UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2022~~ 2023

☐ TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

~~For~~From the transition period from to .

Commission File Number 001-35798

Humanigen, Inc.

(Exact name of registrant as specified in its charter)

Delaware		77-0557236
(State or other jurisdiction of		(IRS Employer
incorporation)		Identification No.)

830 Morris Turnpike, 4th Floor

Short Hills, NJ 07078

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (973) 200-3100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on with registered
Common Stock	HGEN	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of ~~November~~May 93, ~~2022~~2023, there were 119,080,135 shares of common stock of the issuer outstanding.

Unless the context indicates otherwise, the terms “Humanigen,” “we,” “us” and “our” refer to Humanigen, Inc., and its consolidated subsidiaries. This report also may include trademarks, service marks and trade names owned by us or other companies. All trademarks, service marks and trade names included in this report are the property of their respective owners.

TABLE OF CONTENTS

HUMANIGEN, INC.

FORM 10-Q

			Page
PART I. FINANCIAL INFORMATION			4
	Item 1.	Financial Statements (unaudited)	4
		Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	4
		Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	4
		Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021	5
		Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and 2022	5
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	6
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	6
		Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2022 and 2021	7
		Condensed Consolidated Statements of Stockholders’ Deficit for the Three Months Ended March 31, 2023 and 2022	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1513
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2520
	Item 4.	Controls and Procedures	2520
PART II. OTHER INFORMATION			2621
	Item 1.	Legal Proceedings	2621
	Item 1A.	Risk Factors	2621
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2921
	Item 3.	Defaults Upon Senior Securities	2921
	Item 4.	Mine Safety Disclosures	2921
	Item 5.	Other Information	2922
	Item 6.	Exhibits	3022
SIGNATURES			3123

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

Humanigen, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share data)

(Unaudited)

	September 30, 2022			December 31, 2021
	March 31, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	243,~~725~~096		$	7010,~~016~~155
Prepaid expenses and other current assets		1,~~153~~930			~~955~~950
Total current assets		255,~~878~~026			7011,~~971~~105
Other assets		90			90
Total assets	$	255,~~968~~116		$	7111,~~061~~195
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable	$	5338,~~340~~392		$	4440,~~698~~520
Accrued expenses		2214,~~163~~021			1914,~~882~~791
Deferred revenue		~~884~~883			~~4,145~~883
Total current liabilities		7653,~~387~~296			6856,~~725~~194
Non-current liabilities:
Deferred revenue		1,~~986~~545			1,~~018~~766
Long-term debt, net of current portion		-			25,006
Total liabilities		54,841			57,960
Total liabilities		78,373			94,749
Stockholders’ deficit:
Common stock, $0.001 par value: 225,000,000 shares authorized at
September 30, 2022 and December 31, 2021; 119,080,135 and 64,027,629 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		119			64
March 31, 2023 and December 31, 2022; 119,080,135 shares issued and outstanding at March 31, 2023 and December 31, 2022		119			119
Additional paid-in capital		~~633~~636,~~675~~147			~~587~~634,~~327~~925
Accumulated deficit		(~~686~~685,~~199~~991	)		(~~611~~681,~~079~~809	)
Total stockholders’ deficit		(5249,~~405~~725	)		(2346,~~688~~765	)
Total liabilities and stockholders’ deficit	$	255,~~968~~116		$	7111,~~061~~195

See accompanying notes.

Table of Contents

Humanigen, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2022			2021			2022			2021
	2023			2022
Revenue:
License revenue	$	221		$	1,036		$	~~2,293~~		$	~~2,558~~
Total revenue		221			1,036			~~2,293~~			~~2,558~~
Operating expenses:
Research and development		~~18,929~~737			6017,~~811~~220			~~62,587~~			~~183,757~~
General and administrative		43,~~013~~719			64,~~204~~345			~~12,307~~			~~19,228~~
Total operating expenses		224,~~942~~456			6721,~~015~~565			~~74,894~~			~~202,985~~
Loss from operations		(224,~~721~~235	)		(6520,~~979~~529	)		~~(72,601~~	)		~~(200,427~~	)
Other income (expense):
Interest expense		(~~1,298~~18	)		(~~751~~734	)		~~(2,800~~	)		~~(1,516~~	)
Other income (expense), net		~~326~~71			(915	)		~~281~~			~~(1,166~~	)
Net loss	$	(234,~~693~~182	)	$	(6621,~~739~~278	)	$	~~(75,120~~	)	$	~~(203,109~~	)
Basic and diluted net loss per common share	$	(0.2304	)	$	(10.1232	)	$	~~(0.95~~	)	$	~~(3.56~~	)
Weighted average common shares outstanding used to
Weighted average common shares outstanding used to calculate basic and diluted net loss per common share		119,080,135			65,590,724
calculate basic and diluted net loss per common share		101,422,027			59,486,626			79,179,209			56,997,039

See accompanying notes.

Table of Contents

Humanigen, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2022			2021
	2023			2022
Operating activities:
Net loss	$	(754,~~120~~182	)	$	(~~203~~21,~~109~~278	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation expense		41,~~560~~222			31,~~815~~543
Non-cash interest expense related to debt financing		-			~~374~~187
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(~~198~~980	)		(~~872~~1,332	)
Accounts payable		8(2,~~642~~128	)		303,~~596~~175
Accrued expenses		~~2,281~~(770	)		~~15,427~~(701	)
Deferred revenue		(~~2,293~~221	)		(1,~~983~~036	)
Net cash used in operating activities		(627,~~128~~059	)		(~~151~~19,~~786~~442	)
Financing activities:
Net proceeds from issuance of common stock		~~41,843~~-			~~134~~18,~~140~~374
Proceeds from exercise of stock options		-			1,965
Net cash provided by financing activities		-			18,374
Net proceeds from issuance of long-term debt		-			24,444
Net decrease in cash and cash equivalents		(7,059	)		(1,068	)
Repayment of Hercules loan		(25,006	)		-
Cash and cash equivalents, beginning of period		10,155			70,016
Net cash provided by financing activities		16,837			160,549
Cash and cash equivalents, end of period	$	3,096		$	68,948
Net increase (decrease) in cash and cash equivalents		(45,291	)		8,763
Cash and cash equivalents, beginning of period		70,016			67,737
Cash and cash equivalents, end of period	$	24,725		$	76,500
Supplemental cash flow disclosure:
Cash paid for interest	$	~~1,319~~-		$	~~961~~550

See accompanying notes.

Table of Contents

Humanigen, Inc.

Condensed Consolidated Statements of Stockholders’ ~~Equity (~~Deficit)

(in thousands, except share data)

(Unaudited)

	Three and Nine Months Ended September 30, 2022
	Three Months Ended March 31, 2023
										Total
					Additional					Total
					Additional					Stockholders’
	Common Stock				Paid-In		Accumulated			Stockholders’
	Common Stock				Paid-In		Accumulated			Equity
	Shares		Amount		Capital		Deficit			Deficit
	Shares		Amount		Capital		Deficit			(Deficit)
Balances at January 1, 2023		119,080,135	$	119	$	634,925	$	(681,809	)	$	(46,765	)
Balances at January 1, 2022		64,027,629	$	64	$	587,327	$	(611,079	)	$	(23,688	)
Stock-based compensation expense		-		-		1,222		-			1,222
Issuance of common stock, net of expenses		5,926,748		6		18,368		-			18,374
Net loss		-		-		-		(4,182	)		(4,182	)
Stock-based compensation expense		-		-		1,543		-			1,543
Balances at March 31, 2023		119,080,135	$	119	$	636,147	$	(685,991	)	$	(49,725	)
Net loss		-		-		-		(21,278	)		(21,278	)
Balances at March 31, 2022		69,954,377		70		607,238		(632,357	)		(25,049	)
Issuance of common stock, net of expenses		1,288,561		1		3,474		-			3,475
Stock-based compensation expense		-		-		1,635		-			1,635
Net loss		-		-		-		(30,149	)		(30,149	)
Balances at June 30, 2022		71,242,938		71		612,347		(662,506	)		(50,088	)
Issuance of common stock, net of expenses		47,837,197		48		19,946		-			19,994
Stock-based compensation expense		-		-		1,382		-			1,382
Net loss		-		-		-		(23,693	)		(23,693	)
Balances at September 30, 2022		119,080,135	$	119	$	633,675	$	(686,199	)	$	(52,405	)

	Three and Nine Months Ended September 30, 2021
	Three Months Ended March 31, 2022
										Total
					Additional					Total
					Additional					Stockholders’
	Common Stock				Paid-In		Accumulated			Stockholders’
	Common Stock				Paid-In		Accumulated			Equity
	Shares		Amount		Capital		Deficit			Deficit
	Shares		Amount		Capital		Deficit			(Deficit)
Balances at January 1, 2022		64,027,629	$	64	$	587,327	$	(611,079	)	$	(23,688	)
Balances at January 1, 2021		51,626,508	$	52	$	419,923	$	(374,430	)	$	45,545
Issuance of common stock, net of expenses		5,926,748		6		18,368		-			18,374
Issuance of common stock, net of expenses		1,796,858		2		36,104		-			36,106
Stock-based compensation expense		-		-		1,543		-			1,543
Issuance of common stock upon option exercise		233,323		-		429		-			429
Net loss		-		-		-		(21,278	)		(21,278	)
Stock-based compensation expense		-		-		510		-			510
Balances at March 31, 2022		69,954,377	$	70	$	607,238	$	(632,357	)	$	(25,049	)
Net loss		-		-		-		(65,567	)		(65,567	)
Balances at March 31, 2021		53,656,689		54		456,966		(439,997	)		17,023
Issuance of common stock, net of expenses		5,427,017		5		94,167		-			94,172
Issuance of common stock upon option exercise		319,153		-		1,432		-			1,432
Stock-based compensation expense		-		-		1,871		-			1,871
Net loss		-		-		-		(70,803	)		(70,803	)
Balances at June 30, 2021		59,402,859		59		554,436		(510,800	)		43,695
Issuance of common stock, net of expenses		600,933		1		3,861		-			3,862
Issuance of common stock upon option exercise		13,541		-		104		-			104
Stock-based compensation expense		-		-		1,434		-			1,434
Net loss		-		-		-		(66,739	)		(66,739	)
Balances at September 30, 2021		60,017,333	$	60	$	559,835	$	(577,539	)	$	(17,644	)

See accompanying notes.

Table of Contents

Humanigen, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of Operations

Description of the Business

The Company is a clinical stage biopharmaceutical company, developing its portfolio of proprietary Humaneered^® anti-inflammatory immunology and immuno-oncology monoclonal antibodies. The Company’s proprietary, patented Humaneered technology platform is a method for converting existing antibodies (typically murine) into engineered, high-affinity human antibodies designed for therapeutic use, particularly with acute and chronic conditions. Humanigen has developed or in-licensed targets or research antibodies, typically from academic institutions, and then applied its Humaneered technology to optimize them. The Company’s lead product candidate, lenzilumab, or LENZ^®, and its other product candidate, ifabotuzumab (“iFab”), are Humaneered monoclonal antibodies. The Company’s Humaneered antibodies are closer to human antibodies than chimeric or conventionally humanized antibodies and have a high affinity for their target. In addition, the Company believes its Humaneered antibodies offer further important advantages, such as high potency, a slow off-rate and a lower likelihood to induce an inappropriate immune response or infusion related reactions.

