Financial Performance - Total revenue for the three months ended June 30, 2024, was $726,404, an increase of 11.6% compared to $651,005 for the same period in 2023[7]. - Net loss for the three months ended June 30, 2024, was $1,273,970, compared to a net loss of $1,050,963 for the same period in 2023, representing a 21.2% increase in losses[7]. - The total operating costs and expenses for the three months ended June 30, 2024, were $2,063,800, an increase from $1,849,193 for the same period in 2023, reflecting an increase of 11.6%[7]. - For the six months ended June 30, 2024, royalty revenue decreased by 1.6% to $1,237,221 compared to $1,256,849 for the same period in 2023[64]. - Net loss for the six months ended June 30, 2024 was $2,469,083, a 29.4% increase from a net loss of $1,907,517 in the prior year[64]. Research and Development - Research and development expenses for the six months ended June 30, 2024, were $1,878,092, up from $1,498,519 for the same period in 2023, indicating a 25.4% increase[7]. - Research and development expenses for the quarter ended June 30, 2024 were $933,771, a 3.4% increase from $903,243 in the prior year[56]. - The company has paid approximately $0.9 million to Scripps Research to fund research related to its DNase oncology platform technology, with an option to acquire exclusive licensing rights[27]. - The company has entered into a research funding agreement with the University of Virginia, paying approximately $0.2 million to advance its systemic DNase program[29]. - The company is focused on advancing its systemic DNase program as an adjunctive therapy for pancreatic carcinoma and metastatic solid tumors[53]. Assets and Liabilities - Total current assets decreased to $8,014,978 as of June 30, 2024, down from $9,586,874 as of December 31, 2023, reflecting a decline of 16.4%[6]. - Total liabilities increased to $1,587,602 as of June 30, 2024, compared to $809,585 as of December 31, 2023, marking a significant rise of 96%[6]. - Stockholders' equity decreased to $7,445,728 as of June 30, 2024, down from $9,795,641 as of December 31, 2023, representing a decline of 24%[6]. - Working capital decreased by approximately $2.3 million to approximately $6.4 million at June 30, 2024, down from approximately $8.8 million at December 31, 2023[71]. - The company had approximately $7.3 million in cash and approximately $1.6 million in current liabilities at June 30, 2024, down from approximately $9.0 million in cash and approximately $0.8 million in current liabilities at December 31, 2023[71]. Cash Flow and Financing - Cash flows used in operating activities totaled approximately $1.7 million for the six months ended June 30, 2024, compared to approximately $2.4 million for the same period in 2023[74]. - The company anticipates needing additional capital in the long term to pursue its business initiatives, highlighting potential future financing needs[16]. - The company expects to continue incurring operating losses in the near term but believes existing resources will fund operations for at least twelve months from the issuance of the financial statements[72]. - There were no cash flows from investing or financing activities for the six months ended June 30, 2024 and 2023[75][76]. - The company anticipates needing additional capital in the long term to pursue business initiatives, with potential access to capital resources through various means[72]. Collaborations and Agreements - The company has a collaboration with Volition to develop NETs-targeted adoptive cell therapies, with Volition funding $26,000 to date[25]. - The Company has entered into various research, development, license, and supply agreements with Serum Institute, Pharmsynthez, and SynBio, with no revenue recognized from these agreements during the three and six months ended June 30, 2024 and 2023[30]. Stock and Equity - The Company granted 20,000 stock options during the three months ended June 30, 2024, with no stock option awards granted during the same period in 2023[40]. - Total share-based expense related to stock options and RSUs was approximately $42,000 for the three months ended June 30, 2024, compared to $0.1 million for the same period in 2023[38]. - The Company had approximately 462,963 Series A Warrants outstanding as of June 30, 2024, with an exercise price of $33.00 per share[35]. Tax and Valuation - The valuation allowance against deferred tax assets was approximately $40.4 million as of June 30, 2024, reflecting the Company's belief that it is more likely than not that these assets will not be realized[42]. - The Company did not record any unrecognized tax positions as of June 30, 2024[42]. - The Company has no financial instruments classified as Level 3 in the fair value hierarchy during the three and six months ended June 30, 2024 and 2023[32]. General Observations - The company has incurred substantial losses since inception and expects to continue incurring operating losses in the near term, indicating ongoing financial challenges[16]. - There have been no material changes to risk factors previously disclosed in the Annual Report for the year ended December 31, 2023[88].

Financial Results - Xenetic Biosciences, Inc. reported financial results for the three months ended March 31, 2024[6]. - The company issued a press release on May 10, 2024, detailing its business update and financial performance[6]. - The press release is included as Exhibit 99.1, which contains comprehensive financial results for the quarter[9]. Company Classification - The company is classified as an emerging growth company under the Securities Act[5]. Forward-Looking Statements - Forward-looking statements indicate potential risks and uncertainties affecting future performance, including market conditions and regulatory processes[8]. Data Availability - Specific financial metrics and user data were not provided in the extracted content, but the press release is referenced for detailed results[7].

Financial Performance - Total revenue for Q1 2024 was $510,817, a decrease of 15.6% compared to $605,844 in Q1 2023[11] - Net loss for Q1 2024 was $1,195,113, compared to a net loss of $856,554 in Q1 2023, representing an increase of 39.7%[11] - Basic and diluted loss per share for Q1 2024 was $0.78, compared to $0.56 in Q1 2023[11] - Revenue for Q1 2024 decreased by $0.1 million, or 15.7%, to $0.5 million from approximately $0.6 million in Q1 2023, primarily due to timing of rebates related to a sublicense agreement with Takeda Pharmaceuticals[65] - The net loss for Q1 2024 was approximately $1.2 million, compared to a net loss of approximately $0.9 million in Q1 2023, representing an increase in loss of $0.3 million or 39.5%[64] - Working capital decreased by $1.1 million to approximately $7.7 million at March 31, 2024, primarily due to the net loss incurred during the quarter[70] - Cash flows used in operating activities totaled approximately $1.2 million for Q1 2024, compared to approximately $1.1 million for Q1 2023, primarily due to net loss[73] Research and Development - Research and development expenses increased to $944,321 in Q1 2024, up 58.6% from $595,276 in Q1 2023[11] - Research and development expenses increased by approximately $0.3 million, or 58.6%, to approximately $0.9 million in Q1 2024 from approximately $0.6 million in Q1 2023, driven by increased spending on pre-clinical development for the DNase platform[66] - The company is focused on advancing its systemic DNase program for pancreatic carcinoma and has partnered with other companies to develop its proprietary drug delivery platform, PolyXen[21] - The company is focused on advancing its systemic DNase program as an adjunctive therapy for pancreatic carcinoma and locally advanced or metastatic solid tumors[61] - The Company has entered into a Research Funding and Option Agreement with Scripps Research, committing up to $0.9 million for research on the DNase oncology platform technology, with approximately $0.9 million already paid as of March 31, 2024[35] Financial Position - Cash at the end of Q1 2024 was $7,823,701, down from $11,994,827 at the end of Q1 2023, a decrease of 34.8%[17] - Total assets decreased to $9,394,096 as of March 31, 2024, down from $10,605,226 as of December 31, 2023, a decline of 11.4%[9] - Total stockholders' equity decreased to $8,677,602 as of March 31, 2024, down from $9,795,641 as of December 31, 2023, a decrease of 11.4%[9] - The accumulated deficit increased to approximately $194.4 million at March 31, 2024, compared to approximately $193.2 million at December 31, 2023[70] - The valuation allowance against deferred tax assets was approximately $40.1 million as of March 31, 2024, compared to $39.7 million as of December 31, 2023, indicating an increase of about 1.01%[50] Future Outlook - The company expects to continue incurring operating losses in the near term, raising substantial doubt about its ability to continue as a going