XENETIC BIOSCIENCES, INC. 10-K
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
Commission File Number: 001-37937
XENETIC BIOSCIENCES, INC.
(Exact name of registrant as specified in its
charter)
945 Concord Street
Framingham, Massachusetts01701
(Address of principal executive offices and
zip code)
781-778-7720
(Registrant’s telephone number, including
area code)
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.001 par value per share XBIO The Nasdaq Capital Market
Securities registered pursuant to Section 12(g)
of the Act:
None
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 period that 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 (§ 232.405 of this chapter) 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.
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 by the registered public accounting firm that prepared
or issued its audit report. ☐
If securities are registered
pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark
whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation received by
any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark
whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2): Yes ☐ No ☒
The aggregate market
value of the voting and non-voting common stock held by non-affiliates of the registrant as of June 28, 2024, the last business day of
the registrant’s most recently completely second fiscal quarter, based upon the closing price of the registrant’s common stock
on the Nasdaq Capital Market on that date of $4.07, was approximately $5,301,818. For purposes of this computation, all officers, directors,
and 10% beneficial owners of the registrant are deemed to be affiliates. Such determination should not be deemed to be an admission that
such officers, directors or 10% beneficial owners are, in fact, affiliates of the registrant.
As of March 7,
2025, the number of outstanding shares of the registrant’s common stock was 1,542,139.
DOCUMENTS INCORPORATED BY REFERENCE
Information required in response to Part III of
Form 10-K (Items 10, 11, 12, 13 and 14) is hereby incorporated by reference to portions of the registrant's definitive proxy statement
for its 2025 Annual Meeting of Stockholders, information statement or an amendment to this Annual Report on Form 10-K. The registrant
intends to file a definitive proxy statement, information statement or an amendment to this Annual Report on Form 10-K with the Securities
and Exchange Commission no later than 120 days after the end of the registrant's fiscal year ended December 31, 2024.
XENETIC BIOSCIENCES, INC.
2024 ANNUAL REPORT ON FORM 10-K
TABLE CONTENTS
PART I 1
Item 1 Business 1
Item 1A Risk Factors 20
Item 1B Unresolved Staff Comments 48
Item 1C Cybersecurity 48
Item 2 Properties 48
Item 3 Legal Proceedings 49
Item 4 Mine Safety Disclosures 49
Item 6 [Reserved] 50
Item 7A Quantitative and Qualitative Disclosures About Market Risk 55
Item 8 Financial Statements and Supplementary Data 56
Item 9A Controls and Procedures 57
Item 9B Other Information 58
Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 58
PART III 59
Item 10 Directors, Executive Officers and Corporate Governance 59
Item 11 Executive Compensation 59
Item 14 Principal Accounting Fees and Services 59
Item 15 Exhibits and Financial Statement Schedules 60
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (“Annual
Report”) contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended. All statements contained in this Annual Report
other than statements of historical fact, including statements regarding our future results of operations and financial position, our
business strategy and plans, future revenues, projected costs, prospects and our objectives for future operations, are forward-looking
statements. These forward-looking statements include, but are not limited to, statements concerning: anticipated effects of geopolitical
events, including the conflicts in the Ukraine and the Middle East and associated sanctions imposed by the United States (“U.S.”)
and other countries in response; our plans to develop our proposed drug candidates; the uncertainty surrounding government actions, as
well as any changes to existing or newly proposed legislation that may affect the healthcare regulatory space; our expectations regarding
the nature, timing and extent of collaboration arrangements; the expected results pursuant to collaboration arrangements, including the
receipts of royalty and other future payments that may arise pursuant to collaboration arrangements; the outcome of our plans to obtain
regulatory approval of our drug candidates; the outcome of our plans for the commercialization of our drug candidates; our plans to advance
innovative immune-oncology technologies addressing difficult to treat oncology indications; expectations regarding our Deoxyribonuclease
(“DNase”) technology, such as regarding the DNase technology being in development for the treatment of solid tumors and being
aimed at improving outcomes of existing treatments, including immunotherapies, by targeting neutrophil extracellular traps (“NETs”);
our expectations to focus our efforts and resources on advancing the DNase technology into the clinic as an adjunctive therapy for pancreatic
carcinoma and locally advanced or metastatic solid tumors; our expectations regarding our PolyXen® platform and any partnerships
with respect thereto; and all statements under the heading “Opportunity to Address Multiple Oncology Indications” in Item
1 of Part I to this Form 10-K.
In some cases, these statements may be identified
by terminology such as “may,” “will,” “would,” “could,” “should,” “expect,”
“plan,” “anticipate,” “believe,” “estimate,” “seek,” “approximately,”
“intend,” “predict,” “potential,” “projects,” “upcoming”, “opportunity”,
“target” or “continue,” or the negative of such terms and other comparable terminology. Although we believe that
the expectations reflected in the forward-looking statements contained herein are reasonable, we cannot guarantee future results, the
levels of activity, performance or achievements. These statements involve known and unknown risks and uncertainties that may cause our
or our industry's results, levels of activity, performance or achievements to be materially different from those expressed or implied
by forward-looking statements.
