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Item 2. Management’s Discussion and Analysis

2024-08-13 compared with 2024-05-09 · 135 added, 77 removed, 186 unchanged (53% 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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platform, including concerning our plans to leverage the platform.

In some cases, these statements may be identified

by terminology such as “may,” “will,” “would,” “could,” “should,” “expect,”

“plan,” “anticipate,” “believe,” “estimate,” “seek,” “approximately,”

“intend,” “predict,” “potential,” “projects,” or “continue,” or the negative

of such terms and other comparable terminology.

Although we believe that the expectations reflected in the forward-looking statements

contained herein are reasonable, we cannot guarantee future results, the levels of activity, performance or achievements.

These statements

involve known and unknown risks and uncertainties that may cause our or our industry's results, levels of activity, performance or achievements

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

In some cases, these statements

may be identified by terminology such as “may,” “will,” “would,” “could,” “should,”

“expect,” “plan,” “anticipate,” “believe,” “estimate,” “seek,”

“approximately,” “intend,” “predict,” “potential,” “projects,” or “continue,”

or the negative of such terms and other comparable terminology.

Although we believe that the expectations reflected in the forward-looking

statements contained herein are reasonable, we cannot guarantee future results, the levels of activity, performance or achievements.

statements involve known and unknown risks and uncertainties that may cause our or our industry's results, levels of activity, performance

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

The Management’s Discussion and Analysis

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

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

and six months ended June 30, 2024, was on the advancement of our DNase technology.

Impact of the Global Conflicts on Our Operations

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RESULTS OF OPERATIONS

Comparison of Quarter Ended March 31, 2024

Comparison of Quarter Ended June 30, 2024

The comparison of our historical results of operations

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

for the fiscal quarter ended June 30, 2024 to the fiscal quarter ended June 30, 2023 is as follows:

Quarter Ended

March 31, 2024

June 30, 2024

Quarter Ended

March 31, 2023

June 30, 2023

Royalty revenue

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Loss from operations

Other income:

Other income (expense):

Other (expense) income

Interest income, net

$ (1,273,970 )

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.

$ (1,050,963 )

Revenue for the three months ended June 30, 2024

increased by approximately $0.1 million, or 11.6%, to approximately $0.7 million from approximately $0.7 million for the three months

ended June 30, 2023.

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

(“Takeda”) as compared to the same period in 2023.

Research and Development Expenses

Research & development (“R&D”)

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:

Research & development

(“R&D”) expenses for the three months ended June 30, 2024 was relatively flat with 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 June 30, 2024 and

Quarter Ended,

Category of Expense

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

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 related to our DNase platform.

The decrease in outside

services and contract research organizations expense was primarily due to decreased spending in connection with our pre-clinical and process

development efforts related to our DNase platform.

The increase in personnel costs is due to certain severance and benefits expensed in

connection with a separation agreement entered into during the second quarter of 2024 with our former Chief Scientific Officer.

General and Administrative Expenses

General and administrative expenses for the three

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

months ended June 30, 2024 increased by approximately $0.2 million, or 19.5%, to approximately $1.1 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

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.

The increase was primarily due to certain severance and benefits expensed in connection with a separation

agreement entered into during the second quarter of 2024 with our former Chief Executive Officer.

This increase was partially offset by

general decreases in accounting and legal fees during the three months ended June 30, 2024 compared to the same period in 2023.

Other (Expense) Income

Other expense was $21 for the three months ended

June 30, 2024 compared to approximately $21,000 of other income for the comparable quarter in 2023.

This decrease in other income was

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

There were no

similar fees received in the same period in 2024.

Interest Income

Interest income increased to approximately $73,000

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

Interest income, net decreased to approximately

$63,000 during the three months ended June 30, 2024 as compared to approximately $126,000 for the same period in the prior year.

decrease was primarily due to lower average invested funds during the three months ended June 30, 2024 compared to the same period in

2023 as well as a decrease in interest income on the Pharmsynthez Loan.

