10-K

cns_10k-123120.htm

FORM 10-K

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C., 20549

FORM 10-K

For the fiscal year ended December 31,

2020

For the transition period from _________________

to ___________________

Commission File Number: 001-39126

CNS Pharmaceuticals, Inc.

(Exact Name of Registrant as Specified

in its Charter)

2100 West Loop South, Suite 900

Houston, Texas 77027

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s Telephone Number,

including Area Code: 800-946-9185

Securities registered pursuant to Section 12(b) of the Exchange

Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

Common Stock CNSP The NASDAQ Stock Market LLC

Indicate by check mark if the registrant is a well-known seasoned

issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO

☒

Indicate by check mark if the registrant is not required to

file reports pursuant to Section 13 or Section 15(d) of the Act. YES ☐NO

☒

Indicate by check mark whether the registrant (1) has

filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the

preceding 12 months (or for such shorter periods as the registrant was required to file such reports) and (2) has been

subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted

electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding

12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO

☐

Indicate by check mark whether the registrant is a large accelerated

filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions

of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging

growth company” in Rule 12b-2 of the Exchange Act. (check one)

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☒

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the

registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards

provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report

on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under

Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its

audit report. ☐

Indicate by check mark whether the registrant is a shell company

(as defined in Rule 12b-2 of the Act). YES ☐ NO

☒

The registrant was not a public company as of the last business

day of its most recently completed second fiscal quarter and, therefore, cannot calculate the aggregate market value of its voting

and non-voting common equity held by non-affiliates as of such date.

The number of shares of the registrant’s common stock

outstanding as of February 12, 2021 was 25,300,868.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of this registrant’s definitive proxy statement

for its 2021 Annual Meeting of Stockholders to be filed with the SEC no later than 120 days after the end of the registrant’s

fiscal year are incorporated herein by reference in Part III of this Annual Report on Form 10-K.

TABLE OF CONTENTS

Page

PART I

ITEM 1. Business 5

ITEM 1A. Risk Factors 22

ITEM 1B. Unresolved Staff Comments 38

ITEM 2. Properties 38

ITEM 3. Legal Proceedings 39

ITEM 4. Mine Safety Disclosures 39

PART II

ITEM 6. Selected Financial Data 40

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risks 45

ITEM 8. Financial Statements and Supplementary Data 45

ITEM 9A. Controls and Procedures 65

ITEM 9B. Other Information 65

PART III

ITEM 10 Directors, Executive Officers and Corporate Governance 66

ITEM 11 Executive Compensation 66

ITEM 14 Principal Accountant Fees and Services 67

PART IV

ITEM 15 Exhibits, Financial Statement Schedules 68

Exhibit Index 68

Signatures 70

References in this Form 10-K to “we”,

“us”, “its”, “our” or the “Company” are to CNS Pharmaceuticals, Inc., as appropriate

to the context.

Cautionary Statement

About Forward-Looking Statements

We make forward-looking statements under

the “Risk Factors,” “Business,” “Management’s Discussion and Analysis of Financial Condition

and Results of Operations” and in other sections of this report. In some cases, you can identify these statements by forward-looking

words such as “may,” “might,” “should,” “would,” “could,” “expect,”

“plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,”

“potential” or “continue,” and the negative of these terms and other comparable terminology. These forward-looking

statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our

future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions

based on our current expectations and projections about future events. There are important factors that could cause our actual

results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or

achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks and

uncertainties described under “Risk Factors”.

While we believe we have identified material

risks, these risks and uncertainties are not exhaustive. Other sections of this report may describe additional factors that could

adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment.

New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we

assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual

results to differ materially from those contained in any forward-looking statements.

Although we believe the expectations reflected

in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements.

Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking

statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update

any of these forward-looking statements after the date of this report to conform our prior statements to actual results or revised

expectations, and we do not intend to do so.