Some factors that could
cause actual results to differ materially include without limitation:
· uncertainty of the expected financial performance of the Company;
· failure to realize the anticipated potential of the DNase technology;
· our ability to implement our business strategy;
· our ability to finance our business;
· our ability to secure and maintain a manufacturer for our technologies;
· the impact of new technologies on our drug candidates and our competition;
· changes in laws or regulations of governmental agencies;
· interruptions or cancellation of existing contracts;
· impact of competitive products and pricing;
· product demand and market acceptance and risks;
· the presence of competitors with greater financial resources;
ii
· our ability to attract and retain key personnel;
· adverse publicity related to our products or the Company itself;
· adverse claims relating to our intellectual property;
· the adoption of new, or changes in, accounting principles;
· other new lines of business that the Company may enter in the future;
These factors are not
necessarily all of the important factors that could cause actual results to differ materially from those expressed in the forward-looking
statements in this Annual Report. Other unknown or unpredictable factors also could have material adverse effects on our future results,
including, but not limited to, those discussed in the section titled “Risk Factors.” The forward-looking
statements in this Annual Report are made only as of the date of this Annual Report, and we do not undertake any obligation to publicly
update any forward-looking statements to reflect subsequent events or circumstances. We intend that all forward-looking statements be
subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.
As used in this Annual
Report, unless otherwise indicated, all references herein to “Xenetic,” the “Company,” “we” or “us”
refer to Xenetic Biosciences, Inc. and its wholly-owned subsidiaries.
Our brand and product
names, including but not limited to, XDNASETM, XCARTTM, OncoHistTM, PolyXen®,
ErepoXenTM and ImuXenTM contained in this Annual Report are trademarks, registered trademarks or service
marks of Xenetic Biosciences, Inc. and/or its subsidiaries in the United States of America (“USA” or “U.S.”) and
certain other countries. All other company and product names may be trademarks of the respective companies with which they are associated.
Summary Risk Factors
Our business is subject to numerous risks. In
addition to the summary below, you should carefully review the “Risk Factors” section of this Annual
Report on Form 10-K. We may be subject to additional risks and uncertainties not presently known to us or that we currently deem immaterial.
These risks should be read in conjunction with the other information in this Annual Report on Form 10-K. Some of the principal risks relating
to our business include:
iii
iv
v
PART I
ITEM 1 – BUSINESS
Overview
We are a biopharmaceutical company focused on
advancing innovative immuno-oncology technologies addressing difficult to treat cancers. Our proprietary DNase technology is designed to
improve outcomes of existing treatments, including immunotherapies, by targeting NETs, which are involved in cancer growth, metastasis
and progression, and contribute to immunotherapy, chemotherapy and radiotherapy resistance.
The DNase technology is designed to target NETs,
which are weblike structures composed of extracellular chromatin coated with histones and other proteins. NETs are expelled by activated
neutrophils in response to microbial or pro-inflammatory challenges. However, excessive production or reduced clearance of NETs can lead
to aggravated inflammatory, hypercoagulability and autoimmune pathologies, as well as creation of pro-tumorigenic niches in the case of
cancer growth and metastasis.
We are focused on advancing the development of
our DNase technology toward a first-in-human, multicenter, dose escalation and dose-expansion study of IV rhDNase I in subjects with locally
advanced or metastatic solid tumors. Our systemic DNase program is initially targeting multi-billion-dollar indications including pancreatic
ductal adenocarcinoma (“PDAC”), colorectal carcinoma (“CRC”) and other gastrointestinal cancers. These are all
cancer indications with significant unmet need, and with opportunities for substantial improvement of the currently available therapeutic
options. PDAC has a low rate of early diagnosis, a high mortality rate and a poor five-year survival prognosis. Symptoms are usually non-specific
and as a result, PDAC is often not diagnosed until it reaches an advanced stage. Once the disease has metastasized, or spread to other
organs, it becomes especially difficult to treat. There were about approximately 511,000 new cases of pancreatic cancer globally in 2022
and according to the American Cancer Society, in 2025, an estimated 67,000 people in the U.S. will be diagnosed with pancreatic cancer,
with approximately 52,000 deaths projected from the disease; this translates to a high mortality rate, as the five-year relative survival
rate for pancreatic cancer remains around 13%, which constitutes the highest mortality rate among solid tumor malignancies; among those
diagnosed with metastatic disease, the overall five-year survival rate is only 2%. Recent developments that have improved the survival
in many cancer types have not been effective for pancreatic cancer patients, highlighting the urgent need for the development of newer,
more effective therapeutic options. For those few patients that present with earlier stage PDAC, surgical resection followed by chemotherapy
is possible, but for the majority of PDAC patients that present at diagnosis with advanced disease, chemotherapy is the only option, and
has only very limited benefit. Second-line patients that were diagnosed already with metastatic disease have even fewer therapeutic options.
The only approved regimen for second-line patients is Onivyde®, a liposomal irinotecan in combination with 5FU and LV. For these Stage
IV at diagnosis patients reaching second-line therapy, median overall survival is only 4.7 months (Macarulla et al, Pancreas 2020 ).
CRC is the second most common cause of cancer
death in the U.S. after lung cancer. CRC is the third most commonly diagnosed cancer in males and the second in females, globally, according
to the World Health Organization GLOBOCAN database. In the U.S., CRC is the second most common cause of cancer death after lung cancer.
