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Item 7. Management’s Discussion and Analysis

2024-03-28 compared with 2023-03-31 · 87 added, 98 removed, 171 unchanged (52% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

You should read the following discussion and

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Our actual results may differ materially from those discussed

Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed

in the section titled “Risk Factors” included elsewhere in this Annual Report on Form 10-K.

All amounts in this report are

Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those

discussed in the section titled “Risk Factors” included elsewhere in this Annual Report on Form 10-K.

All amounts in this

report are in U.S.

dollars, unless otherwise noted.

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biopharmaceutical company focused on developing new generation therapies for unmet medical needs.

We are focused on developing (i) a topical

formulation for treating side effects from drugs used for the treatment of cancer (HT-001);

(ii) a treatment for mast-cell derived cancers

and anaphylaxis (HT-KIT);

We are focused on developing (i) a

topical formulation for treating side effects from drugs used for the treatment of cancer (HT-001);

(ii) a treatment for mast-cell derived

cancers and anaphylaxis (HT-KIT);

(iii) a treatment for traumatic brain injury and ischemic stroke (HT-TBI);

and (iv) a treatment and/or prevention

for Alzheimer’s or other neuroinflammatory diseases (HT-ALZ).

We also have assets being developed for (i) atopic dermatitis (also

known as eczema) (BioLexa);

and (iv) a treatment and/or

prevention for Alzheimer’s or other neuroinflammatory diseases (HT-ALZ).

We also have assets being developed for (i) atopic dermatitis

(also known as eczema) (BioLexa);

(ii) a treatment for asthma and allergies using inhalational administration (HT-004);

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for acne as well as inflammatory bowel diseases (HT-003).

In addition, we are continuing to evaluate a novel peptide that may be used

to slow the transmission of SARS-CoV-2 (HT-002).

We are also developing a diagnostic device via a mobile device.

Furthermore, we have

interests in certain other assets being developed by third parties including a treatment for patients with lupus that is being developed

by Zylö and potential product candidates being developed pursuant to our agreement with Voltron for the prevention of COVID-19.

Furthermore, we have interests in certain other assets being developed by third

parties including a treatment for patients with lupus that is being developed by Zylö and potential product candidates being developed

pursuant to our agreement with Voltron for the prevention of COVID-19.

Results of Operations

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For the year ended December 31, 2023, research

and development expenses were approximately $3.5 million.

Specifically, during the year ended December 31, 2023, our research and development

costs consisted primarily of the following costs for each of our key research and development projects:

(i) HT-001, approximately $1.7

million related to manufacturing and clinical activities;

(ii) HT-KIT, approximately $1.6 million related to manufacturing and preclinical

(iii) HT-ALZ, approximately $65,000 related to preclinical studies;

(iv) BioLexa, approximately $56,000 related to manufacturing;

and (v) HT-004, approximately $59,000 related to sponsored research.

In addition to the foregoing, we also incurred fees of approximately

$0.2 million payable to members of our scientific advisory board for services.

For the year ended December 31, 2022, research

and development expenses were approximately $4.9 million, of which approximately $87,000 was related to licenses acquired and approximately

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and development costs consisted primarily of the following costs for each of our key research and development projects:

(i) BioLexa, approximately

$1 million related to clinical trial costs;

(ii) HT-001, approximately $2.9 million related to manufacturing, preclinical and clinical

approximately $1.0 million related to clinical trial costs;

(ii) HT-001, approximately $2.9 million related to manufacturing, preclinical

and clinical activities;

(iii) HT-TBI, approximately $0.4 million related to manufacturing and preclinical activities;

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(vi) HT-006, approximately

related to sponsored research (on July 12, 2022, our non-exclusive commercial evaluation license agreement with the United States Army

Medical Research and Development Command terminated and we are no longer pursuing HT-006);

(vii) GW breath based diagnostic device, approximately

$76,000 related to research and development with respect to the design of device;

(viii) HT-KIT, approximately $0.2 million related to

manufacturing and preclinical activities;

$51,000 related to sponsored research (on July 12, 2022, our non-exclusive commercial evaluation license agreement with the United States

Army Medical Research and Development Command terminated and we are no longer pursuing HT-006);

(vii) GW breath based diagnostic device,

approximately $76,000 related to research and development with respect to the design of device;

(viii) HT-KIT, approximately $0.2 million

related to manufacturing and preclinical activities;

and (ix) HT-ALZ, approximately $0.2 million in sponsored research.

