APREA THERAPEUTICS, INC.

(APRE)
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APREA THERAPEUTICS, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

05/16/2022 | 04:30pm EDT
You should read the following discussion and analysis of our financial condition
and results of operations together with the unaudited financial information and
notes thereto included in this Quarterly Report on Form 10-Q. Some of the
information contained in this discussion and analysis or set forth elsewhere in
this Quarterly Report, including information with respect to our plans and
strategy for our business and related financing, including forward-looking
statements that involve risks and uncertainties. As a result of many factors,
including those factors set forth in the "Risk Factors" section of this
Quarterly Report and in our Annual Report on Form 10-K for the year ended
December 31, 2021, our actual results could differ materially from the results
described in or implied by the forward-looking statements contained in the
following discussion and analysis.

Overview

We are a clinical-stage biopharmaceutical company focused on developing and
commercializing novel cancer therapeutics. that reactivate the mutant p53 tumor
suppressor protein. p53 is the protein expressed from the TP53 gene, the most
commonly mutated gene in cancer. We believe that mutant p53 is an attractive
therapeutic target due to the high incidence of p53 mutations across a range of
cancer types and its involvement in key cellular activities such as apoptosis.
Cancer patients with mutant p53 face a significantly inferior prognosis even
when treated with the current standard of care, and a large unmet need for these
patients remains.

APR-246, or eprenetapopt, is a small molecule p53 reactivator that has been
tested in clinical trials for solid tumors and for hematologic malignancies,
including myelodysplastic syndromes, or MDS, and acute myeloid leukemia, or AML.
Eprenetapopt has received Orphan Drug and Fast Track designations from the FDA
for MDS, Fast Track designation from the FDA for AML, and Orphan Drug
designation from the European Commission for MDS and AML, and we believe
eprenetapopt will be a first-in-class therapy if approved by applicable
regulators.

While we currently have no ongoing clinical trials of eprenetapopt, we have
received clearance from FDA to proceed under our existing INDs with new clinical
trials in relapsed/refractory MDS/AML and Richter's transformed NHL, including
initial testing of a new oral formulation of eprenetapopt.

Myeloid Malignancy Program


On August 4, 2021, the U.S. Food and Drug Administration (FDA) placed a partial
clinical hold on the clinical trials of eprenetapopt in combination with
azacitidine in our Phase 3 frontline MDS clinical trial, our Phase 2 MDS/AML
Post-Transplant clinical trial and our Phase 1/2 AML clinical trial. The FDA's
concerns referred to the safety and efficacy data from the Phase 3 frontline MDS
clinical trial. In particular, the FDA requested more information related to a
potential risk-reward imbalance between the combination of eprenetapopt and
azacitidine versus azacitidine alone as it relates to increased serious adverse
events in the Phase 3 frontline clinical trial in MDS. At the time of the
clinical hold announcement the MDS, AML and post-transplant maintenance trials
had all completed enrollment. Patients who were benefiting from treatment could
continue to receive study treatment. In December 2021 we discussed with FDA the
data and analyses from the Phase 3 trial and reached preliminary agreement on
proposals for new clinical trials in myeloid malignancies. In the first quarter
of 2022, FDA informed us that it would continue the partial clinical hold on
these three clinical trials, allowing patients currently on and benefiting from
treatment to continue with treatment, but prohibiting enrollment of new
patients. As all trials had already achieved full enrollment and primary
endpoint readout, we had no plans to enroll new patients into any of these
trials. These trials have been concluded and there are no patients receiving
eprenetapopt in any of these trials. FDA has given us clearance to proceed under
our existing myeloid malignancy IND with a new clinical trial in
relapsed/refractory MDS and AML.

Phase 1 Relapsed/Refractory MDS/AML Trial- In the first quarter of 2022, we

received clearance from the FDA to proceed under our existing IND of a clinical

? trial in relapsed/refractory (R/R) MDS/AML. The trial is designed to determine

the optimal pharmacologically active dose of eprenetapopt in combination with

   azacitidine in relapsed/refractory (R/R) MDS/AML.


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Lymphoid Malignancy Program

On August 11, 2021, FDA placed a clinical hold on our clinical trial evaluating
eprenetapopt in patients with non-Hodgkin lymphoma. The FDA's concerns referred
to the safety and efficacy data from the Phase 3 frontline MDS clinical trial in
our myeloid malignancy program. In particular, the FDA requested more
information related to a potential risk-reward imbalance between the combination
of eprenetapopt and azacitidine versus azacitidine alone as it relates to
increased serious adverse events in the Phase 3 frontline clinical trial in MDS.
At the time of the clinical hold announcement the NHL trial had enrolled one
patient. Patients who were benefiting from treatment could continue to receive
study treatment and no additional patients could be enrolled until the clinical
hold was resolved. There are currently no patients receiving eprenetapopt in
this trial. In October 2021 we discussed with FDA the requested data and
analyses from the Phase 3 trial and proposed amendments for clinical trials to
proceed in our lymphoid malignancy program. FDA lifted the clinical hold in
December 2021.