concern[24] - The company anticipates needing additional capital in the long term to pursue its business initiatives[24] - The company anticipates needing additional capital in the long-term to pursue business initiatives, with existing resources expected to fund operations for at least twelve months[72] Legal and Compliance - The company has not received regulatory marketing authorization for any drug candidates to date, focusing on advancing the DNase technology[62] - The company has no off-balance sheet financing arrangements that could materially affect its financial condition[78] - There have been no material changes in critical accounting estimates from those disclosed in the Annual Report for the year ended December 31, 2023[80] - The management evaluated the effectiveness of disclosure controls and procedures, concluding they are effective as of the end of the reporting period[83] - There were no changes in internal control over financial reporting that would materially affect it during the reporting period[84] - The company is not currently subject to any material legal proceedings, nor are any threatened against it[86] - There have been no material changes to the risk factors previously disclosed in the Annual Report for the year ended December 31, 2023[87] - No unregistered sales of equity securities occurred during the reporting period[88] - No defaults upon senior securities were reported[89] - No director or officer adopted or terminated any trading arrangements during the quarter ended March 31, 2024[91] - The company filed various certifications in compliance with the Sarbanes-Oxley Act of 2002[93] Other Financial Activities - The Company recognized total share-based expense of approximately $0.1 million for both the three months ended March 31, 2024, and 2023[45] - No stock option awards were granted during the three months ended March 31, 2024, and 2023, with no options exercised or expired in either period[47] - The Company has approximately 462,963 Series A Warrants outstanding, exercisable at $33.00 per share, with no warrants exercised during the three months ended March 31, 2024, and 2023[42] - The Company incurred no provision for income taxes during the three months ended March 31, 2024, and 2023, due to losses in both periods[50] - The Company has paid approximately $2.5 million to Catalent for services related to the cGMP manufacturing of Human DNase I as of March 31, 2024[34] - The Company has paid approximately $0.1 million to UVA under a research agreement as of March 31, 2024, with $29,000 recognized as an advance payment[36] - For the three months ended March 31, 2024, the Company recorded royalty payments of approximately $0.5 million from Takeda, compared to $0.6 million in the same period of 2023, reflecting a decrease of about 16.67%[32]

Financial Results - Xenetic Biosciences, Inc. reported financial results for the year ended December 31, 2023, with a focus on corporate updates[6] - The press release detailing the financial results is included as Exhibit 99.1, which is referenced in the report[7] Company Classification - The company is classified as an emerging growth company under the Securities Act of 1933[5] Forward-Looking Statements - Forward-looking statements in the report are subject to risks and uncertainties, including market conditions and regulatory processes[8] - The company does not undertake any obligation to update forward-looking statements except as required by law[8] Report Signing - The report was signed by Chief Financial Officer James Parslow on March 22, 2024[13]

DNase Platform and Oncology Focus - The DNase platform targets neutrophil extracellular traps (NETs) to address inflammatory and autoimmune pathologies, as well as cancer growth and metastasis[24]. - The company is advancing its DNase platform towards a first-in-human study for IV rhDNase I in patients with locally advanced or metastatic solid tumors, focusing on high unmet needs in pancreatic cancer, colorectal carcinoma, and other gastrointestinal cancers[25]. - The DNase program is targeting multi-billion-dollar market opportunities in oncology, particularly in indications with significant unmet needs[25]. - The systemic DNase program is aimed at treating pancreatic carcinoma and other locally advanced or metastatic solid tumors, targeting multi-billion-dollar indications[48]. - The DNase platform targets NETs, which can create pro-tumorigenic niches and impede the effectiveness of existing cancer therapies[46]. - The company plans to prioritize efforts on the newly licensed DNase technology aimed at improving outcomes for solid tumors[11]. - The company is focusing on the advancement of its DNase oncology platform, targeting multi-billion-dollar indications including pancreatic carcinoma and other solid tumors[48]. - The company has exclusive license and sublicense agreements with CLS Therapeutics to develop its interventional DNase platform aimed at improving treatment outcomes, with multiple value-driving milestones expected over the next 12-24 months[48]. Pancreatic Cancer Statistics and Treatment Landscape - Approximately 185,000 individuals are diagnosed with pancreatic cancer globally each year, with an estimated 60,000 diagnoses in the U.S. in 2021[25]. - The five-year survival rate for pancreatic cancer patients is only 7-8%, with metastatic cases having a survival rate of just 3%[25]. - Current treatment options for advanced pancreatic cancer are limited, with second-line therapy yielding a median overall survival of only 4.7 months[25]. - The company emphasizes the urgent need for new therapeutic options for pancreatic cancer due to the ineffectiveness of recent developments for this patient group[25]. - The overall five-year survival rate for pancreatic cancer patients diagnosed with metastatic disease is only 3%[25]. Colorectal Cancer Statistics and Treatment Landscape - In 2023, approximately 153,000 individuals in the U.S. are estimated to be diagnosed with colon cancer, with an estimated 53,000 deaths from the disease[26]. - The 5-year survival rate for localized CRC is 91%, but drops to 72% if the cancer has spread to surrounding tissues, and to 13% if it has metastasized to distant parts of the body[26]. - The five-year relative survival rate for metastatic colorectal cancer is only 13%[26]. - Approximately 10% of all CRC cases exhibit high DNA microsatellite instability (MSI-H), with around 50% response rates to immunotherapy in this subset[28]. - For mCRC patients, chemotherapy remains the main treatment, with 95% of patients being MSS/MMRp mCRC, typically treated with fluoropyrimidine-based regimens[137]. - Immune checkpoint inhibitors are the preferred first-line therapy for the 5% of patients with MSI-H/dMMR mCRC, but 50% of these patients may fail treatment[138]. - The company is exploring novel combinations of immune checkpoint inhibitors with conventional cancer drugs to address vulnerabilities in MSS/MMRp mCRC[138]. Financial and Operational Risks - The company faces risks related to the uncertainty of financial performance and the need for substantial additional funding to achieve its goals[19]. - There is a reliance on third parties for clinical studies, which could impact the company's ability to execute its strategies effectively[19]. - The competitive environment poses challenges, as there are no assurances that competing technologies will not adversely affect the company's business development[19]. - The company has never been profitable and may require substantial additional funding to achieve its goals, which could affect its financial condition[19]. - The success of the company's business is substantially dependent on the DNase oncology platform[19]. - The company may face challenges in enrolling patients for clinical studies, which could delay or prevent the development of its pharmaceutical products[19]. Collaborations and Agreements - A collaboration with Volition aims to develop NETs-targeted adoptive cell therapies for multiple solid cancers, with shared proceeds from commercialization[31]. - The company has committed up to $938,000 to Scripps Research for advancing the pre-clinical development of its DNase oncology platform technology[42]. - The company has entered into a Research Funding and Option Agreement with Scripps Research, committing up to $938,000 for advancing the pre-clinical development of its DNase oncology platform technology, with initial and monthly payments of approximately $78,000 over 12 months[42]. - A Research Funding and Material Transfer Agreement with the University of Virginia was established to advance the systemic DNase program, with an option to acquire exclusive rights to new intellectual property arising from the research[44]. - The company has collaboration agreements with Pharmsynthez and Serum Institute for the development and potential commercialization of ErepoXen, with no revenue recognized from these agreements in 