You should read the following discussion and analysis of our financial condition
and results of operations together with our financial statements and the related
notes appearing elsewhere in this report. In addition to historical information,
this discussion and analysis contains forward-looking statements that involve
risks, uncertainties and assumptions. Our actual results may differ materially
from those discussed below. Factors that could cause or contribute to such
differences include, but are not limited to, those identified below, and those
discussed in the section titled "Risk Factors" included elsewhere in this
report.



The following discussion highlights our results of operations and the principal
factors that have affected our financial condition as well as our liquidity and
capital resources for the periods described, and provides information that
management believes is relevant for an assessment and understanding of the
statements of financial condition and results of operations presented herein.
The following discussion and analysis are based on the audited financial
statements contained in this report, which we have prepared in accordance with
United States generally accepted accounting principles. You should read the
discussion and analysis together with such financial statements and the related
notes thereto.



Basis of Presentation



The audited financial statements for the fiscal years and quarters ended
December 31, 2019 and 2018 include a summary of our significant accounting
policies and should be read in conjunction with the discussion below and our
financial statements and related notes included elsewhere in this annual report.
In the opinion of management, all material adjustments necessary to present
fairly the results of operations for such periods have been included in the
financial statements. All such adjustments are of a normal recurring nature.



Overview




We are a biopharmaceutical company with product candidates in pre-clinical and
clinical development. Neurotrope BioScience began operations in October 2012. We
are principally focused on developing a product platform based upon a drug
candidate called bryostatin for the treatment of Alzheimer's disease ("AD"),
which is in the clinical testing stage. We are also evaluating bryostatin for
other neurodegenerative or cognitive diseases and dysfunctions, such as Fragile
X syndrome, Multiple Sclerosis, and Niemann-Pick Type C disease, which have
undergone pre-clinical testing. In addition, we are also in the early stages of
testing bryostatin activity which may lead to applications in Leukemia and
Lymphoma. Neurotrope has been a party to a technology license and services
agreement with the original Blanchette Rockefeller Neurosciences Institute
("BRNI") (which has been known as Cognitive Research Enterprises, Inc. ("CRE")
since October 2016), and its affiliate NRV II, LLC, which we collectively refer
to herein as "CRE," pursuant to which we now have an exclusive non-transferable
license to certain patents and technologies required to develop our proposed
products. Neurotrope BioScience was formed for the primary purpose of
commercializing the technologies initially developed by BRNI for therapeutic
applications for AD or other cognitive dysfunctions. These technologies have
been under development by BRNI since 1999 and, until March 2013, had been
financed through funding from a variety of non-investor sources (which include
not-for-profit foundations, the National Institutes of Health, which is part of
the U.S. Department of Health and Human Services, and individual
philanthropists). From March 2013 forward, development of the licensed
technology has been funded principally through the Company in collaboration

with
CRE.

Review of Strategic Alternatives


On October 8, 2019, following our announcement of top-line results from our
Phase 2 study of bryostatin-1 in moderate to severe AD (as described below), we
announced our plans to explore strategic alternatives to maximize shareholder
value. Our Board has formed a strategic alternatives committee to aid in
evaluating our alternatives. There can be no assurance that our formal strategic
review of alternatives will result in any successful transaction or other
outcome. We are continuing to determine how to proceed with respect to our
current development programs for bryostatin-1 in our effort to maximize
shareholder value.

Results of Phase 2 Clinical Trial





On May 1, 2017, we reported certain relevant top-line results from our Phase 2
exploratory clinical trial based on a preliminary analysis of a limited portion
of the complete data set generated. A comprehensive analysis of these data from
the Phase 2 exploratory trial evaluating Bryostatin-1 as a treatment of
cognitive deficits in moderate to severe Alzheimer's disease were recently
published in the Journal of Alzheimer's Disease, vol. 67, no. 2, pp. 555-570,
2019.  A total of 147 patients were enrolled into the study; 135 patients in the
mITT population (as defined below) and 113 in the Completer population (as
defined below). This study was the first repeat dose study of bryostatin-1 in
patients with late stage AD (defined as a Mini Mental State Exam 2 ("MMSE-2") of
4-15), in which two dose levels of bryostatin-1 were compared with placebo to
assess safety and preliminary efficacy (p < 0.1, one-tailed) after 12 weeks of
treatment. The pre-specified primary endpoint, the Severe Impairment Battery
(the "SIB") (used to evaluate cognition in severe dementia), compared each dose
of bryostatin-1 with placebo at Week 13 in two sets of patients: (1) the
modified intent-to-treat (the "mITT") population, consisting of all patients who
received study drug and had at least one efficacy/safety evaluation, and (2) the
Completer population, consisting of those patients within the mITT population
who completed the 13-week dosing protocol and cognitive assessments.



  45






These announced top-line results indicated that the 20 µg dose, administered
after two weekly 20 µg doses during the first two weeks and every other week
thereafter, met the pre-specified primary endpoint in the Completer population,
but not in the mITT population. Among the patients who completed the protocol (n
= 113), the patients on the 20 µg dose at 13 weeks showed a mean increase on the
SIB of 1.5 vs. a decrease in the placebo group of -1.1 (net improvement of 2.6,
p < 0.07), whereas, in the mITT population, the 20 µg group had a mean increase
on the SIB of 1.2 vs. a decrease in the placebo group of -0.8 (net improvement
of 2.0, p < 0.134). At the pre-specified 5 week secondary endpoint, the
Completer patients in the 20 µg group showed a net improvement of 4.0 SIB (p <
.016), and the mITT population showed a net improvement of 3.0 (p < .056).
Unlike the 20 µg dose, there was no therapeutic signal observed with the 40 µg
dose.



The Alzheimer Disease Cooperative Study Activities of Daily Living Inventory
Severe Impairment version (the "ADCS-ADL-SIV") was another pre-specified
secondary endpoint. The p values for the comparisons between 20 µg and placebo
for the ADCS-ADL endpoint at 13 weeks were 0.082 for the Completers and 0.104
for the mITT population.



Together, these initial results after preliminary analysis of this exploratory
trial, provided signals that bryostatin-1, at the 20 µg dose, caused sustained
improvement in important functions that are impaired in patients with moderate
to severe Alzheimer's disease, i.e., cognition and the ability to care for
oneself. Since many of the patients in this study were already taking donepezil
and/or memantine, the efficacy of bryostatin-1 was evaluated in the Top Line
results over and above the standard of care therapeutics.



The safety profile of bryostatin-1 20 µg was minimally different from the
placebo group except for a higher incidence of diarrhea and infusion reactions
(11% versus 2% for diarrhea and 17% versus 6% for infusion reactions). Fewer
adverse events were reported in patients in the 20 µg group, compared to the 40
µg group. Patients dosed with 20 µg had a dropout rate less than or identical to
placebo, while patients dosed at 40 µg experienced poorer safety and
tolerability, and had a higher dropout rate. Treatment emergent adverse events
("TEAEs") were mostly mild or moderate in severity. TEAEs, including serious
adverse events, were more common in the 40 µg group, as compared to the 20 µg
and placebo groups. The mean age of patients in the study was 72 years and
similar across all three treatment groups.



Following presentation of the top line results in July 2017 at the Alzheimer's
Association International Conference in London, a much more extensive analysis
of a complete set of the Phase 2 trial data was conducted.



On January 5, 2018, we announced that a pre-specified exploratory analysis of
the comprehensive data set from our recent Phase 2 trial in patients with
advanced AD found evidence of sustained improvement in cognition in patients
receiving the 20 ?g bryostatin regimen. As specified in the Statistical Analysis
Plan ("SAP"), analysis of patients who did not receive memantine, an approved AD
treatment, as baseline therapy showed greater SIB improvement. These findings
suggested that this investigational drug could potentially treat Alzheimer's
disease itself and help reduce and/or reverse the progression of AD, in addition
to alleviating its symptoms.




Comprehensive follow-on analyses found that patients in the 20 ?g treatment arm
showed a sustained improvement in cognition over baseline compared to the
placebo group at an exploratory endpoint week 15 (30 days after last dose at
week 11). These data were observed in the study population as a whole as well as
in the Completers study group.



This follow-on analysis of the data evaluated SIB scores of patients at 15
weeks, 30 days after all dosing had been completed - a pre-specified exploratory
endpoint. For the 20 ?g group, patients in the mITT population (n=34) showed an
overall improvement compared to controls (n=33) of 3.59 (p=0.0503) and in the
Completers population (n=34) showed an overall improvement compared to controls
(n=33) of 4.09 (p=0.0293). In summary, patients on the 20 ?g dose showed a
persistent SIB improvement 30 days after all dosing had been completed. These
p-values and those below are one-tailed.



