Xenetic Biosciences, Inc.

Previous wording

We are a biopharmaceutical company focused on advancing innovative immune-oncology technologies addressing difficult to treat cancers. Our Deoxyribonuclease (“DNase”) technology is designed to improve outcomes of existing treatments, including immunotherapies, by targeting neutrophil extracellular traps (“NETs”), which are involved in cancer progression. We are currently focused on advancing our systemic DNase program into the clinic as an adjunctive therapy for pancreatic carcinoma and locally advanced or metastatic solid tumors.

Current wording

We are a biopharmaceutical company focused on advancing innovative immuno-oncology technologies addressing difficult to treat cancers. Our proprietary DNase technology is designed to improve outcomes of existing treatments, including immunotherapies, by targeting NETs, which are involved in cancer progression. We are currently focused on advancing our systemic DNase program into the clinic as an adjunctive therapy for pancreatic carcinoma and locally advanced or metastatic solid tumors.

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 United States (“U.S.”) by the Food and Drug Administration (“FDA”) 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 year ended December 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 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 years ended December 31, 2025 and 2024, was on the advancement of our DNase technology.

Previous wording

Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits, facilities expenses, overhead expenses, pre-clinical development, clinical trial and related clinical manufacturing expenses, fees paid to contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”) and other outside expenses. We expense research and development costs as incurred. We expense upfront, non-refundable payments made for research and development services as obligations are incurred, except when deposits are made for specifically identified services. The value ascribed to intangible assets acquired but which have not met capitalization criteria is expensed as research and development at the time of acquisition. Upfront payments under license agreements are expensed upon receipt of the license. Milestone payments under license agreements are accrued, with a corresponding expense being recognized, in the period in which the milestone is determined to be probable of achievement and the related amount is reasonably estimable.

Current wording

Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits, facilities expenses, overhead expenses, pre-clinical development, clinical trial and related clinical manufacturing expenses, fees paid to contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”) and other outside expenses. We expense research and development costs as incurred. We expense upfront, non-refundable payments made for research and development services as obligations are incurred, except when deposits are made for specifically identified future services. The value ascribed to intangible assets acquired but which have not met capitalization criteria is expensed as research and development at the time of acquisition. Upfront payments under license agreements are expensed upon receipt of the license. Milestone payments under license agreements are accrued, with a corresponding expense being recognized, in the period in which the milestone is determined to be probable of achievement and the related amount is reasonably estimable.

Previous wording

We are required to estimate accrued research and development expenses at each reporting period. This process involves reviewing open contracts and purchase orders, communicating with our personnel and consultants to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs. The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met. However, some require advanced payments. We make estimates of accrued expenses as of each balance sheet date in the financial statements based on facts and circumstances known at that time. We periodically confirm the accuracy of the estimates with the service providers and make adjustments, if necessary. Examples of estimated accrued research and development expenses include fees paid to:

Current wording

We are required to estimate accrued research and development expenses at each reporting period. This process involves reviewing open contracts and purchase orders, communicating with our personnel and consultants to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs. The majority of our service providers invoice in arrears for services performed, on a pre-determined schedule or when contractual milestones are met. However, some require advanced payments. We make estimates of accrued expenses as of each balance sheet date in the financial statements based on facts and circumstances known at that time. We periodically confirm the accuracy of the estimates with the service providers and make adjustments, if necessary. Examples of estimated accrued research and development expenses include fees paid to:

Previous wording

We base our expenses related to research and development, pre-clinical activities, manufacturing and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple research institutions, CMOs and CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to vendors will exceed the level of services provided and result in a prepayment of the expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or prepaid accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses.

Current wording

We base our expenses related to research and development, pre-clinical activities, manufacturing and clinical trials on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple research institutions, CMOs and CROs that conduct and manage exploratory studies and clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to vendors will exceed the level of services provided and result in a prepayment of the expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or prepaid accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses.

