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Item 1. Business

2023-07-31 compared with 2022-07-28 · 711 added, 1154 removed, 854 unchanged (69% of the section changed)

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.

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™.”

On August 15, 2022, we entered into a Cooperation

Agreement (the “Cooperation Agreement”) with Iroquois Master Fund Ltd.

and its affiliates, pursuant to which we elected a

reconstituted board of directors (the “Board”).

The Board then formed a Business Review Committee to evaluate, investigate

and review our business, affairs, strategy, management and operations and in its sole discretion, to make recommendations to our management

and Board with respect thereto.

The Business Review Committee is also reviewing many of the risks relative to our business.

the Board is reviewing risks associated with our development programs and our relationship with SG Austria Pte.

Ltd (“SG Austria”),

including that all licensed patents have expired, that know-how relating to our Cell-in-a-Box® technology solely resides with SG Austria,

and that the incentives of SG Austria and its management may not be currently aligned with ours.

The Board has curtailed spending on our

programs, including pre-clinical and clinical activities, until the review by the Business Review Committee and the Board is complete

and the Board has determined the actions and plans to be implemented.

The Business Review Committee’s recommendations will include

potentially seeking a new framework for our relationship with SG Austria and its subsidiaries.

If we are unsuccessful in seeking an acceptable

new framework, we will reevaluate whether we should continue those programs which are dependent on SG Austria, including our development

programs for locally advanced, inoperable, non-metastatic pancreatic cancer (“LAPC”), diabetes and malignant ascites.

issues involving SG Austria have delayed our timeline for addressing the FDA clinical hold for its planned clinical trial in LAPC and

could result in other delays or termination of the development activities.

In addition, the curtailment of spending on our programs pending

the review by the Business Review Committee and the Board may cause additional delays.

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.

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

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They are protected from environmental challenges,

such as the sheer forces associated with bioreactors and 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.

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

such as the sheer forces associated with bioreactors and passage through catheters and needles, which we believe enables greater cell

growth and production of the active molecules.

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

We have been 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 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 have also been 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

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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.

Implanting 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 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.

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.

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.

Finally, we have 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.

Implanting these

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

Until the Business Review Committee completes

its evaluation of our programs and we enter into a new framework for its relationship with SG Austria, spending on our development programs

has been curtailed.

Investigational New Drug Application and Clinical

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

FDA for a planned clinical trial in LAPC.

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 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 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.

· Provide additional sequencing data and genetic

stability studies;

· 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 1st and

2nd 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 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 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 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.

· 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 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 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

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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.

We are in the

latter stages of conducting the studies and providing the information requested by the FDA.

We have completed the pilot study of two pigs

and are evaluating the preliminary data before it commences the larger study of 90 pigs.

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 .

· Additional Regulatory Expertise Added to IND

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.

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 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.

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.

· Confirmation of the Exact Sequence of the

Cytochrome P450 2B1 Gene Insert .

An additional, more 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

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.

involved with 10 biocompatibility studies requested by the FDA, eight of which have been completed successfully.

The remaining studies

are underway or about to start.

The Acute 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 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.

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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.

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.

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.

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

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

· Additional Documentation Requested by the

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

treatment for LAPC.

· Pig Study .

We have commenced a study in

pigs to address biocompatibility and long-term implantation and dispersion of CypCaps™.

The study has two phases:

(i) a pilot study with 2 pigs;

(i) a pilot study

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.

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.

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

A Bio-Artificial Pancreas to Treat Diabetes

We are developing a therapy for Type 1 diabetes

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.

The results did not meet our expectations.

We discovered

that, contrary to what we had expected and what we had read in published scientific papers on the Melligen cells published by UTS, the

cells are not stable.

With extensive testing and experiments, we discovered that the Melligen cells lose some of their specific beneficial

properties over time.

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.

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,

regional, and state-wide orders and regulations restricting usual normal activity by people.

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 are shifting their resources

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

The FDA and other healthcare providers are making product candidates for

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

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.

The first phase has been completed and we are evaluating preliminary data.

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.

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

and to our curtailment of spending pending review of our programs by the Business Review Committee and the reconstituted Board, including

seeking a new framework for its relationship with SG Austria and its subsidiaries.

History of the Business

In 2013, we restructured our operations to focus

on biotechnology.

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, diabetes, and malignant ascites using our live cell encapsulation technology.

In 2013, we restructured

our operations to focus on biotechnology.

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, 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 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

SG Austria APA.

Under the Third Addendum, we acquired 100% of the equity interests in Bio Blue Bird and received a 14.5% equity interest

in SG Austria.

Commencing in May 2011,

we entered into a series 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 SG Austria APA.

Under the Third Addendum, we acquired 100% of the equity interests in Bio Blue Bird and received a

14.5% equity interest in SG Austria.

(i) $500,000 to retire all outstanding debt of Bio Blue Bird;

and (ii) $1.0 million to SG Austria.

SG Austria $1,572,193 in exchange for a 14.5% equity interest of SG Austria.

The transaction required SG Austria to return to us the 66,667

shares of our common stock held by SG Austria and for us to return to SG Austria the 67 shares of common stock of Austrianova we held.

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

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

Bird or a sub-licensee, by Contract Manufacturing Organizations, Contract Research Organizations, Consultants, Logistics Companies or

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

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

and (ii) $1.0 million to SG

We also paid SG Austria $1,572,193 in exchange for a 14.5% equity interest of SG Austria.

The transaction required SG Austria

to return to us the 66,667 shares of our common stock held by SG Austria and for us to return to SG Austria the 67 shares of common stock

of Austrianova we held.

