What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-09 compared with 2023-11-09 · 104 added, 210 removed, 159 unchanged (66% 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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include, but are not limited to, statements concerning:

the lingering effects of the coronavirus, or COVID-19, global pandemic and the

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

of operations and financial condition;

anticipated effects of geopolitical events, including the conflict between Russia and Ukraine and

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

our plans to develop our proposed

drug candidates;

anticipated effects of geopolitical events, including the conflicts in the Ukraine

and the Middle East and associated sanctions imposed by the U.S.

and other countries in response;

our plans to develop our proposed drug

our expectations regarding the nature, timing and extent of clinical trials and proposed clinical trials;

our expectations

regarding the timing for proposed submissions of regulatory filings, including but not limited to, any Investigational New Drug filing

or any New Drug Application;

the nature, timing and extent of collaboration arrangements;

the expected results pursuant to collaboration

arrangements, including the receipts of future payments that may arise pursuant to collaboration arrangements;

regarding the timing for proposed submissions of regulatory filings;

our expectations regarding the nature, timing and extent of collaboration

arrangements;

the expected results pursuant to collaboration arrangements, including the receipts of future payments that may arise pursuant

to collaboration arrangements;

the outcome of our plans to obtain regulatory approval of our drug candidates;

the outcome of our plans

to obtain regulatory approval of our drug candidates;

the outcome of our plans for the commercialization of our drug candidates;

to address certain markets, engage third party manufacturers, and evaluate additional drug candidates for subsequent commercial development

along with the likelihood and extent of competition to our drug candidates;

our plans to advance innovative immune-oncology technologies

addressing hard to treat oncology indications;

expectations regarding our Deoxyribonuclease (“DNase”) platform, such as regarding

the DNase platform being in development for the treatment of solid tumors and being aimed at improving outcomes of existing treatments,

including immunotherapies, by targeting Neutrophil Extracellular Traps (“NETs”) and our expectations to prioritize our efforts

and resources on this newly licensed technology;

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

T cell (“XCART”) technology;

and our expectations regarding our PolyXen ® platform.

for the commercialization of our drug candidates;

our plans to address certain markets, engage third party manufacturers, and evaluate

additional drug candidates for subsequent commercial development along with the likelihood and extent of competition to our drug candidates;

our plans to advance innovative immune-oncology technologies addressing hard to treat oncology indications;

expectations regarding our

Deoxyribonuclease (“DNase”) platform, such as regarding the DNase platform being in development for the treatment of solid

tumors and being aimed at improving outcomes of existing treatments, including immunotherapies, by targeting neutrophil extracellular

traps (“NETs”);

our expectations to focus our efforts and resources on advancing the DNase platform into the clinic as an

adjunctive therapy for pancreatic carcinoma and locally advanced or metastatic solid tumors;

and our expectations regarding our PolyXen ®

platform, including concerning our plans to leverage the platform.

In some cases, these statements may be identified

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cause actual results to differ materially include without limitation:

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

uncertainty of the expected financial performance of the Company following completion of the transaction with CLS and the licensing of the DNase platform;

failure to realize the anticipated potential of the DNase, XCART or PolyXen technologies;

uncertainty of the expected financial performance of the Company;

failure to realize the anticipated potential of the DNase or PolyXen technologies;

our ability to implement our business strategy;

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

our failure to maintain compliance with the continued listing requirements of the Nasdaq Stock 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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our ability to attract and retain key personnel;

costs, diversion and other adverse effects of the actions of activist shareholders;

adverse publicity related to our products or the Company itself;

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the costs inherent with complying with statutes and regulations applicable to public reporting companies, such as the Sarbanes-Oxley Act of 2002;

other new lines of business that the Company may enter in the future;

other new lines of business that we may enter in the future;

general economic and business conditions, as well as inflationary trends and financial market instability or disruptions to the banking system due to bank failures;

the impact of natural disasters or public health emergencies, such as the COVID-19 global pandemic, and geopolitical events, such as the Russian invasion of Ukraine, and related sanctions and other economic disruptions or concerns, on our financial condition and results of operations;

the impact of natural disasters or public health emergencies, such as the COVID-19 global pandemic, and geopolitical events, such as the Russian invasion of Ukraine and conflict in the Middle East, and related sanctions and other economic disruptions or concerns, on our financial condition and results of operations;

other factors set forth in the Risk Factors section of our Annual Report on Form 10-K and in subsequent filings with the Securities and Exchange Commission (“SEC”).

