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Item 1. Business

2023-03-22 compared with 2022-03-22 · 456 added, 359 removed, 793 unchanged (51% of the section changed)

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We are a biopharmaceutical company focused on

progressing XCART, a personalized CAR T platform technology engineered to target patient- and tumor-specific neoantigens.

We are initially

advancing 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.

The XCART technology, developed by the Scripps Research Institute (the “Scripps Research”)

in collaboration with the Shemyakin-Ovchinnikov Institute of Bioorganic Chemistry (“IBCH”), is believed to have the potential

to significantly enhance the safety and efficacy of cell therapy for B-cell lymphomas by generating patient- and tumor-specific CAR T

More than 70,000 new cases of non-Hodgkin Lymphoma

(“NHL”) are diagnosed each year in the United States, and more than 19,000 patients die from this group of diseases annually.

Most forms of NHL, including follicular lymphoma, mantle cell lymphoma, marginal zone lymphoma, lymphoplasmacytic lymphoma, and small

lymphocytic lymphoma, which account collectively for ~45% of all cases of NHL, are incurable with available therapies, except for allogeneic

stem cell therapy (“allo-SCT”).

However, many NHL patients are not suitable candidates for allo-SCT, and this treatment is

also limited by significant rates of morbidity and mortality due to graft versus host disease.

Aggressive B-cell lymphomas such as diffuse

large B-cell lymphoma account for 30-35% of NHL.

The majority of patients with aggressive B-NHL are successfully treated with combination

chemotherapy, but a significant portion relapse or have refractory disease, and the outcome of these patients is poor.

CAR T cell therapies are an innovative approach

in which a patient’s T cells are genetically modified to carry chimeric antigen receptors (“CARs”).

High objective response

rates have been reported in some hematological malignancies, but patients treated with CAR T cell therapies can have serious and sometimes

fatal toxicities, which include instances in which the CAR T cells have caused high levels of cytokines due to over-activation (referred

to as “cytokine release syndrome,” or CRS), neurologic toxicities and attacks on healthy organs.

In each case, these toxicities

have sometimes resulted in death.

In addition, all currently approved CAR T cell therapies work by targeting CD19, an antigen common to

A significant number of patients have been observed to experience relapse following this treatment, and in many cases the

relapsing patients are evidencing CD19 antigen escape, or lack of expression of the CD19 antigen as an effective target for those CAR

T cell therapies.

Hematopoietic Stem Cell Transplant (“HSCT”), also known as bone marrow transplantation, has for decades

been curative for many patients with hematological cancers or orphan-inherited blood disorders.

However, adoption of HSCT to date has

been limited by the risks of transplant-related morbidity and mortality from graft-versus-host-disease, or GvHD, and the potential for

serious infections or cancer recurrence due to the lack of an effective immune system following a transplant.

The XCART technology

platform was designed by its originators to utilize an established screening technique to identify peptide ligands that bind specifically

to the unique B-cell receptor (“BCR”) on the surface of an individual patient’s malignant tumor cells.

The peptide is

then inserted into the antigen-binding domain of a CAR T cell, and a subsequent transduction/transfection process is used to engineer

the patient’s T cells into a CAR T format which redirects the patient’s T cells to attack the tumor.

Essentially, the XCART

screening platform is the inverse of a typical CAR T screening protocol wherein libraries of highly specific antibody domains are screened

against a given target.

In the case of XCART screening, the target is itself an antibody domain, and hence highly specific by its nature.

The XCART technology creates the possibility of personalized treatment of lymphomas utilizing a CAR with an antigen-binding domain that

should only recognize, and only be recognized by, the unique BCR of a particular patient’s B-cell lymphoma.

An expected result for

XCART is limited off-tumor toxicities, such as B-cell aplasia.

Our clinical development program will seek to confirm the early preclinical

results and to demonstrate a more attractive safety profile than existing therapies.

We anticipate that our primary focus will now be

on advancing this technology through regulatory approval and commercialization.

Additionally, we are leveraging our 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.

It employs the natural polymer polysialic acid (“PSA”) to prolong

a drug's circulating half-life and potentially improve other pharmacological properties.

We incorporate our patented and proprietary

technologies into drug candidates currently under development with biotechnology and pharmaceutical industry collaborators to create

what we believe will be the next-generation biologic drugs with improved pharmacological properties over existing therapeutics.

candidates have resulted from our research activities or that of our collaborators and are in the development stage.

As a result, we

continue to commit a significant amount of our resources to our research and development activities and anticipate continuing to do so

for the near future.

To date, none of our drug candidates have received regulatory marketing authorization in the U.S.

by the Food and

Drug Administration (“FDA”) nor in any other countries or territories by any applicable agencies.

We are receiving ongoing

royalties pursuant to a license of our PolyXen technology to an industry partner.

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

Our proprietary DNase platform is designed to improve

outcomes of existing treatments, including immunotherapies, by targeting NETs, which have been implicated in cancer progression and resistance

to cancer treatments.

We licensed the DNase oncology platform in April 2022 and we have directed our efforts and resources on the development

of this newly acquired technology.

The DNase platform is designed to target NETs, which are weblike structures

composed of extracellular chromatin coated with histones and other proteins.

NETs are expelled by activated neutrophils, in response to

microbial or pro-inflammatory challenges.

However, excessive production or reduced clearance of NETs can lead to aggravated inflammatory

and autoimmune pathologies, as well as creation of pro-tumorigenic niches in the case of cancer growth and metastasis.

We plan to advance toward a first-in-human, multicenter, dose escalation

and dose-expansion study of IV rhDNase I in subjects with locally advanced or metastatic solid tumors.

Our systemic DNase program is initially

targeting multi-billion-dollar indications including pancreatic carcinoma.

Pancreatic cancer has a low rate of early diagnosis, a high

mortality rate and a poor five-year survival prognosis.

Symptoms are usually non-specific and as a result, pancreatic cancer is often

not diagnosed until it reaches an advanced stage.

Once the disease has metastasized, or spread to other organs, it becomes especially

hard to treat.

Each year, about 185,000 individuals globally are diagnosed with this condition;

and in 2021, the Surveillance, Epidemiology

and End Results program, or SEER, of the National Cancer Institute estimated that in the United States there would be approximately 60,000

individuals diagnosed with pancreatic cancer.

The overall five-year survival rate among pancreatic cancer patients is 7-8%, which constitutes

the highest mortality rate among solid tumor malignancies;

among those diagnosed with metastatic disease, the overall five-year survival

rate is only 3%.

Recent developments that have improved the survival in many cancer types have not been effective for pancreatic cancer

patients, highlighting the need for the development of new therapeutic options.

Furthermore, second-line patients that were diagnosed already with

metastatic disease have very few therapeutic options.

The only approved regimen for second-line patients is Onivyde® in combination

with 5FU and LV.