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

services under contract for Bio Blue Bird or a sub-licensee, by Contract Manufacturing Organizations, Contract Research Organizations,

Consultants, Logistics Companies or 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.

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 that:

(i) the license granted was exclusive;

(ii) a royalty rate increased from 3% to 4.5%;

(iii) Bio Blue Bird assumed the patent prosecution

expenses for the existing patents;

and (iv) to make clear that the license will survive as a license granted by one of the licensors if

the other licensor rejects performance under the Bavarian Nordic License Agreement due to any actions or declarations of insolvency.

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”).

This allows us to develop a therapy to treat diabetes

through encapsulation of a human cell line that has been genetically modified to produce, store and release insulin in response to the

levels of blood sugar in the human body.

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,”

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

studies, when Melligen cells were transplanted into immunosuppressed diabetic mice, the blood glucose levels of the mice became normal.

(iii) Bio Blue Bird assumed the

patent prosecution expenses for the existing patents;

and (iv) to make clear that the license will survive as a license granted by one

of the licensors if the other licensor rejects performance under the Bavarian Nordic License Agreement due to any actions or declarations

of insolvency.

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”).

This allows us to develop a therapy

to treat diabetes through encapsulation of a human cell line that has been genetically modified to produce, store and release insulin

in response to the levels of blood sugar in the human body.

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.

named “Melligen,” were tested by UTS in mice and shown to produce insulin in direct proportion to the amount of glucose in

their surroundings.

In those studies, when Melligen cells were transplanted into immunosuppressed diabetic mice, the blood glucose levels

of the mice became normal.

In other words, the Melligen cells reportedly reversed the diabetic condition.

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

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”).

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.

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

us to seek an investment partner or partners who will finance clinical trials and further develop products for our therapy for cancer,

in exchange for which we, Austrianova and any future investment partner will each receive a portion of the net revenue from the sale of

cancer products.

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

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 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”).

This allows 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.

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 us to seek an investment partner or partners who will finance clinical trials and further develop products for

our therapy for cancer, in exchange for which we, Austrianova and any future investment partner will each receive a portion of the net

revenue from the sale of cancer products.

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 order to:

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

(ii) reflect ownership and notification of improvements;

clarify which provisions survive expiration or termination of the Bavarian Nordic License Agreement;

(iv) provide rights to Bio Blue Bird

to the clinical data after the expiration of the licensed patent rights;

and (v) change the notice address and recipients of Bio Blue

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

to make milestone payments to Austrianova is eliminated in their entirety under the:

(ii) reflect ownership and notification of

improvements;

(iii) clarify which provisions survive expiration or termination of the Bavarian Nordic License Agreement;

rights to Bio Blue Bird to the clinical data after the expiration of the licensed patent rights;

and (v) change the notice address and

recipients of Bio Blue Bird.

In May 2018, we entered

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

The Binding Term Sheet Amendments provide

that our obligation to make milestone payments to Austrianova is eliminated in their entirety under the:

(i) Cannabis License Agreement;

and (ii) the Diabetes

License Agreement, as amended.

The Binding Term Sheet Amendments also provide that our obligation to make milestone payments to SG Austria

for therapies for cancer be eliminated in their entirety.

In addition, 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.

In addition, one of the Binding Term Sheet Amendments

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

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

and (ii) the Diabetes License Agreement, as amended.

The Binding Term Sheet Amendments also provide that our obligation to make milestone

payments to SG Austria for therapies for cancer be eliminated in their entirety.

In addition, 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.

In addition, one of the

Binding Term Sheet Amendments 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 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”);

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

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 ® and its

Associated Technologies.

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’ 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

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

One of the Binding Term Sheet Amendments requires

that we pay $900,000 to Austrianova ratably over a nine-month period in the amount of two $50,000 payments each month during the nine-month

period on the days of the month to be agreed upon between the parties, with a cure period of 20 calendar days after receipt by us of written

notice from Austrianova that we have failed to pay timely a monthly payment.

As of April 30, 2020, the $900,000 amount has been paid in

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 ® 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, 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;

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;

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

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

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 bacteria).

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® and its Associated Technologies.

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 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%.

One of the Binding Term

Sheet Amendments requires that we pay $900,000 to Austrianova ratably over a nine-month period in the amount of two $50,000 payments each

month during the nine-month period on the days of the month to be agreed upon between the parties, with a cure period of 20 calendar days

after receipt by us of written notice from Austrianova that we have failed to pay timely a monthly payment.

As of April 30, 2020, the

$900,000 amount has been paid in full.

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® technology.

Impact of the COVID-19 Pandemic on Operations

In March 2020, the World

Health Organization declared an outbreak of COVID-19 as a pandemic, and the world’s economies have experienced pronounced effects.

Despite the multiple COVID-19 vaccines globally, there remains uncertainty around the extent and duration of disruption and any future

related financial impact cannot reasonably be estimated at this time.

COVID-19 has caused and may continue to cause 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, and this clinical trial may experience delays relating to COVID-19 once commenced, including but not limited to:

(i) delays or

difficulties in enrolling patients in our clinical trial if the FDA allows us to go forward with the trial;

(ii) delays or difficulties

in clinical site activation, including difficulties in recruiting clinical site investigators and clinical site personnel;

in clinical sites receiving the supplies and materials needed to conduct the 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 COVID-19 which

may require us to change the ways in which its 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

(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;

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

Many of these potential delays may be exacerbated by the impact of COVID-19

in foreign countries where we are conducting these preclinical studies, including India, Europe, Singapore and Thailand.

Further, 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.

COVID-19 could materially disrupt our business

and operations, hamper its ability to raise additional funds or sell securities, continue to slow down the overall economy, curtail consumer

spending, interrupt our supply chain, and make it hard to adequately staff our operations.

