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MarketScreener Homepage  >  Equities  >  OTC Bulletin Board - Other OTC  >  Lixte Biotechnology Holdings, Inc.    LIXT

LIXTE BIOTECHNOLOGY HOLDINGS, INC.

(LIXT)
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LIXTE BIOTECHNOLOGY : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

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11/08/2018 | 04:24pm EDT

Overview




The Company is a drug discovery company that uses biomarker technology to
identify enzyme targets associated with serious common diseases and then designs
novel compounds to attack those targets. The Company's product pipeline
encompasses two major categories of compounds at various stages of pre-clinical
and clinical development that the Company believes have broad therapeutic
potential not only for cancer but also for other debilitating and
life-threatening diseases.



The Company's activities are subject to significant risks and uncertainties,
including the need for additional capital, as described below. The Company has
not yet commenced any revenue-generating operations, does not have positive cash
flows from operations, and is dependent on periodic infusions of equity capital
to fund its operating requirements.



The Company's common stock is traded on the OTCQB operated by the OTC Markets under the symbol "LIXT".



Recent Development

In early November 2018, the Company received approval from the FDA for its Investigational New Drug (IND) Application to conduct a Phase 1b/2 clinical trial to evaluate the safety and therapeutic benefit of the Company's lead clinical compound, LB-100, in patients with low and intermediate-1 risk myelodysplastic syndrome (MDS) who have failed or are intolerant of standard treatment. The clinical trial will be conducted at Moffitt Cancer Center in Tampa, Florida.




Going Concern



The Company's condensed consolidated financial statements have been presented on
the basis that it is a going concern, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of business. The
Company has not generated any revenues from operations to date and does not
expect to do so in the foreseeable future. The Company has an equity deficiency
as of September 30, 2018. Furthermore, the Company has experienced recurring
operating losses and negative operating cash flows since inception, and has
financed its working capital requirements during this period primarily through
the recurring sale of its equity securities and the exercise of outstanding
common stock options and purchase warrants.



As a result, management has concluded that there is substantial doubt about the
Company's ability to continue as a going concern within one year of the date
that the consolidated financial statements are being issued. In addition, the
Company's independent registered public accounting firm, in their report on the
Company's consolidated financial statements for the year ended December 31,
2017, has also expressed substantial doubt about the Company's ability to
continue as a going concern.



The Company's ability to continue as a going concern is dependent upon its
ability to raise additional equity capital to fund its research and development
activities and to ultimately achieve sustainable operating revenues and profits.
The Company's condensed consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties.



Because the Company is currently engaged in research at a relatively early
stage, it will likely take a significant amount of time to develop any product
or intellectual property capable of generating sustainable revenues.
Accordingly, the Company's business is unlikely to generate any sustainable
operating revenues in the next several years and may never do so. In addition,
to the extent that the Company is able to generate revenues through licensing
its technologies or through product sales, there can be no assurance that the
Company will be able to achieve positive earnings and operating cash flows.



At September 30, 2018, the Company had cash of $374,360 available to fund its
operations. The Company needs to raise additional capital during the quarter
ending December 31, 2018 (or shortly thereafter) to fund its ongoing business
activities. The next step in the development of the Company's lead anti-cancer
clinical compound LB-100 is to evaluate its safety and therapeutic benefit in a
Phase 1b/2 clinical trial. This clinical trial is scheduled to begin during the
first quarter of 2019 and is expected to complete patient accrual over a period
of 24 months. The Company will need to raise approximately $4,500,000 of
additional capital to fund this clinical trial and other operating costs for
2019 and 2020. The Company's longer-term objective is to secure one or more
strategic partnerships with pharmaceutical companies with major programs in
cancer.



The amount and timing of future cash requirements during the remainder of 2018
and thereafter will depend on the pace and design of the Company's clinical
trial program. As market conditions present uncertainty as to the Company's
ability to secure additional funds, there can be no assurances that the Company
will be able to secure additional financing on acceptable terms, or at all, as
and when necessary to continue to conduct operations. If cash resources are
insufficient to satisfy the Company's ongoing cash requirements, the Company
would be required to scale back or discontinue its technology and product
development programs and/or any clinical trials, or obtain funds, if available
(although there can be no certainty), through strategic alliances that may
require the Company to relinquish rights to certain of its compounds, or to
discontinue its operations entirely

.

21






Recent Accounting Pronouncements

Information with respect to recent accounting pronouncements is provided at Note
3 to the condensed consolidated financial statements for the three months and
nine months ended September 30, 2018 and 2017 included elsewhere in this
document.



Concentration of Risk


Information with respect to concentration of risk is provided at Note 3 to the
condensed consolidated financial statements for the three months and nine months
ended September 30, 2018 and 2017 included elsewhere in this document.



Critical Accounting Policies and Estimates




The preparation of the Company's condensed consolidated financial statements in
conformity with generally accepted accounting principles in the United States
("GAAP") requires management to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements and the notes to the
consolidated financial statements. Some of those judgments can be subjective and
complex, and therefore, actual results could differ materially from those
estimates under different assumptions or conditions. A summary of the Company's
critical accounting policies is presented in Item 7 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2017. There have been
no material changes to the Company's critical accounting policies during the
nine months ended September 30, 2018.



Plan of Operation



Overview of Plans


The Company has two classes of drugs under development for the treatment of
cancer, consisting of protein phosphatase inhibitors (PTase-i), designated by
the Company as the LB-100 series of compounds, and histone deacetylase
inhibitors (HDACi), designated by the Company as the LB-200 series of compounds.
Compounds of both types also have potential use in the prevention and treatment
of neurodegenerative diseases. The LB-100 series consists of novel structures,
which have the potential to be first in their class and may be useful in the
treatment of not only several types of cancer, but also vascular and metabolic
diseases. The LB-200 series contains compounds which have the potential to be
the most effective in its class and may be useful for the treatment of chronic
hereditary diseases, such as Gaucher's disease, in addition to cancer and
neurodegenerative diseases.



