What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-10 compared with 2023-05-11 · 177 added, 105 removed, 204 unchanged (58% 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

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the development of the XCART ™ Chimeric Antigen Receptor (“CAR”)

T cell (“XCART”) technology and plans to develop cell-based therapeutics by targeting the unique B cell receptor on the surface

of an individual patient’s malignant tumor cells for the treatment of B-cell lymphomas;

and our expectations regarding our PolyXen ®

platform, including concerning our plans to leverage the platform by partnering with biotechnology and pharmaceutical companies and its

application to protein or peptide therapeutics and its application to improve the half-life and other pharmaceutical properties of next-generation

biologic drugs.

T cell (“XCART”) technology;

and our expectations regarding our PolyXen ® platform.

In some cases, these statements may be identified

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our ability to implement our business strategy;

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

our failure to meet the continued listing requirements of the Nasdaq Capital Market (“Nasdaq”);

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

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

Our 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 are focusing the majority of our resources on advancing

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

We also have a 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.

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 focused on advancing our DNase platform, which

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 are focusing the majority of

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

or metastatic solid tumors.

We also have a 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

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

months ended March 31, 2023, was on the licensing and advancement of our DNase platform.

and six months ended June 30, 2023, was on the advancement of our DNase platform.

Impact of the Conflict in Ukraine on Our Operations

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RESULTS OF OPERATIONS

Comparison of Quarter Ended March 31, 2023

Comparison of Quarter Ended June 30, 2023

The comparison of our historical results of operations

for the fiscal quarter ended March 31, 2023 to the fiscal quarter ended March 31, 2022 is as follows:

for the fiscal quarter ended June 30, 2023 to the fiscal quarter ended June 30, 2022 is as follows:

Quarter Ended

March 31, 2023

June 30, 2023

Quarter Ended

March 31, 2022

June 30, 2022

Royalty revenue

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Loss from operations

Other income:

Interest income

Other income (expense):

Other income (expense)

Interest income, net

$ (1,050,963 )

Revenue for the three months ended March 31, 2023

increased by $0.2 million, or 55.7%, to $0.6 million from approximately $0.4 million for the three months ended March 31, 2022.

This increase

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

as compared to the

same period in 2022.

$ (2,672,190 )

$ (1,621,227 )

Revenue for the three months ended June 30, 2023

increased by approximately $0.2 million, or 56.2%, to approximately $0.7 million from approximately $0.4 million for the three months

ended June 30, 2022.

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

(“Takeda”) as compared to the same period in 2022.

Research and Development Expenses

Research & development (“R&D”)

expenses for the three months ended March 31, 2023 decreased by approximately $0.5 million, or 46.0%, to approximately $0.6 million from

approximately $1.1 million in the comparable quarter in 2022.

The table below sets forth the R&D costs incurred by the Company by

category of expense for the quarters ended March 31, 2023 and 2022:

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

expenses for the three months ended June 30, 2023 decreased by $1.2 million, or 56.5% to $0.9 million from $2.1 million in the comparable

quarter in 2022 primarily due to in-process research and development (“IPR&D”) expense of $1.3 million in the prior period.

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 2023.

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

expense of approximately $2.1 million for the three months ended June 30, 2022, R&D expense for the three months ended June 30, 2023

increased by approximately $0.1 million, or 16.9%, to approximately $0.9 million from approximately $0.8 million in the comparable quarter

The table below sets forth the R&D costs incurred by us by category of expense for the quarters ended June 30, 2023 and 2022:

Quarter Ended,

Category of Expense

March 31, 2023

March 31, 2022

June 30, 2023

June 30, 2022

IPR&D expense

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 in connection with our pre-clinical development

efforts associated with our DNase platform.

We licensed the DNase platform in April 2022 and expect to continue to direct our efforts

and resources on the development of this newly acquired technology.

As a result, we suspended development of our XCART technology platform.