2023[67]. Regulatory Environment and Compliance - The company is subject to extensive government regulations in the U.S. and other countries regarding the research, development, testing, and marketing of its products[84]. - The FDA requires a lengthy approval process for new drugs, including preclinical testing, submission of an IND, and successful completion of clinical trials[86]. - The company must comply with Good Laboratory Practices (GLP) and Good Clinical Practice (GCP) regulations during the drug development process[86]. - The FDA may impose additional requirements, such as Phase IV trials, after initial marketing approval to monitor the safety and effectiveness of approved products[96]. - The company is required to submit annual progress reports and safety reports to the FDA during the IND phase of drug development[91]. - The approval process for an NDA or BLA can be lengthy and may result in a Complete Response Letter if deficiencies are identified, requiring resubmission[95]. - The FDA's Fast Track program allows for expedited review of new drugs intended for serious conditions, enabling rolling review of marketing application sections[100]. - Breakthrough Therapy Designation can expedite development for drugs showing substantial improvement over existing therapies, with a review of requests within 60 days[102]. - The 21st Century Cures Act established the RMAT program for regenerative medicine, facilitating development for serious conditions[103]. - The FDA may withdraw approval if regulatory compliance is not maintained post-approval, which can lead to market withdrawal[104]. Intellectual Property and Patent Strategy - The company has over 170 U.S. and international patents and pending patent applications covering various aspects of its technologies as of February 15, 2024[72]. - The patent strategy includes filing applications in major pharmaceutical markets, with existing patents for PolyXen technology expiring between 2025 and 2030[69]. - The company relies on trade secrets and know-how to maintain its proprietary position in oncology[72]. - The company plans to utilize data exclusivity and market exclusivity to strengthen its proprietary position[72]. - The first issued patents for the company's PolyXen technology began to expire in 2021, with the majority expiring between 2025 and 2030[69]. - The XCART and XDNASE patent families include recently filed applications with expiration dates extending to 2042[69]. - The company has received patent protection for therapeutics using PolyXen technology, including PSA-EPO and PSA-insulin[73]. - Patent protection has been granted for the production of PSA and the removal of endotoxin during purification, achieving a molecular weight polydispersity of 1.1 or lower[74]. - The XDNASE technology covers the use of DNase for cancer treatment and side effect amelioration, applicable alone or in combination with other therapies[75]. - Patents issued in the U.S. can provide exclusionary rights for twenty years from the earliest effective filing date, with potential extensions up to five years[76]. Company Structure and Workforce - The company employed four full-time employees as of December 31, 2023[128]. - The company utilizes specialists in various fields, including regulatory affairs and clinical development, to complement its professional staff[129]. Competitive Landscape - The biotechnology and pharmaceutical industries are characterized by intense competition, with competitors having greater financial resources and expertise[130]. - Key competitive factors for the company's product candidates include efficacy, safety, side effects, convenience, price, and reimbursement availability[132]. - The company faces competition from existing therapies and new therapies that may become available in the future, which could impact its market position[133]. - The company will compete with currently approved treatments for pancreatic cancer, including Gemcitabine and Abraxane, as well as recently approved therapies like NALIRIFOX[135]. - There have been late-stage clinical failures of compounds for advanced pancreatic ductal adenocarcinoma (PDAC), indicating a challenging development landscape[136]. - Current competing drug delivery platforms include PEGylation, Fc-fusion, and albumin-fusion, among others, indicating a competitive landscape in drug development[140].

For the transition period from to Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-37937 XENETIC BIOSCIENCES, INC. (Exact name of registrant as specified in its charter) Nevada (State or other jurisdic ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37937 XENETIC BIOSCIENCES, INC. (Exact name of registrant as specified in its charter) Nevada (State or other jurisdiction ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37937 XENETIC BIOSCIENCES, INC. (Registrant's telephone number, including area code) Securities registered pursuant to Sec ...

PART I [Business Overview](index=9&type=section&id=Item%201%20Business) Xenetic Biosciences, Inc. focuses on developing immuno-oncology technologies, primarily the DNase tumor platform for refractory cancers, pausing XCART development, and leveraging PolyXen for drug delivery partnerships [Company Overview](index=9&type=section&id=Overview) - The company licensed the DNase tumor platform in April 2022, aiming to improve existing immuno-oncology treatments by targeting NETs, with plans to advance IV rhDNase I into first-in-human clinical trials for locally advanced or metastatic solid tumors, including pancreatic cancer[23](index=23&type=chunk)[25](index=25&type=chunk)[27](index=27&type=chunk) - Pancreatic cancer has a five-year survival rate of only **7-8%**, dropping to **3%** for metastatic disease, highlighting the urgent need for new treatment options[25](index=25&type=chunk) - The company partnered with Volition to explore combining Volition's Nu.Q® technology with Xenetic's DNase-Armored CAR T platform for cell therapies targeting various solid tumors[30](index=30&type=chunk) - Development of the XCART personalized CAR T platform technology has been **paused**, with resources redirected to the DNase project[31](index=31&type=chunk) - PolyXen is a proprietary drug delivery platform utilizing polysialic acid (PSA) to extend the half-life of protein and peptide drugs, with existing collaborations with biotechnology and pharmaceutical companies[32](index=32&type=chunk) [Company Strategy](index=10&type=section&id=Our%20Strategy) - The company's primary strategy is to advance the systemic DNase program into clinical trials as an adjuvant therapy for pancreatic and other solid tumors, aiming to improve responses to checkpoint inhibitors, chemotherapy, and other standard treatments while overcoming resistance[36](index=36&type=chunk) - The company plans to seek orphan drug designation and accelerated approval pathways for relevant oncology indications to gain advantages such as market exclusivity[38](index=38&type=chunk) - The company will primarily advance DNase platform development through contract manufacturing organizations (CMOs) and contract research organizations (CROs) to efficiently manage resources[39](index=39&type=chunk) [Business Developments](index=11&type=section&id=Business%20Developments) - On April 26, 2022, the company entered an exclusive sublicense agreement with CLS for the exclusive license of DNase enzyme for cancer treatment, issuing **375,000 shares of common stock** and committing up to **$13 million** in milestone payments and royalties[40](index=40&type=chunk)[41](index=41&type=chunk) - On the same day, the company signed an exclusive license agreement with CLS for the exclusive license of DNase combined with CAR T therapy, paying **$500,000 in cash**, issuing **500,000 shares of common stock**, and committing up to **$13 million** in milestone payments and royalties[42](index=42&type=chunk)[43](index=43&type=chunk) - On October 4, 2022, the company completed patent transfers related to its collaborations with Volition and CLS, issuing **850,000 shares of common stock** to CLS LLC as consideration for certain patent rights[45](index=45&type=chunk) - On August 2, 2022, the company announced a collaboration with Volition to develop adoptive cell therapies targeting NETs, with Volition funding the research and both parties sharing commercialization revenues[46](index=46&type=chunk) - On June 30, 2022, the company signed a statement of work with Catalent for cGMP manufacturing services of recombinant human DNase I, with an estimated total project cost of up to **$5 million**, planned for completion in the first half of 2024[47](index=47&type=chunk)[64](index=64&type=chunk) - On March 17, 2023, the company entered a research funding and option agreement with Scripps Research, providing up to **$938,000** to fund preclinical development of the DNase tumor platform technology[48](index=48&type=chunk)[573](index=573&type=chunk) [Our