The Company has completed a Phase 1 clinical of its lead anti-cancer compound
LB-100 that showed it is associated with anti-tumor activity in humans at doses
that are readily tolerable. Responses included objective regression (tumor
shrinkage) lasting for 11 months of a pancreatic cancer and cessation of growth
(stabilization of disease) for 4 months or more of 9 other progressive solid
tumors out of 20 patients who had measurable disease. As Phase 1 clinical trials
are fundamentally designed to determine safety of a new compound in humans, the
Company is encouraged by these results. The next step is to demonstrate in Phase
2 clinical trials the efficacy of LB-100 in one or more specific tumor types,
against which the compound has well documented activity in pre-clinical models.



Collaborations with leading academic research centers in the United States,
Europe and Asia have established the breadth of activity of LB-100 in
pre-clinical models of several major cancers. There is considerable scientific
interest in LB-100 because it exerts its activity by a novel mechanism and is
the first of its type to be evaluated so broadly in multiple animal models of
cancer and now in human beings. LB-100 is one a series of serine/threonine
phosphatase (s/t ptase) inhibitors designed by the Company. The s/t ptases are
ubiquitous enzymes that regulate many cell signaling networks important to cell
growth, division and death. The s/t ptases have long been appreciated as
potentially important targets for anti-cancer drugs. However, because of the
multi- functionality of these enzymes, it had been widely held that
pharmacologic inhibitors of s/t ptases would be too toxic to allow their
development as anti-cancer treatments, but the Company has shown that this is
not the case. LB-100 was well tolerated at doses associated with objective
regression (significant tumor shrinkage) and/or the arresting of tumor
progression in patients with progressive cancers.



Pre-clinical studies showed that LB-100 itself inhibits a spectrum of human
cancers and that combined with standard cytotoxic drugs and/or radiation, LB-100
potentiates their effectiveness against hematologic and solid tumor cancers
without enhancing toxicity. Recently, given at very low doses in animal models
of cancer, LB-100 markedly increased the effectiveness of a PD-1 blocker, one of
the widely used new immunotherapy drugs. This finding raises the possibility
that LB-100 may further expand the value of the expanding field of cancer
immunotherapy.



22







Although the Company's focus has been on developing drugs for cancer treatment,
several academic centers studying LB-100 under material transfer agreements with
the Company have generated pre-clinical data indicating that LB-100 may be
therapeutically effective in important non-neoplastic diseases. This development
stems from the fact that dysregulation of the PP2A function is not only a
feature of many cancers but is also a component of the basic inflammatory
response elicited by diverse types of injury in animal models. These include
lipid buildup in the blood vessels (type 2 diabetes), acute oxygen deprivation
(myocardial infarction and stroke (MI/S)), and aversive physical and/or
psychological trauma (depression and post traumatic shock-like syndromes.). The
Company's patent portfolio covers composition of matter for structurally
distinct but comparably effective PP2A inhibitors and their use in the therapy
of a broad spectrum of human diseases. However, the focus of the Company at this
time is on demonstrating the value of LB-100 against specific cancers in humans.



At this time, the Company is not aware of any compound in clinical study that is
a potent inhibitor of PP2A. Revlimid (Celgene) has recently been recognized to
have weak PP2A activity, which presumably underlies its effects in
myelodysplastic syndrome (MDS). Over 30 articles have been published reporting
the anti-cancer activity of LB-100 against many different types of human cancers
in model systems. As a result, the Company believes that some pharmaceutical
companies are either evaluating LB-100 and/or designing their own inhibitors of
PP2A. The Company's patent portfolio includes composition of matter and multiple
uses of LB-100 and analogs and PP2A inhibition in general for multiple cancers
and non-neoplastic diseases.



The LB-200 series consists of histone deacetylase inhibitors (HDACi). Many
pharmaceutical companies are also developing drugs of this type, and at least
two companies have HDACi approved for clinical use, in both cases for the
treatment of a type of lymphoma. Despite this significant competition, the
Company has demonstrated that its HDACi have broad activity against many cancer
types, has neuroprotective activity, and has anti-fungal activity. In addition,
these compounds have low toxicity, making them attractive candidates for
development. It appears that one type of molecule has diverse effects, affecting
biochemical processes that are fundamental to the life of the cell, whether they
are cancer cells, nerve cells, or even fungal cells. The neuroprotective
activity of the Company's HDACi has been demonstrated in the test tube in model
systems that mimic injury to brain cells, such as occurs in stroke and
Alzheimer's disease. This type of protective activity may have potential
application to a broad spectrum of other chronic neurodegenerative diseases,
including Parkinson's disease and Amytrophic Lateral Sclerosis (ALS, or Lou
Gehrig's disease). LB-200 has not yet advanced to the clinical stage and would
require additional capital to fund further development. Accordingly, because of
the Company's focus on the clinical development of LB-100 and analogs for cancer
therapy as described below in more detail, the Company has decided not to
actively pursue the pre-clinical development of its LB-200 series of compounds
at this time. At this time, the Company intends to only maintain its composition
of matter patents for LB-200.



Operating Plans


LB-100 Anti-Cancer Targets and Recent Developments




LB-100 used alone has modest inhibitory activity against many cancers in model
systems, but certain human cancers possessing unique genetic changes, in
addition to those reducing DNA damage repair, are particularly susceptible to
inhibition of PP2A by LB-100.