According to the American Cancer Society, in 2025, an estimated 154,000 people in the US will be diagnosed with colorectal cancer, with
approximately 52,900 deaths expected from the disease; this translates to around 107,000 new colon cancer cases and 47,000 new rectal
cancer cases. CRC is in decline in older patients (>65 years) but that is offset by a steady increase in CRC diagnoses and deaths in
individuals younger than 55 years of age. Despite continued overall declines, CRC is rapidly shifting to diagnosis at a younger age, at
a more advanced stage, and in the left colon/rectum. If CRC is diagnosed at a localized stage, the 5-year survival rate is 91%. However,
if the cancer has spread to surrounding tissues or organs and/or the regional lymph nodes, the 5-year relative survival rate is 72%. There
are numerous treatment options for earlier stage CRC patients, but as they progress to advanced and metastatic disease (“mCRC”),
those options become limited. Approximately 22% of CRC cases have metastasis at presentation, and 19% will develop metastasis after primary
tumor removal. Unfortunately, if CRC has spread to distant parts of the body, the 5-year relative survival rate is 13%.
All major guidelines recommend patients with mCRC
undergo testing of DNA for high DNA microsatellite instability (MSI-H), a mutation found in approximately 10% of all CRC, and up to 5%
of mCRC. CRC patients that are MSI-H/MMRd (or “mismatch repair deficient”) are candidates for immunotherapy using immune checkpoint
inhibitors (“ICIs”); at present, there are three ICIs approved for MSI-H/MMRd CRC – Keytruda, Opdivo (anti-PD-1 antibodies)
and Yervoy (anti-CTLA-4 antibody). While the ICI response rates in this small subset of CRC are encouraging at around 50%, a significant
number of patients are resistant, or become refractory to ICI therapy. However, the vast majority of mCRC patients (>90%) are microsatellite
stable (“MSS”) and mismatch repair proficient (“MMRp”), where ICIs have not been shown to provide benefit. The
lack of ICI response in this subset is due to poor immunogenicity and immunosuppression. Again, this highlights the urgent need for the
development of newer, more effective therapeutic options.
A substantial amount of scientific literature
has implicated NETs in the context of cancer pathogenesis and resistance to cancer therapies (including chemo, radio, and immunotherapies
such as checkpoint inhibitors and cell therapies). In published reports, elevated levels of NETs have been a biomarker associated with
poor prognosis in patients with a variety of cancers and in particular, in gastrointestinal cancers. In addition, resistance to existing
therapeutic agents can involve the release of immunosuppressive signaling factors from NETs, or physical barriers created by NETs, which
can impede the infiltration, activity, and survival of cytotoxic T cells in the tumor microenvironment. Published preclinical models have
demonstrated the effectiveness of systemically administered DNase, alone or in combination with other agents, for the elimination of NETs
and prevention of tumor growth and metastasis. We are currently focused on advancing our systemic DNase program into the clinic as an
adjunctive therapy for pancreatic carcinoma and locally advanced or metastatic solid tumors, including CRC.
Adoptive transfer of Chimeric Antigen Receptor
(“CAR”) T cells has emerged as one of the most promising advances in cancer immunotherapy. CAR T cell therapy, while highly
effective against blood cancers, faces significant challenges when applied to solid tumors due to the complex tumor microenvironment which
hinders CAR T cell infiltration, persistence, and efficacy, making it difficult for them to reach and attack cancer cells within the solid
tumor mass; this includes barriers like dense connective tissue, abnormal blood vessels, and immunosuppressive cells that can exhaust
the CAR T cells, limiting their anti-tumor activity. To successfully treat solid tumors, CAR T cells must be able to infiltrate, persist,
and maintain anti-tumor function in a hostile tumor microenvironment that is itself immunosuppressive and conducive to tumor cell survival
and metastasis. Published evidence suggests that in addition to immunosuppressive factors, mechanical barriers formed by NETs can impede
T-cell penetration and occlude T-cell contact with tumor cells. Recent approaches to CAR T design include “armored” CAR-T
cells, so named because they can express additional factors to resist immunosuppression or degrade physical components of the tumor’s
extracellular matrix, including NETs. We intend to conduct pre-clinical research with the goal of demonstrating that armoring CAR T cells
to secrete DNase can support depth and durability of response against solid tumor indications. Engineered CAR T cells, designed to recognize
cancer-associated antigens, are capable of sustained and selective killing of tumor cells, with substantial reduction of tumor burden.
The conduct of several CAR T in vivo models has been a primary focus of our Scripps collaboration.
Our collaboration with Belgian Volition SARL Limited
(“Volition”) is an early exploratory program to evaluate the potential combination of Volition’s Nu.Q® technology
and Xenetic’s DNase-Armored CAR T platform to develop proprietary adoptive cell therapies potentially targeting multiple types of
solid cancers for which current CAR T cell therapies have shown limited or no effect. Under the terms of the collaboration agreement,
Volition will fund a research program and the two parties will share proceeds from commercialization or licensing of any products arising
from the collaboration. Epigenetically modified nucleosomes are present on tumor cell surfaces and within the tumor microenvironment of
multiple types of solid cancers, and thus these nucleosomes may represent generalizable tumor antigens that are not limited to a single
cancer type. Volition’s Nu.Q® technology can specifically recognize and target epigenetically modified nucleosomes, while our
DNase-Armored CAR T platform is designed to enhance the function of CAR T cells within solid tumor microenvironments.