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

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.

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 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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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.

As a result, we have committed 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.

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

and nine months ended September 30, 2023, was on the advancement of our DNase platform.

Impact of the Conflict in Ukraine on Our Operations

months ended March 31, 2024, was on the advancement of our DNase technology.

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

Comparison of Quarter Ended September 30,

2023 and 2022

Comparison of Quarter Ended March 31, 2024

The comparison of our historical results of operations

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

for the fiscal quarter ended March 31, 2024 to the fiscal quarter ended March 31, 2023 is as follows:

Quarter Ended

September 30,

March 31, 2024

Quarter Ended

September 30,

March 31, 2023

Royalty revenue

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Loss from operations

Other income (expense):

Other expense

Other income:

Interest income, net

$ (1,195,113 )

Revenue for the three months ended September 30,

2023 increased by approximately $0.2 million, or 47.5%, to approximately $0.6 million from approximately $0.4 million for the three months

ended September 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.

Revenue for the three months ended March 31, 2024

decreased by $0.1 million, or 15.7%, to $0.5 million from approximately $0.6 million for the three months ended March 31, 2023.

This decrease

represents a decrease in royalty revenue resulting from the timing of rebates related to our sublicense agreement with Takeda Pharmaceuticals

as compared to the same period in 2023.

Research and Development Expenses

Research & development (“R&D”)

expenses for the three months ended September 30, 2023 increased by approximately $0.6 million, or 155.9%, to approximately $1.0 million

from approximately $0.4 million in the comparable quarter in 2022.

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

of expense for the quarters ended September 30, 2023 and 2022:

expenses for the three months ended March 31, 2024 increased by approximately $0.3 million, or 58.6%, to approximately $0.9 million from

approximately $0.6 million in the comparable quarter in 2023.

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

category of expense for the quarters ended March 31, 2024 and 2023:

Quarter Ended

Category of Expense

September 30,

March 31, 2024

March 31, 2023

Outside services and contract research organizations

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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.

efforts related to our DNase platform.

General and Administrative Expenses

General and administrative expenses for the three

months ended September 30, 2023 decreased by approximately $0.1 million, or 14.6%, to approximately $0.7 million from approximately $0.9

million in the comparable quarter in 2022.

The decrease was primarily due to decreases in personnel costs and share-based expense during

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

Other Income (Expense)

Other expense was approximately $700 for the three

months ended September 30, 2023 compared to approximately $1,700 of other expense for the same period in 2022.

months ended March 31, 2024 decreased by approximately $0.1 million, or 9.8%, to approximately $0.8 million from approximately $0.9 million

in the comparable quarter in 2023.

The decrease was primarily due to a decrease in accounting and legal fees during the three months ended

March 31, 2024 compared to the same period in 2023.

Other income was approximately $52 for the three

months ended March 31, 2024 compared to approximately $4,500 of other income for the comparable quarter in 2023.

This decrease in other

expense was primarily related to favorable changes in foreign currency exchange rates during the three months ended September 30, 2023

as compared to the same period in 2022.

income was primarily related to unfavorable changes in foreign currency exchange rates during the three months ended March 31, 2024 as

compared to the same period in 2023.

Interest Income

Interest income increased to approximately $73,000

during the three months ended September 30, 2023 as compared to approximately $45,000 for the same period in the prior year.

during the three months ended March 31, 2024 as compared to approximately $54,000 for the same period in the prior year.

This increase

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

Comparison of Nine Months Ended September

30, 2023 and 2022

The comparison of our historical results of operations

for the nine months ended September 30, 2023 to the nine months ended September 30, 2022 is as follows:

September 30,

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

$ (2,963,072 )

$ (5,069,818 )

$ (2,106,746 )

Revenue for the nine months ended September 30,

2023 increased by $0.6 million, or 53.1%, to $1.9 million from approximately $1.2 million for the nine months ended September 30, 2022.

