Home Product listing LIXTE BIOTECHNOLOGY HOLDINGS, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

LIXTE BIOTECHNOLOGY HOLDINGS, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

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Forward-looking statements



This Quarterly Report on Form 10-Q of Lixte Biotechnology Holdings, Inc. (the
"Company") contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, and Section 21E of the Securities
Exchange Act of 1934. These might include statements regarding the Company's
financial position, business strategy and other plans and objectives for future
operations, and assumptions and predictions about future clinical trials and
their timing and costs, product demand, supply, manufacturing costs, marketing
and pricing factors are all forward-looking statements. These statements are
generally accompanied by words such as "intend", "anticipate", "believe",
"estimate", "potential(ly)", "continue", "forecast", "predict", "plan", "may",
"will", "could", "would", "should", "expect" or the negative of such terms or
other comparable terminology. The Company believes that the assumptions and
expectations reflected in such forward-looking statements are reasonable, based
on information available to it on the date hereof, but the Company cannot
provide assurances that these assumptions and expectations will prove to have
been correct or that the Company will take any action that the Company may
presently be planning. These forward-looking statements are inherently subject
to known and unknown risks and uncertainties. Actual results or experience may
differ materially from those expected, anticipated or implied in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, regulatory policies or changes
thereto, available cash, research and development results, competition from
other similar businesses, and market and general economic factors. This
discussion should be read in conjunction with the condensed consolidated
financial statements and notes thereto included in Item 1 of this Quarterly
Report on Form 10-Q and the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2021, including the section entitled "Item 1A. Risk
Factors". The Company does not intend to update or revise any forward-looking
statements to reflect new information, future events or otherwise.



Overview



The Company is a drug discovery company that uses biomarker technology to
identify enzyme targets associated with serious common diseases and then designs
novel compounds to attack those targets. The Company's product pipeline is
primarily focused on inhibitors of protein phosphatases, used alone and in
combination with cytotoxic agents and/or x-ray and immune checkpoint blockers,
and encompasses two major categories of compounds at various stages of
pre-clinical and clinical development that the Company believes have broad
therapeutic potential not only for cancer but also for other debilitating and
life-threatening diseases. The Company has developed two classes of drugs for
the treatment of cancer, consisting of protein phosphatase inhibitors (PTase-i),
designated by us as the LB-100 series of compounds, and histone deacetylase
inhibitors (HDACi), designated by us as the LB-200 series of compounds.



The Company's activities are subject to significant risks and uncertainties,
including the need for additional capital. The Company has not yet commenced any
revenue-generating operations, relies on stock-based compensation for a
substantial portion of employee and consultant compensation, does not have
positive cash flows from operations, and is dependent on periodic infusions of
equity capital to fund its operating requirements.



Recent Developments


The following is a summary of recent developments, including information contained in recent press releases issued by the Company:

Summary of October 13, 2022 Press release



The Company announced that the Spanish Agency for Medicines and Health Products
(Agencia Española de Medicamentos y Productos Sanitarios, or AEMPS) has
authorized a Phase 1b/randomized Phase 2 study of LB-100, the Company's lead
clinical compound, plus doxorubicin versus doxorubicin alone, the global
standard for initial treatment of advanced soft tissue sarcomas (ASTS).



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The combination of doxorubicin with drugs that are able to impair the mechanisms
of DNA repair is a promising topic of research, as LB-100 has demonstrated
synergistic action in in vivo preclinical mesenchymal tumors. The authorization
of this clinical trial by AEMPS is expected to facilitate approval of other
LB-100 protocols in EU countries.



The purpose of this clinical trial is to obtain information with respect to the
efficacy and safety of LB-100 combined with doxorubicin in soft tissue sarcomas.
Doxorubicin alone has been the cornerstone of first line treatment of ASTS for
over 40 years, with little therapeutic gain from adding cytotoxic compounds to
or substituting other cytotoxic compounds for doxorubicin. In animal models,
LB-100 has consistently enhanced the anti-tumor activity of doxorubicin without
apparent increases in toxicity. The interim analysis of this clinical trial will
be done before full accrual is completed to determine whether the study has the
possibility of showing superiority of the combination of LB-100 plus doxorubicin
compared to doxorubicin alone. A positive study would have the potential to
change the standard therapy for this disease after four decades of failure to
improve the marginal benefit of doxorubicin alone.



This study was designed and will be carried out by the Spanish Sarcoma Group
(Grupo Español de Investigación en Sarcomas, or GEIS). GEIS was formed in 1994
by oncologists from four hospitals and has grown to include members from more
than 60 medical centers across Spain. For relatively uncommon but
life-threatening diseases like ASTS, GEIS has shown that it is essential for
many institutions to collaborate and accrue a large enough group of patients
needed to timely evaluate promising new treatments. GEIS has chosen to study
whether the Company's lead clinical compound, LB-100, can significantly improve
the anti-tumor activity of doxorubicin, the current clinical standard, an only
marginally effective treatment for previously untreated ASTS. The clinical trial
is expected to begin later this year or during the first quarter of 2023; up to
170 patients will be entered onto the trial, which is expected to be completed
within two and a half years.


Listing of the company’s common stock on the Nasdaq Capital Market

The Company’s common stock and warrants issued under its public offering trade on the Nasdaq Capital Market under the symbols “LIXT” and “LIXTW”, respectively.

On June 24, 2022, the Company received a written notice (the "Notice") from The
Nasdaq Stock Market LLC ("Nasdaq") that the Company has not been in compliance
with the minimum bid price requirement set forth in Nasdaq Listing Rule
5550(a)(2) for a period of 30 consecutive business days. Nasdaq Listing Rule
5550(a)(2) requires listed securities to maintain a minimum closing bid price of
$1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure
to meet the minimum closing bid price requirement exists if the deficiency
continues for a period of 30 consecutive business days. The Notice had no
immediate effect on the listing of the Company's common stock on The Nasdaq
Capital Market.



In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company is provided a
compliance period of 180 calendar days from the date of the Notice, or until
December 21, 2022, to regain compliance with the minimum closing bid price
requirement. If the Company does not regain compliance during the compliance
period ending December 21, 2022, the Company may be afforded a second 180
calendar day period to regain compliance. To qualify for the second compliance
period, the Company must (i) meet the continued listing requirement for market
value of publicly held shares and all other initial listing standards for The
Nasdaq Capital Market, with the exception of the minimum closing bid price
requirement, and (ii) notify Nasdaq of its intent to cure the deficiency. The
Company can achieve compliance with the minimum closing bid price requirement
if, during either compliance period, the minimum closing bid price per share of
the Company's common stock is at least $1.00 for a minimum of 10 consecutive
business days. The Company anticipates that its shares of common stock will
continue to be listed and traded on The Nasdaq Capital Market during the
compliance period(s).



The Company is continuing to assess potential actions to regain compliance.
However, the Company may be unable to regain compliance with the minimum closing
bid price requirement during the compliance period(s), in which case the Company
anticipates Nasdaq would provide a notice to the Company that its shares of
common stock are subject to delisting, and the Company's common shares would
thereupon be delisted.



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Going Concern


At September 30, 2022, the Company had cash of $6,561,840 available to fund its
operations. Because the Company is currently engaged in Phase 2 clinical trials,
it is expected that it will take a significant amount of time and resources to
develop any product or intellectual property capable of generating sustainable
revenues. Accordingly, the Company's business is unlikely to generate any
sustainable operating revenues in the next several years and may never do so.
Even if the Company is able to generate revenues through licensing its
technologies or through product sales, there can be no assurance that the
Company will be able to achieve positive earnings and operating cash flows.



The Company's consolidated financial statements have been presented on the basis
that it will continue as a going concern, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of business. The
Company has no recurring source of revenue and has experienced negative
operating cash flows since inception. The Company has financed its working
capital requirements primarily through the recurring sale of its equity
securities.



As a result, management has concluded that there is substantial doubt about the
Company's ability to continue as a going concern. The Company's independent
registered public accounting firm, in its report on the Company's consolidated
financial statements for the year ended December 31, 2021, has also expressed
substantial doubt about the Company's ability to continue as a going concern.
The Company's consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.



