Executive Summary / Key Takeaways

• Strategic Transformation Underway: Oncotelic Therapeutics is evolving from a capital-constrained biopharma into a specialized player, leveraging its proprietary RNA-targeted therapies (OT-101) and a new nanoparticle platform through a pivotal 45%-owned joint venture (JV) with GMP Bio, aiming to address high-need oncology and rare disease markets.
• Technological Differentiators with Clinical Promise: OT-101, an antisense therapeutic targeting TGF-β2, has shown promising activity in Phase 2 trials for gliomas and pancreatic cancers. Recent Phase 1 data in combination with IL-2 demonstrated a tolerable safety profile, setting the stage for combination studies with checkpoint inhibitors, particularly relevant for younger pancreatic cancer patients where high TGFB2 expression correlates with significantly reduced overall survival.
• Financial Stability Remains a Hurdle, but Recent Performance Shows Improvement: While the company faces substantial doubt about its going concern status due to accumulated losses ($38.10 million) and negative working capital ($19.10 million as of June 30, 2025), recent Q2 2025 results showed a net income of $0.20 million, a $0.50 million improvement year-over-year, driven by lower operating expenses and favorable derivative fair value adjustments.
• Significant Future Value Potential from JV: The JV is aggressively developing six nanoparticle-based anticancer agents and aims for an initial public offering (IPO) in Hong Kong during 2026, with a potential valuation "significantly in excess of $1 billion," which could unlock substantial value for Oncotelic's 45% stake.
• Key Catalysts and Risks: Successful clinical translation of the nanoparticle platform, progress towards the GMP Bio IPO, and the company's ability to secure additional non-dilutive or favorable equity financing for its independent pipeline (apomorphine, OXi4503, CA4P) are critical. Persistent liquidity challenges and internal control weaknesses remain significant risks.

A Biotech's Ambitious Rebirth in Oncology

Oncotelic Therapeutics, Inc. (OTLC) is a clinical-stage biopharmaceutical company with a rich history of transformation, now sharply focused on developing RNA-targeted and small-molecule therapeutics for challenging cancers and rare diseases. From its origins as OXiGENE, Inc. in 1988, through its evolution to Mateon Therapeutics, and finally to Oncotelic in 2020, the company has undergone significant strategic shifts, including reverse mergers in 2019 that aimed to consolidate a promising pipeline of next-generation immunotherapies. This journey has shaped its current strategy: to innovate in niche oncology markets, leveraging differentiated technology, and strategically de-risk development through partnerships.

The biopharmaceutical industry is characterized by high R&D costs, stringent regulatory hurdles, and intense competition, yet it offers immense opportunities in areas of unmet medical need. Oncotelic operates within this dynamic landscape, targeting difficult-to-treat cancers where therapeutic options are limited. The company's overarching strategy is to advance its drug candidates through pivotal clinical trials, either for eventual out-licensing or direct commercialization, while simultaneously building a robust pipeline through its joint venture model. This approach is particularly relevant in an era where precision medicine and targeted therapies are gaining prominence, and the ability to identify and address specific patient populations can confer a significant competitive advantage.

The Technological Edge: RNA-Targeted Therapies and Nanoparticle Innovation

Oncotelic's core investment thesis is deeply rooted in its technological differentiators, particularly its proprietary antisense technology and emerging nanoparticle platform. At the forefront is OT-101, an investigational phosphorothioate antisense oligonucleotide designed to down-regulate Transforming Growth Factor Beta 2 (TGF-β2). TGF-β2 is a cytokine critically implicated in tumor immune evasion, fibrosis, and resistance mechanisms across multiple solid tumors. By targeting TGF-β2, OT-101 aims to disrupt these fundamental processes, potentially enhancing the efficacy of other cancer therapies and offering a novel standalone treatment.

Clinical data for OT-101 has shown promising activity in Phase 2 trials for gliomas and pancreatic cancers. More recently, a Phase 1 clinical trial (NCT04862767) evaluating OT-101 in combination with IL-2 for advanced or metastatic solid tumors successfully demonstrated a tolerable safety profile with no unexpected safety signals. This positive safety data is crucial, as it sets the stage for further clinical studies exploring synergies with checkpoint inhibitors (CKIs) such as PD-1 blockers, a key area of modern oncology.

Further translational research highlights the specific utility of OT-101 in pancreatic ductal adenocarcinoma (PDAC). Analysis indicates that high TGFB2 expression is significantly associated with reduced overall survival in patients under 65, with a median overall survival of 17.9 months for high expression versus 66.9 months for low expression. Conversely, elevated TGFB2 methylation showed improved survival in younger patients (66.9 months vs. 17.9 months). Clinical data from an OT-101 PDAC trial further supported these findings, showing improved overall survival in young patients treated with OT-101 compared to untreated controls. This is particularly significant given that younger adults represent the fastest-growing segment of PDAC incidence, increasing by approximately 4% per year in the 15-34 age bracket, with a grim overall five-year survival rate of only about 12%. OT-101's potential to address this specific, high-need patient population underscores a tangible market opportunity.

