What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-21 compared with 2023-03-22 · 113 added, 140 removed, 300 unchanged (46% of the section changed)

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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.

We licensed the DNase oncology platform in April 2022 and expect

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

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.

We are also developing our personalized Chimeric Antigen Receptor (“CAR”) T platform technology, XCART ™ ,

to develop cell-based therapeutics targeting the unique B-cell receptor on the surface of an individual patient’s malignant tumor

cells, for the treatment of B-cell lymphomas.

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.

Our Deoxyribonuclease (“DNase”) platform

is designed to improve outcomes of existing treatments, including immunotherapies, by targeting neutrophil extracellular traps (“NETs”),

which have been implicated in cancer progression and resistance to cancer treatments.

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.

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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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.

We are receiving ongoing royalties pursuant

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

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

during the year ended December 31, 2022, was on the licensing and advancement of our DNase platform and on the development of our XCART

platform technology.

To date, none of our drug candidates have received regulatory marketing authorization or approval in the United States (“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.

Although we hold a broad patent portfolio, the

focus of our internal efforts during the year ended December 31, 2023, was on the advancement of our DNase platform.

Critical Accounting Policies and Estimates

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We base our expenses related to research and development,

pre-clinical activities and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts

with multiple research institutions, CMOs and CROs that conduct and manage clinical trials on our behalf.

The financial terms of these

agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows.

There may be instances in

which payments made to vendors will exceed the level of services provided and result in a prepayment of the expense.

In accruing service

fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period.

actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or prepaid accordingly.

Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and

timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts

that are too high or too low in any particular period.

To date, there have not been any material adjustments to our prior estimates of

accrued research and development expenses.

pre-clinical activities, manufacturing and clinical trials on our estimates of the services received and efforts expended pursuant to

quotes and contracts with multiple research institutions, CMOs and CROs that conduct and manage clinical trials on our behalf.

The financial

terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows.

be instances in which payments made to vendors will exceed the level of services provided and result in a prepayment of the expense.

accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each

If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or

prepaid accordingly.

Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding

of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result

in reporting amounts that are too high or too low in any particular period.

To date, there have not been any material adjustments to our

prior estimates of accrued research and development expenses.

Share-based Expense

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For non-employee options issued in exchange for goods or services

consumed in the Company’s operations, the fair value measurement date is the earlier of the date the performance of services is

complete or the date the performance commitment has been reached.

We generally determine that the fair value of the stock options is more

reliably measurable than the fair value of the services received.

Compensation expense related to stock options granted to non-employees

is recognized on a straight-line basis over requisite vesting periods of the awards.

consumed in our operations, the fair value measurement date is the earlier of the date the performance of services is complete or the

date the performance commitment has been reached.

We generally determine that the fair value of the stock options is more reliably measurable

than the fair value of the services received.

Compensation expense related to stock options granted to non-employees is recognized on

a straight-line basis over requisite vesting periods of the awards.

In connection with certain financing, consulting

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values or expense.

Effects of the COVID-19 Pandemic

During March 2020, a global pandemic was declared

by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus, or COVID-19.

The pandemic has

significantly affected economic conditions in the U.S., accelerating during the first half of March 2020 and continuing throughout 2021

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

uncertainties in the U.S.

We continue to evaluate the effects of the COVID-19 pandemic on our business, and while there has been

no significant impact to our operations to date despite social distancing and other measures taken in response to the pandemic, the ultimate

impact of the COVID-19 pandemic on our results of operations and financial condition is dependent on future developments, including the

duration of the pandemic and the related extent of its severity, the pace and rate at which vaccines are administered, and the continued

emergence of new strains of COVID-19, such as the Delta and Omicron variants and any subvariants, as well as its impact on macroeconomic

conditions, which are uncertain and cannot be predicted at this time.

If the global response to contain the COVID-19 pandemic escalates

further or is unsuccessful, or if governmental decisions to ease pandemic related restrictions are ineffective, premature or counterproductive,

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

Impact of the Conflict in Ukraine on Our Operations

Impact of the Global Conflicts on Our Operations

The short and long-term implications of Russia’s

invasion of Ukraine are difficult to predict at this time.