Additionally, we have partnered with biotechnology
and pharmaceutical companies to develop our proprietary drug delivery platform, PolyXen, and receive royalty payments under an exclusive
license arrangement in the field of blood coagulation disorders. PolyXen is an enabling platform technology for protein and peptide drug
delivery. It uses the biological polymer polysialic acid (“PSA”) to prolong the drug's half-life and potentially improve the
stability of therapeutic peptides and proteins. Both the site of attachment and the length of the PSA chain can influence the properties
of the therapeutic by changing the apparent hydrodynamic radius of the molecule, which in turn, can enhance a number of the biological
characteristics of the therapeutic. It can also be used for small molecule drugs.
We incorporate our patented and proprietary technologies
into drug candidates currently under development with biotechnology and pharmaceutical industry collaborators to create what we believe
will be the next-generation biologic drugs with improved pharmacological properties over existing therapeutics. Our drug candidates have
resulted from our research activities or that of our collaborators and are in the development stage. As a result, we continue to commit
a significant amount of our resources to our research and development activities and anticipate continuing to do so for the near future.
To date, none of our drug candidates have received regulatory marketing authorization or approval in the U.S. by the Food and Drug Administration
(“FDA”) nor in any other countries or territories by any applicable agencies. As noted above, we are receiving ongoing royalties
pursuant to a license of our PolyXen technology to an industry partner. Although we hold a broad patent portfolio, the focus of our internal
efforts in 2024 was on the licensing and advancement of our DNase technology.
We were incorporated under the laws of the State
of Nevada in August 2011. We, directly or indirectly, through our wholly-owned subsidiaries, Hesperix S.A. (“Hesperix”) and
Xenetic Biosciences (U.K.) Limited (“Xenetic U.K.”), and the wholly-owned subsidiaries of Xenetic UK, Lipoxen Technologies
Limited (“Lipoxen”), Xenetic Bioscience, Incorporated and SymbioTec, GmbH (“SymbioTec”), own various U.S. federal
trademark registrations and applications, along with unregistered trademarks and service marks, including but not limited to XCART, OncoHist,
PolyXen, ErepoXen and ImuXen.
Our Strategy
Our primary focus is aimed at advancing the systemic
DNase program into the clinic as an adjunctive therapy for pancreatic cancer and other locally advanced or metastatic solid tumors, including
CRC. Our goal is to provide solutions in the treatment of solid tumors by improving response and overcoming resistance to checkpoint inhibitors,
chemotherapy, and other standard of care treatments. We also intend to pursue industry collaborations and potential licenses to develop
DNase for other uses and indications.
We intend to pursue orphan drug designations and
accelerated approval pathways for relevant oncology indications as appropriate in both the U.S. and Europe. If our orphan oncology drug
candidates are granted orphan drug designation, then we may benefit from certain key advantages of orphan status including certain market
exclusivities.
We intend to advance development of our DNase
technology primarily through the use of contract manufacturing, contract research organizations (“CROs”) and academic institutions
in order to efficiently manage our resources. Continuous pipeline growth and advancement of out-licensed drug candidates is dependent,
in part, on our ability to raise sufficient capital and to advance our existing co-development collaborations and strategic arrangements
as well as enter into new such arrangements.
Business Developments
University of Virginia (“UVA”)
On December 21, 2023, we entered into a Research
Funding and Material Transfer Agreement with UVA (the “UVA Agreement”) to advance the development of our systemic DNase program.
Under the terms of the UVA Agreement, in addition to
advancing our existing intellectual property, we have an option to acquire an exclusive license to any new intellectual property arising
from the DNase research program. Allan Tsung, MD, a member of the Company’s Scientific Advisory Board and Chair of the Department
of Surgery at the UVA School of Medicine, oversees the research conducted under the UVA Agreement.
In November 2024, we entered into an amendment to extend the term of the UVA Agreement through December 2025. UVA will build on the preclinical
and translational data produced to date and continue to investigate combinations of DNase I with immunotherapies in models of primary
and metastatic colorectal cancer.
Scripps Research Institute (“Scripps
Research”)
On March 17, 2023, we entered into a Research
Funding and Option Agreement (the “Agreement”) with Scripps Research, pursuant to which we agreed to provide Scripps Research
an aggregate of up to $0.9 million to fund research relating to advancing the pre-clinical development of our DNase
technology. Under the Agreement, we have the option to acquire a worldwide exclusive license to Scripps Research’s rights in the
Technology or Patent Rights (as defined in the Agreement), as well as a non-exclusive, royalty-free, non-transferrable license to make
and use TSRI Technology (as defined in the Agreement) solely for our internal research purposes during the performance of the research
program contemplated by the Agreement. During the second quarter of 2024, the Company amended the Agreement to extend the term to October
31, 2024 with no additional funding required.
On November 1, 2024, we entered into a Second
Amendment to the Agreement with Scripps Research (the “Second Amendment”) extending the term of the Agreement for an additional
twelve (12) month period and to provide Scripps Research additional funding in an aggregate amount of up to approximately $400,000 to
fund continuing research. The research funding is payable by us to Scripps Research on a monthly basis in accordance with a negotiated
budget, which provides for an initial payment of approximately $65,000 on the date of the Amendment and subsequent monthly payments of
approximately $65,000 over a 5-month period. All other terms of the Original Agreement remain unchanged.
Our Technology and Drug Candidates
Potential Drug Candidates
We incorporate our patented and proprietary technologies
into a number of drug candidates which are currently under development internally or with our biotechnology and pharmaceutical collaborators,
with the goal of creating what we believe will be the next generation of biologic drugs and therapeutics. While we primarily focus on
researching and developing oncology drugs, we also have ownership and other economic interests in drugs being developed by our collaborators
to treat other conditions.
The Technologies
During the year ended December 31, 2024, the focus
of our internal development efforts was on the advancement of our DNase technology. We have not been actively pursuing development
efforts for XCART or PolyXen or any of our other technologies.
· Value-driving milestones expected over the next 12 -24 months;
· DNase-armored CAR T program in early pre-clinical development; and
Research, Outside Services and Collaborations
Through partner efforts, we are developing our
pipeline of next-generation bio-therapeutics and novel oncology drugs based on our DNase proprietary technology. In order to do this while
efficiently managing our overhead, we rely on the services of contract manufacturers, CROs and our strategic collaborations. We currently
do not have in-house research facilities to pursue these initiatives. Accordingly, continuous pipeline growth and advancement of our technologies
and drug candidates is dependent on several important collaborations and strategic arrangements, including our arrangements with:
Accordingly, in addition to pursuing our development
of the DNase technology, we also have significant interests in drug candidates being developed by our collaborators to treat other conditions.
We may collect some combination of milestone payments and royalties pursuant to these collaborations to the extent that these drugs are
successfully developed and marketed. However, other than royalty payments under a sublicense with Takeda Pharmaceutical Co. Ltd. (together
with its wholly-owned subsidiaries, “Takeda”) and potential royalty payments under our collaboration agreement with Pharmsynthez,
we do not anticipate any milestone or royalty payments in the near term, if at all. For further detail, please read the section titled
“Significant Collaborations and Strategic Arrangements” below.
Our Drug Candidate Pipeline
Our product pipeline contains drug candidates
under development internally and with our biotechnology and pharmaceutical collaborators. The following table summarizes key information
regarding our current drug candidates:
ErepoXen
ErepoXen, or polysialylated erythropoietin (“PSA-EPO”),
uses our PolyXen platform technology for the treatment of anemia in chronic kidney disease (“CKD”) patients. It is designed
to reduce the dosing frequency by extending the circulating half-life of the therapeutic in the body. We are not pursuing clinical development
of ErepoXen but continue to entertain out-license opportunities for the drug candidate in our licensed territories.
We have collaboration agreements with Pharmsynthez
and Serum Institute to develop and launch ErepoXen in limited markets pursuant to which we will collect royalties if they are successful
in these efforts.
Pharmsynthez received regulatory approval to commence
a Phase II(b)/III human clinical trial of ErepoXen (also known as Epolong) in Russia with patient recruitment completed in 2020. In December
2020, Pharmsynthez reported positive data from this trial of Epolong, a treatment for anemia in patients with chronic kidney disease leveraging
our PolyXen technology. Pharmsynthez filed a registration dossier to obtain approval in Russia and received a response letter indicating
certain deficiencies in the dossier. Pharmsynthez developed a gap mitigation strategy and is currently determining next steps.
Serum Institute conducted Phase I and Phase II
clinical trials of ErepoXen in ninety-five human subjects. These safety trials, which had no significant drug-related adverse events,
provided us with the data to commence a Phase II, repeat dosing, International Conference on Harmonisation of Technical Requirements for
Pharmaceuticals for Human Use compliant clinical trial for ErepoXen in Australia, New Zealand and South Africa for CKD patients not on
dialysis. We completed three cohorts of this study and then terminated the study.
In addition, Serum Institute finished Phase I/II
clinical trials in India of ErepoXen for in-center-dialysis patients. Serum Institute is not actively pursuing this program but may seek
to leverage Pharmsynthez’ trial data and potential Russian marketing authorization to request a waiver for a Phase III clinical
trial in India, subject to local regulatory authority approval.
Pipeline Expansion Opportunities
Operating under licenses from us within their
home markets, our collaborators can potentially generate preclinical and clinical data related to our technologies across a wide spectrum
of therapeutic areas. Under these agreements, we retain all rights for major markets and co-own the clinical data. We therefore have the
opportunity to utilize the data in our decision-making process regarding development and commercialization in major markets.
Significant Collaborations and Strategic Arrangements
Significant collaborations with UVA and Scripps Research are described
above under the “Business Developments” section of this Item 1 to Part I of the Form 10-K.
Takeda
In October 2017, the Company granted to Takeda
the right to grant a non-exclusive sublicense to certain patents related to the Company’s PolyXen technology that were previously
exclusively licensed to Takeda in connection with products related to the treatment of blood and bleeding disorders. Royalty payments
of approximately $2.5 million were recorded as revenue for each year by the Company during the years ended December 31, 2024 and 2023
and are based on single digit royalties on net sales of certain covered products.
Belgian Volition SARL Limited (“Volition”)
Collaboration
On August 2, 2022, we announced a research and
development collaboration with Volition to develop NETs-targeted adoptive cell therapies for the treatment of cancer. The collaboration
is an early exploratory program to evaluate the potential combination of Volition’s Nu.Q® Technology Test and our
DNase-Armored CAR T platform to develop proprietary adoptive cell therapies potentially targeting multiple types of solid cancers. Under
the terms of the collaboration agreement, Volition will fund a research program and the two parties will share proceeds from commercialization
or licensing of any products arising from the collaboration.