For these Stage IV at diagnosis patients reaching second-line therapy, median overall survival is only 4.7 months (Macarulla

et al, Pancreas 2020).

A substantial amount of scientific literature has implicated NETs in

the context of cancer pathogenesis and resistance to cancer therapies (including chemo, radio, and immunotherapies such as checkpoint

inhibitors and cell therapies).

In published reports, elevated levels of NETs have been a biomarker associated with poor prognosis in

patients with a variety of cancers.

In addition, resistance to existing therapeutic agents can involve the release of immunosuppressive

signaling factors from NETs, or physical barriers created by NETs, which can impede the infiltration, activity, and survival of cytotoxic

T cells in the tumor microenvironment.

Published pre-clinical models have demonstrated the effectiveness of systemically administered

DNase, alone or in combination with other agents, for the elimination of NETs and prevention of tumor growth and metastasis.

We are currently

focused on advancing our systemic DNase program into the clinic as an adjunctive therapy for pancreatic carcinoma and locally advanced

or metastatic solid tumors.

Adoptive transfer of CAR T cells has emerged as one of the most promising

advances in cancer immunotherapy.

To successfully treat solid tumors, CAR T cells must be able to infiltrate, persist, and maintain anti-tumor

function in a hostile tumor microenvironment that is itself adept at immunosuppression and conducive to tumor cell survival.

Recent approaches

to CAR T design include “armored” CAR-T cells, so named because they can express additional factors to resist immunosuppression

or degrade physical components of the tumor’s extracellular matrix, including NETs.

We intend to conduct pre-clinical research with

the goal of demonstrating that armoring CAR T cells to secrete DNase can support depth and durability of response against solid tumor

Engineered CAR T cells, designed to recognize cancer-associated antigens, are capable of sustained and selective killing

of tumor cells, with substantial reduction of tumor burden.

CAR T therapies have exhibited remarkable clinical success against hematological

malignancies but thus far have failed to demonstrate success in the context of solid tumors.

Published evidence suggests that in addition

to immunosuppressive factors, mechanical barriers formed by NETs can impede T-cell penetration and occlude T-cell contact with tumor cells.

Our collaboration with Belgian Volition SARL Limited (“Volition”)

is an early exploratory program to evaluate the potential combination of Volition’s Nu.Q® technology and Xenetic’s DNase-Armored

CAR T platform to develop proprietary adoptive cell therapies potentially targeting multiple types of solid cancers for which current

CAR T cell therapies have shown limited or no effect.

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.

Epigenetically

modified nucleosomes are present on tumor cell surfaces and within the tumor microenvironment of multiple types of solid cancers, and

thus these nucleosomes may represent generalizable tumor antigens that are not limited to a single cancer type.

Volition’s Nu.Q®

technology can specifically recognize and target epigenetically modified nucleosomes, while our DNase-Armored CAR T platform is designed

to enhance the function of CAR T cells within solid tumor microenvironments.

XCART is our personalized

CAR T platform technology engineered to target patient-specific tumor neoantigens, with a demonstrated proof of mechanism in B-cell Lymphomas.

The XCART technology platform was designed to utilize an established screening technique to identify polypeptide domains that selectively

bind to the unique B-cell receptor (“BCR”) on the surface of an individual lymphoma patient’s malignant B-cell clones.

This BCR-selective targeting domain is engineered into the antigen-binding domain of a CAR, creating the possibility of a CAR T treatment

that should only recognize a given patient’s malignant B-cell clones.

We believe our personalized CAR T therapies have the potential

to offer cancer patients substantial benefits over the existing standard of care and currently approved CAR T therapies.

We have suspended

development of the XCART platform as we prioritized the DNase platform and intend to focus our resources on development of the DNase programs.

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.

PolyXen is an enabling platform technology for protein and peptide drug

It uses the biological polymer polysialic acid (“PSA”) to prolong the drug's half-life and potentially improve the

stability of therapeutic peptides and proteins.

Both the site of attachment and the length of the PSA chain can influence the properties

of the therapeutic by changing the apparent hydrodynamic radius of the molecule, which in turn, can enhance a number of the biological

characteristics of the therapeutic.

It can also be used for small molecule drugs.

We incorporate our patented and proprietary technologies

into drug candidates currently under development with biotechnology and pharmaceutical industry collaborators to create what we believe

will be the next-generation biologic drugs with improved pharmacological properties over existing therapeutics.

Our drug candidates have

resulted from our research activities or that of our collaborators and are in the development stage.

As a result, we continue to commit

a significant amount of our resources to our research and development activities and anticipate continuing to do so for the near future.

To date, none of our drug candidates have received regulatory marketing authorization or approval in the U.S.

by the Food and Drug Administration

(“FDA”) nor in any other countries or territories by any applicable agencies.

Although we hold a broad patent portfolio, the

focus of our internal development efforts in 2021 was on advancing development of our XCART technology.

focus of our internal efforts in 2022 was on the licensing and advancement of our DNase platform and on the development of our XCART platform

We were incorporated under the laws of the State

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Xenetic Biosciences (U.K.) Limited (“Xenetic U.K.”), and the wholly-owned subsidiaries of Xenetic UK, Lipoxen Technologies

Limited (“Lipoxen”), Xenetic Bioscience, Incorporated (“XTI”) and SymbioTec, GmbH (“SymbioTec”), own

federal trademark registrations and applications, along with unregistered trademarks and service marks, including but not

limited to XCART, OncoHist, PolyXen, ErepoXen and ImuXen.

In July 2019 we acquired the XCART platform, a

novel CAR T technology engineered to target patient- and tumor-specific neoantigens (see “Our Technology and Drug Candidates”

for a description of the technology).

We believe these personalized T cell therapies have the potential to offer cancer patients substantial

benefits over the existing standard of care and currently approved CAR T therapies.

We plan to initially apply the XCART technology to

develop cell-based therapeutics for the treatment of B-cell Lymphomas with our primary focus to advance this technology through regulatory

approval and commercialization.

We also intend to pursue industry collaborations and potential licenses to develop XCART for other uses

and indications.

We plan to opportunistically advance our PolyXen

platform technology by entering into collaborative out-license arrangements with pharmaceutical companies who could apply the necessary

resources for advancing drug candidates through to commercialization.

These arrangements would provide support to us in the form of access

to partner-generated clinical data, which is informative when contemplating potential monetization of our proprietary technology in other

One aim of these efforts would be to drive incremental shareholder value and generate working capital to assist in providing

the funding required to support our XCART development efforts.

Limited (“Lipoxen”), Xenetic Bioscience, Incorporated and SymbioTec, GmbH (“SymbioTec”), own various U.S.

trademark registrations and applications, along with unregistered trademarks and service marks, including but not limited to XCART, OncoHist,

PolyXen, ErepoXen and ImuXen.

