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The following discussion and analysis should be read in conjunction with the
unaudited financial information and the notes thereto included herein, as well
as the “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” and our audited financial statements and notes thereto contained
in our Annual Report on Form 10-K for the year ended
on
involve risks and uncertainties. Our actual results and the timing of selected
events could differ materially from those anticipated in these forward-looking
statements as a result of several factors, including those set forth under the
caption “Cautionary Note Regarding Forward-Looking Statements” in this report,
as well as under “Part I – Item 1A – Risk Factors” in our Annual Report on Form
10-K for the year ended
all statements in this report, speak only as of the date of this Quarterly
Report on Form 10-Q (unless another date is indicated), and we undertake no
obligation to update or revise these statements in light of future developments.
Our Management’s Discussion and Analysis of Financial Condition and Results of
Operations, or MD&A, includes the following sections:
• Overview that discusses our operating results and some of the trends that
affect our business.
• Results of Operations that includes a more detailed discussion of our
revenue and expenses.
• Liquidity and Capital Resources which discusses key aspects of our
statements of cash flows, changes in our financial position and our
financial commitments.
Overview
targeted radiotherapeutics for adults and children with rare
and difficult-to-treat cancers. Our novel radioactive drug formulations and
therapeutic candidates are designed to deliver safe and effective doses of
radiation to tumors. To achieve this, we have developed innovative approaches to
drug formulation, including encapsulating radionuclides such as Rhenium isotopes
within nanoliposomes and microspheres. Our formulations are intended to achieve
elevated tumor absorbed radiation doses and extended retention times such that
the clearance of the isotope occurs after significant radiation decay, which we
believe will contribute and provide less normal tissue/organ exposure and
improved safety margins.
Traditional approaches to radiation therapy for cancer such as external beam
radiation have many disadvantages including continuous treatment for 4-6 weeks
(which is onerous for patients), radiation that inadvertently damages healthy
cells and tissue, and a very limited amount of radiation that can be safely
delivered, therefore, is frequently inadequate to fully destroy the cancer.
Our targeted radiotherapeutic platform and unique investigational drugs have the
potential to overcome these disadvantages by directing higher, more powerful
radiation doses at the tumor-and only the tumor-potentially in a single
treatment. By minimizing radiation exposure to healthy tissues while
simultaneously maximizing efficacy, we hope to reduce the toxicity of radiation
for patients, improving their quality of life and life expectancy. Our
radiotherapeutic platform, combined with advances in surgery, nuclear medicine,
interventional radiology, and radiation oncology, affords us the opportunity to
target a broad variety of cancer types.
Our lead radiotherapeutic candidate, Rhenium-186 NanoLiposome (“186RNL”) is
designed specifically to target central nervous system (“CNS”) cancers including
recurrent glioblastoma, leptomeningeal metastases, and pediatric brain cancers
by direct localized delivery utilizing approved standard-of-care tissue access
such as with conduction enhanced delivery (“CED”) and intraventricular brain
catheters (Ommaya reservoir). Our recently acquired radiotherapeutic
candidate, Rhenium-188 NanoLiposome Biodegradable Alginate Microsphere
(“188RNL-BAM”) is designed to treat many solid organ cancers including primary
and secondary liver cancers.
Our headquarters and manufacturing facilities are in
world-class cancer institutions and researchers. Our dedicated team of
engineers, physicians, scientists, and other professionals are committed to
advancing our targeted radiotherapeutic technology for the benefit of cancer
patients and healthcare providers worldwide and our current pipeline is focused
on treating rare and difficult-to-treat cancers with significant unmet medical
needs.
Pipeline
Our most advanced investigational drug, 186RNL, is a patented radiotherapy
potentially useful for patients with CNS and other cancers. Preclinical study
data describing the use of 186RNL for several cancer targets have been published
in peer-reviewed journals. Besides glioblastoma, leptomeningeal metastases, and
pediatric brain cancer, 186RNL has been reported to have potential applications
for head and neck cancer, ovarian cancer, breast cancer and peritoneal
scarcinomatosis.
