ONCOTELIC REPORTS Q2 2022 COMPARED TO Q2 2021 FINANCIAL RESULTS

ONCOTELIC REPORTS Q2 2022 COMPARED TO Q2 2021 FINANCIAL RESULTS




ONCOTELIC REPORTS Q2 2022 COMPARED TO Q2 2021 FINANCIAL RESULTS

  • Net profit of approximately $17.0 million, upon recording fair value of investment in JV of approximately $22.6 million
  • Reduction in expenses in Q2 2022 versus Q2 2021 by over $3.5M,

AGOURA HILLS, Calif., Aug. 22, 2022 (GLOBE NEWSWIRE) — Oncotelic Therapeutics, Inc. (“Oncotelic, “We or the “Company”) (OTCQB:OTLC) today announced financial results for the three months ended June 30, 2022 (“Q2 2022”) as compared to the three months ended June 30, 2021 (“Q2 2021”). The financial results are based on the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 22, 2022.

Highlights for Q2 2022 and thereafter:

As previously reported, on March 31, 2022, we entered into a joint venture, or JV, with Dragon Overseas Capital Ltd. (Dragon Overseas) and GMP Biotechnology Ltd. (GMP Bio). Dragon Overseas and GMP Bio are affiliated with Golden Mountain Partners (GMP). GMP Bio also has a wholly owned subsidiary, Sapu Therapeutics, LLC, which in turn has 2 wholly owned subsidiaries, namely Sapu Bioscience, LLC and Sapu Holdings, LLC.

The plan of the JV is to develop and ultimately market OT-101, individually and/or in combination with other products, along with our JV partners. Also, the JV is intended to be taken into an initial public offering (IPO) as some time in the future.

We plan to evaluate the development plans for the rest of our assets and see if we can leverage that to raise additional funding or seek similar strategic partnerships to monetize our assets and increase shareholder value, without or with minimal dilution to our shareholders.

Other highlights of the JV transaction include:

  • Oncotelic licensed OT-101 to the JV for a 45% ownership in the JV, recorded a fair value of over $22.6 million for the investment and recorded a gain of approximately $17 million.
  • Dragon Overseas investing approximately $27.6 million for the 55% ownership of the JV.
  • Oncotelic would receive up to $50 million on sale of the RPD voucher, following marketing approval of OT-101 for diffuse intrinsic pontine glioma, or DIPG, by the US Food and Drug Administration.
  • The JV, or a subsidiary to be taken into an IPO, is to be domiciled in Hong Kong at a future point in time.
  • Initial focus of JV on the further development and commercialization of OT-101, including for DIPG as well as pancreatic cancers and glioblastoma.

“With the JV transaction, commencing Q2 2022, we have recorded a one-time profit of approximately $16 million, primarily on the gain on transfer of OT-101 to the JV of approximately $17.0 million and substantial cost reductions due to transfer of our payroll and operational costs related to OT-101 to the JV.” Commented Amit Shah, CFO. “This quarter has been transformational for the Company. The results of this quarter allow the Company to focus on uplisting activities going forward.”

Q2 2022 compared to Q2 2021 Financial Results Overview

ONCOTELIC THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED

    June 30, 2022     June 30, 2021     Variance  
Operating expense:                      
Research and development    $ 108,707     $ 956,814     $ (848,107 )
General and administrative     147.608       2,807,398       (2,659,790 )
Total operating expense     256,315       3,764,212       (3,507,897 )
Loss from operations1235     (256,315 )     (3,764,212 )     3,507,897  
Interest expense, net     (1,094,878 )     (433,979 )     (660,899 )
Gain on derecognition of non-financial asset     16,951,477             16,951,477  
Reimbursement of expenses – related party     247,492             247,492  
Change in the value of derivatives on debt     122,919       630,174       (507,255 )
Net income (loss) before controlling interests   $ 15,970,695     $ (3,568,017 )   $ 19,538,712  

Comparing Q2 2022 to Q2 2021, we reported a net profit, before non-controlling interests, of approximately $16.0 million compared to a net loss of approximately $3.6 million, respectively. The higher gain of approximately $19.5 million for Q2 2022 as compared to Q2 2021 was primarily due to a gain on derecognition of non-financial asset, of approximately $17 million, reduced stock-based compensation by approximately $2 million recorded in Q2 2022 compared to Q2 2021, lower compensation expenses of approximately $1 million, reimbursement of expenses by a related party of approximately $0.25 million and higher interest expense of $0.7 million.

Comparing our research and development (“R&D”) expenses between Q2 2022 and Q2 2021, our R&D expenses decreased by approximately $0.8 million for Q2 2022 compared to the Q2 2021, primarily due to personnel and operational expenses related to OT-101 being borne by the JV.

Comparing our general and administrative (“G&A”) expenses between Q2, 2022 and Q2 2021, our G&A expenses decreased by approximately $2.6 million, primarily due to lower stock compensation expense of approximately $2.0 million during Q2 2021 as compared to $25 thousand during Q2 2022, and lower compensation and operational expenses of approximately $0.3 million which was borne by the JV.

As a result of our JV, we expect our future R&D and G&A expenses to be significantly lower, especially those related to OT-101 and payroll related costs.

Comparing our interest expense for Q2 2022 and Q2 2021, our interest expense increased by $0.7 million based on approximately $1.1 million for Q2 2022, primarily in connection with debt raised from convertible notes and the JH Darbie Financing, the November 2021 to March 2022 Financing and May/June 2022 financing as compared to $0.4 million for Q2 2021, in connection with debt raised from convertible notes and JH Darbie during 2021.

