What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-09 compared with 2022-08-11 · 165 added, 170 removed, 195 unchanged (63% of the section changed)

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2 – MANAGEMENT’S

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements

within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A

of the Securities Act of 1933, as amended.

All statements contained in this Quarterly Report other than statements of historical fact,

including statements regarding our future results of operations and financial position, our business strategy and plans, future revenues,

projected costs, prospects and our objectives for future operations, are forward-looking statements.

These forward-looking statements

include, but are not limited to, statements concerning:

the anticipated effects and duration of the novel coronavirus, or COVID-19, global

pandemic and the responses thereto, including the pandemic’s impact on general economic and market conditions, as well as on our

business, results of operations and financial condition;

the uncertainty due to the conflict between Russia and Ukraine and associated

sanctions imposed by the United States (“U.S.”) and other countries in response;

This report contains forward-looking statements within

the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the

Securities Act of 1933, as amended.

All statements contained in this Quarterly Report other than statements of historical fact, including

statements regarding our future results of operations and financial position, our business strategy and plans, future revenues, projected

costs, prospects and our objectives for future operations, are forward-looking statements.

These forward-looking statements include, but

are not limited to, statements concerning:

the anticipated effects and duration of the novel coronavirus, or COVID-19, global pandemic

and the responses thereto, including the pandemic’s impact on general economic and market conditions, as well as on our business,

results of operations and financial condition;

the uncertainty due to the conflict between Russia and Ukraine and associated sanctions

imposed by the United States (“U.S.”) and other countries in response;

our plans to develop our proposed drug candidates;

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to be materially different from those expressed or implied by forward-looking statements.

The Management’s Discussion and Analysis

of Financial Condition and Results of Operations (the “MD&A”) should be read together with our condensed consolidated

financial statements and related notes included elsewhere in this Quarterly Report.

This Quarterly Report, including the MD&A, contains

trend analysis and other forward-looking statements.

Any statements in this Quarterly Report that are not statements of historical facts

are forward-looking statements.

These forward-looking statements made herein are based on our current expectations, involve a number of

risks and uncertainties and should not be considered as guarantees of future performance.

Some factors that could

cause actual results to differ materially include without limitation:

The Management’s Discussion and Analysis of

Financial Condition and Results of Operations (the “MD&A”) should be read together with our condensed consolidated financial

statements and related notes included elsewhere in this Quarterly Report.

This Quarterly Report, including the MD&A, contains trend

analysis and other forward-looking statements.

Any statements in this Quarterly Report that are not statements of historical facts are

forward-looking statements.

These forward-looking statements made herein are based on our current expectations, involve a number of risks

and uncertainties and should not be considered as guarantees of future performance.

Some factors that could cause

actual results to differ materially include without limitation:

unexpected costs, charges or expenses resulting from the transaction with CLS Therapeutics LTD (“CLS”) and the licensing of the DNase platform;

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our failure to meet the continued listing requirements of the Nasdaq Capital Market;

our need to raise additional working capital in the future for the purpose of further developing our DNase and XCART technologies and to continue as a going concern;

our need to raise additional working capital in the future for the purpose of further developing our DNase technology and to continue as a going concern;

our ability to finance our business;

our ability to successfully execute, manage and integrate key acquisitions and mergers;

product development and commercialization risks, including our ability to successfully develop the DNase and XCART technologies;

product development and commercialization risks, including our ability to successfully develop the DNase technology;

the impact of adverse safety outcomes and clinical trial results for our therapies;

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BUSINESS OVERVIEW

We are a biopharmaceutical company focused on

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

The Company’s DNase platform is designed to

improve outcomes of existing treatments, including immunotherapies, by targeting NETs.

The Company is also developing its personalized

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.

We licensed the DNase oncology platform

in April 2022 and expect to prioritize our efforts and resources on the development of this newly acquired technology.

Additionally, we

have partnered with biotechnology and pharmaceutical companies to develop our proprietary drug delivery platform, PolyXen, and receive

royalty payments under an exclusive license arrangement in the field of blood coagulation disorders.

We are a biopharmaceutical company focused on advancing

innovative immune-oncology technologies addressing hard to treat cancers.

The Company’s DNase platform is designed to improve outcomes

of existing treatments, including immunotherapies, by targeting NETs.