Recent accounting pronouncements

Information with respect to recent accounting pronouncements is provided at Note
3 to the condensed consolidated financial statements for the three months and
nine months ended September 30, 2022 and 2021 included elsewhere in this
document.



Concentration of Risk


Information with respect to concentration of risk is provided at Note 3 to the
condensed consolidated financial statements for the three months and nine months
ended September 30, 2022 and 2021 included elsewhere in this document.



Significant Accounting Policies and Estimates



The preparation of the Company's consolidated financial statements in conformity
with generally accepted accounting principles in the United States ("GAAP")
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of expenses during the reporting period. Some of those
judgments can be subjective and complex, and therefore, actual results could
differ materially from those estimates under different assumptions or
conditions. Management bases its estimates on historical experience and on
various assumptions that are believed to be reasonable in relation to the
financial statements taken as a whole under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Management
regularly evaluates the key factors and assumptions used to develop the
estimates utilizing currently available information, changes in facts and
circumstances, historical experience and reasonable assumptions. After such
evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Actual results could differ from those estimates. Significant estimates include
those related to assumptions used in accruals for potential liabilities, valuing
equity instruments issued for services, and the realization of deferred tax
assets. There were no changes to the critical accounting policies described in
the consolidated financial statements included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2021 that impacted the
Company's condensed consolidated financial statements and related notes for the
three months and nine months ended September 30, 2022 and 2021.



The following critical accounting policies affect the most significant judgments and estimates used in the preparation of the Company’s consolidated financial statements.


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Research and Development



Research and development costs consist primarily of fees paid to consultants and
contractors, and other expenses relating to the acquisition, design, development
and clinical trials with respect to the Company's compounds and product
candidates. Research and development costs also include the costs to produce the
compounds used in research and clinical trials, which are charged to operations
as incurred.


Research and development costs are generally charged to operations ratably over
the life of the underlying contracts, unless the achievement of milestones, the
completion of contracted work, the termination of an agreement, or other
information indicates that a different expensing schedule is more appropriate.
However, payments for research and development costs that are contractually
defined as non-refundable are charged to operations as incurred.



Obligations incurred with respect to mandatory scheduled payments under research
agreements with milestone provisions are recognized as charges to research and
development costs in the Company's consolidated statement of operations based on
the achievement of such milestones, as specified in the agreement. Obligations
incurred with respect to mandatory scheduled payments under research agreements
without milestone provisions are accounted for when due, are recognized ratably
over the appropriate period, as specified in the agreement, and are recorded as
liabilities in the Company's consolidated balance sheet, with a corresponding
charge to research and development costs in the Company's consolidated statement
of operations.


Payments made pursuant to research and development contracts are initially
recorded as advances on research and development contract services in the
Company's consolidated balance sheet and are then charged to research and
development costs in the Company's consolidated statement of operations as those
contract services are performed. Expenses incurred under research and
development contracts in excess of amounts advanced are recorded as research and
development contract liabilities in the Company's consolidated balance sheet,
with a corresponding charge to research and development costs in the Company's
consolidated statement of operations. The Company reviews the status of its
research and development contracts on a quarterly basis.



Fees and legal fees for patents and licenses and filing



Due to the significant uncertainty associated with the successful development of
one or more commercially viable products based on the Company's research efforts
and related patent applications, all patent and licensing legal and filing fees
and costs related to the development and protection of its intellectual property
are charged to operations as incurred. Patent and licensing legal and filing
fees and costs are included in general and administrative costs in the Company's
consolidated statements of operations.



During the three months ended September 30, 2022 and 2021, patent and licensing
legal and filing fees and costs related to the development and protection of its
intellectual property were $271,163 and $137,114, respectively, an increase of
$134,049, or 97.8% in 2022, as compared to 2021. During the nine months ended
September 30, 2022 and 2021, patent and licensing legal and filing fees and
costs related to the development and protection of its intellectual property
were $944,789 and $365,466, respectively, an increase of $579,323, or 158.5% in
2022, as compared to 2021.



In late 2021, the Company engaged a new patent law firm that is highly regarded
for its expertise in biotechnology. This firm conducted a comprehensive analysis
of the Company's extensive patent portfolio in order to implement a program to
maximize the Company's intellectual property protection, both domestically and
internationally. In addition, several new patents were recently filed,
reflecting potential new uses of the Company's unique lead clinical compound
LB-100 in cancer therapy. These activities have resulted in an increase in
patent and licensing legal and filing fees and costs in 2022 as compared to
2021. The Company expects that such patent and licensing related legal and
filing costs will continue to increase during the remainder of 2022 as compared
to 2021, and likely thereafter, as the Company continues to develop and expand
its patent portfolio related to the clinical development of LB-100.



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Stock-Based Compensation


The Company periodically issues common stock and stock options to officers,
directors, employees, Scientific Advisory Committee members, contractors and
consultants for services rendered. Options vest and expire according to terms
established at the issuance date of each grant. Stock grants, which are
generally time vested, are measured at the grant date fair value and charged to
operations ratably over the vesting period.



The Company accounts for stock-based payments to officers, directors, employees,
Scientific Advisory Committee members contractors and consultants by measuring
the cost of services received in exchange for equity awards utilizing the grant
date fair value of the awards, with the cost recognized as compensation expense
on the straight-line basis in the Company's financial statements over the
vesting period of the awards.



The fair value of stock options granted as stock-based compensation is
determined utilizing the Black-Scholes option-pricing model, and is affected by
several variables, the most significant of which are the expected life of the
stock option, the exercise price of the stock option as compared to the fair
market value of the common stock on the grant date, and the estimated volatility
of the common stock. Unless sufficient historical exercise data is available,
the expected life of the stock option is calculated as the mid-point between the
vesting period and the contractual term (the "simplified method"). The estimated
volatility is based on the historical volatility of the Company's common stock,
calculated utilizing a look-back period approximately equal to the contractual
life of the stock option being granted. The risk-free interest rate is based on
the U.S. Treasury yield curve in effect at the time of grant. The fair market
value of the common stock is determined by reference to the quoted market price
of the Company's common stock on the grant date. The expected dividend yield is
based on the Company's expectation of dividend payouts and is assumed to be
zero.



The Company recognizes the fair value of stock-based compensation awards in general and administrative expenses and research and development expenses, as applicable, in the Company’s consolidated statements of earnings. The Company issues new common shares to satisfy stock option exercises.

Summary of business activities and plans


Company Overview



The Company is a drug discovery company that uses biomarker technology to
identify enzyme targets associated with serious common diseases and then designs
novel compounds to attack those targets. The Company's product pipeline is
primarily focused on inhibitors of protein phosphatases, used alone and in
combination with cytotoxic agents and/or x-ray and immune checkpoint blockers,
and encompasses two major categories of compounds at various stages of
pre-clinical and clinical development that the Company believes have broad
therapeutic potential not only for cancer but also for other debilitating and
life-threatening diseases.


The Company has developed two series of pharmacologically active drugs, the
LB-100 series and the LB-200 series. The Company believes that the mechanism by
which compounds of the LB-100 series affect cancer cell growth is different from
cancer agents currently approved for clinical use. Lead compounds from each
series have activity against a broad spectrum of common and rarer human cancers
in cell culture systems. In addition, compounds from both series have
anti-cancer activity in animal models of glioblastoma multiforme, neuroblastoma,
and medulloblastoma, all cancers of neural tissue. Lead compounds of the LB-100
series also have activity against melanoma, breast cancer and sarcoma in animal
models and enhance the effectiveness of commonly used anti-cancer drugs in these
animal models. The enhancement of anti-cancer activity of these anti-cancer
drugs occurs at doses of LB-100 that do not significantly increase toxicity in
animals. It is therefore hoped that, when combined with standard anti-cancer
regimens against many tumor types, the Company's compounds will improve
therapeutic benefit without enhancing toxicity in humans.