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 and agarose.

Alginate appears to be the most widely used of these.

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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.

When thawed, the cells are recovered with approximately 85% viability.

We are unaware

of any other cell encapsulation material that is capable of protecting their encapsulated cells to this degree.

The implications of this

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

cells over long distances.

We believe our live cell encapsulation technology

may have significant new advantages and opportunities for us in numerous and developing ways.

The cells encapsulated

using the Cell-in-a-Box ® technology can be frozen for extended periods of time.

When thawed, the cells are recovered

with approximately 85% viability.

We are unaware of any other cell encapsulation material that is capable of protecting their encapsulated

cells to this degree.

The implications of this property of the Cell-in-a-Box ® technology are obvious – long-term

storage of encapsulated cells and shipment of encapsulated cells over long distances.

We believe our live cell

encapsulation technology may have significant new advantages and opportunities for us in numerous and developing ways.

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

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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

Pancreatic cancer is

increasing in most industrialized countries.

The American Cancer Society estimates that in 2022 there will be 62,210 people in the U.S.

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It also estimates 48,830 patients with pancreatic cancer will die in 2022.

Pancreatic cancer accounts for about 3% of all cancers in the

Pancreatic cancer accounts

for about 3% of all cancers in the U.S.

and about 7% of all cancer deaths.

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

it is used in these patients.

We face intense competition in the field of treating

pancreatic cancer.

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.

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 it is used in these patients.

We face intense competition

in the field of treating pancreatic cancer.

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.

Chiles Research Institute reported objective regression of metastatic pancreatic cancer using genetically-engineered

autologous T cells.

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 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.

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:

Epidiolex ® (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.

Sativex ® 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.

(“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.

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

CNBX Pharmaceuticals

(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.

(“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

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

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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.

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 patient.

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

We are developing a therapy to delay the production

8 unchanged sentences

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

Previous Clinical Trials Using Encapsulation

Two previous clinical trials using what is now

our encapsulation technology were carried out in Europe by Bavarian Nordic in 1998-1999 and 2000, respectively.

Both employed the combination

of the cellulose-based live cell encapsulation technology with low doses of the anticancer drug ifosfamide.

However, the FDA may not accept

the results of these trials for various reasons, none of which are in our control.

In such event, we may have to conduct a Phase 1 trial,

not a Phase 2b trial, or even further pre-clinical animal trials.

The results of the two clinical trials have been

published in the peer-reviewed scientific literature and are summarized as follows:

Phase 1/2 Clinical Trial

Dates of Trial and Location :

This clinical

trial was opened on July 28, 1998 and closed on September 20, 1999.

It was carried out at the Division of Gastroenterology, University

of Rostock, Germany.

Identity of Trial Sponsors :

trial was sponsored by Bavarian Nordic.

Trial Design :

The clinical trial was an

open-label, prospective, single-arm and single center trial.

Patient Information :

A total of 17 patients

were enrolled in the clinical trial (51 were screened).

A total of 14 patients were treated because two of the original 17 patients developed

severe infections before the start of the clinical trial and had to be treated by other means.

For the other patient, angiography was

not successful, causing the patient to be disqualified from participating in the clinical trial.

Trial Criteria :

Criteria for enrolling

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 :

On day 0, celiac angiography was performed and 300 (in 13 patients, 250 in one) of the capsules containing the ifosfamide-activating cells

were placed by supraselective catheterization of an artery leading to the tumor.

Each capsule (~0.7 mm in diameter) contained about 20,000

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

into its “cancer-killing” form.

On day 1, patients were monitored for evidence

of any clinically relevant adverse reactions, e.g., allergy and/or pancreatitis.

On days 2-4, each patient received low-dose (1 g/m 2

body surface area) ifosfamide in 250 ml of normal saline administered systemically as a 1-hour infusion.

This was accompanied by a 60%

dose equivalent of the uroprotective drug Mesna, which is used to reduce the side effects of ifosfamide chemotherapy, given as three intravenous

This regimen was repeated on days 23-25 for all but two patients who received only one round of ifosfamide.

A total of only

two cycles of ifosfamide were given to the remainder of the patients.

Specific Clinical Endpoints :

Median survival

time from the time of diagnosis, the percentage of patients who survived one year or more and the quality of life of each patient were

examined in the clinical trial.

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”).

Effects of the treatment on tumor size were measured

Control CT scans were scheduled for weeks 10 and 20, respectively.

During the final visit, a control angiography was performed.

On the initial CT scan, the scan demonstrating the largest diameter of the primary tumor was identified and the area measured.

Using appropriate

landmarks, an identical scan was used for comparison.

CT scans were evaluated by two unrelated radiologists, one of whom was not involved

in the clinical trial.

After formally finishing the clinical trial, patients were followed on an ambulatory basis with visits once every

three months.

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

associated with the use of cancer drugs.

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.

Most clinical trials carried

out in the U.S.

and the United Kingdom code their Adverse Event.

This system consists of five grades.

2 = moderate;

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

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.

A QOL questionnaire

for cancer patients, QLQ-C30, had been validated in several languages, but the module for pancreatic cancer per se was still under

development at the time of the study with respect to reliability, sensibility against changes and multicultural validation.

a version of the core questionnaire and a German QOL scale (published in 1995) for pancreatic cancer patients was used.

QOL data were

documented independently from safety and efficacy data by having patients complete an independent questionnaire.

Assessment of QOL data

did not interfere with routine documentation of Adverse Events reported by the patients.

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

combination in pancreatic cancer patients, the questionnaire was used to assess the QOL of patients undergoing treatment.

analyzed in a similar manner to the way that a QOL questionnaire developed by the EORTC is usually analyzed.