In addition to the foregoing,

we also incurred fees of approximately $0.3 million payable to members of our scientific advisory board for services.

For the year ended December 31, 2021, research

and development expenses were approximately $7.5 million, of which approximately $0.2 million was related to licenses acquired and approximately

$7.4 million was related to other research and development expenses.

Specifically, during the year ended December 31, 2021, our research

and development costs consisted primarily of the following costs for each of our key research and development projects:

(i) BioLexa, approximately

$1.7 million related to clinical trial costs;

(ii) HT-001, approximately $4.1 million related to manufacturing, preclinical and clinical

(iii) HT-002, approximately $56,000 related to sponsored research;

(iv) HT-003, approximately $0.4 million related to preclinical

(v) HT-004, approximately $17,000 related to sponsored research;

(vi) HT-006, approximately $51,000 related to sponsored research;

(vii) GW breath based diagnostic device, approximately $0.3 million related to research and development with respect to the design of

and (viii) HT-KIT, approximately $0.4 million related to research and development manufacturing.

In addition to the foregoing,

we also incurred fees of approximately $0.2 million payable to members of our scientific advisory board for services.

In addition to

the foregoing, we also incurred fees of approximately $0.3 million payable to members of our scientific advisory board for services.

We expect our research and development activities

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associated with the following:

● employee-related expenses,

which include salaries and benefits, and rent expenses;

● fees related to in-licensed

products and technology;

● expenses incurred under agreements

with CROs, investigative sites and consultants that conduct our clinical trials and a substantial portion of our pre-clinical activities;

● the cost of acquiring and manufacturing

clinical trial materials;

● costs associated with non-clinical

activities and regulatory approvals.

Compensation, Professional Fees, Rent and Other (“General

and Administrative Expenses”)

● employee-related

expenses, which include salaries and benefits, and rent expenses;

related to in-licensed products and technology;

incurred under agreements with CROs, investigative sites and consultants that conduct our clinical trials and a substantial portion of

our pre-clinical activities;

cost of acquiring and manufacturing clinical trial materials;

associated with non-clinical activities and regulatory approvals.

General and Administrative Expenses

For the year ended December 31, 2023, General

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● support of business development activities;

increased professional fees and other costs associated with the regulatory requirements.

Other Income (Expenses)

For the year ended December 31, 2022, other expenses

was approximately $0.3 million, which primarily resulted from $0.4 million losses on marketable securities and $0.4 million change in

fair value of investments in joint ventures, partially offset by $0.5 million of other income related to a research and development tax

credit pursuant to Australian regulations.

For the year ended December 31, 2021, other expenses

were approximately $0.2 million, which consisted of the realized gain or loss, unrealized gain or loss, and dividend income related to

marketable securities.

● increased professional fees and other costs associated with

regulatory requirements that we are subject to.

Other Income (Expenses), net

For the year ended December 31, 2023, net other

expenses were approximately $0.1 million, which primarily resulted from $0.2 million of unrealized losses on marketable securities, partially

offset by approximately $0.1 million of dividend income.

For the year ended December 31, 2022, net other

expenses were approximately $0.3 million, which primarily resulted from $0.6 million of losses on marketable securities and $0.4 million

change in fair value of investments in joint ventures, partially offset by $0.1 million of unrealized gains on marketable securities,

$0.5 million of other income related to a research and development tax credit pursuant to Australian regulations and $0.1 million in dividend

Liquidity and Capital Resources

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through the sale of equity and debt securities.

As of December 31, 2022, we had approximately $6.4 million in cash, marketable securities

of approximately $0.2 million, working capital of approximately $5.3 million and an accumulated deficit of approximately $45.0 million.

Net cash used in operating activities was $9.3 million and $12.1 million for the years ended December 31, 2022 and 2021, respectively.

We incurred losses of approximately $11.4 million and $14.3 million for the years ended December 31, 2022 and 2021, respectively.

incurred substantial operating losses since inception and expect to continue to incur significant operating losses for the foreseeable

future as we continue our pre-clinical and clinical development of our product candidates.