Product Candidates


The LB-100 series consists of novel structures which have the potential to be
first in their class and may be useful in the treatment of not only several
types of cancer but also vascular and metabolic diseases. The LB-200 series
contains compounds which have the potential to be the most effective in its
class and may be useful for the treatment of chronic hereditary diseases, such
as Gaucher's disease, in addition to cancer and neurodegenerative diseases.

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The Company has demonstrated that lead compounds of both the LB-100 series and
the LB-200 are active against a broad spectrum of human cancers in cell culture
and against several types of human cancers in animal models. The research on
these compounds was initiated in 2006 under a Cooperative Research and
Development Agreement, or CRADA, with the National Institute of Neurologic
Disorders and Stroke, or NINDS, of the National Institutes of Health, or NIH,
dated March 22, 2006 that was subsequently extended through a series of
amendments until it terminated on April 1, 2013. As discussed below, the
Company's primary focus is on the clinical development of LB-100.



The LB-200 series consists of histone deacetylase inhibitors (HDACi). Many
pharmaceutical companies are also developing drugs of this type, and at least
two companies have HDACi approved for clinical use, in both cases for the
treatment of a type of lymphoma. Despite this significant competition, the
Company has demonstrated that its HDACi have broad activity against many cancer
types, have neuroprotective activity, and have anti-fungal activity. In
addition, these compounds have low toxicity. LB-200 has not yet advanced to the
clinical stage and would require additional capital to fund further development.
Accordingly, because of the Company's focus on the clinical development of
LB-100 and analogs for cancer therapy as described below in more detail, the
Company has decided not to actively pursue pre-clinical development of the
LB-200 series of compounds at this time. At this time, the Company intends to
only maintain composition of matter patents for LB-200.



Collaborations with leading academic research centers in the United States,
Europe and Asia have established the breadth of activity of LB-100 in
pre-clinical models of several major cancers. There is considerable scientific
interest in LB-100 because it exerts its activity by a novel mechanism and is
the first of its type to be evaluated so broadly in multiple animal models of
cancer and now in human beings. LB-100 is one of a series of serine/threonine
phosphatase (s/t ptase) inhibitors designed by the Company. The s/t ptases are
ubiquitous enzymes that regulate many cell-signaling networks important to cell
growth, division and death. The s/t ptases have long been appreciated as
potentially important targets for anti-cancer drugs. However, because of the
multi- functionality of these enzymes, it had been widely held that
pharmacologic inhibitors of s/t ptases would be too toxic to allow their
development as anti-cancer treatments, but the Company has shown that this is
not the case. LB-100 was well tolerated at doses associated with objective
regression (significant tumor shrinkage) and/or the arresting of tumor
progression in patients with progressive cancers.



Pre-clinical studies showed that LB-100 itself inhibits a spectrum of human
cancers and that combined with standard cytotoxic drugs and/or radiation, LB-100
potentiates their effectiveness against hematologic and solid tumor cancers
without enhancing toxicity. Given at very low doses in animal models of cancer,
LB-100 markedly increased the effectiveness of a PD-1 blocker, one of the widely
used new immunotherapy drugs. This finding raises the possibility that LB-100
may further expand the value of the expanding field of cancer immunotherapy.



The Company completed a Phase 1 clinical trial of LB-100 to evaluate its safety
that showed it is associated with antitumor activity in humans at doses that are
readily tolerable. Responses included objective regression (tumor shrinkage)
lasting for 11 months of a pancreatic cancer and cessation of growth
(stabilization of disease) for 4 months or more of 9 other progressive solid
tumors out of 20 patients who had measurable disease. As Phase 1 clinical trials
are fundamentally designed to determine safety of a new compound in humans, the
Company was encouraged by these results. The next step is to demonstrate in
Phase 2 clinical trials the efficacy of LB-100 in one or more specific tumor
types, against which the compound has well documented activity in pre-clinical
models.



As a compound moves through the FDA-approval process, it becomes an increasingly
valuable property, but at a cost of additional investment at each stage. As the
potential effectiveness of LB-100 has been documented at the clinical trial
level, the Company has allocated resources to expand the breadth and depth of
its patent portfolio. The Company's approach has been to operate with a minimum
of overhead, moving compounds forward as efficiently and inexpensively as
possible, and to raise funds to support each of these stages as certain
milestones are reached. The Company's longer-term objective is to secure one or
more strategic partnerships or licensing agreements with pharmaceutical
companies with major programs in cancer.



External risks associated with the Company’s business activities

Covid-19 Virus. The global outbreak of the novel coronavirus (Covid-19) has led
to disruptions in general economic activities worldwide, as businesses and
governments have taken broad actions to mitigate this public health crisis. In
light of the uncertain and continually evolving situation relating to the spread
of Covid-19, this pandemic could pose a risk to the Company. The extent to which
the coronavirus may impact the Company's business activities and capital raising
efforts will depend on future developments, which are highly uncertain and
cannot be predicted at this time. The Company intends to continue to monitor the
situation and may adjust its current business plans as more information and
guidance become available.



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The coronavirus pandemic presents a challenge to medical facilities worldwide.
As the Company's clinical trials are conducted on an outpatient basis, it is not
currently possible to predict the full impact of this developing health crisis
on such clinical trials, which could include delays in and increased costs of
such clinical trials. Current indications from the clinical research
organizations conducting the clinical trials for the Company are that such
clinical trials are being delayed or extended for several months or more as a
result of the coronavirus pandemic.



Inflation Risk. The Company does not believe that inflation has had a material
effect on its operations to date, other than its impact on the general economy.
However, there is a risk that the Company's operating costs could become subject
to inflationary and interest rate pressures in the future, which would have the
effect of increasing the Company's operating costs (including, specifically,
clinical trial costs), and which would put additional stress on the Company's
working capital resources.



Supply Chain Issues. The Company does not currently expect that supply chain
issues will have a significant impact on its business activities, including
its
ongoing clinical trials.



Potential Recession. There are various indications that the United States
economy may be entering a recessionary period. Although unclear at this time, an
economic recession would likely impact the general business environment and the
capital markets, which could, in turn, affect the Company.



The Company continues to monitor these matters and will adjust its current business and financing plans as more information and advice becomes available.



Results of Operations



To September 30, 2022the Company has not yet started any revenue-generating operations, does not have positive cash flow from operations and depends on its ability to raise equity to fund its operating needs.



The Company's condensed consolidated statements of operations as discussed
herein are presented below.


                                           Three Months Ended                 Nine Months Ended
                                              September 30,                     September 30,
                                          2022             2021             2022             2021

Revenues                              $          -     $          -     $          -     $          -

Costs and expenses:
General and administrative costs:
Compensation to related parties            643,957          573,472        1,963,409        2,450,641
Patent and licensing legal and
filing fees and costs                      271,163          137,114          944,789          365,466
Other costs and expenses                   290,993          299,953          875,016          946,266
Research and development costs             272,388          227,181          895,649          933,122
Total costs and expenses                 1,478,501        1,237,720        4,678,863        4,695,495
Loss from operations                    (1,478,501 )     (1,237,720 )     (4,678,863 )     (4,695,495 )
Interest income                              3,911              161            4,211              487
Interest expense                            (2,119 )              -           (5,240 )         (2,944 )
Foreign currency loss                       (1,300 )         (1,165 )         (1,339 )         (1,082 )
Net loss                              $ (1,478,009 )   $ (1,238,724 )   $ 

(4,681,231) ($4,699,034)

Net loss per common share - basic
and diluted                           $      (0.09 )   $      (0.09 )   $  

(0.30 ) $(0.35)

Weighted average common shares outstanding – basic and diluted 16,646,593 13,733,912 15,541,831 13,381,922



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Three months completed September 30, 2022 and 2021

Revenues. The Company recorded no revenue for the three months ended
September 30, 2022 and 2021.

General and Administrative Costs. For the three months ended September 30, 2022,
general and administrative costs were $1,206,113, which consisted of the fair
value of vested stock options issued to directors and officers of $396,883,
patent and licensing legal and filing fees and costs of $271,163, other
consulting and professional fees of $108,630, insurance expense of $114,983,
officer's salary and related costs of $207,091, cash-based director and board
committee fees of $53,324, licensing fees of $6,301, shareholder reporting costs
of $20,487, listing fees of $14,875, filing fees of $3,048, taxes and licenses
of $4,094, and other operating costs of $5,234.



