Xenetic Biosciences, Inc.

Previous wording

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 United States (“U.S.”) and other countries in response; our plans to develop our proposed drug candidates; the uncertainty surrounding government actions, as well as any changes to existing or newly proposed legislation that may affect the healthcare regulatory space; 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 difficult to treat oncology indications; expectations regarding our Deoxyribonuclease (“DNase”) technology, such as regarding the DNase technology 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 technology 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.

Current wording

These forward-looking statements include, but are not limited to, statements concerning: 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 our proposed drug candidates; the uncertainty surrounding government actions, as well as any changes to existing or newly proposed legislation that may affect the healthcare regulatory space; 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 difficult to treat oncology indications; expectations regarding our Deoxyribonuclease (“DNase”) technology, such as regarding the DNase technology 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 technology 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

“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.

Current wording

In some cases, these statements may be identified by terminology such as “may,” “will,” “would,” “could,” “should,” “expect,” “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.

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 continue to commit 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 legacy 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, 2025, 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 continue to commit 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 legacy PolyXen technology to an industry partner. Although we hold a broad patent portfolio, the focus of our internal efforts during the six months ended June 30, 2025, was on the advancement of our DNase technology.

Previous wording

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. Ltd. There was no similar impact on revenue during the three months ended March 31, 2025.

Current wording

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

Previous wording

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 $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:

Current wording

Research & development (“R&D”) 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 June 30, 2025 and 2024:

Previous wording

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.

Current wording

The decrease in personnel 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.

Previous wording

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 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.

Current wording

General and administrative expenses for the three 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 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.

Previous wording

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.

Current wording

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 in 2024.

Previous wording

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. This decrease is primarily due to lower average invested funds during the three months ended March 31, 2025 as compared to the same period in 2024.

Current wording

Interest income, net decreased to approximately $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.

Previous wording

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. 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.

Current wording

We incurred a net loss 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 $4.5 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.

Previous wording

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

Current wording

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. 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.

Previous wording

There were no cash flows from investing activities for the three months ended March 31, 2025 and 2024.

Current wording

There were no cash flows from investing activities for the six months ended June 30, 2025 and 2024.

Previous wording

There were no cash flows from financing activities for the three months ended March 31, 2025 and 2024.

Current wording

There were no cash flows from financing activities for the six months ended June 30, 2025 and 2024.

Previous wording

As of March 31, 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.

Current wording

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 and May 13, 2025.

Previous wording

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 standards.

Current wording

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 and May 13, 2025, for a discussion of recent accounting standards.

Previous wording

Our condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. The preparation of our condensed consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of expenses that are not readily apparent from other sources. Because future events and their effects cannot be determined with certainty, actual results and outcomes may differ materially from our estimates, judgments and assumptions. There have been no material changes in our critical accounting estimates 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.

Current wording

Our condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. The preparation of our condensed consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of expenses that are not readily apparent from other sources. Because future events and their effects cannot be determined with certainty, actual results and outcomes may differ materially from our estimates, judgments and assumptions. There have been no material changes in our critical accounting estimates 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 and May 13, 2025.