Catalent Pharma Solutions LLC (“Catalent”)
On June 30, 2022, we entered into a Statement
of Work (the “SOW”) with Catalent to outline the general scope of work, timeline, and pricing pursuant to which Catalent will
provide certain services to the Company to perform current Good Manufacturing Principles (“cGMP”) manufacturing of the Company’s
recombinant protein, Human DNase I. The parties agreed to enter into a Master Services Agreement that will contain terms and conditions
to govern the project contemplated by the SOW and that will supersede the addendum to the SOW containing Catalent’s standard terms
and conditions.
Other Agreements
We have also entered into various research, development,
license and supply agreements with Serum Institute of India (“Serum Institute”), Pharmsynthez and SynBio, a wholly owned subsidiary
of Pharmsynthez. Our collaborative partners continued to engage in research and development activities with no resultant commercial products
through December 31, 2024. No amounts were recognized as revenue related to the Serum Institute, Pharmsynthez or SynBio agreements during
each of the years ended December 31, 2024 and 2023.
Our Intellectual Property
We strive to protect and enhance the proprietary
technology, inventions and improvements that are commercially important to our business, including seeking, maintaining and defending
patent rights, whether developed internally or licensed from our collaborators or other third parties. Our policy is to seek to protect
our proprietary position by, among other methods, filing patent applications in the U.S. and in jurisdictions outside of the U.S. covering
our proprietary technology, inventions, improvements and product candidates that are important to the development and implementation of
our business. We also rely on trade secrets and know-how relating to our proprietary technology and product candidates, continuing innovation
and in-licensing opportunities to develop, strengthen and maintain our proprietary position in the field of oncology. We also plan to
rely on data exclusivity, market exclusivity and patent term and supplemental patent certificate extensions when available. Our commercial
success will depend in part on our ability to obtain and maintain patent and other proprietary protection for our technology, inventions
and improvements; to preserve the confidentiality of our trade secrets; to obtain and maintain licenses to use intellectual property owned
by third parties; to defend and enforce our proprietary rights, including any patents that we may own in the future; and to operate without
infringing on the valid and enforceable patents and other proprietary rights of third parties.
Our drug candidates are in various stages of development,
each protected by patent and pending patent applications in the U.S. with the U.S. Patent and Trademark Office (“USPTO”) and
in certain other developed countries. Our first issued patents began to expire in 2021 with the remaining PolyXen technology expiring
in 2040. As these PolyXen related patents approach their expiration, we have not renewed these patents for the last years of their life.
Our XCART and XDNASE patent families include patent applications that were recently filed, with those most recently filed having an expiration
date of 2042.
Our patent strategy is to file patent applications
on innovations and improvements in those jurisdictions that comprise the major pharmaceutical markets in the world or locations where
a pharmaceutical may be manufactured. These jurisdictions generally include for our key patent portfolios, but are not limited to, the
U.S., U.K., Australia, Japan, Canada, South Korea, China, India, Russia and certain other countries in the European Union (“E.U.”),
though we do not necessarily file a patent application in each of these jurisdictions for every patent family.
As of February 28, 2025, we directly or indirectly
own (e.g., through a license with CLS), through our wholly-owned subsidiaries, Hesperix and Xenetic U.K., and Xenetic U.K.’s wholly-owned
subsidiaries, Lipoxen, XTI and SymbioTec, 35 U.S. and international patents and pending patent applications that cover various aspects
of our technologies. This number includes patents and patent applications that we have acquired or filed covering various aspects of our
XDNASE and XCART platform technology, including all rights throughout the world in and to patents and patent applications related to “Articles
And Methods Directed To Personalized Therapy Of Cancer,” and our PolyXen platform technology covering polysialylation and advanced
polymer conjugate technologies, respectively, as well as our other product candidates. More specifically, our patents and patent applications
cover cancer treatments, method of use, drug conjugates, formulations, along with methods of administering polymer conjugates.
We have also received patent protection for our
XDNASE technology, which covers the use of DNase for the treatment of cancer and amelioration of the side effects associated with a cancer
treatment. The DNase can be administered alone or in combination with a cancer therapeutic. This portfolio and that of the XCART portfolio
also provide coverage for the use of certain types of CAR-T cells, with or without the addition of a DNase to treat a cancer. The portfolio
further covers the use of CAR-T cells with or without DNase that are administered with an immune checkpoint inhibitor or modulator to
treat a cancer.
Issued patents can provide protection for varying
periods of time, depending upon the date of filing of the patent application, the date of patent issuance and the legal term of patents
in the countries in which they are obtained. In general, patents issued for applications filed in the U.S. can provide exclusionary rights
for twenty years from the earliest effective filing date. In addition, in certain instances, the term of an issued U.S. patent that covers
or claims an FDA approved product can be extended to recapture a portion of the term effectively lost as a result of the FDA regulatory
review period, which is called patent term extension in the United States and supplemental patent certificate in Europe and several other
countries. The restoration period cannot be longer than five years, and the total patent term, including the restoration period, must
not exceed fourteen years following FDA approval. The term of patents outside of the U.S. varies in accordance with the laws of the foreign
jurisdiction but is typically also twenty years from the earliest effective filing date. However, the actual protection afforded by a
patent varies on a product-by-product basis, from country-to-country, and depends upon many factors, including the type of patent, the
scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country and
the validity and enforceability of the patent.
In certain situations, where we work with drugs
covered by one or more patents, our ability to develop and commercialize our technologies may be affected by limitations of our access
to these proprietary drugs. Even if we believe we are free to work with a proprietary drug, we cannot guarantee that we will not be accused
of, or be determined to be, infringing on a third party’s rights and be prohibited from working with the drug or found liable for
damages. Any such restriction on access or liability for damages would have a material adverse effect on our business, results of operations
and financial condition.