For the three months ended September 30, 2021, general and administrative costs
were $1,010,539, which consisted of the fair value of vested stock options
issued to directors and officers of $347,222, patent and licensing legal and
filing fees and costs of $137,114, other consulting and professional fees of
$138,869, insurance expense of $92,663, officer's salary and related costs of
$207,264, cash-based director and board committee fees of $32,500, licensing
fees of $6,301, shareholder reporting costs of $21,000, listing fees of $14,500,
filing fees of $4,653, taxes and licenses of $3,481, and other operating costs
of $4,972.



General and administrative costs increased by $195,574, or 19.4%, in 2022 as
compared to 2021, primarily as a result of an increase in the fair value of
vested stock options issued to directors and officers of $49,661, an increase in
patent and licensing legal and filing fees and costs of $134,049, an increase in
insurance expense of $22,320, an increase in cash-based director and board
committee fees of $20,824, offset by a decrease in other consulting and
professional fees of $30,239.



Research and Development Costs. For the three months ended September 30, 2022,
research and development costs were $272,388, which consisted of contractor
costs incurred in connection with the synthesis work done to develop a new
supply of LB-100 of $1,246, clinical and related oversight costs of $34,232, and
pre-clinical research focused on development of additional novel anti-cancer
compounds to add to the Company's clinical pipeline of $236,910.



For the three months ended September 30, 2021, research and development costs
were $227,181, which consisted of contractor costs incurred in connection with
the synthesis work done to develop a new supply of LB-100 of $151,814, clinical
and related oversight costs of $7,726, and pre-clinical research focused on
development of additional novel anti-cancer compounds to add to the Company's
clinical pipeline of $67,641.



Research and development costs increased by $45,207, or 19.9%, in 2022 as
compared to 2021, primarily as a result of an increase in clinical and related
oversight costs of $26,506 and an increase in pre-clinical research focused on
development of additional novel anti-cancer compounds to add to the Company's
clinical pipeline of $169,269 offset by a decrease in contractor costs incurred
in connection with the synthesis work done to develop a new supply of LB-100 of
$150,568. The absence of costs associated with ongoing clinical trials during
the three months ended September 30, 2022 and 2021 reflects the slow accrual of
patients into such clinical trials and the delay in starting the Spanish Sarcoma
Group clinical trial.


Interest Income. For the three months ended September 30, 2022, the Company had
interest income of $3,911, as compared to interest income of $161 for the three
months ended September 30, 2021, related to the investment of funds generated by
the Company's financing activities.



Interest charges. For the three months ended September 30, 2022the Company had interest charges of $2,119 related to the financing of the civil liability insurance premium of its directors and officers. For the three months ended
September 30, 2021the Company had no interest expense.


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Loss of foreign currency. For the three months ended September 30, 2022the Company incurred a foreign exchange loss of $1,300compared to a foreign exchange loss of $1,165 for the three months ended September 30, 2021foreign currency transactions.



Net Loss. For the three months ended September 30, 2022, the Company incurred a
net loss of $1,478,009, as compared to a net loss of $1,238,724 for the three
months ended September 30, 2021.



Nine month period ended September 30, 2022 and 2021

Revenues. The Company recorded no revenue for the nine months ended
September 30, 2022 and 2021.



General and Administrative Costs. For the nine months ended September 30, 2022,
general and administrative costs were $3,783,214, which consisted of the fair
value of vested stock options issued to directors and officers of $1,160,649,
patent and licensing legal and filing fees and costs of $944,789, other
consulting and professional fees of $344,085, insurance expense of $349,254,
officer's salary and related costs of $627,579, cash-based director and board
committee fees of $221,510, licensing fees of $18,699, shareholder reporting
costs of $26,811, listing fees of $44,625, filing fees of $11,460, taxes and
licenses of $12,231, and other operating costs of $21,522.



For the nine months ended September 30, 2021, general and administrative costs
were $3,762,373, which consisted of the fair value of vested stock options
issued to directors and officers of $1,854,058, patent and licensing legal and
filing fees and costs of $365,466, other consulting and professional fees of
$488,245, insurance expense of $268,177, officer's salary and related costs of
$578,535, cash-based director and board committee fees of $60,332, licensing
fees of $18,698, shareholder reporting costs of $40,760, listing fees of
$43,500, filing fees of $17,217, taxes and licenses of $10,594, and other
operating costs of $16,791.



General and administrative costs increased by $20,841, or 1.0%, in 2022 as
compared to 2021, primarily as a result of an increase in patent and licensing
legal and filing fees and costs of $579,323, an increase in officer's salary and
related costs of $49,044, an increase in cash-based director and board committee
fees of $161,178, and an increase in insurance expense of $81,077, offset by a
decrease in the fair value of vested stock options issued to directors and
officers of $693,409, and a decrease in other consulting and professional fees
of $144,160.



Research and Development Costs. For the nine months ended September 30, 2022,
research and development costs were $895,649, which consisted of contractor
costs incurred in connection with the synthesis work done to develop a new
supply of LB-100 of $352,734, clinical and related oversight costs of $67,570,
and pre-clinical research focused on development of additional novel anti-cancer
compounds to add to the Company's clinical pipeline of $475,345.



For the nine months ended September 30, 2021, research and development costs
were $933,122, which consisted of contractor costs incurred in connection with
the synthesis work done to develop a new supply of LB-100 of $424,141, clinical
and related oversight costs of $382,134, and pre-clinical research focused on
development of additional novel anti-cancer compounds to add to the Company's
clinical pipeline of $126,847.



Research and development costs decreased by $37,473, or 4.0%, in 2022 as
compared to 2021, primarily as a result of a decrease in contractor costs
incurred in connection with the synthesis work done to develop a new supply of
LB-100 of $71,407, a decrease in clinical and related oversight costs of
$314,564, offset by an increase in pre-clinical research focused on development
of additional novel anti-cancer compounds to add to the Company's clinical
pipeline of $348,498.



Interest Income. For the nine months ended September 30, 2022, the Company had
interest income of $4,211, as compared to interest income of $487 for the nine
months ended September 30, 2021, related to the investment of funds generated by
the Company's financing activities.



38






Interest Expense. For the nine months ended September 30, 2022, the Company had
interest expense of $5,240, as compared to interest expense of $2,944 for the
nine months ended September 30, 2021 related to the financing of its directors
and officers liability insurance policy premium.



Foreign Currency Loss. For the nine months ended September 30, 2022, the Company
had a foreign currency loss of $1,339, as compared to a foreign currency loss of
$1,082 for the nine months ended September 30, 2021, from foreign currency
transactions.



Net Loss. For the nine months ended September 30, 2022, the Company incurred a
net loss of $4,681,231, as compared to a net loss of $4,699,034 for the nine
months ended September 30, 2021.



Cash and capital resources – September 30, 2022



The Company's condensed consolidated statements of cash flows as discussed
herein are presented below.



                                                         Nine Months Ended September 30,
                                                            2022                  2021
Net cash used in operating activities                 $     (3,403,289 )     $   (2,996,066 )
Net cash provided by (used in) investing activities                  -                    -
Net cash provided by financing activities                    5,141,384     
      3,887,394
Net increase in cash                                  $      1,738,095       $      891,328




At September 30, 2022, the Company had working capital of $6,411,140, as
compared to working capital of $4,790,338 at December 31, 2021, reflecting an
increase in working capital of $1,620,802 for the nine months ended September
30, 2022. The increase in working capital during the nine months ended September
30, 2022 was the result of the Company completing the sale of 2,900,000 shares
of common stock at a price of $2.00 per share in a registered direct equity
offering on April 12, 2022, generating net proceeds of $5,141,384, reduced by
the funding of the Company's ongoing research and development activities and
other ongoing operating expenses, including maintaining and developing its
patent portfolio. At September 30, 2022, the Company had cash of $6,561,840
available to fund its operations.