Phase 1 NHL Trial-In the first quarter of 2022 we received clearance from FDA

to proceed under our existing IND with a clinical trial in relapsed/refractory

(R/R) TP53 mutant Richter's transformed NHL. Richter's transformed NHL is a

subset of CLL that is characterized by significantly more aggressive disease.

The trial is designed to seek to determine the optimal pharmacologically active

? dose of eprenetapopt in combination with venetoclax and rituximab. The trial

includes administration of an oral formulation of eprenetapopt as part of a

monotherapy lead-in phase. Under the trial protocol, pharmacokinetic data

following oral administration would be collected to assess exposure relative to

intravenous administration and to inform potential future clinical

opportunities of an oral dosage form of eprenetapopt.


Next Generation Programs

APR-548

APR-548 is a second generation p53 reactivator that is a unique analog of eprenetapopt. APR-548 exhibits high oral bioavailability in preclinical testing and is being developed in an oral dosage form.

Phase 1 MDS/AML Trial-We initiated a Phase 1 clinical trial testing APR-548 in

? relapsed/refractory MDS and AML. Enrollment in the first dosing cohort was

completed. There are currently no patients receiving APR-548 in this trial and

enrollment into the trial has been closed.

DNA Damage and Response Programs


As part of the ongoing process to review its business strategy and as the
Company continued FDA interactions related to the clinical holds, on October 18,
2021 the Board of Directors engaged an external advisor to assist the Company
with a search for pre-clinical and/or clinical assets either complementary or in
addition to the Company's lead program. This undertaking was referred as the
"build scenario" and during the subsequent months the Company screened
pre-clinical or clinical assets which could potentially be added to the
Company's development pipeline. On May 16, 2022, we completed the acquisition of
Atrin Pharmaceuticals, Inc., a Delaware corporation ("Atrin"), in accordance
with the terms of the Agreement and Plan of Merger, dated May 16, 2022 (the
"Merger Agreement") (the "Merger").

Following the acquisition of Atrin, the Company's primary focus is expected to
shift to the discovery and development of proprietary molecules targeting DDR
pathways in oncology through synthetic lethality. Atrin has developed a
proprietary platform to interrogate DDR pathways that may enable identification
of both potential novel DDR targets for future development and potential
biomarkers for enhanced sensitivity and patient selection in clinical trials.

ATRN-119


ATRN-119 is an orally bioavailable small molecule product candidate that targets
Ataxia Telangiectasia and Rad3-related ("ATR") protein within the DDR. ATRN-119
and its back up candidate were both discovered by Atrin. We believe the
selectivity and toxicology profiles of ATRN-119 may be differentiated from
other
ATR inhibitors currently

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being developed by other companies. We have an open IND and have received
clearance from FDA to initiate a Phase 1/2a clinical trial of ATRN-119. We
anticipate enrollment of the first patient in this clinical trial in the second
half of 2022. We are planning to study ATRN-119 as both a monotherapy and in
combination with standard of care in Phase 1/2 clinical trials in solid tumor
malignancies. We currently retain worldwide development and commercialization
rights to ATRN-119.

ATRN-W1051
ATRN-W1051 is an orally bioavailable small molecule product candidate that
targets the WEE1 protein within the DDR. ATRN-W1051 was discovered by Atrin. We
believe the selectivity profile of ATRN-119 may be differentiated from other
WEE1 inhibitors currently being developed by other companies. ATRN-W1051 is
currently in preclinical development, and we anticipate commencing IND-enabling
studies in the second half of 2022. We currently retain worldwide development
and commercialization rights to ATRN-W1051.

Aprea Therapeutics AB, or Aprea AB, was originally incorporated in 2002 and
commenced principal operations in 2006. We incorporated Aprea Therapeutics, Inc.
(the "Company") in May 2019. In September 2019 we completed a corporate
reorganization and, as a result, all of the issued and outstanding stock of
Aprea AB was exchanged for common stock, preferred stock or options, as
applicable, of the Company As a result of such transactions, Aprea AB became a
wholly-owned subsidiary of the Company.

We have devoted substantially all of our resources to developing our product
candidates, including eprenetapopt, building our intellectual property
portfolio, business planning, raising capital and providing general and
administrative support for these operations. To date, we have financed our
operations primarily through private placements of preferred stock and the net
proceeds received from the initial public offering (IPO) of our common stock.
Through March 31, 2022, we had received net proceeds of approximately $225.6
million from our sales of preferred and common stock.

Since our inception, we have incurred significant losses on an aggregate basis.
Our ability to generate product revenue sufficient to achieve profitability will
depend on the successful development and eventual commercialization of one or
more of our product candidates. Our net losses were $7.9 million and $9.7
million for the three months ended March 31, 2022 and 2021, respectively, and
$37.1 million, $53.5 million and $28.1 million for the years ended December 31,
2021, 2020 and 2019, respectively. As of March 31, 2022, we had an accumulated
deficit of $189.0 million. These losses have resulted primarily from costs
incurred in connection with research and development activities, patent
investment, and general and administrative costs associated with our operations.
We expect to continue to incur significant expenses and increasing operating
losses for at least the next several years.

