Xenetic Biosciences, Inc. (XBIO) is a biopharmaceutical company focused on advancing innovative immune-oncology technologies to address hard-to-treat cancers. The company's proprietary Deoxyribonuclease (DNase) platform is designed to improve outcomes of existing treatments, including immunotherapies, by targeting neutrophil extracellular traps (NETs), which have been implicated in cancer progression and resistance to cancer treatments.
Company History and Overview Xenetic Biosciences was incorporated in the state of Nevada and is headquartered in Framingham, Massachusetts. The company has established a broad patent portfolio and developed proprietary drug delivery platforms such as PolyXen. Over the years, Xenetic has entered into various research, development, license and supply agreements with partners like Takeda Pharmaceutical Co. Ltd., Belgian Volition SARL Limited, Catalent Pharma Solutions LLC, Scripps Research Institute, and the University of Virginia to further advance its technologies and pipeline.
In 2023, Xenetic undertook a 1-for-10 reverse stock split to regain compliance with the Nasdaq Stock Market's minimum bid price requirement, which was an important milestone for maintaining its public listing. Prior to this, the company had faced challenges, including incurring substantial losses since its inception and the need to continually raise capital to fund its operations and research and development activities.
One of Xenetic's key focus areas is the development of its DNase-based oncology platform, which is currently in preclinical stages. The platform aims to target NETs, which are weblike structures composed of extracellular chromatin coated with histones and other proteins. In the tumor microenvironment, NETs have been shown to promote cancer spread, local and systemic immunosuppression, as well as cancer treatment resistance. By targeting NETs with its systemic DNase I candidate, Xenetic hopes to enhance the efficacy of existing cancer treatments, including immunotherapies.
Xenetic's other technology platform, PolyXen, is a proprietary drug delivery technology that has been licensed to partners in the field of blood coagulation disorders, from which Xenetic receives ongoing royalty payments.
Financials and Key Metrics Financials Xenetic Biosciences reported revenue of $1.85 million for the nine months ended September 30, 2024, which was relatively flat compared to the same period in the prior year. The company incurred a net loss of $2.91 million during this period, compared to a net loss of $2.96 million in the same period of 2023.
For the most recent quarter ended September 30, 2024, Xenetic reported revenue of $614,243 and a net loss of $436,671. The company's operating cash flow (OCF) and free cash flow (FCF) for the quarter were both negative $459,037.
Liquidity As of September 30, 2024, Xenetic had $6.84 million in cash, down from $8.98 million as of December 31, 2023. The company's current ratio stood at 6.96, indicating a strong liquidity position. The quick ratio was also 6.96, further underlining the company's ability to meet short-term obligations.
Xenetic's research and development expenses for the nine months ended September 30, 2024, decreased by 10.8% to $2.25 million, compared to $2.52 million in the same period of 2023. General and administrative expenses increased by 3.9% to $2.71 million during the same period.
The company's focus on advancing its DNase-based oncology platform towards clinical proof-of-concept studies has led to increased R&D spending in recent quarters, as it continues to invest in preclinical research and development activities.
Product Segments DNase Platform Xenetic's DNase platform is the company's primary focus for internal development. During the three months ended September 30, 2024, Xenetic reported research and development expenses of $368,000 related to its DNase platform, a significant decrease of $652,000 or 63.9% compared to the same period in 2023. This decrease was primarily due to lower spending on outside services and contract research organizations for the company's DNase platform development efforts. For the nine months ended September 30, 2024, Xenetic recorded $2.25 million in research and development expenses for the DNase platform, down $273,000 or 10.8% from the prior year period, reflecting a shift in focus and lower spending on external services.
PolyXen Platform Xenetic's PolyXen drug delivery platform generates revenue through licensing agreements. During the three and nine months ended September 30, 2024, the company recorded royalty revenue of $614,000 and $1.85 million, respectively, under this licensing arrangement, representing relatively flat performance compared to the same periods in 2023. These ongoing royalty payments provide a steady revenue stream to support Xenetic's internal R&D initiatives.
Ongoing Preclinical Studies and Collaborations Xenetic has made significant progress in advancing its DNase-based oncology platform, with multiple ongoing preclinical studies and collaborations.
In November 2024, the company presented positive preclinical data demonstrating that the combination of systemic DNase I and anti-CTLA-4 immune checkpoint blockade can promote antitumor immunity and generate immunological memory against microsatellite stable, mismatch repair proficient colorectal carcinoma (CRC) tumors.
Xenetic has also entered into a Research Funding and Option Agreement with The Scripps Research Institute to advance the development of its DNase platform, including the combination of systemic DNase and CAR-T cell therapies. Additionally, the company has extended its research collaboration with the University of Virginia to further develop its systemic DNase program.
Furthermore, Xenetic has entered into a Clinical Trial Services Agreement with the Israel-based biotechnology company PeriNess Ltd. to advance the development of its systemic DNase I candidate in combination with chemotherapy and immunotherapy platforms for the treatment of pancreatic carcinoma, colorectal cancer, and other locally advanced or metastatic solid tumors.
Risks and Challenges Xenetic Biosciences faces several risks and challenges common to the biopharmaceutical industry, including the inherent uncertainty of drug development, the need for regulatory approvals, and the ability to secure adequate funding to support its operations and pipeline advancement.
The company's primary focus on its DNase-based oncology platform means that its success is heavily dependent on the platform's ability to demonstrate clinically meaningful results. Delays or setbacks in the development of this platform could have a significant impact on Xenetic's future prospects.
Additionally, Xenetic's reliance on strategic collaborations and partnerships for the development and commercialization of its technologies introduces risks related to the success and priorities of its partners, as well as the ability to maintain and expand these collaborations over time.
Outlook and Conclusion Xenetic Biosciences is at a pivotal stage in its development as it focuses on advancing its innovative DNase-based oncology platform towards clinical proof-of-concept studies. The company's ongoing preclinical studies and collaborations have generated promising data, suggesting the potential of its approach to enhance the efficacy of existing cancer treatments.
As Xenetic navigates the challenges of drug development and seeks to establish a stronger foothold in the competitive immuno-oncology landscape, its ability to execute on its strategic priorities and secure the necessary funding will be crucial. The company believes its existing resources will be adequate to fund operations for at least the next twelve months, though additional capital may be needed in the long-term to further advance its pipeline and pursue other strategic initiatives.
Investors will closely monitor the company's progress in moving its pipeline forward and delivering on its promising technology platforms. The shift in focus and reduced spending on external services for the DNase platform development may indicate a more strategic allocation of resources, which could potentially lead to more efficient development processes.
Overall, Xenetic Biosciences' focus on addressing hard-to-treat cancers through innovative immuno-oncology approaches positions the company as a potentially compelling investment opportunity for those with a long-term, risk-tolerant investment horizon. The steady royalty revenue from the PolyXen platform provides some financial stability as the company advances its more ambitious DNase-based oncology programs.