  46






Additional analyses compared 20 µg dose patients who were on baseline therapy of
Aricept vs. patients off Aricept. No significant differences were observed.
Another analysis compared the 20 µg dose patients who were on or off baseline
therapy of memantine. The secondary analysis comparing SIB scores in
non-memantine versus memantine patients found the following:

· At week 15, non-memantine patients in the mITT Group treated with 20 ?g (n=14)

showed an SIB improvement of 5.88, while the placebo patients (n=11) showed a

decline in their SIB scores of -0.05 for an overall treatment ? of 5.93 from


   baseline (p=0.0576).

· At week 15, non-memantine patients in the Completers Group treated with 20 ?g

(n=14) showed an SIB improvement of 6.24, while the placebo patients (n=11)

showed a decline in their SIB scores of -0.12 for an overall treatment ? of

6.36 from baseline (p=0.0488).

· Patients taking memantine as background therapy in the 20 ?g (n=20) and control


   (n=22) groups showed no improvement in SIB scores.




Memantine, an NMDA receptor antagonist, is marketed under the brand names
Namenda®, Namenda® XR, and Namzaric® (a combination of memantine and donepezil)
for the treatment of dementia in patients with moderate-to-severe AD. It has
been shown to delay cognitive decline and help reduce disease symptoms.

Further follow-on analyses used trend analyses (testing the dependence of treatment effect on repeated doses).





In the trend analyses, we found that the SIB values did not increase over time
for the placebo patients resulting in slopes that were non-significantly
different from zero (e.g. 'zero-slopes'). In contrast, the SIB slopes for the 20
?g bryostatin patients who did not receive baseline memantine were found to be
statistically significant (p<.001), giving a slope (95% CI) = 0.38 (0.18, 0.57)
SIB points per week in the random intercept model, and a slope (95% CI) = 0.38
(0.18, 0.59) points per week in the random intercept and slope model. These
results provided evidence that SIB improvement (drug benefit) increased as the
number of successive bryostatin doses increased for the 20 ?g patient cohort.

Confirmatory Phase 2 Clinical Trial





On May 4, 2018, we announced a confirmatory, 100 patient, double-blinded
clinical trial for the safe, effective 20 ?g dose protocol for advanced AD
patients not taking memantine as background therapy to evaluate improvements in
SIB scores with an increased number of patients. We engaged Worldwide Clinical
Trials, Inc. ("WCT"), in conjunction with consultants and investigators at
leading academic institutions, to collaborate on the design and conduct of the
trial, which began in April 2018. During July 2018, the first patient was
enrolled in this study. Pursuant to a new Services Agreement (the "New Services
Agreement") with WCT dated as of May 4, 2018, WCT provided services relating to
the trial. The total estimated budget for the services, including pass-through
costs, drug supply and other statistical analyses, was approximately $7.8
million. Of the total estimated study costs, as of December 31, 2019, we have
incurred approximately $7.6 million in expenses of which WCT has represented a
total of approximately $7.2 million and approximately $400,000 of expenses have
been incurred to other trial-related vendors and consultants. Of the
approximately $7.2 million of expenses incurred with WCT, approximately $7.1
million has been paid with the remaining $0.1 million payable as of December 31,
2019. In addition, we paid $1.2 million to WCT as prepaid deposits of which we
have utilized the entire amount. We believe that we have incurred substantially
all of the expenses associated with WCT as of December 31, 2019, resulting in a
savings of approximately $500,000 in total.

On September 9, 2019, we issued a press release announcing that the confirmatory Phase 2 study of bryostatin-1 in moderate to severe AD did not achieve statistical significance on the primary endpoint, which was changed from baseline to Week 13 in the SIB total score.





An average increase in SIB total score of 1.3 points and 2.1 points was observed
for the bryostatin-1 and placebo groups, respectively, at Week 13. There were
multiple secondary outcome measures in this trial, including the changes from
baseline at Weeks 5, 9 and 15 in the SIB total score. No statistically
significant difference was observed in the change from baseline in SIB total
score between the bryostatin -1 and placebo treatment groups.