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

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

invasion of Ukraine and conflict in the Middle East are difficult to predict at this time.

The imposition of current and future sanctions

and counter sanctions may have an adverse effect on the economic markets generally and could impact our business, financial condition,

and results of operations.

Results of Operations

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$ (6,552,353 )

$ (2,417,775 )

Revenue for the year ended December 31, 2023 increased

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Overall, R&D expenses for the year ended December

31, 2022 increased by $1.6 million, or 50.8% to $4.8 million from $3.2 million in the comparable period in 2021 primarily due to IPR&D

31, 2023 decreased by $1.3 million, or 26.7% to $3.5 million from $4.8 million in the comparable period in 2022 primarily due to IPR&D

expense of $1.8 million.

During the year ended December 31, 2022, the Company expensed $1.8 million of IPR&D associated with the Company’s

licensing of the DNase platform.

There was no similar expense in 2021 The table below sets forth the R&D costs incurred by us, by

category of expense, for the year ended December 31, 2022 and 2021:

During the year ended December 31, 2022, the Company expensed $1.8 million of IPR&D associated with our licensing

of the DNase platform.

There was no similar expense in 2023.

Excluding the $1.8 million of IPR&D expense from total R&D expense

of $4.8 million for the year ended December 31, 2022, R&D expenses for the year ended December 31, 2023 increased approximately $0.5

million, or 17.4% to $3.5 million, from $3.0 million for the year ended December 31, 2022.

The table below sets forth the R&D costs

incurred by us, by category of expense, for the years ended December 31, 2023 and 2022:

Year ended December 31,

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Total research and development expense

Excluding the $1.8 million

of IPR&D expense from total R&D expense of $4.8 million, R&D expenses decreased approximately $0.2 million, or 5.9% to $3.0

million for the year ended December 31, 2022, from $3.2 million for the year ended December 31, 2021.

The decrease in outside services

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

which was substantially offset by costs related to the licensing and our initial development efforts related to our DNase platform.

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

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

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 directed our R&D 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 Expense

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ended December 31, 2023 was $3.6 million, decreasing by approximately $0.1 million, or 2.5%, compared to the same period in the prior

The decrease was primarily due to a decrease in consulting and legal costs associated with our intellectual property portfolio substantially

offset by an increase in legal costs related to the licensing of the DNase oncology platform from CLS during the year ended December 31,

2022 compared to the same period in 2021.

The decrease was primarily due to a decrease in employee related costs substantially offset by increases in consulting and legal

costs during the year ended December 31, 2023 compared to the prior year.

Other Income (Expense)

Other expense was approximately $1,600 for the

year ended December 31, 2022 compared to other income of approximately $1,100 for the same period in 2021.

This increase in other expense

was primarily related to unfavorable changes in foreign currency exchange rates during the year ended December 31, 2022 as compared to

the same period in 2021.

Other income was approximately $25,000 for the

year ended December 31, 2023 compared to other expense of approximately $1,600 for the same period in 2022.

This increase in other income

was primarily related to fees associated with the Pharmsynthez Loan recognized during the year ended December 31, 2023 for which there

were no similar fees received in 2022.

Interest Income, net

Interest income, net increased to approximately

$0.2 million during the year ended December 31, 2022 as compared to approximately $0.1 million for the same period in the prior year.

This increase is primarily due to an increase in interest income due to higher interest rates on invested funds during the year ended

December 31, 2022 compared to the same period in 2021.

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

$0.4 million during the year ended December 31, 2023 as compared to approximately $0.2 million in the prior year.

This increase is due

to higher interest rates on invested funds during the year ended December 31, 2023 compared to the prior year, 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

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During the year ended December 31, 2023, our

working capital decreased by $4.7 million primarily due to our net loss for the year ended December 31, 2022 and cash of $0.5 million

used to obtain a license to the DNase oncology platform.

working capital decreased by $3.8 million primarily due to our net loss for the year ended December 31, 2023 and, to a lesser extent,

decreases in current liabilities.