This latter questionnaire

is known as EORTC QLQ-C30.

QOL data were available from the baseline evaluation for 14 patients and for analysis of change for 8 patients.

A clinical benefit score based on variables, including

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,

no complaints, no evidence of disease) and decreases in decrements of 10 down through 50 (requires considerable assistance and frequent

medical care) all the way to 10 (moribund, fatal processes progressing rapidly) and finally to 0 (deceased).

Pain intensity was measured

on a visual analog scale ranging from 0 (no pain) to 100 (the most intensive pain imaginable) in increments of 10.

Analgesic consumption

was assessed using a separate scale in which 0 indicated no regular consumption of analgesics and 25, 50 and 100 indicated administration

of non-steroidal anti-inflammatory drugs or opiates several times per year, per month or per week, respectively.

The primary tumor did not grow in any of the 14

Two patients had a PR;

12 patients exhibited SD;

and two patients showed an MR.

Median survival time of patients in this clinical

trial was 39 weeks.

The one-year survival rate was 36%.

Within the 20-week study period, three patients

died from disease progression (on days 9, 85 and 132).

Upon postmortem examination, the patient who died on day 9 from recurrent pulmonary

embolism was found to have extensive tumor necrosis.

The chemotherapy regimen was well tolerated.

toxicity beyond Grade 2 (moderate adverse effect) was detected in any of the 14 patients.

Eleven SAEs were seen in 7 patients during the

study period.

None of them were treatment-related (due to capsule implantation or ifosfamide administration).

These SAEs were attributed

to underlying disease and/or the effects associated with the disease.

Implanting the capsules did not result in any

obvious allergic or inflammatory response, and no patients developed pancreatitis during the trial.

Some patients exhibited elevated amylase

levels, presumably due to tumor infiltration of the pancreas and limited obstructive chronic pancreatitis.

However, no further increase

in amylase levels was seen after angiography and capsule implantation.

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.

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 the patients showed an increased Karnofsky

Score after treatment.

However, 7 of the 14 patients had stable Karnofsky Scores at the week 10 assessment.

For 4 of these patients, their

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

was obtained).

Two patients showed stable body weights at week 10, one of whom dropped out of the clinical trial and the other showed

weight loss at week 20.

Two scenarios were used to establish the overall

integrative clinical benefit response, where each patient was given a +2 score for an improved value, a +1 score for a stable value and

a -1 score for a worsened value for each of four criteria (pain, analgesic consumption, Karnofsky Score and body weight) as compared to

the relevant week 0 values.

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

Using this scenario, 50% or 7 of the treated patients experienced clinical benefit;

21.4% or 3 patients were neutral (benefits

were offset by impairments);

and 28.6% or 4 patients had no clinical benefit.

The latter included those passing away before the median

survival time.

In the “best case scenario,” a pain

relief score of 10 points or more was an improvement.

A decrease in Karnofsky Score of 20 points or more was considered a worsening.

this scenario, 71.4% or 10 patients had clinical benefit, 14.2% of patients showed neither benefit nor deterioration and 14.3% patients

had no benefit.

Standard of Care :

At the time this clinical

trial was conducted, only one FDA-approved treatment for advanced, inoperable pancreatic cancer was available.

That was the drug gemcitabine,

first approved by the FDA in 1996.

An examination of the prescribing information

for gemcitabine reflects that the median survival seen in the Phase 3 pancreatic cancer clinical trial for gemcitabine was approximately

23 weeks (5.7 months).

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

and the percentage of one-year survivors was approximately 35%.

The treatment with gemcitabine of patients with

pancreatic cancer is often associated with severe side effects.

According to the prescribing information for gemcitabine, for use to treat

pancreatic cancer the recommended dose is 1000 mg/m 2 given intravenously over 30 minutes.

The schedule of administration is

weeks 1-8, weekly dosing for 7 weeks followed by one-week rest and then after week 8, weekly dosing on days 1, 8 and 15 of 28-day cycles.

Reductions in the doses of gemcitabine are necessitated

by the occurrence of myelosuppression.

Permanent discontinuation of gemcitabine is necessary for any of the following:

unexplained dyspnea or other evidence of severe pulmonary toxicity;

severe hepatotoxicity;

hemolytic-uremic syndrome;

capillary leak syndrome;

posterior reversible encephalopathy syndrome.

Gemcitabine should be withheld, or its dose reduced

by 50% for other severe (Grade 3 or 4) non-hematologic toxicity until that toxicity is resolved.

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

was both safe and effective.

This assessment was not based on the opinion of any drug regulatory authority and does not guarantee that

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.

In the opinion of the investigators, the results indicate a trend towards efficacy;

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 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

Location of Trial :

The clinical trial was

opened on November 16, 1999 and closed on December 1, 2000.

This clinical trial was carried out at four centers in two countries in Europe.

These were in Berne, Switzerland, and in Rostock, Munich and Berlin, Germany.

Trial Sponsor :

The clinical trial was sponsored

by Bavarian Nordic.

Trial Design :

This was an open-label, prospective,

single-arm multi-site study.

Patient Information :

All 13 patients enrolled

in the trial were treated.

Twelve patients exhibited Stage 4 disease.

The remaining patient had Stage 3 disease.

Ten of the 13 patients

exhibited metastases.

Duration of Treatment and Dosage Information :

The number of capsules implanted varied from 221 to 300 with a mean of 244.

On day 1, patients were monitored for any allergic reactions

to capsule implantation and/or pancreatitis.

The administration schedule of the treatment was the same as in the earlier Phase 1/2 trial,

except that in this Phase 2 trial the dose of ifosfamide was doubled to 2 g/m 2 .

