Xenetic Biosciences(XBIO) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION This section covers the company's unaudited condensed consolidated financial statements, management's analysis, market risk, and internal controls Item 1. Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, operations, equity, and cash flows, with notes Condensed Consolidated Balance Sheets This section presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024 | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Cash | $4,779,846 | $6,165,568 | | Total current assets | $5,353,700 | $6,587,522 | | Total assets | $5,353,700 | $6,901,443 | | Total current liabilities | $903,430 | $894,263 | | Total stockholders' equity | $4,450,270 | $6,007,180 | - Cash decreased by approximately $1.39 million from December 31, 2024, to June 30, 2025[9] - Total assets decreased by approximately $1.55 million, and total stockholders' equity decreased by approximately $1.56 million during the six-month period[9] Condensed Consolidated Statements of Operations This section details the company's revenues, expenses, and net loss for the three and six months ended June 30, 2025, and 2024 | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Royalty revenue | $589,897 | $726,404 | $1,183,158 | $1,237,221 | | Research and development | $(656,557) | $(933,771) | $(1,535,586) | $(1,878,092) | | General and administrative | $(657,752) | $(1,130,029) | $(1,314,393) | $(1,964,939) | | Loss from operations | $(724,412) | $(1,337,396) | $(1,666,821) | $(2,605,810) | | Net loss | $(688,703) | $(1,273,970) | $(1,591,844) | $(2,469,083) | | Basic and diluted net loss per share | $(0.45) | $(0.83) | $(1.03) | $(1.60) | - Net loss for the three months ended June 30, 2025, decreased by 45.9% to $0.69 million from $1.27 million in the prior year[12] - Net loss for the six months ended June 30, 2025, decreased by 35.5% to $1.59 million from $2.47 million in the prior year[12] Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in stockholders' equity, including net loss and share-based expenses, for the period ended June 30, 2025 | Metric | June 30, 2025 | January 1, 2025 | | :----------------------- | :------------ | :-------------- | | Total Stockholders' Equity | $4,450,270 | $6,007,180 | | Accumulated Deficit | $(198,786,315) | $(197,194,471) | | Share-based expense (6 months) | $34,934 | N/A | | Net loss (6 months) | $(1,591,844) | N/A | - Total stockholders' equity decreased from $6.01 million at January 1, 2025, to $4.45 million at June 30, 2025, primarily due to the net loss incurred[17] - Accumulated deficit increased by approximately $1.59 million during the six months ended June 30, 2025[17] Condensed Consolidated Statements of Cash Flows This section presents the cash flow activities, including operating, investing, and financing, for the six months ended June 30, 2025, and 2024 | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(1,591,844) | $(2,469,083) | | Net cash used in operating activities | $(1,385,722) | $(1,684,449) | | Cash at end of period | $4,779,846 | $7,298,597 | - Net cash used in operating activities decreased by approximately $0.3 million for the six months ended June 30, 2025, compared to the same period in 2024[25] - Cash at the end of the period decreased to $4.78 million as of June 30, 2025, from $7.30 million as of June 30, 2024[25] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements - Xenetic Biosciences, Inc. is a biopharmaceutical company focused on immune-oncology technologies, specifically advancing its proprietary DNase technology for pancreatic carcinoma and solid tumors[28][66] - The Company has incurred substantial losses since inception and expects to continue incurring operating losses. While existing resources are believed to be adequate for the next 12 months, additional long-term capital will be needed[31][84] - Key strategic collaborations include Takeda Pharmaceutical Co. Ltd. (royalty revenue from PolyXen technology), Catalent Pharma Solutions LLC (cGMP manufacturing for Human DNase I), Scripps Research Institute (research funding for DNase technology, with an option for an exclusive license), and University of Virginia (research funding for systemic DNase program)[41][42][43][47] - Share-based expense for the six months ended June 30, 2025, was approximately $35,000, a decrease from $0.1 million in the prior year, primarily due to lower personnel costs[52][53][78] - The Company has no provision for income taxes due to incurred losses and maintains a valuation allowance against deferred tax assets, which increased to approximately $41.6 million as of June 30, 2025[56] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition and results for the three and six months ended June 30, 2025, covering operations, liquidity, and capital BUSINESS OVERVIEW This section provides an overview of Xenetic Biosciences' biopharmaceutical focus on immune-oncology and its proprietary DNase technology - Xenetic Biosciences is a biopharmaceutical company focused on immune-oncology, specifically advancing its proprietary DNase technology to improve outcomes for pancreatic carcinoma and solid tumors by targeting NETs[66] - The company's internal efforts during the six months ended June 30, 2025, were primarily focused on the