We licensed the DNase oncology platform in April 2022 and expect

to prioritize our efforts and resources on the development of this newly acquired technology.

Additionally, we have partnered with biotechnology

and pharmaceutical companies to develop our proprietary drug delivery platform, PolyXen, and receive royalty payments under an exclusive

license arrangement in the field of blood coagulation disorders.

We incorporate our patented and proprietary technologies

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Although we hold a broad patent portfolio, the focus of our internal efforts during

the three and six months ended June 30, 2022, was on advancing the development of our XCART platform technology and the acquisition of

our DNase oncology platform.

the three and nine months ended September 30, 2022, was on the acquisition and advancing of our DNase oncology platform and on the development

of our XCART platform technology.

Effects of the COVID-19 Pandemic

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we could experience a material adverse effect on our business, financial condition, results of operations and cash flows.

Impact of the Conflict in Ukraine on Our Operations

The short and long-term implications of Russia’s

invasion of Ukraine are difficult to predict at this time.

The imposition of sanctions and counter sanctions may have an adverse effect

on the economic markets generally and could impact our business, financial condition, and results of operations.

RESULTS OF OPERATIONS

Comparison of Quarter Ended June 30, 2022

Comparison of Quarter Ended September 30, 2022

The comparison of our historical results of operations

for the fiscal quarter ended June 30, 2022 to the fiscal quarter ended June 30, 2021 is as follows:

for the fiscal quarter ended September 30, 2022 to the fiscal quarter ended September 30, 2021 is as follows:

Quarter Ended

June 30, 2022

September 30, 2022

Quarter Ended

June 30, 2021

September 30, 2021

Royalty revenue

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Other income (expense):

Other income (expense)

Other expense

Interest income, net

Revenue for the three months ended June 30, 2022

increased by $0.1 million, or 44.9%, to $0.4 million from approximately $0.3 million for the three months ended June 30, 2021.

This increase

represents an increase in royalty revenue related to our sublicense agreement with Takeda Pharmaceuticals Co.

as compared to the same period in 2021 as Takeda’s sublicensee continued its worldwide launch of the product.

Revenue for the three months ended September 30, 2022

increased by $0.1 million, or 18.6%, to $0.4 million from approximately $0.3 million for the three months ended September 30, 2021.

increase represents an increase in royalty revenue related to our sublicense agreement with Takeda Pharmaceuticals Co.

for the three months ended September 30, 2022 as compared to the same period in 2021 as Takeda’s sublicensee continued its worldwide

launch of the product.

Research and Development Expenses

Overall, research & development (“R&D”)

expenses for the three months ended June 30, 2022 increased by $1.6 million, or 296.1% to $2.1 million from $0.5 million in the comparable

quarter in 2021 primarily due to in-process research and development (“IPR&D”) expense of $1.3 million.

During the three

months ended June 30, 2022, the Company expensed $1.3 million of IPR&D associated with the Company’s licensing of the DNase

oncology platform.

There was no similar expense in 2021.

Excluding the $1.3 million of IPR&D expense from total R&D expense of

approximately $2.1 million, R&D expense for the three months ended June 30, 2022 increased by approximately $0.3 million, or 47.3%,

to approximately $0.8 million from approximately $0.5 million in the comparable quarter in 2021.

The table below sets forth the R&D

costs incurred by the Company by category of expense for the quarters ended June 30, 2022 and 2021:

Research & development (“R&D”)

expenses for the three months ended September 30, 2022 decreased by $0.4 million, or 48.9% to $0.4 million from $0.8 million in the comparable

quarter in 2021.

The table below sets forth the R&D costs incurred by the Company by category of expense for the quarters ended September

30, 2022 and 2021:

Quarter Ended,

Category of Expense

June 30, 2022

June 30, 2021

IPR&D expense

September 30, 2022

September 30, 2021

Outside services and contract research organizations

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Total research and development expense

The increase in outside

services and contract research organizations expense was primarily due to increased spending related to our XCART platform technology

and, to a lesser extent, spending related to our DNase oncology platform during the three months ended June 30, 2022 as compared to the

same period in the prior year.

Costs related to our XCART program were significantly higher in 2022 as compared to the same period in

2021 as we continued our U.S.

pre-clinical development efforts.

