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Item 2. Management’s Discussion and Analysis

2025-08-12 compared with 2025-05-13 · 125 added, 68 removed, 191 unchanged (50% 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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are not limited to, statements concerning:

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

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

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

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

our plans to develop

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

“anticipate,” “believe,”

“estimate,” “seek,” “approximately,” “intend,” “predict,” “potential,”

“projects,” “upcoming”, “opportunity”, “target” 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.

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

“intend,” “predict,” “potential,” “projects,” “upcoming”, “opportunity”,

“target” 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.

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, 2025, was on the advancement of our DNase technology.

the six months ended June 30, 2025, was on the advancement of our DNase technology.

Impact of the Global Events and Conflicts on

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RESULTS OF OPERATIONS

Comparison of Quarter Ended March 31, 2025

Comparison of Quarter Ended June 30, 2025

The comparison of our historical results of operations

for the fiscal quarter ended March 31, 2025 to the fiscal quarter ended March 31, 2024 is as follows:

for the fiscal quarter ended June 30, 2025 to the fiscal quarter ended June 30, 2024 is as follows:

Quarter Ended

March 31, 2025

June 30, 2025

Quarter Ended

March 31, 2024

June 30, 2024

Royalty revenue

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Loss from operations

Other income:

Other income (expense):

Other income (expense)

Interest income, net

$ (1,273,970 )

Revenue for the three months ended March 31, 2025

increased by approximately $0.1 million, or 16.1%, to approximately $0.6 million from approximately $0.5 million for the three months

ended March 31, 2024.

Royalty revenue for the three months ended March 31, 2024 was negatively impacted by the timing of rebates related

to our sublicense agreement with Takeda Pharmaceutical Co.

There was no similar impact on revenue during the three months ended

March 31, 2025.

Revenue for the three months ended June 30, 2025

decreased by approximately $0.1 million, or 18.8%, to approximately $0.6 million from approximately $0.7 million for the three months

ended June 30, 2024.

This decrease represented a decrease in royalty revenue related to our sublicense agreement with Takeda Pharmaceuticals

(“Takeda”) as compared to the same period in 2024 due to the timing of rebates.

Research and Development Expenses

Research & development (“R&D”)

expenses for the three months ended March 31, 2025 decreased by approximately $65,000, or 6.9%, to approximately $0.9 million from approximately

expenses for the three months ended June 30, 2025 decreased by approximately $277,000, or 29.7%, to approximately $0.7 million from $0.9

million in the comparable quarter in 2024.

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

for the quarters ended March 31, 2025 and 2024:

for the quarters ended June 30, 2025 and 2024:

Quarter Ended,

Category of Expense

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

Outside services and contract research organizations

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The decrease in personnel

costs and share-based expense during the first quarter of 2025 was related to the departure of our former Chief Scientific Officer during

the second quarter of 2024.

The increase in outside services and contract research organizations expense was primarily due to increased

consulting costs and spending in connection with the commencement of exploratory studies during the three months ended March 31, 2025.

costs during the second quarter of 2025 was related 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.

The increase in outside services and contract

research organizations expense was primarily due to increased consulting costs and spending in connection with the commencement of exploratory

studies during the three months ended June 30, 2025.

General and Administrative Expenses

General and administrative expenses for the three

months ended March 31, 2025 decreased by approximately $178,000, or 21.4%, to approximately $0.7 million from approximately $0.8 million

months ended June 30, 2025 decreased by approximately $472.000, or 41.8%, to approximately $0.7 million from approximately $1.1 million

in the comparable quarter in 2024.

The decrease was primarily due to a decrease in personnel costs and share-based expense related to

the departure our former Chief Executive Officer during the second quarter of 2024.

Other income was approximately $78 for the three

months ended March 31, 2025 compared to approximately $52 of other income for the comparable quarter in 2024.

This increase in other income

was primarily related to favorable changes in foreign currency exchange rates during the three months ended March 31, 2025 as compared

to the same period in 2024.

The decrease 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.

Other Income (Expense)

Other income was $1,477 for the three months ended

June 30, 2025 compared to approximately $21 of other expense for the comparable quarter in 2024.

This increase in other income was primarily

related to favorable changes in foreign currency exchange rates during the three months ended June 30, 2025 as compared to the same period

Interest Income, net

Interest income, net decreased to approximately

$39,000 during the three months ended March 31, 2025 as compared to approximately $73,000 for the same period in the prior year.

decrease is primarily due to lower average invested funds during the three months ended March 31, 2025 as compared to the same period

$34,000 during the three months ended June 30, 2025 as compared to approximately $63,000 for the same period in the prior year.

This decrease

is primarily due to lower average invested funds during the three months ended June 30, 2025 as compared to the same period in 2024.

Comparison of Six Months Ended June 30,

2025 and 2024

The comparison of our historical results of operations

for the six months ended June 30, 2025 to the six months ended June 30, 2024 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

$ (1,591,844 )

$ (2,469,083 )

Revenue for the six months ended June 30, 2025

decreased by approximately $54,000, or 4.4%, to approximately $1.2 million from approximately $1.2 million for the six months ended June

This decrease represented a decrease in royalty revenue related to our sublicense agreement with Takeda as compared to the same

period in 2024 due to the timing of rebates.

Research and Development Expenses

R&D expenses for the six months ended June

30, 2025 decreased by approximately $343,000, or 18.2%, to approximately $1.5 million from approximately $1.9 million in the comparable

period in 2024.

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

30, 2025 and 2024:

Six Months Ended,

Category of Expense

June 30, 2025

June 30, 2024

Outside services and contract research organizations

Personnel costs

Share-based expense

Total research and development expense

The decrease in personnel

costs and share-based expense during the six months ended June 30, 2025 was related 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.

The increase in outside

services and contract research organizations expense was primarily due to increased consulting costs and spending in connection with the

commencement of exploratory studies during the six months ended June 30, 2025.

General and Administrative Expenses

General and administrative expenses for the six

months ended June 30, 2025 decreased by approximately $0.7 million, or 33.1%, to approximately $1.3 million from approximately $2.0 million

in the comparable period in 2024.

The decrease 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.

Other income was $1,555 for the six months ended

June 30, 2025 compared to approximately $31 for the comparable period in 2024.

This increase in other income was primarily related to

favorable changes in foreign currency exchange rates during the six months ended June 30, 2025 as compared to the same period in 2024.

Interest Income

Interest income, net decreased to approximately

$73,000 during the six months ended June 30, 2025 as compared to approximately $137,000 for the same period in the prior year.

This decrease

is primarily due to lower average invested funds during the six months ended June 30, 2025 as compared to the same period in 2024.

Liquidity and Capital Resources

We incurred a net loss

of approximately $0.9 million for the three months ended March 31, 2025.

We had an accumulated deficit of approximately $198.1 million

at March 31, 2025, as compared to an accumulated deficit of approximately $197.2 million at December 31, 2024.

of approximately $1.6 million for the six months ended June 30, 2025.

We had an accumulated deficit of approximately $198.8 million at

June 30, 2025, as compared to an accumulated deficit of approximately $197.2 million at December 31, 2024.

Working capital was approximately

$4.8 million at March 31, 2025 and $5.7 million at December 31, 2024.

During the three months ended March 31, 2025, our working capital

decreased by $0.9 million primarily due to our net loss for the three months ended March 31, 2025.

$4.5 million at June 30, 2025, and approximately $5.7 million at December 31, 2024.

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

capital decreased by approximately $1.2 million primarily due to our net loss for the six months ended June 30, 2025.

Our principal source

of liquidity consists of cash.

At March 31, 2025, we had approximately $5.2 million in cash and $0.7 million in current liabilities.

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

At June 30, 2025, we had approximately $4.8 million in cash and approximately $0.9 million in current liabilities.

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

We have historically relied upon

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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

While we believe 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, and factors related to financial, economic, geo-political, industry and market conditions, many of

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Cash flows used in operating activities for the

three months ended March 31, 2025 totaled approximately $1.0 million, which was primarily due to our net loss for the period and, to a

lesser extent, a decrease in accounts payable, accrued expenses and other current liabilities due to payments made in accordance with

severance arrangements.

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.

six months ended June 30, 2025 totaled approximately $1.4 million, which was primarily due to our net loss for the period, partially offset

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

The decrease in other assets was due to the reclassification of long-term assets

to prepaid expenses and other current assets as of June 30, 2025.

Cash flows used in operating activities for the 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 during the period.

Cash Flows from Investing Activities

There were no cash flows from investing activities

for the three months ended March 31, 2025 and 2024.

Cash Flows from Financing Activities

for the six months ended June 30, 2025 and 2024.

Cash Flow from Financing Activities

There were no cash flows from financing activities

for the three months ended March 31, 2025 and 2024.

for the six months ended June 30, 2025 and 2024.

Contractual Obligations and Commitments

As of March 31, 2025, there were no material changes

As of June 30, 2025, 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,

2024, filed with the SEC on March 18, 2025, as amended on April 29, 2025.

2024, filed with the SEC on March 18, 2025, as amended on April 29, 2025 and May 13, 2025.

Off Balance Sheet Arrangements

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See Note 3 in our Annual Report on Form 10-K for

the year ended December 31, 2024, filed with the SEC on March 18, 2025, as amended on April 29, 2025, for a discussion of recent accounting

the year ended December 31, 2024, filed with the SEC on March 18, 2025, as amended on April 29, 2025 and May 13, 2025, for a discussion

of recent accounting standards.

Critical Accounting Estimates

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those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 18, 2025,

as amended on April 29, 2025.

as amended on April 29, 2025 and May 13, 2025.

ITEM 3 – QUANTITATIVE AND QUALITATIVE

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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