Technology and Drug Candidates](index=12&type=section&id=Our%20Technology%20and%20Drug%20Candidates) - In 2022, internal development focused on licensing and advancing the DNase tumor platform and XCART technology, while PolyXen and other technologies were not actively pursued[51](index=51&type=chunk) - The DNase platform aims to target NETs to improve existing treatment efficacy, with first-in-human studies planned for **2024-2025**, initially targeting multi-billion dollar markets like pancreatic cancer[53](index=53&type=chunk)[55](index=55&type=chunk) - The XCART technology platform aimed to develop personalized CAR T-cell therapies for B-cell lymphoma by targeting patient-specific B-cell receptors, but further development is currently **paused**[55](index=55&type=chunk) - PolyXen is a bioplatform technology that chemically links PSA to extend drug molecule circulation time in the body, aiming to create superior next-generation therapeutic candidates[55](index=55&type=chunk) - ErepoXen (PSA-EPO) is a PolyXen platform candidate for anemia in chronic kidney disease, with Pharmsynthez completing Phase II(b)/III clinical trials and submitting a registration application in Russia, and Serum Institute completing Phase I/II clinical trials in India[56](index=56&type=chunk)[59](index=59&type=chunk)[61](index=61&type=chunk) [Significant Collaborations and Strategic Arrangements](index=15&type=section&id=Significant%20Collaborations%20and%20Strategic%20Arrangements) - The company has a non-exclusive sublicense agreement with Takeda for PolyXen technology, generating approximately **$1.7 million** and **$1.2 million** in royalty revenue in 2022 and 2021, respectively[63](index=63&type=chunk)[472](index=472&type=chunk) - The company signed a service agreement with Catalent for cGMP manufacturing of recombinant human DNase I protein, with an estimated total project cost of up to **$5 million**, planned for completion in the first half of 2024[64](index=64&type=chunk)[473](index=473&type=chunk) - The research funding agreement with Scripps Research for XCART preclinical development terminated additional funding in the **second quarter of 2022**[66](index=66&type=chunk)[475](index=475&type=chunk) - The company has an exclusive license agreement with Pharmsynthez for PolyXen and ImuXen technology products, with Pharmsynthez responsible for development and commercialization in Russia and CIS countries, and the company entitled to sales royalties[67](index=67&type=chunk)[70](index=70&type=chunk)[484](index=484&type=chunk) - The company has an exclusive license agreement with Serum Institute for PolyXen technology PSA-EPO products, with Serum Institute responsible for clinical trials and regulatory approvals in specific territories, and the company entitled to sales royalties[73](index=73&type=chunk)[487](index=487&type=chunk) [Our Intellectual Property](index=17&type=section&id=Our%20Intellectual%20Property) - As of January 23, 2023, the company directly or indirectly owns over **170** U.S. and international patents and pending patent applications, covering DNase, XCART, and PolyXen platform technologies[77](index=77&type=chunk) - The company has obtained patent protection for PolyXen technologies (e.g., PSA-EPO, PSA-insulin, PSA-rFVIII) and methods for PSA production and endotoxin removal[79](index=79&type=chunk)[80](index=80&type=chunk) - The company also secured patent protection for DNase technology in cancer treatment and mitigating cancer treatment side effects, including use alone or in combination with cancer therapeutics, CAR-T cells, immune checkpoint inhibitors, or modulators[81](index=81&type=chunk) - U.S. patents typically provide **20 years** of exclusivity from the earliest effective filing date, with potential extensions of up to **5 years** through patent term extension mechanisms[82](index=82&type=chunk) [Manufacturing and Supply](index=19&type=section&id=Manufacturing%20and%20Supply) - The company lacks internal manufacturing capabilities and relies on third-party manufacturers to support drug candidate development programs[88](index=88&type=chunk) - The company has agreements with Catalent and Serum Institute for the manufacturing of clinical materials for DNase and PolyXen technology-related drug candidates[88](index=88&type=chunk) - XCART technology currently lacks third-party manufacturing agreements, and the company will seek third-party manufacturers to meet future clinical supply needs[88](index=88&type=chunk) [Government Regulation](index=19&type=section&id=Government%20Regulation) - In the U.S., new drugs require FDA approval via NDA or BLA processes, involving preclinical testing, IND submission, three phases of clinical trials, cGMP manufacturing inspections, and FDA review[89](index=89&type=chunk)[90](index=90&type=chunk)[92](index=92&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[102](index=102&type=chunk) - The FDA offers expedited development and review programs like orphan drug designation (**7 years** of market exclusivity), Fast Track, Priority Review, Accelerated Approval, and Breakthrough Therapy designation to facilitate drug development for serious or life-threatening conditions[106](index=106&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) - Approved products remain subject to ongoing regulatory requirements, including manufacturing, labeling, promotion, post-market studies, and safety reporting, with non-compliance potentially leading to approval withdrawal or market restrictions[105](index=105&type=chunk)[115](index=115&type=chunk)[184](index=184&type=chunk)[186](index=186&type=chunk) - The Biologics Price Competition and Innovation Act (BPCIA) provides **12 years** of data exclusivity for innovative biologics, while the Hatch-Waxman Amendments allow patent term extensions of up to **5 years**[116](index=116&type=chunk)[117](index=117&type=chunk) - In the EU, drug marketing requires a marketing authorization application, with new chemical entities typically receiving **8 years** of data exclusivity and **2 years** of market exclusivity, and orphan drugs potentially gaining **10 years** of market exclusivity[124](index=124&type=chunk)[126](index=126&type=chunk) - Drug sales and reimbursement are heavily regulated by third-party payers (e.g., government healthcare, commercial insurers), who increasingly challenge drug prices and implement cost control measures, such as the Inflation Reduction Act allowing Medicare to directly negotiate drug prices[134](index=134&type=chunk)[135](index=135&type=chunk) [Environmental Regulation](index=29&type=section&id=Environmental%20Regulation) - The company complies with environmental regulations, incurring low compliance costs as it does not engage in manufacturing drug candidates[142](index=142&type=chunk) - The company uses hazardous and flammable materials, posing risks of accidental contamination or injury, but has not purchased specific insurance to mitigate this risk[143](index=143&type=chunk) [Employees](index=29&type=section&id=Employees) - As of December 31, 2022, the company had **four** full-time employees and utilizes external experts and consultants to supplement internal professionals[144](index=144&type=chunk)[145](index=145&type=chunk) [Competition](index=29&type=section&id=Competition) - The biotechnology and pharmaceutical industries are highly competitive, with the company facing competition from large pharmaceutical, specialty pharmaceutical, and biotechnology companies, as well as academic and government institutions[146](index=146&type=chunk)[147](index=147&type=chunk) - Key competitive factors include efficacy, safety, side effects, convenience, price, generic competition, and reimbursement accessibility[148](index=148&type=chunk) - In pancreatic cancer, the company will compete with existing approved treatments (e.g., gemcitabine combined with Abraxane or FOLFIRINOX) and products like Merck's KEYTRUDA and Lynparza[152](index=152&type=chunk) - In B-cell lymphoma CAR T-cell therapy, the company faces competition from approved products like Novartis' Kymriah, Gilead's Yescarta and Tecartus, Bristol Myers Squibb's Breyanzi and Abecma, Janssen's Carvykti, and over a hundred CAR T-cell therapies in development[154](index=154&type=chunk) - In PSA drug delivery platforms, the company faces competition from existing platforms such as PEGylation, Fc-fusion, albumin-fusion, HESylation, PASylation, and CTP-fusion[155](index=155&type=chunk) - The company primarily focuses on advancing the DNase tumor platform, aiming to improve existing cancer treatment efficacy by targeting NETs, especially for pancreatic cancer and locally advanced or metastatic solid tumors[23](index=23&type=chunk)[27](index=27&type=chunk)[36](index=36&type=chunk) - The XCART personalized CAR T-cell platform technology development has been **paused**, with resources prioritized for the DNase project[31](index=31&type=chunk)[55](index=55&type=chunk) - The