InThe ~~July~~Company ~~2022,~~is ~~preliminary~~developing ~~topline~~lenzilumab ~~results~~in ~~from~~chronic ~~the~~myelomonocytic ~~Accelerating~~leukemia ~~COVID-19~~(“CMML”), ~~Therapeutic~~a ~~Interventions~~rare ~~and~~blood ~~Vaccines-5~~cancer, for which the Precision Approach to Chronic Myelomonocytic Leukemia (“~~ACTIV~~PREACH-5M”) study is underway, and ~~Big~~is ~~Effect~~continuing ~~Trial,~~its inplans for the Risk Adapted Therapy in Acute GvHD (“BRATinG”) ~~arm~~study ofin ~~the~~acute ~~trial~~graft versus host disease (“~~BET-B~~aGvHD”), ~~referred~~that tooccurs asin ~~the~~patients ~~ACTIV-5/BET-B~~undergoing ~~trial,~~bone ~~were~~marrow ~~released.~~transplant, ~~The~~as ~~study~~these ~~was~~studies are ~~sponsored~~majority ~~and~~ funded by its partners. In April 2023, the ~~National~~ ~~Institutes~~Company announced that as of ~~Health~~December ~~(“NIH”)~~31, ~~and~~2022, ~~evaluated~~eleven ~~lenzilumab~~subjects inhad ~~combination~~been dosed with ~~remdesivir,~~lenzilumab ~~compared~~and towith ~~placebo~~current ~~and~~standard ~~remdesivir~~of care, azacytidine, in ~~hospitalized~~the ~~COVID~~PREACH-19M ~~patients~~study. ~~Based~~Six subjects were evaluable based on ~~the~~at ~~preliminary~~least ~~topline~~three months ~~results~~of follow-up, ~~the~~including ~~trial~~those ~~did~~with ~~not~~high ~~achieve~~risk ~~statistical~~CMML, ~~significance~~and onall ~~the primary~~demonstrated ~~endpoint~~clinical benefit. In addition, ~~although~~LENZ ~~the~~appeared ~~preliminary~~to ~~topline~~be ~~results~~well-tolerated. The ~~did~~Company ~~indicate~~anticipates ~~that~~the ~~lenzilumab~~first ~~demonstrated~~patient adosing ~~positive~~in ~~trend~~the RATinG study to occur in ~~mortality~~the second quarter of 2023. ~~The~~A leading network of centers, ~~Company~~The ~~continues~~Mayo toClinics, ~~support~~is ~~NIH’s~~currently ~~further~~progressing ~~analysis~~with an investigator-initiated trial (“IIT”) of ~~the~~lenzilumab ~~data~~in ~~and~~combination awith CAR-T ~~global~~therapies. ~~group~~With the exception of ~~leading~~the ~~institutions~~one ~~and~~lenzilumab ~~research~~batch ~~networks~~ in process, the Company has ~~indicated~~discontinued ~~interest~~the inmanufacturing ~~including~~of lenzilumab and inis ~~their~~consolidating ~~large-scale,~~the ~~multinational~~remaining ~~studies~~inventory of ~~COVID-19.~~lenzilumab ~~Tocilizumab~~bulk drug substance and ~~baricitinib~~drug ~~demonstrated~~product in a central location for potential future ~~mortality~~use. ~~benefit~~The ~~following~~Company ~~inclusion~~is inalso ~~REMAP~~developing iFab, an EpAh-~~CAP~~3 ~~and~~targeted ~~RECOVERY~~monoclonal antibody, ~~despite~~currently ~~having~~in ~~failed~~Phase to1 dodevelopment, soas inpart ~~smaller~~of ~~studies~~an antibody drug conjugate (“ADC”), for certain solid tumors.

InSee ~~connection~~Management’s ~~with~~Discussion ~~the~~and ~~release of preliminary~~Analysis ~~topline data from ACTIV-5/BET-B, the Company announced a strategic realignment~~ of ~~its~~Financial ~~pipeline~~Condition and ~~resources~~Results ~~and its regulatory strategy. The Company plans to accelerate the development~~ of ~~lenzilumab~~Operations inincluded ~~chronic myelomonocytic leukemia (“CMML”), a rare blood cancer, for which the PREACH-M study is already underway, and to continue its plans for the RATinG study~~ in ~~acute~~Item ~~graft~~7 ~~versus~~of ~~host disease (“aGvHD”) that occurs in patients undergoing bone marrow transplant. Recruitment for~~ the ~~RATinG study is temporarily halted due to an administrative issue and the~~ Company ~~is currently unable to estimate when the first patient will be enrolled in the study. These studies are majority funded by the Company~~’s ~~partners.~~2022 InAnnual ~~addition,~~Report ~~the~~on ~~Company~~Form ~~is currently assessing requests for investigator~~10-~~initiated~~K trials (“IIT”s) of lenzilumab in combination with CAR-T therapies; the previously planned Company-sponsored study of lenzilumab with certain CAR-T therapies has been terminated pursuant to the strategic realignment plan. The Company also plans to continue the development of iFab, an EpAh-3 targeted monoclonal antibody currently in Phase 1 development, as part of an antibody drug conjugate (“ADC”), for ~~certain~~additional ~~solid~~information ~~tumors.~~regarding ~~Under~~ the realignment plan, the Company will deemphasize the deployment of resources for the development of lenzilumab for COVID-19 and currently does not plan to pursue regulatory pathways, pending further data from ACTIV-5/BET-B or a future large-scale study; the Named Patient program in select European Countries has been terminatedbusiness.

See Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 of the Company’s 2021 Annual Report on Form 10-K for additional information regarding the business.

Liquidity and Going Concern

The Condensed Consolidated Financial Statements for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2022~~2023 were prepared on the basis of a going concern, which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. However, the Company has incurred net losses since its inception, and has negative operating cash flows and its total liabilities exceed total assets. These conditions raise ~~substantial~~ substantial doubt about the Company’s ability to continue as a going concern.

As of March 31, 2023, the Company had cash and cash equivalents of $3.1 million. Considering the Company’s current cash resources and its current and expected levels of operating expenses for the next twelve months, which includes combined accounts payable and accrued expenses recorded in the Company’s consolidated balance sheets as of March 31, 2023 of $52.4 million, certain of which are in dispute, and manufacturing commitments of $1.8 million for the remaining nine months of 2023, with no significant commitments thereafter (see Note 6 below), the Company requires additional capital to fund the Company’s planned operations. The Company intends to seek to defer payments, negotiate lower amounts or pursue other courses of action for certain amounts owed to manufacturing and other partners at March 31, 2023. In order to remain a going concern, the Company must successfully renegotiate these amounts owed, and settle disputes, including current and potential future arbitration and litigation. During 2022, the Company engaged SC&H Capital, an affiliate of SC&H Group, Inc.(“SC&H”), to advise the Company on exploration of strategic options to maximize value around its development pipeline. The Company has not set a timetable for the conclusion of its review of strategic alternatives, and there can be no assurance that this process will result in any transaction.

As previously reported, the Company has executed a non-binding letter of intent and is engaged in exclusive negotiations relating to a proposed business combination with a privately held biopharmaceutical company, which contemplates a tax-free stock-for-stock merger. The Company is seeking external financing in connection with the potential business combination. There can be no assurance that the potential business combination or financing will be consummated on favorable terms or at all.

Table of Contents

As of September 30, 2022, the Company had cash and cash equivalents of $24.7 million. Considering the Company’s current cash resources and its current and expected levels of operating expenses for the next twelve months, which includes combined accounts payable and accrued expenses recorded in the Company’s condensed consolidated balance sheets as of September 30, 2022 of $75.5 million, certain of which are in dispute, and manufacturing commitments of $3.2 million during the remaining three months of 2022, $2.3 million for 2023, and $3.8 million thereafter (see Note 6 below), the Company requires additional capital to fund the Company’s planned operations. The Company intends to seek to defer payments, negotiate lower amounts or pursue other courses of action for certain commitments and amounts owed to manufacturing and other partners at September 30, 2022. In order to remain a going concern and execute its strategic realignment plan, the Company must successfully renegotiate these amounts owed, and settle disputes, including current and potential future arbitration and litigation. The Company recently engaged SC&H Capital, an affiliate of SC&H Group, (“SC&H”), to advise the Company on exploration of strategic options to maximize value around its development pipeline. The Company has not set a timetable for the conclusion of its review of strategic alternatives, and there can be no assurance that this process will result in any transaction. The Company also may seek to raise ~~such~~ additional capital through public or private equity offerings, including under the Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), grant financing, convertible and other debt financings, collaborations, strategic alliances, or licensing arrangements involving LENZ and iFab. Additional funds may not be available when the Company needs them on terms that are acceptable to the Company, or at all. If adequate funds are not available, the Company may be required to delay or reduce the scope of or eliminate one or more of its research or development programs, ~~its commercialization efforts or its manufacturing commitments~~ and ~~capacity, and~~ may not be able to continue as a going concern. In addition, if the Company raises additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, the Company may have to relinquish rights to its technologies, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to the Company. While management believes its realignment plans and its plans to raise additional funds will alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern, these plans are not entirely within the Company’s control and cannot be assessed as being probable of occurring.

Basis of Presentation

The accompanying interim unaudited Condensed Consolidated Financial Statements have been prepared in accordance with ~~U.S.~~US generally accepted accounting principles (“~~U.S.~~US GAAP”) for ~~interim~~ interim financial information and on a basis consistent with the annual consolidated financial statements and include all adjustments ~~necessary~~ necessary for the presentation of the Company’s condensed consolidated financial position, results of operations and cash flows for the periods presented.

The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. These financial statements have been prepared on a basis that assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The December 31, ~~2021~~2022 Condensed Consolidated Balance Sheet was derived from the audited financial statements but does not include all disclosures required by ~~U.S.~~US GAAP. These interim financial results are not necessarily indicative of the results to be expected for the year ending December 31, ~~2022~~2023, or for any other future annual or interim period. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s ~~2021~~2022 Annual Report on Form 10-K.

The preparation of financial statements in conformity with ~~U.S.~~US GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the Condensed ~~Consolidated~~ Consolidated Financial Statements and accompanying notes. Actual results could differ materially from those estimates. The Company believes ~~judgment~~ judgment is involved in accounting for the determination of revenue recognition, fair value-based measurement of stock-based compensation and accruals. The Company evaluates its estimates and assumptions as facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from these estimates and assumptions, and those differences could be material to the Condensed Consolidated Financial Statements.

2. Summary of Significant Accounting Policies

The Company’s significant accounting policies are detailed in its Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022. There have been no significant changes to the Company’s significant accounting policies during the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023, from those previously disclosed in its ~~2021~~2022 Annual Report on Form 10-K.

3. Potentially Dilutive Securities

The Company’s potentially dilutive securities, which include stock options and warrants and shares of common stock issuable upon conversion of convertible debt, have been excluded from the computation of diluted net loss per common share as the effect of including those securities would be to reduce the net loss per common share and be antidilutive. Therefore, the denominator used to calculate both basic and diluted net loss per common share is the same in each period presented.

The following outstanding potentially dilutive securities have been excluded from the computations of diluted net loss per common share:

	As of March 31,
	2023		2022
Options to purchase common stock		7,177,605		4,712,659
Warrants to purchase common stock		31,238		31,238
Convertible debt		-		510,986
		7,208,843		5,254,883

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The following outstanding potentially dilutive securities have been excluded from the computations of diluted net loss per common share:

	As of September 30,
	2022		2021
Options to purchase common stock		8,291,826		4,144,864
Warrants to purchase common stock		31,238		31,238
Convertible debt		-		510,986
		8,323,064		4,687,088

4. License Revenue

On November 3, 2020, the Company entered into a License Agreement (the “South Korea Agreement”) with KPM Tech Co., Ltd. (“KPM”) and its affiliate, Telcon RF Pharmaceutical, Inc. (together with KPM, the “Licensee”). Pursuant to the South Korea Agreement, among other things, the Company granted the Licensee a license under certain patents and other intellectual property to develop and commercialize lenzilumab for treatment of COVID-19 pneumonia, in South Korea and the Philippines (the “Territory”), subject to certain reservations and limitations. The Licensee will be responsible for gaining regulatory approval for, and subsequent commercialization of, lenzilumab in the Territory.

