What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-07-21 compared with 2022-04-21 · 47 added, 44 removed, 197 unchanged (32% of the section changed)

13 unchanged sentences

Our formulations are intended to achieve elevated tumor absorbed radiation doses and extended retention times such that the clearance of the isotope occurs after significant radiation decay, which we believe will contribute and provide less normal tissue/organ exposure and improved safety margins.

Traditional approaches to radiation therapy for cancer such as external beam radiation have many disadvantages including continuous treatment for 4-6 weeks (which is onerous for patients), radiation that inadvertently damages healthy cells and tissue, and a very limited amount of radiation that can be safely delivered, therefore, is frequently inadequate to fully destroy the cancer.

Traditional approaches to radiation therapy for cancer such as external beam radiation have many disadvantages including continuous treatment for 4-6 weeks (which is onerous for patients), radiation that inadvertently damages healthy cells and tissue, and a limited amount of radiation that can be safely delivered, therefore, is frequently inadequate to fully destroy the cancer.

Our targeted radiotherapeutic platform and unique investigational drugs have the potential to overcome these disadvantages by directing higher, more powerful radiation doses at the tumor—and only the tumor—potentially in a single treatment.

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Our radiotherapeutic platform, combined with advances in surgery, nuclear medicine, interventional radiology, and radiation oncology, affords us the opportunity to target a broad variety of cancer types.

Our lead radiotherapeutic candidate, Rhenium-186 NanoLiposome (“ 186 RNL”) is designed specifically to target central nervous system (“CNS”) cancers including recurrent glioblastoma, leptomeningeal metastases, and pediatric brain cancers by direct localized delivery utilizing approved standard-of-care tissue access such as with conduction enhanced delivery (“CED”) and intraventricular brain catheters (Ommaya reservoir).

Our recently acquired radiotherapeutic candidate, Rhenium-188 NanoLiposome Biodegradable Alginate Microsphere (“ 188 RNL-BAM”) is designed to treat many solid organ cancers including primary and secondary liver cancers.

Our lead radiotherapeutic candidate, Rhenium-186 NanoLiposome (“ 186 RNL”) is designed specifically to target central nervous system (“CNS”) cancers including recurrent glioblastoma, leptomeningeal metastases, and pediatric brain cancers by direct localized delivery utilizing convection-enhanced delivery (“CED”) and intraventricular (Ommaya reservoir) catheter systems.

Our headquarters and manufacturing facilities are in Texas and are nearby world-class cancer institutions and researchers.

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Preclinical study data describing the use of 186 RNL for several cancer targets have been published in peer-reviewed journals.

Besides glioblastoma, leptomeningeal metastases, and pediatric brain cancer, 186 RNL has been reported to have potential applications for head and neck cancer, ovarian cancer, breast cancer and peritoneal scarcinomatosis.

The 186 RNL technology was part of a licensed radiotherapeutic portfolio that we acquired from NanoTx, Corp.

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Subsequently, in November 2021, the FDA granted a Fast Track designation for 186 RNL for the treatment of leptomeningeal metastases.

We treated our first patient in the ReSPECT-LM Phase 1 clinical trial in Q1 2022.

We treated our first patient in the ReSPECT-LM Phase 1 clinical trial in Q1 2022 and completed the first cohort in Q2 2022.

The ReSPECT-LM multi-center, sequential cohort, open-label, dose escalation study is evaluating the safety, tolerability, and distribution of 186 RNL via intrathecal infusion to the ventricle of patients with LM after standard surgical, radiation, and/or chemotherapy treatment.

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Recent Developments

Services Agreement and Statement of Work with Medidata

On March 31, 2022, we entered into a Statement of Work (the “SOW”) with Medidata Solutions, Inc.

Services Agreement and Sales Order with Medidata

On March 31, 2022, we entered into a Sales Order (the “Sales Order”) with Medidata Solutions, Inc.

(“Medidata”), pursuant to which Medidata will build a Synthetic Control Arm ® (SCA) platform that facilitates the use of historical clinical data to incorporate into the Company’s Phase 2 clinical trial of 186 RNL in GBM.

The SOW has a term of six (6) months.

We will pay Medidata $1.45 million in managed services fees and a contingent managed services fee of $150,000 if the U.S.

Food & Drug Administration approves a path forward for us to use the SCA in its clinical trial of 186 RNL for treatment of GBM.

The SOW may only be terminated for a material breach by either party or if the clinical study’s authorization or approval is withdrawn by a regulatory agency.

The Sales Order has a term of six (6) months.

The Sales Order may only be terminated for a material breach by either party, if the clinical study is terminated or if the clinical study’s authorization or approval is withdrawn by a regulatory agency.

UT Health Science Center San Antonio (UTHSA) License Agreement

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Research and development expenses include costs associated with the design, development, testing, and enhancement of our product candidates, payment of regulatory fees, laboratory supplies, pre-clinical studies, and clinical studies .

