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Item 1. Financial Statements

2022-08-11 compared with 2022-05-12 · 285 added, 173 removed, 296 unchanged (61% of the section changed)

ITEM 1 - FINANCIAL STATEMENTS

ITEM 1 – FINANCIAL

XENETIC BIOSCIENCES, INC.

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Series B, $ 0.001 par value:

1,804,394 shares issued and outstanding as of March 31, 2022 and December 31, 2021

1,804,394 shares issued and outstanding as of June 30, 2022 and December 31, 2021

Series A, $ 0.001 par value:

970,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021

970,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021

Common stock, $ 0.001 par value;

50,000,000 shares authorized as of March 31, 2022 and December 31, 2021;

13,468,287 and 13,466,603 shares issued as of March 31, 2022 and December 31, 2021, respectively;

13,441,296 and 13,439,612 shares outstanding as of March 31, 2022 and December 31, 2021, respectively

50,000,000 shares authorized as of June 30, 2022 and December 31, 2021;

14,343,587 and 13,466,603 shares issued as of June 30, 2022 and December 31, 2021, respectively;

14,316,596 and 13,439,612 shares outstanding as of June 30, 2022 and December 31, 2021, respectively

Additional paid in capital

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

THREE MONTHS ENDED

SIX MONTHS ENDED

Royalty revenue

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( 2,077,499 )

( 3,178,898 )

( 1,154,279 )

General and administrative

( 1,026,290 )

( 1,933,599 )

( 1,821,282 )

Total operating costs and expenses

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( 1,415,254 )

( 5,112,497 )

( 2,975,561 )

Loss from operations

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( 1,127,651 )

Other income:

Interest income

( 4,306,794 )

( 2,496,742 )

Other income (expense):

Other income (expense)

Interest income, net

Total other income

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$ ( 1,106,678 )

Basic and diluted loss per share

Weighted-average shares of common stock outstanding, basic and diluted

$ ( 4,265,801 )

$ ( 2,452,623 )

Basic and diluted net loss per share

Weighted-average shares of common stock

outstanding, basic and diluted

The accompanying notes are an integral part of

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

THREE MONTHS ENDED MARCH 31, 2022

THREE MONTHS ENDED JUNE 30, 2022

Comprehensive

Stockholders'

Balance as of April 1, 2022

$ 206,072,322

$ ( 184,140,876 )

$ ( 5,281,180 )

Issuance of common stock in connection with purchase of in-process research

and development

Share-based expense

Exercise of purchase warrants

( 2,672,190 )

Balance as of June 30, 2022

$ 207,012,317

$ ( 186,813,066 )

$ ( 5,281,180 )

SIX MONTHS ENDED JUNE 30, 2022

Preferred Stock

Number of Shares

Par Value ($0.001)

Number of Shares

Par Value ($0.001)

Paid in Capital

Accumulated Deficit

Comprehensive Income

Treasury Stock

Stockholders' Equity

Balance as of January 1, 2022

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$ ( 5,281,180 )

Issuance of common stock in connection with purchase of in-process research and development

Share-based expense

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( 4,265,801 )

Balance as of March 31, 2022

as of June 30, 2022

$ 207,012,317

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

THREE MONTHS ENDED MARCH 31, 2021

THREE MONTHS ENDED JUNE 30, 2021

Value ($0.001)

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Stockholders'

Balance as of April 1, 2021

( 178,248,031

Share-based expense

Balance as of June 30, 2021

( 179,354,709

SIX MONTHS ENDED JUNE 30, 2021

Value ($0.001)

Comprehensive

Stockholders'

Balance as of January 1, 2021

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Exercise of purchase warrants

Balance as of March 31, 2021

Balance as of June 30, 2021

( 179,354,709

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Adjustments to reconcile net loss to net cash used in operating activities:

Acquired in-process research and development

Amortization of right of use asset

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( 2,245,998 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Net cash paid to acquire in-process research and development

Net cash used in investing activities

Net change in cash

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SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Issuance of common stock to acquire in-process research and development

Issuance of common stock from cashless exercise of purchase warrants

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or the “Company”), incorporated in the state of Nevada and based in Framingham, Massachusetts, is a biopharmaceutical company

focused on advancing innovative immune-oncology technologies addressing hard to treat oncology indications.