As consideration for the license, the Licensee ~~has~~ agreed to pay the Company (i) an up-front license fee of $6.0 million, payable promptly following the execution of the License Agreement, which was received in the fourth quarter of 2020, (ii) up to an aggregate of $14.0 million in two payments based on achievement by the Company of two specified milestones in the ~~U.S.~~US, of which the first milestone was met in the first quarter of 2021 and $6.0 million (or $4.5 million net of withholding taxes and other fees and royalties) was received in the second quarter of 2021, and (iii) subsequent to the receipt by the Licensee of the requisite regulatory approvals, double-digit royalties on the net sales of lenzilumab in South Korea and the Philippines. The Licensee has agreed to certain development and commercial performance obligations. It is expected that the Company will supply lenzilumab to the Licensee for a minimum of 7.5 years at a cost-plus basis from an existing or future manufacturer. The Licensee has agreed to certain minimum purchases of lenzilumab on an annual basis.

Since the provision of the license and the cooperation and assistance to be provided by the Company to the Licensee with regulatory authorities in the Territory and the Company’s obligation to serve on a joint steering committee (the “Services”) are considered a single performance obligation, the $6.0 million upfront payment (or $4.5 million net of withholding taxes and other fees and royalties) and the first milestone payment of $6.0 million (or $4.5 million net of withholding taxes and other fees and royalties, ~~are~~were initially being recognized as revenue ratably over the performance period through March 2023 (the “Performance Period”), the expected period over which the Company ~~expects~~conservatively ~~the~~expected the Services to be performed ~~(the~~with ~~“Performance~~approval ~~Period”). Through~~in ~~June~~the ~~30,~~Territory ~~2022,~~expected ~~revenue~~by ~~was being amortized through March 31, 2023,~~ the ~~expected~~ end of ~~the~~March ~~performance period~~2023. During the quarter ended September 30, 2022, the performance period was reevaluated, and the estimated end date of the performance period was adjusted to December 31, 2025. The change in estimate resulted in a decrease of $0.8 million in quarterly license revenue, as compared to amounts that would have been recorded under the previous timeline. Therefore, the Company recognized license revenue totaling approximately $0.2 million and $21.30 million in the three ~~and nine~~ months ended ~~September~~March 3031, ~~2022,~~2023 ~~respectively,~~ and ~~$1.0 million and $2.6 million in the three and nine months ended September 30~~2022, ~~2021,~~ respectively. ~~Prospective periods will reflect the impact of this change in estimate.~~

Licensee’s purchases of lenzilumab for development purposes or for commercial requirements, represent options under the agreement and revenues will therefore be recognized when control of the product is transferred to Licensee.

Contract Liabilities

A contract liability of $2.9 4 million was recorded on the Condensed Consolidated Balance Sheets as deferred revenue as of ~~September~~March 3031, ~~2022~~ 2023 related to the South Korea agreement. There were no contract asset or deferred contract acquisition costs as of ~~September~~March 3031, ~~2022~~2023 associated with the South Korea agreement.

The following table presents changes in the Company’s contract liability for the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023 (in thousands):

Balance at January 1, 2022	$	5,163
Balance at January 1, 2023	$	2,649
Deductions for performance obligations satisfied:
In current period		(~~2,293~~221	)
Balance at September 30, 2022	$	2,870
Balance at March 31, 2023	$	2,428

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5. Long-Term Debt

Secured Term Loan Facility

On March 10, 2021, the Company executed the Loan and Security Agreement with Hercules Capital as agent for its affiliates serving as lenders thereunder (the “Term Loan”) which provided a loan in the aggregate principal amount of up to $80.0 million, in three tranches. On March 29, 2021, the Company drew the initial $25.0 million tranche under the Term Loan. After giving effect to payment of fees and expenses associated with the draw, the Company received net proceeds of approximately $24.4 million. The Term Loan bore interest at a floating rate equal to the greater of either (i) 8.75% plus the prime rate as reported in The Wall Street Journal minus 3.25%, or (ii) 8.75%. The Company was initially obligated to make monthly payments of accrued interest under the Term Loan commencing on the initial borrowing date and continuing to April 1, 2023, followed by monthly installments of principal and interest until March 1, 2025. InInterest ~~July~~expense ~~2022,~~related ~~the~~to ~~Company prepaid $25.0 million of outstanding principal, together with approximately $1.7 million of accrued interest, fees and other amounts, due under~~ the Term Loan., Inrecorded ~~connection~~during ~~with~~ the ~~prepayment,~~three months ~~the~~ended ~~Term~~March ~~Loan with Hercules was terminated~~31, ~~and all obligations~~2022, ~~liens~~ ~~and~~was ~~security~~approximately ~~interests~~$0.7 ~~under~~million ~~the Term Loan were released, discharged~~ and ~~satisfied. By retiring~~ the ~~Term~~effective ~~Loan, the Company is able to reduce future cash payments for~~ interest ~~and~~rate ~~enhance~~was ~~its ability to generate additional liquidity from its intellectual property by removing the loan’s collateral requirements~~9. 25%.

Interest expense related to the Term Loan was $1.3 million and $2.8 million for the three and nine months ended September 30, 2022, respectively, and the effective interest rate was approximately 8.8% and 9.3% for the three and nine months ended September 30, 2022, respectively. Interest expense in the three months ended September 30, 2022 included $1.2 million in unamortized loan fees recognized in connection with the loan payoff. Interest expense related to the Term Loan, for the three and nine months ended September 30, 2021 was $0.7 and $1.5 million, respectively, and the effective interest rate was 9.0% for both periods.10

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In July 2022, the Company prepaid $25.0 million of outstanding principal, together with approximately $1.7 million of accrued interest, fees and other amounts, due under the Term Loan. In connection with the prepayment, the Term Loan with Hercules was terminated, and all obligations, liens and security interests under the Term Loan were released, discharged and satisfied.

6. Commitments and Contingencies

Eversana Agreement

On January 10, 2021, the Company announced that it had entered into a master services agreement (the “Eversana Agreement”) with Eversana Life Science Services, LLC (“Eversana”) pursuant to which Eversana will provide the Company multiple services from its integrated commercial platform in preparation for the potential commercialization of lenzilumab.

Under the Eversana Agreement, Eversana will provide the Company with services in connection with the potential launch of lenzilumab. Eversana services during 2021 comprised marketing, market access, consulting, field solutions, field operations, health economics and medical affairs. Additional services may be negotiated by the parties and set forth in statements of work delivered in accordance with the Eversana Agreement.

On September 21, 2021, the Company notified Eversana that due to the EUA status in the U.S., it was terminating the initial statement of work related to commercialization support of lenzilumab for the treatment of COVID-19 in the United States. Eversana is disputing the termination notice and has requested payment of approximately $4.5 million it has asserted the Company owes for services rendered from April 1, 2021 to September 30, 2021. The Company has disputed this assertion and Eversana has filed for arbitration to resolve this dispute. See Note 10 below for more information on this dispute.

Manufacturing Agreements

The Company has entered into agreements with several contract manufacturing organizations (“CMOs”) to manufacture bulk drug substance (“BDS”) and to provide fill/finish services or drug product (“DP”) for lenzilumab for a potential launch of lenzilumab in anticipation of an EUA or CMA. The Company has also entered into agreements for packaging of the drug. These agreements include upfront amounts prior to commencement of manufacturing and progress payments through the course of the manufacturing process and payments for technology transfer. Since September 9, 2021, the Company has amended, and in some cases canceled, certain of these agreements, some of which were contingent on EUA, in an effort to reduce its future spending on lenzilumab production. More recently, the Company has sought to mitigate its financial commitments by ceasing additional manufacturing of lenzilumab in connection with its realignment plan. As of ~~September~~March 3031, ~~2022~~2023, the Company estimates ~~that~~ that its commitments remaining to be incurred under ~~these~~its contract manufacturing organization (“CMO”) agreements are approximately $31.28 million for the remaining ~~three~~nine months of ~~2022,~~ ~~$2.3 million for~~ 2023, ~~and~~with ~~$3.8~~no ~~million~~significant commitments thereafter. ~~The Company intends to seek to defer these and other payments, negotiate lower amounts or pursue other courses of action for these amounts, but the Company’s efforts may not be successful.~~

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The Company believes it has sufficient supply to conduct its contemplated clinical development efforts. The Company estimates the number of vials required per patient in its clinical trials is between 48 and 150. The Company has stopped all manufacturing of lenzilumab, with the exception of batches in process at one of its CMOs, Catalent Pharma Solutions, LLC (“Catalent”). As of October 31, 2022, there were an additional approximately 630,000 lenzilumab vials either in production or available for storage at Catalent. If the Company is unable to obtain regulatory approval for lenzilumab prior to the expiration of the shelf life at that time, the remaining inventory will not be available for commercial use. Catalent has notified the Company that it claims the Company is in breach of its manufacturing agreement with Catalent and has stopped all manufacturing activities being performed under the agreement. The parties are negotiating a resolution; however, approximately 630,000 lenzilumab vials at Catalent may not be released if the Company is unable to reach an agreement with Catalent.

Another 594,000 lenzilumab vials are in production at one of the Company’s other CMOs, Thermo Fisher Scientific, Inc. (“Thermo”), for which material has not yet been released by the Company because the batches produced are out of specification. Nonetheless, Thermo has notified the Company that they have stopped production and have recently filed a lawsuit against the Company in Delaware Superior Court for $25.9 million. The Company denies Thermo’s claims and assertions and intends to vigorously defend against them. See Note 10 below for more information on this dispute.

7. Stockholders’ Equity

Controlled Equity Offering

On December 31, 2020, the Company entered into a Sales Agreement with Cantor, under which the Company could issue and sell, from time-to-time, shares of the Company’s common stock, having an aggregate gross sales price of up to $100 million through Cantor, as the sales agent. On April 14, 2022, the Company filed a prospectus in respect of the Sales Agreement which provides the Company with the ability to offer and sell shares of common stock having an aggregate offering price of up to an additional $75.0 million. During the three ~~and nine~~ months ended ~~September~~March 3031, 2022, ~~under~~ the ~~Sales~~ ~~Agreement, the~~ Company issued and sold 475,~~837~~926,~~197~~748 shares of its common stock ~~for~~under ~~net proceeds of $20.0 million, and 55,052,506 shares of its common stock for net proceeds of $41.8 million, respectively. During~~ the ~~three and nine months ended September 30, 2021, under the~~ Sales Agreement, ~~the Company issued and sold 600,933 shares of its common stock~~ for net proceeds of $318.94 million~~, and 2,397,791 shares of its common stock for net proceeds of $40~~.0 ~~million, respectively.~~ No shares ~~have~~were ~~been~~ sold under the Sales Agreement ~~subsequent~~during ~~to September~~the 30three months ended March 31, ~~2022~~2023.

2021 Underwritten Public Offering

On March 30, 2021, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Jefferies LLC, Credit Suisse Securities (USA) LLC and Cantor, as representatives of the several underwriters, in connection with the public offering of 5,000,000 shares of our common stock. In addition, we granted the underwriters a 30-day option to purchase an additional 750,000 shares of our common stock. The initial offering closed on April 5, 2021. On May 3, 2021, we closed on the sale of an additional 427,017 shares of our common stock related to the exercise of the underwriters’ 30-day option. The aggregate gross proceeds from the sale of the 5,427,017 shares in the offering, inclusive of the additional shares purchased by the underwriters, were approximately $100.4 million. The net proceeds from this offering, after deducting underwriting discounts and offering costs, were approximately $94.2 million.

