What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-12 · 119 added, 68 removed, 218 unchanged (46% 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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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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We are a biopharmaceutical company focused on

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

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

Our proprietary DNase technology is designed

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

the three months ended March 31, 2026, was on the advancement of our DNase technology.

the six months ended June 30, 2026, was on the advancement of our DNase technology.

Recent Developments

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a “reverse merger”.

An independent committee of the Board has engaged in discussions with third parties regarding

potential transactions.

Any such completed transaction could have a significant impact on our stockholders, including if the transaction

would result in the current investors of the counterparty holding a substantial majority of our outstanding common stock following consummation

of the potential transaction.

Given the current stage of such discussions, at this time there is no way to quantify the potential

impact of a transaction, if any.

There is no deadline or definitive timetable set for the completion of the strategic alternatives process,

and there can be no assurance any proposal will be made or accepted, any agreement will be executed, or any transaction will be consummated

An independent committee of the Board has engaged in discussions with third parties regarding potential

transactions.

Any such completed transaction could have a significant impact on our stockholders, including if the transaction would result

in the current investors of the counterparty holding a substantial majority of our outstanding common stock following consummation of

the potential transaction.

Given the current stage of such discussions, at this time there is no way to quantify the potential impact

of a transaction, if any.

There is no deadline or definitive timetable set for the completion of the strategic alternatives process, and

there can be no assurance any proposal will be made or accepted, any agreement will be executed, or any transaction will be consummated

in connection with this review.

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RESULTS OF OPERATIONS

Comparison of Quarter Ended March 31, 2026

Comparison of Quarter Ended June 30, 2026

The comparison of our historical results of operations

for the fiscal quarter ended March 31, 2026 to the fiscal quarter ended March 31, 2025 is as follows:

for the fiscal quarter ended June 30, 2026 to the fiscal quarter ended June 30, 2025 is as follows:

Quarter Ended

March 31, 2026

June 30, 2026

Quarter Ended

March 31, 2025

June 30, 2025

Royalty revenue

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Loss from operations

Other (expense) income:

Other income (expense):

Other (expense) income

Interest income, net

Revenue for the three months ended March 31, 2026

Revenue for the three months ended June 30, 2026

increased by approximately $0.1 million, or 12.0%, to approximately $0.7 million from approximately $0.6 million for the three months

ended March 31, 2025.

ended June 30, 2025.

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

as compared to the same period in 2025 primarily due to royalties recognized from certain countries during the first quarter

as compared to the same period in 2025 primarily due to royalties recognized from certain countries during the second quarter

of 2026 compared to the same period in 2025.

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Research & development (“R&D”)

expenses for the three months ended March 31, 2026 decreased by approximately $0.2 million, or 24.8%, to approximately $0.7 million from

approximately $0.9 million in the comparable quarter in 2025.

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

category of expense for the quarters ended March 31, 2026 and 2025:

expenses for the three months ended June 30, 2026 decreased by approximately $0.1 million, or 15.9%, to approximately $0.6 million from

$0.7 million in the comparable quarter in 2025.

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

for the quarters ended June 30, 2026 and 2025:

Quarter Ended,

Category of Expense

March 31, 2026

March 31, 2025

June 30, 2026

June 30, 2025

Outside services and contract research organizations

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The decrease in outside

services and contract research organizations expense was primarily due to a decrease in pre-clinical and exploratory study costs both

partially offset by an increase in manufacturing development efforts during the three months ended March 31, 2026 compared to the same

period in 2025.

services and contract research organizations expense was primarily due to a decrease in manufacturing development efforts and, to a lesser

extent, a decrease in consulting costs during the three months ended June 30, 2026 compared to the same period in 2025.

General and Administrative Expenses

General and administrative expenses for the three

months ended March 31, 2026 decreased by approximately $9,000, or 1.4%, to approximately $648,000 from approximately $657,000 in the comparable

quarter in 2025.

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

Executive Officer substantially offset by an increase in legal expense related to our strategic review process during the first quarter

of 2026 compared to the same period in 2025.

months ended June 30, 2026 increased by approximately $0.4 million, or 64.2%, to approximately $1.1 million from approximately $0.7 million

in the comparable quarter in 2025.

The increase was primarily due to an increase in legal expense related to our strategic review process

during the second quarter of 2026 compared to the same period in 2025.

Other (Expense) Income

Other expense was approximately $21 for the three

months ended March 31, 2026 compared to approximately $78 of other income for the comparable quarter in 2025.

This increase in other expense

was primarily related to unfavorable changes in foreign currency exchange rates during the three months ended March 31, 2026 as compared

to the same period in 2025.

Other expense was $72 for the three months ended

June 30, 2026 compared to $1,477 of other income for the comparable quarter in 2025.

This increase in other expense was primarily related

to unfavorable changes in foreign currency exchange rates during the three months ended June 30, 2026 as compared to the same period in

Interest Income, net

Interest income, net increased to approximately

$46,000 during the three months ended March 31, 2026 as compared to approximately $39,000 for the same period in the prior year.

increase is primarily due to higher average invested funds during the three months ended March 31, 2026 as compared to the same period

$42,000 during the three months ended June 30, 2026 as compared to approximately $34,000 for the same period in the prior year.

is primarily due to higher average invested funds during the three months ended June 30, 2026 as compared to the same period in 2025.

Comparison of Six Months Ended June 30,

2026 and 2025

The comparison of our historical results of operations

for the six months ended June 30, 2026 to the six months ended June 30, 2025 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):

Other (expense) income

Interest income, net

$ (1,386,077 )

$ (1,591,844 )

Revenue for the six months ended June 30, 2026

increased by approximately $0.3 million, or 24.0%, to approximately $1.5 million from approximately $1.2 million for the six months ended

June 30, 2025.

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

as compared to the same period in 2025 primarily due to royalties recognized from certain countries during the six months ended

June 30, 2026 compared to the same period in 2025.

Research and Development Expenses

R&D expenses for the six months ended June

30, 2026 decreased by approximately $0.3 million, or 21.0%, to approximately $1.2 million from approximately $1.5 million in the comparable

period in 2025.

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

30, 2026 and 2025:

Six Months Ended,

Category of Expense

June 30, 2026

June 30, 2025

Outside services and contract research organizations

Total research and development expense

The decrease in outside

services and contract research organizations expense was primarily due to a decrease in spending in connection with our Israeli exploratory

studies and, to a lesser extent, decreases in pre-clinical development efforts and consulting costs during the six months ended June 30,

2026 compared to the same period in 2025.

General and Administrative Expenses

General and administrative expenses for the six

months ended June 30, 2026 increased by approximately $0.4 million, or 31.5%, to approximately $1.7 million from approximately $1.3 million

in the comparable period in 2025.

The increase was primarily due to an increase in legal expense related to our strategic review process

during the six months ended June 30, 2026 compared to the same period in 2025.

Other (Expense) Income

Other expense was $93 for the six months ended

June 30, 2026 compared to approximately $1,555 of other income for the comparable period in 2025.

This increase in other expense was primarily

related to unfavorable changes in foreign currency exchange rates during the six months ended June 30, 2026 as compared to the same period

Interest Income

Interest income, net increased to approximately

$88,000 during the six months ended June 30, 2026 as compared to approximately $73,000 for the same period in the prior year.

This increase

is primarily due to higher average invested funds during the six months ended June 30, 2026 as compared to the same period in 2025.

Liquidity and Capital Resources

We incurred a net loss

of approximately $456,000 for the three months ended March 31, 2026.

of approximately $1.4 million for the six months ended June 30, 2026.

We had an accumulated deficit of approximately $201.3 million at

March 31, 2026, as compared to an accumulated deficit of approximately $199.9 million at December 31, 2025.

June 30, 2026, as compared to an accumulated deficit of approximately $199.9 million at December 31, 2025.

Working capital was approximately

$6.6 million at March 31, 2026, and approximately $7.1 million at December 31, 2025, respectively.

During the three months ended March

31, 2026, our working capital decreased by approximately $445,000 primarily due to our net loss for the three months ended March 31, 2026.

$5.8 million at June 30, 2026, and approximately $7.1 million at December 31, 2025.

During the six months ended June 30, 2026, our working

capital decreased by approximately $1.3 million primarily due to our net loss for the six months ended June 30, 2026.

Our principal source

of liquidity consists of cash.

At March 31, 2026, we had approximately $7.3 million in cash and $1.0 million in current liabilities.

December 31, 2025, we had approximately $7.9 million in cash and $1.0 million in current liabilities.

At June 30, 2026, we had approximately $6.5 million in cash and approximately $0.9 million in current liabilities.

At December 31, 2025, we had approximately $7.9 million in cash and $1.0 million in current liabilities.

We have historically relied upon

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Cash flows used in operating activities for the

three months ended March 31, 2026 totaled approximately $0.5 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 liabilities.

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 liabilities due to payments made in accordance

with severance arrangements.

six months ended June 30, 2026 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.

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

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 from Investing Activities

There were no cash flows from investing activities

for the three months ended March 31, 2026 and 2025.

Cash Flows from Financing Activities

for the six months ended June 30, 2026 and 2025.

Cash Flow from Financing Activities

There were no cash flows from financing activities

for the three months ended March 31, 2026 and 2025.

for the six months ended June 30, 2026 and 2025.

Contractual Obligations and Commitments

As of March 31, 2026, there were no material changes

As of June 30, 2026, 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