In April 2022 we licensed the DNase platform.

The DNase platform is designed to improve outcomes of existing treatments, including immunotherapies, by targeting NETs (see “Overview”

and “Our Technology and Drug Candidates” for a description of the technology).

Our primary efforts are now aimed at advancing

the systemic DNase program into the clinic as an adjunctive therapy for pancreatic cancer and other locally advanced or metastatic solid

Our goal is to provide solutions in the treatment of solid tumors by improving response and overcoming resistance to checkpoint

inhibitors, chemotherapy, and other standard of care treatments.

We also intend to pursue industry collaborations and potential licenses

to develop DNase for other uses and indications.

We intend to pursue orphan drug designations and

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exclusivities.

We intend to advance development of our drug candidates

primarily through the use of contract manufacturing and contract research organizations (“CROs”) in order to efficiently manage

our resources.

Continuous pipeline growth and advancement of out-licensed drug candidates is dependent, in part, on our ability to raise

sufficient capital and to advance our existing co-development collaborations and strategic arrangements as well as enter into new such

arrangements.

We intend to advance development of our DNase

platform primarily through the use of contract manufacturing and contract research organizations (“CROs”) in order to efficiently

manage our resources.

Continuous pipeline growth and advancement of out-licensed drug candidates is dependent, in part, on our ability

to raise sufficient capital and to advance our existing co-development collaborations and strategic arrangements as well as enter into

new such arrangements.

Business Developments

XCART Technology

On June 12, 2020, we entered into a Master Services

Agreement with Pharmsynthez (“MSA”) to advance the development of our XCART technology for B-cell malignancies.

MSA, Pharmsynthez agreed to provide services pursuant to work orders agreed upon by the parties from time to time, which services include,

but are not limited to, acting as the Company’s primary CRO to assist in managing collaborations with multiple academic institutions

in Russia and Belarus.

We are required to pay reasonable fees, expenses and pass-through costs incurred by Pharmsynthez in providing the

services in accordance with a budget and payment terms set forth in each work order.

Additionally, in the event that a work order provides

for milestone payments, we are required to make such payments to Pharmsynthez, or third-party service providers designated by Pharmsynthez,

in accordance with the terms set forth in the work order, which milestone payments may be made, at our sole discretion, in cash or shares

of our common stock.

We executed a work order with Pharmsynthez on

June 12, 2020 (the “Work Order”), under the MSA pursuant to which Pharmsynthez agreed to conduct a Stage 1 study of our XCART

technology under the research program as set forth in the Work Order.

The activities to be performed under the Work Order were expected

to take approximately 20 months unless earlier terminated in accordance with the MSA.

On October 12, 2021, we entered into an Amendment

Number One to the MSA (the “MSA Amendment”) with Pharmsynthez to, among other things, terminate all work orders under the

As a result, no further services were to be performed under the Work Order, and any additional services will be covered by new work

In exchange, we entered into a new work order (the “Second Work Order”) simultaneously with the MSA Amendment.

the terms of the Second Work Order, Pharmsynthez shall provide certain enumerated services to support the development of our XCART technology

upon the written request of the Company, which work may be requested by us from time to time.

Pursuant to the MSA Amendment and Second Work

Order, upon entry into the Second Work Order, we made a one-time $40,000 payment to Pharmsynthez, of which $21,000 was a one-time payment

in full for all money and other compensation owed by us under the Work Order, and the remaining $19,000 will be creditable against any

out-of-pocket costs and expenses incurred by Pharmsynthez on behalf of us pursuant to any new work orders initiated after the effective

date of the MSA Amendment, including the Second Work Order.

At The Market (“ATM”) Offering

On November 19, 2021, we entered into an ATM Offering

Agreement (the “ATM Agreement”) with H.C.

Wainwright & Co., LLC, as the exclusive sales agent (“Wainwright”),

pursuant to which we may offer and sell, from time to time through Wainwright, shares of our common stock.

The offer and sale of the shares

will be made pursuant to a shelf registration statement on Form S-3 (File No.

333-260201) and the related prospectus, as supplemented

by a prospectus supplement dated November 19, 2021, and filed with the Securities and Exchange Commission (the “SEC”) on such

date pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”), and is currently limited

to a number of shares of up to $4,000,000 of common stock pursuant to General Instruction I.B.6 of Form S-3.

Pursuant to the ATM Agreement, Wainwright may

sell the shares in sales deemed to be “at-the-market” equity offerings as defined in Rule 415 promulgated under the Securities

Act, including sales made directly on or through the Nasdaq Capital Market.

If agreed to in a separate terms agreement, we may sell shares

to Wainwright as principal, at a purchase price agreed upon by Wainwright and us.

Wainwright may also sell shares in privately negotiated

transactions with our prior approval.

Sales of the shares through Wainwright, if any, will be made in amounts and at times to be determined

by us from time to time, but we have no obligation to sell any of the shares, and either we or Wainwright may at any time suspend offers

under the agreement or terminate the agreement.

Actual sales will depend on a variety of factors to be determined by us from time to time,

including (among others) market conditions, the trading price of our common stock and determinations by us of the appropriate sources

of funding for us.

The offer and sale of the shares pursuant to the ATM Agreement will terminate upon the earlier of (a) the issuance

and sale of all of the shares subject to the ATM Agreement or (b) the termination of the ATM Agreement by Wainwright or us pursuant to

the terms thereof.

No shares were sold under the ATM Agreement during

the year ended December 31, 2021.

Private Placement

On July 26, 2021, we entered into a securities

purchase agreement in connection with a private placement with the purchaser named on the signature page thereto (“Purchaser”),

pursuant to which we issued and sold to Purchaser, in a private placement priced at-the-market under Nasdaq rules, (i) 950,000 shares

of our common stock, par value $0.001 per share;

(ii) warrants to purchase an aggregate of 4,629,630 shares of our common stock, with

an exercise price of $3.30 per share (the “Series A Warrants”) which expire three and one half years from the earlier of (a)

the six month anniversary of the initial exercise date and (b) the date that the registration statement registering all of the warrant

shares underlying the Series A Warrants is declared effective;

and (iii) pre-funded warrants to purchase up to 3,679,630

shares of our common stock, with an exercise price of $0.001 per share (the “Series B Warrants”) with no expiration (the

“Private Placement”), at a purchase price of $2.70 per one share and one Series A Warrant and $2.699 per one Series B Warrant

and one Series A Warrant.

The Private Placement closed on July 28, 2021 resulting in gross proceeds from the Private Placement of approximately

$12.5 million, before deducting placement agent fees and offering expenses, and excluding the exercise of any such warrants.

from the Private Placement were $11.5 million.