During Q2 2022, the Company was reimbursed approximately $0.25 million on behalf of our JV.

During Q2 2022, we recorded a non-cash gain of approximately $16.9 million on the derecognition of our non-financial asset upon the transfer of OT-101 as our capital contribution for the JV. We adopted the fair value measurements under the equity method and the gain was net of the fair value of the asset of approximately $22.6 million as reduced by the value of the intangibles of approximately $0.8 million for OT-101 and the value of the goodwill of $4.9 million recorded at the time of the 2019 Merger with Oncotelic Inc.

During Q2 2022, we recorded approximately $0.1 million change in value of derivatives upon conversion of certain debt from liability as compared to approximately $0.6 million during Q2 2021.

About Oncotelic

Oncotelic Therapeutics Inc. (f/k/a Mateon Therapeutics, Inc.), was formed in the State of New York in 1988 as OXiGENE, Inc., was reincorporated in the State of Delaware in 1992, and changed its name to Mateon Therapeutics, Inc. in 2016, and Oncotelic Therapeutics, Inc. in November 2020. Oncotelic is seeking to leverage its deep expertise in oncology drug development to improve treatment outcomes and survival of cancer patients with a special emphasis on rare pediatric cancers. Oncotelic has rare pediatric designation for DIPG (OT-101), melanoma (CA4P), and AML (OXi 4503). Oncotelic also acquired PointR Data Inc. in November 2019.

Additionally, Oncotelic acquired AL-101, during the 4th quarter of 2021, for the intranasal delivery of apomorphine. We intend to develop AL-101 for the treatment of PD. Over 60,000 new patients are being diagnosed with PD in the United States. Currently there are over 1 million patients in the US and expected to increase to over 1.2 million by 2030. In addition, approximately 10 million suffer from this disease globally. https://www.parkinson.org/Understanding-Parkinsons/Statistics. AL-101 is also being developed for ED. ED is the most prevalent male sexual disorder globally. The percentages of men affected by ED are as follows: 14.3-70% of men aged ≥60 years, 6.7-48% of men aged ≥70 years, and 38% of men aged ≥80 years (Geerkens MJM et al. (2019). Eur Urol Focus. pii: S2405-4569(19)30079-3). However, with the increasing administration of PDE5 inhibitors in clinical practice, it was found that approximately 30-35% of ED patients are treatment failures (McMahon CN et al. (2006). BMJ, 332: 589-92). AL-101 is designed to target treatment failure ED patients who do not respond to PDE5 inhibitors. Through similar mechanism of action, AL-101 is being developed for FSD. Female sexual dysfunction is a prevalent problem, afflicting approximately 40% of women and there are few treatment options. FSD is more typical as women age and is a progressive and widespread condition. (Allahdadi, KJ et al. (2009) Cardiovascular & hematological agents in medicinal chemistry, 7(4), 260–269). There is no available drug for the treatment of FSD. In June 2019, the U.S. Food and Drug Administration approved Vyleesi (bremelanotide) to treat acquired, generalized HSDD in premenopausal women. This is the only available drug treatment. Vyleesi has essentially replaced the only other drug for HSDD – however, it has a long list of drug-drug interactions, including commonly used antidepressants, such as fluoxetine and sertraline. In addition, it has a black box warning regarding its use with alcohol, a combination that has been associated with hypotension and syncopal episodes. Therefore, there is an urgent need for effective therapy against FSD and HSDD.

For more information, please visit www.oncotelic.com

Oncotelic’s Cautionary Note on Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this communication regarding strategy, future operations, future financial position, prospects, plans and objectives of management are forward-looking statements. Words such as “may”, “expect”, “anticipate” “hope”, “vision”, “optimism”, “design”, “exciting”, “promising”, “will”, “conviction”, “estimate,” “intend,” “believe”, “quest for a cure of cancer”, “innovation-driven”, “paradigm-shift”, “high scientific merit”, “impact potential” and similar expressions are intended to identify forward-looking statements. Forward¬ looking statements contained in this press release include, but are not limited to, statements about future plans related to the operations of the JV, , expectations for our future R&D and G&A expenses to be significantly lower, especially those related to OT-101 and payroll related costs, the results of this quarter are not necessarily indicative of the results for the future, primarily the recording of the gain, taking the JV into an initial public offering or the success thereof, the progress, timing of clinical development, scope and success of future clinical trials of any of our products, the reporting of clinical data for the company’s product candidates and the potential use of the company’s product candidates to treat various cancer indications as well as obtaining required regulatory approval to conduct clinical trials and upon granting of approval by the regulatory agencies, the successful marketing of the products, the ability to raise any additional funds for the Company to develop our other products, the ability to get uplisted to a national stock exchange, the ability and success of an initial public offering for the Company or the JV. Each of these forward-looking statements involves risks and uncertainties, and actual results may differ materially from these forward-looking statements. Many factors may cause differences between current expectations and actual results, including unexpected safety or efficacy data observed during preclinical or clinical studies, clinical trial site activation or enrollment rates that are lower than expected, changes in expected or existing competition, changes in the regulatory environment, failure of collaborators to support or advance collaborations or product candidates and unexpected litigation or other disputes. These risks are not exhaustive, the company faces known and unknown risks, including the risk factors described in the Company’s annual report on Form 10-K filed with the SEC on April 15, 2022 and in the company’s other periodic filings. Forward-looking statements are based on expectations and assumptions as of the date of this press release. Except as required by law, the company does not assume any obligation to update forward-looking statements contained herein to reflect any change in expectations, whether as a result of new information future events, or otherwise.

Contact Information:

For Oncotelic Therapeutics, Inc.:

Amit Shah
ashah@oncotelic.com