XENETIC BIOSCIENCES, INC. Form 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 30, 2025, 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 $3.92, was approximately $5,110,488. 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 6, 2026, the number of outstanding shares
of the registrant’s common stock was 2,291,056.
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 2026 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, 2025.
XENETIC BIOSCIENCES, INC.
2025 ANNUAL REPORT ON FORM 10-K
TABLE CONTENTS
PART I 1
Item 1 Business 1
Item 1A Risk Factors 22
Item 1B Unresolved Staff Comments 51
Item 1C Cybersecurity 51
Item 2 Properties 51
Item 3 Legal Proceedings 52
Item 4 Mine Safety Disclosures 52
Item 6 [Reserved] 53
Item 7A Quantitative and Qualitative Disclosures About Market Risk 58
Item 8 Financial Statements and Supplementary Data 59
Item 9A Controls and Procedures 60
Item 9B Other Information 61
Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 61
PART III 62
Item 10 Directors, Executive Officers and Corporate Governance 62
Item 11 Executive Compensation 62
Item 14 Principal Accounting Fees and Services 62
Item 15 Exhibits and Financial Statement Schedules 63
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, and prospects 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;
ii
· 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;
· 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, 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.
iii
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:
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 neutrophil extracellular traps (“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
cancer, 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. Globally,
there are over 500,000 new pancreatic cancers annually 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
3%. 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. According to the American Cancer Society, in 2025, an estimated 154,000 people in
the US will be diagnosed with colorectal cancer, with approximately 53,000 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.
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 2025 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 and orpha 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
Strategic Review Process
While we believe our DNase platform technology holds
promise, given we are in early stage development, we have initiated a formal strategic review process with the assistance of outside financial
and legal advisors. We are considering a wide range of alternatives to maximize shareholder value, including, but not limited to, the
sale of all or part of the Company or its assets or a business combination, including a “reverse merger”, share exchange or
similarly structured transaction. An independent committee of the Board has engaged in preliminary discussions with third parties regarding
potential transactions. Any such completed transaction could have a significant impact on the Company’s stockholders, including
if the transaction would result in the current investors of the counterparty holding a substantial majority of the Company’s outstanding
common stock following consummation of the potential transaction. Given the preliminary stage of such discussions, at this time there
is no way to quantify the potential impact of a transaction, if any. There is no deadline or definitive timetable set for the completion
of the strategic alternatives process, and there can be no assurance any proposal will be made or accepted, any agreement will be executed,
or any transaction will be consummated in connection with this review. In addition, if we do enter into definitive agreements with respect
to a potential transaction, we expect that consummation of the potential transaction would be subject to a number of conditions, including
approval by our stockholders and Nasdaq, and other customary conditions, which would be out of our control and may never be satisfied.
We remain committed to advancing our DNase technology and do not intend to make further announcements regarding the review process unless
and until the Board approves a specific transaction or otherwise determines that further disclosure is appropriate.
PeriNess Ltd (“PeriNess”)
During the fourth quarter of 2024, we entered into
a clinical trial services agreement with PeriNess, a privately held Israeli company, to advance our development program for our systemic
DNase I oncology program in combination with chemotherapy and immunotherapy platforms for the treatment of pancreatic carcinoma, colorectal
cancer and other locally advanced or metastatic solid tumors toward institutional, investigator led exploratory studies in Israel. Under
this agreement, PeriNess has announced the dosing of patients in an exploratory study of systemic DNase I in combination with Folfirinox
for the first line treatment of unresectable, locally advanced or metastatic pancreatic cancer at Bnei Zion Medical Center. In addition,
PeriNess announced that it had entered into a clinical study agreement with the Tel-Aviv Sourasky Medical Center in Israel to support
an exploratory study of DNase I in combination with anti-CD 19 CAR T cells in patients with large B cell lymphoma.
Scripps Research Institute (“Scripps Research”)
On March 17, 2023, we entered into a Research Funding
and Option Agreement (the “Scripps 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 Scripps 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 Scripps Agreement), as well as a non-exclusive, royalty-free, non-transferrable license to make and
use TSRI Technology (as defined in the Scripps Agreement) solely for our internal research purposes during the performance of the research
program contemplated by the Scripps Agreement. During the second quarter of 2024, the Company amended the Scripps 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 Scripps Agreement with Scripps Research (the “Second Amendment”) extending the term of the Scripps 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 Scripps Agreement remain unchanged.
Effective May 1, 2025, we entered into a Third Amendment
to the Scripps Agreement with Scripps Research (the “Third Amendment”), pursuant to which we expanded the services to be performed
under the Scripps Agreement and provided Scripps Research additional funding in an aggregate amount of up to approximately $0.4 million
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 $70,000 on the date of the Third Amendment and subsequent monthly payments
of approximately $70,000 over a 5-month period. All other terms of the Scripps Agreement remain unchanged.
Effective November 1, 2025, we entered into a Fourth
Amendment to the Scripps Agreement with Scripps Research (the “Fourth Amendment”), pursuant to which we extended and expanded
the services to be performed under the Scripps Agreement and provided Scripps Research with additional funding in an aggregate amount
of up to approximately $0.3 million. 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 $85,000 on the effective date of the Fourth Amendment and subsequent
monthly payments of approximately $85,000 over a 3-month period. All other terms of the Scripps Agreement remain unchanged.
Effective March 1, 2026, we entered into a Fifth
Amendment to the Scripps Agreement with Scripps Research (the “Fifth Amendment”), pursuant to which we extended and expanded
the services to be performed under the Scripps Agreement and agreed to provide Scripps Research additional funding in an aggregate amount
of up to approximately $0.5 million. 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 $80,000 on the effective date of the Fifth Amendment and subsequent
monthly payments of approximately $80,000 over a 5-month period. All other terms of the Scripps Agreement remain unchanged.
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 produced preclinical and translational data under the UVA Agreement
and has investigated combinations of DNase I with immunotherapies in models of primary and metastatic colorectal cancer. The Company is
currently in discussions with UVA concerning completion of current activities and expansion of the scope of work under the UVA Agreement.
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, 2025, 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;
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 PJSC Pharmsynthez
(“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 legacy 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 informed us that it had received a
response letter indicating certain deficiencies in the dossier. Pharmsynthez further informed the Company that they developed a gap mitigation
strategy and are awaiting further feedback from regulatory authorities.
Serum Institute informed the Company that it finished
Phase I/II clinical trials in India of ErepoXen for in-center-dialysis patients. Serum Institute further informed the Company that it
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 Scripps Research, PeriNess and UVA 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 our 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 $3.0
million and $2.5 million were recorded as revenue by us during the years ended December 31, 2025 and 2024 and are based on single digit
royalties on net sales of certain covered products.
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 Practices (“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 our legacy technologies as
discussed above with no resultant commercial products through December 31, 2025. No amounts were recognized as revenue related to the
Serum Institute, Pharmsynthez or SynBio agreements during each of the years ended December 31, 2025 and 2024.
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 expired in 2021 with the remaining PolyXen technology expiring over the
next few years as we are not renewing patents and pending patent applications related to our legacy PolyXen technology going forward.
Our DNase 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, Israel, 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 10, 2026, 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, 32 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
DNase 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.” 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 DNase
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 provides 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 intellectual property ( 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 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