Among these cancers is MDS, an increasingly common neoplastic disease,
especially in persons aged 65 and older, characterized by failure of the bone
marrow. In particular, a variant of MDS termed del(5q)MDS is missing 50% of its
PP2A activity, rendering this tumor potentially more sensitive to further
pharmacologic inhibition of PP2A. There is only one drug, Revlimid (Celgene),
that is currently approved for the treatment of del(5q)MDS and there is no
drug
for MDS in general.



Other cancers, in particular small cell lung cancer (SCLC) and hepatocellular
cancer occurring in the liver (HCC), have acquired genetic abnormalities, which
render them sensitive to inhibition of PP2A by a process termed synthetic
lethality. Pre-clinical studies have shown that both SCLC and HCC are sensitive
to PP2A inhibition by LB-100 alone and especially so when LB-100 is combined
with drugs used as standard treatment for these diseases. SCLC is the lung
cancer variant associated with cigarette smoke and comprises about 15% of all
lung cancers. HCC is the 5th most common cancer in the world and the 3rd leading
cause of death from cancer, with the majority of cases being in Asia. There is
no satisfactory treatment available for either of these devastating tumors.



Scientists at the National Institute of Neurological Disorders and Stroke
(NINDS) have conducted pre-clinical studies of LB-100 that showed anti-cancer
activity in models of a variety of human brain tumors, including
glioblastomamultiforme (GBM), medulloblastoma and malignant meningioma. Studies
of LB-100 and analogs in models of human brain tumors of adults and children are
continuing under a Material-Cooperative Research and Development Agreement
(M-CRADA) with the National Cancer Institute (NCI). The NCI has an FDA-approved
clinical pharmacokinetic (non-therapeutic) study of LB-100 (Phase 0 Trial,
NCT03027388) in patients with recurrent GBM to assess penetration of the
compound into these highly malignant tumors. The rationale for this clinical
study is that LB-100 potentiates the anti-tumor activity of both x-ray and the
drug temozolomide, which are the mainstays of treatment for GBM.



23






Recent extensive pre-clinical studies of the Company's lead PP2A inhibitor,
LB-100, raise the possibility that LB-100 has the potential to enhance the
effectiveness of the now widely used PD-1 inhibitors that attack a variety of
cancers by activating the patient's own immune system to reject their own tumors
(Ho et al. (2018) Pharmacologic inhibition of protein phosphatase-2A achieves
durable immune-mediated antitumor activity when combined with PD-1 blockade.
Nature Communications (2018), 9:2126; Maggio et al. (2017) PD-1 Antagonism With
Concurrent Competitive Inhibition Of PP2A Promotes Enhanced Regression Of
Intracranial Glioblastoma. Neuro-Oncology, (2017) 19(6): vi75. DOI:
10.1093/neuonc/nox168.306). If these findings were confirmed in clinical
studies, there could potentially be multiple clinical applications of
combination therapy with a PD-1 inhibitor plus LB-100. The Company is focusing
on the use of such combinations clinically because the dose of LB-100 required
in the model systems to enhance PD-1 effectiveness is very low, about 20% of a
readily tolerable dose of LB-100 given alone in humans (Chung V et al. (2017)
Safety, tolerability, and preliminary activity of LB-100, an inhibitor of
protein phosphatase 2A, in patients with relapsed solid tumors. Clinical Cancer
Research (2017) DOI: 10.1158/1078-0432.CCR-16-2299). In the animal models, there
was no evidence that LB-100 potentiation of PD-100 immunological repression of
cancers is accompanied by autoimmune toxicity to normal tissue targets.



In addition, an entirely new application of LB-100 to a specific class of
hematologic cancers called B cell leukemias and lymphomas was reported by a
group of hematological cancer experts from several national cancer centers in
the journal Cell (Xiao et al. (2018) B-Cell-Specific Diversion of Glucose Carbon
Utilization Reveals a Unique Vulnerability in B Cell Malignancies. Cell (2018)
173:1-15). The seminal finding was that B cell cancers in general require
overexpression of PP2A for survival, and that in multiple pre-clinical models
and in isolated human B cell cancers, LB-100 is highly inhibitory. The journal
Cellis a peer-reviewed scientific journal publishing research papers across a
broad range of disciplines within the life sciences.



The following is a news release regarding this novel finding issued by the City
of Hope Comprehensive Cancer Center, Duarte, California, on March 14, 2018 (the
Phase 1 clinical trial of LB-100 was conducted in part at the City of Hope
Comprehensive Cancer Center):



B cells are a type of white blood cell known for producing antibodies in the
human immune system and play an important role in the immune defense against
infections caused by viruses or bacteria.



However, the ability of B cells to make antibodies through a series of DNA-recombination events comes with the risk of DNA lesions that may cause malignant transformation and cancer. In B cells, cancer-causing aberrations typically result in leukemia and lymphoma.




In a new paper published today in the journal Cell, a team of researchers led by
City of Hope's Markus Müschen, M.D., Ph.D., chair of the Department of Systems
Biology and holder of The Norman and Sadie Lee Foundation Professorship in
Pediatrics, and Gang Xiao, Ph.D., assistant research professor in the Department
of Systems Biology, report on the discovery of a new therapeutic target for
these B cell malignancies.



All cells need energy to survive. But the team found - through a series of
studies in animal models - that B cells and B cell-derived tumors convert sugar
and nutrients into energy in a way that is fundamentally different from other
cells. The process involves an enzyme called PP2A and its newly discovered
ability to redirect energy metabolites from sugars into a pathway that generates
antioxidants to protect cells from damage during metabolism.