Beyond OT-101, Oncotelic is developing proprietary Self-Immunization Protocol (SIP) candidates designed to offer advantages over other immunotherapies by not requiring tumor extraction or antigen isolation, potentially enabling broad-spectrum applicability across various cancer types. The company is also making significant strides with its nanoparticle platform through its joint venture. This platform is undergoing aggressive formulation development for six new anticancer compounds, in addition to improved formulations for OT-101 with new nanoparticle sizes. A dedicated GMP manufacturing facility was established in San Diego in January 2024, receiving a Drug Manufacturing License later that year, and is now poised to produce Phase 1 clinical trial materials. This operational capability is critical for accelerating the development of these novel agents.

Complementing its therapeutic pipeline, Oncotelic utilizes its PDAOAI knowledge platform to efficiently assemble and interrogate multi-omic and clinical datasets. This AI-driven approach aims to accelerate therapeutic insight generation, streamlining the drug discovery and development process. For investors, these technological differentiators represent a crucial competitive moat. The ability to develop targeted therapies with potentially superior efficacy, address specific patient populations with high unmet needs, and leverage advanced manufacturing and AI capabilities positions Oncotelic for long-term growth and market penetration in specialized oncology segments.

Strategic Evolution and Competitive Arena

Oncotelic's strategic evolution is heavily influenced by its joint venture (JV) with Dragon Overseas Capital Limited and GMP Biotechnology Limited (GMP Bio), both affiliates of Golden Mountain Partners (GMP). Formalized in March 2022, this JV is a cornerstone of Oncotelic's strategy, as it assumes responsibility for the funding and development of OT-101 and the burgeoning nanoparticle platform. Oncotelic holds a 45% ownership interest in GMP Bio, aligning its success directly with the JV's progress. This structure allows Oncotelic to de-risk its lead asset's development while retaining significant upside potential.

The competitive landscape for Oncotelic is bifurcated. On one hand, it faces direct competition from large, established pharmaceutical companies like Bristol-Myers Squibb (BMY), Merck (MRK), Pfizer (PFE), and Amgen (AMGN), which possess vast resources, diversified oncology portfolios, and extensive global commercialization capabilities. These giants dominate the broader oncology market with approved drugs and robust pipelines. For example, BMY's strong oncology franchise and global reach provide a significant advantage in market penetration and regulatory navigation. MRK's leadership in checkpoint inhibitors and PFE's broad R&D capabilities represent formidable competitive forces. AMGN's expertise in biologics and targeted therapies also positions it as a major player.

Oncotelic, by contrast, is a smaller, clinical-stage entity. Its competitive advantages lie in its specialized focus on orphan indications and its differentiated RNA-targeted and nanoparticle technologies. While BMY, MRK, PFE, and AMGN benefit from recurring revenues and established market shares, Oncotelic's agility in niche innovation, particularly with OT-101's mechanism of action against TGF-β2, could allow it to carve out specific market segments. The company's proprietary SIP candidates, which do not require tumor extraction or antigen isolation, also offer a unique value proposition compared to more conventional immunotherapies.

However, Oncotelic's smaller scale and limited funding present significant vulnerabilities. Its financial health and operational capacity are constrained compared to its larger rivals, which can outspend on R&D, clinical trials, and marketing. This disparity means Oncotelic must rely heavily on the success of its clinical programs and strategic partnerships to compete effectively. The partnership with Shanghai Medicilon, Inc. for access to its rapid IND development platform is a strategic move to accelerate its pipeline, including the six compounds in the JV, positioning them as next-generation anticancer agents.

Beyond oncology, Oncotelic is also developing other assets, including apomorphine for Parkinson's Disease, erectile dysfunction, and female sexual dysfunction, and evaluating OXi4503 for acute myeloid leukemia and CA4P in combination with a checkpoint inhibitor for advanced metastatic melanoma. These diversified programs, while important, also require significant capital and successful clinical translation to contribute meaningfully to the company's value.

Financial Performance: A Glimmer of Progress Amidst Persistent Challenges

Oncotelic's financial performance reflects its stage of development and strategic pivot. The company has incurred substantial accumulated net losses, totaling approximately $38.10 million since the inception of Oncotelic Inc., and has reported net losses every year since its formation. This history underscores the significant capital requirements inherent in biopharmaceutical R&D.

However, the most recent financial results show a notable improvement. For the three months ended June 30, 2025, Oncotelic recorded a net income of approximately $0.20 million, a significant turnaround from a net loss of approximately $0.30 million during the same period in 2024. This $0.50 million improvement was primarily driven by lower operating expenses, which decreased by approximately $30 thousand, lower interest expense by approximately $8 thousand, and a favorable change in the fair value of derivatives on debt, contributing approximately $0.50 million.

Similarly, for the six months ended June 30, 2025, the net loss decreased to approximately $0.20 million, a $0.60 million reduction compared to a net loss of approximately $0.80 million in the first half of 2024. This improvement was attributed to lower operating expenses (approximately $0.10 million), reduced interest costs (approximately $40 thousand), a higher gain from the change in fair value of derivatives on debt (approximately $0.40 million), and a lower loss on conversion of debt (approximately $0.10 million), partially offset by lower reimbursements from a related party.