Forward-looking statements include, but

are not limited to, statements about:

· our ability to obtain additional funding to develop our product candidates;

· the need to obtain regulatory approval of our product candidates;

· the success of our clinical trials through all phases of clinical development;

· our ability to commercialize our product candidates;

· market acceptance of our product candidates;

· competition from existing products or new products that may emerge;

· potential product liability claims;

· our ability to adequately support future growth; and

We caution you not to place undue reliance

on the forward-looking statements, which speak only as of the date of this report in the case of forward-looking statements contained

in this report.

You should not rely upon forward-looking

statements as predictions of future events. Our actual results and financial condition may differ materially from those indicated

in the forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements. Although we

believe that the expectations reflected in the forward looking-statements are reasonable, we cannot guarantee future results, levels

of activity, performance or achievements. Therefore, you should not rely on any of the forward-looking statements. In addition,

with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements

contained in the Private Securities Litigation Reform Act of 1995.

PART I

Item 1. Business.

Overview

We are a clinical pharmaceutical company

organized as a Nevada corporation in July 2017 to focus on the development of anti-cancer drug candidates for the treatment of

brain and central nervous system tumors, based on intellectual property that we license under license agreements with Houston Pharmaceuticals,

Inc. (“HPI”) and The University of Texas M.D. Anderson Cancer Center (“UTMDACC”) and own pursuant to a

collaboration and asset purchase agreement with Reata Pharmaceuticals, Inc. (“Reata”).

We believe our lead drug candidate, Berubicin,

if approved by the FDA, may be a significant discovery in the treatment of glioblastoma. Glioblastoma are tumors that arise from

astrocytes, which are star-shaped cells making up the supportive tissue of the brain. These tumors are usually highly malignant

(cancerous) because the cells reproduce quickly, and they are supported by a large network of blood vessels. Berubicin is an anthracycline,

which is a class of drugs that are among the most powerful chemotherapy drugs known. Based on limited clinical data, we believe

Berubicin is the first anthracycline that appears to have crossed the blood brain barrier and target brain cancer cells. While

our current focus is solely on the development of Berubicin, we are also in the process of attempting to secure intellectual property

rights in additional compounds that may be developed into drugs to treat cancers.

Berubicin was discovered at MD Anderson

by Dr. Waldemar Priebe, the founder of the Company. Through a series of transactions, Berubicin was initially licensed to Reata.

Reata conducted a Phase I clinical trial on Berubicin but subsequently allowed their IND with the FDA to lapse for strategic reasons.

This required us to obtain a new IND for Berubicin before beginning further clinical trials. On December 17, 2020, we announced

that our IND application with the FDA for Berubicin for the treatment of Glioblastoma Multiforme was in effect. We intend to initiate

our trial during the first quarter of 2021 to investigate the efficacy of Berubicin in adults with Glioblastoma Multiforme who

have failed first-line therapy. Recent correspondence between us and the FDA resulted in modifications to our previously disclosed

trial design, including designating overall survival (OS) as the primary endpoint of the study. OS is a rigorous endpoint that

the FDA has recognized as a basis for approval of oncology drugs when a statistically significant improvement can be shown relative

to a randomized control arm.

The planned Phase 2 trial will evaluate

the efficacy of Berubicin in patients with Glioblastoma Multiforme who have failed primary treatment for their disease, and results

will be compared to the current standard of care, with 2 to 1 randomization of the 243 patients to Berubicin or Lomustine. Subjects

receiving Berubicin will be administered a 2-hour IV infusion of 7.5 mg/m2 berubicin hydrochloride daily for three consecutive

days followed by 18 days off (21-day cycle). Lomustine is administered orally. The trial will include an interim analysis that

will evaluate the comparative effectiveness of these treatments. The trial's adaptive design is intended to allow this interim

analysis of the data to demonstrate meaningful differences in efficacy between treatments and then to allow an adjustment to the

size of the patient population in the trial for maximum efficiency in terms of time in development. Even if Berubicin is approved,

there is no assurance that patients will choose an infusion treatment, as compared to the current standard of care, which requires

oral administration.

We do not have manufacturing facilities

and all manufacturing activities are contracted out to third parties. Additionally, we do not have a sales organization.