The patent positions of pharmaceutical and biotechnology
companies, such as ours, are uncertain and involve complex legal and factual issues. There can be no assurance that patents that have
been issued will be held valid and enforceable in a court of law. Even for patents that are held valid and enforceable, the legal process
associated with obtaining such a judgment is time consuming and costly. Additionally, issued patents can be subject to opposition or other
proceedings that can result in the revocation of the patent or maintenance of the patent in amended form (and potentially in a form that
renders the patent without commercially relevant and/or broad coverage). Further, our competitors may be able to circumvent and otherwise
design around our patents. Even if a patent is issued and enforceable, because development and commercialization of pharmaceutical products
can be subject to substantial delays, patents may expire early and provide only a short period of protection, if any, following the commercialization
of products encompassed by our patent(s). We may have to participate in interference proceedings declared by the USPTO, which could result
in a loss of the patent and/or substantial cost to us. Further, we understand that if any of our pending patent applications do not issue,
or are deemed invalid following issuance, we may lose valuable IP protection.
U.S. and foreign patent rights and other proprietary
rights exist that are owned by third parties and relate to pharmaceutical compositions and reagents, medical devices and equipment and
methods for preparation, packaging and delivery of pharmaceutical compositions. We cannot predict with any certainty which, if any, of
these rights will be considered relevant to our technology by authorities in the various jurisdictions where such rights exist, nor can
we predict with certainty which, if any, of these rights will or may be asserted against us by third parties. We could incur substantial
costs in defending ourselves and our partners against any such claims. Furthermore, parties making such claims may be able to obtain injunctive
or other equitable relief, which could effectively block our ability to develop or commercialize some or all of our products in the U.S.
and in other countries and could result in the award of substantial damages. In the event of a claim of infringement, we or our partners
may be required to obtain one or more licenses from third parties. There can be no assurance that we can obtain a license to any technology
that we determine we require on reasonable terms, if at all, or that we could develop or otherwise obtain alternative technology. The
failure to obtain licenses, if required, may have a material adverse effect on our business, results of operations and financial condition.
Further, we may not be able to obtain IP licenses related to the development of our drug candidates on a commercially reasonable basis,
if at all.
It is our policy to require our employees and
consultants, outside scientific collaborators, sponsored researchers and other advisors who receive confidential information from us to
execute confidentiality agreements upon the commencement of employment or consulting relationships with us. These agreements provide that
all confidential information developed or made known to the individual during the course of the individual’s relationship with us
is to be kept confidential and not disclosed to third parties except in specific circumstances. The agreements provide that all inventions
conceived by an employee shall be our property. There can be no assurance, however, that these agreements will provide meaningful protection
or adequate remedies for our trade secrets in the event of unauthorized use or disclosure of such information.
Manufacturing and Supply
We do not have the capability to manufacture our
own materials necessary to support our drug candidate development programs nor do we intend to acquire such capability as part of our
present business strategy. We currently have the SOW in place with Catalent to produce clinical materials for use in the development of
drug candidates involving our DNase technology.
Government Regulation
General
Government authorities in the U.S. at the federal,
state and local level, and other countries, extensively regulate, among other things, the research, development, testing, manufacture,
quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, marketing and export and
import of products such as those we are developing. Generally, a new drug must be approved by the FDA through the NDA process and a new
biologic must be licensed by the FDA through the biologics license application (“BLA”) process before it may be legally marketed
in the U.S.
U.S. Regulation
Drug Development Process
In the U.S., the FDA regulates drugs under the
Federal Food, Drug, and Cosmetic Act (“FDCA”), and in the case of biologics, also under the Public Health Service Act (“PHSA”)
and the FDCA, and their implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate
federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure
to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval
may subject an applicant to administrative actions or judicial sanctions. These actions or sanctions could include the FDA’s refusal
to approve pending applications, withdrawal of an approval, required additional studies, license revocation, a clinical hold, warning
letters or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions,
fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties. Any agency or judicial enforcement
action could have a material adverse effect on us.
Prior to marketing a drug or biologic in the U.S. the drug or biologic
sponsor generally must complete the following steps:
· submission to the FDA of an NDA or BLA;
· FDA review and approval of the NDA or BLA.
The drug or biologic manufacturer may also be
subject to post-approval regulatory requirements. Once a pharmaceutical candidate is identified for development, it enters the preclinical
testing stage. Preclinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies.
An IND sponsor must submit the results of the preclinical tests, together with manufacturing information and analytical data, to the FDA
as part of the IND. The sponsor will also include a protocol detailing, among other things, the objectives of the first phase of the clinical
trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated, if the first phase lends itself
to an efficacy evaluation. Some preclinical testing may continue even after the IND is submitted. The IND automatically becomes effective
thirty days after receipt by the FDA, unless the FDA, within the thirty-day time period, places the clinical trial on a clinical hold.
In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Clinical holds
may also be imposed by the FDA at any time before or during clinical trials due to safety concerns about ongoing or proposed clinical
trials or noncompliance with specific FDA requirements, and the trials may not begin or continue until the FDA notifies the sponsor that
the hold has been lifted.
