consent of the individuals to whom the personal data relates, the information provided to the individuals, the transfer of

personal data out of the EEA or the United Kingdom, security breach notifications, security and confidentiality of the personal data and

imposition of substantial potential fines for breaches of the data protection obligations.

European data protection authorities may interpret

the GDPR and national laws differently and impose additional requirements, which add to the complexity of processing personal data in

or from the EEA or United Kingdom.

Guidance on implementation and compliance practices are often updated or otherwise revised.

In the EEA, the collection and use of personal

data, including clinical trial data, is governed by the provisions of the General Data Protection Regulation (“GDPR”).

GDPR became effective on May 25, 2018, repealing its predecessor directive and increasing responsibility and liability of pharmaceutical

and medical device companies in relation to the processing of personal data of EU data subjects.

The GDPR, together with national legislation,

regulations and guidelines of the EU member states governing the processing of personal data, impose strict obligations and restrictions

on the ability to collect, use and transfer personal data, including health data from clinical trials and adverse event reporting.

particular, these obligations and restrictions concern the consent of the individuals to whom the personal data relates, the information

provided to the individuals, the transfer of personal data out of the EEA, security breach notifications, security and confidentiality

of the personal data and imposition of substantial potential fines for breaches of the data protection obligations.

The United Kingdom

has retained the GDPR following Brexit and supplemented it by the UK Data Protection Act 2018 (“UK GDPR”).

National or local

data protection laws or regulations may apply in addition to the (UK) GDPR.

Furthermore, European data protection authorities may interpret

the (UK) GDPR and national or local laws differently, and they may impose additional requirements, which add to the complexity of processing

personal data in or from the EEA or United Kingdom.

Guidance on implementation and compliance practices are often updated or otherwise

The federal Physician Payments Sunshine Act under

the Affordable Care Act and its implementing regulations also require that certain manufacturers of drugs, devices, biologics and medical

supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with certain exceptions,

to report information related to certain payments or other transfers of value made or distributed to physicians and teaching hospitals,

or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals.

It also requires reporting

annually certain ownership and investment interests held by physicians and their immediate family members and payments or other “transfers

of value”

made to such physician owners.

Failure to submit timely, accurately and completely the required information may result

in civil monetary penalties of up to an aggregate of $150,000 per year and up to an aggregate of $1 million per year for “knowing

failures”.

Manufacturers were required to begin collecting data on August 1, 2013 and submit reports on aggregate payment data

to the government for the first reporting period of August 1, 2013 to December 31, 2013, by March 31, 2014.

They are also

required to report detailed payment data for the first reporting period and submit legal attestation to the accuracy of such data by June 30,

Thereafter, manufacturers must submit reports by the 90th day of each subsequent calendar year.

The CMS made all reported data publicly

available starting on September 30, 2014.

Certain states also mandate implementation of compliance programs, impose additional restrictions

on pharmaceutical manufacturer marketing practices and/ or require the tracking and reporting of gifts, compensation and other remuneration

to healthcare providers and entities.

To distribute products commercially, we must comply

with state laws that require the registration of manufacturers and wholesale distributors of pharmaceutical products in a state, including,

in some states, manufacturers and distributors who ship products into the state even if such manufacturers or distributors have no place

of business within the state.

Some states also impose requirements on manufacturers and distributors to establish the pedigree of product

in the chain of distribution, including some states that require manufacturers and others to adopt new technology capable of tracking

and tracing products as they move through the distribution chain.

Several states have enacted legislation requiring pharmaceutical companies

to, among other things, establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures

on sales, marketing, pricing, clinical trials and other activities, and/or register their sales representatives.

They also prohibit pharmacies

and other healthcare entities from providing specified physician prescribing data to pharmaceutical companies for use in sales and marketing,

and to prohibit other specified sales and marketing practices.

All our activities are potentially subject to federal and state consumer

protection and unfair competition laws.

supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with certain exceptions,

to report information related to certain payments or other transfers of value made or distributed to physicians, certain other health

care professionals, and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians,

health care professionals, and teaching hospitals.

It also requires reporting annually certain ownership and investment interests held

by physicians and their immediate family members and payments or other “transfers of value” made to such physician owners.

Failure to submit timely, accurately and completely the required information may result in civil monetary penalties of up to, as adjusted

in 2021, an aggregate of $189,692 per year and up to an aggregate of $1,264,622 million per year for “knowing failures”.