advancement of its DNase technology[67] - The company receives ongoing royalties from a license of its legacy PolyXen technology to an industry partner, but none of its drug candidates have yet received regulatory marketing authorization[67] RESULTS OF OPERATIONS This section analyzes the company's financial performance, including revenue, expenses, and net loss, for the recent reporting periods Quarterly Financial Performance (YoY Change) | Metric | June 30, 2025 | June 30, 2024 | Increase (Decrease) | Percentage Change | | :-------------------------- | :------------ | :------------ | :------------------ | :---------------- | | Royalty revenue | $589,897 | $726,404 | $(136,507) | (18.8)% | | Research and development | $(656,557) | $(933,771) | $(277,214) | (29.7)% | | General and administrative | $(657,752) | $(1,130,029) | $(472,277) | (41.8)% | | Loss from operations | $(724,412) | $(1,337,396) | $(612,984) | (45.8)% | | Net loss | $(688,703) | $(1,273,970) | $(585,267) | (45.9)% | Six-Month Financial Performance (YoY Change) | Metric | June 30, 2025 | June 30, 2024 | Increase (Decrease) | Percentage Change | | :-------------------------- | :------------ | :------------ | :------------------ | :---------------- | | Royalty revenue | $1,183,158 | $1,237,221 | $(54,063) | (4.4)% | | Research and development | $(1,535,586) | $(1,878,092) | $(342,506) | (18.2)% | | General and administrative | $(1,314,393) | $(1,964,939) | $(650,546) | (33.1)% | | Loss from operations | $(1,666,821) | $(2,605,810) | $(938,989) | (36.0)% | | Net loss | $(1,591,844) | $(2,469,083) | $(877,239) | (35.5)% | - The decrease in R&D expenses for both periods was primarily due to lower personnel costs and share-based expense, partially offset by increased consulting and exploratory study costs[72][78] - General and administrative expenses decreased significantly due to severance and benefits expensed in connection with the separation agreement with the former Chief Executive Officer in Q2 2024[73][79] Liquidity and Capital Resources This section discusses the company's cash position, working capital, and ability to meet short-term and long-term financial obligations - The company reported a net loss of approximately $1.6 million for the six months ended June 30, 2025, and an accumulated deficit of approximately $198.8 million[82] | Metric | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Cash | $4.8 million | $6.2 million | | Working Capital | $4.5 million | $5.7 million | | Current Liabilities | $0.9 million | $0.9 million | - Working capital decreased by approximately $1.2 million during the six months ended June 30, 2025, primarily due to the net loss[82] - Management believes existing resources are adequate for the next 12 months but anticipates needing additional capital long-term, relying on potential equity offerings, debt financings, or collaborations[84] - Net cash used in operating activities was approximately $1.4 million for the six months ended June 30, 2025, a decrease from $1.7 million in the prior year[85] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Xenetic Biosciences, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is exempt from providing market risk disclosures as it qualifies as a "smaller reporting company" under Rule 12b-2 of the Exchange Act[92] Item 4. Controls and Procedures Management concluded disclosure controls and procedures are effective, with no material changes in internal control - Management concluded that disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[94] - No material changes in internal control over financial reporting occurred during the period covered by this Quarterly Report[95] PART II OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings Xenetic Biosciences, Inc. is not currently subject to any material legal proceedings, nor are any material legal proceedings threatened against the company - The company is not currently involved in any material legal proceedings, and none are known to be threatened[98] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors have occurred since the filing of the Annual Report on Form 10-K for the year ended December 31, 2024[99] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report during the period - No unregistered sales of equity securities or use of proceeds occurred during the reporting period[100] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities to report during the period - No defaults upon senior securities occurred during the reporting period[101] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to Xenetic Biosciences, Inc - Mine safety disclosures are not applicable to the company's operations[102] Item 5. Other Information No director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - No changes in Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors or officers were reported during the quarter[103] Item 6. Exhibits This section lists the exhibits incorporated by reference or filed as part of this report, including amendments to agreements and certifications - Exhibits include the Third Amendment to Research Funding and Option Agreement with Scripps Research Institute, certifications from the Interim Principal Executive Officer and Principal Financial Officer, and XBRL financial statements[105]