The Company's ability to continue as a going concern is dependent upon its
ability to raise additional equity capital to fund its research and development
activities and to ultimately achieve sustainable operating revenues and
profitability. The amount and timing of future cash requirements depends on the
pace and design of the Company's clinical trial program, which, in turn, depends
on the availability of operating capital to fund such activities.



Based on current operating plans, the Company estimates that existing cash
resources will provide sufficient working capital to fund the current clinical
trial program with respect to the development of the Company's lead anti-cancer
clinical compound LB-100 through approximately September 30, 2023. However,
existing cash resources will not be sufficient to complete development of and
obtain regulatory approval for the Company's product candidate, and the Company
will need to raise significant additional capital to do so. In addition, the
Company's operating plan may change as a result of many factors currently
unknown, and additional funds may be needed sooner than planned.



As market conditions present uncertainty as to the Company's ability to secure
additional funds, there can be no assurances that the Company will be able to
secure additional financing on acceptable terms, as and when necessary, to
continue to conduct operations. There is also significant uncertainty as to the
effect that the coronavirus pandemic may have on the Company's clinical trial
schedule and the amount and type of financing available to the Company in the
future.



If cash resources are insufficient to satisfy the Company's ongoing cash
requirements, the Company would be required to scale back or discontinue its
clinical trial program, as well as its licensing and patent prosecution efforts
and its technology and product development efforts, or obtain funds, if
available, through strategic alliances or joint ventures that could require the
Company to relinquish rights to and/or control of LB-100, or to discontinue
operations



39







Operating Activities. For the nine months ended September 30, 2022, operating
activities utilized cash of $3,403,289, as compared to utilizing cash of
$2,996,066 for the nine months ended September 30, 2021, to fund the Company's
ongoing research and development activities and to fund its other ongoing
operating expenses, including maintaining and developing its patent portfolio.



Investment activities. For the nine months ended September 30, 2022 and 2021, the Company had no investing activity.



Financing Activities. For the nine months September 30, 2022, financing
activities consisted of the gross proceeds from the sale of common stock in the
Company's direct equity offering of $5,800,000, reduced by offering costs of
$658,616. For the nine months ended September 30, 2021, financing activities
consisted of the gross proceeds from the sale of common stock in the Company's
direct equity offering of $4,192,478, reduced by offering costs of $502,717,
$17,100 from the exercise of common stock warrants, and $201,000 from the
exercise of common stock options. The Company also paid public offering costs of
$20,467 during the nine months ended September 30, 2021 related to the Company's
financing activities.



Principal Commitments



Clinical Trial Agreements



At September 30, 2022, the Company's unpaid remaining contractual commitments
pursuant to clinical trial agreements, and clinical trial monitoring agreements,
as described below, aggregated $8,002,000, which are currently scheduled to be
incurred through December 31, 2025. The Company's ability to conduct and fund
these contractual commitments is subject to the timely availability of
sufficient capital to fund such expenditures, as well as any changes in the
allocation or reallocation of such funds to the Company's current or future
clinical trial programs. The Company expects that the full amount of these
expenditures will be incurred only if such clinical trial programs are conducted
as originally designed and their respective enrollments and duration are not
modified or reduced. Clinical trial programs, such as the types that the Company
is engaged in, can be highly variable and can frequently involve a series of
changes and modifications over time as clinical data is obtained and analyzed,
and are frequently modified, suspended or terminated before the clinical trial
endpoint. Accordingly, such contractual commitments as discussed herein should
be considered as estimates only based on current clinical assumptions and
conditions, and are typically subject to significant revisions over time.



Moffitt. Effective August 20, 2018, the Company entered into a Clinical Trial
Research Agreement with the Moffitt Cancer Center and Research Institute
Hospital Inc., Tampa, Florida, effective for a term of five years, unless
terminated earlier by the Company pursuant to 30 days written notice. Pursuant
to the Clinical Trial Research Agreement, Moffitt agreed to conduct and manage a
Phase 1b/2 clinical trial to evaluate the therapeutic benefit of the Company's
lead anti-cancer clinical compound LB-100 to be administered intravenously in
patients with low or intermediate-1 risk myelodysplastic syndrome (MDS).



In November 2018, the Company received approval from the U.S. Food and Drug
Administration for its Investigational New Drug Application ("IND") to conduct a
Phase 1b/2 clinical trial to evaluate the therapeutic benefit of LB-100 in
patients with low and intermediate-1 risk MDS who have failed or are intolerant
of standard treatment. Patients with MDS, although usually older, are generally
well except for severe anemia requiring frequent blood transfusions. This Phase
1b/2 clinical trial utilizes LB-100 as a single agent in the treatment of
patients with low and intermediate-1 risk MDS, including patients with del(5q)
myelodysplastic syndrome (del5qMDS) failing first line therapy. The bone marrow
cells of patients with del5qMDS are deficient in PP2A by virtue of an acquired
mutation and are especially vulnerable to further inhibition of PP2A by LB-100.
The clinical trial began at a single site in April 2019 and the first patient
was entered into the clinical trial in July 2019. A total enrollment of 41
patients is planned. An interim analysis will be done after the first 21
patients are entered. If there are 3 or more responders but fewer than 7, an
additional 20 patients will be entered. If at any point there are 7 or more
responders, this will be sufficient evidence to support continued development of
LB-100 for the treatment of low and intermediate-1 risk MDS. Recruitment has
been slow and the Covid-19 pandemic has further reduced recruitment of patients
into the protocol. At the current rate of accrual, the clinical trial is
expected to be completed by June 30, 2025. However, with additional funds, the
Company would consider adding two additional MDS centers to the Phase 2 portion
of the study to accelerate patient accrual.



40







During the three months ended September 30, 2022 and 2021, the Company incurred
costs of $9,218 and $0, respectively, pursuant to this agreement, which have
been included in research and development costs in the Company's consolidated
statements of operations. During the nine months ended September 30, 2022 and
2021, the Company incurred costs of $18,623 and $17,693, respectively, pursuant
to this agreement, which have been included in research and development costs in
the Company's consolidated statements of operations. As of September 30, 2022,
total costs of $123,300 have been incurred pursuant to this agreement. The
Company's aggregate commitment pursuant to this agreement, less amounts
previously paid to date, totaled approximately $590,000 as of September 30,
2022, which is expected to be incurred through December 31, 2025.



GEIS. Effective July 31, 2019, the Company entered into a Collaboration
Agreement for an Investigator-Initiated Clinical Trial with the Spanish Sarcoma
Group (Grupo Español de Investigación en Sarcomas or "GEIS"), Madrid, Spain, to
carry out a study entitled "Randomized phase I/II trial of LB-100 plus
doxorubicin vs. doxorubicin alone in first line of advanced soft tissue
sarcoma". The purpose of this clinical trial is to obtain information with
respect to the efficacy and safety of LB-100 combined with doxorubicin in soft
tissue sarcomas. Doxorubicin is the global standard for initial treatment of
advanced soft tissue sarcomas ("ASTS"). Doxorubicin alone has been the mainstay
of first line treatment of ASTS for over 40 years, with little therapeutic gain
from adding cytotoxic compounds to or substituting other cytotoxic compounds for
doxorubicin. In animal models, LB-100 consistently enhances the anti-tumor
activity of doxorubicin without apparent increases in toxicity.



GEIS has a network of referral centers in Spain and across Europe that have an
impressive track record of efficiently conducting innovative studies in ASTS.
The Company agreed to provide GEIS with a supply of LB-100 to be utilized in the
conduct of this clinical trial, as well as to provide funding for the clinical
trial. The goal was to enter approximately 150 patients in this clinical trial
over a period of two years. As advanced sarcoma is a very aggressive disease,
the design of the study assumes a median progression free survival (PFS, no
evidence of disease progression or death from any cause) of 4.5 months in the
doxorubicin arm and an alternative median PFS of 7.5 months in the doxorubicin
plus LB-100 arm to demonstrate a statistically significant decrease in relative
risk of progression or death by adding LB-100. There is a planned interim
analysis of the primary endpoint when approximately 50% of the 102 events
required for final analysis is reached.