Manufacturers

were required to begin collecting data on August 1, 2013 and submit reports on aggregate payment data to the government for the first

reporting period of August 1, 2013 to December 31, 2013, by March 31, 2014.

They are also required to report detailed payment data for

the first reporting period and submit legal attestation to the accuracy of such data by June 30, 2014.

Thereafter, manufacturers must

submit reports by the 90th day of each subsequent calendar year.

CMS made all reported data publicly available starting on September 30,

Certain states also mandate implementation of compliance programs, impose additional restrictions on pharmaceutical manufacturer

marketing practices and/ or require the tracking and reporting of gifts, compensation and other remuneration to healthcare providers and

Because of the breadth of these laws and the narrowness

5 unchanged sentences

fines, imprisonment, exclusion from participation in government programs, injunctions, recall or seizure of products, total or partial

suspension of production, denial or withdrawal of pre-marketing product approvals, private “qui tam”

actions brought by individual

suspension of production, denial or withdrawal of pre-marketing product approvals, private “qui tam” actions brought by individual

whistleblowers in the name of the government or refusal to allow us to enter supply contracts and the curtailment or restructuring of

7 unchanged sentences

Our product candidates involving Cannabis

contain controlled substances, as defined in the federal Controlled Substances Act of 1970 (“CSA”).

The CSA and its implementing

regulations establish a “closed system”

of regulations for controlled substances.

regulations establish a “closed system” of regulations for controlled substances.

The CSA imposes registration, security,

recordkeeping and reporting, storage, manufacturing, distribution, importation and other requirements under the oversight of the U.S.

Drug Enforcement Administration (“DEA”).

The DEA is the federal agency responsible for regulating controlled substances.

1 unchanged sentence

with the regulatory requirements to prevent the diversion of controlled substances to illicit channels of commerce.

The DEA categorizes controlled substances into

one of five schedules—Schedule I, II, III, IV or V—with varying qualifications for listing in each schedule.

Schedule I substances

have a high potential for abuse, have no currently accepted medical use in treatment in the U.S.

and lack accepted safety for use under

medical supervision.

They may be used only in federally approved research programs and may not be marketed or sold for dispensing to patients

Pharmaceutical products having a currently accepted medical use that are otherwise approved for marketing may be listed as

Schedule II, III, IV or V substances, with Schedule I substances presenting the highest potential for abuse and physical or psychological

Schedule V substances present the lowest relative potential for abuse and dependence.

The regulatory requirements are more

restrictive for Schedule II substances than Schedule III substances.

For example, all Schedule II drug prescriptions must be signed by

a physician, physically presented to a pharmacist in most situations and cannot be refilled.

Following FDA approval of a drug containing a

Schedule I controlled substance, that substance must be rescheduled as a Schedule II, III, IV or V substance before it can be marketed.

On November 17, 2015, H.R.

The DEA categorizes

controlled substances into one of five schedules—Schedule I, II, III, IV or V—with varying qualifications for listing in each

Although cannabis is legal in the State of North Carolina, we had to obtain a Schedule I license for our research with our research

university partner (University of Northern Colorado) that relies on federal grants.

Schedule I substances have a high potential for abuse,

have no currently accepted medical use in treatment in the U.S.

and lack accepted safety for use under medical supervision.

used only in federally -approved research programs and may not be marketed or sold for dispensing to patients in the U.S.

Pharmaceutical

products having a currently accepted medical use that are otherwise approved for marketing may be listed as Schedule II, III, IV or V

substances, with Schedule I substances presenting the highest potential for abuse and physical or psychological dependence.

substances present the lowest relative potential for abuse and dependence.

The regulatory requirements are more restrictive for Schedule

II substances than Schedule III substances.

For example, all Schedule II drug prescriptions must be signed by a physician, physically

presented to a pharmacist in most situations and cannot be refilled.

Following FDA approval of a drug containing a Schedule I controlled

substance, that substance must be rescheduled as a Schedule II, III, IV or V substance before it can be marketed.

On November 17, 2015,

639, Improving Regulatory Transparency for New Medical Therapies Act, passed through both houses of Congress.

On November 25, 2015, the bill was signed into law.

The law removes uncertainty associated with timing of the DEA rescheduling process

after FDA approval.

Specifically, it requires DEA to issue an “interim final rule,”

pursuant to which a manufacturer may market

its product within 90 days of FDA approval.

The law also preserves the period of orphan marketing exclusivity for the full seven years

such that this period only begins after DEA scheduling.

This contrasts with the previous situation whereby the orphan “clock”

began to tick upon FDA approval, even though the product could not be marketed until DEA scheduling was complete.