In other cell types, PP2A is dispensable because other molecules can provide
antioxidant protection. In contrast, B cells and B cell leukemia and lymphoma
cells critically depend on PP2A. When the researchers removed PP2A in B cells
through genetic deletion of the PP2A gene, this had little effect on other cells
but induced acute death in B cell leukemia and lymphoma cells.



"Other cells try to balance generation of building blocks for growth with
protection against oxidative stress, which can cause damage to the cells," said
Müschen, corresponding author on the paper. "In B cell tumors, this balance is
heavily tilted toward growth, so these cells are very sensitive to oxidative
stress."



This makes B cell tumors, including leukemia and lymphoma, vulnerable, according
to Xiao. "In our paper, we show several new strategies of how this vulnerability
can be targeted to kill B cell tumors but spare normal cells," he said.



One such strategy is a drug that can further skew the balance in energy metabolism by targeting PP2A. It is called LB-100 and is already in a clinical trial at City of Hope.



24







"We think that the same mechanism used to target B cell tumors could also work
in autoimmune diseases, in which uncontrolled B cells make self-destructive
antibodies causing type 1diabetes, lupus, rheumatoid arthritis and other serious
diseases," Müschen said. "We think that targeting this pathway with LB-100 and
similar drugs may be beneficial for patients with B cell tumors, as our paper
shows, but perhaps also for patients with B cell autoimmune diseases.



"The unique way that B cells and B cell-derived tumors consume glucose
encourages us to discover more regulating molecules in addition to PP2A, which
was identified in this study," Xiao added. "As we accumulate this type of
knowledge, we may be able to exacerbate the vulnerability of B cell tumors
and/or improve the fitness of normal lymphocytes in the immune system to help
them defend our bodies."


Müschen and Xiao worked with others at City of Hope and collaborators from UCLA,
UC San Francisco, Jena University in Germany, the University of British
Columbia, Dana Farber Cancer Institute and Harvard Medical School on the studies
and resulting Cell paper, "B Cell-specific Diversion of Glucose Carbon
Utilization Reveals a Unique Vulnerability in B Cell Malignancies."



Near-Term Objectives



The Company's immediate goals are to demonstrate significant therapeutic benefit
of LB-100, the Company's lead anti-cancer clinical compound, against one or more
specific human cancers in Phase 2 clinical trials. The Company has several
attractive targets for new therapies incorporating LB-100. The potentiation of
cancer immunotherapy by adding LB-100 to regimens of PD-1 blockers, as reported
by Ho et al (2018), and the unexpected findings of Muschen et al (2018) that a
metabolic imbalance involving over activity of the enzyme PP2A in B cell
cancers, which is the target of LB-100, may provide a selective advantage in the
therapy of B cell cancers. These findings have also led the Company to reexamine
the most attractive cancer targets for demonstrating the clinical effectiveness
LB-100 and to enter into discussions with cancer centers that focus on the
inhibition of PP2A as an important cancer target.



Presented below is a list of proposed clinical trials that the Company would
like to conduct over the next few years. The Company expects that this list of
potential clinical trials, and the details thereof, will change over time as the
Company obtains more clinical information on LB-100. The Company's ability to
conduct these clinical trials is subject to the availability of sufficient
financial resources.



(1) A Phase 1b/2 clinical trial of LB-100 as a single agent in the treatment of
patients with del(5q) myelodysplastic syndrome (del5qMDS) failing first line
therapy. The bone marrow cells of these patients are deficient in PP2A and are
especially vulnerable to further inhibition of PP2A by LB-100.



In this regard, effective August 20, 2018, the Company and the Moffitt Cancer
Center and Research Institute Hospital Inc. in Tampa, Florida ("Moffitt")
entered into a Clinical Trial Research Agreement (the "Clinical Trial Research
Agreement") effective for a term of five years, unless terminated earlier by the
Company pursuant to 30 days written notice. Pursuant to the Clinical Trial
Research Agreement, Moffitt will conduct and manage a Phase 1b/2 clinical trial
to evaluate the safety and therapeutic benefit of the Company's lead anti-cancer
clinical compound LB-100 to be administered intravenously in patients with low
or intermediate-1 risk MDS. This clinical trial is expected to begin during the
first quarter of 2019 and to complete patient accrual over a period of 24
months. The Company will need to raise approximately $4,500,000 of additional
capital to fund this clinical trial and other operating costs for 2019 and 2020.



(2) A Phase 1b/2 randomized clinical trial in previously untreated patients with
small cell lung cancer (SCLC) comparing the standard regimen,
carboplatin/etoposide, with and without LB-100. The malignant cells of this
uniformly rapidly fatal lung cancer are genetically sensitive to PP2A inhibition
(by a process termed synthetic lethality).



(3) A Phase 1b/2 randomized clinical trial in patients adding LB-100 to PD-1
inhibitors against one of several cancers in which PD-1 inhibitors alone have
definite but modest activity.



(4) A phase 1b/2 clinical trial in a refractory B cell cancer to confirm the
pre-clinical observations of Muschen et al (2018) that a metabolic imbalance
involving over activity of the enzyme PP2A in B cell cancers, which is the
target of LB-100, may provide a selective advantage in the therapy of B cell
cancers.


The Phase 1b/2 clinical trials in SCLC, in LB-100 plus a PD-1 inhibitor in a yet
to be specified cancer, and in a B cell malignancy will require additional
financing in excess of that currently contemplated to fund a Phase 1b/2 clinical
trial that is scheduled to begin during the first quarter of 2019 as described
above, and/or partnering relationships with other pharmaceutical companies, in
order for the Company to undertake and complete such clinical studies. The
Company is in discussions with various parties with respect to the financing of
these clinical studies, although there can be no assurances that the Company
will be able to obtain such financing and/or partnering relationships on
acceptable terms or at all. The Company's longer-term objective is to secure one
or more strategic partnerships with pharmaceutical companies with major programs
in cancer research and drug development.