The Company had previously expected this clinical trial to begin during the quarter ended June 30, 2020. However, during July 2020, the Spanish regulatory authority informed the company that, although it approved the scientific and ethical basis of the protocol, it required the company to manufacture new stock of LB-100 in accordance with current Spanish pharmaceutical manufacturing standards. These standards were adopted after the production of the Company’s existing LB-100 inventory.



In order to manufacture a new inventory supply of LB-100 for the GEIS clinical
trial, the Company engaged a number of vendors to carry out the multiple tasks
needed to make and gain approval of a new clinical product for investigational
study in Spain. These tasks include the synthesis under good manufacturing
practices (GMP) of the active pharmacologic ingredient (API), with documentation
of each of the steps involved by an independent auditor. The API was then
transferred to a vendor that prepares the clinical drug product, also under GMP
conditions documented by an independent auditor. The clinical drug product was
then sent to a vendor to test for purity and sterility, provide appropriate
labels, store the drug, and distribute the drug to the clinical centers for use
in the clinical trials. A formal application documenting all steps taken to
prepare the clinical drug product for clinical use must be submitted to the
appropriate regulatory authorities for review and approval before being used in
a clinical trial.



As of September 30, 2022, this program to provide new inventory of the clinical
drug product for the Spanish Sarcoma Group study, and potentially for subsequent
multiple trials within the European Union, had cost $1,144,041. While the
production of new inventory has been completed, immaterial amounts of trailing
costs are expected.



On October 13, 2022, the Company announced that the Spanish Agency for Medicines
and Health Products (Agencia Española de Medicamentos y Productos Sanitarios or
"AEMPS") had authorized a Phase 1b/randomized Phase 2 study of LB-100, the
Company's lead clinical compound, plus doxorubicin, versus doxorubicin alone,
the global standard for initial treatment of advanced soft tissue sarcomas
(ASTS). Consequently, the GEIS clinical trial is now scheduled to commence
during late 2022 or the first quarter of 2023 and to be completed by June 30,
2025. Up to 170 patents will be entered into the clinical trial. The Phase 1b
section of the protocol is expected to be completed by December 31, 2023, at
which time the Company expects to have data on both response and toxicity from
this portion of the clinical trial.



41







The interim analysis of this clinical trial will be done before full accrual of
patients is completed to determine whether the study has the possibility of
showing superiority of the combination of LB-100 plus doxorubicin compared to
doxorubicin alone. A positive study would have the potential to change the
standard therapy for this disease after four decades of failure to improve the
marginal benefit of doxorubicin alone.



The Company's agreement with GEIS provides for various payments based on
achieving specific milestones over the term of the agreement. Through September
30, 2022, the Company has paid GEIS an aggregate of $67,582 towards the second
milestone payment for current work being done under this agreement.



During the three months ended September 30, 2022 and 2021, the Company did not
incur any costs pursuant to this agreement. During the nine months ended
September 30, 2022 and 2021, the Company incurred costs of $0 and $24,171,
respectively, pursuant to this agreement, which have been included in research
and development costs in the Company's consolidated statements of operations. As
of September 30, 2022, total costs of $155,053 have been incurred pursuant to
this agreement. The Company's aggregate commitment pursuant to this agreement,
less amounts previously paid to date, totaled approximately $3,836,000 as of
September 30, 2022, which is expected to be incurred through December 31, 2025.



On October 7, 2022, the third milestone pursuant to this agreement was achieved.
Accordingly, as of that date, the balance remaining pursuant to the second
milestone of $18,244, and the amount due upon achieving the third milestone of
$254,543 became due, and were paid subsequent to September 30, 2022.



City of Hope. Effective January 18, 2021, the Company executed a Clinical
Research Support Agreement with the City of Hope National Medical Center, an
NCI-designated comprehensive cancer center, and City of Hope Medical Foundation
(collectively, "City of Hope"), to carry out a Phase 1b clinical trial of
LB-100, the Company's first-in-class protein phosphatase inhibitor, combined
with a standard regimen for treatment of untreated extensive- stage disease
small cell lung cancer (ED-SCLC). LB-100 will be given in combination with
carboplatin, etoposide and atezolizumab, an FDA-approved but marginally
effective regimen, to previously untreated ED-SCLC patients. The dose of LB-100
will be escalated with the standard fixed doses of the 3-drug regimen to reach a
recommended Phase 2 dose (RP2D). Patient entry will be expanded so that a total
of 12 patients will be evaluable at the RP2D to confirm the safety of the LB-100
combination and to look for potential therapeutic activity as assessed by
objective response rate, duration of overall response, progression-free-survival
and overall survival.



The clinical trial was initiated on March 9, 2021, with patient accrual expected
to take approximately two years to complete. However, patient accrual has been
slower than expected. The Company is currently seeking to add two additional
centers to increase the rate of patient accrual. With the additional sites, the
Company expects this clinical trial to be completed by December 31, 2024.
Without additional sites, the completion date for this clinical trial will be no
sooner than December 31, 2025.



During the three months ended September 30, 2022 and 2021, the Company did not
incur any costs pursuant to this agreement. During the nine months ended
September 30, 2022 and 2021, the Company incurred costs of $0 and $525,528,
respectively, pursuant to this agreement. The Company's aggregate commitment
pursuant to this agreement, less amounts previously paid to date, totaled
approximately $2,433,000 as of September 30, 2022, which is expected to be
incurred through December 31, 2024, based upon a target of 42 enrollees. If a
significant number of patients fail during the dose-escalation process, an
increase of up to 12 patients would likely be necessary, at an estimated
additional cost of approximately $800,000. The Company currently expects that
enrollment in this clinical trial will range from approximately 18 to 30
enrollees, with 24 enrollees as the most likely number. Should fewer than 42
enrollees be required, the Company has agreed to compensate City of Hope on
a
per enrollee basis.



National Cancer Institute Pharmacologic Clinical Trial. In May 2019, the
National Cancer Institute (NCI) initiated a glioblastoma (GBM) pharmacologic
clinical trial. During the fourth quarter of 2019, the NCI enrolled the first
two patients of a planned eight patient pharmacologic study of the ability of
LB-100 to enter the brain and penetrate recurrent brain tumors in patients where
surgical removal of the cancers is indicated (clinical trials registry
NCT03027388). This study is being conducted and funded by the NCI under a
Cooperative Research and Development Agreement, with the Company being required
to provide the LB-100 clinical compound.



42







Primary malignant brain tumors (gliomas) are very challenging to treat.
Radiation combined with the chemotherapeutic drug temozolomide has been the
mainstay of therapy of the most aggressive gliomas (glioblastoma multiforme or
GBM) for decades, with some further benefit gained by the addition of one or
more anti-cancer drugs, but without major advances in overall survival for the
majority of patients. In animal models of GBM, the Company's novel protein
phosphatase inhibitor, LB-100, has been found to enhance the effectiveness of
radiation, temozolomide chemotherapy treatments and immunotherapy, raising the
possibility that LB-100 may improve outcomes of standard GBM treatment in the
clinic. Although LB-100 has proven safe in patients at doses associated with
apparent anti-tumor activity against several human cancers arising outside the
brain, the ability of LB-100 to penetrate tumor tissue arising in the brain is
not known. Unfortunately, many drugs potentially useful for GBM treatment do not
enter the brain in amounts necessary for anti-cancer action.



The neurosurgical unit at the NCI, which had been closed to research studies due
to the Covid-19 epidemic, was reopened and patient accrual has been completed,
and the Company is awaiting the resulting data. There is an urgent need to
improve therapy for this type of aggressive brain tumor. If the NCI study shows
that LB-100 does penetrate the brain, a clinical study of LB-100 in combination
with standard therapy for GBM, the drug temozolomide and radiation, both of
which have been well documented in pre-clinical studies to be significantly
enhanced by LB-100, would be of significant interest to neuro-oncologists
frustrated by decades of limited advances in therapy for this common brain
tumor
in adults.