The Company’s Deoxyribonuclease

(“DNase”) oncology platform, in development for the treatment of solid tumors, is aimed at improving outcomes of existing

treatments, including immunotherapies, by targeting Neutrophil Extracellular Traps (“NETs”).

The Company is also developing

its personalized Chimeric Antigen Receptor (“CAR”) T platform technology, XCART ™ , to develop cell-based therapeutics

targeting the unique B-cell receptor on the surface of an individual patient’s malignant tumor cells, for the treatment of B-cell

On April 26, 2022, the Company entered into exclusive license and sublicense agreements with CLS Therapeutics Ltd.

to develop its interventional DNase based oncology platform as more fully described in Note 11.

Additionally, Xenetic is leveraging its proprietary

drug delivery platform, PolyXen ® , by partnering with biotechnology and pharmaceutical companies.

PolyXen is an enabling

platform technology which can be applied to protein or peptide therapeutics.

PolyXen has demonstrated its ability to improve the half-life

and other pharmacological properties of next-generation biologic drugs.

The Company receives royalty payments under an exclusive license

arrangement in the field of blood coagulation disorders.

focused on advancing innovative immune-oncology technologies addressing hard to treat cancers.

The Company’s Deoxyribonuclease (“DNase”)

platform is designed to improve outcomes of existing treatments, including immunotherapies, by targeting Neutrophil Extracellular Traps

The Company is also developing its personalized Chimeric Antigen Receptor (“CAR”) T platform technology,

XCART ™ , to develop cell-based therapeutics targeting the unique B-cell receptor on the surface of an individual patient’s

malignant tumor cells, for the treatment of B-cell lymphomas.

On April 26, 2022, the Company entered into exclusive license and sublicense

agreements with CLS Therapeutics Ltd.

(“CLS”) to develop its interventional DNase based oncology platform as more fully described

Additionally, Xenetic has partnered with biotechnology and pharmaceutical companies to develop its proprietary drug delivery

platform, PolyXen ® , and receives royalty payments under an exclusive license arrangement in the field of blood coagulation

As used in this Quarterly Report on Form 10-Q

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SymbioTec, GmbH (“SymbioTec”), own various United States (“U.S.”) federal trademark registrations and applications,

along with unregistered trademarks and service marks, including but not limited to XCART, OncoHist™, PolyXen, ErepoXen™, and

ImuXen™, which are used throughout this Quarterly Report.

All other company and product names may be trademarks of the respective

companies with which they are associated.

and unregistered trademarks and service marks, including but not limited to XCART, OncoHist™, PolyXen, ErepoXen™, and ImuXen™,

which are used throughout this Quarterly Report.

All other company and product names may be trademarks of the respective companies with

which they are associated.

Going Concern and Management’s Plan

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The Company believes that

its existing resources will be adequate to fund the Company’s operations into the second quarter of 2023.

its existing resources will be adequate to fund the Company’s operations into the third quarter of 2023.

However, the Company anticipates

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will depend upon several factors, including the achievement of progress in its clinical development programs, its ability to identify

and enter into licensing or other strategic arrangements, and factors related to financial, economic, geo-political, industry and market

conditions, many of which are beyond its control.

The capital markets for the biotech industry can be highly volatile, which make the

terms, timing and extent of any future financing uncertain.

and enter into licensing or other strategic arrangements, its continued listing on the Nasdaq Stock Market (“Nasdaq”), and

factors related to financial, economic, geo-political, industry and market conditions, many of which are beyond its control.

markets for the biotech industry can be highly volatile, which make the terms, timing and extent of any future financing uncertain.

June 3, 2022, the Company received a written notification (the “Notice”) from the Listing Qualifications Department of Nasdaq

notifying the Company that the closing bid price for its common stock had been below $1.00 for 30 consecutive business days and that the

Company therefore is not in compliance with the minimum bid price requirement for continued inclusion on the Nasdaq Capital Market under

Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”).

The Notice has no immediate effect on the listing of the Company’s

common stock on the Nasdaq Capital Market.