PolyXen drug delivery platform collaborates with biotechnology and pharmaceutical companies, utilizing polysialic acid (PSA) to extend drug half-life and generate royalty income in the hemophilia field[32](index=32&type=chunk)[63](index=63&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A%20Risk%20Factors) The company faces multiple risks including uncertain profitability, significant capital needs, reliance on its DNase platform, clinical and regulatory challenges, third-party dependencies, intellectual property issues, and stock market volatility [Risks Related to Our Financial Condition and Capital Requirements](index=31&type=section&id=Risks%20Related%20to%20Our%20Financial%20Condition%20and%20Capital%20Requirements) - The company has never been profitable, with accumulated losses of approximately **$189.1 million** as of December 31, 2022, and may not achieve or maintain profitability in the future[160](index=160&type=chunk)[162](index=162&type=chunk) - The company requires substantial additional funding to achieve its objectives; failure to obtain financing on acceptable terms in a timely manner may force delays, limitations, or termination of product development or commercialization efforts[163](index=163&type=chunk)[167](index=167&type=chunk) - Raising additional capital may result in **dilution** for existing shareholders, restrict company operations, or require the company to relinquish rights to technologies or drug candidates[169](index=169&type=chunk)[170](index=170&type=chunk) [Risks Related to the Discovery and Development of our Pharmaceutical Products](index=33&type=section&id=Risks%20Related%20to%20the%20Discovery%20and%20Development%20of%20our%20Pharmaceutical%20Products) - The company's business is highly dependent on the successful clinical development, regulatory approval, and commercialization of the DNase tumor platform; failure to secure necessary collaborations or funding may delay or terminate clinical development[171](index=171&type=chunk) - As an early-stage pharmaceutical company, no products have received commercial approval, with revenue primarily from a single partner's royalties, and business operations may not fully materialize or create value for investors[173](index=173&type=chunk) - Clinical studies may be delayed or hindered by difficulties in patient enrollment, impacting product development timelines and regulatory approvals[174](index=174&type=chunk)[176](index=176&type=chunk) - Clinical trials may experience significant delays or fail to demonstrate safety and efficacy, thereby impeding or delaying the commercialization of drug candidates[178](index=178&type=chunk) - Even upon completing clinical studies, it is unpredictable when or if regulatory approval will be obtained, and approval may be limited to narrower indications than anticipated[183](index=183&type=chunk) - Approved products will remain subject to ongoing regulatory scrutiny, and non-compliance may lead to approval withdrawal or market restrictions[184](index=184&type=chunk)[188](index=188&type=chunk) - The commercial success of any future drugs depends on market acceptance by physicians, patients, and third-party payers[189](index=189&type=chunk) - The commercial potential of drug candidates is difficult to predict; if market size is smaller than expected, it could negatively impact revenue and financial condition[193](index=193&type=chunk) - Failure to obtain or maintain adequate reimbursement may limit product market penetration and reduce revenue[194](index=194&type=chunk)[199](index=199&type=chunk) - The company may allocate limited resources to projects with lower ultimate commercial potential or fail to identify and develop more profitable projects[200](index=200&type=chunk) - The company may not successfully identify or discover additional drug products, leading to development failures[201](index=201&type=chunk)[202](index=202&type=chunk) - The market opportunity for drug candidates may be limited to patients who do not qualify for or have failed existing treatments, potentially resulting in a small market size[204](index=204&type=chunk)[205](index=205&type=chunk) - Clinical trials may fail to demonstrate the safety and efficacy of drug candidates, thereby preventing or significantly delaying regulatory approval[206](index=206&type=chunk)[207](index=207&type=chunk) - The company may not obtain orphan drug designation, or even if obtained, may not maintain associated benefits, including market exclusivity[211](index=211&type=chunk)[212](index=212&type=chunk) - Healthcare reform measures could materially adversely affect the company's business and operating results, such as the Inflation Reduction Act potentially impacting Medicare drug pricing[213](index=213&type=chunk)[214](index=214&type=chunk)[216](index=216&type=chunk) [Risks Related to Our Reliance on Third-Parties](index=43&type=section&id=Risks%20Related%20to%20Our%20Reliance%20on%20Third-Parties) - The company may seek additional collaborations; failure to secure them on commercially reasonable terms may necessitate changes to development and commercialization plans[219](index=219&type=chunk)[222](index=222&type=chunk) - Conflicts with collaborators or strategic partners may arise, where they act in their own interests, limiting the company's strategic implementation[224](index=224&type=chunk)[225](index=225&type=chunk) - The company relies on third parties for clinical study oversight and monitoring; poor performance by them could harm the company's business[226](index=226&type=chunk)[228](index=228&type=chunk) - Collaborators or strategic partners may adopt alternative technologies or fail to develop commercially viable products using the company's technology, negatively impacting revenue and product development strategy[230](index=230&type=chunk) - If collaborations are established, the company may be forced to relinquish significant rights and control over drug candidate development or accept unfavorable terms[231](index=231&type=chunk) - The company lacks internal manufacturing, sales, marketing, or distribution capabilities and may need to invest substantial resources to develop these[232](index=232&type=chunk)[233](index=233&type=chunk) - Reliance on third parties requires sharing trade secrets, increasing the risk of competitors discovering or misappropriating trade secrets[234](index=234&type=chunk)[236](index=236&type=chunk) - Contract manufacturers are highly regulated; failure to consistently meet regulatory requirements or limited capacity could lead to clinical study delays, hindered regulatory submissions, or commercialization failures[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk)[243](index=243&type=chunk) [Risks Related to Our Intellectual Property](index=48&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) - Failure to adequately protect or enforce intellectual property may hinder effective operations, as patents and trademarks could be challenged, invalidated, or canceled[244](index=244&type=chunk)[245](index=245&type=chunk) - Granted patents for drug candidates, if challenged in court, may be deemed invalid or unenforceable[250](index=250&type=chunk) - The company may be unable to protect intellectual property globally, preventing it from stopping third parties from using its inventions or selling infringing products in certain countries[251](index=251&type=chunk)[252](index=252&type=chunk) - If the company infringes on others' intellectual property, it may face significant liability, be required to cease using relevant technology, or pay royalties, adversely affecting business and profitability[254](index=254&type=chunk) - Failure to comply with license agreement obligations or a breakdown in licensor relationships could result in the loss of license rights critical to the business[256](index=256&type=chunk)[257](index=257&type=chunk)[258](index=258&type=chunk) - The company may face allegations of improper use or disclosure of third-party confidential information or former employers' trade secrets by employees, consultants, or independent contractors[260](index=260&type=chunk) - The company may face claims challenging the inventorship or ownership of patents or other intellectual property[262](index=262&type=chunk) - Inability to protect confidential information and trade secrets will harm the company's business and competitive position[263](index=263&type=chunk) - The company may become involved in litigation to protect or enforce patents, which can be costly, time-consuming, and potentially unsuccessful[264](index=264&type=chunk)[265](index=265&type=chunk) - Changes in U.S. patent law could diminish patent value and weaken the company's ability to protect its products[268](index=268&type=chunk)[269](index=269&type=chunk) - Obtaining and maintaining patent protection depends on complying with various procedural, filing, and fee payment requirements of government patent agencies; non-compliance may result