We have not yet commercialized any products

and have never generated any revenue from product sales.

We believe that our existing cash as of December 31, 2022 will enable us to fund

our operating expenses and capital expenditure requirements for at least 12 months from the date that our audited financial statements

are available to be issued.

As of December 31, 2023, we had approximately $9.3 million in cash and marketable securities,

working capital of approximately $8.8 million and an accumulated deficit of approximately $52.9 million.

Net cash used in operating activities

was $8.4 million and $9.3 million for the years ended December 31, 2023 and 2022, respectively.

We incurred losses of approximately $7.8

million and $11.4 million for the years ended December 31, 2023 and 2022, respectively.

We have incurred substantial operating losses

since inception and expect to continue to incur significant operating losses for the foreseeable future as we continue our pre-clinical

and clinical development of our product candidates.

We have not yet commercialized any products and have never generated any revenue from

product sales.

We believe that our existing cash as of December 31, 2023 will enable us to fund our operating expenses and capital expenditure

requirements for at least 12 months from the date that our audited financial statements are available to be issued.

We have entered into certain license, sublicense,

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scale back or discontinue the development and commercialization of one or more of our product candidates.

In addition, the magnitude and

duration of the COVID-19 pandemic and its impact on our liquidity and future funding requirements is uncertain as of the filing date of

this Annually Report on Form 10-K.

Cash Flows from Operating Activities

For the year ended December 31, 2023, net cash used in operating activities

was approximately $8.4 million, which primarily resulted from a net loss of approximately $7.8 million, a $0.3 million gain on termination

of license agreement, offset by $0.2 million unrealized loss on marketable securities, $0.2 million stock-based compensation and changes

in operating assets and liabilities of approximately $0.7 million.

For the year ended December 31, 2022, net cash

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assets and liabilities of approximately $0.6 million.

For the year ended December 31, 2021, net cash

used in operating activities was approximately $12.1 million, which primarily resulted from a net loss of approximately $14.3 million,

and was partially offset by changes in operating assets and liabilities of approximately $0.5 million, unrealized loss on marketable securities

of approximately $0.2 million, and approximately $1.3 million stock-based compensation.

Cash Flows from Investing Activities

The Company did not have any cash flows from investing activities for

the year ended December 31, 2023.

For the year ended December 31, 2022, net cash

provided by investing activities was approximately $1.2 million which was primarily related to the sale of marketable securities.

For the year ended December 31, 2021, net cash

used in investing activities was approximately $0.2 million, which was primarily related to the sale of marketable securities of approximately

$2.5 million, and was partially offset by the purchase of marketable securities of approximately $2.6 million.

Cash Flows from Financing Activities

For the year ended December 31, 2023, net cash provided by financing

activities was approximately $11.3 million, which primarily resulted from net proceeds from the issuance of common stock, common stock

warrants, and prefunded warrants.

For the year ended December 31, 2022, net cash

provided by financing activities was approximately $6.0 million, which primarily resulted from net proceeds from the issuance of common

For the year ended December 31, 2021, net cash

provided by financing activities was approximately $18.2 million.

Which primarily resulted from approximately $17.8 million in net proceeds

from the issuance of common stock, common stock warrants and pre-funded warrants, and $0.4 million in proceeds from the exercise of warrants.

Our ultimate success is dependent on our ability

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When uncertain tax positions exist, we recognize the tax benefit of tax positions to the extent that the

benefit would more likely than not be realized assuming examination by the taxing authority.

The determination as to whether the tax benefit

will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available

facts and circumstances.

benefit would more likely than not be realized.

The determination as to whether the tax benefit will more likely than not be realized

is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

Significant Accounting Policies

See Note 2 to the

consolidated financial statements for a discussion of recent accounting policies.

See Note 2 to the consolidated financial statements

for a discussion of significant accounting policies and recent accounting pronouncements.

On April 5, 2012, the JOBS Act was enacted.

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the rules of the SEC.

However, beginning December 31, 2024, we will no longer be an “emerging growth company,” and will no

longer have the ability to delay adoption of these new or revised accounting standards, or to take advantage of reduced corporate governance

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-K

Item 7. Management’s Discussion and Analysis