On November 25, 2015,

the bill was signed into law.

The law removes uncertainty associated with timing of the DEA rescheduling process after FDA approval.

Specifically,

it requires DEA to issue an “interim final rule,” pursuant to which a manufacturer may market its product within 90 days of

FDA approval.

The law also preserves the period of orphan marketing exclusivity for the full seven years such that this period only begins

after DEA scheduling.

This contrasts with the previous situation whereby the orphan “clock” began to tick upon FDA approval,

even though the product could not be marketed until DEA scheduling was complete.

Facilities that manufacture, distribute, import

20 unchanged sentences

registration, as bulk manufacturers of that substance.

Once registered, manufacturing facilities must maintain records documenting the

manufacture, receipt and distribution of all controlled substances.

Manufacturers must submit periodic reports to the DEA of the distribution

of Schedule I and II controlled substances, Schedule III narcotic substances and other designated substances.

Registrants must also report

any controlled substance thefts or significant losses and must obtain authorization to destroy or dispose of controlled substances.

with applications for registration as a bulk manufacturer, an application for an importer registration for a Schedule I or II substance

must also be published in the Federal Register, which remains open for 30 days for comments.

Imports of Schedule I and II controlled substances

for commercial purposes are generally restricted to substances not already available from domestic supplier or where there is not adequate

competition among domestic suppliers.

In addition to an importer or exporter registration, importers and exporters must obtain a permit

for every import or export of a Schedule I and II substance or Schedule III, IV and V narcotic, and submit import or export declarations

for Schedule III, IV and V non-narcotics.

In some cases, Schedule III non-narcotic substances may be subject to the import/export permit

requirement, if necessary, to ensure that the U.S.

complies with its obligations under international drug control treaties.

Once registered, manufacturing facilities must

maintain records documenting the manufacture, receipt and distribution of all controlled substances.

Manufacturers must submit periodic

reports to the DEA of the distribution of Schedule I and II controlled substances, Schedule III narcotic substances and other designated

Registrants must also report any controlled substance thefts or significant losses and must obtain authorization to destroy

or dispose of controlled substances.

As with applications for registration as a bulk manufacturer, an application for an importer registration

for a Schedule I or II substance must also be published in the Federal Register, which remains open for 30 days for comments.

of Schedule I and II controlled substances for commercial purposes are generally restricted to substances not already available from domestic

supplier or where there is not adequate competition among domestic suppliers.

In addition to an importer or exporter registration, importers

and exporters must obtain a permit for every import or export of a Schedule I and II substance or Schedule III, IV and V narcotic, and

submit import or export declarations for Schedule III, IV and V non-narcotics.

In some cases, Schedule III non-narcotic substances may

be subject to the import/export permit requirement, if necessary, to ensure that the U.S.

complies with its obligations under international

drug control treaties.

For drugs manufactured in the U.S., the DEA establishes

annually an aggregate quota for substances within Schedules I and II that may be manufactured or produced in the U.S.

based on the DEA’s

estimate of the quantity needed to meet legitimate medical, scientific research and industrial needs.

21 unchanged sentences

of paramount importance to our business, as are the trade secrets and other strategies we have employed with Austrianova to protect the

proprietary Cell-in-a-Box ®

proprietary Cell-in-a-Box ® technology.

Although we believe we take reasonable measures to protect our intellectual property

5 unchanged sentences

treatment of solid cancerous tumors and (ii) encapsulation of cells for producing retroviral particles for gene therapy.

exclusive worldwide licensing rights to patents, trademarks and know-how using Cell-in-a-Box ®

technology in the diabetes

field and in the treatment of diseases and related conditions using cannabinoids.

exclusive licensing rights to patents, trademarks and know-how using Cell-in-a-Box ® technology in the diabetes field and

in the treatment of diseases and related conditions using cannabinoids.

Litigation may be required to protect our product

4 unchanged sentences

intellectual property could be discovered to be owned by others, be invalid or be unenforceable - potentially bringing unforeseen challenges

Intellectual Property Agreements and Patent

Intellectual Property Agreements

The following agreements are a material component

2 unchanged sentences

The Bavarian Nordic/GSF License Agreement was signed in July 2005 and amended in December 2006.

Pursuant to the Bavarian Nordic/GSF License, the licensee is granted an exclusive license to use Bavarian Nordic’s clinical data and know-how for encapsulating genetically modified human cells to treat cancer.