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 geopolitical events and global conflicts, including those in 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

Overall, R&D expenses for the year ended December 31, 2024 decreased by approximately $0.2 million, or 5.9%, to $3.3 million from $3.5 million in the comparable period in 2023 primarily due to decreased spending in connection with our DNase process development efforts. During the year ended December 31, 2024, the Company expensed approximately $0.7 million related to the impairment of long-lived assets associated with our legacy PSA technology. There was no similar expense in 2023. Excluding the $0.7 million impairment charge from total R&D expense of $3.3 million for the year ended December 31, 2024, adjusted R&D expenses for the year ended December 31, 2024 decreased approximately $0.9 million, or 26.1%, to $2.6 million, from $3.5 million for the year ended December 31, 2023. The table below sets forth the R&D costs incurred by us, by category of expense, for the years ended December 31, 2024 and 2023:

Current wording

Overall, R&D expenses for the year ended December 31, 2025 decreased by approximately $0.2 million, or 6.8%, to $3.1 million from $3.3 million in the comparable period in 2024 primarily due to approximately $0.7 million of expense related to the impairment of long-lived assets associated with our legacy PSA technology incurred in 2024. There was no similar expense in 2025. Excluding the $0.7 million impairment charge from total R&D expense of $3.3 million for the year ended December 31, 2024, adjusted R&D expenses for the year ended December 31, 2025 increased approximately $0.5 million, or 18.6%, to $3.1 million, from $2.6 million for the year ended December 31, 2024. The table below sets forth the R&D costs incurred by us, by category of expense, for the years ended December 31, 2025 and 2024:

Previous wording

The decrease in outside services and contract research organizations expense was primarily due to the aforementioned decreased spending in connection with our process development efforts, partially offset by increased third-party pre-clinical development efforts related to our DNase technology. 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 increase in outside services and contract research organizations expense was primarily due to increased consulting, pre-clinical and manufacturing development efforts as well as costs incurred in connection with the commencement of DNase exploratory studies during the year ended December 31, 2025. The decrease in salaries and wages and share-based expense during the year ended December 31, 2025 was related to certain severance and benefits expensed during the year ended December 31, 2024 in connection with a separation agreement entered into during the second quarter of 2024 with our former Chief Scientific Officer, for which there were none in 2025.

Previous wording

General and administrative expenses for the year ended December 31, 2024 was $3.4 million, decreasing by approximately $0.1 million, or 4.1%, compared to the same period in the prior year. The decrease was primarily due to a reduction in legal and accounting costs during the year ended December 31, 2024 compared to the prior year. These decreases were substantially offset by 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.

Current wording

General and administrative expenses for the year ended December 31, 2025 decreased by approximately $0.7 million, or 19.6%, to approximately $2.7 million from approximately $3.4 million in the comparable period in 2024. The decrease was primarily due to certain severance and benefits expensed during the year ended December 31, 2024 in connection with a separation agreement entered into during the second quarter of 2024 with our former Chief Executive Officer and, to a lesser extent, a decrease in board of director fees. This decrease was partially offset by an increase in legal and accounting costs.

Previous wording

Other expense was approximately $6,000 for the year ended December 31, 2024 compared to other income of approximately $25,400 for the same period in 2023. This decrease in other income was primarily related to fees associated with the Pharmsynthez Loan recognized during the year ended December 31, 2023 for which there were no similar fees received in the same period in 2024.

Current wording

Other income was approximately $6,000 for the year ended December 31, 2025 compared to approximately $6,000 of other expense for the comparable period in 2024. This increase in other income was primarily related to favorable changes in foreign currency exchange rates during the year ended December 31, 2025 as compared to the same period in 2024.

Previous wording

Interest income, net decreased to approximately $250,000 during the year ended December 31, 2024 as compared to approximately $356,000 in the prior year. This decrease is primarily due to lower average invested funds during the year ended December 31, 2024 compared to the prior year, as well as a decrease in interest income received on the Pharmsynthez Loan.

Current wording

Interest income, net decreased to approximately $148,000 during the year ended December 31, 2025 as compared to approximately $250,000 for the same period in the prior year. This decrease is primarily due to lower average invested funds during the year ended December 31, 2025 as compared to the same period in 2024.