The NCI study is designed to determine the extent to which LB-100 enters
recurrent malignant gliomas. Patients having surgery to remove one or more
tumors will receive one dose of LB-100 prior to surgery and have blood and tumor
tissue analyzed to determine the amount of LB-100 present and to determine
whether the cells in the tumors show the biochemical changes expected to be
present if LB-100 reaches its molecular target. As a result of the innovative
design of the NCI study, data from a few patients should be sufficient to
provide a sound rationale for conducting a larger clinical trial to determine
the effectiveness of adding LB-100 to the standard treatment regimen for GBMs.
Five patients have been entered and analysis of the blood and tissue will now
proceed. If there is evidence in at least two of the patients of penetration of
LB 100 into tumor tissue, the study will be deemed as successful.



Clinical Trial Monitoring Agreements



Moffitt. On September 12, 2018, the Company finalized a work order agreement
with Theradex Systems, Inc. ("Theradex"), an international contract research
organization ("CRO"), to monitor the Phase 1b/2 clinical trial being managed and
conducted by Moffitt. The clinical trial began in April 2019 and the first
patient was entered into the clinical trial in July 2019. At the current rate of
accrual, the clinical trial is expected to be completed by June 30, 2025.



Costs under this work order agreement are estimated to be approximately
$954,000, with such payments expected to be divided approximately 94% to
Theradex for services and approximately 6% for payments for pass-through costs.
The costs of the Phase 1b/2 clinical trial being paid to or through Theradex are
being recorded and charged to operations based on the periodic documentation
provided by the CRO. During the three months ended September 30, 2022 and 2021,
the Company incurred costs of $11,953 and $869, respectively, pursuant to this
work order. During the nine months ended September 30, 2022 and 2021, the
Company incurred costs of $19,791 and $9,350, respectively, pursuant to this
work order. As of September 30, 2022, total costs of $111,676 have been incurred
pursuant to this work order agreement. The Company's aggregate commitment
pursuant to this clinical trial monitoring agreement, less amounts previously
paid to date, totaled approximately $853,000 as of September 30, 2022, which is
expected to be incurred through June 30, 2025.



City of Hope. On February 5, 2021, the Company signed a new work order agreement
with Theradex to monitor the City of Hope investigator-initiated clinical trial
in small cell lung cancer in accordance with FDA requirements for oversight by
the sponsoring party. Costs under this work order agreement are estimated to be
approximately $335,000. During the three months ended September 30, 2022 and
2021, the Company incurred costs of $7,731 and $6,857, respectively, pursuant to
this work order. During the nine months ended September 30, 2022 and 2021, the
Company incurred costs of $23,466 and $21,170, respectively, pursuant to this
work order. As of September 30, 2022, total costs of $48,092 have been incurred
pursuant to this work order agreement. The Company's aggregate commitment
pursuant to this clinical trial monitoring agreement, less amounts previously
paid to date, totaled approximately $290,000 as of September 30, 2022, which is
expected to be incurred through June 30, 2025.



43






Patent and license agreements

INSERM. On March 22, 2018, the Company entered into a Patent Assignment and
Exploitation Agreement with INSERM TRANSFERT SA, acting as delegatee of the
French National Institute of Health and Medical Research, for the assignment to
the Company of INSERM'S interest in United States Patent No. 9,833,450 entitled
"Oxabicyloheptanes and Oxabicycloheptenes for the Treatment of Depressive and
Stress Disorders", which was filed with the United States Patent and Trademark
Office in the name of INSERM and the Company as co-owners on February 19, 2015
and granted on May 12, 2017, and related patent applications and filings. INSERM
is a French public institution dedicated to research in the field of health and
medicine that had previously entered into a Material Transfer Agreement with the
Company to allow INSERM to conduct research on the Company's proprietary
compound LB-100 and/or its analogs for the treatment of depressive or stress
disorders in humans. Pursuant to the Agreement, the Company has agreed to make
certain milestone payments to INSERM aggregating up to $1,750,000 upon
achievement of development milestones and up to $6,500,000 upon achievement of
commercial milestones. The Company also agreed to pay INSERM certain commercial
royalties on net sales of products attributed to the Agreement. The Company's
initial plan was to complete the validation process to evaluate LB-100 for the
treatment of depressive or stress disorders in humans within three years;
however, the exploitation of this patent for the treatment of depressive and
stress disorders in humans will require substantial additional capital and/or a
joint venture or other type of business arrangement with a pharmaceutical
company with substantially greater capital and business resources than those
available to the Company. As there can be no assurances that the Company will be
able to obtain the capital or business resources necessary to focus on the
exploitation of this patent, it is uncertain as to when, if at all, the Company
may reach any of the development or commercialization milestones under the
Agreement. As of September 30, 2022 and December 31, 2021, no amounts were
due
under this agreement.



Moffitt. Effective August 20, 2018, the Company entered into an Exclusive
License Agreement with Moffitt. Pursuant to the License Agreement, Moffitt
granted the Company an exclusive license under certain patents owned by Moffitt
(the "Licensed Patents") relating to the treatment of MDS and a non-exclusive
license under inventions, concepts, processes, information, data, know-how,
research results, clinical data, and the like (other than the Licensed Patents)
necessary or useful for the practice of any claim under the Licensed Patents or
the use, development, manufacture or sale of any product for the treatment of
MDS which would otherwise infringe a valid claim under the Licensed Patents. The
Company was obligated to pay Moffitt a non-refundable license issue fee of
$25,000 after the first patient is entered into a Phase 1b/2 clinical trial to
be managed and conducted by Moffitt. The clinical trial began at a single site
in April 2019 and the first patient was entered into the clinical trial in July
2019. The Company is also obligated to pay Moffitt an annual license maintenance
fee of $25,000 commencing on the first anniversary of the Effective Date and
every anniversary thereafter until the Company commences payment of minimum
royalty payments. The Company has also agreed to pay non-refundable milestone
payments to Moffitt, which cannot be credited against earned royalties payable
by the Company, based on reaching various clinical and commercial milestones
aggregating $1,897,000, subject to reduction by 40% under certain circumstances
relating to the status of Valid Claims, as such term is defined in the License
Agreement. During the three months ended September 30, 2022 and 2021, the
Company recorded charges to operations of $6,301 and $6,301, respectively, in
connection with its obligations under the License Agreement. During the nine
months ended September 30, 2022 and 2021, the Company recorded charges to
operations of $18,699 and $18,698, respectively, in connection with its
obligations under the License Agreement. As of September 30, 2022, no milestones
had yet been attained.



The Company will be obligated to pay Moffitt earned royalties of 4% on worldwide
cumulative net sales of royalty-bearing products, subject to reduction to 2%
under certain circumstances, on a quarterly basis, with a minimum royalty
payment of $50,000 in the first four years after sales commence, and $100,000 in
year five and each year thereafter, subject to reduction by 40% under certain
circumstances relating to the status of Valid Claims, as such term is defined in
the License Agreement. The Company's obligation to pay earned royalties under
the License Agreement commences on the date of the first sale of a
royalty-bearing product, and shall automatically expire on a country-by-country
basis on the date on which the last valid claim of the Licensed Patents expires,
lapses or is declared invalid, and the obligation to pay any earned royalties
under the License Agreement shall terminate on the date on which the last valid
claim of the Licensed Patents expires, lapses, or is declared to be invalid
in
all countries.



44






Employment contracts with managers



During July and August 2020, the Company entered into one-year employment
agreements with its executive officers, consisting of Dr. John S. Kovach, Eric
J. Forman, Dr. James S. Miser, and Robert N. Weingarten, which provided for
aggregate annual compensation of $640,000, payable monthly. The employment
agreements are automatically renewable for additional one-year periods unless
terminated by either party upon 60 days written notice prior to the end of the
applicable one-year period, or by death, or by termination for cause. These
employment agreements were automatically renewed for additional one-year periods
in July and August 2021 and 2022.