On November 21, 2017, we entered into a

Collaboration and Asset Purchase Agreement with Reata (the “Reata Agreement”). Pursuant to the Reata Agreement we purchased

all of Reata’s intellectual property and development data regarding Berubicin, including all trade secrets, knowhow, confidential

information and other intellectual property rights, which we refer to as the Reata Data.

On December 28, 2017, we obtained the rights

to a worldwide, exclusive royalty-bearing, license to the chemical compound commonly known as Berubicin from HPI in an agreement

we refer to as the HPI License. HPI is affiliated with Dr. Priebe, who controls a majority of our shares. Under the HPI License

we obtained the exclusive right to develop certain chemical compounds for use in the treatment of cancer anywhere in the world.

In the HPI License we agreed to pay HPI: (i) development fees of $750,000 over a three-year period beginning November 2019; (ii)

a 2% royalty on net sales; (iii) a $50,000 per year license fee; (iv) milestone payments of $100,000 upon the commencement of a

Phase II trial and $1.0 million upon the approval of an New Drug Application (“NDA”) for Berubicin; and (v) 200,000

shares of our common stock. The patents we licensed from HPI expired in March 2020.

On June 10, 2020, the FDA granted Orphan

Drug Designation (“ODD”) for Berubicin for the treatment of malignant gliomas. ODD from the FDA is available for drugs

targeting diseases with less than 200,000 cases per year. ODD may enable market exclusivity of 7 years from the date of approval

of a NDA in the United States. During that period the FDA generally could not approve another product containing the same drug

for the same designated indication. Orphan drug exclusivity will not bar approval of another product under certain circumstances,

including if a subsequent product with the same active ingredient for the same indication is shown to be clinically superior to

the approved product on the basis of greater efficacy or safety, or providing a major contribution to patient care, or if the company

with orphan drug exclusivity is not able to meet market demand. The ODD now constitutes our primary intellectual property protections

although the Company is exploring if there are other patents that could be filed related to Berubicin to extend additional protections.

With the Reata Agreement and the HPI License,

we believe we have obtained all rights and intellectual property necessary to develop Berubicin. As stated earlier, it is our plan

to obtain additional intellectual property covering other compounds which, subject to the receipt of additional financing, may

be developed into drugs for brain and other cancers.

On January 10, 2020, we entered into a Patent

and Technology License Agreement (the “1244 Agreement”) with The Board of Regents of The University of Texas System,

an agency of the State of Texas, on behalf of the UTMDACC. Pursuant to the 1244 Agreement, we obtained a royalty-bearing, worldwide,

exclusive license to certain intellectual property rights, including patent rights, related to our WP1244 drug technology. In consideration,

we must make payments to UTMDACC including an up-front license fee, annual maintenance fee, milestone payments and royalty payments

(including minimum annual royalties) for sales of licensed products developed under the 1244 Agreement. The term of the 1244 Agreement

expires on the last to occur of: (a) the expiration of all patents subject to the 1244 Agreement, or (b) fifteen years after execution;

provided that UTMDACC has the right to terminate the 1244 Agreement in the event that we fail to meet certain commercial diligence

milestones.

On May 7, 2020, pursuant to the WP1244 Portfolio

license agreement described above, the Company entered into a Sponsored Research Agreement with UTMDACC to perform research relating

to novel anticancer agents targeting CNS malignancies. The Company agreed to fund approximately $1,134,000 over a two-year period.

The Company paid and recorded $334,000 in 2020 related to this agreement in research and development expenses

in the Company’s Statements of Operations. The remaining $720,000 will be paid in 2021, of which $400,000 was accrued at

December 31, 2020. The principal investigator for this agreement is Dr. Priebe.

Market for Cancer Drugs and Berubicin

Cancer is the second leading cause of death

in the United States behind heart disease. In 2016, there were an estimated 15.5 million cancer survivors in the United States.

In 2018, the American Cancer Society estimated that nearly 1.7 million new cases would be diagnosed and over 600,000 Americans

would die from cancer.

Digestive, reproductive, breast and respiratory

cancers comprise 65% of expected cancer diagnoses in 2018, while cancers like leukemia and brain tumors are considered “rare

diseases.”