We anticipate that our expenses will increase substantially if and as we:

? conduct our planned clinical trials and additional preclinical research;

? initiate and continue research and preclinical and clinical development of our

other product candidates;

? seek to identify and develop additional product candidates;

? seek marketing approvals for any of our product candidates that successfully

complete clinical trials, if any;

? establish a sales, marketing, manufacturing and distribution infrastructure to

commercialize any products for which we may obtain marketing approval;

? require the manufacture of larger quantities of our product candidates for

clinical development and potential commercialization;



? maintain, expand, protect and enforce our intellectual property portfolio;


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? acquire or in-license other drugs and technologies;

? defend against any claims of infringement, misappropriation or other violation

of third-party intellectual property;

? hire and retain additional clinical, quality control and scientific personnel;

and

add operational, financial and management information systems and personnel, ? including personnel to support our drug development, any future

commercialization efforts and our operation as a public company.



Furthermore, if we obtain marketing approval for any of our product candidates,
we expect to incur significant commercialization expenses related to product
manufacturing, marketing, sales and distribution.

As a result, we will need additional financing to support our continuing
operations. Until such time as we can generate significant revenue from product
sales, if ever, we expect to finance our operations through a combination of
public or private equity or debt financings or other sources, which may include
collaborations with third parties. We may be unable to raise additional funds or
enter into other agreements or arrangements when needed on favorable terms, or
at all. If we fail to raise capital or enter into such agreements as and when
needed, we may have to significantly delay, scale back or discontinue the
development or commercialization of one or more of our product candidates.

Because of the numerous risks and uncertainties associated with product
development, we are unable to predict the timing or amount of increased expenses
or when or if we will be able to achieve or maintain profitability. Even if we
are able to generate revenue from product sales, we may not become profitable.
If we fail to become profitable or are unable to sustain profitability on a
continuing basis, then we may be unable to continue our operations at planned
levels and be forced to reduce or terminate our operations.

As of March 31, 2022, we had cash and cash equivalents of $47.6 million. We
believe that our existing cash and cash equivalents will enable us to fund our
operating expenses and capital expenditure requirements into the second half of
2023. We have based this estimate on assumptions that may prove to be wrong, and
we could exhaust our available capital resources sooner than we expect. See
"-Liquidity and Capital Resources."

The COVID-19 pandemic


The novel coronavirus outbreak (COVID-19) has been declared a "Public Health
Emergency of International Concern" by the World Health Organization. COVID-19
has spread to the countries in which we, our suppliers, and our other business
partners conduct business. Governments in affected regions have implemented, and
may continue to implement or re-implement, safety precautions, including
quarantines, travel restrictions, business closures, cancellations of public
gatherings, and other measures they deem necessary. Like many other
organizations and individuals, the Company and our employees are taking
additional steps to avoid or reduce infection, including limiting travel and
implementing remote work arrangements. We will continue to actively monitor the
situation and may take further actions that could alter our business operations
as may be required by national, state, or local authorities, or that we
determine are in the best interests of our employees and stockholders.

There are many uncertainties regarding the COVID-19 pandemic, and we are closely
monitoring the impact of the pandemic on all aspects of our business, including
how it will impact our clinical trials, employees, suppliers, vendors and
business partners. While the pandemic did not materially affect our financial
results and business operations for the three months ended March 31, 2022, we
are unable to predict the impact that COVID-19 will have on our financial
position and operating results at this time due to numerous uncertainties such
as the duration and spread of the outbreak. We will continue to assess the
evolving impact of the COVID-19 pandemic and will make adjustments to our
operations if necessary.

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Components of our results of operations

Revenue


We have not generated any revenue from product sales and do not expect to
generate any revenue from the sale of products in the near future. If our
development efforts for any of our product candidates are successful and result
in marketing approval or collaboration or license agreements with third parties,
we may generate revenue in the future from a combination of product sales or
payments from collaboration or license agreements that we may enter into with
third parties.

Operating expenses

Our expenses since inception have consisted solely of research and development costs and general and administrative costs.

Research and development expenses


Research and development expenses consist primarily of costs incurred for our
research activities, including our discovery efforts, and the development of our
product candidates, and include:

expenses incurred under agreements with third parties, including contract

research organizations, or CROs, that conduct research, preclinical activities ? and clinical trials on our behalf as well as contract manufacturing

organizations, or CMOs, that manufacture our product candidates for use in our

preclinical and clinical trials;

? salaries, benefits and other related costs, including stock-based compensation

expense, for personnel engaged in research and development functions;

? costs of outside consultants, including their fees, stock-based compensation

and related travel expenses;

? costs of laboratory supplies and acquiring, developing and manufacturing

preclinical study and clinical trial materials;

? expenses related to compliance with regulatory requirements; and

facility-related expenses, which include direct depreciation costs and ? allocated expenses for rent and maintenance of facilities and other operating

costs.