The 186RNL technology was part of a licensed radiotherapeutic portfolio that we
acquired from NanoTx, Corp. (“NanoTx”) on
radiotherapeutic has been evaluated in preclinical studies for several cancer
targets and we have an active
of Health/National Cancer Institute
continued clinical development of 186RNL for recurrent glioblastoma through the
completion of a Phase 2 clinical trial including enrollment of up to 55
patients. Thus far, 23 patients have been treated in the Phase 1 clinical trial
and the Phase 2 clinical trial has not yet been
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initiated.
We are currently conducting the ReSPECT-GBM and ReSPECT-LM clinical trials for
recurrent glioblastoma (“GBM”) and leptomeningeal metastases (“LM””),
respectively. In addition, we anticipate seeking the
Administration
ReSPECT-PBC clinical trial for pediatric brain cancer (“PBC”) in late 2022 or
early 2023.
186RNL versus External Beam Radiation Therapy
186RNL is a novel injectable radiotherapy designed to deliver targeted, high
dose radiation directly into glioblastoma tumors in a safe, effective, and
convenient manner that may ultimately prolong patient survival. 186RNL is
composed of the radionuclide Rhenium-186 and a nanoliposomal carrier, and is
infused in a highly targeted fashion, directly into the tumor via precision
brain mapping and convection enhanced delivery (“CED”). Potential benefits of
186RNL compared to standard external beam radiotherapy (“EBRT”) include:
•The 186RNL radiation dose delivered to patients may be up to 20 times greater than what is possible with commonly used EBRT. •186RNL can be visualized in real-time during administration, possibly giving clinicians better control of radiation dosing and distribution. •186RNL potentially more effectively treats the bulk tumor and microscopic disease that has already invaded healthy tissue. •186RNL is infused directly into the targeted tumor, bypassing the blood brain barrier, which reduces radiation exposure to healthy cells, in contrast to EBRT which passes through normal tissue to reach the tumor, continuing its path through the tumor, hence being less targeted and selective. •186RNL is given during a single, short, in-patient hospital visit, and is available in all hospitals with nuclear medicine and neurosurgery, while EBRT requires out-patient visits 5 days a week for approximately 4-6 weeks.
ReSPECT-GBM Trial for Recurrent GBM
GBM is the most common, complex, and aggressive primary brain cancer in adults.
Annually in the
10,000 patients succumb to the disease each year. The average life expectancy
with primary glioblastoma is less than 24 months, with a one-year survival rate
of 40.8% and a five-year survival rate of only 6.8%. GBM often causes and
presents with headaches, seizures, vision changes and other significant
neurological complications. Despite the best available medical treatments to
eliminate the initial brain tumor, some microscopic disease frequently remains,
with tumor regrowth within months. Approximately 90% or more of patients with
primary GBM experience tumor recurrence. Complete surgical removal of GBM is not
typically possible and GBM is often resistant or quickly develops resistance to
most available therapies. Even today, the treatment of GBM remains a significant
challenge and it has been nearly a decade since the FDA approved a new therapy
for this disease.
For recurrent GBM, there are few currently approved treatments that in the
aggregate, provide only marginal survival benefit. Furthermore, these therapies
are associated with significant side effects, which limit dosing and prolonged
use.
While EBRT has been shown to be safe and effective in many malignancies
including glioblastoma, the maximum possible administered dose is limited by
toxicity to the normal tissues surrounding the malignancy. In contrast, targeted
radiopharmaceuticals that precisely deliver radiation in the form of beta
particles such as Iodine-131 for thyroid cancer, are known to minimize exposure
to normal cells and tissues which we hope will result in a safer and more
effective treatment.
Interim results from our ongoing Phase 1/2a ReSPECT-GBM trial, suggest beta
particle energy from our lead investigational drug 186RNL may also have utility
in treating GBM and other malignancies. More specifically, the preliminary data
from ReSPECT-GBM indicates that radiation, in the form of high energy beta
particles or electrons, can be effective against GBM. Thus far, we have been
able to deliver up to 740 Gy of absorbed radiation to tumor issue without
significant or dose limiting toxicities. In comparison, current EBRT protocols
for recurrent GBM typically recommend a total maximum dose of about 35 Gy.