The worldwide cancer drug business has been

estimated to represent nearly $100 billion in annual sales. Our lead drug candidate, Berubicin, is in a class of drugs referred

to as anthracyclines, which are chemotherapy drugs designed to destroy the DNA of targeted cancer cells. The most common approved

anthracyclines are daunorubicin and doxorubicin and, prior to the expansion of their generic equivalents, annual revenues generated

from anthracyclines have been estimated in the range of $600 million. Many cancers are currently treated with anthracyclines; however,

primary and metastatic brain cancers have not been among them because heretofore no anthracyclines have been able to penetrate

the BBB. We believe that based on limited pre-clinical and clinical data, Berubicin appears to show that it can cross the BBB.

However, there is no assurance that Berubicin will be able to demonstrate such traits in more fulsome clinical trials.

Brain cancer in general is considered a

rare disease for which there are few available treatments. The leading brain tumor drug is temozolomide (“TMZ”), a

drug introduced under the brand name Temodar®. In 2012, one industry source reported annual revenues of approximately $882

million for Temodar before the expiration of its patent protection, at which point generic versions of the drug began to enter

the market and reduce prices. Temozolomide may extend progression free survival (“PFS”) but has never been shown to

be curative of any brain cancers.

The Orphan Drug Act and other legislative

initiatives provide incentives, including market exclusivity and accelerated approval pathways, for companies that pursue the development

of treatments for rare diseases and serious diseases for which there are few or no acceptable available treatment alternatives.

Orphan Drug exclusivity prevents for seven years the approval of another product with the same active moiety for the same rare

disease. If a product is a new chemical entity (i.e., generally that the moiety has not previously been approved), it may receive

five years of exclusivity, during which period FDA may not accept for review certain NDAs for another product with the same moiety.

If approval of a product required new clinical data, it may convey three years of exclusivity against approval of certain NDAs

for similar products. Over the last 10 years, an increasing number of companies have begun using these designations to obtain new

drug approvals for drugs where patent coverage has expired and/or where accelerated approval appears possible. An IMS Health report

estimated that, in 2013, the sale of drugs with full or partial Orphan Drug exclusivity represented approximately $29 billion in

revenue. We consider the receipt of Orphan Drug exclusivity and expedited pathways to approval or further development to be an

important part of our development strategy for our drug candidates.

The Berubicin Clinical Therapeutic Opportunity

The Company was created to specialize in

the discovery and development of novel treatments for brain tumors. Our main focus is currently the development and testing of

Berubicin. Based on limited clinical data, we believe Berubicin is the first anthracycline that appears in animal models and limited

clinical data derived from a Phase 1 human clinical trial to cross the BBB and target cancer cells. In 2009, Reata, the prior developer

of Berubicin, completed its Phase 1 clinical trial in patients diagnosed with brain cancers, including glioblastoma, the most aggressive

form of brain cancer.

Currently, there are no effective therapies

for glioblastoma. In the clinical trial completed in February 2009, Berubicin demonstrated one durable complete response (considered

clinically to be a cure) lasting over 11 years in a glioblastoma patient. This patient remains disease free and clinically stable

as of November 6, 2020.

In the trial, 25 of the 35 patients enrolled

were evaluable for response. In a prior clinical trial, Berubicin has also shown promising data in a patient population that currently

has a dismal median survival rate of only 14.6 months from glioblastoma diagnosis and few effective therapeutic options. If the

early results are proven to be reproducible and if we secure regulatory approval to market Berubicin, its apparent ability to

cross the BBB combined with its mechanism of action, more thoroughly discussed below, has the potential to become an effective

treatment for this deadly cancer.

In the United States, 22,850 new glioblastoma

patients are diagnosed, and 15,300 patients die of this deadly disease annually (National Cancer Institute 2015). Due to the lack

of effective therapies, the five-year survival rate of glioblastoma ranges from 13% for younger aged patients (20 to 44 years)

to 1% for older populations (over 44 years). The current standard for treatment is surgery, radiation, and chemotherapy with TMZ.