We expense research and development costs as incurred. We recognize costs for
certain development activities, such as clinical trials, based on an evaluation
of the progress to completion of specific tasks using data such as patient
enrollment, clinical site activations, or information provided to us by our
vendors and our clinical investigative sites. Payments for these activities are
based on the terms of the individual agreements, which may differ from the
pattern of costs incurred, and are reflected in our financial statements as
prepaid or accrued research and development expenses.

We typically use our employee and infrastructure resources across our
development programs. We track outsourced development costs and payments made to
our research partners by product candidate or development program, but we do not
allocate personnel costs or other internal costs to specific development
programs or product candidates.

Research and development activities are central to our business model. Product
candidates in later stages of clinical development generally have higher
development costs than those in earlier stages of clinical development,
primarily due to the increased size and duration of later-stage clinical trials.
We expect that our research and development expenses will continue to increase
for the foreseeable future as we initiate clinical trials for ATRN-119 and other
product candidates and continue to discover and develop additional product
candidates.

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We cannot determine with certainty the duration and costs of planned clinical
trials of our product candidates or if, when, or to what extent we will generate
revenue from the commercialization and sale of any our product candidates for
which we obtain marketing approval. We may never succeed in obtaining marketing
approval for any of our product candidates. The duration, costs and timing of
clinical trials and development of our product candidates will depend on a
variety of factors, including:

the scope, rate of progress, expense and results of any future clinical trials ? of our product candidates and other research and development activities that we

may conduct;

? uncertainties in clinical trial design and patient enrollment rates;

? significant and changing government regulation and regulatory guidance;

? the timing and receipt of, and any limitations imposed by regulatory bodies on,

any marketing approvals; and

? the expense of filing, prosecuting, defending and enforcing any patent claims

and other intellectual property rights.



A change in the outcome of any of these variables with respect to the
development of a product candidate could mean a significant change in the costs
and timing associated with the development of that product candidate. For
example, if the U.S. Food and Drug Administration, or FDA, or another regulatory
authority in a foreign jurisdiction were to require us to conduct clinical
trials beyond the scope we currently anticipate, or additional clinical trials
beyond those that we anticipate will be required for the completion of clinical
development of a product candidate, or if we experience significant trial delays
due to patient enrollment or other reasons, we would be required to expend
significant additional financial resources and time on the completion of
clinical development.

We have conducted multiple trials in hematologic malignancy including a Phase 3
trial of eprenetapopt with azacitidine for frontline treatment of TP53 mutant
MDS and which is supported by published data from two Phase 1b/2
investigator-initiated trials in the U.S. (Sallman et al., J Clin Oncol, 2021)
and France (Cluzeau et al., J Clin Oncol, 2021); a Phase 2 trial of eprenetapopt
with azacitidine for the post-allogeneic hematopoietic cell transplantation
(allo-HCT) maintenance treatment of TP53 mutant MDS/AML; a Phase 1/2 trial of
eprenetapopt with venetoclax ± azacitidine for the treatment of frontline and
relapsed/refractory AML; and a Phase 1 clinical trial for the treatment of TP53
mutant chronic lymphoid leukemia (CLL) with either eprenetapopt with venetoclax
and rituximab, or eprenetapopt with ibrutinib. In addition, we have also tested
eprenetapopt with anti-PD-1 therapy in solid tumor patients through a Phase 1/2
clinical trial in advanced gastric, bladder and non-small cell lung cancers. We
have also initiated a Phase 1 clinical trial testing an orally-dosed
next-generation small molecule p53 reactivator, APR-548, as a potential
therapeutic for MDS and AML. Enrollment in the first dosing cohort was completed
and enrollment has been closed. We have assembled a management team with
extensive experience in the discovery, development and commercialization of
novel oncology drugs to support our mission of developing p53-reactivating
therapies for cancer patients.

General and administrative expenses

General and administrative expenses consist primarily of salaries and other
related costs, including stock-based compensation, for personnel in our
executive, finance, corporate and business development and administrative
functions. General and administrative expenses also include legal fees relating
to patent and corporate matters; professional fees for accounting, auditing, tax
and consulting services; insurance costs; travel expenses; and facility-related
expenses, which include direct depreciation costs and allocated expenses for
rent and maintenance of facilities and other operating costs.

We expect that our general and administrative expenses will increase in the
future as a result of the costs associated with the Merger as well as the
expansion of operations subsequent to the Merger, as we increase our headcount
to support personnel in research and development and to support our operations
generally, and as we increase our research and development activities and
activities related to the potential commercialization of our product candidates.
We also expect to continue to incur increased expenses associated with being a
public company, including costs of accounting, audit, legal, regulatory and
tax-related services associated with maintaining compliance with exchange
listing and SEC requirements; director and officer insurance costs; and investor
and public relations costs.