Previous wording

We incurred a net loss of approximately $4.0 million for the year ended December 31, 2024. We had an accumulated deficit of approximately $197.2 million at December 31, 2024, as compared to an accumulated deficit of approximately $193.2 million at December 31, 2023. Working capital was approximately $5.7 million at December 31, 2024, and approximately $8.8 million at December 31, 2023, respectively. During the year ended December 31, 2024, our working capital decreased by approximately $3.1 million primarily due to our net loss for the year ended December 31, 2024.

Current wording

We incurred a net loss of approximately $2.7 million for the year ended December 31, 2025. We had an accumulated deficit of approximately $199.9 million at December 31, 2025, as compared to an accumulated deficit of approximately $197.2 million at December 31, 2024. Working capital was approximately $7.1 million at December 31, 2025, and approximately $5.7 million at December 31, 2024, respectively. During the year ended December 31, 2025, our working capital increased by approximately $1.4 million primarily due to net proceeds of approximately $4.0 million from our October 2025 underwritten public offering substantially offset by our net loss for the year ended December 31, 2025.

Previous wording

Our principal source of liquidity consists of cash. At December 31, 2024, we had approximately $6.2 million in cash and approximately $0.9 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 December 31, 2025, we had approximately $7.9 million in cash and approximately $1.0 million in current liabilities. At December 31, 2024, we had approximately $6.2 million in cash and approximately $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 (“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. 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. In addition, the Company raised net proceeds of approximately $4.0 million in an underwritten public offering of common stock in October 2025. However, we anticipate we will need additional capital in the long-term to pursue our business initiatives. While we believe that we will continue to 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 product 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 year ended December 31, 2024 totaled approximately $2.8 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 $0.2 million, other assets decreased by approximately $0.7 million due to the impairment of long-lived assets and accounts payable, accrued expenses and other current liabilities increased approximately $0.1 million during the year ended December 31, 2024 compared to the prior year. Cash flows used in operating activities for the year ended December 31, 2023 totaled approximately $4.1 million, which was primarily due to our net loss for the period, partially offset by non-cash charges associated with share-based expense and, to a lesser extent, a decrease in accounts payable, accrued expenses and other current liabilities.

Current wording

Cash flows used in operating activities for the year ended December 31, 2025 totaled approximately $2.3 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 $0.3 million and accounts payable, accrued expenses and other current liabilities increased approximately $0.1 million during the year ended December 31, 2025 compared to the prior year. Cash flows used in operating activities for the year ended December 31, 2024 totaled approximately $2.8 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 $0.2 million, other assets decreased by approximately $0.7 million due to the impairment of long-lived assets and accounts payable, accrued expenses and other current liabilities increased approximately $0.1 million during the year ended December 31, 2024 compared to the prior year.

Previous wording

Contractual obligations represent future cash commitments and liabilities under agreements with third-parties and exclude contingent liabilities for which we cannot reasonably predict future payment. Our contractual obligations result from a property lease for office space. Although we do have obligations for CMO and CRO services, the table below excludes potential payments we may be required to make under our agreements with CMOs and CROs because timing of payments and actual amounts paid under those agreements may be different depending on the timing of receipt of goods or services or changes to agreed-upon terms or amounts for some obligations, and those agreements are cancelable upon written notice by the Company and therefore, not long-term liabilities. The contracts may also contain variable costs that are hard to predict as they are based on such things as patients enrolled and clinical trial sites, which can vary and, therefore, are also not included in the table below. Additionally, the expected timing of payment of the obligations presented below is estimated based on current information.

Current wording

Contractual obligations represent future cash commitments and liabilities under agreements with third-parties and exclude contingent liabilities for which we cannot reasonably predict future payment. Our contractual obligations result from a property lease for office space. Although we do have obligations for CMO and CRO services, the table below excludes potential payments we may be required to make under our agreements with CMOs and CROs because timing of payments and actual amounts paid under those agreements may be different depending on the timing of receipt of goods or services or changes to agreed-upon terms or amounts for some obligations, and those agreements are cancelable upon written notice by the Company and therefore, not long-term liabilities. The contracts may also contain variable costs that are hard to predict as they are based on such things as patients enrolled and exploratory study sites, which can vary and, therefore, are also not included in the table below. Additionally, the expected timing of payment of the obligations presented below is estimated based on current information.