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

Research and Development Expenses

Overall, R&D expenses for the nine months

ended September 30, 2023 decreased by $1.1 million, or 29.6% to $2.5 million from $3.6 million in the comparable period in 2022 primarily

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

During the nine months ended September 30,

2022, the Company expensed $1.3 million of IPR&D associated with the Company’s licensing of the DNase oncology platform.

was no similar expense in 2023.

Excluding the $1.3 million of IPR&D expense from total R&D expense of approximately $3.6 million

for the nine months ended September 30, 2022, R&D expenses for the nine months ended September 30, 2023 increased approximately $0.2

million, or 10.8% to $2.5 million, from approximately $2.3 million for the nine months ended September 30, 2022.

The table below sets

forth the R&D costs incurred by us, by category of expense, for the nine months ended September 30, 2023 and 2022:

Nine Months Ended,

Category of Expense

September 30,

IPR&D expense

Outside services and contract research organizations

Salaries and wages

Share-based expense

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 nine

months ended September 30, 2023 was $2.6 million, decreasing approximately $0.2 million, or 6.7%, compared to the same period in the prior

The decrease was primarily due to decreases in share-based expense, legal costs and personnel costs partially offset by increases

in accounting and consulting costs during the nine months ended September 30, 2023 as compared to the same period in 2022.

Other Income (Expense)

Other income was approximately $25,000 for the

nine months ended September 30, 2023 compared to approximately $2,600 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 nine months ended September 30, 2023.

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

Interest Income

Interest income increased to approximately $0.3

million during the nine months ended September 30, 2023 as compared to approximately $0.1 million for the same period in the prior year.

This increase is due to higher interest rates on invested funds during the nine months ended September 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.

is primarily due to higher interest rates on invested funds during the three months ended March 31, 2024 compared to the same period in

Liquidity and Capital Resources

We incurred a net loss

of approximately $3.0 million for the nine months ended September 30, 2023.

of approximately $1.2 million for the three months ended March 31, 2024.

We had an accumulated deficit of approximately $194.4 million

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

Working capital was

approximately $10.2 million at September 30, 2023, and $12.6 million at December 31, 2022.

During the nine months ended September 30,

2023, our working capital decreased by $2.4 million primarily due to our net loss for the nine months ended September 30, 2023, partially

offset by proceeds from the repayment of the Pharmsynthez Loan.

at March 31, 2024, as compared to an accumulated deficit of approximately $193.2 million at December 31, 2023.

Working capital was approximately

$7.7 million at March 31, 2024 and $8.8 million at December 31, 2023.

During the three months ended March 31, 2024, our working capital

decreased by $1.1 million primarily due to our net loss for the three months ended March 31, 2024.

Our principal source

of liquidity consists of cash.

At September 30, 2023, we had approximately $9.8 million in cash and $1.1 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 March 31, 2024, we had approximately $7.8 million in cash and $0.7 million in current liabilities.

December 31, 2023, we had approximately $9.0 million in cash and $0.8 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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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 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

Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal

Deposit Insurance Corporation (“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 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.

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 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.

Cash Flows from Operating Activities

Cash flows used in operating activities for the

nine months ended September 30, 2023 totaled approximately $3.3 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 Loan.

Cash flows used in operating activities for the nine months ended September 30, 2022 totaled approximately $3.9

million, which was primarily due to our net loss for the period, partially offset by non-cash charges associated with acquired IPR&D

and share-based expense.

In addition, current liabilities decreased during the nine months ended September 30, 2022.

three months ended March 31, 2024 totaled approximately $1.2 million, which was primarily due to our net loss for the period, partially

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

Cash flows used in operating activities for the 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 from Investing Activities

Cash flows used in investing activities for the

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

no cash flows from investing activities for the nine months ended September 30, 2023.

There were no cash flows from investing activities

for the three months ended March 31, 2024 and 2023.

Cash Flow from Financing Activities

There were no cash flows from financing activities

for the nine months ended September 30, 2023 and 2022.

for the three months ended March 31, 2024 and 2023.

Contractual Obligations and Commitments

As of September 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

As of March 31, 2024, 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,

2023, filed with the SEC on March 21, 2024, as amended on April 26, 2024.

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the year ended December 31, 2023, filed with the SEC on March 21, 2024, as amended on April 26, 2024, for a discussion of recent accounting

Critical Accounting Policies and Estimates

Critical Accounting 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