Under the Nasdaq Listing Rules, the Company has a period of 180 calendar days from the date

of the Notice to regain compliance with the Bid Price Requirement.

Accordingly, the Company has until November 30, 2022 (the "Compliance

Date"), to regain compliance with the Bid Price Requirement and may be eligible for an additional 180 calendar day compliance period

if certain other criteria are met.

Impact of COVID-19

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pandemic has significantly affected economic conditions in the U.S., accelerating during the first half of March 2020 and continuing throughout

2020 and 2021 and into 2022, as federal, state and local governments reacted to the public health crisis with mitigation measures, creating

significant uncertainties in the U.S.

The Company continues to evaluate the effects of the COVID-19 pandemic on its business

and while there has been no significant impact to the Company’s operations to date, the Company at this time remains uncertain of

the impact this event may have on the Company’s future operations.

The extent to which the COVID-19 pandemic affects our business,

operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, and such uncertainty

is expected to continue for some time.

2021 and into 2022, as federal, state and local governments reacted to the public health crisis with mitigation measures, creating significant

uncertainties in the U.S.

The Company continues to evaluate the effects of the COVID-19 pandemic on its business and while there

has been no significant impact to the Company’s operations to date, the Company at this time remains uncertain of the impact this

event may have on the Company’s future operations.

The extent to which the COVID-19 pandemic affects our business, operations and

financial results will depend on numerous evolving factors that we may not be able to accurately predict, and such uncertainty is expected

to continue for some time.

Summary of Significant Accounting Policies

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that are outstanding during the period, except where such non-participating securities would be anti-dilutive.

For the three months ended March 31, 2022 and

2021, basic and diluted net loss per share are the same for each respective period due to the Company’s net loss position.

For the three and six months ended June 30, 2022

and 2021, basic and diluted net loss per share are the same for each respective period due to the Company’s net loss position.

dilutive, non-participating securities have not been included in the calculations of diluted net loss per share, as their inclusion would

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after December 15, 2022 but early adoption is permitted.

We are currently evaluating the impact of adoption, but we do not anticipate

that it will have a material effect on our consolidated financial statements.

The Company is currently evaluating the impact of adoption, but it does not anticipate

that adoption will have a material effect on the Company’s consolidated financial statements.

Significant Strategic Collaborations

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and SynBio LLC (“SynBio”), a wholly owned subsidiary of Pharmsynthez.

The Company and its collaborative partners continue

to engage in research and development activities with no resultant commercial products through March 31, 2022.

The Company’s collaborative partners continue

to engage in research and development activities with no resultant commercial products through June 30, 2022.

No amounts were recognized

as revenue related to the Serum Institute, Pharmsynthez or SynBio agreements during the three months ended March 31, 2022 and 2021, respectively.

as revenue related to the Serum Institute, Pharmsynthez or SynBio agreements during the three and six months ended June 30, 2022 and 2021,

respectively.

In October 2017, the Company granted to Takeda

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Royalty payments of approximately $ 0.4 million and $ 0.8 million were recorded as revenue by the Company during the

three months ended March 31, 2022 and 2021, respectively, and are based on single digit royalties on net sales of certain covered products.

The Company’s policy is to recognize royalty payments as revenue when they are reliably measurable, which is upon receipt of reports

three and six months ended June 30, 2022, respectively, and approximately $ 0.3 million and $ 0.5 million were recorded as revenue by the

Company during the three and six months ended June 30, 2021, respectively.

These payments are based on single digit royalties on net sales

of certain covered products.

The Company’s policy is to recognize royalty payments as revenue when they are reliably measurable,

which is upon receipt of reports from Takeda.

The Company receives these reports in the quarter subsequent to the actual sublicensee sales.

At the time the revenue was

received, there were no remaining performance obligations and all other revenue recognition criteria were met.

At the time the revenue was received, there were no remaining performance obligations and all other revenue recognition criteria were

On May 15, 2020, the Company and The Scripps Research

Institute (“Scripps Research”) entered into a Research Funding and Option Agreement (the “Scripps Agreement”),

pursuant to which the Company has agreed to provide Scripps Research an aggregate of up to $3.0 million to fund research relating to advancing

pursuant to which the Company had agreed to provide Scripps Research an aggregate of up to $3.0 million to fund research relating to advancing

the pre-clinical development of XCART.