All of the Series B Warrants were exercised in 2021 resulting in approximately $4,000 of

Exclusive Sublicense Agreement

On April 26, 2022, we entered into an Exclusive

Sublicense Agreement (the “Sublicense Agreement”) with CLS pursuant to which we 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, we

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 us under the Sublicense Agreement, we issued to CLS 375,000 shares of our common stock (the “Sublicense Agreement Shares”),

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

(“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, we are 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 our common stock to

CLS based on the achievement of certain regulatory milestones.

In addition, we are 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 us

from any sublicensees.

Exclusive License Agreement

On April 26, 2022, we entered into an Exclusive

License Agreement (the “License Agreement”) with CLS, pursuant to which we 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, we 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

In consideration for the license and other rights

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

stock, and are 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, we are 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 we receive from any

sublicensees.

Patent Assignment and Volition Collaboration

On October 4, 2022, we completed a patent assignment

related to our collaboration with Volition and CLS.

In connection with the patent assignment, we entered into a Subscription Agreement

with CLS Therapeutics, LLC, a Delaware limited liability company (“CLS LLC”), on October 12, 2022, pursuant to which we agreed

to issue to CLS LLC, and CLS LLC agreed to subscribe for, 850,000 shares of our common stock as consideration for the assignment by CLS

and its affiliates to us of certain patent rights owned by CLS and its affiliates.

2, 2022, we announced a research and development collaboration with Volition 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®

technology Test and our 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.

On June 30, 2022, we 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 us to perform cGMP manufacturing of our recombinant protein, Human

Scripps Research

On March 17, 2023, we

entered into a Research Funding and Option Agreement (the “Agreement”) with Scripps Research pursuant to which we have agreed

to provide Scripps Research an aggregate of up to $938,000 to fund research relating to advancing the pre-clinical development of the

Company’s DNase oncology platform technology.

The research funding is payable by us to Scripps Research on a monthly basis in accordance

with a negotiated budget, which provides for an initial payment of approximately $78,000 on the date of the Agreement and subsequent monthly

payments of approximately $78,000 over a 12-month period.

Under the Agreement, we have the option to acquire a worldwide exclusive license

to Scripps Research’s rights in the Technology or Patent Rights (as defined in the Agreement), as well as a non-exclusive, royalty-free,

non-transferrable license to make and use TSRI Technology (as defined in the Agreement) solely for our internal research purposes during

the performance of the research program contemplated by the Agreement.

Unless earlier terminated,

the term of the Agreement continues from the date of the Agreement for fifteen (15) months.

The Agreement may be terminated by us with

30 days advance written notice to Scripps Research beginning six (6) months after the Effective Date (as defined in the Agreement) or

by Scripps Research if we fail to make timely payments due under the Agreement, subject to 30 days’ written notice to cure such

The Agreement may further be terminated by either party in the event of the other party’s uncured failure to perform

any obligations under the Agreement or the bankruptcy of the other party.

Our Technology and Drug Candidates

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During the year ended December 31, 2022, the focus

of our internal development efforts was on advancing development of our XCART technology.

We have not been actively pursuing development

efforts for PolyXen or any of our other technologies.

of our internal development efforts was on the licensing and advancement of our DNase oncology platform and the development of our XCART

We have not been actively pursuing development efforts for PolyXen or any of our other technologies.

The DNase platform is designed to target NETs,

which are weblike structures composed of extracellular chromatin coated with histones and other proteins.

NETs are expelled by activated

neutrophils, in response to microbial or pro-inflammatory challenges.

However, excessive production or reduced clearance of NETs can lead

to aggravated inflammatory and autoimmune pathologies, as well as creation of pro-tumorigenic niches in the case of cancer growth and

Program Highlights:

Exclusive license and sublicense agreements with CLS to develop its interventional DNase platform, which is aimed at improving outcomes

of existing treatments, including immunotherapies;

Advancing toward first-in-human study start targeted for 2024-2025;

Systemic DNase program initially targeting multi-billion-dollar indications

including pancreatic carcinoma and other locally advanced or metastatic solid tumors;

DNase-armored CAR T program in early pre-clinical development.

The XCART technology platform was designed by its originators to utilize an established screening technique to identify peptide ligands that bind specifically to the unique BCR on the surface of an individual patient’s malignant tumor cells.

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An expected result for XCART is limited off-tumor toxicities, such as B-cell aplasia.

Our clinical development program will seek to confirm the early preclinical results, and to demonstrate a more attractive safety profile than existing therapies to support our preliminary discussions with the FDA in advance of an IND filing.

An enabling biological platform technology designed to extend the circulation time of drug molecules in the human body by chemically attaching polysialic acid, or PSA, to the drug molecule by a process termed polysialylation, thereby creating potentially superior next generation therapeutic candidates.

We have suspended further development of XCART at this time, as we focus our efforts and resources on our DNase technology platform.

An enabling biological platform technology designed to extend the circulation time of drug molecules in the human body by chemically attaching PSA, to the drug molecule by a process termed polysialylation, thereby creating potentially superior next generation therapeutic candidates.

PSA, a biopolymer, comprising a chain of sialic acid molecules, is a natural constituent of the human body, although we obtain our PSA from a bacterial source.

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Through partner efforts, we are developing our

pipeline of next-generation bio-therapeutics and novel oncology drugs based on our XCART and PolyXen proprietary technologies.

to do this while efficiently managing our overhead, we rely on the services of contract manufacturers, CROs and our strategic collaborations.

pipeline of next-generation bio-therapeutics and novel oncology drugs based on our DNase, XCART and PolyXen proprietary technologies.

In order to do this while efficiently managing our overhead, we rely on the services of contract manufacturers, CROs and our strategic

collaborations.

We currently do not have in-house research facilities to pursue these initiatives.

Accordingly, continuous pipeline growth and advancement

of our technologies and drug candidates is dependent on several important collaborations and strategic arrangements, including our arrangements

Accordingly, continuous pipeline growth

and advancement of our technologies and drug candidates is dependent on several important collaborations and strategic arrangements, including

our arrangements with:

Catalent, a global leader in enabling biopharma,

cell, gene and consumer health partners to optimize development, launch, and supply of better patient treatments across multiple modalities;

Pharmsynthez, including its wholly-owned subsidiary SynBio LLC (“SynBio”), a beneficial owner of approximately 2.9% of our common stock;

Serum Institute of India Limited (“Serum Institute”), one of the world’s largest vaccine manufacturers and one of India’s largest biotech companies;

Scripps Research, one of the world’s largest, private non-profit research organizations.

The Scripps Research Institute (“Scripps Research”), one of the world’s largest, private non-profit research organizations.

Accordingly, in addition to pursuing our development

of the XCART technology, we also have significant interests in drug candidates being developed by our collaborators to treat other conditions.

of the DNase technology, we also have significant interests in drug candidates being developed by our collaborators to treat other conditions.