in loss of patent rights[270](index=270&type=chunk) [Risks Related to Our Business Operations](index=53&type=section&id=Risks%20Related%20to%20Our%20Business%20Operations) - Adverse developments in the financial services industry (e.g., bank liquidity issues or failures) could negatively impact the company's current and future business operations, financial condition, and operating results, such as the SVB collapse[272](index=272&type=chunk)[276](index=276&type=chunk)[277](index=277&type=chunk) - The company's future success depends on retaining key members of its executive team, advisors, and consultants, and attracting, retaining, and motivating qualified personnel[279](index=279&type=chunk) - The company needs to expand its organization and may encounter difficulties managing growth, which could disrupt operations[281](index=281&type=chunk) - The company is a party to collaboration agreements and other material agreements containing complex commercial terms, potentially leading to disputes, litigation, or indemnification liabilities[282](index=282&type=chunk)[283](index=283&type=chunk) - The company operates in a highly competitive field, and competing technologies could harm its business development[285](index=285&type=chunk) - Potential new accounting pronouncements or legislative actions could adversely affect the company's future financial condition or operating results[286](index=286&type=chunk)[287](index=287&type=chunk) [Risks Related to Our Common Stock](index=56&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) - Failure to meet Nasdaq's continued listing requirements (e.g., minimum bid price) could result in common stock delisting, impacting share price and liquidity, and reducing financing capabilities[288](index=288&type=chunk)[289](index=289&type=chunk)[292](index=292&type=chunk) - The market price of the company's securities may be highly volatile, and investors may be unable to sell their securities[293](index=293&type=chunk)[294](index=294&type=chunk) - The rights, preferences, and privileges of preferred stock are senior to common stockholders, potentially leading to divergent interests[295](index=295&type=chunk) - Future issuances of common stock may result in **dilution** for existing shareholders[296](index=296&type=chunk)[297](index=297&type=chunk) - The company may face securities class action lawsuits[298](index=298&type=chunk) - An active, liquid, and orderly market for the company's common stock or warrants may not develop[299](index=299&type=chunk) - Agreements entered into by the company with its shareholders may create conflicts of interest[300](index=300&type=chunk) - The company does not intend to pay dividends on common or preferred stock, so any return will be limited to stock value[302](index=302&type=chunk) - Certain provisions in the company's certificate of incorporation, bylaws, and Nevada Revised Statutes may have anti-takeover effects, potentially leading to a decrease in common stock market price[303](index=303&type=chunk) [General Risk Factors](index=59&type=section&id=General%20Risk%20Factors) - Adverse U.S. or global economic conditions (e.g., COVID-19 pandemic, Russia-Ukraine conflict, and related sanctions) could negatively impact the company's financial condition, operating results, business, and cash flows[304](index=304&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk)[308](index=308&type=chunk) - The company's ability to utilize potential future operating losses and federal and state NOL carryforwards to offset taxable income may be limited[309](index=309&type=chunk)[310](index=310&type=chunk) - Tax reforms could significantly impact the company and its shareholders, leading to inaccurate estimates of effective tax rates and deferred income tax assets and liabilities[311](index=311&type=chunk)[312](index=312&type=chunk) - Governments may implement price controls, adversely affecting the company's future profitability[313](index=313&type=chunk) - Company employees, principal investigators, consultants, and business partners may engage in misconduct, including non-compliance with regulatory standards and insider trading[315](index=315&type=chunk) - Use of the company's drug candidates may result in adverse side effects, leading to hindered regulatory approval or product liability lawsuits[316](index=316&type=chunk)[317](index=317&type=chunk) - The company faces potential product liability; successful claims could result in substantial liabilities and costs[319](index=319&type=chunk) - Failure to comply with environmental, health, and safety laws and regulations could result in fines or costs, materially adversely impacting business success[320](index=320&type=chunk)[321](index=321&type=chunk) - Non-cash expenses such as stock-based compensation may adversely affect operating results[322](index=322&type=chunk) - Differing interpretations of existing standards and rules could lead to the company restating previously reported operating results[324](index=324&type=chunk) - The company's disclosure controls and procedures may not prevent or detect all errors or fraud[325](index=325&type=chunk) - Information technology system failures, including cybersecurity attacks or other data security incidents, could severely disrupt company operations[326](index=326&type=chunk)[327](index=327&type=chunk) - As a smaller reporting company, simplified reporting requirements may reduce the attractiveness of the company's common stock to investors[328](index=328&type=chunk) - The company has never been profitable, with accumulated losses of approximately **$189.1 million** as of December 31, 2022, faces uncertain future profitability, and requires substantial additional funding for product development and commercialization[160](index=160&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) - The company's business is highly dependent on the successful development, regulatory approval, and commercialization of the DNase tumor platform; failure to secure necessary collaborations or funding may delay or terminate clinical development[171](index=171&type=chunk) - Clinical studies may be delayed or terminated due to patient recruitment difficulties, regulatory delays, or unfavorable clinical trial results, impacting timely product commercialization[174](index=174&type=chunk)[176](index=176&type=chunk)[178](index=178&type=chunk) - Even with regulatory approval, products will remain subject to ongoing regulatory scrutiny, and commercial success depends on market acceptance by physicians, patients, and third-party payers, as well as adequate reimbursement[184](index=184&type=chunk)[189](index=189&type=chunk)[194](index=194&type=chunk) - The company relies on third parties for manufacturing, clinical research, and distribution; poor performance by or disruption of relationships with third parties could adversely affect the business[226](index=226&type=chunk)[232](index=232&type=chunk)[234](index=234&type=chunk)[237](index=237&type=chunk) - Intellectual property protection faces challenges, with patents potentially being challenged as invalid or unenforceable globally, and the risk of infringing on others' intellectual property[244](index=244&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk)[254](index=254&type=chunk) - The company faces operational risks including adverse financial services industry developments (e.g., SVB collapse), loss of key personnel, difficulties managing organizational expansion, collaboration agreement disputes, intense competition, changes in accounting standards, and information technology system failures[272](index=272&type=chunk)[279](index=279&type=chunk)[281](index=281&type=chunk)[282](index=282&type=chunk)[285](index=285&type=chunk)[286](index=286&type=chunk)[326](index=326&type=chunk) - The company's common stock may face delisting risk due to failure to meet Nasdaq listing requirements, and its stock price may be highly volatile[288](index=288&type=chunk)[293](index=293&type=chunk) [Unresolved Staff Comments](index=63&type=section&id=Item%201B%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments [Properties](index=64&type=section&id=Item%202%20Properties) The company leases office spaces in Framingham, Massachusetts, and Miami, Florida, deeming current facilities adequate with options for additional space - The company leases shared office space in Framingham, Massachusetts, with the lease term extending until **September 2023**[331](index=331&type=chunk) - The company leases **360 square feet** of office space in Miami, Florida, with the lease term extended until **November 30, 2023**[332](index=332&type=chunk) [Legal Proceedings](index=64&type=section&id=Item%203%20Legal%20Proceedings) The company is occasionally involved in litigation and claims, but management believes these will not materially impact its financial condition or operations as of December 31, 2022 - The company may face litigation and claims, but as of December 31, 