General and Administrative Expenses

General and administrative expenses for the three

months ended June 30, 2023 decreased by approximately $0.1 million, or 7.8%, to approximately $0.9 million from approximately $1.0 million

in the comparable quarter in 2022.

The decrease was primarily due to a decrease in legal fees and share-based expense during the three

months ended June 30, 2023 compared to the same period in 2022.

Other Income (Expense)

Other income was approximately $21,000 for the

three months ended June 30, 2023 compared to approximately $1,100 of other expense for the same period in 2022.

This increase in other

income was primarily related to fees associated with the Pharmsynthez Loan recognized during the three months ended June 30, 2023.

were no similar fees received in the same period in 2022.

Interest Income

Interest income increased to approximately $126,000

during the three months ended June 30, 2023 as compared to approximately $16,000 for the same period in the prior year.

This increase

is due to higher interest rates on invested funds during the three months ended June 30, 2023 compared to the same period in 2022 as well

as an increase in interest income on the Pharmsynthez Loan.

Comparison of Six Months Ended June 30,

2023 and 2022

The comparison of our historical results of operations

for the six months ended June 30, 2023 to the six months ended June 30, 2022 is as follows:

Royalty revenue

Operating costs and expenses:

Research and development

General and administrative

Total operating costs and expenses

Loss from operations

Other income (expense):

Other income (expense)

Interest income, net

$ (1,907,517 )

$ (4,265,801 )

$ (2,358,284 )

Revenue for the six months ended June 30, 2023

increased by $0.5 million, or 56.0%, to $1.3 million from approximately $0.8 million for the six months ended June 30, 2022.

This increase

represents an increase in royalty revenue related to our sublicense agreement with Takeda as compared to the same period in 2022.

Research and Development Expenses

Overall, R&D expenses for the six months ended

June 30, 2023 decreased by $1.7 million, or 52.9% to $1.5 million from $3.2 million in the comparable period in 2022 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.

There was no similar expense in 2023.

Excluding the $1.3 million of

IPR&D expense from total R&D expense of approximately $3.2 million for the six months ended June 30, 2022, R&D expenses for

the six months ended June 30, 2023 decreased approximately $0.4 million, or 20.0% to $1.5 million, from approximately $1.9 million for

the six months ended June 30, 2022.

The table below sets forth the R&D costs incurred by us, by category of expense, for the six months

ended June 30, 2023 and 2022:

Six Months Ended,

Category of Expense

June 30, 2023

June 30, 2022

IPR&D expense

Outside services and contract research organizations

Salaries and wages

Share-based expense

Total research and development expense

The decrease in outside

services and contract research organizations expense was primarily due to decreased spending in connection with our XCART platform technology

which was partially offset by costs related to our initial development efforts associated with our DNase platform.

We licensed the DNase

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

we suspended development of our XCART technology platform.

The decrease in other expense was due to lower consulting costs incurred during

the first quarter of 2023 compared to the same period in 2022.

Consulting costs during the three months ended March 31, 2002 were related

to the licensing of the DNase oncology platform from CLS.

There were no similar consulting costs incurred during the three months ended

March 31, 2023.

which was partially offset by increased costs related to our initial development efforts associated with our DNase platform.

the DNase platform in April 2022 and expect to continue to direct our efforts and resources on the development of this newly acquired

As a result, we suspended development of our XCART technology platform.

The decrease in other expense was due to lower consulting

costs incurred in the first six months of 2023 compared to the same period in 2022.

Consulting costs during the six months ended June

30, 2022 were related to the licensing of the DNase oncology platform from CLS.

General and Administrative Expenses

General and administrative expenses for the three

months ended March 31, 2023 increased by approximately $18,000, or 2.0%, to approximately $926,000 from approximately $907,000 in the

comparable quarter in 2022.

The increase was primarily due to an increase in accounting fees during the three months ended March 31, 2023

compared to the same period in 2022.