TMZ, the current chemotherapeutic component of the standard of care for glioblastoma, has limited efficacy. In the TMZ final clinical

trial performed before submitting for FDA approval (573 patients), overall survival was only improved by 2.5 months versus radiation

alone. At least 50% of TMZ treated patients do not respond to TMZ, primarily due to the over-expression of O6-methylguanine methyltransferase

(“MGMT”) and/or lack of a DNA repair pathway in glioblastoma cells. Given the different mechanism of action of Berubicin,

these patients may show a better outcome and our planned phased 2 clinical trial could be used to support an application for approval

of Berubicin as a frontline therapy. However, we believe that the most prudent initial investigational objective is a phase 2 stratified

trial that can either serve as a registration trial or provide sufficient data to power a phase 3 registration trial.

Based on data relating to the mechanism

of action of Berubicin, as well as clinical results from the Phase 1 study in brain tumors performed by Reata, the prior developer

of Berubicin, we are conducting a randomized, controlled multicenter study that will evaluate the efficacy of Berubicin versus

Lomustine (CCNU, CeeNU®, or Gleostine®) in patients with recurrent glioblastoma. Randomization to the two therapies (Berubicin

or Lomustine) will be on a 2:1 basis with 2 patients receiving Berubicin for every patient randomized to Lomustine. Lomustine is

a drug considered effective in patients with glioblastoma that has recurred or progressed following first line therapy. From the

data available from the Reata Phase 1 clinical trial (RTA 744-C-0401), the FDA has agreed that the dosage for Berubicin will be

at the maximum tolerated dose (“MTD”) determined in that trial. Thus, patients randomized to the Berubicin arm will

receive a 2-hour IV infusion of 7.5 mg/m2 berubicin hydrochloride daily for three consecutive days followed by 18 days off (21-day

cycle). Patients randomized to Lomustine will receive a single oral dose of 130 mg/m2 (rounded to the nearest 5 mg) every 6 weeks,

or per the full prescribing information for Lomustine incorporating institutional standards at each study site.

Efficacy will be measured by the benefit

of Berubicin vs. Lomustine in terms of overall survival (OS), considered the preferred standard as an endpoint for clinical trials

in Neuro-Oncology. Secondary endpoints using accepted radiologic methodology (magnetic resonance imaging (“MRI”)),

including both pre- and post-gadolinium T1-weighted scans and T2/fluid attenuated inversion recovery (“FLAIR”) images

will evaluate objective response rates (ORR), which include complete responses (CR) and partial responses (PR) as per RANO (Response

Assessment for Neuro-Oncology), and progression free survival at 6 months (PFS6). Additional information to be collected include

event free survival (EFS), corticosteroid usage, neurologic status, quality of life, and safety, and for Berubicin, the pharmacokinetics

(PK) at the dose and schedule employed. The trial will include an interim analysis to estimate the likelihood of achieving statistical

significance for the primary endpoint, OS, after approximately 50% of enrolled patients have reached 6 months on study.

Assuming data from the above described Phase

2 study is positive (and depending on the strength and quality of such data) at its completion we may seek approval to market Berubicin

from relevant regulatory authorities, we may look for a partner with which to conduct a Phase 3 study, or we may attempt to raise

sufficient capital to conduct such a study on our own. The goal of these potential Phase 3 studies, should they be necessary, is

to develop a body of evidence to support a successful application with the FDA and/or other similar regulatory agencies around

the world. Should we obtain approval from the FDA or other international regulatory agencies to market Berubicin, we will either

partner with third parties to sell and distribute it to physicians and patients, or we will develop our own sales force to do so.

Berubicin

Our first product under development is Berubicin,

a development stage anthracycline intended to treat glioblastoma. Berubicin is an anthracycline, a class of drugs that are among

the most powerful chemotherapy drugs known. Berubicin intercalates into DNA and interrupts topoisomerase II activity, resulting

in the inhibition of DNA replication and repair, and RNA and protein synthesis. Based on evidence developed from animal models

and limited clinical data derived from a Phase 1 human clinical trial, Berubicin appears to cross the blood brain barrier and target

cancer cells, specifically glioblastoma, unlike any other known anthracyclines.