Comparison of Six Months Ended June 30,

2024 and 2023

The comparison of our historical results of operations

for the six months ended June 30, 2024 to the six months ended June 30, 2023 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):

Interest income, net

$ (2,469,083 )

$ (1,907,517 )

Revenue for the six months ended June 30, 2024

was relatively flat with the six months ended June 30, 2023.

Research and Development Expenses

R&D expenses for the six months ended June

30, 2024 increased by approximately $0.4 million, or 25.3%, to approximately $1.9 million from approximately $1.5 million in the comparable

period in 2023.

The table below sets forth the R&D costs incurred by the Company by category of expense for the six months ended June

30, 2024 and 2023:

Six Months Ended,

Category of Expense

June 30, 2024

June 30, 2023

Outside services and contract research organizations

Personnel costs

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 offset by lower process development

efforts related to our DNase platform.

The increase in personnel costs is due to certain severance and benefits expensed in connection

with a separation agreement entered into during the second quarter of 2024 with our former Chief Scientific Officer.

General and Administrative Expenses

General and administrative expenses for the six

months ended June 30, 2024 increased by approximately $0.1 million, or 5.0%, to approximately $2.0 million from approximately $1.9 million

in the comparable period in 2023.

The increase was primarily due to certain severance and benefits expensed in connection with a separation

agreement entered into during the second quarter of 2024 with our former Chief Executive Officer.

This increase was partially offset by

general decreases in accounting and legal fees during the six months ended June 30, 2024 compared to the same period in 2023.

Other income was $31 for the six months ended

June 30, 2024 compared to approximately $26,000 of other income for the six months ended June 30, 2023.

This decrease in other income

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

were no similar fees received in the same period in 2024.

Interest Income

Interest income decreased to approximately $137,000

during the six months ended June 30, 2024 as compared to approximately $180,000 for the same period in the prior year.

This decrease was

primarily due to lower average invested funds during the six months ended June 30, 2024 compared to the same period in 2023 as well as

a decrease in interest income received on the Pharmsynthez Loan.

Liquidity and Capital Resources

We incurred a net loss

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

We had an accumulated deficit of approximately $194.4 million

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

of approximately $2.5 million for the six months ended June 30, 2024.

We had an accumulated deficit of approximately $195.7 million at

June 30, 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.

$6.4 million at June 30, 2024, and approximately $8.8 million at December 31, 2023.

During the six months ended June 30, 2024, our working

capital decreased by approximately $2.3 million primarily due to our net loss for the six months ended June 30, 2024.

Our principal source

of liquidity consists of cash.

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.

At June 30, 2024, we had approximately $7.3 million in cash and approximately $1.6 million in current liabilities.

At December 31, 2023, we had approximately $9.0 million in cash and approximately $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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to continue to incur operating losses in the near-term.

These factors raise substantial doubt about our ability to continue as a going

We believe that we have access to capital resources through possible public or private equity offerings, debt financings, corporate

collaborations, related party funding, or other means to continue as a going concern.

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 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.

The Company believes that its existing resources will be adequate to fund the

Company’s operations for a period of at least twelve months from the date of the issuance of these financial statements.

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

While the Company believes it has access

to capital resources through possible public or private equity offerings, debt financings, corporate collaborations, related party funding,

or other means to continue as a going concern, 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

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.

six months ended June 30, 2024 totaled approximately $1.7 million, which was primarily due to our net loss for the period, partially offset

by non-cash charges associated with share-based expense and an increase in current liabilities during the period.

Cash flows used in operating

activities for the 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 Loan.

In addition, current liabilities decreased during the six months ended June 30, 2023.

Cash Flows from Investing Activities

There were no cash flows from investing activities

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

for the six months ended June 30, 2024 and 2023.

Cash Flow from Financing Activities

There were no cash flows from financing activities

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

for the six months ended June 30, 2024 and 2023.

Contractual Obligations and Commitments

As of March 31, 2024, there were no material changes

As of June 30, 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,

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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