The research funding is payable by the Company to Scripps Research on a quarterly basis in accordance

with a negotiated budget, which provides for an initial payment of approximately $300,000 on the date of the Scripps Agreement and subsequent

The research funding was payable by the Company to Scripps Research on a quarterly basis in accordance

with a negotiated budget, which provided for an initial payment of approximately $300,000 on the date of the Scripps Agreement and subsequent

quarterly payments of approximately $300,000 over a 27-month period.

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the performance of the research program contemplated by the Scripps Agreement.

The Company has paid $ 2.4 million to Scripps Research under

this agreement through March 31, 2022.

As of March 31, 2022 and December 31, 2021, approximately $ 0.2 million has been recognized as an

advance payment under this agreement and is included in prepaid expenses and other current assets.

During the second quarter of 2022, the parties mutually

agreed to terminate additional funding under the Scripps Agreement.

As a result, Scripps Research agreed to continue to perform work under

the agreement until funding previously advanced is expended.

The Company paid $ 2.4 million to Scripps Research under this agreement through

June 30, 2022.

As of December 31, 2021, approximately $ 0.2 million has been recognized as an advance payment under this agreement and

is included in prepaid expenses and other current assets.

There were no amounts recognized as an advance payment under this agreement

or accrued as of June 30, 2022.

On June 30, 2022, the Company entered into a Statement

of Work (the “SOW”) with Catalent Pharma Solutions, LLC (“Catalent”) to outline the general scope of work, timeline,

and pricing pursuant to which Catalent will provide certain services to the Company to perform cGMP manufacturing of the Company’s

recombinant protein, Human DNase I.

The parties agreed to enter into a Master Services Agreement (“MSA”) that will contain

terms and conditions to govern the project contemplated by the SOW and that will supersede the addendum to the SOW containing Catalent's

standard terms and conditions.

In addition, in the event of any conflict between the project-specific terms and conditions set forth in

the SOW and the MSA, the MSA terms and conditions shall govern.

The estimated total cost of the project contemplated by the SOW is expected

to be up to approximately $5 million (exclusive of certain fees and potential alternatives) for the manufacturing services over the course

of the term of the project with each phase of the project invoiced separately in connection with the commencement of such phase.

earlier terminated, the manufacturing services contemplated by the SOW are currently expected to take approximately 17 months from the

The SOW is terminable by the Company at any time with 30 days' prior written notice to Catalent.

SOW also contains customary provisions related to, among other things, confidentiality, warranties, intellectual property and indemnification.

No payments were made or costs incurred during the three and six months ended June 30, 2022.

Exclusive Sublicense Agreement

On April 26, 2022, the Company entered into an

Exclusive Sublicense Agreement (the “Sublicense Agreement”) with CLS pursuant to which the Company received an exclusive license,

under certain patent rights and know-how owned or controlled by CLS, to develop and commercialize pharmaceutical products and methods

incorporating DNase enzyme for use in treatment of cancer (the “Sublicensed Products”).

Under the terms of the Sublicense

Agreement, the Company will have sole responsibility for, and shall use commercially reasonable efforts to, among other things, research,

develop and obtain marketing approval for the Sublicensed Products in the U.S.

and certain European markets, and to commercialize such

Sublicensed Products in the relevant market once marketing approval is obtained.

In consideration for the license and other rights

granted to the Company under the Sublicense Agreement, the Company issued to CLS 375,000 shares of the Company’s common stock (the

“Sublicense Agreement Shares”), of which 250,000 Sublicense Agreement Shares were issued directly to OPKO Health, Inc.

in lieu of transfer indirectly from CLS to EirGen Pharma Ltd.

(“EirGen”), a wholly owned subsidiary of OPKO, in satisfaction

of certain third-party contractual obligations between CLS and EirGen.