The decrease in outside services

and contract research organizations expense was primarily due to decreased spending related to our XCART platform technology partially

offset by spending related to our DNase oncology platform during the three months ended September 30, 2022 as compared to the same period

in the prior year.

Costs related to our XCART program were significantly lower for the three months ended September 30, 2022 as compared

to the same period in 2021 as we prioritized our R&D efforts and resources on our newly acquired DNase oncology platform.

General and Administrative Expenses

General and administrative expenses for the three

months ended June 30, 2022 increased by approximately $0.1 million, or 15.2%, to approximately $1.0 million from approximately $0.9 million

in the comparable quarter in 2021.

The increase was primarily due to an increase in legal costs related to the licensing of the DNase

oncology platform from CLS during the three months ended June 30, 2022 compared to the same period in 2021.

Other Income (Expense)

Other expense was approximately $1,100 for the

three months ended June 30, 2022 compared to approximately $200 of other income for the same period in 2021.

This increase in other expense

was primarily related to changes in foreign currency exchange rates during the three months ended June 30, 2022 as compared to the same

period in 2021.

months ended September 30, 2022 decreased by approximately $82,000, or 8.7%, to approximately $863,000 from approximately $945,000 in

the comparable quarter in 2021.

The decrease was primarily due to a decrease in costs related to our intellectual property during the

three months ended September 30, 2022 compared to the same period in 2021.

Other Expense

Other expense was approximately $1,700 for the three

months ended September 30, 2022 compared to approximately $2,900 of other expense for the same period in 2021.

This decrease in other

expense was primarily related to changes in foreign currency exchange rates during the three months ended September 30, 2022 as compared

to the same period in 2021.

Interest Income

Interest income decreased to approximately $16,000

during the three months ended June 30, 2022 as compared to approximately $21,000 for the same period in the prior year.

This decrease

is primarily due to no interest income being recorded on the Pharmsynthez Loan during the second quarter of 2022 compared to approximately

$11,000 during the same period in 2021.

Comparison of Six Months Ended June 30,

Interest income increased to approximately $45,000

during the three months ended September 30, 2022 as compared to approximately $28,000 for the same period in the prior year.

This increase

is primarily due to higher interest rates on invested funds during the third quarter of 2022 as compared to the same period in the prior

Comparison of Nine Months Ended September 30,

2022 and 2021

The comparison of our historical results of operations for the six

months ended June 30, 2022 to the six months ended June 30, 2021 is as follows:

The comparison of our historical results of operations

for the nine months ended September 30, 2022 to the nine months ended September 30, 2021 is as follows:

September 30,

Royalty revenue

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Other income (expense):

Other income (expense)

Other expense

Interest income, net

Revenue for the six months ended June 30, 2022

increased by $0.3 million, or 68.3%, to $0.8 million from approximately $0.5 million for the six months ended June 30, 2021.

This increase

represents an increase in royalty revenue related to our sublicense agreement with Takeda as compared to the same period in 2021, as the

sublicensee continued its worldwide launch of the product.

$ (5,069,818 )

$ (3,803,499 )

Revenue for the nine months ended September 30, 2022

increased by $0.4 million, or 47.3%, to $1.2 million from approximately $0.8 million for the nine months ended September 30, 2021.

increase represents an increase in royalty revenue related to our sublicense agreement with Takeda as compared to the same period in 2021,

as the sublicensee continued its worldwide launch of the product.

Research and Development Expenses

Overall, R&D expenses for the six months ended

June 30, 2022 increased by $2.0 million, or 175.4% to $3.2 million from $1.2 million in the comparable period in 2021 primarily due to

IPR&D expense of $1.3 million.

During the six months ended June 30, 2022, the Company expensed $1.3 million of IPR&D associated

with the Company’s licensing of the DNase oncology platform.

Overall, R&D expenses for the nine months ended

September 30, 2022 increased by $1.6 million, or 84.9% to $3.6 million from $1.9 million in the comparable period in 2021 primarily due

to IPR&D expense of $1.3 million.

During the nine months ended September 30, 2022, the Company expensed $1.3 million of IPR&D

associated with the Company’s licensing of the DNase oncology platform.

There was no similar expense in 2021.

Excluding the $1.3 million of

IPR&D expense from total R&D expense of $3.2 million, R&D expenses increased approximately $0.7 million, or 62.3% to $1.9

million for the six months ended June 30, 2022, from $1.2 million for the six months ended June 30, 2021.

The table below sets forth the

R&D costs incurred by us, by category of expense, for the six months ended June 30, 2022 and 2021:

Six Months Ended,

Excluding the $1.3

million of IPR&D expense from total R&D expense of $3.6 million, R&D expenses increased approximately $0.3 million, or 17.5%

to $2.3 million for the nine months ended September 30, 2022, from $1.9 million for the nine months ended September 30, 2021.

below sets forth the R&D costs incurred by us, by category of expense, for the nine months ended September 30, 2022 and 2021:

Nine Months Ended,

Category of Expense

June 30, 2022

June 30, 2021

September 30, 2022

September 30, 2021

IPR&D expense

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Total research and development expense

The increase in outside

services and contract research organizations expense was primarily due to increased spending related to our XCART platform technology

and, to a lesser extent, spending related to our DNase oncology platform during the six months ended June 30, 2022 as compared to the

same period in the prior year.

Costs related to our XCART program were higher in 2022 as compared to the same period in 2021 as we continued

pre-clinical development efforts.

The increase in other expense was due to consulting costs incurred in 2022 in connection with

the licensing of our DNase oncology platform.

The increase in outside services

and contract research organizations expense was primarily due to increased spending in connection with the acquisition and our initial

development efforts related to our DNase oncology platform during the nine months ended September 30, 2022 as compared to the same period

in the prior year.

General and Administrative Expenses

General and administrative expenses for the six

months ended June 30, 2022 was $1.9 million, increasing $0.1 million, or 6.2%, compared to the same period in the prior year.

was primarily due to an increase in legal costs related to the licensing of the DNase oncology platform from CLS during the six months

ended June 30, 2022 compared to the same period in 2021.

Other Income (Expense)

Other expense was approximately $900 for the six

months ended June 30, 2022 compared to other income of approximately $1,100 for the same period in 2021.

This increase in other expense

was primarily related to changes in foreign currency exchange rates during the six months ended June 30, 2022 as compared to the same

period in 2021.

General and administrative expenses for the nine months

ended September 30, 2022 was $2.8 million, increasing slightly by approximately $30,000, or 1.1%, compared to the same period in the prior

The increase was primarily due to an increase in legal costs related to the licensing of the DNase oncology platform from CLS during

the nine months ended September 30, 2022 compared to the same period in 2021, substantially offset by decreased spend on intellectual

property and decreased consulting costs.

Other Expense

Other expense was approximately $2,600 for the nine

months ended September 30, 2022 compared to other expense of approximately $1,800 for the same period in 2021.

This increase in other

expense was primarily related to changes in foreign currency exchange rates during the nine months ended September 30, 2022 as compared

to the same period in 2021.

Interest Income

Interest income decreased to approximately $42,000

during the six months ended June 30, 2022 as compared to approximately $43,000 for the same period in the prior year.

This decrease is

primarily due to a decrease in interest income on the Pharmsynthez Loan substantially offset by an increase in interest income on invested

funds due to a higher cash balance in the first six months of 2022 compared to the same period in 2021.

Interest income increased to approximately $87,000

during the nine months ended September 30, 2022 as compared to approximately $71,000 for the same period in the prior year.

This increase

is primarily due to an increase in interest income on invested funds due to higher interest rates on invested funds during the first nine

months of 2022 compared to the same period in 2021.

This increase was partially offset by a decrease in interest income on the Pharmsynthez

Liquidity and Capital Resources

We incurred a net loss

of approximately $4.3 million for the six months ended June 30, 2022.

We had an accumulated deficit of approximately $186.8 million at

June 30, 2022, as compared to an accumulated deficit of approximately $182.5 million at December 31, 2021.

Working capital was approximately

$14.1 million at June 30, 2022, and $17.3 million at December 31, 2021, respectively.

During the six months ended June 30, 2022, our working

capital decreased by $3.2 million primarily due to our net loss for the six months ended June 30, 2022 and cash used of $0.5 million to

obtain a license to the DNase oncology platform.