Research and Development (R&D) expenses remained relatively consistent for both the three and six months ended June 30, 2025, compared to the prior year periods. This stability is largely due to the strategic transfer of OT-101 development costs to the JV with GMP Bio since April 2022. General and Administrative (G&A) expenses also saw a reduction, decreasing by approximately $30 thousand for the three months and $0.10 million for the six months ended June 30, 2025, primarily due to lower legal, professional, and other operational costs.

Despite these improvements in recent net income/loss figures, Oncotelic's liquidity remains a critical concern. As of June 30, 2025, the company reported negative working capital of approximately $19.10 million and negative cash flows from operations of approximately $0.30 million for the six-month period. Its cash balance stood at approximately $0.10 million. These conditions, coupled with the accumulated deficit, raise substantial doubt about the company's ability to continue as a going concern for the next year.

To address its funding needs, Oncotelic continues to rely on short-term loans from related parties, including approximately $0.30 million from Autotelic Inc. and $10 thousand from its CFO during the first six months of 2025. Subsequent to the quarter end, the company secured additional financing, including a $560,000 convertible secured note from Mast Hill on July 31, 2025, and an Equity Purchase Agreement with Mast Hill on August 1, 2025, allowing for the purchase of up to $25 million in common stock. These financing activities are crucial for maintaining operations and advancing its pipeline, but they also highlight the ongoing need for capital.

Outlook and the Path Forward

Oncotelic's future outlook is heavily tied to the successful execution of its strategic initiatives, particularly those involving its joint venture with GMP Bio. The JV is aggressively pursuing the development of its nanoparticle platform, with plans to complete formulation development work for its six anticancer compounds in 2025 and initiate clinical trials for various compounds. These agents are anticipated to become significant growth contributors to the JV, which in turn would add substantial value to Oncotelic.

A major catalyst on the horizon is the potential initial public offering (IPO) of GMP Bio. Management has indicated that GMP Bio is progressing with efforts to secure third-party financing and a possible IPO in Hong Kong during 2026, with a potential valuation "significantly in excess of $1 billion." While there are no guarantees, a successful IPO at such a valuation would represent a transformative event for Oncotelic, unlocking substantial value from its 45% equity ownership.

Oncotelic also plans to increase its independent research and development activities for other pipeline assets, including apomorphine, new oncology indications, and AI-based tools, contingent on securing sufficient funding. The company's recent agreements with Jefferson Capital Ventures, LLC and Valor Nation, Inc. for consulting and advisory services include compensation tied to corporate milestones, such as achieving a market capitalization exceeding $100 million, a cumulative increase of at least $10 million in shareholder equity, and successful uplisting to a U.S. national exchange (e.g., Nasdaq or NYSE American). These milestones provide concrete targets for future growth and improved market visibility.

Key Risks to the Investment Thesis

Despite the promising pipeline and strategic initiatives, several significant risks could impact Oncotelic's investment thesis. The most pressing is the substantial doubt about its ability to continue as a going concern, stemming from persistent accumulated losses, negative working capital, and negative operating cash flows. The company's ability to secure adequate additional financing on favorable terms, or at all, is not assured, and a failure to do so could necessitate curtailment or cessation of operations.

Clinical development risks are inherent in the biopharmaceutical industry. The success of OT-101, the nanoparticle platform, and other pipeline candidates depends on favorable clinical trial outcomes, regulatory approvals, and competitive developments. Early clinical findings, while promising, may not be replicated in larger, controlled trials. The uncertainty surrounding the GMP Bio IPO is also a material risk; there are no contractual arrangements in place, and the timing, valuation, or even the completion of such an event are not guaranteed.

Furthermore, management has identified material weaknesses in internal control over financial reporting as of June 30, 2025. These include a lack of formal policies and procedures, absence of a functioning audit committee and independent directors, inadequate segregation of duties, and insufficient resources for internal control. While management is implementing remediation measures, these weaknesses pose operational and financial reporting risks that could impact investor confidence and the company's ability to manage its growth effectively.

Conclusion

Oncotelic Therapeutics stands at a pivotal juncture, embodying the high-risk, high-reward nature of clinical-stage biopharma. Its strategic pivot, anchored by the joint venture with GMP Bio and a focus on RNA-targeted therapies and a novel nanoparticle platform, represents a compelling narrative of innovation in underserved oncology markets. The demonstrated clinical promise of OT-101, particularly in addressing the critical unmet needs of younger pancreatic cancer patients, coupled with the ambitious development of six new anticancer agents through the JV, highlights significant long-term value creation potential.

While the company's financial fragility and the persistent "going concern" doubt demand careful consideration, the recent improvements in net income and the strategic initiatives to secure funding and accelerate development offer a glimmer of hope. The potential for GMP Bio's IPO, targeting a valuation significantly exceeding $1 billion, serves as a powerful future catalyst. For discerning investors, Oncotelic represents a speculative opportunity, where the successful translation of its technological leadership and the effective execution of its strategic partnerships could unlock substantial shareholder value, provided the company successfully addresses its immediate liquidity challenges and navigates the inherent risks of drug development.