25







As a compound moves through the FDA-approval process, it becomes an increasingly
valuable property, but at a cost of additional investment at each stage. As the
potential effectiveness of LB-100 has been documented at the clinical trial
level, the Company has allocated resources to expand the breadth and depth of
its patent portfolio. The Company's approach has been to operate with a minimum
of overhead, moving compounds forward as efficiently and inexpensively as
possible, and to raise funds to support each of these stages as certain
milestones are reached.



Results of Operations


At September 30, 2018, the Company had not yet commenced any revenue-generating operations, does not have any positive cash flows from operations, and is dependent on its ability to raise equity capital to fund its operating requirements.




The Company's condensed consolidated statements of operations as discussed
herein are presented below.



                                           Three Months Ended                 Nine Months Ended
                                              September 30,                     September 30,
                                          2018             2017             2018             2017

Revenues                              $          -     $          -     $          -     $          -

Costs and expenses:
General and administrative costs         1,030,929          257,542        1,715,837        1,013,280
Research and development costs               3,454          205,674           70,249          363,476
Total costs and expenses                 1,034,383          463,216        1,786,086        1,376,756
Loss from operations                    (1,034,383 )       (463,216 )     (1,786,086 )     (1,376,756 )
Interest income                                424              797            1,547              961
Net loss                              $ (1,033,959 )$   (462,419 )   $ 

(1,784,539 ) $ (1,375,795 )


Net loss per common share - basic
and diluted                           $      (0.02 )$      (0.01 )   $  

(0.03 ) $ (0.02 )

Weighted average common shares outstanding - basic and diluted 58,029,292 58,016,031 58,026,986 55,073,250

Three Months Ended September 30, 2018 and 2017

Revenues. The Company did not have any revenues for the three months ended September 30, 2018 and 2017.

General and Administrative Costs. For the three months ended September 30, 2018,
general and administrative costs were $1,030,929, which consisted of the fair
value of vested stock options issued to directors and consultants of $772,390
(including the cost of extending certain stock options previously granted to a
consultant of $711,738), patent and licensing legal fees and costs of $133,985,
other consulting and professional fees of $84,837, insurance expense of $12,921,
officer's salary and related costs of $16,975, stock transfer fees of $3,057,
listing fees of $3,000, and other operating costs of $3,764.



For the three months ended September 30, 2017, general and administrative costs
were $257,542, which consisted of patent and licensing legal fees and costs of
$161,119, consulting and professional fees of $54,950, insurance expense of
$13,343, officer's salary and related costs of $16,829, stock transfer fees of
$2,265, travel and entertainment costs of $3,626, listing fees of $2,500, and
other operating costs of $2,910.



General and administrative costs increased by $773,387 or 300.3% in 2018 as compared to 2017, primarily as a result of an increase of $772,390 in the fair value of stock options issued to directors and consultants.



26







Research and Development Costs. For the three months ended September 30, 2018,
research and development costs were $3,454, which consisted entirely of
contractor costs, primarily in connection with the Company's pre-clinical
research focused on the development of additional novel anti-cancer compounds to
add to its clinical pipeline.



For the three months ended September 30, 2017, research and development costs
were $205,674, which consisted of the fair value of vested common stock options
and warrants of $15,960, and contractor costs of $189,714, incurred primarily in
connection with the Company's pre-clinical research focused on the development
of additional novel anti-cancer compounds to add to the Company's clinical
pipeline, including $40,225 to Theradex in connection with the Phase 1 clinical
trial of LB-100, $30,000 to BioPharma Works, and $12,500 to the National Cancer
Institute in connection with Amendment No. 1 to the M-CRADA.



Research and development costs decreased by $202,220 or 98.3% in 2018 as compared to 2017, primarily as a result of a decrease of $186,260 in contractor costs.

Interest Income. For the three months ended September 30, 2018, the Company had
interest income of $424, as compared to interest income of $797 for the three
months ended September 30, 2017.



Net Loss. For the three months ended September 30, 2018, the Company incurred a net loss of $1,033,959, as compared to a net loss of $462,419 for the three months ended September 30, 2017.

Nine Months Ended September 30, 2018 and 2017

Revenues. The Company did not have any revenues for the nine months ended September 30, 2018 and 2017.




General and Administrative Costs. For the nine months ended September 30, 2018,
general and administrative costs were $1,715,837, which consisted of the fair
value of vested stock options issued to directors and consultants of $772,390
(including the cost of extending certain stock options previously granted to a
consultant of $711,738), patent and licensing legal fees and costs of $594,798,
other consulting and professional fees of $224,469, insurance expense of
$38,514, officer's salary and related costs of $50,763, stock transfer fees of
$9,496, travel and entertainment costs of $1,215, listing fees of $9,000, filing
fees of $6,892,and other operating costs of $8,300.



For the nine months ended September 30, 2017, general and administrative costs
were $1,013,280, which consisted of the fair value of vested stock options
issued to directors and consultants of $5,681, patent and licensing legal fees
and costs of $648,867, other consulting and professional fees of $217,482,
insurance expense of $40,249, officer's salary and related costs of $50,600,
stock transfer fees of $7,538, filing fees of $6,593, travel and entertainment
costs of $13,274, listing fees of $7,500, conference fees of $6,577,and other
operating costs of $8,919.