On April 9, 2021, the Board of Directors increased the annual compensation of
Eric J. Forman, the Company's Chief Administrative Officer, Dr. James S. Miser,
the Company's Chief Medical Officer, and Robert N. Weingarten, the Company's
Chief Financial Officer, under the employment agreements, such that the total
aggregate annual compensation of all officers increased to $775,000, effective
May 1, 2021.


Other material agreements and contracts



On December 24, 2013, the Company entered into an agreement with NDA Consulting
Corp. for consultation and advice in the field of oncology research and drug
development. As part of the agreement, NDA also agreed to cause its president,
Dr. Daniel D. Von Hoff, M.D., to become a member of the Company's Scientific
Advisory Committee. The term of the agreement was for one year and provided for
a quarterly cash fee of $4,000. The agreement has been automatically renewed for
additional one-year terms on its anniversary date since 2014. Consulting and
advisory fees charged to operations pursuant to this agreement were $4,000 and
$4,000 for the three months ended September 30, 2022 and 2021, respectively, and
$12,000 and $12,000 for the nine months ended September 30, 2022 and 2021, which
were included in research and development costs in the consolidated statements
of operations.



Effective September 14, 2015, the Company entered into a Collaboration Agreement
with BioPharmaWorks, pursuant to which the Company engaged BioPharmaWorks to
perform certain services for the Company. Those services included, among other
things: (a) assisting the Company to (i) commercialize its products and
strengthen its patent portfolio, (ii) identify large pharmaceutical companies
with potential interest in the Company's product pipeline, and (iii) prepare and
deliver presentations concerning the Company's products; (b) at the request of
the Board of Directors, serving as backup management for up to three months
should the Company's Chief Executive Officer and scientific leader be
temporarily unable to carry out his duties; (c) being available for consultation
in drug discovery and development; and (d) identifying providers and overseeing
tasks relating to clinical use and commercialization of new compounds.



BioPharmaWorks was founded in 2015 by former Pfizer scientists with extensive
multi-disciplinary research and development and drug development experience. The
Collaboration Agreement was for an initial term of two years and automatically
renews for subsequent annual periods unless terminated by a party not less than
60 days prior to the expiration of the applicable period. In connection with the
Collaboration Agreement, the Company agreed to pay BioPharmaWorks a monthly fee
of $10,000, subject to the right of the Company to pay a negotiated hourly rate
in lieu of the monthly payment and agreed to issue to BioPharmaWorks certain
equity-based compensation. Excluding expense reimbursements, the Company
recorded charges to operations pursuant to this Collaboration Agreement of
$30,000 and $30,000 for the three months ended September 30, 2022 and 2021,
respectively, and $90,000 and $90,000 for the nine months ended September 30,
2022 and 2021, respectively, which were included in research and development
costs in the consolidated statements of operations.



Effective August 12, 2020, the Company entered into a Master Service Agreement
with the Foundation for Angelman Syndrome Therapy (FAST) to collaborate in
supporting pre-clinical studies of the potential benefit of LB-100 in a mouse
model of Angelman Syndrome (AS) as reported in The Proceedings of The National
Academy of Science (Wang et al, June 3, 2019). The pre-clinical studies were to
be conducted at The University of California - Davis under the direction of Dr.
David Segal, an internationally recognized leader in AS research. If the
pre-clinical studies confirm that LB-100 reduces AS signs in rodent models, the
Company has agreed to enter into discussions with FAST with respect to possible
collaborations to most efficiently assess the benefit of LB-100 in patients with
AS, which is a rare disease affecting an estimated one out of 12,000 to one out
of 20,000 persons in the United States. The genetic cause of AS, reduced
function of a specific maternal gene called Ube3, has been understood for some
time, but the molecular abnormality resulting from the genetic lesion has now
been shown to be increased concentrations of protein phosphatase 2A (PP2A), a
molecular target of the Company's investigational compound, LB-100. The Company
has agreed to provide FAST with a supply of LB-100 to be utilized in the conduct
of this study, which was initially expected to be completed within three years.
Conditioned on FAST's completion of this study, the Company has agreed to pay
FAST five percent (5%) of all proceeds, as defined in the Master Service
Agreement, received by the Company, up to a maximum of $250,000 from the
exploitation of the study results.



45







The research team at the University of California - Davis recently completed
their pre-clinical study of the potential benefit of LB-100 in a mouse model of
AS, and the results are currently under review by FAST. The preliminary analysis
indicates that the positive results previously reported by Chinese investigators
were not confirmed in the US model. The Company is currently awaiting input from
FAST as to whether it intends to continue to pursue pre-clinical studies of LB
100. To date, FAST has not indicated whether it desires to pursue further
studies of LB-100,



On October 8, 2021, the Company entered into a Development Collaboration
Agreement with the Netherlands Cancer Institute, Amsterdam (NKI), one of the
world's leading comprehensive cancer centers, and Oncode Institute, Utrecht, a
major independent cancer research center, to identify the most promising drugs
to be combined with LB-100, and potentially LB-100 analogues, to be used to
treat a range of cancers, as well as to identify the specific molecular
mechanisms underlying the identified combinations. The Company has agreed to
fund the study and provide a sufficient supply of LB-100 to conduct the study.
The study is expected to take approximately two years to conduct. During the
three months ended September 30, 2022, the Company incurred charges in the
amount of $46,068 with respect to this agreement, which amount is included in
research and development costs in the Company's consolidated statements of
operations. During the nine months ended September 30, 2022, the Company
incurred charges in the amount of $149,184 with respect to this agreement, which
amount is included in research and development costs in the Company's
consolidated statements of operations. As of September 30, 2022, total costs of
$204,433 have been incurred pursuant to this collaboration agreement. The
Company's aggregate commitment pursuant to this collaboration agreement, less
amounts previously paid to date, totaled approximately $250,000 as of September
30, 2022, which is expected to be incurred through June 30, 2025. As the work is
being conducted in Europe and is paid for in Euros, final costs are subject to
foreign currency fluctuations between the United States Dollar and the Euro.



On February 2, 2012, the Company entered into a contract with MRI Global for the
analysis and stability testing of LB-100. On June 10, 2022, the contract was
amended to reflect a new total contract price of $273,980 and an estimated
completion date of April 30, 2023. During the three months ended September 30,
2022 and 2021, the Company incurred costs of $6,749 and $0, respectively,
pursuant to this work order. During the nine months ended September 30, 2022 and
2021, the Company incurred costs of $27,102 and $17,432, respectively, pursuant
to this work order. As of September 30, 2022, total costs of $212,778 have been
incurred pursuant to this work order agreement. The Company's aggregate
commitment pursuant to this clinical trial monitoring agreement, less amounts
previously paid to date, totaled approximately $61,000 as of September 30, 2022.



Off-balance sheet arrangements

To September 30, 2022the Company had no transaction, obligation or relationship that could be considered an off-balance sheet arrangement.

Trends, events and uncertainties

The research and development of new pharmaceutical compounds is, by nature, unpredictable. Although the Company undertakes research and development efforts with commercially reasonable diligence, there can be no assurance that the Company’s cash position will be sufficient to permit it to develop pharmaceutical compounds to the extent necessary to generate future revenues sufficient to support operations.

There can be no assurances that the Company's pharmaceutical compounds will
obtain the regulatory approvals and market acceptance to achieve sustainable
revenues sufficient to support operations. Even if the Company is able to
generate revenues, there can be no assurances that it will be able to achieve
operating profitability or positive operating cash flows. There can be no
assurances that the Company will be able to secure additional financing, to the
extent required, on acceptable terms or at all. If cash resources are
insufficient to satisfy the Company's ongoing cash requirements, the Company
would be required to reduce or discontinue its research and development
programs, or attempt to obtain funds, if available (although there can be no
assurances), through strategic alliances that may require the Company to
relinquish rights to certain of its pharmaceutical compounds, or to curtail or
discontinue its operations entirely.



Other than as discussed above, the Company is not currently aware of any trends,
events or uncertainties that are likely to have a material effect on its
financial condition in the near term, although it is possible that new trends or
events may develop in the future that could have a material effect on the
Company's financial condition.



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