Berubicin hydrochloride (HCl) is a novel

synthetic anthracycline with a chemical structure similar to doxorubicin HCl, a cytotoxic anthracycline topoisomerase II inhibitor

isolated from cultures of Streptomyces peucetius var. caesius. Doxorubicin HCl Injection and Doxorubicin HCl for Injection, drugs

related in chemical structure and mechanism of action to Berubicin, are approved by FDA for the treatment of various cancers, including

acute lymphoblastic leukemia, acute myeloblastic leukemia, Hodgkin lymphoma, Non-Hodgkin lymphoma, metastatic breast cancer, metastatic

Wilms’ tumor, metastatic neuroblastoma, metastatic soft tissue sarcoma, metastatic bone sarcomas, metastatic ovarian carcinoma,

metastatic transitional cell bladder carcinoma, metastatic thyroid carcinoma, metastatic gastric carcinoma, and metastatic bronchogenic

carcinoma, as well as part of a multiagent adjuvant chemotherapy for the treatment of women with axillary lymph node involvement

after resection of primary breast cancer. A liposomal formulation of doxorubicin HCl is also approved for the treatment of ovarian

cancer, AIDS-related Kaposi’s sarcoma, and multiple myeloma.

Doxorubicin HCl is not indicated for

cancers of the brain, where it has limited efficacy due to its poor penetration through the blood-brain barrier. Further, even

for those cancers that doxorubicin HCl is indicated, development of drug resistance remains a problem. In an effort to develop

a second generation anthracycline topoisomerase II inhibitor that can circumvent the BBB and the development of drug resistance,

Dr. Priebe created a library of high-affinity and sequence-selective deoxyribonucleic acid (“DNA”)-binding agents and

screened against a panel of P-glycoprotein 1 (Pgp) and multidrug resistance-associated protein 1 (MRP1)-overexpressing cells. This

led to the identification of berubicin HCl, which preclinical studies appear to show to be less affected by multidrug transporters

than doxorubicin, to be potentially more potent as an inhibitor of cell growth and inducer of apoptosis than doxorubicin, to sequester

preferentially in tumor tissue versus brain tissue, and to improve overall survival in an intracranial orthotopic glioma model.

There is no assurance that Berubicin will be able to demonstrate such traits in future clinical trials.

Glioblastoma has an unfavorable prognosis

mainly due to its high propensity for tumor recurrence, which is inevitable after a median survival time of 32–36 weeks.

A plethora of monotherapy and combination chemotherapy strategies have been evaluated in patients with recurrent glioblastoma.

Although these can result in some minor improvements in progression-free survival, with an estimation of approximately 30% after

six months, no obvious increase in survival has been associated with any particular regimen.

Despite aggressive initial treatment, most

patients develop recurrent diseases which can be treated with reresection, systemic treatment with targeted agents or cytotoxic

chemotherapy, reirradiation, or radiosurgery. Research into novel therapies is investigating alternative temozolomide regimens,

convection-enhanced delivery, immunotherapy, gene therapy, antiangiogenic agents, poly ADP ribose polymerase inhibitors, or cancer

stem cell signaling pathways. Overall, the 5-year survival rate is <10%, with a final mortality rate of close to 100%. Therefore,

the development of novel therapeutic options for patients with recurrent glioblastoma remains a priority. Given the short-term

efficacy and low survival rate of glioblastoma and other CNS patient groups, we believe there is a significant unmet need, and

financial opportunity.

Less than 40% of glioblastoma patients have

a genetic variation which makes their tumors initially more responsive to TMZ. However, because nearly all these patients will

quickly become resistant, Berubicin could be prescribed after failure with TMZ. The remaining 60% of patients initially fail to

respond to TMZ, primarily due to the over-expression of O6-methylguanine methyltransferase (MGMT) and/or lack of a DNA repair pathway

in glioblastoma cells. If Berubicin shows efficacy in clinical trials, of which there is no assurance, it could become the primary

drug treatment because TMZ is ineffective in this patient population.

Reata licensed in berubicin HCl with the

intent of developing it for commercialization. On December 28, 2004, Reata filed an initial IND (IND 68,279; Serial No. 000) for

an injection formulation of berubicin HCl (RTA 744 Injection) for the treatment of anaplastic astrocytoma, anaplastic oligodendroglioma,

anaplastic mixed oligo-astrocytoma, glioblastoma, and gliosarcoma. Three clinical trials were initiated under IND 68,279, two phase

1 trials and one phase 2 trial. The initial phase 1 trial (Study RTA 744-C-0401) was completed and the maximum tolerated dose determined.

A 44% disease control response rate was observed. The disease control rate was based on patients with stable disease plus responses.

In the trial, out of 25 patients, one patient achieved a complete response and 10 patients achieved a stable response. The 44%

disease control response rate is based on these 11 patients (out of 25 patients). Regardless, in 2008, Reata decided to curtail

development of RTA 744 Injection for strategic reasons. Further enrollment in the two ongoing berubicin clinical trials was halted.

Reata submitted a request to inactive the IND on March 17, 2011 (Serial No. 054) and requested that the IND be withdrawn on June

10, 2016 (Serial No. 0055). IND 68,279 was not withdrawn due to safety or efficacy concerns, but rather due to the above noted

corporate reprioritization.

CNS was formed in 2017, with Dr. Priebe

as the Scientific Founder. Reata sold CNS all rights to the berubicin investigational drug data, including the data submitted under

IND 68,279, and CNS has assumed sole authority, discretion and responsibility with respect to the development of the drug. As a

result of the Reata Agreement, we are the direct beneficiaries of the 4 years of active clinical development work performed by

Reata, including the execution of multiple Phase 1 human clinical trials. Furthermore, should our human trials demonstrate a significant

improvement in glioblastoma patient outcomes, the FDA may grant us an accelerated review schedule under its Breakthrough Therapy

Designation.

On May 24, 2019, our sublicensee, WPD, signed

the Granting Agreement with the Polish National Center for Research and Development for co-funding of research and development

work in the amount of 22,033,066 PLN (approximately US $5,798,875) for a new drug development as a part of the project “New

approach to glioblastoma treatment addressing the critical unmet medical need”, undertaken pursuant to the WPD Sublicense.

The grant will be co-funded by the European Union, under the Smart Growth Operational Program 2014-2020, Sectoral Programme InnoNeuroPharm,

Priority Axis I: Support R&D carried out by enterprises, Measure 1.2 Sectorial programs R&D. The main goal of the WPD Project

is to implement the first in the world multicenter pediatric phase I clinical trial to determine maximum tolerated dose (MTD) and

phase IB and II clinical trials in adults, in order to attempt to determine safety and efficacy of Berubicin. The WPD Project will

also include preclinical tests to determine the prospective use of Berubicin with temozolomide and with other compounds being developed

by WPD as candidates for anticancer drugs.

The WPD Project includes the implementation

of the following stages of R&D:

1. Scientific

Advice Procedure implementation; Regulatory documentation for “First in Children” and phase Ib and II clinical trial

in adults preparation;

2. IP

Manufacturing according to GMP;

3. Possible

In vitro studies on anticancer activity of Berubicin in combination with TMZ and other WPD molecules;

4. “First

in children” and Phase Ib in adults clinical trials conducting;

5. Phase

II in adults clinical trial conducting.

Berubicin Clinical Trial

In the first clinical trial for Berubicin,

which was referred to as Study RTA 744-C-0401, 25 of the 35 patients enrolled were evaluable for response. One patient achieved

a complete response, remained on study through seven cycles of therapy and was withdrawn for adverse events unrelated to Berubicin.

The patient was disease free as of November 6, 2020.

Study design

Study RTA 744-C-0401 was a Phase 1 dose-finding,

safety and pharmacokinetic (PK) study of intravenous Berubicin injection in patients with recurrent or refractory anaplastic astrocytoma,

anaplastic oligodendroglioma, anaplastic mixed oligo-astrocytoma, glioblastoma multiforme or gliosarcoma.