General and administrative expenses for the six

months ended June 30, 2023 was $1.9 million, decreasing approximately $62,000, or 3.2%, compared to the same period in the prior year.

The decrease was primarily due to a decrease in legal costs partially offset by increases in accounting and consulting costs during the

six months ended June 30, 2023 as compared to the same period in 2022.

Other Income (Expense)

Other income was approximately $26,000 for the

three months ended March 31, 2023 compared to approximately $200 of other income for the same period in 2022.

six months ended June 30, 2023 compared to approximately $1,000 of other expense for the same period in 2022.

This increase in other income

was primarily related to favorable changes in foreign currency exchange rates during the three months ended March 31, 2023 as compared

to the same period in 2022.

was primarily related to fees associated with the Pharmsynthez Loan recognized during the six months ended June 30, 2023.

There were no

similar fees received in the same period in 2022.

Interest Income

Interest income increased to approximately $180,000

during the three months ended March 31, 2023 as compared to approximately $26,000 for the same period in the prior year.

This increase

is primarily due to higher interest rates on invested funds during the three months ended March 31, 2023 compared to the same period in

This increase was partially offset by a decrease in interest income on our loan with Pharmsynthez.

during the six months ended June 30, 2023 as compared to approximately $42,000 for the same period in the prior year.

This increase is

due to higher interest rates on invested funds during the six months ended June 30, 2023 compared to the same period in 2022 as well as

an increase in interest income on the Pharmsynthez Loan.

Non-GAAP Measures

In our narrative discussion of operations above,

we exclude the impact of non-cash expenses from certain operating measures, which narrative discussion includes reconciliation of such

adjusted financial measures to the directly comparable GAAP financial measure.

We believe these adjusted operating measures may provide

investors with useful information regarding our underlying performance from period to period and allow investors to better understand

our results of operations.

Management uses these adjusted measures when assessing the performance of the business.

Liquidity and Capital Resources

We incurred a net loss

of approximately $0.9 million for the three months ended March 31, 2023.

We had an accumulated deficit of approximately $190.0 million

at March 31, 2023, as compared to an accumulated deficit of approximately $189.1 million at December 31, 2022.

of approximately $1.9 million for the six months ended June 30, 2023.

We had an accumulated deficit of approximately $191.0 million at

June 30, 2023, as compared to an accumulated deficit of approximately $189.1 million at December 31, 2022.

Working capital was approximately

$12.0 million at March 31, 2023, and $12.6 million at December 31, 2022.

During the three months ended March 31, 2023, our working capital

decreased by $0.6 million primarily due to our net loss for the three months ended March 31, 2023.

$11.2 million at June 30, 2023, and $12.6 million at December 31, 2022.

During the six months ended June 30, 2023, our working capital

decreased by $1.4 million primarily due to our net loss for the six months ended June 30, 2023 partially offset by proceeds from the repayment

of the Pharmsynthez Loan.

Our principal source

of liquidity consists of cash.

At March 31, 2023, we had approximately $12.0 million in cash and $0.9 million in current liabilities.

At December 31, 2022, we had approximately $13.1 million in cash and $1.1 million in current liabilities.

We have historically relied

upon sales of our equity securities to fund our operations.

At June 30, 2023, we had approximately $10.7 million in cash and $0.9 million in current liabilities.

December 31, 2022, we had approximately $13.1 million in cash and $1.1 million in current liabilities.

We have historically relied upon

sales of our equity securities to fund our operations.

We evaluate whether there

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depend upon several factors, including the achievement of progress in our clinical development programs, our ability to identify and enter

into licensing or other strategic arrangements, our continued listing on the Nasdaq Stock Market (“Nasdaq”), and factors related

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

The capital markets for the

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

On June 3, 2022, we

received a written notification (the “Notice”) from the Listing Qualifications Department of Nasdaq notifying us that the

closing bid price for our common stock had been below $1.00 for 30 consecutive business days and that we therefore were not in compliance

with the minimum bid price requirement for continued inclusion on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (the

“Bid Price Requirement”).