General and administrative costs increased by $702,557 or 69.3% in 2018 as compared to 2017, primarily as a result of an increase in the fair value of stock options issued to directors and consultants of $766,709, offset by a decrease of $54,069 in patent and licensing legal fees and costs.




Research and Development Costs. For the nine months ended September 30, 2018,
research and development costs were $70,249, which consisted entirely of
contractor costs, primarily in connection with the Company's pre-clinical
research focused on the development of additional novel anti-cancer compounds to
add to its clinical pipeline, including $25,000 to the National Cancer Institute
in connection with Amendment No. 1 to the M-CRADA.



For the nine months ended September 30, 2017, research and development costs
were $363,476, which consisted of the fair value of vested common stock options
and warrants of $32,020, and contractor costs of $331,456, incurred primarily in
connection with the Company's pre-clinical research focused on the development
of additional novel anti-cancer compounds to add to the Company's clinical
pipeline,including $104,840 to Theradex in connection with the Phase 1 clinical
trial of LB-100, $60,000 to BioPharma Works, and $62,500 to the National Cancer
Institute in connection with Amendment No. 1 to the M-CRADA.



Research and development costs decreased by $293,227 or 80.7% in 2018 as compared to 2017, primarily as a result of a decrease of $261,207 in contractor costs and a decrease of $32,020 for the fair value of vested stock options.

Interest Income. For the nine months ended September 30, 2018, the Company had
interest income of $1,547, as compared to interest income of $961 for the nine
months ended September 30, 2017.



27







Net Loss. For the nine months ended September 30, 2018, the Company incurred a
net loss of $1,784,539, as compared to a net loss of $1,375,795 for the nine
months ended September 30, 2017.



Liquidity and Capital Resources - September 30, 2018




The Company's condensed consolidated financial statements have been presented on
the basis that it is a going concern, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of business. The
Company has not generated any revenues from operations to date and does not
expect to do so in the foreseeable future. The Company has an equity deficiency
as of September 30, 2018. Furthermore, the Company has experienced recurring
operating losses and negative operating cash flows since inception, and has
financed its working capital requirements during this period primarily through
the recurring sale of its equity securities and the exercise of outstanding
common stock options and purchase warrants. As a result, management has
concluded that there is substantial doubt about the Company's ability to
continue as a going concern within one year of the date that the condensed
consolidated financial statements are being issued. In addition, the Company's
independent registered public accounting firm, in their report on the Company's
consolidated financial statements for the year ended December 31, 2017, has also
expressed substantial doubt about the Company's ability to continue as a going
concern (see "Going Concern" above).



At September 30, 2018, the Company had working capital deficiency of $18,695, as
compared to a working capital surplus of $995,041 at December 31, 2017,
reflecting a decrease in working capital of $1,013,736 for the nine months ended
September 30, 2018. The decrease in working capital during the nine months ended
September 30, 2018 was the result of working capital being utilized to fund the
Company's research and development activities and ongoing operating expenses,
including maintaining and developing the Company's patent portfolio.



At September 30, 2018, the Company had cash of $374,360 available to fund its
operations. The Company needs to raise additional capital during the quarter
ending December 31, 2018 (or shortly thereafter) to fund its ongoing business
activities. The next step in the development of the Company's lead anti-cancer
clinical compound LB-100 is to evaluate its safety and therapeutic benefit in a
Phase 1b/2 clinical trial. This clinical trial is scheduled to begin during the
first quarter of 2019 and is expected to complete patient accrual over a period
of 24 months. The Company will need to raise approximately $4,500,000 of
additional capital to fund this clinical trial and other operating costs for
2019 and 2020. The Company's longer-term objective is to secure one or more
strategic partnerships with pharmaceutical companies with major programs in
cancer.



The amount and timing of future cash requirements during the remainder of 2018
and thereafter will depend on the pace and design of the Company's clinical
trial program. As market conditions present uncertainty as to the Company's
ability to secure additional funds, there can be no assurances that the Company
will be able to secure additional financing on acceptable terms, or at all, as
and when necessary to continue to conduct operations. If cash resources are
insufficient to satisfy the Company's ongoing cash requirements, the Company
would be required to scale back or discontinue its technology and product
development programs and/or any clinical trials, or obtain funds, if available
(although there can be no certainty), through strategic alliances that may
require the Company to relinquish rights to certain of its compounds, or to
discontinue its operations entirely.



Operating Activities. For the nine months ended September 30, 2018, operating
activities utilized cash of $934,388, as compared to utilizing cash of
$1,127,848 for the nine months ended September 30, 2017, to fund the Company's
ongoing research and development activities and to fund its other ongoing
operating expenses, including maintaining and developing its patent portfolio.



Investing Activities. For the nine months ended September 30, 2018 and 2017, the Company had no investing activities.




Financing Activities. For the nine months ended September 30, 2018, financing
activities consisted of $3,000 received from the exercise of stock options to
acquire 20,000 shares of the Company's common stock at an exercise price of
$0.15 per share. For the nine months ended September 30, 2017, financing
activities consisted of the receipt of $1,000,000 and $1,500,000 of proceeds
from the sale of 4,000,000 shares and 6,000,000 shares of the Company's common
stock at $0.25 per share in closings occurring in January 2017 and April 2017,
respectively. In addition, on July 6, 2017, the Company received $18,000 from a
former director for the exercise of stock options to acquire 150,000 shares of
the Company's common stock at an exercise price of $0.12 per share.