The licensors have rights to terminate the license if the annuity and upkeep fees are not paid to Bavarian Nordic, there is not proper reporting or there is not a clearly documented effort to commercialize this technology.

The term of the Bavarian Nordic/GSF License Agreement expired on March 27, 2017.

In October 2016, Bavarian Nordic/GSF and Bio Blue

Bird amended the Bavarian Nordic/GSF License Agreement to include, among other things, the right to import within the scope of the license,

reflect ownership and notification of improvements, clarify which provisions survive expiration or termination of the Bavarian Nordic

License Agreement and provide rights to Bio Blue Bird to the clinical data and know-how after the expiration of the licensed patent rights.

The Diabetes Licensing Agreement provides us with

an exclusive worldwide license, with a right to sublicense, to use the Cell-in-a-Box®

trademark and its associated technology

with genetically modified or non-modified non-stem cell lines and induced pluripotent stem (“iPS”) cells designed to produce

insulin or other critical components for the treatment of diabetes.

The Cannabis Licensing Agreement provides us with an exclusive worldwide license, with a right to sublicense, to use the Cell-in-a-Box®

trademark and its associated technology with genetically modified non-stem cell lines which are designed to convert cannabinoids to their active form to develop therapies for diseases and their related symptoms.

We entered into a Binding Term Sheet with SG Austria

and Austrianova pursuant to which the parties reached an agreement to amend certain provisions in the SG Austria APA, the Diabetes Licensing

Agreement and the Cannabis Licensing Agreement.

In October 2016, Bavarian Nordic/GSF and Bio Blue Bird amended the Bavarian Nordic/GSF License Agreement to include, among other things, the right to import within the scope of the license, reflect ownership and notification of improvements, clarify which provisions survive expiration or termination of the Bavarian Nordic License Agreement and provide rights to Bio Blue Bird to the clinical data and know-how after the expiration of the licensed patent rights.

The Diabetes Licensing Agreement provides us with an exclusive worldwide license, with a right to sublicense, to use the Cell-in-a-Box® trademark and its associated technology with genetically modified or non-modified non-stem cell lines and induced pluripotent stem (“iPS”) cells designed to produce insulin or other critical components for the treatment of diabetes.

The Cannabis Licensing Agreement provides us with an exclusive worldwide license, with a right to sublicense, to use the Cell-in-a-Box® trademark and its associated technology with genetically modified non-stem cell lines which are designed to convert cannabinoids to their active form to develop therapies for diseases and their related symptoms.

We entered into a Binding Term Sheet with SG Austria and Austrianova pursuant to which the parties reached an agreement to amend certain provisions in the SG Austria APA, the Diabetes Licensing Agreement and the Cannabis Licensing Agreement.

We entered into the amendments contemplated by the Binding Term Sheet Amendments.

4 unchanged sentences

One of the Binding Term Sheet Amendments also provides that the scope of the Diabetes License Agreement is expanded to include all cell types and cell lines of any kind or description now or later identified, including, but not limited to, primary cells, mortal cells, immortal cells and stem cells at all stages of differentiation and from any source specifically designed to produce insulin for the treatment of diabetes.

one of the Binding Term Sheet Amendments provides that we have a 5-year right of first refusal from August 30, 2017 in the event that

Austrianova chooses to sell, transfer or assign at any time during this period the Cell-in-a-Box®

technology, tradename and Associated

Technologies;

In addition, one of the Binding Term Sheet Amendments provides that we have a 5-year right of first refusal from August 30, 2017 in the event that Austrianova chooses to sell, transfer or assign at any time during this period the Cell-in-a-Box® technology, tradename and Associated Technologies;

provided, however, that the Associated Technologies subject to the right of first refusal do not include Bac-in-a-Box.

The Binding Term Sheet Amendments further provide

(i) the royalty payments on gross sales as specified in the SG Austria APA, the Cannabis License Agreement and the Diabetes License

Agreement are changed to 4%;

and (ii) the royalty payments on amounts received by us from sublicensees on sublicensees’

under the same agreements are changed to 20% of the amount received by us from our sublicensees, provided, however, that in the event

the amounts received by us from sublicensees is 4% or less of sublicensees’

gross sales, Austrianova will receive 50% of what we

receive (up to 2%) and then additionally 20% of any amount we receive over that 4%.

The Binding Term Sheet Amendments also provide that Austrianova will receive 50% of any other financial and non-financial consideration received from our sublicensees of the Cell-in-a-Box®

The Melligen Cell License Agreement provides us

with an exclusive worldwide license, with a right to sublicense, to use genetically modified human cells that have been modified to comprise

pancreas islet cell glucokinase for use in developing a therapy for diabetes.