In the Phase1/2 trial, it was 1g/m 2 .

On days 2-4, patients received 2 g/m 2 in normal saline as a one-hour infusion.

The urinary tract protector Mesna was also given

as 3 intravenous injections.

This regimen was repeated on days 23-25.

Specific Clinical Endpoints :

endpoint of the trial was to determine response rate as defined by SD, PR and MR as well as the clinical benefit (Karnofsky score) of

the treatment.

The timing of the tumor size measurements and determination of tumor sizes by CT scans were done by independent radiologists.

A secondary endpoint was to determine time to progression, tumor response, duration of partial or complete remission, length of symptom-free

survival, survival time and quality of life.

Another secondary endpoint was to evaluate the safety and tolerability of the treatment regimen,

with attention being paid to the appearance of pancreatitis or immediate allergic reactions.

Safety Analysis of Angiography, Capsule Implantation

and Chemotherapy :

On average, angiography took approximately 40 minutes.

For 5 of the patients in this clinical trial, more than one

blood vessel had to be used for placement of the capsules.

The administration of the capsules was well tolerated.

There were no signs

of allergic reactions or hemorrhagic cystitis after implantation of the capsules.

Two patients had increased levels of serum lipase at

After additional measurements, these were not considered to be clinically relevant.

The dose of ifosfamide (2 g/m 2 )

used was found to be toxic in most patients.

This resulted in one patient having to reduce the ifosfamide dose in the second of the two

cycles of treatment with the drug.

The most common toxic effects were nausea, vomiting, malaise, anorexia and mild hematuria.

Serious Adverse Events :

A total of 16 SAEs

were documented in eight patients, including 3 SAEs leading to death.

None of these SAEs were attributed to placement of the encapsulated

One patient experienced neurological impairment (drowsiness, nocturnal enuresis, mild somnolence) which was attributed to treatment

with the 2 g/m 2 dose of ifosfamide.

All patients experienced between 5 and 19 SAEs.

Six SAEs were rated as life-threatening;

10.2% were rated as severe;

28.7% were rated as moderate;

and 53.7% were rated as mild.

None of the SAEs was thought to be related to

placement of the encapsulated cells, but 44% were related to the administration of ifosfamide at the elevated dose given.

Most frequent

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%

had Grade 3 and 4.6% had Grade 4 toxicities.

Tumor Reductions and Patient Survival Results :

The size of the primary tumor was measured before starting the live cell encapsulation plus ifosfamide therapy and at weeks 10 and 20

post-treatment.

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.

The median survival of patients was 40 weeks.

Most the survival benefit was shown early during the entire observation period.

However, as time progressed, these patients succumbed

at the same rate as historical controls.

This observation suggested to the investigators that prolongation of the survival benefit might

be achieved if additional courses of ifosfamide chemotherapy were given.

The one-year survival rate was 23%.

It was thought that this

may be attributable to the higher dose of ifosfamide used in this clinical trial.

Quality of Life :

An assessment of the quality

of life of the patients was performed in this clinical trial.

Quality of life data were available for all the patients.

According to this

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.

Conclusions :

The opinions of the investigators

were as follows:

(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;

and (iii) since

doubling the dose of ifosfamide from that used in the Phase 1/2 trial had no beneficial antitumor or survival effect but was associated

with increased side effects from the treatment, the dose of ifosfamide to be used in combination with the encapsulated cells for all future

trials should be 1 g/m 2 .

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.

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.

Material Agreements

Third Addendum to

the SG Austria APA

In June 2013, we and SG Austria entered the Third

Addendum and the Clarification Agreement.

The Third Addendum requires us to make the following payments for the purchased assets;

payments were timely made in full under the payment deadlines set forth in the Third Addendum:

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;

$1,000,000 to SG Austria.

Pursuant to the Third Addendum, we agreed to and

have entered a manufacturing agreement with SG Austria for the manufacture of the pancreatic cancer clinical trial product to treat LAPC.

The Manufacturing Framework Agreement requires us to pay Austrianova a one-time manufacturing setup fee in the amount of $647,000, of

which 50% is required to be paid on the effective date of the Manufacturing Framework Agreement and 50% is required to be paid three months

We have paid the full amount of the manufacturing setup fee.

The Manufacturing Framework Agreement also requires

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® product.

The fees under the Manufacturing Framework Agreement are subject to annual

increases according to the annual inflation rate in the country in which the encapsulated cell products are manufactured.

We placed and

have received an order to produce 400 vials for our clinical trial to treat LAPC.

Austrianova has been paid the full amount for the order.

The Third Addendum also requires us to make future

royalty and milestone payments as follows:

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.

On May 14, 2018, we entered into amendments to

the Third Addendum.

For a full description of these amendments, see Item 1.

“History of the Business.”

Diabetes Licensing

Under the Diabetes Licensing Agreement, we are

required to make a payment of $2,000,000 in two equal payments of $1,000,000 each.

We made our first $1,000,000 payment on October 30,

Our second payment of $1,000,000 was made on February 25, 2014.

The Diabetes Licensing Agreement requires us to

pay Austrianova, pursuant to a manufacturing agreement to be entered between the parties, a one-time manufacturing setup fee in the amount

of approximately $600,000, of which 50% is required to be paid on the signing of a manufacturing agreement for a product and 50% is required

to be paid three months later.

In addition, the Diabetes Licensing Agreement requires us to pay a manufacturing production fee, which

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 product.

All costs for encapsulated cell products will be subject to an annual increase equal to the published rate of inflation in the country

of manufacture of the vials.