2022, management believes these will not materially adversely affect its financial condition, operating results, or cash flows[333](index=333&type=chunk)[334](index=334&type=chunk) [Mine Safety Disclosures](index=64&type=section&id=Item%204%20Mine%20Safety%20Disclosures) Not applicable PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=65&type=section&id=Item%205%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock and warrants are listed on Nasdaq, with 426 common stockholders as of March 10, 2023, and no cash dividends have been declared, with future earnings retained for business development - The company's common stock and warrants are listed on the Nasdaq Capital Market under the symbols **“XBIO”** and **“XBIOW”**, respectively[338](index=338&type=chunk) - As of March 10, 2023, the company had **426** holders of common stock[339](index=339&type=chunk) - The company has never declared or paid any cash dividends on its common stock and plans to retain earnings for business development in the foreseeable future[340](index=340&type=chunk) - The company did not repurchase any outstanding shares of common stock during the **fourth quarter of 2022**[343](index=343&type=chunk) [Item 6 [Reserved]](index=65&type=section&id=Item%206%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=66&type=section&id=Item%207%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company focuses on the DNase platform, reported increased revenue and R&D expenses in 2022, a net loss of $6.6 million, and faces significant going concern doubts despite securing its funds from SVB [BUSINESS OVERVIEW](index=66&type=section&id=BUSINESS%20OVERVIEW) - The company focuses on advancing the DNase tumor platform, aiming to improve existing cancer treatment efficacy by targeting NETs, and has **paused** XCART platform development, concentrating resources on the DNase project[346](index=346&type=chunk)[347](index=347&type=chunk) - The company collaborates with biotechnology and pharmaceutical companies through its PolyXen drug delivery platform, generating royalties in the hemophilia field[346](index=346&type=chunk)[347](index=347&type=chunk) - To date, none of the company's drug candidates have received marketing authorization or approval from the U.S. FDA or other national regulatory authorities[347](index=347&type=chunk) [Critical Accounting Policies and Estimates](index=66&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - The company recognizes revenue under ASC Topic 606, involving five steps: identifying contracts, performance obligations, transaction price, allocating transaction price, and recognizing revenue, with critical judgments for milestone payments and variable consideration[352](index=352&type=chunk)[353](index=353&type=chunk)[354](index=354&type=chunk)[355](index=355&type=chunk)[356](index=356&type=chunk) - Research and development expenses are recognized as incurred, including compensation and benefits, facility costs, preclinical development, clinical trials and related manufacturing, and fees paid to CROs and CMOs[358](index=358&type=chunk)[359](index=359&type=chunk) - Stock-based compensation expense is based on the estimated fair value of options or restricted stock units, calculated using the Black-Scholes option pricing model, requiring judgment on assumptions like volatility and expected term[362](index=362&type=chunk)[363](index=363&type=chunk) - Warrants are valued using the Black-Scholes model, with fair value recognized as expense over the service period or on the issuance date[364](index=364&type=chunk)[365](index=365&type=chunk) - Intangible assets (including in-process research and development, IPR&D) are recognized at fair value, not amortized, but reviewed for impairment at least annually[366](index=366&type=chunk)[368](index=368&type=chunk)[369](index=369&type=chunk) - The ultimate impact of the COVID-19 pandemic and the Russia-Ukraine conflict on the company's business, operations, and financial performance remains uncertain[371](index=371&type=chunk)[372](index=372&type=chunk) [Results of Operations](index=71&type=section&id=Results%20of%20Operations) Operating Results Overview (2022 vs. 2021) | Item | 2022 (USD) | 2021 (USD) | Change (USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 1,706,925 | 1,160,692 | 546,233 | 47.1% | | Research and Development Expenses | (4,770,834) | (3,163,485) | 1,607,349 | 50.8% | | General and Administrative Expenses | (3,653,999) | (3,743,972) | (89,973) | (2.4)% | | Operating Loss | (6,717,908) | (5,746,765) | 971,143 | 16.9% | | Other Income (Expense) | (1,597) | 1,119 | 2,716 | 242.7% | | Interest Income, Net | 167,152 | 100,467 | 66,685 | 66.4% | | Net Loss | (6,552,353) | (5,645,179) | 907,174 | 16.1% | - Revenue increased by **47.1%** to **$1.7 million** in 2022, primarily due to increased royalty income from the Takeda sublicense agreement[376](index=376&type=chunk) - Research and development expenses increased by **50.8%** to **$4.8 million** in 2022, mainly due to **$1.8 million** in in-process research and development (IPR&D) expenses related to the DNase platform license[377](index=377&type=chunk) - Excluding IPR&D expenses, 2022 R&D expenses decreased by **5.9%** to **$3.0 million**, primarily due to reduced XCART technology platform expenditures, partially offset by initial DNase platform development costs[378](index=378&type=chunk) - General and administrative expenses decreased by **2.4%** to **$3.7 million** in 2022, mainly due to reduced consulting and legal fees related to the intellectual property portfolio, partially offset by increased legal fees for the DNase platform license[379](index=379&type=chunk) - Net interest income increased to approximately **$0.2 million** in 2022, primarily due to higher interest rates on invested funds[381](index=381&type=chunk) [Liquidity and Capital Resources](index=72&type=section&id=Liquidity%20and%20Capital%20Resources) - The company reported a net loss of approximately **$6.6 million** in 2022, with accumulated losses of approximately **$189.1 million**, and working capital decreased from **$17.3 million** in 2021 to **$12.6 million** in 2022[382](index=382&type=chunk) - As of December 31, 2022, the company had approximately **$13.1 million** in cash and **$1.1 million** in current liabilities[383](index=383&type=chunk) - The company faces significant going concern doubts but believes existing resources are sufficient for the next **12 months** of operations and plans to secure additional capital through equity financing, debt financing, or collaborations[385](index=385&type=chunk) - The company fully recovered its deposits at SVB on **March 13, 2023**, and expects no losses from the event[386](index=386&type=chunk)[575](index=575&type=chunk) - Cash outflow from operating activities was approximately **$4.6 million** in 2022, primarily due to net loss, partially offset by non-cash expenses such as in-process research and development (IPR&D) and stock-based compensation[387](index=387&type=chunk) - Cash outflow from investing activities was **$0.5 million** in 2022, used for the DNase tumor platform license[388](index=388&type=chunk) - There was no cash flow from financing activities in 2022, compared to a cash inflow of approximately **$11.5 million** in 2021, primarily from net proceeds of a private placement in **July 2021**[389](index=389&type=chunk) [Contractual Obligations](index=74&type=section&id=Contractual%20Obligations) - The company's contractual obligations primarily stem from office space leases, excluding potential CMO service payments due to their unpredictable timing, amount, and cancellable nature[391](index=391&type=chunk) Contractual Obligations (As of December 31, 2022) | Obligation Type | Total (USD) | Less than 1 Year (USD) | 1-3 Years (USD) | 3-5 Years (USD) | More than 5 Years (USD) | | :--- | :--- | :--- | :--- | :--- | :--- | | Lease Obligations | 28,524 | 28,524 | – | – | – | [Recent Accounting Standards](index=74&type=section&id=Recent%20Accounting%20Standards) - The company is evaluating the impact of ASU 2016-13, Financial Instruments—Credit Losses, and does not expect a material impact on its consolidated financial statements[393](index=393&type=chunk)[471](index=471&type=chunk) - The company primarily focuses on advancing the DNase tumor platform, has **paused** XCART technology platform development, and concentrates resources on the DNase project[346](index=346&type=chunk)[347](index=347&type=chunk)[378](index=378&type=chunk) - The company reported a net loss of approximately **$6.6 million** in 2022, with accumulated losses of approximately **$189.1 million**, and working capital decreased from **$17.3 million** in 2021 to **$12.6 million** in 2022[375](index=375&type=chunk)[382](index=382&type=chunk) - The company faces significant going concern doubts but believes capital can be obtained through equity financing, debt financing, or collaborations, with existing resources