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Other income and expense

Interest income and expense

Interest income consists of income earned on our cash and cash equivalents.
Interest expense consists of the interest component associated with our facility
leases. Our interest income initially increased as our cash and cash equivalents
were higher due to the cash proceeds received from our IPO. Such interest income
is subsequently decreasing as (i) our cash balance decreases as we continue to
fund operations and (ii) a decrease in interest rates.

Foreign currency gain

Our consolidated financial statements are presented in U.S. dollars, which is
our reporting currency. The financial position and results of operations of our
subsidiary Aprea AB is measured using the foreign subsidiary's local currency as
the functional currency. Aprea AB cash accounts holding U.S. dollars are
remeasured based upon the exchange rate at the date of remeasurement with the
resulting gain or loss included in the consolidated statement of operations and
comprehensive loss. Expenses of such subsidiaries have been translated into U.S.
dollars at average exchange rates prevailing during the period. Assets and
liabilities have been translated at the rates of exchange on the consolidated
balance sheet date. The resulting translation gain and loss adjustments are
recorded directly as a separate component of stockholders' equity and as other
comprehensive loss on the consolidated statement of operations and comprehensive
loss.

Income taxes
We have not recorded any U.S. federal, state or foreign income tax expense or
benefits for the net losses we have incurred in any year, due to our uncertainty
of realizing a benefit from those items. We have provided a valuation allowance
for the full amount of the net deferred tax assets as, based on all available
evidence, it is considered more likely than not that all the recorded deferred
tax assets will not be realized in a future period.

Critical accounting policies and use of estimates

Our management's discussion and analysis of financial condition and results of
operations is based on our financial statements, which have been prepared in
accordance with generally accepted accounting principles in the United States.
The preparation of our financial statements and related disclosures requires us
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, costs and expenses in our financial statements. We base our
estimates on historical experience, known trends and events and various other
factors that we believe are reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. We evaluate
our estimates and assumptions on an ongoing basis. Our actual results may differ
from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in the notes to our financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.

Accrued research and development expenses


As part of the process of preparing our financial statements, we are required to
estimate our accrued research and development expenses at each balance sheet.
This process involves reviewing open contract and purchase orders, communicating
with our personnel to identify services that have been performed on our behalf
and estimating the level of service performed and the associated costs incurred
for the services when we have not yet been invoiced or otherwise notified of the
actual costs. The majority of our service providers invoice us in arrears for
services performed, on a pre-determined schedule or when contractual milestones
are met; however, some require advanced payments. We make estimates of our
accrued expenses as of each balance sheet date in our financial statements
based
on facts and

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circumstances known to us at that time. Examples of estimated accrued research and development expenses include fees paid to:

? CROs in connection with performing research activities on our behalf and

conducting preclinical studies and clinical trials on our behalf;

? investigative sites or other service providers in connection with clinical

trials;

? vendors in connection with preclinical and clinical development activities; and

? vendors related to product manufacturing and development and distribution of

preclinical and clinical supplies.

We base our expenses related to preclinical studies and clinical trials on our
estimates of the services received and efforts expended pursuant to quotes and
contracts with CROs that conduct and manage preclinical studies and clinical
trials on our behalf. The financial terms of these agreements are subject to
negotiation, vary from contract to contract and may result in uneven payment
flows. There may be instances in which payments made to our vendors will exceed
the level of services provided and result in a prepayment of the expense.
Payments under some of these contracts depend on factors such as the successful
enrollment of patients and the completion of clinical trial milestones. In
accruing fees, we estimate the time period over which services will be
performed, enrollment of patients, number of sites activated and the level of
effort to be expended in each period. If the actual timing of the performance of
services or the level of effort varies from our estimate, we adjust the accrual
or amount of prepaid expense accordingly. Although we do not expect our
estimates to be materially different from amounts actually incurred, our
understanding of the status and timing of services performed relative to the
actual status and timing of services performed may vary and may result in us
reporting amounts that are too high or too low in any particular period. To
date, we have not made any material adjustments to our prior estimates of
accrued research and development expenses.

Stock-based compensation

We measure stock options and other stock-based awards granted to employees and
directors based on their fair value on the date of the grant and recognize
compensation expense of those awards, over the requisite service period, which
is generally the vesting period of the respective award. We apply the
straight-line method of expense recognition to all awards with only
service-based vesting conditions and apply the graded-vesting method to all
awards with performance-based vesting conditions or to awards with both
service-based and performance-based vesting conditions.

For stock-based awards granted to non-employees, compensation expense is
recognized over the period during which services are rendered by such
non-employees until completed in accordance with the FASB issued
ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to
Nonemployee Share-Based Payment Accounting. The new standard largely aligns the
accounting for share-based payment awards issued to employees and nonemployees
by expanding the scope of ASC 718 to apply to nonemployee share-based
transactions, as long as the transaction is not effectively a form of financing.