Additionally, the Company is obligated to pay to CLS up to $13,000,000

in cash in potential milestone payments for the achievement of certain clinical and regulatory milestones, as well as issue an additional

950,000 shares of the Company’s common stock to CLS based on the achievement of certain regulatory milestones.

In addition, the

Company is obligated to pay tiered royalties ranging from the mid-single to low-double digits on net sales of licensed products falling

within the scope of the license during the Royalty Term (as defined in the Sublicense Agreement), as well as pay a percentage share in

the low-to-mid teens of certain consideration received by the Company from any sublicensees.

Exclusive License Agreement

On April 26, 2022, the Company entered into an

Exclusive License Agreement (the “License Agreement”) with CLS, pursuant to which the Company received an exclusive license

under certain patent rights and know-how owned or controlled by CLS to develop and commercialize pharmaceutical products and methods incorporating

DNase in conjunction with CAR T therapies (the “Licensed Products”).

Under the terms of the License Agreement, the Company

will have sole responsibility for, and shall use commercially reasonable efforts to, among other things, research, develop and obtain

marketing approval for the Licensed Products in the U.S.

and certain European markets, and to commercialize such Licensed Products in

the relevant market once marketing approval is obtained.

In consideration for the license and other rights

granted to the Company under the License Agreement, the Company paid CLS a one-time fee of $ 500,000 in cash, issued to CLS 500,000 shares

of the Company’s common stock, and is obligated to pay up to $13,000,000 in cash in potential milestone payments for the achievement

of certain clinical and regulatory milestones for each Licensed Product.

In addition, the Company is obligated to pay tiered royalties

ranging from the mid-single to low-double digits on net sales of licensed products falling within the scope of the license during the

Royalty Term (as defined in the License Agreement), as well as pay a percentage share in the mid-teens to low double digits of certain

consideration received by the Company from any sublicensees.

The total consideration for the Sublicense

and License Agreements was approximately $ 1.3

million, which consists of a $ 0.5

million cash payment and the fair value of the 875,000

common shares issued of $ 0.8

million utilizing the closing market price of the Company’s stock price at the closing date.

As there was no future

alternative use for the sublicense and license, the Company recorded an expense of $ 1.3

million to research and development expense for the three months ended June 30, 2022.

In addition, the Company incurred approximately

million and $ 0.2

million related to consulting and transaction costs in connection with the Sublicense and License Agreements in the three and six

months ended June 30, 2022, respectively.

Fair Value Measurements

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at the measurement date.

As of March 31, 2022 and December 31, 2021, the carrying amounts of the Company’s financial instruments

As of June 30, 2022 and December 31, 2021, the carrying amounts of the Company’s financial instruments

approximates fair value due to their short maturities.

There were no financial instruments classified as Level 3 in the fair value hierarchy

during the three months ended March 31, 2022 and 2021.

during the three and six months ended June 30, 2022 and 2021.

Stockholders’ Equity

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common stock and expire on February 23, 2025 .

No Series A Warrants were exercised or forfeited during the three months ended March 31,

No Series A Warrants were exercised or forfeited during the three and six months ended June

In addition to the Series A Warrants, warrants

to purchase approximately 29,000 and 31,000 shares of the Company’s common stock were outstanding as of March 31, 2022 and December

to purchase approximately 29,000 and 31,000 shares of the Company’s common stock were outstanding as of June 30, 2022 and December

31, 2021, respectively, as described below.

Publicly traded warrants to purchase approximately

21,000 and 23,000 shares of common stock were outstanding as of March 31, 2022 and December 31, 2021, respectively.

21,000 and 23,000 shares of common stock were outstanding as of June 30, 2022 and December 31, 2021, respectively.

These warrants have

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Warrants to purchase approximately 1,984 shares and 1,485 shares of common stock were exercised on a cashless,

one-for-one basis during the three months ended March 31, 2022 and 2021, respectively.

No ne of these warrants were forfeited during the

three months ended March 31, 2022 and 2021.

one-for-one basis during the six months ended June 30, 2022 and 2021, respectively.

Warrants to purchase approximately 300 shares of common

stock were exercised on a cashless, one-for-one basis during the three months ended June 30, 2022.

No warrants were exercised during the

three months ended June 30, 2021.

None of these warrants were forfeited during the three and six months ended June 30, 2022 and 2021.

Warrants to purchase approximately 8,000 shares

of the Company’s common stock were outstanding as of March 31, 2022 and December 31, 2021.

of the Company’s common stock were outstanding as of June 30, 2022 and December 31, 2021.

These warrants have an exercise price

of $ 2.91 per share and expire on July 3, 2026 .

None of these warrants were exercised or forfeited during the three months ended March

31, 2022 and 2021.

None of these warrants were exercised or forfeited during the three and six months ended

June 30, 2022 and 2021.

Share-Based Expense

Total share-based expense related to stock options

and restricted stock units (“RSUs”) was approximately $ 0.1 million during each of the three months ended March 31, 2022 and

Share-based expense is classified in the condensed

consolidated statements of operations as follows:

Total share-based expense related to stock options, restricted stock units and common stock awards was approximately $ 0.1 million for each of the three months ended June 30, 2022 and 2021

and approximately $ 0.3 million and $ 0.2 million for the six months ended June 30, 2022 and 2021, respectively.

Share-based compensation expense is classified in the condensed consolidated

statements of operations as follows:

Schedule of Share-Based Compensation Expense

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Research and development expenses

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Employee Stock Options

During the three months ended March 31, 2022,

the Company granted 200,000 stock option awards to purchase shares of common stock.

During the six months ended June 30, 2022, the

Company granted 200,000 stock option awards to purchase shares of common stock.

The weighted average grant date fair value per option

share was $ 0.99 .

Key assumptions used in the Black-Scholes option pricing model for options granted during the three months ending March

Key assumptions used in the Black-Scholes option pricing model for options granted during the six months ending June

30, 2022 were the Company’s stock price, a risk free rate of 2.38 %, an expected life of 5.88

years and an expected volatility rate of 126.32 %.

D uring the three months ended March 31, 2021, the Company granted 200,000 stock

During the six months ended June 30, 2021, the Company granted 200,000 stock

option awards to purchase shares of common stock.

The Company recognized a total of approximately $ 0.1 million of compensation expense

related to employee stock options during each of the three months ended March 31, 2022 and 2021, respectively.

No employee stock options

or RSUs were exercised and none expired during the three months ended March 31, 2022 and 2021.

The Company recognized a total of $ 0.1 million of compensation expense related to employee

stock options during each of the three months ended June 30, 2022 and 2021 and $ 0.3 million and $ 0.2 million during the six months ended

June 30, 2022 and 2021, respectively.

Non-Employee Stock Options

There were no non-employee stock options granted

or exercised and none expired during the three months ended March 31, 2022 and 2021, respectively.

The Company did not recognize any expense

related to non-employee stock options during the three months ended March 31, 2022 and 2021, respectively.

During the three months ended March 31, 2022 and

2021, there was no provision for income taxes as the Company incurred losses during both periods.

The Company did no t grant any non-employee stock

options during the six months ended June 30, 2022 and 2021.

The Company did not recognize any expense related to non-employee stock options

during the three and six months ended June 30, 2022 and 2021, respectively.

During the three and six months ended June 30,

2022 and 2021, there was no provision for income taxes as the Company incurred losses during both periods.

Deferred tax assets and liabilities

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The valuation allowance against deferred tax assets

was approximately $ 31.8 million and $ 31.4 million as of March 31, 2022 and December 31, 2021, respectively.

As of March 31, 2022 and December 31, 2021,

was approximately $ 32.6 million and $ 31.4 million as of June 30, 2022 and December 31, 2021, respectively.

As of June 30, 2022 and December 31, 2021,

the Company did no t record any unrecognized tax positions.

Supplemental cash flow information and non-cash

activity related to our operating leases are as follows:

activity related to the Company’s operating leases are as follows:

Cash flow information regarding leases

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Supplemental balance sheet information related

to our operating leases is as follows:

to the Company’s operating leases is as follows:

Supplemental information related to operating leases

Balance Sheet Classification

March 31, 2022

March 31, 2021

June 30, 2022

June 30, 2021

Right-of-use assets - ST

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of 2019, the Company entered into a loan agreement with Pharmsynthez (the “Pharmsynthez Loan”), pursuant to which the Company

advanced Pharmsynthez an aggregate principal amount of up to $ 500,000 to be used for the development of a specific product under the Company’s

Co-Development Agreement with Pharmsynthez.

The Pharmsynthez Loan had a term of 15-months and accrued interest at a rate of 10 % per annum.

The Pharmsynthez Loan is guaranteed by all of the operating subsidiaries of Pharmsynthez, including SynBio and AS Kevelt, and is secured

by all of the common and preferred stock of the Company owned by Pharmsynthez and SynBio.

advanced Pharmsynthez an aggregate principal amount of up to $ 500,000

to be used for the development of a specific product under the Company’s Co-Development Agreement with Pharmsynthez.

Pharmsynthez Loan had a term of 15-months and accrued interest at a rate of 10 %

The Pharmsynthez Loan is guaranteed by all of the operating subsidiaries of Pharmsynthez, including SynBio and AS Kevelt,

and is secured by all of the common and preferred stock of the Company owned by Pharmsynthez and SynBio.

The Company recognized approximately

and $ 12,000 of interest income related to this loan during the three months ended March 31, 2022 and 2021, respectively.

of interest income related to this loan during the three months ended June 30, 2021 and approximately $ 9,000

of interest income related to this loan during the six months ended June 30, 2022 and 2021, respectively.

The Company did no t

recognize any interest income during the three months ended June 30, 2022 as Pharmsynthez informed the Company that it could not make

interest payments during the second quarter as a result of Russian sanctions imposed in response to sanctions from the U.S.

countries, as discussed below.

Effective January 23, 2021, the Company entered

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All other terms of the Pharmsynthez Loan,

as amended, remain in effect.

as amended, remained in effect.

All required payments under the Second Pharmsynthez Loan Extension had been made through January 31, 2022.

In February 2022, the Company received a request from Pharmsynthez to further extend the principal repayments until September 2022.

Company agreed to extend the maturity date, although final terms of such extension are under negotiation.

All other terms of the Pharmsynthez

Loan, as amended, are expected to remain in effect.

As a result of this request and the current economic uncertainty due to the conflict

between Russia and Ukraine and associated sanctions imposed by the U.S.

and other countries in response, the Company has classified the

loan receivable as long-term as of March 31, 2022 and December 31, 2021.

The Company assessed the collectability of the loan and determined

that the collateral held by the Company, consisting of all of the common and preferred stock of the Company owned by Pharmsynthez and

SynBio, was adequate to support the outstanding principal balance.

As of March 31, 2022 and December 31, 2021, approximately $ 0.4 million

was included in other assets on the condensed consolidated balance sheet.

In April 2022, the Company agreed to license certain

technology from CLS as described in Note 11.

One of the Company’s directors, Roger Kornberg, is a member of the scientific advisory

board of CLS, however, Mr.

Kornberg does not own any equity of CLS and is not receiving any economic benefit as a result of the transactions

contemplated by the License Agreement and Sublicense Agreement.

Adam Logal, one of our directors, is Senior Vice President, Chief

Financial Officer, Chief Accounting Officer and Treasurer of OPKO Health, Inc.

In February 2022, the Company received a request from Pharmsynthez to further extend the principal repayments and the maturity of the

While the Company is working with Pharmsynthez to extend the maturity date of the loan, the terms of such extension are under negotiation

and have not yet been finalized.

As a result of this request and the ongoing economic uncertainty due to the conflict between Russia and

Ukraine and associated sanctions imposed by the U.S.

and other countries in response, the Company has classified the loan receivable as

long-term as of June 30, 2022 and December 31, 2021.

The Company assessed the collectability of the loan and determined that the U.S.-based

collateral held by the Company, consisting of all of the common and preferred stock of the Company owned by Pharmsynthez and SynBio, was

adequate to support the repayment of the outstanding principal balance.

As of June 30, 2022 and December 31, 2021, approximately $ 0.4

million was included in other assets on the condensed consolidated balance sheet.

In April 2022, the Company entered into Exclusive

License and Sublicense Agreements with CLS as described in Note 5.