We incurred a net loss of

approximately $5.1 million for the nine months ended September 30, 2022.

We had an accumulated deficit of approximately $187.6 million

at September 30, 2022, as compared to an accumulated deficit of approximately $182.5 million at December 31, 2021.

Working capital was

approximately $13.1 million at September 30, 2022, and $17.3 million at December 31, 2021, respectively.

During the nine months ended

September 30, 2022, our working capital decreased by $4.2 million primarily due to our net loss for the nine months ended September 30,

2022 and cash used of $0.5 million to obtain a license to the DNase oncology platform.

Our principal source of liquidity consists of cash.

At June 30, 2022, we had approximately

$14.9 million in cash and $1.3 million in current liabilities.

At December 31, 2021, we had approximately $18.2 million in cash and $1.4

million in current liabilities.

At September 30, 2022, we had approximately $13.8 million in cash and $1.1 million in current liabilities.

At December 31, 2021, we had

approximately $18.2 million in cash and $1.4 million in current liabilities.

We evaluate whether there

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We believe that our existing resources will be adequate

to fund our operations into the third quarter of 2023.

to fund our operations into the first quarter of 2024.

However, we anticipate we may need additional capital in the long-term to pursue

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Cash Flows from Operating Activities

Cash flows used in operating activities for the

six months ended June 30, 2022 totaled approximately $2.8 million, which was primarily due to our net loss for the period, partially offset

by non-cash charges associated with acquired IPR&D and share-based expense.

In addition, current liabilities decreased during the

six months ended June 30, 2022.

Cash flows used in operating activities for the six months ended June 30, 2021 totaled approximately $2.2

million, which was primarily due to our net loss for the period, partially offset by non-cash charges associated with share-based expense.

Cash flows used in operating activities for the nine

months ended September 30, 2022 totaled approximately $3.9 million, which was primarily due to our net loss for the period, partially

offset by non-cash charges associated with acquired IPR&D and share-based expense.

In addition, current liabilities decreased during

the nine months ended September 30, 2022.

Cash flows used in operating activities for the nine months ended September 30, 2021 totaled

approximately $3.3 million, which was primarily due to our net loss for the period, partially offset by non-cash charges associated with

share-based expense.

Cash Flows from Investing Activities

Cash flows used in investing activities for the

six months ended June 30, 2022 totaled $500,000, which represented cash paid to license the DNase oncology platform.

Cash flows used in investing activities for the nine

months ended September 30, 2022 totaled $500,000, which represented cash paid to license the DNase oncology platform.

There were no cash

flows from investing activities for the six months ended June 30, 2021.

flows from investing activities for the nine months ended September 30, 2021.

Cash Flow from Financing Activities

There were no cash flows from financing activities

for the six months ended June 30, 2022 and 2021.

for the nine months ended September 30, 2022.

Cash flows from financing activities for the nine months ended September 30, 2021 totaled

approximately $11.5 million representing net proceeds from our private placement in July 2021.

Contractual Obligations and Commitments

As of June 30, 2022, there were no material changes

As of September 30, 2022, there were no material changes

in our contractual obligations and commitments from those disclosed in our Annual Report on Form 10-K for the year ended December 31,

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Off Balance Sheet Arrangements

We do not have any off-balance sheet financing

arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial

condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

We do not have any off-balance sheet financing arrangements

that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition,

revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Recent Accounting Standards

See Note 3 in our Annual Report on Form 10-K for

the year ended December 31, 2021, filed with the SEC on March 22, 2022, as amended on April 28, 2022, for a discussion of recent accounting

See Note 3 in our Annual Report on Form 10-K for the

year ended December 31, 2021, filed with the SEC on March 22, 2022, as amended on April 28, 2022, for a discussion of recent accounting

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements

are prepared in accordance with U.S.

Our condensed consolidated financial statements are

prepared in accordance with U.S.

The preparation of our condensed consolidated financial statements requires us to make estimates,

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with the SEC on March 22, 2022, as amended on April 28, 2022.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are not required to provide the information

required by this Item because we are a “smaller reporting company” (as defined in Rule 12b-2 of the Exchange Act).

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

We are not required to provide the information required

by this Item because we are a “smaller reporting company” (as defined in Rule 12b-2 of the Exchange Act).

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