The Diabetes Licensing Agreement requires us to

make future royalty and milestone payments as follows:

Ten percent royalty of gross sales of all products we sell;

Twenty percent royalty of the amount received by us from a sub-licensee on its gross sales;

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,

as amended, may be terminated and all rights will revert to Austrianova if any of the following milestone events do not occur within the

following timeframes, subject to all the necessary and required research having been successful and the relevant product being sufficiently

prepared to enter a clinical trial:

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.

In May 2018, we entered into amendments to the

Diabetes Licensing Agreement.

For a full description of these amendments, see Item 1.

“History of the Business.”

Cannabis Licensing

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

with genetically modified non-stem cell lines which are designed to activate cannabinoids to develop therapies involving Cannabis with

a right to sublicense.

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

monthly partial payments of the Upfront Payment in amounts to be agreed upon between the parties prior to each such payment being made.

Under the Cannabis Licensing Agreement, the Upfront Payment must be paid in full by no later than June 30, 2015.

The parties amended the

Cannabis Licensing Agreement twice pursuant to which the balance of the Upfront Payment is to be paid by June 30, 2016.

We have paid the

Upfront Payment of $2,000,000 in full.

The Cannabis Licensing Agreement requires us to

pay Austrianova, pursuant to a manufacturing agreement to be entered between the parties, a one-time manufacturing setup fee in the amount

of $800,000, of which 50% is required to be paid on the signing of a manufacturing agreement for a product and 50% is required to be paid

three months later.

In addition, the Cannabis Licensing Agreement requires us to pay a manufacturing production fee, which is to be defined

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® product.

All costs for encapsulated cell products, the manufacturing

setup fee and the manufacturing production fee will be subject to annual increases, in accordance with the inflation rate in the country

in which the encapsulated cell products are manufactured.

The Cannabis Licensing Agreement requires us to

make future royalty and milestone payments as follows:

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;

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 or its equivalent based on the country in which it is accepted for each product.

The license under the Cannabis Licensing Agreement,

as amended, may be terminated and all rights will revert to Austrianova if any of the following milestone events do not occur within the

following timeframes:

If we do not enter a research program involving the scope of the license within three years of December 1, 2014, the effective date of the Cannabis Licensing Agreement (we have met this requirement);

If we do not enter a clinical trial or its equivalent for a product within 7 years of the effective date of the Cannabis Licensing Agreement.

In May 2018, we entered into amendments to the

Cannabis Licensing Agreement.

For a full description of these amendments, see Item 1.

“History of the Business.”

Melligen Cell License

The Melligen Cell License Agreement requires that

we pay royalty, milestone and patent costs to UTS as follows:

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.

In the event of a default under the Melligen Cell

License Agreement, the non-defaulting party may immediately terminate the agreement by notice in writing to the defaulting party if:

the default has continued for not less than 14 days or occurred more than 14 days earlier and has not been remedied;

(ii) the non-defaulting

party serves upon the defaulting party notice in writing requiring the default to be remedied within 30 days of such notice, or such greater

number of days as the non-defaulting party may in its discretion allow, and (iii) the defaulting party has failed to comply with the notice

referred to in (ii) above.

The Melligen Cell License Agreement was amended

in April 2016 to change the name of the licensee to our current name and clarify certain ambiguities in the agreement.

We are required

to pay the Melligen cell patent prosecution costs and to pay to UTS a patent administration fee equal to 15% of all amounts paid by UTS

to prosecute and maintain patents related to the Melligen cells.

In August 2017, we entered into the Binding Term

Sheet 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 May 2018, we entered into agreements with SG

Austria and Austrianova to amend certain provisions of the SG Austria APA, the Diabetes Licensing Agreement and the Cannabis Licensing

Agreement pursuant to the Binding Term Sheet.

For a full description of these amendments, see Item 1.

“History of the Business.”

Sources and Availability

of Raw Materials

The entire encapsulation

process relating to the encapsulation of the cells for the oncology and diabetes-based therapies we are developing is to be carried out

by Austrianova.

Austrianova is the sole source of our product candidates.

Austrianova is responsible for acquiring all of the necessary

raw materials used in this process, including the cellulose sulfate necessary for encapsulating the live cells, a process proprietary

to Austrianova.

Austrianova from time to time has experienced significant supply chain delays, and we believe Austrinova may also be experiencing

liquidity issues as well.

If Austrianova is unwilling or unable to perform such manufacturing for us, we may not be able to locate a replacement

manufacturer for our product candidates.

Patents, Intellectual Property and Trade Secrets

Intellectual property and patent protection are

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® technology.

Although we believe we take reasonable measures to protect our intellectual property and trade

secrets and those of Austrianova, we cannot guarantee we will be able to protect and enforce our IP or obtain patent protection for our

product candidates as needed.

We license technology and trademarks relating to three areas:

(i) live cell encapsulation with cells that

express cytochrome P450 where the capsule is permeable to prodrug molecules and the cells are retained within the capsules;

(ii) treatment

of solid cancerous tumors and (ii) encapsulation of cells for producing retroviral particles for gene therapy.

We also have 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

candidates, intellectual property rights or to determine the validity and scope of the proprietary rights of others.

Establishment, maintenance

and enforcement of our intellectual property utilizes financial and operational resources.

In addition, the possibility exists that our

intellectual property could be discovered to be owned by others, be invalid or be unenforceable – potentially bringing unforeseen

challenges to us.

Human Capital

As of April 30, 2023, we had two full-time employees

and several consultants who devote substantial time to us.

The consultants are physicians, scientists, regulatory experts, clinical operation

experts and cGMP experts.

All of our research and development (“R&D”) work is handled by our consultants.

Reverse Stock Split

Effective July 12, 2021, we filed a Certificate

of Change with the Nevada Secretary of State that authorized a 1:1500 reverse stock split of our common stock.