sufficient for the next **12 months** of operations[385](index=385&type=chunk) - The company fully recovered its deposits at SVB on **March 13, 2023**, and expects no losses from the event[386](index=386&type=chunk)[575](index=575&type=chunk) Operating Results Overview (2022 vs. 2021) | Item | 2022 (USD) | 2021 (USD) | Change (USD) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 1,706,925 | 1,160,692 | 546,233 | 47.1% | | Research and Development Expenses | (4,770,834) | (3,163,485) | 1,607,349 | 50.8% | | General and Administrative Expenses | (3,653,999) | (3,743,972) | (89,973) | (2.4)% | | Operating Loss | (6,717,908) | (5,746,765) | 971,143 | 16.9% | | Other Income (Expense) | (1,597) | 1,119 | 2,716 | 242.7% | | Interest Income, Net | 167,152 | 100,467 | 66,685 | 66.4% | | Net Loss | (6,552,353) | (5,645,179) | 907,174 | 16.1% | [Quantitative and Qualitative Disclosures About Market Risk](index=74&type=section&id=Item%207A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is not required to provide this information [Financial Statements and Supplementary Data](index=75&type=section&id=Item%208%20Financial%20Statements%20and%20Supplementary%20Data) This section includes the company's consolidated financial statements for 2022 and 2021, with an unqualified opinion from Marcum LLP, highlighting going concern and royalty revenue as key audit matters, and detailed notes on accounting policies and strategic agreements - Independent registered public accounting firm Marcum LLP issued an unqualified opinion on the company's consolidated financial statements as of December 31, 2022, and 2021[399](index=399&type=chunk) - Going concern assessment and royalty revenue recognition were identified as key audit matters, involving significant judgments regarding future cash flow projections and variable consideration estimates[404](index=404&type=chunk)[407](index=407&type=chunk)[408](index=408&type=chunk) Consolidated Balance Sheets (As of December 31, 2022 and 2021) | Item | 2022 (USD) | 2021 (USD) | | :--- | :--- | :--- | | **Assets** | | | | Cash | 13,097,265 | 18,244,030 | | Prepaid Expenses and Other Current Assets | 556,094 | 479,399 | | **Total Current Assets** | **13,653,359** | **18,723,429** | | Other Assets | 1,066,931 | 1,091,931 | | **Total Assets** | **14,720,290** | **19,815,360** | | **Liabilities and Stockholders' Equity** | | | | Accounts Payable | 287,360 | 362,470 | | Accrued Expenses and Other Current Liabilities | 785,796 | 1,058,633 | | **Total Current Liabilities** | **1,073,156** | **1,421,103** | | **Total Liabilities** | **1,073,156** | **1,421,103** | | Preferred Stock | 2,774 | 2,774 | | Common Stock | 15,192 | 13,465 | | Additional Paid-in Capital | 207,756,232 | 205,952,729 | | Accumulated Deficit | (189,099,618) | (182,547,265) | | Accumulated Other Comprehensive Income | 253,734 | 253,734 | | Treasury Stock | (5,281,180) | (5,281,180) | | **Total Stockholders' Equity** | **13,647,134** | **18,394,257** | | **Total Liabilities and Stockholders' Equity** | **14,720,290** | **19,815,360** | Consolidated Statements of Comprehensive Loss (For the Years Ended December 31, 2022 and 2021) | Item | 2022 (USD) | 2021 (USD) | | :--- | :--- | :--- | | Revenue | 1,706,925 | 1,160,692 | | Operating Costs and Expenses | (8,424,833) | (6,907,457) | | Operating Loss | (6,717,908) | (5,746,765) | | Other Income, Net | 165,555 | 101,586 | | **Net Loss** | **(6,552,353)** | **(5,645,179)** | | Net Loss Per Share, Basic and Diluted | (0.46) | (0.55) | | Weighted-Average Common Shares Outstanding, Basic and Diluted | 14,224,430 | 10,279,408 | Consolidated Statements of Cash Flows (For the Years Ended December 31, 2022 and 2021) | Cash Flow Activities | 2022 (USD) | 2021 (USD) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (4,646,765) | (4,738,067) | | Net Cash Used in Investing Activities | (500,000) | – | | Net Cash Provided by Financing Activities | – | 11,454,545 | | Net Change in Cash | (5,146,765) | 6,716,478 | | Cash at Beginning of Period | 18,244,030 | 11,527,552 | | Cash at End of Period | 13,097,265 | 18,244,030 | [Notes to Consolidated Financial Statements](index=82&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=110&type=section&id=Item%209%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) Not applicable [Controls and Procedures](index=110&type=section&id=Item%209A%20Controls%20and%20Procedures) Management assessed the effectiveness of disclosure controls and internal financial reporting controls as of December 31, 2022, concluding they are effective at a reasonable assurance level, with no auditor attestation report included - As of December 31, 2022, the company's disclosure controls and procedures were assessed by management as **effective** at a reasonable assurance level[578](index=578&type=chunk)[579](index=579&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of December 31, 2022[580](index=580&type=chunk) - This annual report does not include an attestation report of the company's registered public accounting firm regarding the effectiveness of internal control over financial reporting, as the company is a non-accelerated filer[581](index=581&type=chunk) - No material changes occurred in the company's internal control over financial reporting during the reporting period[582](index=582&type=chunk) - Controls and procedures have inherent limitations, providing only reasonable, not absolute, assurance, and may not prevent or detect all errors or fraud[584](index=584&type=chunk) [Other Information](index=111&type=section&id=Item%209B%20Other%20Information) The company entered a research funding and option agreement with Scripps Research on March 17, 2023, providing up to $938,000 for preclinical DNase tumor platform development with exclusive global licensing rights - On March 17, 2023, the company entered a research funding and option agreement with Scripps Research, providing up to **$938,000** to fund preclinical development of the DNase tumor platform technology[585](index=585&type=chunk) - The agreement has a **15-month** term, granting the company the right to an exclusive worldwide license for Scripps Research's related technology or patent rights[586](index=586&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=111&type=section&id=Item%209C%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) Not applicable PART III [Directors, Executive Officers and Corporate Governance](index=112&type=section&id=Item%2010%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information required for this item will be filed via the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders or an amendment to this annual report [Executive Compensation](index=112&type=section&id=Item%2011%20Executive%20Compensation) Information required for this item will be filed via the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders or an amendment to this annual report [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=112&type=section&id=Item%2012%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information required for this item will be filed via the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders or an amendment to this annual report [Certain Relationships and Related Transactions, and Director Independence](index=112&type=section&id=Item%2013%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information required for this item will be filed via the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders or an amendment to this annual report [Principal Accounting Fees and Services](index=112&type=section&id=Item%2014%20Principal%20Accounting%20Fees%20and%20Services) Information required for this item will be filed via the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders or an amendment to this annual report PART IV [Exhibits and Financial Statement Schedules](index=113&type=section&id=Item%2015%20Exhibits%20and%20Financial%20Statement%20Schedules) This annual report includes consolidated financial statements and the independent registered public accounting firm's report, with all schedules omitted and an exhibit index listing all filed or incorporated by reference exhibits - This annual report includes the consolidated financial statements and the report of the independent registered public accounting firm[601](index=601&type=chunk) - All schedules have been omitted as they are not applicable or required, or the information required is presented in the consolidated financial statements or their notes[601](index=601&type=chunk) - The Exhibit Index lists the exhibits filed with or incorporated by reference into this annual report[601](index=601&type=chunk)[602](index=602&type=chunk) [Form 10-K Summary](index=113&type=section&id=Item%2016%20Form%2010-K%20Summary) Not applicable

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-37937 XENETIC BIOSCIENCES, INC. (Exact name of registrant as specified in its charter) Nevada (State or other jurisdic ...