The following table summarizes the components of our research and development expenses for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

The following table summarizes the components of our research and development expenses for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

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Total research and development expenses

The increase of $0.7 million in research and development expenses for the three months ended March 31, 2022 as compared to the same period in 2021 was due primarily to increased expenditures related to increase in development costs of 186 RNL of $0.5 million as we ramp up to plan for the pivotal trial, an increase of $0.1 million in professional expenses and an increase of $0.1 million in personnel expenses .

We expect aggregate research and development expenditures to increase in absolute dollars during 2022 due to the expected costs of development of the 186 RNL™ therapy acquired from NanoTx and development expenses related to 188 RNL-BAM.

The increase of $1.7 million in research and development expenses for the three months ended June 30, 2022 as compared to the same period in 2021 was due primarily to an increase of $0.8 million in development costs relating to the development of cGMP 186 RNL

drug, an increase of $0.7 million in other expenses which includes the development of the SCA, and an increase of $0.2 million in personnel expenses .

The increase of $2.4 million in research and development expenses for the six months ended June 30, 2022, as compared to the same period in 2021 was due primarily to an increase of $1.4 million in development costs relating to the development of cGMP 186 RNL drug, an increase of $0.8 million in other expenses which includes the development of the SCA, and an increase of $0.2 million in personnel expenses.

We expect aggregate research and development expenditures to increase in absolute dollars during the remainder of 2022 due to the expected costs of development of the 186 RNL™ therapy acquired from NanoTx and development expenses related to 188 RNL-BAM.

General and administrative expenses

General and administrative expenses include costs for administrative personnel, legal and other professional expenses, and general corporate expenses.

The following table summarizes the general and administrative expenses for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

The following table summarizes the general and administrative expenses for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

General and administrative

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Total general and administrative expenses

General and administrative expenses increased by approximately $0.8 million during the three months ended March 31, 2022 as compared to the same period in 2021.

The increase was primarily due to an increase of $0.6 million of legal, intellectual property and other professional expenses, and an increase of $0.2 million of personnel related expenses.

General and administrative expenses increased by approximately $0.8 million and $1.6 million during the three and six months ended June 30, 2022, respectively, as compared to the same period in 2021.

The increase during the three months ended June 30, 2022 was primarily due to an increase of $0.7 million in legal fees, intellectual property and other professional expenses, and an increase of $0.1 million in personnel related expenses.

The increase during the six months ended June 30, 2022 was primarily due to an increase of $1.4 million in legal fees, intellectual property and other professional expenses, and an increase of $0.2 million in personnel related expenses.

We expect general and administrative expenditures to remain generally consistent in 2022 as compared with the year ended December 31, 2021, subject to litigation cost which is not predictable at this time.

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Such expense is recognized over the requisite service period.

The following table summarizes the components of our stock-based compensation expenses for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

The following table summarizes the components of our stock-based compensation expenses for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

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Financing items

The following table summarizes interest income, interest expense, and other income and expense for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

The following table summarizes interest income, interest expense, and other income and expense for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Interest income

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Change in fair value of liability instruments

The decrease in interest expense for the three months ended March 31, 2022 as compared to the same periods in 2021 was primarily due to the repayment of debt principal of $0.3 million in 2021 and $0.4 million during the first quarter of 2022.

The decrease in interest expense for the three and six months ended June 30, 2022 as compared to the same periods in 2021 was primarily due to the repayment of debt principal of $0.4 million and $0.8 million for the three and six months ended June 30, 2022 as compared to no principal payments during the same periods in 2021.

We expect interest expense in 2022 to decrease as compared with 2021 due to scheduled debt principal repayments which commenced on November 1, 2021.

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Short-term and long-term liquidity

The following is a summary of our key liquidity measures at March 31, 2022 and December 31, 2021 (in thousands):

March 31, 2022

The following is a summary of our key liquidity measures at June 30, 2022 and December 31, 2021 (in thousands):

June 30, 2022

December 31, 2021

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For the periods presented, operating losses have been funded primarily from outside sources of invested capital in our common stock.

We believe that our cash and cash equivalents of $21.2 million at March 31, 2022 will enable us to fund our current and planned operations for at least the next twelve months and beyond from the date these condensed financial statements were issued.

We believe that our cash and cash equivalents of $18.1 million at June 30, 2022 will enable us to fund our current and planned operations for at least the next twelve months and beyond from the date these condensed financial statements were issued.

We have had, and we will continue to have, an ongoing need to raise additional cash from outside sources to fund our future clinical development programs and other operations.

Our inability to raise additional cash would have a material and adverse impact on operations and would cause us to default on our loan.

On January 14, 2022, we entered into an Equity Distribution Agreement (the “2022 Distribution Agreement”) with Canaccord Genuity LLC (the “Agent”, or “Canaccord”), pursuant to which we may issue and sell, from time to time, shares of its common stock having an aggregate offering price of up to $5,000,000 (the “Shares”), depending on market demand, with the Agent acting as an agent for sales.