In
designations to 186RNL for the treatment of patients with glioblastoma.
186RNL is presently under clinical investigation in a multicenter, sequential
cohort, open-label, volume and dose escalation study of the safety,
tolerability, and distribution of 186RNL given by CED to patients with recurrent
or progressive malignant glioma after standard surgical, radiation, and/or
chemotherapy treatment (NCT01906385). The study uses a modified Fibonacci dose
escalation, followed by a planned expansion at the maximum tolerated
dose/maximum feasible dose to determine efficacy. The trial is funded through
Phase 2 in large part by a
grant is 21 patients in the dose-escalation part of the study and 34 patients in
the expansion cohort. The study is in its 8th dosing administration cohort and
is under development
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and internal review to potentially advance to a Phase 2 or registration trial.
At the
patient data which at that time included the results for 22 patients treated in
the ReSPECT-GBM trial. The trial, thus far, has shown that CED in recurrent GBM
patients is feasible. Median absorbed dose to the tumor volume across all
subjects in the first eight cohorts (n=22) was 267.5 Gy (range 8.9-740). In a
subset of patients in whom tumor coverage was greater than or equal to 75%, the
median absorbed dose was 405 Gy (range 146-593). By contrast, the median
absorbed doses to the whole brain and the total body across all subjects were
0.55 Gy (range 0.001-2.728) and 0.09 Gy (range 0.001-0.182), respectively. Small
doses, as delivered to the body, are typically well-tolerated. Based on observed
and reported patient protocol activity and all available adverse event (“AE”)
data, 186RNL has been well-tolerated. No AEs with an outcome of death or study
drug-related serious AEs have been reported. Furthermore, no patient has been
discontinued from the study because of an AE. All AEs have been mild or moderate
(Grade 1 or 2) in intensity, except for one case of Grade 3 vasogenic edema,
which was considered by the investigator to be unrelated to the study drug. AEs
considered by the investigator to be at least possibly related to 186RNL have
included Grade 1 to 2 skin and soft tissue infection, intermittent cephalgia,
neck and jaw pain, nausea with or without vomiting, constipation, increased
lethargy, difficulty walking (gait disturbance), worsening double vision, and
dysuria. Scalp discomfort and tenderness related to the surgical procedure has
also been reported.
In the 22 subjects with recurrent GBM receiving a single administration of
186RNL, the mean & median OS for all 22 patients as of
33.1 weeks, respectively, with 7 patients alive. In a subset of 13 patients
receiving a presumed therapeutic absorbed radiation dose to the tumor (>100 Gy),
the mean & median OS was 64.8 & 47.1 weeks, respectively, with 7 of 13 patients
alive. In contrast, in 9 patients receiving a presumed sub-therapeutic absorbed
radiation dose to the tumor (<100 Gy), the mean and median OS was 23.9 & 22.3
weeks, respectively. A Kaplan-Meier curve comparing patients with presumed
therapeutic vs. sub-therapeutic radiation dose to the tumor showed a
statistically significant difference between the groups (p=.0002). It is
hypothesized that targeted infusion of 186RNL into the tumor by CED, bypassing
the blood-brain barrier and normal brain and external tissues, significantly
spares normal tissues from radiation exposure and potential toxicity and
concentrates radiation to the tumor and surrounding region of interest.
ReSPECT-LM Clinical Trial for Leptomeningeal Metastases
LM is a rare complication of cancer in which the disease spreads to the
membranes (meninges) surrounding the brain and spinal cord. The incidence of LM
is growing and occurs in approximately 5% of people with late-stage cancer, or
110,000 people in the
average 1-year survival of just 7%. LM occurs with cancers that are most likely
to spread to the central nervous system. The most common cancers to spread to
the leptomeninges are breast cancer, lung cancer, melanoma and gastrointestinal
cancers—though most solid tumors have the potential for LM spread.
The ReSPECT-LM Phase 1 clinical trial (ClinicalTrials.gov NCT05034497) is
predicated in part upon preclinical studies in which tolerance to doses
of 186RNL as high as 1,075 Gy was shown in animal models with LM without
significant observed toxicity. Furthermore, treatment led to marked reduction in
tumor burden in both C6 and MDA-231 LM models.
In
for the treatment of LM. Subsequently, in
Track designation for 186RNL for the treatment of leptomeningeal metastases. We
treated our first patient in the ReSPECT-LM Phase 1 clinical trial in Q1 2022.
The ReSPECT-LM multi-center, sequential cohort, open-label, dose escalation
study is evaluating the safety, tolerability, and distribution of 186RNL via
intrathecal infusion to the ventricle of patients with LM after standard
surgical, radiation, and/or chemotherapy treatment. The primary endpoint of the
study is the incidence and severity of adverse events and dose limiting
toxicities.
ReSPECT-PBC Clinical Trial for Pediatric
In
2021
Meeting. In
to a pre-IND meeting briefing package in which the FDA stated that we are not
required to perform any additional preclinical or toxicology studies.
Currently, we plan to investigate the use of 186RNL in 2 pediatric brain
cancers. High-grade glioma (HGG) is a rare, fast-growing CNS tumor that forms in
glial cells of the brain and spinal cord. It can be found almost anywhere within
the CNS, but is most commonly within the supratentorium in children
ages 15-19. HGG tumors in children act differently from those in adults, causing
headaches, seizures, and difficulty achieving developmental milestones depending
on the tumor location. Approximately 360-400 children are diagnosed with HGG
annually in
contrast to HGG, ependymoma is a rare, slow- or fast-growing (depending on the
grade) primary CNS tumor that forms in ependymal cells in the brain and spinal
cord-and may spread throughout the CNS, though infrequently. All ependymomas can
recur, but patients are often tumor-free for years before testing shows tumor
regrowth, either at the initial tumor site or elsewhere within the CNS. Symptoms
depend on tumor location and size, usually including irritability,
sleeplessness, vomiting, nausea, back pain, arm/leg weakness, and headaches.
Approximately 250 children are diagnosed with ependymoma annually in the
while 71% of children with Grade II and 57% with
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Grade III survive 5 years from diagnosis.
Based on the aggregate preclinical and clinical work completed to date in adult
recurrent glioblastoma, we hypothesize that 186RNL may offer potential clinical
benefit for PBCs, such as high-grade glioma and ependymoma. We intend to submit
an IND application to the FDA for 186RNL for the treatment of PBC (high-grade
glioma and ependymoma) in late 2022 or early 2023.
Rhenium-188 NanoLiposome Biodegradable Alginate Microsphere Technology
In
The
Center
radiotherapeutics pipeline. We intend to combine our Rhenium NanoLiposome
technology with the BAM technology to create a novel radioembolization
technology. Initially, we intend to utilize the Rhenium-188 isotope, 188RNL-BAM
for the intra-arterial embolization and local delivery of a high dose of
targeted radiation for a variety of solid organ cancers such as hepatocellular
cancer, hepatic metastases, pancreatic cancer and many others.
Preclinical data from an ex vivo embolization experiment in
which Technetium-99m-BAM was intra-arterially delivered to a bovine kidney
perfusion model was presented at the recent 2021
Radiology
technology required for radiolabeling BAM could successfully deliver, embolize
and retain radiation in the target organ. 188RNL-BAM is a preclinical
investigational drug we intend to further develop and move into clinical trials.
Specifically, in 2022, we intend to transfer the 188RNL-BAM technology from
Health Science Center
complete certain preclinical studies to support a future FDA IND submission. Our
likely initial clinical target is liver cancer which is the 6th most common and
3rd deadliest cancer worldwide. It is a rare disease with increasing
incidence (42,000) and deaths (30,000).
Recent Developments
Services Agreement and Statement of Work with
On
Solutions, Inc.
Control Arm® (SCA) platform that facilitates the use of historical clinical data
to incorporate into the Company’s Phase 2 clinical trial of 186RNL in GBM.
The SOW has a term of six (6) months. We will pay
managed services fees and a contingent managed services fee of
its clinical trial of 186RNL for treatment of GBM. The SOW may only be
terminated for a material breach by either party or if the clinical study’s
authorization or approval is withdrawn by a regulatory agency.
UT Health Science Center San Antonio (UTHSA) License Agreement
On
Health Science Center
commercialize 188RNL-BAM. Under the license agreement with
Center
develop the 188RNL-BAM product candidate acquired under the license agreement.
Further, we are subject to future milestone, earn-out and other payments to
Health Science Center
commercialization and sale activities for product candidates.
Recent Financings
Refer to the “Liquidity and Capital Resources” section below for information on
our recent financings.
Results of Operations
Research and development expenses
Research and development expenses include costs associated with the design,
development, testing, and enhancement of our product candidates, payment of
regulatory fees, laboratory supplies, pre-clinical studies, and clinical
studies.
The following table summarizes the components of our research and development
expenses for the three months ended
Three Months Ended March 31,
2022 2021
Research and development $ 1,760 $ 1,106
Share-based compensation 25 21
Total research and development expenses
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The increase of
months ended
primarily to increased expenditures related to increase in development costs of
186RNL of
of
personnel expenses.
We expect aggregate research and development expenditures to increase in
absolute dollars during 2022 due to the expected costs of development of
the 186RNL™ therapy acquired from NanoTx and development expenses related to
188RNL-BAM.
General and administrative expenses
General and administrative expenses include costs for administrative personnel,
legal and other professional expenses, and general corporate expenses. The
following table summarizes the general and administrative expenses for the three
months ended
Three Months Ended March 31,
2022 2021
General and administrative $ 1,986 $ 1,266
Share-based compensation 155 86
Total general and administrative expenses
General and administrative expenses increased by approximately
during the three months ended
2021. The increase was primarily due to an increase of
intellectual property and other professional expenses, and an increase of
million
We expect general and administrative expenditures to remain generally consistent
in 2022 as compared with the year ended
cost which is not predictable at this time.
Stock-based compensation expense
Stock-based compensation expense includes charges related to stock options
issued to employees, directors and non-employees. We measure stock-based
compensation expense based on the grant-date fair value of any awards granted to
our employees. Such expense is recognized over the requisite service period.
The following table summarizes the components of our stock-based compensation
expenses for the three months ended
Three Months Ended March 31,
2022 2021
Research and development $ 25 $ 21
General and administrative
155 86
Total share-based compensation $ 180 $ 107
The increases in our stock-based compensation was primarily due to increases in
grants of stock-based options as well as higher grant-date fair value of
stock-based awards.
Financing items
The following table summarizes interest income, interest expense, and other income and expense for the three months endedMarch 31, 2022 and 2021 (in thousands): Three Months Ended March 31, 2022 2021 Interest income $ 7 $ 4 Interest expense (198 ) (247 ) Change in fair value of liability instruments 1 2 Total $ (190 ) $ (241 )
The decrease in interest expense for the three months ended
compared to the same periods in 2021 was primarily due to the repayment of debt
principal of
2022.
We expect interest expense in 2022 to decrease as compared with 2021 due to
scheduled debt principal repayments which commenced on
20
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Liquidity and Capital Resources
Short-term and long-term liquidity
The following is a summary of our key liquidity measures at
March 31, 2022 December 31, 2021
Cash and cash equivalents $ 21,239 $ 18,400
Current assets $ 22,104 $ 19,724
Current liabilities 4,921 5,870
Working capital $ 17,183 $ 13,854
For the periods presented, operating losses have been funded primarily from
outside sources of invested capital in our common stock. We believe that our
cash and cash equivalents of
fund our current and planned operations for at least the next twelve months and
beyond from the date these condensed financial statements were issued.
We have had, and we will continue to have, an ongoing need to raise additional
cash from outside sources to fund our future clinical development programs and
other operations. Our inability to raise additional cash would have a material
and adverse impact on operations and would cause us to default on our loan.
On
Distribution Agreement”) with
“Canaccord”), pursuant to which we may issue and sell, from time to time, shares
of its common stock having an aggregate offering price of up to
“Shares”), depending on market demand, with the Agent acting as an agent for
sales. Sales of the Shares may be made by any method permitted by law deemed to
be an “at the market offering” as defined in Rule 415(a)(4) of the Securities
Act of 1933, as amended, including, without limitation, sales made directly on
or through the Nasdaq. Since
the 2022 Distribution Agreement for net proceeds of approximately
On
Distribution Agreement”) with Canaccord, pursuant to which we could issue and
sell, from time to time, our common stock in “at the market” offerings,
depending on market demand, with Canaccord acting as an agent for sales. During
2021, we issued 2,179,193 shares under the 2020 Distribution Agreement for net
proceeds of
On
registration rights agreement with
committed to purchase up to
issued 5,685,186 shares of our common stock under the 2020 Purchase Agreement
for total proceeds of
2022
approximately
any additional shares of common stock registered to sell under the 2020 Purchase
Agreement, and at this time we do not intend to register any additional shares
of common stock under the 2020 Purchase Agreement.
We continue to seek additional capital through strategic transactions and other
financing alternatives. Without additional capital, current working capital and
cash generated from sales will not provide adequate funding for research and
product development activities at their current levels. If sufficient capital is
not raised, we will at a minimum need to significantly reduce or curtail our
research and development and other operations, and this would negatively affect
our ability to achieve corporate growth goals. There may be continued market
volatility due to the pandemic, downturn in global economy, or other events,
which could cause our stock price to decline. This in turn will likely
negatively impact our ability to raise funds through equity-related financings.
Should we be unable to raise additional cash from outside sources or if we are
unable to do so in a timely manner or on commercially reasonable terms, it would
have a material adverse impact on our operations.
Cash (used in) provided by operating, investing, and financing activities for
the three months ended
thousands):
Three Months Ended March 31,
2022 2021
Net cash used in operating activities
Net cash used in investing activities
(577 ) (84 ) Net cash provided by financing activities 7,292 9,191
Net increase in cash and cash equivalents
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Material Cash Obligations
On
use of historical clinical data to incorporate into the Company’s Phase 2
clinical trial of 186RNL in GBM.
During the six month term of the SOW, we will pay
managed services fees. Further, if the
a path forward for us to use the SCA in its clinical trial of 186RNL for
treatment of GBM, we will pay
fee of
We are also obligated to make ongoing principal and interest payments under the
Term Loan with Oxford through the maturity date of
the accompanying condensed financial statements for more information). In
addition, as described in more detail in Note 7 of the accompanying condensed
financial statements, we are obligated to make operating lease payments for our
office and laboratory space and we may be required to make payments under
certain of our other contractual agreements.
Operating activities
Net cash used in operating activities for the three months ended
was
operational cash use increased during the three months ended
compared to the same period in 2021, due primarily to increased expenditures for
our research and development activities.
Investing activities
Net cash used in investing activities for the three months ended
were related to cash payments of
development assets from UTHSA and purchases of fixed assets and intangible
assets of
months ended
Financing Activities
Net cash provided by financing activities for the three months ended
2022
offering cost through the 2022 Distribution Agreement with Canaccord and the
2020 Purchase Agreement with
Net cash provided by financing activities for the three months ended
2021
offering cost through the 2020 Purchase Agreement with
Distribution Agreement with Canaccord, as well as
warrants.
Critical Accounting Policies and Significant Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in
assumptions that affect the reported amounts of our assets, liabilities,
revenues and expenses, and that affect our recognition and disclosure of
contingent assets and liabilities.
While our estimates are based on assumptions we consider reasonable at the time
they were made, our actual results may differ from our estimates, perhaps
significantly. If results differ materially from our estimates, we will make
adjustments to our financial statements prospectively as we become aware of the
necessity for an adjustment.
impairment exist. We perform our impairment test annually during the fourth
quarter. We operate in a single operating segment and reporting unit. We monitor
the fluctuations in our share price and have experienced significant volatility
during the year.
We estimate the fair value of liability classified warrants using an option
pricing model. Following the authoritative accounting guidance, warrants with
potential cash settlement outside control of the Company are accounted for as
liabilities, with changes in the fair value included in operating expenses.
We believe it is important for you to understand our most critical accounting
policies. Our critical accounting policies and estimates are discussed in our
Annual Report on Form 10-K for the fiscal year ended
have been no material changes during the three months ended
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