We estimate the fair value of each stock option grant on the date of grant using
the Black-Scholes option-pricing model, which uses as inputs the fair value of
our common stock and assumptions we make for the volatility of our common stock,
the expected term of our stock options, the risk-free interest rate for a period
that approximates the expected term of our stock options and our expected
dividend yield.

We also award restricted stock units ("RSUs") to employees and directors. RSUs
are generally subject to forfeiture if employment terminates prior to completion
of the vesting restrictions. We expense the cost of the RSUs, which is
determined to be the fair market value of the shares of common stock underlying
the RSUs at the date of grant, ratably over the period during which the vesting
restrictions lapse.

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Emerging growth company and smaller reporting company status

We are an emerging growth company (EGC), as defined in the JOBS Act. Under this
act, emerging growth companies are permitted to delay adopting new or revised
accounting standards applicable to public companies until those standards would
otherwise apply to private companies. We have irrevocably elected not to avail
ourselves of this exemption from new or revised accounting standards and,
therefore, will be subject to the same new or revised accounting standards as
other public companies that are not emerging growth companies.

We may remain classified as an EGC until the end of the fiscal year in which the
fifth anniversary of our IPO occurs, although if the market value of our common
stock that is held by non-affiliates exceeds $700 million as of the last trading
day of the second quarter before that time or if we have annual gross revenues
of $1.07 billion or more in any fiscal year, we would cease to be an EGC as of
December 31 of the applicable year. We also would cease to be an EGC if we issue
more than $1 billion of non-convertible debt over a three-year period.

We are also a "smaller reporting company," as such term is defined in Rule 12b-2
of the Exchange Act, meaning that the market value of our common stock held by
non-affiliates is less than $700 million and our annual revenue is less than
$100 million during the most recently completed fiscal year. We may continue to
be a smaller reporting company if either (i) the market value of our common
stock held by non-affiliates is less than $250 million or (ii) our annual
revenue is less than $100 million during the most recently completed fiscal year
and the market value of our common stock held by non-affiliates is less than
$700 million. If we are a smaller reporting company at the time we cease to be
an emerging growth company, we may continue to rely on exemptions from certain
disclosure requirements that are available to smaller reporting companies.
Specifically, as a smaller reporting company we may choose to present only the
two most recent fiscal years of audited financial statements in our Annual
Report on Form 10-K and, similar to emerging growth companies, smaller reporting
companies have reduced disclosure obligations regarding executive compensation.

Results of operations

Comparison of the three months ended March 31, 2022 and 2021

                                    Three months ended March 31,
                                        2022              2021            Change
Operating expenses:
Research and development          $      4,089,577    $   6,763,848    $ (2,674,271)
General and administrative               3,985,298        3,425,833        559,465
Total operating expenses                 8,074,875       10,189,681      (2,114,806)
Other income (expense):
Interest income (expense), net           1,971            (1,057)          
3,028
Foreign currency gain                      136,211          521,983        (385,772)
Total other income                         138,182          520,926        (382,744)
Net loss                          $    (7,936,693)    $ (9,668,755)    $  1,732,062

Research and development expenses

                                                    Three months ended March 31,
                                                      2022                2021             Change
Eprenetapopt (APR-246)                           $     1,591,898     $     3,803,173    $ (2,211,275)
Other early-stage development programs                   755,392           1,116,000       (360,608)
Unallocated research and development expenses          1,742,287           1,844,675        (102,388)
Total research and development expenses          $     4,089,577     $     6,763,848    $ (2,674,271)


Research and development expenses for the three months ended March 31, 2022 were
$4.1 million, compared to $6.8 million for the three months ended March 31,
2021. The overall decrease of $2.7 million was primarily due to the decreased
activity in connection with the wrap up of the clinical trials of eprenetapopt
as follows:

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a decrease of $0.4 million related to our pivotal Phase 3 clinical trial of

? eprenetapopt with azacitidine for frontline treatment of TP53 mutant MDS which

completed enrollment in Q2 2020;

a decrease of $0.4 million in manufacturing expenses related to the pausing of

? scale-up of manufacturing activities for the anticipated commercial production

of eprenetapopt;

? a decrease of $0.3 million related to our Phase 2 post-transplant MDS/AML

clinical trial;

? a decrease of $0.3 million related to our Phase 1 AML clinical trial;

? a decrease of $0.3 million related to our Phase 1/2 solid tumor trial

a decrease of $0.2 million related to the development of a Phase 1/2 clinical

trial in relapsed/refractory TP53 mutant chronic lymphoid leukemia (CLL)

? assessing eprenetapopt with venetoclax and rituximab and eprenetapopt with

ibrutinib in order to further assess eprenetapopt in hematological

malignancies;

a decrease of $0.2 million related to the development of a Phase 1

? dose-escalation clinical trial of APR-548, a next generation p53 reactivator

being developed in an oral dosage form; and

? a decrease of $0.2 million related to pre-clinical activities.