On January 14, 2022, we entered into an Equity Distribution Agreement (the “2022 Distribution Agreement”) with Canaccord Genuity LLC (the “Agent”, or “Canaccord”), pursuant to which we may issue and sell, from time to time, shares of our common stock having an aggregate offering price of up to $5,000,000 (the “Shares”), depending on market demand, with the Agent acting as an agent for sales.

Sales of the Shares may be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended, including, without limitation, sales made directly on or through the Nasdaq.

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We continue to seek additional capital through strategic transactions and other financing alternatives.

Without additional capital, current working capital and cash generated from sales will not provide adequate funding for research and product development activities at their current levels.

If sufficient capital is not raised, we will at a minimum need to significantly reduce or curtail our research and development and other operations, and this would negatively affect our ability to achieve corporate growth goals.

Without additional capital, current working capital and cash generated from sales will not provide adequate funding for research and product development

activities at their current levels.

There may be continued market volatility due to the pandemic , downturn in global economy, or other events, which could cause our stock price to decline.

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Should we be unable to raise additional cash from outside sources or if we are unable to do so in a timely manner or on commercially reasonable terms, it would have a material adverse impact on our operations.

Cash (used in) provided by operating, investing, and financing activities for the three months ended March 31, 2022 and 2021 is summarized as follows (in thousands):

Three Months Ended March 31,

Cash (used in) provided by operating, investing, and financing activities for the six months ended June 30, 2022 and 2021 is summarized as follows (in thousands):

Six Months Ended June 30,

Net cash used in operating activities

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Net cash provided by financing activities

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Material Cash Obligations

On March 31, 2022, we entered into the SOW with Medidata pursuant to which Medidata will build a Synthetic Control Arm® (SCA) platform that facilitates the use of historical clinical data to incorporate into the Company’s Phase 2 clinical trial of 186RNL in GBM.

During the six month term of the SOW, we will pay Medidata $1.45 million in managed services fees.

Further, if the U.S.

Food & Drug Administration approves a path forward for us to use the SCA in its clinical trial of 186RNL for treatment of GBM, we will pay Medidata an additional contingent managed services fee of $150,000.

On March 31, 2022, we entered into the Sales Order with Medidata pursuant to which Medidata will build a Synthetic Control Arm® (SCA) platform that facilitates the use of historical clinical data to incorporate into the Company’s Phase 2 clinical trial of 186 RNL in GBM.

We are also obligated to make ongoing principal and interest payments under the Term Loan with Oxford through the maturity date of June 1, 2024 (See Note 5 of the accompanying condensed financial statements for more information).

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Operating activities

Net cash used in operating activities for the three months ended March 31, 2022 was $3.9 million compared to $3.0 million in the same period of 2021.

Our operational cash use increased during the three months ended March 31, 2022 as compared to the same period in 2021, due primarily to increased expenditures for our research and development activities.

Net cash used in operating activities for the six months ended June 30, 2022 was $6.5 million compared to $5.4 million in the same period of 2021.

Our operational cash use increased during the six months ended June 30, 2022 as compared to the same period in 2021, due primarily to increased expenditures for our research and development activities.

Investing activities

Net cash used in investing activities for the three months ended March 31, 2022 were related to cash payments of $0.3 million made for in process research and development assets from UTHSA and purchases of fixed assets and intangible assets of $0.3 million.

Net cash used in investing activities for the three months ended March 30, 2021 was primarily related to purchases of fixed assets.

Net cash used in investing activities for the six months ended June 30, 2022 was related to cash payments of $0.2 million made for in process research and development assets from UTHSA and purchases of fixed assets and intangible assets of $0.5 million.

Net cash used in investing activities for the six months ended June 30, 2021 was primarily related to purchases of fixed assets.

Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2022 was primarily related to sales of common stock of $7.7 million, net of offering cost through the 2022 Distribution Agreement with Canaccord and the 2020 Purchase Agreement with Lincoln Park.

Net cash provided by financing activities for the three months ended March 31, 2021 was primarily related to sales of common stock of $7.2 million, net of offering cost through the 2020 Purchase Agreement with Lincoln Park and the 2022 Distribution Agreement with Canaccord, as well as $2.0 million from exercise of warrants.

Net cash provided by financing activities for the six months ended June 30, 2022 was primarily related to sales of common stock of $7.8 million, net of offering cost through the 2022 Distribution Agreement with Canaccord and the 2020 Purchase Agreement with Lincoln Park.

Net cash provided by financing activities for the six months ended June 30, 2021 was primarily related to sales of common stock of $12.3 million, net of offering cost through the 2020 Purchase Agreement with Lincoln Park and the Distribution Agreement with Canaccord, as well as $2.0 million from exercise of warrants.

Critical Accounting Policies and Significant Estimates

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We believe it is important for you to understand our most critical accounting policies.

Our critical accounting policies and estimates are discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and there have been no material changes during the three months ended March 31, 2022.

Quantitative and Qualitative Disclosures about Market Risk

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis