Xenetic Biosciences Inc

Previous wording

We incorporate our patented and proprietary technologies into drug candidates currently under development with biotechnology and pharmaceutical industry collaborators to create what we believe will be the next-generation biologic drugs with improved pharmacological properties over existing therapeutics. Our drug candidates have resulted from our research activities or that of our collaborators and are in the development stage. 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. by the Food and Drug Administration nor in any other countries or territories by any applicable agencies. 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 three months ended March 31, 2024, was on the advancement of our DNase technology.

Current wording

We incorporate our patented and proprietary technologies into drug candidates currently under development with biotechnology and pharmaceutical industry collaborators to create what we believe will be the next-generation biologic drugs with improved pharmacological properties over existing therapeutics. Our drug candidates have resulted from our research activities or that of our collaborators and are in the development stage. 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. by the Food and Drug Administration nor in any other countries or territories by any applicable agencies. 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 three and six months ended June 30, 2024, was on the advancement of our DNase technology.

Previous wording

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 Co. Ltd. as compared to the same period in 2023.

Current wording

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

Previous wording

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.

Current wording

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.

Previous wording

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 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.

Current wording

General and administrative expenses for the three 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 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.

Previous wording

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.

Current wording

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.

Previous wording

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 2023.

Current wording

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. This 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.

Previous wording

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:

Current wording

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:

Previous wording

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. 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.

Current wording

We incurred a net loss 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 $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.

Previous wording

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. At 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.

Current wording

Our principal source of liquidity consists of cash. 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.

Previous wording

We evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued. We have incurred substantial losses since our inception, and we expect to continue to incur operating losses in the near-term. These factors raise substantial doubt about our ability to continue as a going concern. 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. 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.

Current wording

We evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued. We have incurred substantial losses since our inception, and we expect to continue to incur operating losses in the near-term. 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. However, 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.

Previous wording

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.

Current wording

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 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.

Previous wording

There were no cash flows from investing activities for the three months ended March 31, 2024 and 2023.

Current wording

There were no cash flows from investing activities for the six months ended June 30, 2024 and 2023.

Previous wording

There were no cash flows from financing activities for the three months ended March 31, 2024 and 2023.

Current wording

There were no cash flows from financing activities for the six months ended June 30, 2024 and 2023.