We may collect some combination of milestone payments and royalties pursuant to these collaborations to the extent that these drugs are

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However, other than royalty payments under a sublicense with Takeda and potential royalty payments

from Pharmsynthez under our collaboration agreement, we do not anticipate any milestone or royalty payments in the near term, if at all.

under our collaboration agreement with Pharmsynthez, we do not anticipate any milestone or royalty payments in the near term, if at all.

For further detail, please read the section titled “Significant Collaborations and Strategic Arrangements” below.

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under development internally and with our biotechnology and pharmaceutical collaborators.

The following discussion summarizes key information

The following table summarizes key information

regarding our current drug candidates:

XCART is a personalized CAR T cell platform technology

engineered to target patient-specific tumor neoantigens.

We believe XCART has the potential to offer cancer patients substantial benefits

over the existing standard of care and currently approved CAR T therapies, including enhanced safety and efficacy of cell therapy for

B-cell lymphomas.

We are initially advancing 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.

The XCART platform was designed to target personalized,

patient-specific tumor neoantigens and has demonstrated proof of mechanism in B-cell lymphoma, an area of significant unmet medical need.

The acquisition of XCART fits with our current strategy of focusing on research addressing unmet needs in oncology.

Our R&D efforts

will focus initially on leveraging the XCART platform to develop cell-based therapeutics for the treatment of B-cell non-Hodgkin lymphomas,

an initial global market opportunity estimated to exceed $5 billion per year.

ErepoXen, or polysialylated erythropoietin (“PSA-EPO”),

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a Phase II(b)/III human clinical trial of ErepoXen (also known as Epolong) in Russia with patient recruitment completed in 2020.

2020, Pharmsynthez reported positive data from this clinical trial and filed a registration dossier to obtain approval of Epolong in Russia.

In February 2021, Pharmsynthez reported in a press release that it had started the registration phase of Epolong by filing a registration

dossier to obtain approval in Russia.

Pharmsynthez had reported in its press release that it expected that the Russian stage of registration

activities would be completed in 2021 and that it would be able to start production of the product as early as the first quarter of 2022.

Pharmsynthez has not informed the Company that the registration process has been completed or that production of the product has commenced.

2020, Pharmsynthez reported positive data from this clinical trial and, in February 2021, reported in a press release that it had started

the registration phase of Epolong by filing a registration dossier to obtain approval in Russia.

Pharmsynthez had reported in its press

release that it expected that the Russian stage of registration activities would be completed in 2021 and that it would be able to start

production of the product as early as the first quarter of 2022.

Pharmsynthez has informed us that it had received a response letter indicating

certain deficiencies in the dossier and intends to refile the registration upon correction.

Serum Institute conducted Phase I and Phase II

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Significant Collaborations and Strategic Arrangements

We were a party to an exclusive research, development

and license agreement with Takeda, related to the development of a novel series of polysialylated blood coagulation factors.

This collaboration

with Takeda relied on our PolyXen technology to conjugate PSA with therapeutic blood-clotting factors, with the goal of improving the

pharmacokinetic profile and extending the active half-life of these biologic molecules.

The agreement granted Takeda a worldwide, exclusive,

royalty-bearing license to our PSA-patented and proprietary technology in combination with Takeda’s proprietary molecules designed

for the treatment of blood and bleeding disorders.

There are no active projects under the exclusive research, development and license

agreement and the parties mutually terminated the agreement in August 2021.

In October 2017, we granted to Takeda the right

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in late 2019.

During the years ended December 31, 2021, and December 31, 2020, royalty payments of approximately $1.2 million and $0.4

million were recorded as revenue by us, respectively.

The termination of the Takeda exclusive research, development and license agreement

had no impact on the Company’s non-exclusive sublicense agreement and the royalties being generated.

In August 2011, we entered into a stock subscription

and collaborative development agreement with SynBio (the “Co-Development Agreement”), pursuant to which we granted SynBio

an exclusive license to develop, market and commercialize certain drug candidates utilizing molecules based on SynBio’s technology

and our PolyXen, OncoHist and ImuXen platform technologies in Russia and the CIS, collectively referred to herein as the SynBio Market.

In exchange for our granting to SynBio those certain license rights, SynBio granted an exclusive license to us to use any preclinical

and clinical data generated by SynBio and to engage in the development and commercialization of drug candidates that may arise from the

collaboration in any territory outside of the SynBio Market based upon the Co-Development Agreement.

We hope and expect to mitigate certain technical

and commercial risks of drug development by working in collaboration with SynBio.

Under the Co-Development Agreement, SynBio is responsible

for progressing six new product candidates through human proof of concept trials in Russia as primary validation for the initiation of

European Medicines Agency (“EMA”) or FDA clinical trials by us.

The primary goal of the Co-Development Agreement

is to research and develop drug candidates for planned commercialization using SynBio and our combined respective expertise and technologies.

Drug candidates must meet the success criteria as decided upon by a joint steering committee, which includes representation from both

SynBio and us, where we have the right to appoint the chair who has the casting vote.

Once a potential drug candidate is selected, clinical

trials will be separately conducted by each company in their respective territories with the goal to achieve regulatory approval of the

products for commercial sale.

SynBio is wholly responsible for funding and conducting

its own research and clinical development activities in Russia, and we are wholly responsible for funding and conducting our own research

and clinical development activities in the U.S., Europe and elsewhere outside the SynBio Market.

There are no milestones or other research-related

payments provided for under the Co-Development Agreement other than fees for the provision of each party’s respective research supplies

based on their technology.

Upon successful commercialization of any resultant products, we are entitled to receive low double-digit royalties

on sales in certain territories and pay royalties to SynBio for sales outside those certain territories subject to the terms of the Co-Development

For the years ended December 31, 2021, and December 31, 2020, there were no supply service revenues in connection with

the Co-Development Agreement.

The Co-Development Agreement continues until it is terminated in accordance with the terms and conditions

set forth therein.

Effective December 20, 2021 SynBio assigned the Co-Development Agreement to its parent company, Pharmsynthez.

Royalty payments of approximately $1.7 million and $1.2 million were recorded as revenue by the Company during the years

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

On June 30, 2022, we entered into a SOW with Catalent

to outline the general scope of work, timeline, and pricing pursuant to which Catalent will provide certain services to us to perform

cGMP manufacturing of our 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

Unless earlier amended or terminated, the manufacturing services contemplated by the SOW are currently targeted to be completed

by the first half of 2024.

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

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

Scripps Research

On May 15, 2020, we entered into a Research Funding

and Option Agreement with Scripps Research (the “Scripps Agreement”), pursuant to which we 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

was payable by us 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 quarterly payments of approximately $300,000 over a 27-month

Under the Scripps Agreement, Scripps Research granted us a license within the Field (as defined in the Scripps Agreement) to any

Patent Rights or Technology (as defined in the Scripps Agreement) under the terms of that certain license agreement with Scripps Research,

dated February 25, 2019, assigned to us on March 1, 2019.

Additionally, we have the option to acquire a worldwide exclusive license to

Scripps Research’s rights in the Technology or Patent Rights not already licensed to us, as well as a non-exclusive, royalty-free,

non-transferrable license to make and use Scripps Research Technology (as defined in the Scripps Agreement) solely for the Company’s

internal research purposes during the performance of the research program contemplated by the Scripps Agreement.

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 was expended.

PJSC Pharmsynthez

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an exclusive license to Pharmsynthez to develop, commercialize and market six product candidates based on our PolyXen and ImuXen technology

anywhere within Russia and the CIS, as well as certain clinical and research data developed by us on the six product candidates.

Pharmsynthez granted us an exclusive license to use any preclinical and clinical data developed by Pharmsynthez within the scope of the

Pharmsynthez Arrangement and to engage in further research, development and commercialization of drug candidates in any territory outside

of Russia and the CIS at our own expense.

We expect to mitigate certain risks of drug development

by reviewing human clinical data arising out of this collaboration with Pharmsynthez before we take a particular drug candidate into FDA

and EMA trials.

Under the Pharmsynthez Arrangement, Pharmsynthez is responsible for progressing six drug candidates through human proof

of concept trials in Russia as primary validation prior to the initiation of EMA/FDA clinical trials by us outside of Russia.

steering committee, where we have the right to appoint the chair who has the casting vote, was established to facilitate the communication

of scientific data and to assist generally with each party’s research decisions and to monitor research and development progress

under the Pharmsynthez Arrangement.

in certain territories.

In exchange, Pharmsynthez granted us an exclusive license to use any preclinical and clinical data developed by

Pharmsynthez within the scope of the Pharmsynthez Arrangement and to engage in further research, development and commercialization of

drug candidates outside of certain territories at our own expense.

Pharmsynthez is wholly responsible for funding

and conducting its own research and clinical development activities in Russia.

We are wholly responsible for funding and conducting our

own research and clinical development activities in the U.S., Europe and the rest of the world outside of Russia and the ex-CIS regions.

There are no milestones or other research related payments provided for under the Pharmsynthez Arrangement other than royalties.

The Pharmsynthez

Arrangement shall continue until it is terminated in accordance with the terms and conditions set forth therein.

Pharmsynthez directly, and indirectly through

SynBio, has a share ownership in us of approximately 3.3% of the total outstanding common stock of the Company as of December 31, 2021.

In addition to its common stock ownership, Pharmsynthez holds approximately 1.5 million shares of our outstanding Series B Preferred Stock

(as defined in Note 10, Stockholders’ Equity ) and all of our issued and outstanding Series A Preferred Stock (as defined

in Note 10, Stockholders’ Equity ) through SynBio.

There are no milestones or other research related payments

provided for under the Pharmsynthez Arrangement other than royalties.

The Pharmsynthez Arrangement shall continue until it is terminated

in accordance with the terms and conditions set forth therein.

In August 2011, we entered into a stock subscription

and collaborative development agreement with SynBio (the “Co-Development Agreement”), a wholly-owned subsidiary of Pharmsynthez,

pursuant to which we granted SynBio an exclusive license to develop, market and commercialize certain drug candidates utilizing molecules

based on SynBio’s technology and our PolyXen, OncoHist and ImuXen platform technologies in Russia and the CIS, collectively referred

to herein as the SynBio Market.

In exchange for our granting to SynBio those certain license rights, SynBio granted an exclusive license

to us to use any preclinical and clinical data generated by SynBio and to engage in the development of commercial candidates that may

arise from the collaboration in any territory outside of the SynBio Market based upon the Co-Development Agreement.

SynBio is wholly responsible for funding and conducting

its own research and clinical development activities in Russia.

There are no milestones or other research-related payments provided for

under the Co-Development Agreement other than fees for the supply of each party’s respective research supplies based on their technology,

which, when provided, are due to mutual convenience and not representative of an ongoing or recurring obligation to supply research supplies.

Upon successful commercialization of any resultant products, we are entitled to receive a 10% royalty on sales in certain territories

and pay royalties to SynBio for sales outside those certain territories subject to the terms of the Co-Development Agreement.

years ended December 31, 2022, and December 31, 2021, there were no supply service revenues in connection with the Co-Development

The Co-Development Agreement continues until it is terminated in accordance with the terms and conditions set forth therein.

Effective December 20, 2021 SynBio assigned the Co-Development Agreement to its parent company, Pharmsynthez.

See Note 4 Significant Strategic Collaborations

for Pharmsynthez’ share ownership in us.

Serum Institute

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research and development agreement with Serum Institute (the “Serum Agreement”) providing Serum Institute an exclusive license

to use our PolyXen technology to research and develop one potential commercial product, PSA-EPO.

Serum Institute is responsible for conducting

all preclinical and clinical trials required to achieve regulatory approvals within certain predetermined territories at Serum Institute’s

Royalty payments are payable by Serum Institute to us for net sales to certain customers in the Serum Institute sales territory.

Royalty payments are payable by us to Serum Institute for net sales received by us over the term of the license.

There are no milestone

or other research-related payments due under the collaborative arrangement.

The Serum Agreement continues until it is terminated in accordance

with the terms and conditions set forth therein.

Through December 31, 2021, Serum Institute continued to engage in research and development

activities with no resultant commercial products.

No royalty revenue or expense was recognized by us related to the Serum Institute arrangement

during the years ended December 31, 2021, and December 31, 2020.

Serum Institute had a share ownership of less than 1% of our total outstanding

common stock as of December 31, 2021.

to use our PolyXen technology to research and develop one potential commercial product, Polysialylated Erythropoietin (“PSA-EPO.”)

Serum Institute is responsible for conducting all preclinical and clinical trials required to achieve regulatory approvals within certain

predetermined territories at Serum Institute’s own expense.

Royalty payments are payable by Serum Institute to us for net sales

to certain customers in the Serum Institute sales territory.

Royalty payments are payable by us to Serum Institute for net sales received

by us over the term of the license.

There are no milestone or other research-related payments due under the collaborative arrangement.

The Serum Agreement continues until it is terminated in accordance with the terms and conditions set forth therein.

Through December 31,

2022, no commercial products were developed and no royalty revenue or expense was recognized by us related to this arrangement.

Institute had a share ownership of less than 1% of our total outstanding common stock as of December 31, 2022.

Our Intellectual Property

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Our first issued patents began to expire in 2021 with the majority of the existing issued patents

expiring between 2025 and 2030.

for our PolyXen and OncoHist technology expiring between 2025 and 2030.

Our patent strategy is to file patent applications

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a pharmaceutical may be manufactured.

These jurisdictions include, but are not limited to, the U.S., U.K., Australia, Japan, Canada, South

Korea, China, India, Russia and certain other countries in the European Union (“E.U.”) and Asia, though we do not necessarily

file a patent application in each of these jurisdictions for every patent family.