General and administrative expenses


General and administrative expenses for the three months ended March 31, 2022
were $4.0 million, compared to $3.4 million for the three months ended March 31,
2021. The increase of $0.6 million was primarily related to

? an increase of $0.4 million of legal expense associated with general legal

matters and ongoing SEC filings; and

an increase of $0.2 million in non-cash stock-based compensation expense. The

increase in non-cash stock-based compensation expense was primarily related to

? stock option and RSU grants made in March 2022 in connection with the Company's

annual compensation review for employees and stock option and RSU grants made

in June 2021 in connection with the Company's annual compensation review for

its non-employee board members.

Other income and expense


Foreign currency gain for the three months ended March 31, 2022 was $0.1 million
compared to a foreign currency gain of $0.5 million for the three months ended
March 31, 2021. The decrease in the foreign currency loss of $0.4 million was
primarily due to a weakening of the U.S. dollar against the Swedish Krona during
the three months ended March 31, 2022 as compared to the three months ended
March 31, 2021. Interest income, net for the three months ended March 31, 2022
consisted of interest income on our cash and cash equivalents, offset in part,
by interest expense associated with our facility leases. Interest expense, net
for the three months ended March 31, 2021 consisted of interest expense on our
facility leases, offset in part, by interest income on our cash and cash
equivalents.

Liquidity and capital resources


Since our inception, we have incurred significant losses on an aggregate basis.
We have not yet commercialized any of our product candidates, which are in
various phases of preclinical and clinical development, and we do not expect to
generate revenue from sales of any products for several years, if at all. To
date, we have financed our operations primarily through private placements of
our preferred and common stock and the net proceeds received from the initial
public offering (IPO) of our common stock. Through March 31, 2022, we had
received net proceeds of $225.6 million from our sales of preferred and common
stock. As of March 31, 2022, we had cash and cash equivalents of $47.6 million.

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  Table of Contents

If our stockholders do not timely approve the conversion of our Series A
Preferred Stock, then the holders of the our Series A Preferred Stock may elect
to require that we settle their shares of Series A Preferred Stock for cash at a
price per share equal to the fair value of the Series A Preferred Stock, as
described in our certificate of designation relating to the Series A Preferred
Stock. If we are forced to settle a significant amount of the Series A Preferred
Stock, it could materially affect our results of operations, including raising a
substantial doubt about the entity's ability to continue as a going concern
within one year from the date of this quarterly report on Form 10-Q

Cash flows

The following table summarizes our sources and uses of cash for each of the periods presented:


                                               Three months ended March 31,
                                                  2022               2021
Net cash provided by (used in):
Operating activities                         $   (5,495,329)    $ (11,522,106)
Investing activities                                      --                --
Financing activities                                      --                --

Net decrease in cash and cash equivalents $ (5,495,329) $ (11,522,106)



Operating activities.

Cash used in operating activities resulted primarily from our net losses
adjusted for non-cash charges and changes in components of working capital. Net
cash used in operating activities was $5.5 million for the three months ended
March 31, 2022 compared to $11.5 million for the three months ended March 31,
2021. The decrease in cash used in operating activities of $6.0 million was
primarily attributable to a decrease in our net loss of $1.8 million, which was
largely due to decreased clinical trial activity, and a decrease in operating
assets and liabilities of $3.6 million, partially offset by an increase in
non-cash stock-based compensation of $0.3 million.

Investing activities.

No cash was used in investing activities for the three months ended March 31, 2022 or 2021.


Financing activities.

No cash was provided by financing activities for the three months ended March 31, 2022 or 2021.


Funding requirements

We expect our expenses to increase in connection with our ongoing and planned
development activities. In addition, we have incurred and continue to incur
additional costs associated with operating as a public company. We expect that
our expenses will increase substantially if and as we:

? initiate and conduct clinical trials and additional preclinical research for

our product candidates;

? seek to identify and develop additional product candidates;

? seek marketing approvals for any of our product candidates that successfully

complete clinical trials, if any;

? establish a sales, marketing, manufacturing and distribution infrastructure to

commercialize any products for which we may obtain marketing approval;

? require the manufacture of larger quantities of our product candidates for

clinical development and potentially commercialization;


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  Table of Contents

? maintain, expand, protect and enforce our intellectual property portfolio;

? acquire or in-license other drugs and technologies;

? defend against any claims of infringement, misappropriation or other violation

of third-party intellectual property;

? hire and retain additional clinical, quality control and scientific personnel;

? build out new facilities or expand existing facilities to support our ongoing

development activity;

add operational, financial and management information systems and personnel, ? including personnel to support our drug development, any future

commercialization efforts and our transition to a public company; and

? continue to operate as a public company.

As of March 31, 2022, we had cash and cash equivalents of $47.6 million. We
believe that our existing cash and cash equivalents will enable us to fund our
operating expenses and capital expenditure requirements into the second half of
2023. We have based this estimate on assumptions that may prove to be wrong, and
we could exhaust our available capital resources sooner than we expect.