Principal Commitments



Effective October 18, 2013, the Company entered into a Materials Cooperative
Research and Development Agreement (M-CRADA) with the National Institute of
Neurological Disorders and Stroke (NINDS) of the National Institutes of Health
(NIH) for a term of four years. The Surgical Neurology Branch of NINDS is
conducting research characterizing a variety of compounds proprietary to the
Company and is examining the potential of the compounds for anti-cancer
activity, reducing neurological deficit due to ischemia and brain injury, and
stabilizing catalytic function of misfolded proteins for inborn brain diseases.
Under an M-CRADA, a party provides research material, in this case proprietary
compounds from the Company's pipeline, for study by scientists at NIH. The
exchange of material is for research only and does not imply any endorsement of
the material on the part of either party. Under the M-CRADA, the NIH grants a
collaborator an exclusive option to elect an exclusive or non-exclusive
commercialization license.



28







On June 14, 2017, the Company executed Amendment No. 1 to the M-CRADA, pursuant
to which the Company agreed to provide funding in the amount of $100,000 to the
National Cancer Institute for use in acquiring technical, statistical and
administrative support for research activities. The $100,000 amount was
scheduled to be paid in two equal installments of $50,000, the first of which
was paid, as scheduled, on July 9, 2017, and was charged to operations on such
date. The second installment of $50,000 was scheduled to be paid on the June 14,
2018 anniversary date of the amendment and was accreted ratably through such
date. During the three months ended September 30, 2018 and 2017, $0 and $12,500,
respectively, was charged to operations and is included in research and
development costs with respect to Amendment No. 1. During the nine months ended
September 30, 2018 and 2017, $25,000 and $62,500, respectively, was charged to
operations and is included in research and development costs with respect to
Amendment No. 1. Prior to the payment of the second installment of $50,000,
NINDS and the Company agreed to defer such payment, which has been fully accrued
at June 30, 2018, until further collaborative plans have been established.



On December 24, 2013, the Company entered into an agreement with NDA Consulting
Corp. ("NDA") for consultation and advice in the field of oncology research and
drug development. As part of the agreement, NDA also agreed to cause its
president, Dr. Daniel D. Von Hoff, M.D., to become a member of the Company's
Scientific Advisory Committee. The term of the agreement was for one year and
provided for a quarterly cash fee of $4,000. In 2014, 2015, 2016 and 2017, the
agreement had been automatically renewed on its anniversary date for an
additional one-year term. Consulting and advisory fees charged to operations
pursuant to this agreement were $4,000 during the three months ended September
30, 2018 and 2017, and $12,000 during the nine months ended September 30, 2018
and 2017.



Effective September 14, 2015, the Company entered into a Collaboration Agreement
with BioPharmaWorks, pursuant to which the Company engaged BioPharmaWorks to
perform certain services for the Company. Those services include, among other
things: (a) assisting the Company to (i) commercialize its products and
strengthen its patent portfolio, (ii) identify large pharmaceutical companies
with potential interest in the Company's product pipeline, and (iii) prepare and
deliver presentations concerning the Company's products; (b) at the request of
the Board of Directors, serving as backup management for up to three months
should the Company's Chief Executive Officer and scientific leader be
temporarily unable to carry out his duties; (c) being available for consultation
in drug discovery and development; and (d) identifying providers and overseeing
tasks relating to clinical use and commercialization of new compounds.



BioPharmaWorks was founded in 2015 by former Pfizer scientists with extensive
multi-disciplinary research and development and drug development experience. The
Collaboration Agreement was for an initial term of two years and automatically
renews for subsequent annual periods unless terminated by a party not less than
60 days prior to the expiration of the applicable period. In connection with the
Collaboration Agreement, the Company agreed to pay BioPharmaWorks a monthly fee
of $10,000, subject to the right of the Company to pay a negotiated hourly rate
in lieu of the monthly payment and agreed to issue to BioPharmaWorks certain
equity-based compensation as described at Note 6. In November 2016, it was
mutually agreed to suspend services and payments under this agreement, without
extending the term of the agreement, for the period from November 1, 2016
through March 31, 2017. The agreement resumed as scheduled on April 1, 2017 and
was automatically renewed for an additional one-year period on September 13,
2017. In April 2018, it was again mutually agreed to suspend services and
payments under this agreement, without extending the term of the agreement, for
the period from February 1, 2018 through the September 13, 2018 anniversary
date, at which time the Company and BioPharma Works further agreed to suspend
all services and payments under this agreement until a future date to be
determined by the Company. The Company recorded charges to operations pursuant
to this Collaboration Agreement of $0 and $30,000 during the three months ended
September 30, 2018 and 2017, respectively, and $10,000 and $60,000 during the
nine months ended September 30, 2018 and 2017, respectively.



On March 22, 2018, the Company entered into a Patent Assignment and Exploitation
Agreement (the "Agreement") with INSERM TRANSFERT SA, acting as delegatee of the
French National Institute of Health and Medical Research ("INSERM"), for the
assignment to the Company of INSERM'S interest in United States Patent No.
9,833,450 entitled "Oxabicyloheptanes and Oxabicycloheptenes for the Treatment
of Depressive and Stress Disorders", which was filed with the United States
Patent and Trademark Office in the name of INSERM and the Company as co-owners
on February 19, 2015 and granted on May 12, 2017, and related patent
applications and filings. INSERM is a French public institution dedicated to
research in the field of health and medicine that had previously entered into a
Material Transfer Agreement ("MTA") with the Company to allow INSERM to conduct
research on the Company's proprietary compound LB-100 and/or its analogs for the
treatment of depressive or stress disorders in humans. Pursuant to the
Agreement, the Company has agreed to make certain milestone payments to INSERM
aggregating up to $1,750,000 upon achievement of development milestones and up
to $6,500,000 upon achievement of commercial milestones. The Company also agreed
to pay INSERM certain commercial royalties on net sales of products attributed
to the Agreement. The Company's current plan is to complete the validation
process to evaluate LB-100 for the treatment of depressive or stress disorders
in humans within three years; however, the exploitation of this patent for the
treatment of depressive and stress disorders in humans will require substantial
additional capital and/or a joint venture or other type of business arrangement
with a pharmaceutical company with substantially greater capital and business
resources than the Company. As there can be no assurances that the Company will
be able to obtain the capital or business resources necessary to focus on the
exploitation of this patent, it is uncertain when the Company may reach any of
the development or commercialization milestones under the Agreement, if at
all.