Our principal source

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We believe that our existing resources will be adequate

to fund our operations for a period of at least twelve months from the date of these financial statements.

However, we anticipate we may

need additional capital in the long-term to pursue our business initiatives.

The terms, timing and extent of any future financing will

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.

On March 10, 2023, SVB was closed by the California Department of Financial

Protection and Innovation, which appointed the FDIC as receiver.

We maintained our cash primarily with SVB.

On March 12, 2023, the U.S.

Treasury, Federal Reserve and FDIC rolled out emergency measures to fully protect all depositors of SVB and, on March 13, 2023, we had

full access to our cash on deposit with SVB.

As a result, we do not anticipate any losses with respect to such balances.

to fund our operations for a period of at least twelve months from the date of the issuance of these financial statements.

anticipate we may need additional capital in the long-term to pursue our business initiatives.

The terms, timing and extent of any future

financing will 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.

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

June 3, 2022, we received a written notification 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”).

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, we 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 the Company’s 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

Cash Flows from Operating Activities

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year ended December 31, 2023 totaled approximately $4.1 million, which was primarily due to our net loss for the period, partially offset

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

In addition, current liabilities decreased during the

year ended December 31, 2022.

Cash flows used in operating activities for the year ended December 31, 2021 totaled approximately $4.7

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

by non-cash charges associated with share-based expense and, to a lesser extent, a decrease in current liabilities.

Cash flows used in

operating activities for the year ended December 31, 2022 totaled approximately $4.6 million, which was primarily due to our net loss

for the period, partially offset by non-cash charges associated with acquired IPR&D and share-based expense.

In addition, current

liabilities decreased during the year ended December 31, 2022.

Cash Flows from Investing Activities

Cash flows used in investing activities for the

year ended December 31, 2022 totaled $500,000, which represented cash paid to license the DNase oncology platform.

There were no cash

flows from investing activities for the year ended December 31, 2021.

Cash Flow from Financing Activities

There were no cash flows from financing activities

There were no cash flows from investing activities

for the year ended December 31, 2023.

Cash flows from financing activities for the year ended December 31, 2021 totaled approximately

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

Cash flows used in investing activities for the year ended December 31, 2022 totaled $500,000, which

represented cash paid to license the DNase oncology platform.

Cash Flows from Financing Activities

There were no cash flows from financing activities

for each of the years ended December 31, 2023 and 2022.

Contractual Obligations

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Our contractual obligations result from property leases for office space.

Although we do have obligations for CMO services,

the table below excludes potential payments we may be required to make under our agreements with CMOs because timing of payments and actual

amounts paid under those agreements may be different depending on the timing of receipt of goods or services or changes to agreed-upon

terms or amounts for some obligations, and those agreements are cancelable upon written notice by the Company and therefore, not long-term

The contracts may also contain variable costs that are hard to predict as they are based on such things as patients enrolled

and clinical trial sites, which can vary and, therefore, are also not included in the table below.

Additionally, the expected timing of

payment of the obligations presented below is estimated based on current information.

Although we do have obligations for CMO and

CRO services, the table below excludes potential payments we may be required to make under our agreements with CMOs and CROs because timing

of payments and actual amounts paid under those agreements may be different depending on the timing of receipt of goods or services or

changes to agreed-upon terms or amounts for some obligations, and those agreements are cancelable upon written notice by the Company and

therefore, not long-term liabilities.

The contracts may also contain variable costs that are hard to predict as they are based on such

things as patients enrolled and clinical trial sites, which can vary and, therefore, are also not included in the table below.

Additionally,

the expected timing of payment of the obligations presented below is estimated based on current information.

The following tables represent our contractual

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We are not required to provide the information required by this Item

because we are a smaller reporting company.

because we are a “smaller reporting company” (as

defined in Rule 12b-2 of the Exchange Act).

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

What changed 10-K

Item 7. Management’s Discussion and Analysis