Because of the numerous risks and uncertainties associated with the development
of our product candidates and programs and because the extent to which we may
enter into collaborations with third parties for development of our product
candidates is unknown, we are unable to estimate the timing and amounts of
increased capital outlays and operating expenses associated with completing the
research and development of our product candidates. Our future capital
requirements will depend on many factors, including:

? the scope, progress, results and costs of our planned clinical trials, drug

discovery and preclinical research for our product candidates;

? the number of future product candidates that we pursue and their development

requirements;

? the costs, timing and outcome of regulatory review of our product candidates;

the extent to which we acquire or invest in assets or businesses, products and

technologies, including entering into or maintaining licensing or collaboration ? arrangements for product candidates on favorable terms, and although we

recently completed the Merger and may continue to explore such opportunities

from time to time during the normal course of business, we currently have no

commitments or agreements to complete any such transactions];

the costs and timing of future commercialization activities, including drug

sales, marketing, manufacturing and distribution, for any of our product ? candidates for which we receive marketing approval, to the extent that such

sales, marketing, manufacturing and distribution are not the responsibility of

any collaborator that we may have at such time;

? the amount of revenue, if any, received from commercial sales of our product

candidates, should any of our product candidates receive marketing approval;

? the impact of COVID-19 on the financial markets in general and on our business

in particular;

the costs of preparing, filing and prosecuting patent applications, ? maintaining, protecting and enforcing our intellectual property rights and

defending intellectual property-related claims;

? our headcount growth and associated costs as we expand our business operations

and our research and development activities; and


                                       27

  Table of Contents

? the costs of operating as a public company.



Developing drug products, including conducting preclinical studies and clinical
trials, is a time-consuming, expensive and uncertain process that takes years to
complete, and we may never generate the necessary data or results required to
obtain marketing approval for any product candidates or generate revenue from
the sale of any products for which we may obtain marketing approval. In
addition, our product candidates, if approved, may not achieve commercial
success. Our commercial revenues, if any, will be derived from sales of drugs
that we do not expect to be commercially available for many years, if ever.
Accordingly, we will need to obtain substantial additional funds to achieve our
business objectives.

Adequate additional funds may not be available to us on acceptable terms, or at
all. We do not currently have any committed external source of funds. To the
extent that we raise additional capital through the sale of equity or
convertible debt securities, ownership interests in our securities may be
diluted, and the terms of these securities may include liquidation or other
preferences and anti-dilution protections that could adversely affect the rights
of our common stockholders. Additional debt or preferred equity financing, if
available, may involve agreements that include restrictive covenants that may
limit our ability to take specific actions, such as incurring debt, making
capital expenditures or declaring dividends, which could adversely impact our
ability to conduct our business, and may require the issuance of warrants, which
could potentially dilute existing ownership interest.

If we raise additional funds through collaborations, strategic alliances or
licensing arrangements with third parties, we may have to relinquish valuable
rights to our technology, future revenue streams, research programs, or product
candidates or grant licenses on terms that may not be favorable to us. If we are
unable to raise additional funds through equity or debt financings or
collaborations, strategic alliances or licensing arrangements with third parties
when needed, we may be required to delay, limit, reduce and/or terminate our
product development programs or any future commercialization efforts or grant
rights to develop and market product candidates that we would otherwise prefer
to develop and market ourselves.

Contractual obligations and commitments

For additional details regarding our contractual obligations, see Note 3 "Leases" to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Shelf Registration Statement


On November 12, 2020, we filed a universal shelf registration statement with the
SEC for the issuance of common stock, preferred stock, warrants, rights and debt
securities and units up to an aggregate of $350.0 million. On November 30, 2020,
the Shelf Registration Statement was declared effective by the SEC. The
universal shelf registration statement includes an at-the-market offering
program for the sale of up to $50.0 million of shares of our common stock.
During the year ended December 31, 2021, we sold 366,773 shares of our common
stock under the at-the-market offering program resulting in net proceeds of
approximately $1.5 million. There were no sales of common stock under the
at-the-market program during the three months ended March 31, 2022.

Recent accounting pronouncements


From time to time, new accounting pronouncements are issued by the Financial
Accounting Standards Board ("FASB") or other standard setting bodies that we
adopt as of the specified effective date.

We do not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on our financial statements.

Off-balance sheet arrangements

We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined in the rules and regulations of
the
SEC.

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  Table of Contents

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Sales 2021
Net income 2021
Net Debt 2021
P/E ratio 2021
Yield 2021
Capitalization 18,7 M 18,7 M -
EV / Sales 2021
EV / Sales 2022 -
Nbr of Employees -
Free-Float 90,2%
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Christian S. Schade Chairman & Chief Executive Officer
Oren Gilad President & Director
Scott M. Coiante Chief Financial Officer, Secretary & Senior VP
Eyal C. Attar Chief Medical Officer & Senior Vice President
Lars Abrahmsén Chief Scientific Officer & Senior Vice President
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