8. Stock-Based Compensation

A summary of stock option activity for the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023 under all the Company’s options plans is as follows:

	Options			Weighted Average Exercise Price
Outstanding at January 1, 2022		4,429,906		$	7.89
Outstanding at January 1, 2023		7,472,056		$	4.23
Granted		~~4,708,969~~-		$	~~0.57~~-
Exercised		-		$	-
Cancelled (forfeited)		(820,024	)	$	4.37
Cancelled (expired)		(294,451	)	$	6.43
Cancelled (expired)		(27,025	)	$	13.64
Outstanding at March 31, 2023		7,177,605		$	4.14
Outstanding at September 30, 2022		8,291,826		$	4.06

The weighted average fair value of options granted during the nine months ended September 30, 2022 was $0.47 per share.

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The Company valued the options granted using the Black-Scholes options pricing model and the following weighted-average assumption terms for the nine months ended September 30, 2022:

	Nine Months Ended
	September 30, 2022
Exercise price	$0.38 - $2.99
Market value	$0.38 - $2.99
Expected term	6 years
Expected volatility	104% - 109%
Risk-free interest rate	1.59% - 2.89%
Expected dividend yield	0%

The Company recorded stock-based compensation expense in the Condensed Consolidated Statements of Operations as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
	2022		2021		2022		2021
	2023		2022
General and administrative	$	1,~~366~~105	$	1,~~077~~294	$	~~4,001~~	$	~~2,848~~
Research and development		16117		~~357~~249		~~559~~		~~967~~
Total stock-based compensation	$	1,~~382~~222	$	1,~~434~~543	$	~~4,560~~	$	~~3,815~~

At ~~September~~March 3031, ~~2022~~2023, the Company had $74.87 million of total unrecognized stock-based compensation expense, net of estimated forfeitures, related to outstanding stock options that will be recognized over a weighted-average period of 1.73 years. As of ~~September~~March 3031, ~~2022~~2023, there were 12,~~128~~061,~~365~~764 shares available for grant under ~~the~~ the Company’s 2020 Equity Incentive Plan.

9. ~~License and Collaboration Agreements~~ Litigation

Clinical Trial Agreement with the National Institute of Allergy and Infectious Diseases

On July 24, 2020, the Company entered into a clinical trial agreement (the “ACTIV-5 Clinical Trial Agreement”) with the National Institute of Allergy and Infectious Diseases (“NIAID”), part of NIH, which is part of the U.S. Government Department of Health and Human Services, as represented by the Division of Microbiology and Infectious Diseases. Pursuant to the ACTIV-5 Clinical Trial Agreement, lenzilumab was evaluated in the NIAID-sponsored ACTIV-5/BET-B trial in hospitalized patients with COVID-19. According to the preliminary topline results released in July 2022, the trial did not achieve statistical significance on the primary endpoint. The preliminary topline data showed a non-significant trend toward a reduction in mortality in the overall patient population [HR 0.72]. There were no new safety signals attributed to lenzilumab in the ACTIV-5/BET-B study.

Pursuant to the ACTIV-5 Clinical Trial Agreement, NIAID served as sponsor and was responsible for funding, supervising and overseeing the ACTIV-5/BET-B trial. The Company provided lenzilumab to NIAID without charge and in quantities to ensure a sufficient supply of lenzilumab. The ACTIV-5 Clinical Trial Agreement imposed additional obligations on the Company that are reasonable and customary for clinical trial agreements of this nature, including in respect of compliance with data privacy laws and potential indemnification obligations.

10. Litigation

Eversana Arbitration

On May 19, 2022, Eversana Life Science Services, LLC (“Eversana”) filed a Demand for Arbitration claiming approximately $4.5 million in damages against the Company with the American Arbitration Association entitled Eversana Life Sciences, LLC v. Humanigen, Inc. [(AAA Case No. 01-22-0002-1591)]. The Demand contains two breach of contract claims related to the Eversana Agreement between the parties and a related agreement between the companies’ European subsidiaries, and a claim for unjust enrichment. Eversana asserts that the Company failed to pay it amounts due for work preparing for the potential commercializing of lenzilumab performed between April 1, 2021 and September 30, 2021. AnThe ~~arbitrator~~Company ~~has~~and ~~been~~Eversana ~~selected~~have ~~for~~agreed in principle on a conditional resolution of the ~~matter~~matters being disputed and are negotiating a formal settlement agreement. The settlement agreement is expected to provide that the Company will, subject to its receipt of adequate proceeds from a financing transaction, make a one-time payment to Eversana of $750,000 and, in connection with such payment, the parties will dismiss the pending arbitration ~~hearing~~and ~~has~~release and ~~been~~discharge ~~scheduled~~each ~~for~~other ~~August~~from ~~2023.~~all Toexisting ~~date~~claims, demands, causes of actions, charges and grievances of any kind arising out of, or relating to, the commercial agreements between the parties. There can be no ~~discovery~~assurances ~~has~~that ~~been~~a settlement agreement will be reached on these terms. If a settlement is not completed, the Company intends to vigorously defend against Eversana’s claims.

~~The Company denies Eversana’s claims and assertions and will continue to vigorously defend against them.~~11

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Avid ~~Arbitration~~ Settlement

On ~~December~~February 1721, ~~2021~~2023, ~~Avid Bioservices, Inc. (“Avid”) filed a Demand for Arbitration claiming more than $20.5 million in damages against~~ the Company ~~with~~and ~~the American Arbitration Association entitled,~~ Avid Bioservices, Inc. ~~v. Humanigen, Inc.~~ (~~AAA Case No. 01-21-0018-0523~~“Avid”). ~~The~~entered ~~Demand~~into ~~contains~~a ~~three~~Settlement ~~claims~~Agreement ~~for:~~ (~~1) Breach of Contract concerning~~ the ~~Process~~“Avid ~~Development~~Settlement ~~and Manufacturing Master Services~~ Agreement~~; (2~~”) ~~Anticipatory~~providing ~~Breach~~for ofa ~~Contract concerning~~conditional ~~the~~resolution ~~Capacity~~of ~~Expansion~~certain ~~and~~previously ~~Contribution/Commitment~~reported ~~letter;~~disputes ~~and~~between ~~(3) Trade Libel and Commercial Disparagement. Avid claims that~~ the Company ~~canceled~~ ~~the~~and ~~contract after~~ Avid ~~was~~arising ~~unable~~pursuant to ~~successfully produce any full batches of lenzilumab BDS, but that~~ the ~~Company~~commercial ~~still~~agreements ~~owes~~between the ~~full~~two ~~amount~~parties ~~due~~(collectively, ~~under~~ the ~~contract~~“Lenzilumab ~~for all batches under the contract~~Disputes”). Avid blamed its failed attempts on a subcontractor. To date, the Company has paid Avid $10.6 million, despite Avid not being able to produce any full BDS batches. Avid has since dismissed its second claim relating to Anticipatory Breach of Contract.

OnPursuant ~~January~~to 6,the ~~2022~~Settlement Agreement, the Company made ~~filed~~a anone-time ~~Answer~~ payment of $3.0 million to Avid’s ~~Demand~~(the “Settlement Payment”). In addition, ~~denying~~the parties mutually agreed that, effective upon the ~~allegations~~expiration of 120 days from the date of the Settlement Agreement and ~~asserting~~only ~~affirmative~~if ~~defenses.~~Humanigen Onhas ~~July~~not 1,by ~~2022~~such date filed for or been placed into bankruptcy or commenced an assignment for the benefit of creditors or other insolvency proceeding, the ~~Company~~parties ~~filed~~will dismiss ~~its~~the ~~own~~pending Lenzilumab Disputes and release and discharge each other from all existing claims, demands, causes of actions, charges ~~against~~and ~~Avid~~grievances ~~for:~~of ~~(1)~~any ~~Breach~~kind arising out of, ~~Contract;~~or ~~(2)~~relating ~~Declaratory~~to, ~~Relief;~~the Lenzilumab Disputes and ~~(3)~~the ~~Unfair~~commercial ~~Business~~agreements ~~Practices~~between the parties, which were terminated in accordance with their respective terms.

The Company denies Avid’s claims and assertions and will continue to vigorously defend against them.

Savant Litigation

The Company was previously involved in litigation against Savant Neglected Diseases, LLC (“Savant”). In March 2022, the Company and Savant reached a confidential settlement. Accordingly, the litigation involving Savant was dismissed on March 31, 2022.

Thermo Litigation

On October 24, 2022, one of the Company’s former CMOs, Thermo ~~has~~Fisher ~~notified~~Scientific, Inc. (“Thermo”) filed a lawsuit against the Company ~~that~~in ~~they~~Delaware ~~have~~Superior ~~stopped~~Court ~~production~~(Patheon ~~and~~Biologics, ~~have~~Inc. v. ~~issued~~Humanigen, aInc., ~~demand~~Case ~~for~~No. ~~payment~~N22C-10-185 MMJ) for ~~unreleased~~$25.9 ~~batches~~million. ~~Thermo~~The Company has ~~594,000~~filed ~~vials~~a countersuit against Thermo for breach of contract ~~lenzilumab~~seeking ~~that~~more ~~are~~than in$37.5 ~~production,~~million. ~~for~~The ~~which~~Company ~~material~~and ~~has~~Thermo ~~not~~have ~~yet~~agreed ~~been~~in ~~released~~principle byon ~~the~~a ~~Company~~conditional ~~because~~resolution of the ~~batches~~matters ~~produced~~being disputed and are ~~out~~negotiating ofa ~~specification~~formal settlement agreement. ~~Thermo~~The ~~recently~~settlement ~~filed~~agreement ais ~~lawsuit~~expected ~~against~~to provide that the Company inwill, ~~Delaware~~subject to ~~Superior~~its ~~Court~~receipt ~~(Patheon~~of ~~Biologics~~adequate proceeds from a financing transaction, ~~Inc.~~make v$8. ~~Humanigen~~0 million of payments to Thermo and, ~~Inc.~~in connection with such payments, ~~Case~~the ~~No.~~parties ~~N22C-10-185~~will ~~MMJ)~~dismiss ~~for~~the ~~$25.9~~pending ~~million.~~litigation ~~The~~and ~~Company~~release ~~denies~~and ~~Thermo’s~~discharge each other from all existing claims, ~~and~~demands, ~~assertions~~causes of actions, charges and grievances of any kind arising out of, or relating to, the commercial agreements between the parties. There can be no assurances that a settlement agreement will ~~vigorously~~be reached on these terms. If a settlement is not completed, the Company intends to vigorously defend against ~~them.~~Thermo’s claims.

Securities Class Action Litigation

On August 26, 2022, a putative securities class action complaint captioned Pieroni v. Humanigen Inc., et al., Case No. 22-cv-05258, was filed in the United States District Court for the District of New Jersey against the Company, its Chief Executive Officer, Dr. Cameron Durrant, and its former Chief Financial Officer, Timothy Morris. On October 17, 2022, a second putative securities class action complaint captioned Greenbaum v. Humanigen Inc., et al., Case No. 22-cv-06118, was filed in the United States District Court for the District of New Jersey against the Company, Dr. Durrant~~, Mr.~~ ~~Morris,~~ and the Company’s Chief Scientific Officer, Dale Chappell. The complaints assert claims and seek damages for alleged violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. ~~Motions~~The ~~are currently pending to consolidate the~~ two actions ~~and~~have ~~for~~been ~~appointment~~consolidated ofinto a single ~~lead~~action captioned ~~plaintiff~~In inre ~~the~~Humanigen, ~~consolidated litigation~~Inc. ~~The~~Securities ~~deadline~~Litigation, ~~for defendants’~~Case ~~responsive~~No. ~~pleading~~2:22-cv-05258 ~~will~~and beco-lead ~~set~~plaintiffs ~~after the actions are consolidated~~ and ~~the court appoints the~~ co-lead ~~plaintiff,~~law ~~which~~firms have ~~may~~been ~~involve the filing of an amended complaint by the lead plaintiff~~appointed. The Company believes that the allegations in the putative complaints are without merit and will vigorously defend against them.

14Shareholder Derivative Litigation

On January 17, 2023, a derivative lawsuit captioned Chul Yang derivatively on behalf of Humanigen, Inc. v. Durrant, et al., Case No. 2:23-cv-00235, was filed in the United States District Court for the District of New Jersey against the company’s Chief Executive Officer, Dr. Cameron Durrant, its former Chief Financial Officer, Timothy Morris, and each of its Directors. The complaint asserts claims and seeks damages against all of the defendants for alleged violations of section 14(a) of the Securities Exchange Act of 1934 and Rule 14a-9 promulgated thereunder, breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets, and against Dr. Durrant and Mr. Morris for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. This matter has been stayed pending initial rulings in the consolidated securities class action matter. The Company believes that the allegations in the putative derivative action are without merit and will vigorously defend against them.

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis together with our financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 (the “2022 Annual Report”). This Quarterly Report on Form 10-Q contains statements that discuss future events or expectations, projections of results of operations or financial condition, trends in our business, business prospects and strategies and other “forward-looking” information. In some cases, you can identify “forward-looking statements” by words like “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential” or “continue” or the negative of those words and other comparable words. These forward-looking statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. These statements may relate to, among other things, our expectations regarding the scope, progress, timing, expansion, and costs of researching, developing and commercializing our product candidates; our expectations relating to regulatory pathways to ~~emergency use or other conditional~~ marketing ~~authorizations~~authorization and the opportunity to benefit from various regulatory incentives; expectations for our financial results, revenue, operating expenses and other financial measures in future periods; the adequacy of our sources of liquidity to satisfy our working capital needs, capital expenditures, and other liquidity requirements; and our exploration of strategic alternatives. Among the factors that could cause actual results to differ materially are the factors discussed under “Risk Factors” in “Part I, Item 1A– - Risk Factors” in ~~our Annual Report on Form 10-K for~~ the ~~fiscal~~2022 ~~year~~Annual ~~ended December 31~~Report, ~~2021,~~ and the additional or modified risk factors disclosed in ~~our~~this Quarterly Report on Form 10-Q ~~for the~~and ~~fiscal~~each ~~quarter~~subsequently ~~ended~~filed ~~June 30, 2022 and this~~ Quarterly Report on Form 10-Q. Some additional factors that could cause actual results to differ include:

● our ability to attain the significant amount of additional financing we need to continue as a going concern on favorable terms or at all, and the availability of future financing;

●

our ability to complete the proposed business combination and related financing transactions described in the 2022 Annual Report under “Item 1. Business – Overview”, or to identify and execute upon another strategic transaction or alternative to maximize value for our stakeholders;

●

our ability to demonstrate by August 21, 2023, and thereafter maintain compliance with, the listing requirements of the Nasdaq Capital Market;

●

the outcome of pending, threatened or future litigation or arbitration;

●

our ability to resolve pending or threatened litigation regarding payment disputes with certain Contract Manufacturing Organizations (“CMOs”) and other parties, and our ability to defer payments, negotiate lower amounts or successfully pursue other courses of action for certain amounts accrued at March 31, 2023;

●

our ability to successfully execute the strategic realignment of our pipeline and resources;

● our ability to identify and execute upon a strategic transaction to maximize value for our stakeholders;

●

the timing of the initiation, enrollment and completion and results of ongoing or planned clinical trials;

● our ability to obtain sponsorship from a third party for inclusion of lenzilumab, or LENZ®, in a large multi-center platform trial to study the effects of lenzilumab on patients with COVID-19;

● our ability to resolve disputes with certain Contract Manufacturing Organizations (“CMOs”) regarding our obligations to make payments to them despite their failure to produce lenzilumab within contractual specifications, and our ability to defer payments, negotiate lower amounts or seek other courses of action for certain amounts accrued at September 30, 2022;

● our ability to cure the breach of the Multiple Facility Clinical Supply and Services Agreement (the “MSA”) with Catalent Pharma Solutions, LLC (“Catalent”) to prevent termination of the MSA;

●

our ability to research, develop and commercialize our product candidates, including our ability to do so after our competitors have developed and commercialized competing products or alternative therapies;

● the ability of partners to initiate and conduct the PREACH-M and RATinG studies (as described below) of lenzilumab in chronic myelomonocytic leukemia (“CMML”) and in patients atwith ~~risk of~~ acute Graft versus Host Disease (“aGvHD”), respectively, as currently planned;

● our ability to assess and support further clinical assessment of lenzilumab as a companion therapy with commercially available chimeric antigen receptor T-cell (“CAR-T”) therapies in non-Hodgkin lymphoma through an investigator-initiated trial (“IIT”);

●

increasing levels of market acceptance of CAR-T therapies and stem cell transplants and the development of a market for lenzilumab in these therapies;

●

our ability to maintain licenses with third parties;

●

our ability to attain market exclusivity and/or to obtain, maintain, protect and enforce our intellectual property and to operate our business without infringing, misappropriating or otherwise violating, the intellectual property rights of others;

● our ability to achieve collaborations, strategic alliances, or licensing arrangements for ~~LENZ in chronic inflammatory conditions including rheumatoid arthritis, eosinophilic asthma, and ulcerative colitis~~lenzilumab;

● the outcome of pending, threatened or future litigation or arbitration;

●

acquisitions or in-licensing or out-licensing transactions that we may pursue may fail to perform as expected;

● changes in the regulatory landscape that may prevent us from pursuing or realizing any of the expected benefits from the various regulatory incentives, or the imposition of regulations that affect our products; and

● our ability to regain and maintain compliance with the listing requirements of the Nasdaq Capital Market; and

●

the accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing.

These are only some of the factors that may affect the forward-looking statements contained in this Form 10-Q. For a discussion identifying additional important factors that could cause actual results to vary materially from those anticipated in the forward-looking statements, see “Risk Factors” in Item 1A of Part II below and in Part I, Item 1A of ~~our Annual Report on Form 10-K for~~ the ~~fiscal~~2022 ~~year~~Annual ~~ended December 31, 2021~~Report. You should review these risk factors, together, for a more complete understanding of the risks associated with an investment in our securities. However, we operate in a competitive and rapidly changing environment and new risks and uncertainties emerge, are identified or become apparent from time-to-time. It is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Form 10-Q. You should be aware that the forward-looking statements contained in this Form 10-Q are based on our current views and assumptions. We undertake no obligation to revise or update any forward-looking statements made in this Form 10-Q to reflect events or circumstances after the date hereof or to reflect new information or the occurrence of unanticipated events, except as required by law.

1513

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Overview

We are a clinical stage biopharmaceutical company, developing our portfolio of proprietary Humaneered^® anti-inflammatory immunology and immuno-oncology monoclonal antibodies. Our proprietary, patented Humaneered technology platform is a method for converting existing antibodies (typically murine) into engineered, high-affinity human antibodies designed for therapeutic use, particularly with acute and chronic conditions. We have developed or in-licensed targets or research antibodies, typically from academic institutions, and then applied our Humaneered technology to optimize them. Our lead product candidate, lenzilumab, and our other product candidate, ifabotuzumab (“iFab”), are Humaneered monoclonal antibodies. Our Humaneered antibodies are closer to human antibodies than chimeric or conventionally humanized antibodies and have a high affinity for their target. In addition, we believe our Humaneered antibodies offer further important advantages, such as high potency, a slow off-rate and a lower likelihood to induce an inappropriate immune response or infusion related reaction.

We are focusing our efforts on the development of our lead product candidate, lenzilumab. Lenzilumab is a monoclonal antibody that has been demonstrated to neutralize human granulocyte-macrophage colony-stimulating factor (“GM-CSF”), a cytokine that we believe leads to the overproduction of monocytes which are responsible for CMML, a rare blood cancer and is of critical importance in ~~the hyperinflammatory cascade, sometimes referred to as CRS or cytokine storm, associated with~~ aGvHD associated with bone marrow transplants. As previously announced in July 2022, we are currently executing a strategic realignment of our pipeline and resources. Our strategic realignment plans include accelerating the development of LENZ in CMML, for which the PREACH-M study is already underway, and continuing our plans for the RATinG study in aGvHD, as these studies are majority funded by our partners. In addition, we are currently assessing requests for IIT of lenzilumab in combination with CAR-T therapies. The previously planned Company-sponsored study of lenzilumab with certain CAR-T therapies has been terminated. We also plan to continue the development of iFab, an EpAh-3 targeted monoclonal antibody currently in Phase 1 development, as part of an antibody drug conjugate (“ADC”), for certain solid tumors.

We are currently developing lenzilumab in CMML for which the Precision Approach to Chronic Myelomonocytic Leukemia (“PREACH-M”) ~~Study~~study is underway, and we are continuing plans for the Risk Adapted Therapy in Acute GvHD (“RATinG”) study in aGvHD, as these studies are majority funded by our partners.

WeIn ~~are~~April ~~currently~~2023, ~~evaluating~~we ~~lenzilumab~~announced ~~for~~that ~~the treatment~~as of ~~high-risk CMML in patients with NRAS~~December 31, ~~KRAS~~2022, ~~and~~eleven ~~CBL~~subjects ~~genetic~~had ~~mutations~~been indosed anwith ~~ongoing~~lenzilumab ~~Phase~~and 2with ~~study,~~current ~~known~~standard asof ~~“PREcision Approach~~care, toazacytidine, ~~Chronic~~in ~~Myelomonocytic~~the ~~Leukemia” or “~~PREACH-M study.” ~~The~~Six ~~PREACH-M~~subjects were ~~study~~evaluable isbased ~~being~~on ~~conducted~~at inleast ~~partnership~~three ~~with the~~months ~~South~~of ~~Australian~~follow-up, ~~Health~~including &those ~~Medical~~with ~~Research~~high ~~Institute~~risk ~~(“SAHMRI”)~~CMML, and ~~the~~all ~~University~~demonstrated ofclinical ~~Adelaide~~benefit. ~~The study is currently~~ ~~enrolling~~In ataddition, ~~sites~~lenzilumab inappeared ~~Australia~~to ~~and~~be ~~New Zealand~~well-tolerated. AsWe ofanticipate ~~November~~the 8,first ~~2022,~~patient ~~seven~~dosing ~~lenzilumab-treated~~in ~~patients~~the ~~have~~RATinG ~~been~~study ~~enrolled~~to occur in the ~~study~~second ~~and~~quarter ~~followed~~of ~~for multiple cycles, with what we believe to be encouraging results~~2023.

WeA ~~will~~leading ~~provide~~network ~~lenzilumab~~of ~~for~~centers, ~~this~~The ~~study~~Mayo ~~and the~~Clinics, ~~majority~~is currently progressing with an IIT of ~~the~~lenzilumab ~~study~~in ~~costs~~combination ~~will~~with beCAR-T ~~borne~~therapies. byWe ~~the~~are ~~partner~~also ~~and~~developing ~~funded~~iFab, byan aEpAh-3 ~~grant~~targeted monoclonal ~~from~~antibody, ~~the~~currently ~~Medical~~in ~~Research~~Phase ~~Futures~~1 ~~Fund~~development, aas ~~research~~part ~~fund set~~of upan byantibody ~~the~~drug ~~Australian~~conjugate ~~Government~~(“ADC”), for certain solid tumors.

~~RATinG~~Recent ~~Study~~ Developments

WeOur ~~are~~current ~~currently~~capital ~~evaluating~~resources ~~lenzilumab~~are ~~for~~not ~~the~~sufficient ~~early~~to ~~treatment~~fund ofour ~~aGvHD~~operations infor ~~patients~~the ~~undergoing~~remainder ~~bone~~of ~~marrow~~2023. ~~transplants in a Phase 2/3 potentially registrational trial~~Accordingly, ~~known~~ as ~~the “RATinG”~~previously ~~study. The study is being conducted by the IMPACT Partnership~~disclosed, awe ~~collection~~have ofbeen 22pursuing ~~stem~~strategic ~~cell~~alternatives ~~transplant centers located~~and inseeking ~~the United Kingdom. Recruitment for the RATinG study is temporarily halted due~~ to anraise ~~administrative~~additional ~~issue~~capital and wesettle ~~are~~or ~~currently~~otherwise ~~unable to~~resolve ~~estimate~~payment ~~when~~disputes ~~the~~and ~~first~~other ~~patient~~ongoing ~~will~~arbitration beand ~~enrolled in the study~~litigation.

WeAs ~~will~~previously ~~provide~~reported, ~~lenzilumab~~during ~~for~~2022 ~~the~~we ~~study including~~engaged ~~the~~SC&H ~~cost~~Capital, an affiliate of ~~import~~SC&H Group, ~~labeling~~(“SC&H”) ~~and~~to ~~distribution~~advise us on exploration of ~~the~~strategic ~~study~~options. ~~drug,~~SC&H is ~~and~~an ~~support~~investment ~~certain~~banking ~~laboratory~~and ~~tests~~advisory ~~related~~firm toproviding ~~the~~merger ~~study~~and acquisition (M&A), ~~but~~financial ~~the~~restructuring ~~majority~~and related business advisory ofsolutions. ~~the~~SC&H ~~study~~has ~~costs~~acted ~~will~~as beour ~~borne~~advisor byas ~~the~~we ~~IMPACT~~explore ~~Partnership~~strategic options to maximize value around lenzilumab and ifabotuzumab. ~~The~~We also ~~goal~~have ofconsidered ~~the~~and ~~study~~pursued isa full range of options to ~~determine~~raise ~~the~~additional ~~efficacy~~capital and ~~safety~~to ofaddress, ~~lenzilumab~~satisfy, defer or restructure our inaccounts ~~reducing~~payable ~~non-relapse~~and ~~mortality~~accrued atliabilities ~~six~~to ~~months~~manufacturing and other parties.

16We have executed a non-binding letter of intent and are engaged in exclusive negotiations relating to a proposed business combination with a privately held biopharmaceutical company (the “Partner Company”). The proposed terms for the business combination contemplate a tax-free stock-for-stock merger, as a result of which we would issue shares of our capital stock to stockholders of the Partner Company which are expected to represent roughly two times the number of our currently outstanding shares of common stock.

We cannot assure you that we and the Partner Company will enter into a definitive agreement for the proposed transaction, and the final form and terms of any such transaction may be materially different from the terms described above. Our ability to enter into a definitive agreement is subject to conditions, including that we have received binding commitments for investment of additional capital that will be necessary to fund the operations of the combined company going forward and enable the combined company to maintain a listing of its common stock on the Nasdaq Capital Market or another national securities exchange, as well as customary matters such as approval of the terms of the definitive agreement by the Partner Company’s board of directors and stockholders. Certain of these conditions will be out of our control. Accordingly, we cannot provide any assurance that we will effect the proposed business combination or related financing transactions. If we are unable to complete the proposed transactions or identify and complete another strategic or financing transaction in the first half of 2023, we may elect or be required to pursue a reorganization or seek other protection under the federal bankruptcy code. See Part I, Item 1A, “Risk Factors” to the 2022 Annual Report.

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Market Opportunity in CMML and Related Hematological Cancers

Clonal cytogenic abnormalities are commonly seen in CMML patients. RAS (Retrovirus-Associated DNA Sequence) mutations, which make leukemic cells hyperresponsive to GM-CSF, are seen in approximately 50% of CMML patients and are the anticipated target patient population for lenzilumab. The incidence of new CMML patients in the U.S., UK, and Australia is about 1,700 patients annually.1 RAS mutations, which may drive GM-CSF hyperresponsiveness, are also seen in additional myeloid hematological malignancies including juvenile myelomonocytic leukemia (“JMML”), myelodysplastic syndromes (“MDS”) and acute myeloid leukemia (“AML”), totaling approximately 4,000 new cases annually in the U.S. We believe success with CMML may provide proof of principle for targeting RAS pathway mutations in myeloid leukemias with lenzilumab and allow us to develop, and if successful, commercialize lenzilumab in these additional patient populations.

As a treatment for a rare disease, lenzilumab may qualify for certain regulatory and commercial benefits that may accelerate development and approval. Pricing and reimbursement for rare diseases are traditionally higher than treatments for more common diseases and can exceed $100,000 per year.

We are assessing regulatory pathways that may enable early results to support a regulatory submission and potential approval by the Therapeutic Goods Administration in Australia, which could be expanded through Project Orbis, an international regulatory agency collaboration, to the United States and the United Kingdom.

There have been no new therapeutic agents for patients with high-risk CMML in 30 years2 and independent publications have demonstrated the key role of GM-CSF and RAS pathway mutations in this and other cancers, including JMML, myelodysplastic syndromes, myeloproliferative neoplasms, and acute myeloid leukemia.3,4,5

A clinical protocol is also being developed for JMML with NRAS, KRAS, PTPN11 and/or NF1 genetic mutations.

Lenzilumab for COVID-19

As previously disclosed, in July 2022, preliminary topline results from the Accelerating COVID-19 Therapeutic Interventions and Vaccines-5 (“ACTIV-5”) and Big Effect Trial, in the “B” arm of the trial (“BET-B”), referred to as the ACTIV-5/BET-B trial, were released. The study was sponsored and funded by the National Institutes of Health (“NIH”) and evaluated lenzilumab in combination with remdesivir, compared to placebo and remdesivir, in hospitalized COVID-19 patients. Based on preliminary topline results, the trial did not achieve statistical significance on the primary endpoint, although the preliminary topline results did indicate that lenzilumab demonstrated a positive trend in mortality. We continue to support NIH’s further analysis of the data and a global group of leading institutions and research networks has indicated interest in including lenzilumab in their large-scale, multinational studies of COVID-19. Tocilizumab and baricitinib demonstrated mortality benefit following inclusion in REMAP-CAP and RECOVERY having failed to do so in smaller studies.

With the recent preliminary topline results from the ACTIV-5/BET-B trial, we are executing the strategic realignment plan to deemphasize the deployment of certain resources for the development of lenzilumab for COVID-19 and currently do not plan to pursue regulatory pathways, pending further data from ACTIV-5/BET-B or a future large-scale study; the Named Patient program in select European Countries has been terminated.

With the exception of lenzilumab batches in process, we plan to stop the manufacturing of lenzilumab and consolidate the remaining inventory of lenzilumab bulk drug substance and drug product in a central location for potential future use.

1 Incidence extrapolated by applying American Cancer Society incidence rate of four per one million people to the population of U.S., UK, and Australia. https://www.cancer.org/cancer/chronic-myelomonocytic-leukemia/about/key-statistics.html

2 Aim of first-ever CMML study – to improve survival. Leukaemia Foundation. (2021, October 11). Retrieved July 21, 2022, from https://www.leukaemia.org.au/stories/aim-of-first-ever-cmml-study-to-improve-survival/

3 Gupta, A. et al. (2021, February 28). Juvenile myelomonocytic leukemia-A comprehensive review and recent advances in management. American Journal of Blood Research, 11(1), 1–21. Retrieved July 21, 2022, from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8010610/pdf/ajbr0011-0001.pdf

4 Padron, E., et al. (2013, June 20). GM-CSF–dependent PSTAT5 sensitivity is a feature with therapeutic potential in chronic myelomonocytic leukemia. Blood, 121(25), 5068–5077. https://doi.org/10.1182/blood-2012-10-460170

5 Emanuel, P. D., et al. (1991, March 1). Selective hypersensitivity to granulocyte-macrophage colony-stimulating factor by juvenile chronic myeloid leukemia hematopoietic progenitors. Blood, 77(5), 925–929. https://doi.org/10.1182/blood.v77.5.925.925

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C-SMART Study

As of the end of July 2022, the C-SMART study in cancer patients with COVID-19 ceased taking on any new patients in all arms of the trial and is being concluded. The investigational product is in the process of being destroyed, due to COVID-19 being deprioritized by us and the Australian Government.

Phase 1 Study by South Korean Partners

In May 2022, our partners in South Korea dosed the final healthy volunteer of the 20 required for their Phase 1 bridging study. This study is being conducted to explore the safety, tolerability, and pharmacokinetic (“PK”) properties of lenzilumab and compare it between Koreans and Caucasians.

Review of Strategic Options and Alternatives

We have engaged SC&H Capital, an affiliate of SC&H Group, (“SC&H”) to advise us on exploration of strategic options. SC&H is an investment banking and advisory firm providing merger and acquisition (M&A), financial restructuring and related business advisory solutions. SC&H will act as our advisor as we explore strategic options to maximize value around lenzilumab and ifabotuzumab. We also intend to evaluate a full range of options to address, satisfy, defer or restructure our accounts payable and accrued liabilities to manufacturing and other parties.

Our review of strategic options and alternatives could result in, among other things, a sale, merger, consolidation or business combination, asset divestiture, partnering, licensing or other collaboration agreements, or potential acquisitions, recapitalizations or restructurings, in one or more transactions, or continuing to operate with our current business plan and executing our strategic realignment plan discussed above. We may incur substantial expenses associated with identifying, evaluating and pursuing potential strategic alternatives. Our board of directors has not set a timetable for the conclusion of its review of strategic alternatives, and there can be no assurance that this process will result in any transaction to maximize value for our stakeholders. See Part II, Item 1A, “Risk Factors.”

Nasdaq Listing Deficiencies

As previously reported, we have received two notices from The Nasdaq Stock Market, LLC regarding our failures to satisfy the $1 minimum bid price and $35 million total market value of listed securities standards for continued listing. As disclosed, we have 180 days from the date of the applicable notice to cure each deficiency. In addition, our common stock may be subject to immediate delisting from the Nasdaq Capital Market if our common stock has a closing bid price of $0.10 or less for any ten consecutive trading days. See Part II, Item 1A, “Risk Factors.”

Our Pipeline

Our product candidates are in the clinical stage of development and require substantial time, resources, research and development, and regulatory approval prior to commercialization. Our ~~current~~ pipeline is depicted below:

18Nasdaq Listing Deficiencies

~~Table~~As previously reported, we have received two notices from The Nasdaq Stock Market, LLC (“Nasdaq”) regarding our failures to satisfy the $1 minimum bid price and $35 million total market value of ~~Contents~~listed securities standards for continued listing. On April 18, 2023, we were notified that we had been granted an extension until August 21, 2023 to demonstrate compliance with all applicable requirements for listing of our common stock on Nasdaq by the Nasdaq Hearings Panel (the “Panel”), subject to our compliance with the Panel’s requirements for periodic updates relating to the status of our progress against achievement of the compliance plan presented at the April 6, 2023 hearing with the Panel. There can be no assurance that we will be successful in our execution of the compliance plan or otherwise regain compliance with the applicable Nasdaq listing requirements within the extended compliance period. In addition, our common stock may be subject to immediate delisting from the Nasdaq Capital Market if our common stock has a closing bid price of $0.10 or less for any ten consecutive trading days. See Part I, Item 1A, “Risk Factors” to the 2022 Annual Report.

Critical Accounting Policies and Use of Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the ~~U.S.~~US, or GAAP. The preparation of our financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. Our management believes judgment is involved in determining revenue recognition, the fair value-based measurement of stock-based compensation, and accruals. Our management evaluates estimates and assumptions as facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from these estimates and assumptions, and those differences could be material to the Condensed Consolidated Financial Statements. If our assumptions change, we may need to revise our estimates, or take other corrective actions, either of which may also have a material adverse effect on our statements of operations, liquidity and financial condition.

There were no significant and material changes in our critical accounting policies and use of estimates during the nine months ended September 30, 2022, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates” in our 2021 Annual Report on Form 10-K, filed with the SEC on March 1, 2022.15

Results of Operations

At September 30, 2022, we had an accumulated deficit of $686.2 million. Since inception, we have recognized a nominal amount of revenue from payments for license or collaboration fees. Our product candidates may never be successfully developed or commercialized and we may therefore never realize revenue from any product sales. Accordingly, we expect to continue to incur substantial losses from operations for the foreseeable future, and there can be no assurance that we will ever generate significant revenue or profits. Our ability to continue as a going concern depends on our ability to attain a significant amount of additional financing, as more fully described under “—Liquidity and Capital Resources” and in “Risk Factors” in Item 1A of Part II below.

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~~Comparison~~There ofwere ~~Three~~no significant and ~~Nine~~material ~~Months~~changes in ~~Ended~~our ~~September~~critical 30accounting policies and use of estimates during the three months ended March 31, ~~2022~~2023, as compared to those disclosed in “Management’s Discussion and ~~2021~~Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates” in the 2022 Annual Report.

Results of Operations

At March 31, 2023, we had an accumulated deficit of $686.0 million, primarily as a result of research and development and general and administrative expenses. Since inception, we have recognized a nominal amount of revenue from payments for license or collaboration fees. While we may in the future generate additional revenue from a variety of sources, including license fees, milestone payments, and research and development payments in connection with strategic partnerships, our product candidates may never be successfully developed or commercialized and we may therefore never realize revenue from any product sales. Accordingly, we expect to continue to incur substantial losses from operations for the foreseeable future, and there can be no assurance that we will ever generate significant revenue or profits. Our ability to continue as a going concern depends on our ability to attain a significant amount of additional financing, as more fully described under “—Liquidity and Capital Resources” below and in “Risk Factors” in the 2022 Annual Report.

Comparison of Three Months Ended March 31, 2023 and 2022

The following table summarizes the results of our operations for the periods indicated (amounts in thousands, except percentages):

	Three Months Ended September 30,						Increase/ (Decrease)						Nine Months Ended September 30,						Increase/ (Decrease)
	Three Months Ended March 31,						Increase/ (Decrease)
(in thousands)	~~2022~~2023			~~2021~~2022			Amount			%			~~2022~~			~~2021~~			~~Amount~~			%
Revenue:
License revenue	$	221		$	1,036		$	(815	)		(79	)	$	~~2,293~~		$	~~2,558~~		$	~~(265~~	)		~~(10~~	)
Total revenue		221			1,036			(815	)					~~2,293~~			~~2,558~~			~~(265~~	)
Operating expenses:
Research and development		~~18,929~~737			6017,~~811~~220			(4116,~~882~~483	)		(6996	)		~~62,587~~			~~183,757~~			~~(121,170~~	)		~~(66~~	)
General and administrative		43,~~013~~719			64,~~204~~345			(~~2,191~~626	)		(3514	)		~~12,307~~			~~19,228~~			~~(6,921~~	)		~~(36~~	)
Total operating expenses		224,~~942~~456			6721,~~015~~565			(4417,~~073~~109	)		(6679	)		~~74,894~~			~~202,985~~			~~(128,091~~	)		~~(63~~	)
Loss from operations		(224,~~721~~235	)		(6520,~~979~~529	)		(4316,~~258~~294	)		(6679	)		~~(72,601~~	)		~~(200,427~~	)		~~(127,826~~	)		~~(64~~	)
Other income (expense):
Interest expense		(~~1,298~~18	)		(~~751~~734	)		~~547~~(716	)		73(98	)		~~(2,800~~	)		~~(1,516~~	)		~~1,284~~			85
Other income (expense), net		~~326~~71			(915	)		(~~335~~86	)		(~~3,722~~573	)		~~281~~			~~(1,166~~	)		~~(1,447~~	)		~~(124~~	)
Net loss	$	(234,~~693~~182	)	$	(6621,~~739~~278	)	$	(4317,~~046~~096	)		(6480	)	$	~~(75,120~~	)	$	~~(203,109~~	)	$	~~(127,989~~	)		~~(63~~	)

Revenue

Revenue in the three ~~and nine~~ months ended ~~September~~March 3031, ~~2022~~ 2023 and ~~2021~~2022, represents license revenue under the license agreement (the “South Korea Agreement”) with KPM Tech Co., Ltd. (“KPM”) and its affiliate, Telcon RF Pharmaceutical, Inc. (together with KPM, the “Licensee”) described in more detail in Note 4 to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. ~~Through~~License ~~June 30, 2022,~~ revenue was ~~being~~$0.2 ~~amortized~~million ~~through~~for ~~March 31, 2023,~~ the ~~expected end of the performance period.~~ ~~During~~three ~~the~~months ~~quarter~~ ended ~~September~~March 3031, ~~2022~~2023, ~~the~~as ~~performance~~compared ~~period~~to ~~was~~$1.0 ~~reevaluated,~~million ~~and~~for the ~~estimated~~three ~~end~~months ~~date~~ended ofMarch ~~the performance period was adjusted to December~~ 31, ~~2025~~2022. The ~~change in estimate resulted in a~~ decrease ~~of $0.8 million~~ in ~~quarterly license~~ revenue, ~~as compared~~for tothe ~~amounts~~three ~~that~~months ~~would~~ended ~~have~~March ~~been~~31, ~~recorded~~2023, ~~under~~compared ~~the~~to ~~previous~~March ~~timeline.~~31, ~~Therefore~~2022, weis ~~recognized~~due ~~license~~to ~~revenue~~a ~~totaling~~change ~~approximately $0.2~~in ~~million~~the ~~and~~length ~~$2.3~~of ~~million in~~ the ~~three~~performance ~~and~~period ~~nine~~in ~~months~~the ~~ended~~third quarter ~~September~~of ~~30,~~ 2022, ~~respectively,~~as ~~and~~described ~~$1.0~~in ~~million~~more ~~and~~detail ~~$2.6 million~~ in ~~the~~ ~~three~~Note ~~and~~4 ~~nine~~to ~~months~~the ~~ended~~Condensed ~~September~~Consolidated ~~30,~~Financial ~~2021,~~Statements ~~respectively.~~included ~~Prospective~~in ~~periods will reflect the impact of~~ this ~~change~~Quarterly inReport on ~~estimate~~Form 10-Q.

Research and Development Expenses

Conducting research and development is central to our business model. We expense both internal and external research and development costs as incurred. We track external research and development costs incurred by project for each of our clinical programs. Our external research and development costs consist primarily of:

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●

expenses incurred under agreements with contract research organizations, investigative sites, and consultants that conduct our clinical trials and our pre-clinical activities;

●

the cost of acquiring and manufacturing clinical trial, pre-commercial and other materials, the cost to transfer the manufacturing process for bulk drug substance and fill/finish production, development of and periodic performance of a variety of tests and assays for stability, release, comparability and product characterization, costs associated with quality management, the preparation of documents and information necessary to file with regulatory authorities; and

●

other costs associated with development activities, including additional studies.

Other research and development costs consist primarily of internal research and development costs such as salaries and related fringe benefit costs for our employees, stock-based compensation charges, and travel costs not allocated to one of our clinical programs. Internal research and development costs generally benefit multiple projects and are not separately tracked per project.

20The following table shows our total research and development expenses for the three months ended March 31, 2023 and 2022:

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	Three Months Ended March 31,
(in thousands)	2023		2022
External Costs
Lenzilumab	$	489	$	16,448
Ifabotuzumab		26		158
Internal costs		222		614
Total research and development	$	737	$	17,220

~~The~~Research ~~following~~and ~~table~~development ~~shows~~expenses ~~our~~decreased ~~total~~by $16.5 ~~research~~million ~~and development~~from ~~expenses~~$17.2 million for the three ~~and~~months ~~nine~~ended March 31, 2022 to $0.7 million for the three months ended ~~September~~March 3031, ~~2022~~2023. The decrease is primarily due to a $13.9 million decrease in lenzilumab manufacturing costs and ~~2021:~~ a $2.6 million decrease in clinical trial expenses as the LIVE-AIR study has been completed.

	Three Months Ended Septmber 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
External Costs
Lenzilumab	$	18,553	$	59,950	$	60,972	$	181,089
Ifabotuzumab		138		25		321		75
Internal costs		238		836		1,294		2,593
Total research and development	$	18,929	$	60,811	$	62,587	$	183,757

We expect our development costs will decrease in 2023 as compared to 2022. In connection with our realignment to deemphasize the deployment of certain resources for the development of lenzilumab for COVID-19, with the exception of one lenzilumab batch in process, we have discontinued the manufacturing of lenzilumab and are consolidating the remaining inventory of lenzilumab bulk drug substance and drug product in a central location for potential future use. We believe we have sufficient drug product for our currently planned clinical trials.

Research and development expenses decreased by $41.9 million from $60.8 million for the three months ended September 30, 2021 to $18.9 million for the three months ended September 30, 2022 and decreased by $121.2 million from $183.8 million for the nine months ended September 30, 2021 to $62.6 million for the nine months ended September 30, 2022. The decrease in the three months ended September 30, 2022 as compared to September 30, 2021 is primarily due to a $38.4 million decrease in lenzilumab manufacturing costs and $1.5 million in clinical trial expenses, while the decrease in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 is primarily due to a $108.7 million decrease in lenzilumab manufacturing costs, a $6.8 million decrease in clinical trial expenses as the LIVE-AIR study has been completed and the CAR-T trial was terminated in Q3 2022, as part of our plan to reduce costs, and a $2.4 million decrease in consulting expenses.

We expect our research and development costs will continue to decrease in 2022 as compared to 2021. We have sought to mitigate our financial commitments by ceasing additional manufacturing of lenzilumab, certain operational activities, and reducing staff and consultants in connection with our realignment plan. Our earlier mitigation efforts included the amendment or in some cases cancelation of certain of our agreements with CMOs for future manufacturing work, some of which were contingent on an EUA, in an effort to reduce our future spending. We incurred cancellation fees for several of these modifications. We also have disputed several invoices for cancellation fees and for production batches for lenzilumab that had been submitted by CMOs that failed to produce lenzilumab within our stated release specifications, but our mitigation efforts may not be successful to recoup any such loss of lenzilumab bulk drug substance (“BDS”) or drug product (“DP”). See Notes 6 and 10 to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for more information on these disputes.

General and Administrative Expenses

General and administrative expenses consist principally of personnel-related costs (including stock-based compensation), professional fees for legal and patent expenses, insurance, consulting, audit, investor relations costs, and other general operating expenses not otherwise included in research and development.

General and administrative expenses decreased by by $20.26 million from $64.23 million for the three months ended ~~September~~March 3031, ~~2021~~2022 to $43.07 million for the three months ended ~~September 30,~~March ~~2022 and decreased by $6.9 million from $19.2 million for the nine months ended September 30~~31, ~~2021 to $12~~2023.3 ~~million for the nine months ended September 30, 2022.~~ The decrease for the three months ended ~~September~~March 3031, ~~2022~~2023, is primarily due to a ~~decrease~~reduction ofin ~~$2.2 million~~headcount in ~~consulting~~2023 ~~expenses,~~as ~~while~~compared ~~the decrease for the nine months ended September 30, 2022, is primarily due~~ to ~~decreases of $6~~2022.4 million in consulting expenses and $1.1 million in investor and public relations expenses partially offset by a $0.6 million increase in compensation related expenses, primarily non-cash stock-based compensation expense. We expect ~~that~~ our overall general and administrative costs ~~may~~to ~~decrease~~continue ~~in the near-term due~~ to ~~our~~decrease ~~realignment~~as ~~plan~~compared ~~designed~~ to ~~significantly reduce our go-forward, cash-based general and administrative expenses~~2022.