  47






The confirmatory Phase 2 multicenter trial was designed to assess the safety and
efficacy of bryostatin-1 as a treatment for cognitive deficits in patients with
moderate to severe AD - defined as a Mini Mental State Exam 2 ("MMSE-2") score
of 4-15 - who are not currently taking memantine. Patients were randomized 1:1
to be treated with either bryostatin -1 20?g or placebo, receiving 7 doses over
12 weeks. Patients on memantine, an NMDA receptor antagonist, were excluded
unless they had been discontinued from memantine treatment for a 30-day washout
period prior to study enrollment. The primary efficacy endpoint was the change
in the SIB score between the baseline and week 13. Secondary endpoints included
repeated SIB changes from baseline SIB at weeks 5, 9, 13 and 15.



On January 22, 2020, we announced the completion of an additional analysis in
connection with the confirmatory Phase 2 study, which examined moderately severe
to severe AD patients treated with byrostatin-1 in the absence of memantine. To
adjust for the baseline imbalance observed in the study, a post-hoc analysis was
conducted using paired data for individual patients, with each patient as
his/her own control. For the pre-specified moderate stratum (i.e., MMSE-2
baseline scores 10-15), the baseline value and the week 13 value were used,
resulting in pairs of observations for each patient. The changes from baseline
for each patient were calculated and a paired t-test was used to compare the
mean change from baseline to week 13 for each patient. A total of 65 patients
had both baseline and week 13 values, from which there were 32 patients in the
bryostatin-1 treatment group and 33 patients in the placebo group.  There was a
statistically significant improvement over baseline (4.8 points) in the mean SIB
at week 13 for subjects in the bryostatin-1 treatment group (32 subjects),
paired t-test p < 0.0076, 2-tailed. In the placebo group (33 subjects), there
was also a statistically significant increase from baseline in the mean SIB at
week 13, for paired t-test p < 0.0144, consistent with the placebo effect seen
in the overall 203 study. Although there was a signal of bryostatin-1's benefit
for the moderately severe stratum, the difference between the bryostatin-1 and
placebo treatment groups was not statistically significant (p=0.2727). As a
further test of the robustness of this Moderate Stratum benefit signal, a
pre-specified trend analysis (measuring increase of SIB improvement as a
function of successive drug doses) was performed on the repeated SIB measures
over time (Weeks 0, 5, 9, and 13).  These trend analyses showed a significant
positive slope of improvement for the treatment groups in the 203 study that was
significantly greater than for the placebo group (p<.01).



In connection with the additional analysis, we also announced the receipt of a
$2.7 million award from the National Institutes of Health to support an
additional Phase 2 clinical study focused on the moderate stratum for which we
saw improvement in the 203 study. We are planning to meet with the Food and Drug
Administration ("FDA") to present the totality of the clinical data for
bryostatin-1. We are continuing to determine how to proceed with respect to our
current development programs for bryostatin-1.



Other Development Projects



To the extent resources permit, we may pursue development of selected technology
platforms with indications related to the treatment of various disorders,
including neurodegenerative disorders such as AD, based on our currently
licensed technology and/or technologies available from third party licensors or
collaborators.



For example, we have entered into a Cooperative Research and Development
Agreement ("CRADA") with the National Cancer Institute (NCI) for the research
and clinical development of Bryostatin-1. Under the CRADA, Neurotrope will
collaborate with the NCI's Center for Cancer Research, Pediatric Oncology Branch
(POB) to develop a Phase I clinical trial testing the safety and toxicity of
Bryostatin-1 in children and young adults with CD22 + leukemia and B-cell
lymphoma. In the growing era of highly effective immunotherapies targeting
cell-surface antigens (e.g., CAR-T cell therapy), and the recognition that
antigen modulation plays a critical role in evasion of response to
immunotherapy, the ability for Bryostatin-1 to upregulate CD22 may serve a
synergistic role in enhancing the response to a host of CD22 targeted therapies.
Under the CRADA, Bryostatin-1 is expected to be tested in the clinic to evaluate
its ability to modulate CD22 in patients with relapsed/refractory CD22+ disease,
while evaluating safety, toxicity and overall response.



Nemours Agreement



On September 5, 2018, we announced a collaboration with The Nemours / Alfred I.
duPont Hospital for Children ("Nemours"), a premier U.S. children's hospital, to
initiate a clinical trial in children with Fragile X syndrome ("Fragile X"). In
addition to the primary objective of safety and tolerability, measurements will
be made of working memory, language and other functional aspects such as
anxiety, repetitive behavior, executive functioning, and social behavior. The
total estimated cost of this proposed trial to us is approximately $100,000.



Recent Developments



Registered Direct Offering



On January 22, 2020, we entered into a securities purchase agreement with
certain institutional investors and certain pre-existing high net worth
individual investors. Pursuant to the terms of the purchase agreement, we issued
to the purchasers in a registered offering an aggregate of 18,000 shares of our
newly designated Series D Convertible Preferred Stock, par value $0.0001 per
share (the "Series D Preferred Stock") (which are convertible into a total of
10,909,100 shares of common stock) and Series H warrants to purchase up to an
aggregate of 10,909,100 shares of common stock for an aggregate purchase price
of approximately $18 million. The warrants are exercisable at a price of $1.65
per share immediately upon issuance. They feature a five-year term and a right
by us, in certain circumstances, to call for the cancellation of up to 50% of
the shares of common stock underlying such warrants for consideration equal to
$0.0001 per share of underlying common stock in the event the value weighted
average price of our common stock exceeds $5.00 for each of 10 consequence
trading days in a 30-day calendar period. The Series D Preferred Stock and the
Series H warrants are immediately separable and were issued separately. The net
proceeds to us from the offering were approximately $16.4 million, after
deducting financial advisory fees and estimated offering expenses payable by us.



  48






Director Resignations




On February 21, 2020, James Gottlieb resigned as a member of our Board and from
all committees thereof, effective immediately. On February 25, 2020, Shana
Phares resigned as a member of the Board and from all committees thereof,
effective immediately. Mr. Gottlieb and Ms. Phares served as the two Board
designees of the licensor of the patents and technologies utilized by us in our
attempts to develop therapeutic applications for Alzheimer's disease and other
cognitive dysfunctions.

Critical Accounting Policies, Estimates, and Judgments





Our financial statements are prepared in accordance with accounting principles
that are generally accepted in the United States. The preparation of these
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. We continually evaluate our
estimates and judgments, the most critical of which are those related to
accounting for equity compensation, research and development accruals, and our
commitments to strategic alliance partners and the timing of the achievement of
collaboration milestones. Materially different results can occur as
circumstances change and additional information becomes known. Besides the
estimates identified above that are considered critical, we make many other
accounting estimates in preparing our financial statements and related
disclosures. All estimates, whether or not deemed critical, affect reported
amounts of assets, liabilities, revenues and expenses, as well as disclosures of
contingent assets and liabilities. These estimates and judgments are also based
on historical experience and other factors that are believed to be reasonable
under the circumstances. Materially different results can occur as circumstances
change and additional information becomes known, even for estimates and
judgments that are not deemed critical.



As required by Section 404, management has conducted an evaluation of the
effectiveness of our internal control over financial reporting at December 31,
2019. We identified a number of material weaknesses in our internal control over
financial reporting and concluded that, as of December 31, 2019, we did not
maintain effective control over financial reporting based on criteria
established in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. We are in the process of
remedying all of the identified material weaknesses, and this work will continue
during fiscal 2020 and beyond. For a detailed description of our remedial
efforts, see Item 9A, "Controls and Procedures."

Recent Accounting Pronouncements





In August 2018, the SEC issued a final rule Release No. 33-10532, "Disclosure
Update and Simplification," to amend certain disclosure requirements now seen as
redundant, duplicative, overlapping, outdated or superseded in wake of recent
accounting pronouncements. The amended rules became effective November 5, 2018.
The Company analyzed the release in preparation of this Form 10-K, which
resulted in the additional disclosure of changes to stockholders' equity during
interim periods, as presented within this Form 10-K within the condensed
consolidated statements of stockholders' equity. Many of the amended
requirements under this Release are not applicable to the Company.



In November 2018, the FASB issued ASU-2018-18, Collaborative Arrangements (Topic
808). In November 2018, the FASB issued new guidance to clarify the interaction
between the authoritative guidance for collaborative arrangements and revenue
from contracts with customers. The new guidance clarifies that, when the
collaborative arrangement participant is a customer in the context of a
unit-of-account, revenue from contracts with customers guidance should be
applied, adds unit-of-account guidance to collaborative arrangements guidance,
and requires, that in a transaction with a collaborative arrangement participant
who is not a customer, presenting the transaction together with revenue
recognized under contracts with customers is precluded. The guidance is
effective for the Company beginning in the first quarter of fiscal year 2020.
Early adoption is permitted. The Company will assess the impact of the adoption
of this guidance on its consolidated financial statements once the Company

begins to generate revenue.



  49

Accounting Pronouncements Adopted During the Period:





In February 2016, the FASB issued new guidance related to how an entity should
account for lease assets and lease liabilities. The guidance specifies that an
entity who is a lessee under lease agreements should recognize lease assets and
lease liabilities for those leases classified as operating leases under previous
FASB guidance. Accounting for leases by lessors is largely unchanged under the
new guidance. The guidance is effective for the Company beginning in the first
quarter of 2019. In transition, lessees and lessors are required to recognize
and measure leases at the beginning of the earliest period presented using a
modified retrospective approach. The adoption of this standard did not have a
material impact to its financial statements based upon the de minimis amount of
short-term lease commitments.

Comparison of the years ended December 31, 2019 and December 31, 2018





The following table summarizes our results of operations for the years ended
December 31, 2019 and 2018:



                                               Years ended
                                              December 31,                Dollar
                                          2018             2017           Change         % Change
Revenue                               $          -     $          -     $         -               0 %
Operating Expenses:
Research and development expenses -
Related Party                         $          -     $    262,012     $  (262,012 )        (100.0 )%
Research and development expenses -
Other                                 $  4,540,947     $  4,623,551     $   (82,604 )          (1.8 )%
General and administrative expenses
- Related party                       $     50,000     $     50,000     $         -               0 %
General and administrative expenses
- Other                               $  6,740,510     $  3,997,222     $ 2,743,288            68.6 %
Stock based compensation expenses -
Related Party                         $    220,856     $    291,577     $   (70,721 )         (24.3 )%
Stock based compensation expenses -
Other                                 $  3,961,144     $  1,925,034     $ 2,036,110           105.8 %
Other income, net                     $    378,707     $    127,110     $   251,597           197.9 %
Net loss                              $ 15,134,750     $ 11,022,286     $ 4,112,464            37.3 %




Revenues

We did not generate any revenues for the years ended December 31, 2019 and 2018.





Operating Expenses



Overview



Total operating expenses for the year ended December 31, 2019 were $15,513,457
as compared to $11,149,396 for the year ended December 31, 2018, an increase of
approximately 39%. The increase in total operating expenses is due primarily to
an increase in our general and administrative and stock-based, non-cash,
compensation expenses.

Research and Development Expenses





For the year ended December 31, 2019, we incurred $0 of research and development
expenses with a related party as compared to $262,012 for the year ended
December 31, 2018. The total amounts incurred for the year ended December 31,
2018 consisted of patent expenses and lab testing of drug materials. We have
discontinued utilizing our licensing partner CRE for patent expense and lab

testing assistance.



  50






For the year ended December 31, 2019, we incurred $4,540,947 in research and
development expenses with non-related parties as compared to $4,623,551 for the
year ended December 31, 2018. These expenses were incurred pursuant to
developing the potential AD therapeutic product, specifically expenses relating
to the recently concluded confirmatory Phase 2 clinical trial for AD. Of these
expenses, for the year ended December 31, 2019, $3,862,697 was incurred
principally relating to our confirmatory clinical trial and related storage of
drug product, $622,911 for clinical consulting services, $28,291 of amortization
of prepaid licensing fees relating to the Stanford and Mount Sinai license
agreements and $27,048 for development of alternative drug supply with Stanford
University as compared to, for the year ended December 31, 2018, a credit of
$163,400 was reflected related to closing out our AD Phase 2 clinical trial,
which was substantially completed in 2017, plus $4,417,361 incurred relating to
our recently concluded confirmatory clinical trial, and related storage of drug
product, $306,842 for clinical consulting services, $36,194 of amortization of
prepaid licensing fees relating to the Stanford and Mount Sinai license
agreements and $26,554 for development of alternative drug supply with Stanford
University. We expect our research and development expenses to substantially
decrease, in the short term, as our confirmatory Phase 2 clinical trial was
recently concluded. Other development might increase, as our resources permit,
in order to advance our potential products. We are continuing to determine how
to proceed with respect to our current development programs for bryostatin-1.

General and Administrative Expenses





We incurred related party general and administrative expenses totaling $50,000
for the years ended December 31, 2019 and 2018. The amounts for both years are
attributable to director fees paid to certain members of the Board that are
affiliates of CRE.



We incurred $6,740,510 and $3,997,222 of general and administrative expenses for
the years ended December 31, 2019 and 2018, respectively, an increase of
approximately 69%. Of the amounts for the years ended December 31, 2019, as
compared to the comparable 2018 period: $2,172,287 was incurred primarily for
wages, bonuses, vacation pay, severance, taxes and insurance, versus $1,657,701
for the 2018 comparable period. The increase for the year ending December 31,
2019 is principally based upon contractual bonus payments made to certain
officers of $210,000 and the hiring of a new Chief Operating Officer; $701,433
was incurred for ongoing legal expenses versus $536,168 for the 2018 comparable
period; $1,771,850 was incurred for outside operations consulting services,
versus $481,525 for the 2018 comparable period as we incurred additional cash
and non-cash expenses for investment banking consulting; $184,749 was incurred
for travel expenses, versus $190,753 for the 2018 comparable period; $1,038,730
was incurred for investor relations services which included adding outside
service providers to replace our internal investor relations staff person paid
both in cash and non-cash stock compensation, versus $356,075 for the 2018
comparable period; $129,355 was incurred for professional fees associated with
auditing, financial, accounting and tax advisory services, versus $141,217 for
the 2018 comparable period; $515,634 was incurred for insurance, versus $430,217
for the 2018 comparable period; and $226,472 was incurred for utilities,
supplies, license fees, filing costs, rent, advertising and other versus
$203,566 for the 2018 comparable period.

Stock Based Compensation Expenses

We incurred related party non-cash expenses totaling $220,856 and $291,577 for the years ended December 31, 2019 and 2018, respectively. The decrease is primarily attributable to fully expensing certain options in 2018.





We incurred $3,961,144 and $1,925,034 of non-related party non-cash expenses for
the years ended December 31, 2019 and 2018, respectively. The increase for the
comparable period is primarily attributable to newly issued stock options during
2019, which included awards with accelerated vesting terms.



Other Income, net




We earned $378,707 of interest income for the year ended December 31, 2019 as
compared to $127,110 for the year ended December 31, 2018 on funds deposited in
interest bearing money market accounts which were received from our
December 2018 capital raise.

Net loss and loss per share





We incurred losses of $15,134,750 and $11,022,286 for the years ended
December 31, 2019 and 2018, respectively. The increased loss was primarily
attributable to the increase in our general and administrative expenses and
stock-based compensation expense, offset by discontinuing our related party
research and development activities. Earnings (losses) per common share were
($1.16) and ($1.37) for the years ended December 31, 2019 and 2018,
respectively. The decrease in loss per share is primarily attributable to the
increase in our net loss offset by an increase in weighted average common shares
outstanding.



The computation of diluted loss per share for the year ended December 31, 2019
excludes 10,482,158 warrants and options to purchase 2,366,519 shares of our
common stock as they are anti-dilutive due to our net loss. For the year ended
December 31, 2018, the computation excludes 10,236,232 warrants and options to
purchase 1,520,246 shares of our common stock, as they are anti-dilutive due to
our net loss.



  51

Financial Condition, Liquidity and Capital Resources

Cash and Working Capital



Since inception, we have incurred negative cash flows from operations. As of
December 31, 2019, we had an accumulated deficit of $88,816,843 and had working
capital of $17,397,094 as compared to working capital of $26,500,467 as of
December 31, 2018. The $9,103,373 decrease in working capital was primarily
attributable to our net loss, excluding non-cash compensation, consulting
expenses and depreciation, of $9,518,002 plus capital expenditures of $5,214
offset by proceeds received from exercise of warrants, by outside investors, to
purchase shares of common stock totaling $419,843.



On January 22, 2020, we entered into a securities purchase agreement with
certain institutional investors and certain pre-existing high net worth
individual investors, pursuant to which we sold in a registered offering an
aggregate of 18,000 shares of Series D Convertible Preferred Stock (which are
convertible into a total of 10,909,100 shares of common stock) and Series H
warrants to purchase up to an aggregate of 10,909,100 shares of common stock,
for an aggregate purchase price of approximately $18 million.See Footnote 9 to
the Financials - Subsequent Events, for transaction details.



Sources and Uses of Liquidity




Since inception, we have satisfied our operating cash requirements from the
private placement of equity securities sold principally to outside investors. We
expect to continue to incur expenses, resulting in losses and negative cash
flows from operations, over at least the next several years as we may continue
to develop AD and other therapeutic products. We anticipate that this
development may include new clinical trials and additional research and
development expenditures. We are continuing to determine how to proceed with
respect to our current development programs for bryostatin-1.



                                           Years ended December 31,
                                            2019              2018

Cash used in operating activities $ (11,886,809 ) $ (7,696,771 ) Cash used in investing activities

              (5,214 )         (3,186 )

Cash provided by financing activities 419,843 20,441,025

Net Cash Used in Operating Activities





Cash used in operating activities was $11,886,809 for the year ended
December 31, 2019, compared to $7,696,771 for the year ended December 31, 2018.
The $4,190,038 increase primarily resulted from the increased net loss of
approximately $4.1 million and decrease in payable of approximately $4.1
million, offset by the increase in non-cash stock-based compensation expenses of
approximately $3.4 million offset by a utilization of prepaid expenses and other
of approximately $0.6 million, for the year ended December 31, 2019.

Net Cash Used in Investing Activities





Net cash used in investing activities was $5,214 for the year ended December 31,
2019 compared to $3,186 for the year ended December 31, 2018. The cash used in
investing activities for both periods was for capital expenditures.

Net Cash Provided by Financing Activities





Net cash provided by financing activities was $419,843 for the year ended
December 31, 2019 compared to $20,436,598 for the year ended December 31, 2018.
Net cash provided for the year ended December 31, 2019 was the result of funds
raised through exercise of warrants by investors in our historical private
placements. Net cash provided for the year ended December 31, 2018 was the
result of funds raised through the issuance of common stock and warrants and the
exercise of warrants by investors in our historical private placements.



On January 22, 2020, we raised, through a registered direct offering,
approximately $16.4 million in net proceeds. Pursuant to the terms of a purchase
agreement, we issued to the purchasers an aggregate of 18,000 shares of Series D
Preferred Stock (which are convertible into a total of 10,909,100 shares of
common stock) and Series H warrants to purchase up to an aggregate of 10,909,100
shares of common stock for an aggregate purchase price of approximately $18
million. (See Footnote 9 to the Financials -Subsequent Events, for transaction
details.)



  52






As of February 20, 2020, we had approximately $32.7 million in cash, cash
equivalents and marketable investment securities. We expect that our existing
capital resources will be sufficient to support our projected operating
requirements over at least the next 12 months from the Form 10-K filing date,
including the potential continued development of bryostatin, our novel drug
targeting the activation of PKC epsilon. Projections beyond this are dependent
upon our continuing effort to determine how to proceed with respect to our
current development programs for bryostatin-1, which will affect how our
financial resources are deployed. Currently, our funds are anticipated to be
used to make final payments relating to our recently concluded Phase 2
confirmatory study treating moderate to severe Alzheimer's patients, and to
potentially conduct other non-clinical and research activities for our existing
and other potential therapeutic products. We currently expect that the balance
of the funds will be used for general corporate and working capital purposes,
but that is subject to change based on how we determine to proceed with respect
to our current development programs for bryostatin-1 and if we pursue any
strategic alternatives.



We expect to require additional capital in order to initiate, pursue and
complete all potential AD clinical trials, including the development of
bryostatin for other potential product applications, or in connection with any
strategic alternatives that we may pursue. Additional funding may not be
available to us on acceptable terms, or at all. If we are unable to access
additional funds when needed, we may not be able to initiate, pursue and
complete all planned clinical trials or continue the development of our product
candidates or we could be required to delay, scale back or eliminate some or all
of our development programs and operations. Any additional equity financing, if
available, may not be available on favorable terms, would most likely be
significantly dilutive to our current stockholders and debt financing, if
available, and may involve restrictive covenants. If we are able to access funds
through collaborative or licensing arrangements, we may be required to
relinquish rights to some of our technologies or product candidates that we
would otherwise seek to develop or commercialize on our own, on terms that are
not favorable to us. Our ability to access capital when needed is not assured
and, if not achieved on a timely basis, will materially harm our business,
financial condition and results of operations.

Off-Balance Sheet Arrangements

We did not engage in any "off-balance sheet arrangements" (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of December 31, 2018.

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