One of the Company’s directors, Roger Kornberg, is a member of

the scientific advisory board of CLS, however, Mr.

Kornberg does not own any equity of CLS and is not receiving any economic benefit as

a result of the transactions contemplated by the License Agreement and Sublicense Agreement.

Adam Logal, one of our directors, is

Senior Vice President, Chief Financial Officer, Chief Accounting Officer and Treasurer of OPKO.

Subsequent Events

2 unchanged sentences

recognition or disclosure in the financial statements except as described below.

Exclusive Sublicense Agreement

On April 26, 2022, the Company entered into an

Exclusive Sublicense Agreement (the “Sublicense Agreement”) with CLS pursuant to which the Company received an exclusive license,

under certain patent rights and know-how owned or controlled by CLS, to develop and commercialize pharmaceutical products and methods

incorporating DNase enzyme for use in treatment of cancer (the “Sublicensed Products”).

Under the terms of the Sublicense

Agreement, the Company will have sole responsibility for, and shall use commercially reasonable efforts to, among other things, research,

develop and obtain marketing approval for the Sublicensed Products in the U.S.

and certain European markets, and to commercialize such

Sublicensed Products in the relevant market once marketing approval is obtained.

In consideration for the license and other rights

granted to the Company under the Sublicense Agreement, the Company issued to CLS 375,000 shares of the Company’s common stock (the

“Sublicense Agreement Shares”), of which 250,000 Sublicense Agreement Shares were issued directly to OPKO in lieu of transfer

indirectly from CLS to EirGen Pharma Ltd.

(“EirGen”), a wholly owned subsidiary of OPKO, in satisfaction of certain third-party

contractual obligations between CLS and EirGen.

Additionally, the Company is obligated to pay to CLS up to $13,000,000 in cash in potential

milestone payments for the achievement of certain clinical and regulatory milestones, as well as issue an additional 950,000 shares of

the Company’s common stock to CLS based on the achievement of certain regulatory milestones.

In addition, the Company is obligated

to pay tiered royalties ranging from the mid-single to low-double digits on net sales of licensed products falling within the scope of

the license during the Royalty Term (as defined in the Sublicense Agreement), as well as pay a percentage share in the low-to-mid teens

of certain consideration received by the Company from any sublicensees.

Exclusive License Agreement

On April 26, 2022, the Company entered into an

Exclusive License Agreement (the “License Agreement”) with CLS, pursuant to which the Company received an exclusive license

under certain patent rights and know-how owned or controlled by CLS to develop and commercialize pharmaceutical products and methods incorporating

DNase in conjunction with CAR T therapies (the “Licensed Products”).

Under the terms of the License Agreement, the Company

will have sole responsibility for, and shall use commercially reasonable efforts to, among other things, research, develop and obtain

marketing approval for the Licensed Products in the U.S.

and certain European markets, and to commercialize such Licensed Products in

the relevant market once marketing approval is obtained.

In consideration for the license and other rights

granted to the Company under the License Agreement, the Company paid CLS a one-time fee of $500,000 in cash, issued to CLS 500,000 shares

of the Company’s common stock, and is obligated to pay up to $13,000,000 in cash in potential milestone payments for the achievement

of certain clinical and regulatory milestones for each Licensed Product.

In addition, the Company is obligated to pay tiered royalties

ranging from the mid-single to low-double digits on net sales of licensed products falling within the scope of the license during the

Royalty Term (as defined in the License Agreement), as well as pay a percentage share in the mid-teens to low double digits of certain

consideration received by the Company from any sublicensees.

2, 2022, the Company announced a research and development collaboration with Belgian Volition SARL Limited to develop NETs-targeted

adoptive cell therapies for the treatment of cancer.

The collaboration is an early exploratory program to evaluate the potential combination

of Volition’s Nu.Q® NETs Test and the Company’s DNase-Armored CAR T platform to develop proprietary adoptive cell therapies

potentially targeting multiple types of solid cancers.

Under the terms of the collaboration agreement, Volition will fund a research program

and the two parties will share proceeds from commercialization or licensing of any products arising from the collaboration.

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 1. Financial Statements