These jurisdictions generally include for our key patent portfolios, but are not limited to, the

U.S., U.K., Australia, Japan, Canada, South Korea, China, India, Russia and certain other countries in the European Union (“E.U.”),

though we do not necessarily file a patent application in each of these jurisdictions for every patent family.

As of January 23, 2023, we directly or indirectly

own, through our wholly-owned subsidiaries, Hesperix and Xenetic U.K., and Xenetic U.K.’s wholly-owned subsidiaries, Lipoxen, XTI

and SymbioTec, more than 170 U.S.

and international patents and pending patent applications that cover various aspects of our technologies.

We have acquired or filed patent applications, and plan to file additional patent applications, covering various aspects of our XCART

platform technology, including all rights throughout the world in and to patents and patent applications related to “Articles And

Methods Directed To Personalized Therapy Of Cancer,” and our PolyXen platform technology covering polysialylation and advanced polymer

conjugate technologies, respectively, as well as our other product candidates.

More specifically, our patents and patent applications

cover polymer architecture, drug conjugates, formulations, methods of manufacturing polymers and polymer conjugates along with methods

of administering polymer conjugates.

through a license with CLS), through our wholly-owned subsidiaries, Hesperix and Xenetic U.K., and Xenetic U.K.’s wholly-owned

subsidiaries, Lipoxen, XTI and SymbioTec, more than 170 U.S.

and international patents and pending patent applications that cover various

aspects of our technologies.

This number includes patents and patent applications that we have acquired or filed covering various aspects

of our DNase and XCART platform technology, including all rights throughout the world in and to patents and patent applications related

to “Articles And Methods Directed To Personalized Therapy Of Cancer,” and our PolyXen platform technology covering polysialylation

and advanced polymer conjugate technologies, respectively, as well as our other product candidates.

More specifically, our patents and

patent applications cover cancer treatments, method of use, polymer architecture, drug conjugates, formulations, methods of manufacturing

polymers and polymer conjugates along with methods of administering polymer conjugates.

We have received patent protection for certain

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and pH, resulting in a fractionated polysaccharide that has a molecular weight polydispersity of 1.1 or lower.

We have also received patent protection for our

DNase technology, which covers the use of DNase for the treatment of cancer and amelioration of the side effects associated with a cancer

The DNase can be administered alone or in combination with a cancer therapeutic.

This portfolio and that of the XCART portfolio

also provide coverage for the use of certain types of CAR-T cells, with or without the addition of a DNase to treat a cancer.

The portfolio

further covers the use of CAR-T cells with or without a DNase that are administered with an immune checkpoint inhibitor or modulator to

treat a cancer.

Issued patents can provide protection for varying

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present business strategy.

We currently have agreements in place with Serum Institute whereby Serum Institute would produce clinical materials

for use in the development of drug candidates involving our PolyXen technology, including candidates developed by our partners.

not have any agreements in place to manufacture clinical materials for use in the development of our XCART technology and anticipate seeking

a third party manufacturer for our clinical supply needs.

We currently have agreements in place with Catalent and Serum Institute whereby Catalent and Serum Institute

would produce clinical materials for use in the development of drug candidates involving our DNase and PolyXen technologies, respectively,

including candidates developed by our partners.

We do not have any agreements in place to manufacture clinical materials for use in the

development of our XCART technology and would seek a third party manufacturer for our clinical supply needs, if necessary.

Government Regulation

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In the U.S., the FDA regulates drugs under the

Federal Food, Drug, and Cosmetic Act (“FDCA”), and in the case of biologics, also under the Public Health Service Act, and

their implementing regulations.

Federal Food, Drug, and Cosmetic Act (“FDCA”), and in the case of biologics, also under the Public Health Service Act (“PHSA”),

and their implementing regulations.

The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal,

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and security and physician payment transparency laws.

Pricing and rebate programs must comply with the Medicaid rebate requirements of

Omnibus Budget Reconciliation Act of 1990 and more recent requirements in the Patient Protection and Affordable Care Act, as

amended by the Health Care and Education Reconciliation Act of 2010, collectively the Affordable Care Act.

If products are made available

to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply.

handling of any controlled substances must comply with the U.S.

Controlled Substances Act and Controlled Substances Import and Export

Products must meet applicable child-resistant packaging requirements under the U.S.

Pricing and rebate programs must comply with the federal health care program (e.g.

Medicaid) rebate requirements of the U.S.

Omnibus Budget Reconciliation Act of 1990 and more recent requirements in the Patient Protection

and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, collectively the Affordable Care Act,

as well as the Inflation Reduction Act of 2022.

If products are made available to authorized users of the Federal Supply Schedule of the

General Services Administration, additional laws and requirements apply.

The handling of any controlled substances must comply with the

Controlled Substances Act and Controlled Substances Import and Export Act.

Products must meet applicable child-resistant packaging

requirements under the U.S.

Poison Prevention Packaging Act.

Manufacturing,

sales, promotion and other activities are also potentially subject to federal and state consumer protection and unfair competition laws.

Manufacturing, sales, promotion and other activities are also potentially

subject to federal and state consumer protection and unfair competition laws.

The distribution of pharmaceutical products is

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stipulated request to delay the effective date of the Part D rebate rule to January 1, 2023.

On August 7, 2022, Congress passed the Inflation

Reduction Act of 2022 which delayed the implementation of the changes to the Medicare Part D drug rebate program and the U.S.

Anti-Kickback Statute until January 2032.

Additionally, the Inflation Reduction Act of 2022

may impact existing Medicare programs that cover prescription drugs.

In addition to other relevant provisions, the Inflation Reduction

Act of 2022 allow the Medicare program to directly negotiate the price of certain high-expenditure prescription drugs covered under Medicare

Parts B and D, starting in the year 2028 and 2026, respectively, by setting certain "maximum fair prices." Moreover, the Inflation

Reduction Act of 2022 requires manufacturers to pay rebates to the federal government if prices of certain drugs covered under the Medicare

program rise faster than the rate of inflation.

At the state level, legislatures have increasingly

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These individuals include scientific advisors as well as independent consultants.

The pharmaceutical and biotechnology industries

are characterized by intense competition and rely heavily on the ability to move quickly, adapt to changing medical and market needs and

to develop and maintain strong intellectual property positions.

We believe that the development experience of our Scientific Advisory

Board, our Board of Directors and our scientific and management team, as well as the strength and promise of our drug candidates, provide

us with a competitive advantage; nevertheless, we face potential competition from a myriad of sources, many of which operate with

greater resources and more mature products.

These include pharmaceutical and biotechnology companies, academic institutions, governmental

The biotechnology and pharmaceutical industries are characterized by

rapidly advancing technologies, intense competition, and a strong emphasis on proprietary products.

While we believe that our technology,

development experience and scientific knowledge provide us with competitive advantages, we face potential competition from many different

sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and governmental

agencies and public and private research institutions.

Competition is intense and is expected to increase.

Product and Technology Specific Competition

Any product candidates that we successfully develop and commercialize will compete

with existing therapies and new therapies that may become available in the future.

Many of our competitors may have significantly greater financial resources

and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals,

and marketing approved products than we do.

Mergers and acquisitions in the pharmaceutical, biotechnology, and diagnostic industries may

result in even more resources being concentrated among a smaller number of our competitors.

These competitors also compete with us in

recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration

for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

Smaller or early stage companies

may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

The key competitive factors affecting the success of all our product

candidates, if approved, are likely to be their efficacy, safety, side effects, convenience, price, the level of generic competition,

and the availability of reimbursement from government and other third-party payors.

Our commercial opportunity could be reduced or eliminated if our competitors

develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient, or are

less expensive than any products that we may develop.

Our competitors also may obtain FDA or other regulatory approval for their products

more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before

we are able to enter the market.

In addition, our ability to compete may be affected in many cases by insurers or other third-party payors

seeking to encourage the use of generic products.

There are many generic products currently on the market for the indications that we

are pursuing, and additional products are expected to become available on a generic basis over the coming years.

If our therapeutic product

candidates are approved, we expect that they will be priced at a significant premium over competitive generic products.

The most common methods of treating patients with cancer are surgery,

radiation and drug therapy, including chemotherapy, hormone therapy, immunotherapy, and targeted drug therapy.

There are a variety of

available drug therapies marketed for cancer.

In many cases, these drugs are administered in combination to enhance efficacy.

To the extent

our product candidates are ultimately used in combination with or as an adjunct to existing drug or other therapies, our product candidates

will not be competitive with them.

Some of the currently approved drug therapies are branded and subject to patent protection, and others

are available on a generic basis.

Many of these approved drugs are well established therapies and are widely accepted by physicians, patients

and third-party payors.

In general, although there has been considerable progress over the past few decades in the treatment of cancer

and the currently marketed therapies provide benefits to many patients, these therapies all are limited to some extent in their efficacy

and frequency of adverse events, and none of them are successful in treating all patients.

As a result, the level of morbidity and mortality

from cancer remains high.

DNase for pancreatic cancer and solid tumors

In the field of pancreatic cancer, we will compete with the few, currently

approved treatments for pancreatic carcinoma, including pancreatic ductal adenocarcinoma (“PDAC”).

In the first line setting,

Gemcitabine in combination with Abraxane ® or FOLFIRINOX regimen are the current standard of care.

Oncologists have limited

options of existing therapies for second-line metastatic patients.

The only FDA-approved second-line treatment is Onivyde ®

in combination with Fluorouracil (5FU) and leucovorin (LV) for gemcitabine-treated patients.

In addition to chemotherapy, Merck’s

KEYTRUDA ® was approved for MSI-H cancers (approximately 1% of all cases) and Lynparza ® was approved for

maintenance of BRCA mutated pancreatic cancer (approximately 7% of all cases).

In the last years there have been a number of late-stage clinical failures

of compounds for advanced PDAC.

Most of these failed trials have been based on a single promising endpoint.

There are very few compounds

in advanced stages of development in PDAC.

With respect to other solid tumors, there are a large number of companies

developing treatments intended to be used in combination with approved immunotherapies, including immune checkpoint inhibitors, to treat

a variety of solid tumor indications.

XCART for B-cell lymphomas

Should any product candidate incorporating the

XCART platform technology be approved for use, we will face substantial competition.

In addition to the current standard of care for patients,

commercial and academic clinical studies are being pursued by a number of parties in the field of immunotherapy.

Early results from these

studies have fueled continued interest in T-cell immunotherapy.

In addition, if approved, our CAR T cell programs would compete with currently-marketed

drugs and therapies used for treatment of the indications we are addressing and potentially with drug candidates currently in development

for the same indications.

There are currently five CAR T therapies approved

Novartis’ Kymriah (tisagenlecleucel);

Gilead Sciences, Inc.’s and Kite Pharma’s Yescarta (axicabtagene

ciloleucel) and Tecartus (brexucabtagene autoleucel);

and Bristol Myers Squibb’s Breyanzi (lisocabtagene maraleucel) and Abecma

(idecabtagene vicleucel).

However, there are over one-hundred CAR T therapy products in development with more than thirty-five being allogeneic

and off-the-shelf cell therapies.

In addition, depending on the diseases that our CAR T therapies target, we may face competition in the

indication of interest from both CAR T therapies and other modalities such as small molecules and antibodies.

T-cell based treatments for cancer, such as CAR

T and TCR therapies, have recently been an area of significant research and development by academic institutions and biopharmaceutical

XCART therapies may compete with product candidates from a number of companies that are currently focused on this therapeutic

modality, which we estimate to include over one-hundred other companies.

There are a number of CAR T therapies approved

and EU including Novartis’ Kymriah (tisagenlecleucel);

Gilead Sciences, Inc.’s and Kite Pharma’s Yescarta

(axicabtagene ciloleucel) and Tecartus (brexucabtagene autoleucel);

Bristol Myers Squibb’s Breyanzi (lisocabtagene maraleucel) and

Abecma (idecabtagene vicleucel);

and Janssen’s Carvykti (ciltacabtagene autoleucel).

In addition, there are over one-hundred CAR

T therapy products in development with a significant number being allogeneic and off-the-shelf cell therapies.

In addition, depending

on the diseases that our CAR T therapies target, we may face competition in the indication of interest from both CAR T therapies and other

modalities such as small molecules and antibodies.

T-cell based treatments for cancer, such as CAR T and TCR therapies, have recently

been an area of significant research and development by academic institutions and biopharmaceutical companies.

PSA for Drug Delivery

Current competing platforms include PEGylation,

Fc-fusion, albumin-fusion, HESylation, PASylation, and CTP-fusion, among others as well as academic institutions and other smaller pharmaceutical

companies during the drug development stage.

In addition to competing with universities and other research institutions in the development

of drug products, therapies, technologies and processes, we may compete with other companies in acquiring rights to products or technologies

from universities.

There can be no assurance that our products or drug candidates will be more effective or achieve greater market acceptance

than competitive products or that these companies will not succeed in developing products and technologies that are more effective than

those being developed for us or that would render our products and technologies less competitive or obsolete.

Fc-fusion, albumin-fusion, HESylation, PASylation, and CTP-fusion, among others as well as those of academic institutions and other smaller

pharmaceutical companies engaged in drug development.

In addition to competing with universities and other research institutions in the

development of drug products, therapies, technologies and processes, we may compete with other companies in acquiring rights to products

or technologies from universities.

Available Information

11 unchanged sentences

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 1. Business