The Melligen cells are patent protected in the U.S.

Europe, which expire in August 2028, subject to any applicable patent term adjustment or extension that may be available.

Details of Our Material Agreements

The Binding Term Sheet Amendments further provide that:

(i) the royalty payments on gross sales as specified in the SG Austria APA, the Cannabis License Agreement and the Diabetes License Agreement are changed to 4%;

and (ii) the royalty payments on amounts received by us from sublicensees on sublicensees’ gross sales under the same agreements are changed to 20% of the amount received by us from our sublicensees, provided, however, that in the event the amounts received by us from sublicensees is 4% or less of sublicensees’ gross sales, Austrianova will receive 50% of what we receive (up to 2%) and then additionally 20% of any amount we receive over that 4%.

The Binding Term Sheet Amendments also provide that Austrianova will receive 50% of any other financial and non-financial consideration received from our sublicensees of the Cell-in-a-Box® technology.

The Melligen Cell License Agreement provides

us with an exclusive worldwide license, with a right to sublicense, to use genetically modified human cells that have been modified to

comprise pancreas islet cell glucokinase for use in developing a therapy for diabetes.

The Melligen cells are patent protected in the

and Europe, which expire in August 2028, subject to any applicable patent term adjustment or extension that may be available.

Material Agreements

Third Addendum to the SG Austria APA

4 unchanged sentences

A $60,000 payment due under the SG Austria APA;

A payment of Stamp Duty estimated to be $10,000-17,000

to the Singapore Government;

$500,000 to be used to pay off the existing debt

of Bio Blue Bird;

A payment of Stamp Duty estimated to be $10,000-17,000 to the Singapore Government;

$500,000 to be used to pay off the existing debt of Bio Blue Bird;

$1,000,000 to SG Austria.

6 unchanged sentences

us to pay a fee for producing the final encapsulated cell product of $647 per vial of 300 capsules after production, with a minimum purchased

batch size of 400 vials of any Cell-in-a-Box ®

batch size of 400 vials of any Cell-in-a-Box ® product.

The fees under the Manufacturing Framework Agreement are subject

6 unchanged sentences

Two percent royalty on all gross sales received by us or our affiliates;

Ten percent royalty on gross revenues received

by us or our affiliates from a sublicense or right to use the patents or the licenses granted by us or our affiliates;

Milestone payments of $100,000 within 30 days

after enrollment of the first human patient in the first clinical trial for each product;

$300,000 within 30 days after enrollment of

the first human patient in the first Phase 3 clinical trial for each product;

and $800,000 within 60 days after having a NDA or a BLA

approved by the FDA or a MAA approved by the EMA in Europe, or its equivalent based on the country in which it is accepted for each product;

Milestone payments of $50,000 due 30 days after

enrollment of the first veterinary patient in the first trial for each product and $300,000 due 60 days after having a BLA, a NDA or a

MAA or its equivalent approved based on the country in which it is accepted for each veterinary product.

Ten percent royalty on gross revenues received by us or our affiliates from a sublicense or right to use the patents or the licenses granted by us or our affiliates;

Milestone payments of $100,000 within 30 days after enrollment of the first human patient in the first clinical trial for each product;

$300,000 within 30 days after enrollment of the first human patient in the first Phase 3 clinical trial for each product;

and $800,000 within 60 days after having a NDA or a BLA approved by the FDA or a MAA approved by the EMA in Europe, or its equivalent based on the country in which it is accepted for each product;

Milestone payments of $50,000 due 30 days after enrollment of the first veterinary patient in the first trial for each product and $300,000 due 60 days after having a BLA, a NDA or a MAA or its equivalent approved based on the country in which it is accepted for each veterinary product.

On May 14, 2018, we entered into amendments to

1 unchanged sentence

For a full description of these amendments, see Item 1.

“History of the Business.”