29







Effective April 2, 2018, the Company entered into a consulting agreement for a
term of two years with Liberi Life Sciences Consultancy BV, located in The
Netherlands, for consulting and advisory services with respect to sales and
licensing, as well as the procurement of investors in China, Japan and South
Korea (the "Consulting Agreement"). The Consulting Agreement provided for the
payment of a fixed, one-time retainer of EURO 15,000 (US $18,348), which was
paid on April 5, 2018, and 2.5% of the net payments received by the Company from
sales of products or licensing activities arising directly and exclusively from
leads generated by the advisor during the term of the Consulting Agreement, and
any investors introduced to the Company by the advisor that results in an
investment in the Company during the term of the Consulting Agreement. The
Company recorded the payment of the retainer as a prepaid expense in the
Company's condensed consolidated balance sheet. The Company is amortizing the
retainer payment over the two-year life of the Consulting Agreement, as a result
of which the Company recorded a charge to operations of $2,294 and $4,587 during
the three months and nine months ended September 30, 2018. At September 30,
2018, the unamortized balance of the retainer payment was $13,761, of which
$9,174 was classified as a current asset and $4,587 was classified as a
non-current asset in the Company's condensed consolidated balance sheet at
such
date.



Effective August 20, 2018 (the "Effective Date"), the Company and Moffitt
entered into an Exclusive License Agreement (the "License Agreement"). Pursuant
to the License Agreement, Moffitt granted the Company an exclusive license under
certain patents owned by Moffitt (the "Licensed Patents") relating to the
treatment of MDS and a non-exclusive license under inventions, concepts,
processes, information, data, know-how, research results, clinical data, and the
like (other than the Licensed Patents) necessary or useful for the practice of
any claim under the Licensed Patents or the use, development, manufacture or
sale of any product for the treatment of MDS which would otherwise infringe a
valid claim under the Licensed Patents. The Company is obligated to pay Moffitt
a non-refundable license issue fee of $25,000 on the date on which the first
patient is entered into the Phase 1b/2 clinical trial to be conducted by Moffitt
that is scheduled to begin during the first quarter of 2019. The Company is also
obligated to pay Moffitt an annual license maintenance fee of $25,000 commencing
on the first anniversary of the Effective Date and every anniversary thereafter
until the Company commences payment of minimum royalty payments. The Company has
also agreed to pay non-refundable milestone payments to Moffitt, which cannot be
credited against earned royalties payable by the Company, based on reaching
various clinical and commercial milestones aggregating $1,897,000, subject to
reduction by 40% under certain circumstances.



The Company will be obligated to pay Moffitt earned royalties of 4% on worldwide
cumulative net sales of royalty-bearing products, subject to reduction to 2%
under certain circumstances, on a quarterly basis, with a minimum royalty
payment of $50,000 in the first four years after sales commence, and $100,000 in
year five and each year thereafter, subject to reduction by 40% under certain
circumstances. The Company's obligation to pay earned royalties under the
License Agreement commences on the date of the first sale of a royalty-bearing
product, and shall automatically expire on a country-by-country basis on the
date on which the last valid claim of the Licensed Patents expires, lapses or is
declared invalid, and the obligation to pay any earned royalties under the
License Agreement shall terminate on the date on which the last valid claim of
the Licensed Patents expires, lapses, or is declared to be invalid in all
countries.



Effective August 20, 2018, the Company and Moffitt also entered into a Clinical
Trial Research Agreement (the "Clinical Trial Research Agreement") effective for
a term of five years, unless terminated earlier by the Company pursuant to 30
days written notice. Pursuant to the Clinical Trial Research Agreement, Moffitt
will conduct and manage a Phase 1b/2 clinical trial to evaluate the safety and
therapeutic benefit of the Company's lead anti-cancer clinical compound LB-100
to be administered intravenously in patients with low or intermediate-1 risk
MDS. This clinical trial is expected to begin during the first quarter of 2019
and to complete patient accrual over a period of 24 months.



On September 12, 2018, the Company entered into a work order agreement with
Theradex to monitor a Phase 1b/2 clinical trial that is scheduled to begin
during the first quarter of 2019, subject to the timing of FDA approval. This
clinical trial is expected to complete patient accrual over a period of 24
months. The clinical trial will be managed and conducted by Moffitt to evaluate
the safety and therapeutic benefit of the Company's lead anti-cancer clinical
compound LB-100 to be administered intravenously in patients with low or
intermediate-1 risk MDS. This work order became effective in August 2018 and is
estimated to be completed by September 2021. Costs under this work order
agreement are estimated to be approximately $954,000. As of September 30, 2018,
no costs had been incurred pursuant to this work order agreement.



Off-Balance Sheet Arrangements

At September 30, 2018, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

30

© Edgar Online, source Glimpses

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Managers
NameTitle
John S. Kovach President, CEO, CFO, Director
Philip F. Palmedo Independent Director
Stephen J. Forman Director
Yun Yen Director
Sze Chun Ho Director
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