All clinical trials must be conducted under the
supervision of one or more qualified investigators in accordance with GCP regulations. They must be conducted under protocols detailing
the objectives of the trial, dosing procedures, subject selection and exclusion criteria and the safety and effectiveness criteria to
be evaluated. Each protocol must be submitted to the FDA as part of the IND, and timely safety reports must be submitted to the FDA if
any serious and unexpected adverse events occur. An institutional review board (“IRB”) at each institution participating in
the clinical trial (or in some cases an independent IRB) must review and approve each protocol before a clinical trial commences at that
institution. As part of its review, the IRB must also approve the information regarding the trial and the consent form that must be provided
to each trial subject or his or her legal representative, monitor the study until completion and otherwise comply with IRB regulations.
Human clinical trials are typically conducted in three sequential phases
that may overlap or be combined:
Post-approval trials, sometimes referred to as
Phase IV studies, may be conducted after initial marketing approval. These trials are used to gain additional experience from the treatment
of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of Phase IV clinical trials
as a condition of approval of an NDA or BLA.
The FDA or the sponsor may suspend a clinical
trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk.
Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted
in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients. In addition,
some clinical trials are overseen by an independent group of qualified experts organized by the sponsor, known as a data safety monitoring
board or committee. Depending on its charter, this group may determine whether a trial may move forward at designated check points based
on access to certain data from the trial.
Concurrent with clinical trials, sponsors must
also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing
the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing
quality batches of the drug candidate and, among other things, the manufacturer must develop methods for testing the identity, strength,
quality and purity of the final drug. In addition, appropriate packaging must be selected and tested and stability studies must be conducted
to demonstrate that the drug candidate does not undergo unacceptable deterioration over its shelf life.
While the IND is active and before approval, progress
reports summarizing the results of the clinical trials and nonclinical studies performed since the last progress report must be submitted
at least annually to the FDA by the Sponsor, and written IND safety reports must be submitted to the FDA for serious and unexpected suspected
adverse events, findings from other studies suggesting a significant risk to humans exposed to the same or similar drugs, findings from
animal or in-vitro testing suggesting a significant risk to humans and any clinically important increased incidence of a serious suspected
adverse reaction compared to that listed in the protocol or investigator brochure.
There are also requirements governing the reporting
of ongoing clinical trials and completed trial results to public registries. Sponsors of certain clinical trials of FDA-regulated products
are required to register and disclose specified clinical trial information, which is publicly available at www.clinicaltrials.gov. Information
related to the product, patient population, phase of investigation, trial sites and investigators and other aspects of the clinical trial
is then made public as part of the registration. Sponsors are also obligated to discuss the results of their clinical trials after completion.
Disclosure of the results of these trials can be delayed until the new product or new indication being studied has been approved.
U.S. Market Approval Process
The results of product development, preclinical
and other non-clinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on
the chemistry of the drug, proposed labeling and other relevant information will be submitted to the FDA as part of an NDA or BLA requesting
approval to market the product. The submission of an NDA or BLA is subject to the payment of user fees; a waiver of such fees may
be obtained under certain limited circumstances. The FDA reviews all NDAs and BLAs submitted to ensure they are sufficiently complete
for substantive review before it accepts them for filing. The FDA may request additional information rather than accept an NDA or BLA
for filing. In this event, the NDA or BLA must be resubmitted with the additional information. The resubmitted application also is subject
to review before the FDA accepts it for filing.
Once the submission is accepted for filing, the
FDA begins an in-depth substantive review. The FDA may refer the NDA or BLA to an advisory committee for review, evaluation and recommendation
as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendation of an advisory
committee, but it generally follows such recommendations. The approval process is lengthy and often difficult, and the FDA may refuse
to approve an NDA or BLA if the applicable regulatory criteria are not satisfied or may require additional clinical or other data and
information. Even if such data and information are submitted, the FDA may ultimately decide that the NDA or BLA does not satisfy the criteria
for approval. The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and
whether its manufacturing is cGMP-compliant to assure and preserve the product’s identity, strength, quality and purity. The FDA
reviews a BLA to determine, among other things whether the product is safe, pure and potent and the facility in which it is manufactured,
processed, packed or held meets standards designed to assure the product’s continued safety, purity and potency. Before approving
an NDA or BLA, the FDA will inspect the facility or facilities where the product is manufactured.
After the FDA evaluates an NDA or BLA, it will
issue an approval letter or a Complete Response Letter. An approval letter authorizes commercial marketing of the drug with prescribing
information for specific indications. A Complete Response Letter indicates that the review cycle of the application is complete and the
application will not be approved in its present form. A Complete Response Letter usually describes the specific deficiencies in the NDA
or BLA identified by the FDA and may require additional clinical data, such as an additional pivotal Phase III trial or other significant
and time-consuming requirements related to clinical trials, nonclinical studies or manufacturing. If a Complete Response Letter is issued,
the sponsor must resubmit the NDA or BLA, addressing all of the deficiencies identified in the letter, or withdraw the application. Even
if such data and information are submitted, the FDA may decide that the NDA or BLA does not satisfy the criteria for approval.
If a product receives regulatory approval, the
approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could
restrict the commercial value of the product. In addition, the FDA may require a sponsor to conduct Phase IV testing, which involves clinical
trials designed to further assess a drug’s safety and effectiveness after NDA or BLA approval, and may require testing and surveillance
programs to monitor the safety of approved products which have been commercialized. The FDA may also place other conditions on approval