Diabetes Licensing Agreement

9 unchanged sentences

is to be defined in the manufacturing agreement, for producing the final encapsulated cell product of approximately $600.00 per vial of

300 capsules after production, with a minimum purchased batch size of 400 vials of any Cell-in-a-Box ®

encapsulation-based

300 capsules after production, with a minimum purchased batch size of 400 vials of any Cell-in-a-Box ® encapsulation-based

All costs for encapsulated cell products will be subject to an annual increase equal to the published rate of inflation in the

4 unchanged sentences

Twenty percent royalty of the amount received by us from a sub-licensee on its gross sales;

payments of $100,000 within 30 days of beginning the first pre-clinical experiments using the encapsulated cells ;

$500,000 within 30 days after

enrollment of the first human patient in the first clinical trial;

$800,000 within 30 days after enrollment of the first human patient

in the first Phase 3 clinical trial and;

$1,000,000 within 90 days after having a NDA or

a BLA approved by the FDA or a MAA approved by the EMA in Europe, or its equivalent based on the country in which it is accepted for each

Milestone payments of $100,000 within 30 days of beginning the first pre-clinical experiments using the encapsulated cells;

$500,000 within 30 days after enrollment of the first human patient in the first clinical trial;

$800,000 within 30 days after enrollment of the first human patient in the first Phase 3 clinical trial and;

$1,000,000 within 90 days after having a NDA or a BLA approved by the FDA or a MAA approved by the EMA in Europe, or its equivalent based on the country in which it is accepted for each product.

The license under the Diabetes Licensing Agreement,

3 unchanged sentences

If we fail to enter a research program with the technology in the scope of the license providing a total funding equal to or greater than $400,000 within three years of June 25, 2013, the effective date of the Diabetes Licensing Agreement (we have met this requirement);

If we fail to enter a clinical trial or its equivalent

for a product within seven years of the effective date of the Diabetes Licensing Agreement.

If we fail to enter a clinical trial or its equivalent for a product within seven years of the effective date of the Diabetes Licensing Agreement.

In May 2018, we entered into amendments to the

1 unchanged sentence

For a full description of these amendments, see Item 1.

“History of the Business.”

Cannabis Licensing Agreement

Pursuant to the Cannabis Licensing Agreement,

we acquired from Austrianova an exclusive worldwide license to use the Cell-in-a-Box ®

trademark and its associated technology

we acquired from Austrianova an exclusive worldwide license to use the Cell-in-a-Box ® trademark and its associated technology

with genetically modified non-stem cell lines which are designed to activate cannabinoids to develop therapies involving Cannabis

1 unchanged sentence

Under the Cannabis Licensing Agreement, we are

required to pay Austrianova an initial upfront payment of $2,000,000 (“Upfront Payment”).

We have the right to make periodic

11 unchanged sentences

in the manufacturing agreement, for producing the final encapsulated cell product of $800 per vial of 300 capsules after production with

a minimum purchased batch size of 400 vials of any Cell-in-a-Box ®

a minimum purchased batch size of 400 vials of any Cell-in-a-Box ® product.

All costs for encapsulated cell products, the

4 unchanged sentences

Ten percent royalty of the gross sale of all products sold by us;

Twenty percent royalty of the amount received

by us from a sublicense on its gross sales;

Twenty percent royalty of the amount received by us from a sublicense on its gross sales;

Milestone payments of $100,000 within 30 days of beginning the first pre-clinical experiments using the encapsulated cells;

10 unchanged sentences

For a full description of these amendments, see Item 1.

“History of the Business.”

Melligen Cell License Agreement

2 unchanged sentences

Six percent of gross exploitation revenue on product sales;

Twenty-five percent of gross revenues if the product

is sublicensed by us;

Milestone payments of AU$ 50,000 at the successful

conclusion of a preclinical study, AU$ 100,000 at the successful conclusion of a Phase 1 clinical trial, AU$ 450,000 at the successful

conclusion of a Phase 2 clinical trial, and AU$ 3,000,000 at the successful conclusion of a Phase 3 clinical trial;

Patent costs of fifteen percent of the costs paid

by UTS to prosecute and maintain patents related to the licensed intellectual property.

Twenty-five percent of gross revenues if the product is sublicensed by us;

Milestone payments of AU$ 50,000 at the successful conclusion of a preclinical study, AU$ 100,000 at the successful conclusion of a Phase 1 clinical trial, AU$ 450,000 at the successful conclusion of a Phase 2 clinical trial, and AU$ 3,000,000 at the successful conclusion of a Phase 3 clinical trial;

Patent costs of fifteen percent of the costs paid by UTS to prosecute and maintain patents related to the licensed intellectual property.

In the event of a default under the Melligen Cell

17 unchanged sentences

For a full description of these amendments, see Item 1.

“History of the Business.”

Sources and Availability of Raw Materials

4 unchanged sentences

process, including the cellulose sulfate necessary for encapsulating the live cells.

Those cells have been grown by Eurofins to populate

a MCB for our future clinical trials.

What changed 10-K

Item 1. Business