Xenetic Biosciences Inc

Previous wording

This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended. All statements contained in this Quarterly Report other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, future revenues, projected costs, prospects and our objectives for future operations, are forward-looking statements. These forward-looking statements include, but 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 U.S. and other countries in response; our plans to develop our proposed drug candidates; our expectations regarding the nature, timing and extent of clinical trials and proposed clinical trials; our expectations regarding the timing for proposed submissions of regulatory filings; our expectations regarding the nature, timing and extent of collaboration arrangements; the expected results pursuant to collaboration arrangements, including the receipts of future payments that may arise pursuant to collaboration arrangements; the outcome of our plans to obtain regulatory approval of our drug candidates; the outcome of our plans for the commercialization of our drug candidates; our plans to address certain markets, engage third party manufacturers, and evaluate additional drug candidates for subsequent commercial development along with the likelihood and extent of competition to our drug candidates; our plans to advance innovative immune-oncology technologies addressing hard to treat oncology indications; expectations regarding our Deoxyribonuclease (“DNase”) platform, such as regarding the DNase platform being in development for the treatment of solid tumors and being aimed at improving outcomes of existing treatments, including immunotherapies, by targeting neutrophil extracellular traps (“NETs”); our expectations to focus our efforts and resources on advancing the DNase platform into the clinic as an adjunctive therapy for pancreatic carcinoma and locally advanced or metastatic solid tumors; and our expectations regarding our PolyXen® platform, including concerning our plans to leverage the platform.

Current wording

This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended. All statements contained in this Quarterly Report other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, future revenues, projected costs, prospects and our objectives for future operations, are forward-looking statements. These forward-looking statements include, but 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 U.S. and other countries in response; our plans to develop our proposed drug candidates; our expectations regarding the nature, timing and extent of collaboration arrangements; the expected results pursuant to collaboration arrangements, including the receipts of royalty and other future payments that may arise pursuant to collaboration arrangements; the outcome of our plans to obtain regulatory approval of our drug candidates; the outcome of our plans for the commercialization of our drug candidates; our plans to advance innovative immune-oncology technologies addressing hard to treat oncology indications; expectations regarding our Deoxyribonuclease (“DNase”) platform, such as regarding the DNase platform being in development for the treatment of solid tumors and being aimed at improving outcomes of existing treatments, including immunotherapies, by targeting neutrophil extracellular traps (“NETs”); our expectations to focus our efforts and resources on advancing the DNase platform into the clinic as an adjunctive therapy for pancreatic carcinoma and locally advanced or metastatic solid tumors; and our expectations regarding our PolyXen® platform and any partnerships with respect thereto.

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

Previous wording

The short and long-term implications of Russia’s invasion of Ukraine and conflict in the Middle East are difficult to predict at this time. The imposition of current and future sanctions and counter sanctions may have an adverse effect on the economic markets generally and could impact our business, financial condition, and results of operations.

Current wording

The short and long-term implications of conflicts in the Ukraine and the Middle East are difficult to predict at this time. The imposition of current and future sanctions and counter sanctions may have an adverse effect on the economic markets generally and could impact our business, financial condition, and results of operations.

Previous wording

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 2023:

Current wording

Research & development (“R&D”) expenses for the three months ended September 30, 2024 decreased by approximately $0.7 million, or 63.9%, to approximately $0.4 million from approximately $1.0 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 September 30, 2024 and 2023:

Previous 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.

Current wording

The decrease in outside services and contract research organizations expense was primarily due to decreased spending in connection with our process development efforts related to our DNase platform. The decrease in personnel costs during the three months ended September 30, 2024 as compared to the three months ending September 30, 2023 is due to the departure of our former Chief Scientific Officer during the second quarter of 2024.

Previous 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.

Current wording

Other income was approximately $1,500 for the three months ended September 30, 2024 compared to approximately $700 of other expense for the comparable quarter in 2023. This increase in other income was primarily related to favorable changes in foreign currency exchange rates during the three months ended September 30, 2024 as compared to the same period in 2023.

Previous 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.

Current wording

Interest income, net decreased to approximately $61,000 during the three months ended September 30, 2024 from approximately $92,000 for the same period in the prior year. This decrease was primarily due to lower average invested funds during the three months ended September 30, 2024 compared to the same period in 2023.

Previous wording

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:

Current wording

The comparison of our historical results of operations for the nine months ended September 30, 2024 to the nine months ended September 30, 2023 is as follows:

Previous 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:

Current wording

R&D expenses for the nine months ended September 30, 2024 decreased by approximately $0.3 million, or 10.8%, to approximately $2.2 million from approximately $2.5 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 nine months ended September 30, 2024 and 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 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.

Current wording

The decrease in outside services and contract research organizations expense was primarily due to decreased spending in connection with our process development efforts, partially offset by increased pre-clinical 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 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.

Current wording

General and administrative expenses for the nine months ended September 30, 2024 increased by approximately $0.1 million, or 3.9%, to approximately $2.7 million from approximately $2.6 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 fees during the nine months ended September 30, 2024 compared to the same period in 2023.

Previous wording

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.

Current wording

Other income was approximately $1,500 for the nine months ended September 30, 2024 compared to approximately $25,000 of other income for the nine months ended September 30, 2023. This decrease in other income was primarily related to fees associated with the Pharmsynthez Loan recognized during the nine months ended September 30, 2023 for which there was no similar fees received in the same period in 2024.

Previous wording

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.

Current wording

Interest income decreased to approximately $198,000 during the nine months ended September 30, 2024 as compared to approximately $272,000 for the same period in the prior year. This decrease was primarily due to lower average invested funds during the nine months ended September 30, 2024 compared to the same period in 2023, as well as a decrease in interest income received on the Pharmsynthez Loan.

Previous 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.

Current wording

We incurred a net loss of approximately $2.9 million for the nine months ended September 30, 2024. We had an accumulated deficit of approximately $196.1 million at September 30, 2024, as compared to an accumulated deficit of approximately $193.2 million at December 31, 2023. Working capital was approximately $6.0 million at September 30, 2024, and approximately $8.8 million at December 31, 2023. During the nine months ended September 30, 2024, our working capital decreased by approximately $2.8 million primarily due to our net loss for the nine months ended September 30, 2024.

Previous 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.

Current wording

Our principal source of liquidity consists of cash. At September 30, 2024, we had approximately $6.8 million in cash and approximately $1.0 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

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.

Current wording

Cash flows used in operating activities for the nine months ended September 30, 2024 totaled approximately $2.1 million, which was primarily due to our net loss for the period, partially offset by non-cash charges associated with share-based expense. In addition, prepaid expenses and other decreased approximately $0.4 million and current liabilities increased approximately $0.2 million during the period. Cash flows used in operating activities for the nine months ended September 30, 2023 totaled approximately $3.3 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.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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