OVERVIEW

The following discussion should be read in conjunction with the unaudited condensed financial statements and notes thereto set forth in Item 1 of this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019 (the "2019 Form 10-K").

Except for the historical information contained herein, the matters discussed in this Quarterly Report on Form 10-Q may be deemed to be forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. In this Quarterly Report on Form 10-Q, words such as "believe", "estimate", "expect", "anticipate", "will", "may", "intend" and other similar expressions, are intended to identify forward-looking statements. We caution that forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors that are, in many instances, beyond our control. Actual results, performance or achievements may differ materially from those contemplated, expressed or implied by the forward-looking statements.

Although we believe that the expectations reflected in our forward-looking statements are reasonable as of the date we make them, actual results could differ materially from those currently anticipated due to a number of factors, including risks relating to:

? uncertainties about the exploration and evaluation of strategic alternatives,

including that they may not result in a definitive transaction or enhance

shareholder value and may create a distraction or uncertainty that may

adversely affect our operating results, business, or investor perceptions;

? uncertainties about the paths of our programs and our ability to evaluate and

identify a path forward for those programs, particularly given the constraints

we have as a small company with limited financial, personnel and other

operating resources;

? the impact of the COVID-19 pandemic on the economy, our industry, and our

financial condition and results of operations, as well as our ability to enter

into and complete a strategic transaction;

? our understandings and beliefs regarding the role of certain biological

mechanisms and processes in cancer;

? our product candidates being in early stages of development, including in

preclinical development;

? our ability to successfully and timely complete clinical trials for our drug

candidates in clinical development;

? uncertainties related to the timing, results and analyses related to our drug

candidates in preclinical development;

? our ability to obtain the necessary U.S. and international regulatory approvals


   for our drug candidates;



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? our reliance on third-party contract research organizations and other

investigators and collaborators for certain research and development services;

? our ability to maintain or engage third-party manufacturers to manufacture,

supply, store and distribute supplies of our drug candidates for our clinical

trials;

? our ability to form strategic alliances and partnerships with pharmaceutical

companies and other partners for development, sales and marketing of certain of

our product candidates;

? demand for and market acceptance of our drug candidates;

? the scope and validity of our intellectual property protection for our drug

candidates and our ability to develop our candidates without infringing the

intellectual property rights of others;

? our lack of profitability and the need for additional capital to operate our

business; and

? other risks and uncertainties, including those set forth herein and in the 2019

Form 10-K under the caption "Risk Factors" and those detailed from time to time

in our filings with the Securities and Exchange Commission.

These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

We are a clinical stage biopharmaceutical company developing innovative therapies to improve patient outcomes in cancers that are difficult to treat. Our pipeline features two clinical-stage product candidates and additional compounds in preclinical development.

? RX-3117 is a novel, investigational oral, small molecule nucleoside compound.

Once intracellularly activated (phosphorylated) by the enzyme UCK2, it is

incorporated into the DNA or RNA of cells and inhibits both DNA and RNA

synthesis, which induces apoptotic cell death of tumor cells. RX-3117 is the

subject of a Phase 2a clinical trial in combination with Celgene's Abraxane®

(paclitaxel protein-bound particles for injectable suspension) as a first-line

treatment in patients newly diagnosed with metastatic pancreatic cancer. The

trial reached its target enrollment in February 2019. As of July 24, 2019, an

overall response rate of 23% had been observed in 40 patients that had at least

one scan on treatment. Preliminary and unaudited data indicates that the

median progression free survival for patients in the study is approximately 5.4

months. Complete data from the trial is expected to be available in 2020. We

do not plan to conduct or sponsor any additional trials with RX-3117.

On March 10, 2020, we amended our collaboration and license agreement (as amended, the "License and Assignment Agreement") with BioSense Global LLC ("BioSense") to advance the development and commercialization of RX-3117 for all human uses in the Republic of Singapore, China, Hong Kong, Macau, and Taiwan (the "Territory"). Under the terms of the License and Assignment Agreement, upon payment in full of an upfront payment, we will grant BioSense an exclusive license to develop and commercialize pharmaceutical products containing RX-3117 as a single agent for all human uses in the Territory and assign and transfer to BioSense all of our patents and patent applications related to RX-3117 in the Territory. The upfront payment consists of an aggregate of $1,650,000, of which $1,500,000 has been received to date. Under the License and Assignment Agreement, we are eligible to receive milestone payments in an aggregate of up to $84.5 million upon the achievement of development, regulatory and commercial goals and will also be eligible to receive tiered royalties in the mid-single digits to low tens on annual net sales in the Territory.



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? RX-5902 is a potential first-in-class small molecule modulator of the

Wnt/beta-catenin pathway which plays a key role in cancer cell proliferation

and tumor growth. In August 2018, we entered into a Clinical Trial

Collaboration and Supply Agreement (the "Collaboration Agreement") with Merck

Sharp & Dohme B.V. ("Merck") to evaluate the combination of RX-5902 and Merck's

anti-PD-1 therapy, KEYTRUDA® (pembrolizumab) in a Phase 2 trial in patients

with metastatic triple negative breast cancer ("TNBC"). On April 7, 2020, we

notified Merck that we were terminating the Collaboration Agreement, effective

immediately, in connection with our determination to discontinue development of

RX-5902 for the treatment of TNBC. We are evaluating development options for

RX-5902 and may or may not sponsor additional clinical trials with the

compound.

? RX-0301 is a potential best-in-class, potent inhibitor of the synthesis of the

protein kinase Akt-1, which we believe plays a critical role in cancer cell

proliferation, survival, angiogenesis, metastasis, and drug resistance.

RX-0301 is currently in preclinical development by Zhejiang HaiChang

Biotechnology Co., Ltd. ("HaiChang") as a nano-liposomal formulation of RX-0201

(Archexin®) using HaiChang's proprietary QTsome™ technology On February 8,

2020, we entered into an exclusive license agreement with HaiChang (the

"HaiChang License Agreement") pursuant to which we granted HaiChang an

exclusive (even as to us), royalty-bearing, sublicensable worldwide license to

research, develop and commercialize RX-0201 and RX-0301. The HaiChang License

Agreement supersedes a prior agreement with HaiChang to develop RX-0301 under

which HaiChang was to conduct certain preclinical and clinical activities

through completion of a Phase 2a proof-of-concept clinical trial in

hepatocellular carcinoma.

We have no product sales to date, and our major sources of working capital have been proceeds from various private and public financings and licensing and collaboration agreements with our partners. In September 2019, we commenced a process to explore and evaluate strategic alternatives to enhance shareholder value, and have engaged Oppenheimer and Co. Inc. as our financial advisor to assist us in this process. Potential strategic alternatives include an acquisition, merger, reverse merger, other business combination, sales of assets, licensing, or other strategic alternatives. In connection with the evaluation of strategic alternatives, we are evaluating opportunities to extend our resources and have reduced our headcount to five employees.

The outbreak of the COVID-19 disease, which the World Health Organization declared a pandemic in March 2020, has led to disruption in the global economy and the biopharmaceutical industry. The extent of the COVID-19 pandemic's impact on our business, financial condition and results of operations, as well as on our ability to enter into and complete a strategic transaction, is highly uncertain and will depend on various factors, including the duration and scope of the pandemic, restrictions on business and social distancing guidelines that may be requested or mandated by governmental authorities, other actions taken to contain the impact of the pandemic, and impacts on our ability or the ability of potential strategic partners to access the markets on favorable terms, or at all.

Results of Operations

Comparison of the Three Months Ended March 31, 2020 and March 31, 2019



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Total Revenues

We recorded revenues of $1,150,000 during the three months ended March 31, 2020, consisting of $250,000 earned from the HaiChang License Agreement and $900,000 from the BioSense License and Assignment Agreement. We had no revenues for the three months ended March 31, 2019.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related expenses for executive, finance and other administrative personnel, recruitment expenses, professional fees, and other corporate expenses, including business development, investor relations, and general legal activities.

General and administrative expenses decreased approximately $440,000, or 25.9%, to approximately $1,256,000 for the three months ended March 31, 2020 from $1,696,000 for the three months ended March 31, 2019. The decreases were primarily attributable to decreased personnel and operating costs resulting from the streamlining of operations.

Research and Development Expenses

Research and development costs are expensed as incurred. These costs consist primarily of salaries and related personnel costs, and amounts paid to contract research organizations, hospitals and laboratories for the provision of services and materials for drug development and clinical trials. Our research and development expenses are currently related to our oncology drug candidates.

Research and development expenses decreased approximately $1,785,000, or 79.6%, to approximately $457,000 for the three months ended March 31, 2020, from approximately $2,242,000 for the three months ended March 31, 2019. The decreases are a result of the completion of our RX-3117 and RX-5902 clinical trials, and decreased drug manufacturing costs.



The table below summarizes the approximate amounts incurred in each of our
research and development projects for the three months ended March 31, 2020 and
2019:

                                            For the Three Months Ended
                                                     March 31,
                                              2020               2019
Clinical Candidates:
RX-3117                                   $     326,900       $ 1,078,400
RX-5902                                           4,200           342,400
RX-0201                                           1,800           115,800

Preclinical, Personnel and Overhead             123,890           705,629

Total Research and Development Expenses $ 456,790 $ 2,242,229

We expect total research and development expenses to decrease in the remainder of 2020 as compared to the three months ended March 31, 2020 as we complete our Phase 2a clinical trial of RX-3117 with Abraxane and explore and evaluate strategic alternatives.



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Interest Income

Interest income decreased approximately $47,000, or 57.7% for the three months ended March 31, 2020, compared to the same period in 2019. The decreases were primarily attributable to lower interest rates and balances of cash, cash equivalents and marketable securities for the three months ended March 31, 2020 compared to the same period in 2019.

Unrealized (Loss) Gain on Fair Value of Warrants

Our warrants are recorded as liabilities at fair value, and the warrants are valued using a lattice model. Changes in the fair value of warrants are recorded as an unrealized gain or loss in our statement of operations. During the three months ended March 31, 2020 and 2019, we recorded unrealized (losses) gains on the fair value of our warrants of approximately $(58,000) and $1,513,000, respectively. Estimating fair values of warrants requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the warrants due to related changes to external market factors. The large unrealized gain for the three months ended March 31, 2019 primarily resulted from a significant decrease in the stock price of the underlying common stock at the end of this period compared to the beginnings of this period.

Net Loss

As a result of the above, net loss for the three months ended March 31, 2020 was approximately $587,000 or $0.15 per share, compared to approximately $2,343,000, or $0.62 for the three months ended March 31, 2019.

Liquidity and Capital Resources

Current and Future Financing Needs

We have incurred negative cash flow from operations since we started our business. We expect to continue to incur negative cash flow and operating losses as we explore strategic alternatives. We have spent, and subject to our exploration of strategic alternatives, expect to continue to spend, substantial amounts in connection with implementing our business strategy, including our planned product development efforts, our clinical trials and our research and development efforts. Subject to the result of our exploration of strategic alternatives, we will need to raise additional capital through public or private equity or debt offerings or through arrangements with strategic partners or other sources in order to continue to develop our drug candidates. In conjunction with our exploration of strategic alternatives, we are exploring opportunities to extend our resources. We believe that our cash and cash equivalents of approximately $11.0 million as of March 31, 2020 will be sufficient to cover our cash flow requirements for our current activities for at least the next 12 months following the issuance of the financial statements contained in this Quarterly Report. However, our resource requirements could materially change to the extent we identify and enter into any strategic transaction. Our ability to enter into a strategic transaction could also be impacted by our, or any potential partner's ability to, raise additional capital.

Cash Flows

Cash used in operating activities was approximately $1,221,000 for the three months ended March 31, 2020. The operating cash flows during the three months ended March 31, 2020 reflect a net loss of approximately $587,000, a net decrease of cash components of working capital and non-cash charges totaling $634,000. Cash used in operating activities was approximately $4,380,000 for the three months ended March 31, 2019. The operating cash flows during the three months ended March 31, 2019 reflect a net loss of approximately $2,343,000, an unrealized gain on the fair value of warrants of approximately $1,514,000, and a net increase of cash components of working capital and non-cash charges totaling approximately $523,000.



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Table of Contents Cash provided by investing activities was $3,000,000 from the redemption of marketable securities for the three months ended March 31, 2020. Cash used in investing activities was approximately $5,895,000 for the three months ended March 31, 2019 which consisted of approximately $8,888,000 and approximately $13,000 from the purchases of marketable securities and equipment, respectively, offset by approximately $6,000 from the sale of equipment and $3,000,000 from the redemption of marketable securities.

There was no cash provided by financing activities for the three months ended March 31, 2020. Cash provided by financing activities was approximately $7,654,000 for the three months ended March 31, 2019, which consisted of net proceeds from our underwritten offering in January 2019.

Contractual Obligations

We have a variety of contractual obligations, as more fully described in the 2019 Form 10-K. These obligations include, but are not limited to, contractual obligations in connection with license agreements (including related milestone payments), lease payments, employee compensation and incentive program expenses, and contracts with various vendors for services. As of March 31, 2020, the total estimated cost to complete our contracts with vendors for research and development services was approximately $800,000 under the terms of the applicable agreements. All of these agreements may be terminated by either party upon appropriate notice as stipulated in the respective agreements.



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