The reverse stock split

resulted in reducing the authorized number of shares of our common stock from 50 billion to 33,333,334 with a par value of $0.0001 per

Any fractional shares resulting from the reverse stock split were rounded up to the next whole share.

All warrants, option, share

and per share information in this Quarterly Report gives retroactive effect to such 1:1500 reverse stock split.

Our Corporate Information

We are a Nevada corporation incorporated in 1996.

In 2013, we restructured our operations to focus on biotechnology.

The restructuring resulted in us focusing our efforts developing a

novel, effective and safe way to treat cancer and diabetes.

In January 2015, we changed our name from Nuvilex, Inc.

to PharmaCyte Biotech,

to reflect the nature of our current business.

Our corporate headquarters are located at 3960

Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169.

Our telephone number is (917) 595-2850.

We maintain a website at www.pharmacyte.com

to which we post copies of our press releases as well as additional information about us.

Our filings with the SEC are available free

of charge through our website as soon as reasonably practicable after being electronically filed with or furnished to the SEC.

contained in our website is not a part of, nor incorporated by reference into, this Report or our other filings with the SEC, and should

not be relied upon.

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.

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.

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.

Regulatory approval, when obtained, may be limited

in scope which may significantly limit the uses for which a product may be placed into the market.

Further, approved drugs or biologic

products, as well as their manufacturers, are subject to ongoing post-marketing review, inspection and discovery of previously unknown

issues regarding the safety and efficacy of such products or the manufacturing or quality control procedures used in their production.

These may result in restrictions on their manufacture, sale or use or in their withdrawal from the market.

Any failure or delay by us,

our suppliers of manufactured drug product, collaborators or licensees in obtaining regulatory approvals could adversely affect the marketing

of our product candidates and our ability to receive product revenue, license revenue or profit-sharing payments.

For more information,

in scope which may significantly limit the uses for which a product may be placed in the market.

Further, approved drugs or biologic products,

as well as their manufacturers, are subject to ongoing post-marketing review, inspection and discovery of previously unknown issues regarding

the safety and efficacy of such products or the manufacturing or quality control procedures used in their production.

These may result

in restrictions on their manufacture, sale or use or in their withdrawal from the market.

Any failure or delay by us, our suppliers of

manufactured drug product, collaborators or licensees in obtaining regulatory approvals could adversely affect the marketing of our product

candidates and our ability to receive product revenue, license revenue or profit-sharing payments.

For more information, see Item 1A.

“Risk Factors.”

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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;

submission to the FDA of an IND to support human clinical testing in the U.S.;

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;

· 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;

· submission to the FDA of an IND to support human

clinical testing in the U.S.;

· 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;

· FDA review and approval of the NDA or BLA.

434 unchanged sentences

to their safety and efficacy.

We may need to conduct expensive pharmacoeconomic studies in to demonstrate the medical necessity and cost-effectiveness

We may need to conduct expensive pharmacoeconomic studies to demonstrate the medical necessity and cost-effectiveness

of our product candidates, in addition to the costs required to obtain FDA approvals.

224 unchanged sentences

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.

of Schedule I and II controlled substances for commercial purposes are generally restricted to substances not already available from a

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

23 unchanged sentences

In certain circumstances, violations could lead to criminal prosecution.

Patents, Intellectual Property and Trade Secrets

Intellectual property and patent protection are

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 ® technology.

Although we believe we take reasonable measures to protect our intellectual property

and trade secrets and those of Austrianova, we cannot guarantee we will be able to protect and enforce our IP or obtain patent protection

for our product candidates as needed.

We license technology and trademarks relating to three areas:

(i) live cell encapsulation with cells

that express cytochrome P450 where the capsule is permeable to prodrug molecules and the cells are retained within the capsules;

treatment of solid cancerous tumors and (ii) encapsulation of cells for producing retroviral particles for gene therapy.

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

candidates, intellectual property rights or to determine the validity and scope of the proprietary rights of others.

Establishment, maintenance

and enforcement of our intellectual property utilizes financial and operational resources.

In addition, the possibility exists that our

intellectual property could be discovered to be owned by others, be invalid or be unenforceable - potentially bringing unforeseen challenges

Intellectual Property Agreements

The following agreements are a material component

of our intellectual property:

We are a party to the Bavarian Nordic/GSF License Agreement pursuant to which Bavarian Nordic/GSF are the licensors and Bio Blue Bird, our wholly owned subsidiary, is the licensee.

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.

We entered into the amendments contemplated by the Binding Term Sheet Amendments.

The Binding Term Sheet Amendments provide that our obligation to make milestone payments to Austrianova will be eliminated in their entirety under the:

(i) Cannabis License Agreement;

and (ii) the Diabetes License Agreement, as amended.

The Binding Term Sheet Amendments also provides that our obligation to make milestone payments to SG Austria pursuant to the SG Austria APA, as amended and clarified, is eliminated in their entirety.

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.

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 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

In June 2013, we and SG Austria entered the Third

Addendum and the Clarification Agreement.

The Third Addendum requires us to make the following payments for the purchased assets;

payments were timely made in full under the payment deadlines set forth in the Third Addendum:

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;

$1,000,000 to SG Austria.

Pursuant to the Third Addendum, we agreed to and

have entered a manufacturing agreement with SG Austria for the manufacture of the pancreatic cancer clinical trial product to treat LAPC.

The Manufacturing Framework Agreement requires us to pay Austrianova a one-time manufacturing setup fee in the amount of $647,000, of

which 50% is required to be paid on the effective date of the Manufacturing Framework Agreement and 50% is required to be paid three months

We have paid the full amount of the manufacturing setup fee.

The Manufacturing Framework Agreement also requires

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 ® product.

