Xenetic Biosciences(XBIO) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Condensed Consolidated Financial Statements The unaudited condensed consolidated financial statements for Q1 2025 show a reduced net loss and decreased cash, with notes detailing DNase technology and liquidity Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $5.8 million from $6.9 million, driven by a $1.0 million cash reduction, while total equity declined to $5.1 million Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash | $5,163,676 | $6,165,568 | | Total current assets | $5,477,296 | $6,587,522 | | Total assets | $5,791,217 | $6,901,443 | | Liabilities & Equity | | | | Total current liabilities | $667,927 | $894,263 | | Total liabilities | $667,927 | $894,263 | | Total stockholders' equity | $5,123,290 | $6,007,180 | Condensed Consolidated Statements of Operations For Q1 2025, royalty revenue increased by 16.1% to $0.6 million, operating expenses decreased by 13.7%, resulting in a reduced net loss of $0.9 million Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Royalty revenue | $593,261 | $510,817 | | Total operating costs and expenses | ($1,535,670) | ($1,779,231) | | Loss from operations | ($942,409) | ($1,268,414) | | Net loss | ($903,141) | ($1,195,113) | | Basic and diluted net loss per share | ($0.59) | ($0.78) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities for Q1 2025 was $1.0 million, leading to a $1.0 million decrease in cash balance, ending at $5.2 million with no investing or financing activities Cash Flow Summary (Unaudited) | Cash Flow Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($1,001,892) | ($1,159,345) | | Cash at beginning of period | $6,165,568 | $8,983,046 | | Cash at end of period | $5,163,676 | $7,823,701 | Notes to Condensed Consolidated Financial Statements The notes detail the company's DNase technology focus, going concern assessment, key collaboration agreements, and the expiration of Series A Warrants - The company is a biopharmaceutical firm focused on advancing its proprietary DNase technology to target neutrophil extracellular traps (NETs) in difficult-to-treat cancers[22] - Management believes existing resources are adequate to fund operations for at least twelve months from the financial statement issuance date, but anticipates needing additional long-term capital[25] - Royalty revenue from Takeda was approximately $0.6 million for Q1 2025, based on single-digit royalties on net sales of certain products using the company's PolyXen technology[32] - The company has ongoing research and manufacturing agreements with Catalent, Scripps Research, and the University of Virginia (UVA) to advance the development of its DNase technology[33][34][37] - Series A Warrants to purchase approximately 462,963 shares of common stock expired in February 2025[40] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial performance, noting increased revenue, decreased expenses, and a narrowed net loss, while focusing on DNase program advancement and future financing needs Business Overview Xenetic focuses on advancing its DNase technology for oncology, particularly for pancreatic carcinoma, while generating revenue from legacy PolyXen technology royalties - The company's core focus is advancing its proprietary DNase technology for immune-oncology applications, aiming to improve outcomes of existing cancer treatments[58] - The primary development goal is to move the systemic DNase program into the clinic for pancreatic carcinoma and other solid tumors[58] - To date, none of the company's drug candidates have received regulatory marketing authorization. Revenue is generated from ongoing royalties via a legacy technology license[59] Results of Operations Q1 2025 saw a 16.1% revenue increase and significant reductions in R&D and G&A expenses, leading to a 24.4% decrease in net loss Comparison of Operations for Quarters Ended March 31 | Description | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Royalty revenue | $593,261 | $510,817 | 16.1% | | Research and development | ($879,029) | ($944,321) | (6.9)% | | General and administrative | ($656,641) | ($834,910) | (21.4)% | | Net loss | ($903,141) | ($1,195,113) | (24.4)% | - The decrease in R&D expenses was mainly due to lower personnel and share-based costs related to the departure of the former Chief Scientific Officer in Q2 2024[63] - The decrease in G&A expenses was primarily due to lower personnel and share-based costs related to the departure of the former Chief Executive Officer in Q2 2024[64] Liquidity and Capital Resources As of March 31, 2025, the company held $5.2 million in cash and $4.8 million in working capital, believing it has sufficient liquidity for 12 months but will require additional long-term capital - As of March 31, 2025, the company had approximately $5.2 million in cash and working capital of $4.8 million[67][68] - Management believes existing resources are adequate for at least the next twelve months, but acknowledges the need for additional long-term capital, which is subject to uncertainty[69] Cash Flows For Q1 2025, approximately $1.0 million in cash was used for operating activities, primarily due to net loss, with no investing or financing cash flows - Cash used in operating activities totaled approximately $1.0 million for Q1 2025, primarily due to the net loss[70] - There were no cash flows from investing or financing activities for the three months ended March 31, 2025 and 2024[71][72] Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company," the company is exempt from providing quantitative and qualitative disclosures about market risk - As a "smaller reporting company," the company is exempt from providing quantitative and qualitative disclosures about market risk[77] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of the end of the quarter, the company's disclosure controls and procedures are effective at a reasonable assurance level[79] - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[80] PART II - OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings, nor is it aware of any threatened against it - The company is not currently subject to any material legal proceedings[82] Risk Factors No material changes to risk factors have occurred since the last Annual Report on Form 10-K - No material changes to risk factors have occurred since the last Annual Report on Form 10-K[83] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None[84] Other Information No director or officer adopted or terminated any Rule 10b5-1 trading arrangement during the quarter ended March 31, 2025 - No director or officer adopted or terminated any Rule 10b5-1 trading arrangement during the quarter[87] Exhibits The report lists several exhibits filed, including a consulting agreement, Sarbanes-Oxley Act certifications, and financial statements in inline XBRL - Key exhibits filed include a consulting agreement with Chairman Dmitry Genkin (10.1), CEO/CFO certifications (31.1, 31.2, 32.1), and XBRL data (101)[90]