The Notice has no immediate effect on the listing of our common stock on the Nasdaq Capital Market.

Under the Nasdaq Listing Rules, we had a period of 180 calendar days from the date of the Notice to regain compliance with the Bid Price

Accordingly, we had until November 30, 2022 to regain compliance with the Bid Price Requirement and were eligible for an

additional 180 calendar day compliance period if certain other criteria were met.

On December 1, 2022, we received a letter from Nasdaq

informing us that although our common stock had not regained compliance with the minimum $1.00 bid price per share requirement, Nasdaq

had determined that we were eligible for an additional 180 calendar day period, or until May 29, 2023, to regain compliance.

determination was based on the Company meeting the continued listing requirement for market value of publicly held shares and all other

applicable requirements for initial listing on the Nasdaq Capital Market with the exception of the bid price requirement, and our written

notice of our intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.

into licensing or other strategic arrangements, our continued listing on Nasdaq, and factors related to financial, economic, geo-political,

industry and market conditions, many of which are beyond our control.

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

which make the terms, timing and extent of any future financing uncertain.

On June 3, 2022, we received a written notification (the “Notice”)

from the Listing Qualifications Department of Nasdaq notifying us that the closing bid price for our common stock had been below $1.00

for 30 consecutive business days and that we therefore were not in compliance with the minimum bid price requirement for continued inclusion

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

The Notice had no immediate effect on the listing

of our common stock on Nasdaq.

On May 15, 2023, we effected a reduction, on a 1-for-10 basis, in our authorized common stock, par value

$0.001, along with a corresponding and proportional decrease in the number of shares issued and outstanding.

On May 30, 2023, the Company

received a letter from Nasdaq notifying us that we had regained compliance with the Bid Price Requirement as a result of the closing bid

price of our common stock being at $1.00 per share or greater for the 10 consecutive business days from May 15, 2023 through May 26, 2023

and that this matter is now closed.

On March 10, 2023, Silicon

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full access to our cash on deposit with SVB.

As of March 31, 2023, we have transferred our primary banking relationship to a large financial

As of June 30, 2023, we have transferred our primary banking relationship to a large financial

institution and all cash on deposit is covered under federally insured limits.

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Cash flows used in operating activities for the

three months ended March 31, 2023 totaled approximately $1.1 million, which was primarily due to our net loss for the period, partially

offset by non-cash charges associated with share-based expense and principal repayments on the Pharmsynthez Loan.

In addition, prepaid

expenses increased and current liabilities decreased during the three months ended March 31, 2023.

Cash flows used in operating activities

for the three months ended March 31, 2022 totaled approximately $2.1 million, which was primarily due to our net loss for the period offset

by non-cash charges associated with share-based expense.

In addition, prepaid expenses increased and current liabilities decreased during

the three months ended March 31, 2022.

six months ended June 30, 2023 totaled approximately $2.4 million, which was primarily due to our net loss for the period as well as advance

payments made in accordance with our statement of work with Catalent, partially offset by cash received from the repayment of the Pharmsynthez

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.

addition, current liabilities decreased during each of the six months ended June 30, 2023 and 2022.

Cash Flows from Investing Activities

There were no cash flows from investing activities

for the three months ended March 31, 2023 and 2022.

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.

There were no cash

flows from investing activities for the six months ended June 30, 2023.

Cash Flow from Financing Activities

There were no cash flows from financing activities

for the three months ended March 31, 2023 and 2022.

for the six months ended June 30, 2023 and 2022.

Contractual Obligations and Commitments

As of March 31, 2023, there were no material changes

As of June 30, 2023, 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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the year ended December 31, 2022, filed with the SEC on March 22, 2023, as amended on April 28, 2023, for a discussion of recent accounting

Critical Accounting Estimates

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis