What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-18 compared with 2024-03-21 · 91 added, 253 removed, 160 unchanged (68% of the section changed)

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We are a biopharmaceutical company focused on

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

Our Deoxyribonuclease (“DNase”) platform

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

Our Deoxyribonuclease (“DNase”) technology

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.

which are involved in cancer progression.

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 incorporate our patented and proprietary technologies

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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

ongoing royalties pursuant to a license of our legacy 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, 2024, was on the advancement of our DNase technology.

Critical Accounting Estimates

The preparation of our financial statements in

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differ from these assumptions.

Revenue Recognition

We enter into supply, license and collaboration

arrangements with pharmaceutical and biotechnology partners, some of which include royalty agreements based on potential net sales of

approved commercial pharmaceutical products.

We recognize revenue in accordance with Accounting

Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”).

This standard

applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance,

collaboration arrangements and financial instruments.

Under ASC 606, an entity recognizes revenue when its customer obtains control of

promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods

To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the entity performs

the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize

revenue at a point in time, or over time, as it satisfies a performance obligation.

We only apply the five-step model to contracts when

it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

At contract inception, once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within

each contract, determine those that are performance obligations, and assess whether each promised good or service is distinct.

recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance

obligation is satisfied.

As part of the accounting for these arrangements,

we must use significant judgment to determine:

a) the number of performance obligations based on the determination under step (ii) above;

b) the transaction price under step (iii) above;

and c) the stand-alone selling price for each performance obligation identified in the

contract for the allocation of transaction price in step (iv) above.

We use judgment to determine whether milestones or other variable

consideration should be included in the transaction price as described further below.

The transaction price is allocated to each performance

obligation on a relative stand-alone selling price basis, for which we recognize revenue as or when the performance obligations under

the contract are satisfied.

In developing the stand-alone price for a performance obligation, we consider applicable market conditions

and relevant entity-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated

We validate the stand-alone selling price for performance obligations by evaluating whether changes in the key assumptions used

to determine the stand-alone selling prices will have a significant effect on the allocation of transaction price between multiple performance

We recognize a contract asset or liability for the difference between our performance (i.e., the goods or services transferred

to the customer) and the customer’s performance (i.e., the consideration paid by, and unconditionally due from, the customer).

The terms of our license agreements may include

delivery of an IP license to a collaboration partner.

We may be compensated under license arrangements through a combination of non-refundable

upfront receipts, development and regulatory objective receipts and royalty receipts on future product sales by partners.

We anticipate

recognizing non-refundable upfront license payments and development and regulatory milestone payments received by us in license and collaboration

arrangements that include future obligations, such as supply obligations, ratably over our expected performance period under each respective

We make our best estimate of the period over which we expect to fulfill our performance obligations, which may include technology

transfer assistance, research activities, clinical development activities, and manufacturing activities from development through the commercialization

of the product.

Given the uncertainties of these collaboration arrangements, significant judgment is required to determine the duration

of the performance period.

When we enter into an arrangement to sublicense

some of our patents, we will consider the performance obligations to determine if there is a single element or multiple elements to the

arrangement as we determine the proper method and timing of revenue recognition.

We consider the terms of the license or sublicense for

such elements as price adjustments or refund clauses in addition to any performance obligations for us to provide such as services, patent

defense costs, technology support, marketing or sales assistance or any other elements to the arrangement that could constitute an additional

deliverable to it that could change the timing of the revenue recognition.

Non-refundable upfront license and sublicense fees received,

whereby continued performance or future obligations are considered inconsequential or perfunctory to the relevant licensed technology,

are recognized as revenue upon delivery of the technology.

We expect to recognize royalty revenue in the

period of sale, based on the underlying contract terms, provided that the reported sales are reliably measurable, we have no remaining

performance obligations, and all other revenue recognition criteria are met.

We anticipate reimbursements for research and development

services completed by us related to the collaboration agreements to be recognized in operations as revenue on a gross basis.

and collaboration agreements with certain collaboration partners could also provide for future milestone receipts to us based solely upon

the performance of the respective collaboration partner in consideration of deadline extensions or upon the achievement of specified sales

volumes of approved drugs.

For such receipts, we expect to recognize the receipts as revenue when earned under the applicable contract

terms on a performance basis or ratably over the term of the agreement.

These receipts may also be recognized as revenue when continued

performance or future obligations by us are considered inconsequential or perfunctory.

Research and Development Expenses

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We expense research and development costs as

We expense upfront, non-refundable payments made for research and development services as obligations are incurred.

ascribed to intangible assets acquired but which have not met capitalization criteria is expensed as research and development at the time

of acquisition.

Upfront payments under license agreements are expensed upon receipt of the license.

Milestone payments under license agreements

are accrued, with a corresponding expense being recognized, in the period in which the milestone is determined to be probable of achievement

and the related amount is reasonably estimable.

We expense upfront, non-refundable payments made for research and development services as obligations are incurred, except when

deposits are made for specifically identified services.

The value ascribed to intangible assets acquired but which have not met capitalization

criteria is expensed as research and development at the time of acquisition.

Upfront payments under license agreements are expensed upon

receipt of the license.

Milestone payments under license agreements are accrued, with a corresponding expense being recognized, in the

period in which the milestone is determined to be probable of achievement and the related amount is reasonably estimable.

We are required to estimate accrued research and

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This process involves reviewing open contracts and purchase orders, communicating with

our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated

cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs.

The majority of our service providers

invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met.

However, some require

advanced payments.

We make estimates of accrued expenses as of each balance sheet date in the financial statements based on facts and

circumstances known at that time.

We periodically confirm the accuracy of the estimates with the service providers and make adjustments,

if necessary.

our personnel and consultants to identify services that have been performed on our behalf and estimating the level of service performed

and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs.

of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are

However, some require advanced payments.

We make estimates of accrued expenses as of each balance sheet date in the financial statements

based on facts and circumstances known at that time.

We periodically confirm the accuracy of the estimates with the service providers

and make adjustments, if necessary.

Examples of estimated accrued research and development expenses include fees paid to:

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prior estimates of accrued research and development expenses.

Share-based Expense

Share-based expense includes grants of options

and restricted stock units (“RSUs”) to employees and non-employees to purchase shares of our common stock, Joint Share Ownership

Plan awards to employees and agreements to issue common stock in exchange for services provided by non-employees.

Share-based expense is based on the estimated

fair value of the option or calculated using the Black-Scholes option pricing model.

Determining the appropriate fair value model and

related assumptions requires judgment, including estimating share price volatility and expected terms of the awards.

The expected volatility

rates are estimated based on the historical volatility of the Company.

To the extent Company data is not available for the full expected

term of the awards, we use a weighted average of our historical volatility and of a peer group of comparable publicly traded companies

over the expected term of the option.

The expected term represents the time that options are expected to be outstanding.

We account for

forfeitures as they occur and not at the time of grant.

We have not paid dividends and do not anticipate paying cash dividends in the

foreseeable future and, accordingly, we use an expected dividend yield of zero.

The risk-free interest rate is based on the rate of U.S.

Treasury securities with maturities consistent with the estimated expected term of the awards.

Upon exercise, stock options are redeemed

for newly issued shares of our common stock.

RSUs are redeemed for newly issued shares of our common stock as the vesting and settlement

provisions of the grant are met.

For employee options that vest based solely on

service conditions, the fair value measurement date is generally on the date of grant and the related compensation expense is recognized

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

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

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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fair value of the award and other instrument(s).

Indefinite-lived Intangible Assets

Assets acquired and liabilities assumed in business

combinations, licensing and other transactions are generally recognized at the date of acquisition at their respective fair values.

acquisition, we generally determine the fair value of intangible assets, including in-process research and development (“IPR&D”),

using the “income method.” Acquired IPR&D intangible assets are considered indefinite-lived intangible assets until completion

or abandonment of the associated research and development efforts.

Substantial additional research and development may be required before

the Company’s IPR&D reaches technological feasibility.

Upon completion of the IPR&D project, the IPR&D assets will be

amortized over their estimated useful lives.

Indefinite lived intangibles are not amortized

but are reviewed for impairment at least annually or when events or changes in the business environment indicate it is more likely than

not that the carrying value may be impaired.

Our annual assessment may consist of a qualitative or quantitative analysis to determine

if it is more likely than not that its fair value exceeds the carrying value.

When performing the qualitative method, we determine whether

the existence of events or circumstances leads us to determine that it is more likely than not (that is, a likelihood of more than 50%)

that indefinite lived intangibles are impaired.

If we choose to first assess qualitative factors and it is determined that it is not more

likely than not that intangible assets are impaired, then we are not required to take further action to test for impairment.

the option to bypass the qualitative assessment and perform only the quantitative impairment test, which we may choose to perform in some

periods but not in others.

As the option to perform the qualitative assessment is not a permanent election, we reassess this option during

each annual impairment review.

An impairment loss, if any, is measured as the excess of the carrying value of the intangible asset over

its fair value.

Intangible assets are highly vulnerable to impairment

charges, particularly newly acquired assets for IPR&D.

Considering the high risk nature of research and development and the industry’s

success rate of bringing developmental compounds to market, IPR&D impairment charges are likely to occur in future periods.

the fair value of IPR&D for potential impairment is highly sensitive to changes in projections and assumptions and changes in assumptions

could potentially lead to impairment.

We believe our estimates and assumptions are reasonable

and otherwise consistent with assumptions that market participants would use in their estimates of fair value.

However, if future results

are not consistent with our estimates and assumptions, then we may be exposed to an impairment charge, which could be material.

different estimates and judgments could yield materially different results in our analysis and could result in materially different asset

values or expense.

Impact of the Global Conflicts on Our Operations

Impact of Global Conflicts on Operations

The short and long-term implications of Russia’s

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Other income (expense):

Other income (expense)

Other (expense) income

Interest income, net

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$ (4,134,578 )

$ (2,417,775 )

Revenue for the year ended December 31, 2023 increased

by $0.8 million, or 48.8%, to $2.5 million from approximately $1.7 million for the year ended December 31, 2022.

The increase represents

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

Revenue for the year ended December 31, 2024 was

relatively flat with that of the year ended December 31, 2023.

Research and Development Expense

Overall, R&D expenses for the year ended December

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 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:

31, 2024 decreased by approximately $0.2 million, or 5.9%, to $3.3 million from $3.5 million in the comparable period in 2023 primarily

due to decreased spending in connection with our DNase process development efforts.

During the year ended December 31, 2024, the Company

expensed approximately $0.7 million related to the impairment of long-lived assets associated with our legacy PSA technology.

no similar expense in 2023.

Excluding the $0.7 million impairment charge from total R&D expense of $3.3 million for the year ended

December 31, 2024, adjusted R&D expenses for the year ended December 31, 2024 decreased approximately $0.9 million, or 26.1%, to $2.6

million, from $3.5 million for the year ended December 31, 2023.

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

of expense, for the years ended December 31, 2024 and 2023:

Year ended December 31,

Category of Expense

IPR&D expense

Impairment of long-lived assets

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 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.

The decrease in outside

services and contract research organizations expense was primarily due to the aforementioned decreased spending in connection with our

process development efforts, partially offset by increased third-party pre-clinical development efforts related to our DNase technology.

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 Expense

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ended December 31, 2024 was $3.4 million, decreasing by approximately $0.1 million, or 4.1%, compared to the same period in the prior

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 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

The decrease was primarily due to a reduction in legal and accounting costs during the year ended December 31, 2024 compared to

the prior year.

These decreases were substantially offset by 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.

Other (Expense) Income

Other expense was approximately $6,000 for the

year ended December 31, 2024 compared to other income of approximately $25,400 for the same period in 2023.

This decrease 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.

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

Interest Income, net

Interest income, net increased to approximately

$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.

Interest income, net decreased to approximately

$250,000 during the year ended December 31, 2024 as compared to approximately $356,000 in the prior year.

This decrease is primarily due

to lower average invested funds during the year ended December 31, 2024 compared to the prior year, as well as a decrease in interest

income received 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.

we exclude the impact of certain non-cash expenses from R&D expenses, 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.

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Working capital was approximately

$8.8 million at December 31, 2023, and $12.6 million at December 31, 2022, respectively.

During the year ended December 31, 2023, our

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.

$5.7 million at December 31, 2024, and approximately $8.8 million at December 31, 2023, respectively.

During the year ended December 31,

2024, our working capital decreased by approximately $3.1 million primarily due to our net loss for the year ended December 31, 2024.

Our principal source

of liquidity consists of cash.

At December 31, 2023, we had approximately $9.0 million in cash and $0.8 million in current liabilities.

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

At December 31, 2024, we had approximately $6.2 million in cash and approximately $0.9 million in current

At December 31, 2023, we had approximately $9.0 million in cash and approximately $0.8 million in current liabilities.

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 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

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.

However, we anticipate we will need

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

While 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, 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.

Cash Flows from Operating Activities

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year ended December 31, 2024 totaled approximately $2.8 million, which was primarily due to our net loss for the period, partially offset

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.

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

In addition, prepaid expenses and other decreased approximately $0.2 million,

other assets decreased by approximately $0.7 million due to the impairment of long-lived assets and accounts payable, accrued expenses

and other current liabilities increased approximately $0.1 million during the year ended December 31, 2024 compared to the prior year.

Cash flows used in operating activities for the 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 share-based expense and, to a lesser extent, a decrease

in accounts payable, accrued expenses and other current liabilities.

Cash Flows from Investing Activities

There were no cash flows from investing activities

for the year ended December 31, 2023.

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.

for each of the years ended December 31, 2024 and 2023.

Cash Flows from Financing Activities

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future payment.

Our contractual obligations result from property leases for office space.

Our contractual obligations result from a property lease for office space.

Although we do have obligations for CMO and

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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-K

Item 7. Management’s Discussion and Analysis