The study was an open-label, accelerated

dose-escalation study to determine the maximum tolerated dose starting with patients who were not taking concurrent enzyme-inducing

anti-epileptic drugs (EIAEDs) that could interfere with Berubicin drug metabolism. Intra-patient dose-escalation was allowed after

a patient had received a minimum of 4 cycles. Berubicin injection was administered either daily for three consecutive days repeated

every three weeks (Group A), or once-weekly for four-consecutive weeks repeated every five weeks (Group C). Enrollment for a planned

dose escalation in Group B (patients on EIAEDs) was not initiated after it was determined that the standard of care had changed

and an insufficient number of patients being treated with these anti-epileptic drugs would make it difficult to accrue the requisite

number of patients. The MTD for the remaining groups was determined in a stepwise fashion such that once the MTD for Group A (three

days in a row every 3 weeks) was determined, Group C was initiated at the MTD from Group A, given on a weekly basis for 4 of every

5 weeks to evaluate the tolerability and MTD of Berubicin on this alternative schedule.

Study Results

The first patient was enrolled into the

study in November 2005 and as of February 2009, the study was closed to accrual with no active patients remaining on study. Berubicin

was administered to a total of 54 patients (35 male and 19 female) with ages ranging from 25 to 70 years. Thirty-seven of the patients

(69%) entered the study with a diagnosis of glioblastoma multiforme, seven of which were secondary to transformation from anaplastic

astrocytoma. The time from the initial brain tumor diagnosis to enrollment on the study ranged from four months to 301 months (this

last timing for a patient diagnosed with childhood anaplastic astrocytoma).

Efficacy: Twenty-five of the 35 patients

enrolled in Group A were evaluable for response (under the Macdonald criteria described below). One patient receiving Berubicin

at 2.4 mg/m2/day achieved a complete response. The patient remained on study through 7 cycles of therapy before being withdrawn

for elevated liver function tests unrelated to study drug, and in follow-up remains disease free and clinically stable as of November

6, 2020.

One additional patient receiving Berubicin

at 7.5 mg/m2/day achieved an unconfirmed partial response as their best recorded response, unconfirmed since the scan showing the

partial response required a second scan corroborating the response. Although the patient had an 80% reduction in tumor volume after

two cycles of therapy, at the end of four cycles of therapy when an additional scan was obtained, despite the fact that the initial

lesion remained reduced, the patient developed a new lesion and was assessed as having disease progression, thus the PR could not

be confirmed. Ten additional patients in Group A had stable disease of 2-to-8 cycles in duration, with a median progression free

survival of four cycles (12 weeks). In Group C, seven patients were evaluable for response and all had progressive disease. Twelve

patients were discontinued from the study prior to the end of cycle 2 due to clinical deterioration and/or disease progression.

Macdonald criteria: The Macdonald

criteria, similarly to other systems, divides response into four types of response based on imaging (MRI) and clinical features:

Assessment Imaging Features Clinical Features

Measurements of lesions are obtained from

axial post contrast T1 images. The maximal diameter is obtained, and then the second diameter is obtained at right angles to the

first. The product of these measurements is then used as the size of the lesion for the purpose of comparison.

Summary of Adverse Events: The adverse

events documented during Study RTA 744-C-0401 for all CTC grades of severity and regardless of relationship to study medication

are identified below.

Serious Adverse Event Number of Patients Experiencing Adverse Event

Pulmonary embolism 5

Convulsion 5

Urinary tract infection 1

Peripheral motor neuropathy 1

Peripheral sensory neuropathy 1

Urinary retention 1

Nausea 4

Vomiting 5

Constipation 1

Leukopenia 1

Neutropenia 1

Headache 3

Speech disorder 1

Pyramidal tract syndrome 3

Somnolence 1

Dehydration 3

Brain oedema 1

Papilloedema 1

Eyelid ptosis 1

Macular oedema 1

Syncope 2

Deep vein thrombosis 1

Loss of consciousness 1

Embolism 1

Hemiparesis 1

Hydrocephalus 1

Muscle atrophy 1

Thrombocytopenia 1

Disease progression 3

Mental status changes 4

Thrombosis 1

Sepsis 1

Depressed level of consciousness 1

Dyspnoea 2

The larger number of events related to the

central nervous system is consistent with the impact of the underlying malignant disease in the brain of these patients. Myelosupression,

i.e., a decrease in the number of bone-marrow derived cells, is expected and consistent with the known toxicities of anthracyclines,

which can be managed by the use of effective supportive care.