The fees under the Manufacturing Framework Agreement are subject

to annual increases according to the annual inflation rate in the country in which the encapsulated cell products are manufactured.

placed and have received an order to produce 400 vials for our clinical trial to treat LAPC.

Austrianova has been paid the full amount

for the order.

The Third Addendum also requires the Company to

make future royalty and milestone payments as follows:

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;

On May 14, 2018, we entered into amendments to

the Third Addendum.

For a full description of these amendments, see Item 1.

“History of the Business.”

Diabetes Licensing Agreement

Under the Diabetes Licensing Agreement, we are

required to make a payment of $2,000,000 in two equal payments of $1,000,000 each.

We made our first $1,000,000 payment on October 30,

Our second payment of $1,000,000 was made on February 25, 2014.

The Diabetes Licensing Agreement requires us to

pay Austrianova, pursuant to a manufacturing agreement to be entered between the parties, a one-time manufacturing setup fee in the amount

of approximately $600,000, of which 50% is required to be paid on the signing of a manufacturing agreement for a product and 50% is required

to be paid three months later.

In addition, the Diabetes Licensing Agreement requires us to pay a manufacturing production fee, which

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

All costs for encapsulated cell products will be subject to an annual increase equal to the published rate of inflation in the

country of manufacture of the vials.

The Diabetes Licensing Agreement requires us to

make future royalty and milestone payments as follows:

Ten percent royalty of gross sales of all products we sell;

Twenty percent royalty of the amount received by us from a sub-licensee on its gross sales;

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,

as amended, may be terminated and all rights will revert to Austrianova if any of the following milestone events do not occur within the

following timeframes, subject to all the necessary and required research having been successful and the relevant product being sufficiently

prepared to enter a clinical trial:

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

Diabetes Licensing Agreement.

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

with genetically modified non-stem cell lines which are designed to activate cannabinoids to develop therapies involving Cannabis

with a right to sublicense .

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

monthly partial payments of the Upfront Payment in amounts to be agreed upon between the parties prior to each such payment being made.

Under the Cannabis Licensing Agreement, the Upfront Payment must be paid in full by no later than June 30, 2015.

The parties amended the

Cannabis Licensing Agreement twice pursuant to which the balance of the Upfront Payment is to be paid by June 30, 2016.

We have paid the

Upfront Payment of $2,000,000 in full.

The Cannabis Licensing Agreement requires us to

pay Austrianova, pursuant to a manufacturing agreement to be entered between the parties, a one-time manufacturing setup fee in the amount

of $800,000, of which 50% is required to be paid on the signing of a manufacturing agreement for a product and 50% is required to be paid

three months later.

In addition, the Cannabis Licensing Agreement requires us to pay a manufacturing production fee, which is to be defined

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 ® product.

All costs for encapsulated cell products, the

manufacturing setup fee and the manufacturing production fee will be subject to annual increases, in accordance with the inflation rate

in the country in which the encapsulated cell products are manufactured.

The Cannabis Licensing Agreement requires us to

make future royalty and milestone payments as follows:

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;

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 or its equivalent based on the country in which it is accepted for each product.

The license under the Cannabis Licensing Agreement,

as amended, may be terminated and all rights will revert to Austrianova if any of the following milestone events do not occur within the

following timeframes:

If we do not enter a research program involving the scope of the license within three years of December 1, 2014, the effective date of the Cannabis Licensing Agreement (we have met this requirement);

If we do not enter a clinical trial or its equivalent for a product within 7 years of the effective date of the Cannabis Licensing Agreement.

In May 2018, we entered into amendments to the

Cannabis Licensing Agreement.

For a full description of these amendments, see Item 1.

“History of the Business.”

Melligen Cell License Agreement

The Melligen Cell License Agreement requires that

we pay royalty, milestone and patent costs to UTS as follows:

Six percent of gross exploitation revenue on product sales;

Twenty-five percent of gross revenues if the product is sublicensed by us;

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

License Agreement, the non-defaulting party may immediately terminate the agreement by notice in writing to the defaulting party if:

the default has continued for not less than 14 days or occurred more than 14 days earlier and has not been remedied;

(ii) the non-defaulting

party serves upon the defaulting party notice in writing requiring the default to be remedied within 30 days of such notice, or such greater

number of days as the non-defaulting party may in its discretion allow, and (iii) the defaulting party has failed to comply with the notice

referred to in (ii) above.

The Melligen Cell License Agreement was amended

in April 2016 to change the name of the licensee to our current name and clarify certain ambiguities in the agreement.

We are required

to pay the Melligen cell patent prosecution costs and to pay to UTS a patent administration fee equal to 15% of all amounts paid by UTS

to prosecute and maintain patents related to the Melligen cells.

In August 2017, we entered into the Binding Term

Sheet 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 May 2018, we entered into agreements with SG

Austria and Austrianova to amend certain provisions of the SG Austria APA, the Diabetes Licensing Agreement and the Cannabis Licensing

Agreement pursuant to the Binding Term Sheet.

For a full description of these amendments, see Item 1.

“History of the Business.”

Sources and Availability of Raw Materials

The entire encapsulation process relating to the

encapsulation of the cells for the oncology and diabetes-based therapies we are developing is to be carried out by Austrianova.

is the sole source of our product candidates.

Austrianova is responsible for acquiring all of the necessary raw materials used in this

process, including the cellulose sulfate necessary for encapsulating the live cells.

Austrianova from time to time has experienced significant

supply chain delays, some of which may be related to COVID-19.

We believe Austrinova may also be experiencing liquidity issues.

cells have been grown by Eurofins to populate a MCB for our future clinical trials.

What changed 10-K

Item 1. Business