Interest Expense

Interest expense for ~~both~~the ~~periods~~three ismonths ~~primarily~~ended March 31, 2022 related to the Loan and Security Agreement with Hercules Capital as agent for its affiliates serving as lenders thereunder (the “Term Loan”). ~~Interest~~See ~~expense~~Note ~~related~~5 to the ~~Term~~Condensed ~~Loan~~Consolidated ~~was~~Financial ~~$1.3~~Statements ~~million~~of ~~and~~this ~~$0.8~~Quarterly ~~million~~Report ~~for~~on ~~the~~Form ~~three~~10-Q ~~months ended September 30, 2022 and 2021, respectively, and $2.8 million~~ for ~~the nine months ended September 30, 2022 as compared to $1.5 million for the nine months~~additional ~~ended~~information ~~September~~on ~~30, 2021. Interest expense in~~ the ~~three months ended September 30, 2022 included $1.2 million in unamortized loan fees recognized in connection with the loan payoff. We drew the initial $25.0 million under the~~ Term Loan ~~on March 29, 2021~~. ~~After giving effect to payment of fees and expenses associated with the draw, we received net proceeds of approximately $24.4 million.~~

In July 2022, we paid $26.7 million in full settlement of the Term Loan with Hercules. See Note 5 to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for additional information on the Term Loan.

Other Income (Expense), Net

Other income (expense), net decreased by $1.5 million for the nine months ended September 30, 2022, primarily due to litigation settlement costs incurred in the prior year period.

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Liquidity and Capital Resources

Since our inception, we have financed our operations primarily through proceeds from the public offerings of our common stock, private placements of our common and preferred stock, debt financings, interest income earned on cash, and cash equivalents, and marketable securities, and borrowings against lines of credit, and with the proceeds under the South Korea Agreement. At ~~September~~March 3031, ~~2022~~2023, we had cash and cash equivalents of $243.71 million. In the ~~nine-month~~first quarter ~~period~~of ~~ended September 30,~~ 2022, we sold an aggregate of 555,~~052~~926,~~506~~748 shares of our common stock under the ~~Controlled Equity OfferingSM~~ Sales Agreement ~~(the~~for ~~“Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), raising~~ net proceeds of ~~approximately~~ $4118.84 million. No shares ~~have~~were ~~been~~ sold under the Sales Agreement ~~subsequent~~in tothe ~~September~~first ~~30,~~quarter ~~2022~~of 2023.

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Primary Sources of and Uses of Cash

The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented below:

	Nine Months Ended September 30,
	Three Months Ended March 31,
(In thousands)	~~2022~~2023			~~2021~~2022
Net cash (used in) provided by:
Operating activities	$	(627,~~128~~059	)	$	(~~151~~19,~~786~~442	)
Financing activities		~~16,837~~-			~~160~~18,~~549~~374
Net increase (decrease) in cash and cash equivalents	$	(45,291	)	$	8,763
Net decrease in cash and cash equivalents	$	(7,059	)	$	(1,068	)

Net cash used in operating activities was $627.1 million and $~~151~~19.84 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022, respectively. Cash used in operating activities of $627.1 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023, primarily related to our net loss of $754.12 million, adjusted for non-cash items, ~~such~~ such as $41.62 million in stock-based compensation, and a net change in operating assets and liabilities of $8.4 ~~million, including a $8~~.~~6 million~~1 ~~increase in accounts payable, a $2.3~~ million ~~increase in accrued expenses and a $2~~.~~3 million decrease in deferred revenue.~~

Cash used in operating activities of $~~151~~19.84 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022, primarily related to our net loss of $~~203~~21.13 million, adjusted for non-cash items, such as $31.8 5 million in stock-based compensation, and a net change in operating assets and liabilities of $470.1 million~~, including a $30~~.~~6 million increase in accounts payable and a $15.4 million increase in accrued expenses.~~

There were no financing activities for the three months ended March 31, 2023. Net cash provided by financing activities was $1618.8 4 million for the ~~nine~~three months ended ~~September~~March 3031, 2022 and consists of net proceeds ofreceived ~~$41.8 million~~ from the issuance of common stock in connection with the Sales Agreement with Cantor~~, offset by the Hercules loan repayment of $25~~.~~0 million.~~

Net cash provided by financing activities was $160.5 million for the nine months ended September 30, 2021 and consists primarily of net proceeds of approximately $94.2 million related to the sale of 5,427,017 shares of our common stock in connection with an underwritten public offering, $40.0 million received from the issuance of common stock in connection with the Sales Agreement with Cantor, $24.4 million in net proceeds received from the Term Loan, and $1.9 million received from the exercise of stock options.

Recent Financings

Controlled Equity Offering

On December 31, 2020, we entered into the Sales Agreement with Cantor, under which we could issue and sell shares of our common stock, having an aggregate gross sales price of up to $100 million through Cantor, as sales agent. On April 14, 2022, we filed a prospectus in respect of the Sales Agreement which provides us with the ability to offer and sell shares of common stock having an aggregate offering price of up to an additional $75.0 million. As mentioned above, for the nine-month period ended September 30, 2022, we issued and sold 55,052,506 shares of our common stock under the Sales Agreement, raising net proceeds of $41.8 million, and for the nine-month period ended September 30, 2021, we issued and sold 2,397,791 shares of our common stock under the Sales Agreement, raising net proceeds of $40.0 million. The ability to continue to utilize the Sales Agreement at terms acceptable to us and in sufficient quantities relies on future market conditions that are uncertain and cannot be relied upon. See “Risk Factors” in Item 1A of Part II below.

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2021 Underwritten Public Offering

On March 30, 2021, we entered into an underwriting agreement with Jefferies LLC, Credit Suisse Securities (USA) LLC and Cantor, as representatives of the several underwriters, in connection with the public offering of 5,000,000 shares of our common stock. In addition, we granted the underwriters a 30-day option to purchase an additional 750,000 shares of our common stock. The initial offering closed on April 5, 2021. On May 3, 2021, we closed on the sale of an additional 427,017 shares of our common stock related to the exercise of the underwriters’ 30-day option. The aggregate gross proceeds from the sale of the 5,427,017 shares in the offering, inclusive of the additional shares purchased by the underwriters, were approximately $100.4 million. The net proceeds from this offering, after deducting underwriting discounts and offering costs, were approximately $94.2 million.

Term Loan with Hercules

On March 10, 2021, we entered into the Term Loan with Hercules which provided us with the ability to draw an initial amount of $25.0 million, which we drew on March 29, 2021. In July 2022, we paid $26.7 million in full settlement of the Term Loan with Hercules. See Note 5 to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information on the Term Loan.

Liquidity and Manufacturing Commitments

As of ~~September~~March 3031, ~~2022~~2023, we had cash and cash ~~equivalents~~ equivalents of $243.71 million.; ~~Considering our current cash resources and our current and expected levels of operating expenses for the next twelve months, which includes our~~ combined accounts payable and accrued expenses as of ~~September 30, 2022 of~~ $7552.54 million, certain of which ~~are~~were in dispute,; and ~~our~~ manufacturing commitments of $31.28 million for the ~~remaining~~remainder ~~three months~~ of ~~2022,~~2023 ~~$2.3~~with ~~million~~no ~~for~~significant ~~2023~~commitments, ~~and $3.8 million~~ thereafter ~~related to our manufacturing agreements~~, as further described below (see “– Contracts”)~~, we require additional capital to fund our planned operations and capital requirements~~. We intend to seek to defer these ~~and~~disputed ~~other~~payment ~~payments~~obligations, negotiate lower amounts or seek other courses of action, which may include legal recourse for the amounts in question. WeOur ~~may seek to raise additional~~ capital ~~through~~resources public or private equity offerings, including under the Sales Agreement with Cantor, grant financing, convertible and other debt financings, collaborations, strategic alliances, or licensing arrangements. Additional funds may not be available when we need them on terms that are ~~acceptable to us, or at all. If adequate funds are~~ not available, we may be required to delay or reduce the scope of or eliminate one or more of our research or development programs, our commercialization efforts or our manufacturing commitments and capacity. In addition, if we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish rights to our technologies, future revenue streams or product candidates or to grant licenses on terms that may not be favorable to us. While we believe our strategic realignment plan and our plans to raise additional funds will alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, these plans are not entirely within our control and cannot be assessed as being probable of occurring at this time. If we are unsuccessful in our efforts to raise additional capital, based on our current and expected levels of operating expenses our current capital will not be sufficient to fund our operations for the remainder ~~next~~of ~~twelve months~~2023.

Our ability to enter into a definitive agreement with the Partner Company for the strategic transaction described above is subject to numerous conditions, including (among others) that we have received binding commitments for investment of additional capital that will be necessary to enable us to fund the operations of the combined company going forward and enable the combined company to maintain a listing of its common stock on the Nasdaq Capital Market or another national securities exchange. We cannot provide any assurance that we will be able to raise sufficient funds to permit us to effect the proposed business combination. If we are unable to complete the proposed transactions or identify and complete another strategic or financing transaction in the first half of 2023, we may elect or be required to pursue a reorganization or seek other protection under the federal bankruptcy code. If the proposed business combination with the Partner Company and related financing is completed, we would expect to issue a significant number of shares of common stock and/or convertible equity securities to the stockholders of the Partner Company as discussed above and to new investors in the financing, each of which would have a significant dilutive effect on our existing stockholders.

See Part I, Item 1A, “Risk Factors” in the 2022 Annual Report for further discussion of the risks surrounding the proposed transaction and our company.

Contracts

Eversana Agreement

On January 10, 2021, we announced that we had entered into a master services agreement (the “Eversana Agreement”) with Eversana Life Science Services, LLC (“Eversana”) pursuant to which Eversana will provide us with services in connection with the potential launch of lenzilumab.

On September 21, 2021, we notified Eversana that due to the EUA status in the U.S., we were terminating the initial statement of work related to commercialization support of lenzilumab for the treatment of COVID-19 in the United States. Eversana is disputing the termination notice and has requested payment of approximately $4.5 million it has asserted we owe for services rendered from April 1, 2021 to September 30, 2021. We have disputed this assertion and Eversana has filed for arbitration to resolve this dispute. See Note 10 to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information.18

Manufacturing Agreements

We entered into agreements with several CMOs to manufacture BDS and fill/finish DP for our lenzilumab clinical trial activities in COVID-19 as well as to manufacture BDS and DP for a potential launch of lenzilumab in anticipation of an EUA or CMA, should one have been obtained in that indication. We also entered into agreements for packaging of the drug. These agreements provided for upfront amounts prior to commencement of manufacturing and progress payments through the course of the manufacturing process and payments for technology transfer. Certain of these CMOs were unsuccessful in their efforts to manufacture some batches of lenzilumab to our specifications for various reasons.

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~~We believe~~On weSeptember ~~have~~21, ~~sufficient~~2021, ~~supply~~we tonotified ~~conduct~~Eversana ~~our~~that ~~contemplated~~due ~~clinical~~to ~~development efforts. We estimate~~ the ~~number~~Emergency Use ofAuthorization ~~vials~~status ~~required per patient~~ in ~~our~~the ~~clinical~~US, ~~trials~~we iswere ~~between~~terminating 48the ~~and~~initial ~~150.~~statement Weof ~~have~~work ~~stopped~~related ~~all~~to ~~manufacturing~~commercialization support of lenzilumab, for ~~with~~ the ~~exception~~treatment of ~~batches~~COVID-19 in ~~process~~ atthe ~~one~~United ofStates. ~~our~~Eversana ~~CMOs,~~disputed ~~Catalent~~the ~~Pharma~~termination ~~Solutions,~~notice ~~LLC~~and ~~(“Catalent”).~~requested Aspayment of ~~October~~approximately ~~31, 2022, there were an additional~~$4.5 ~~approximately~~million ~~630,000~~it ~~lenzilumab~~asserted ~~vials~~we ~~either~~owed ~~in production or available~~ for ~~storage~~services atrendered ~~Catalent.~~from IfApril we1, ~~are~~2021 ~~unable~~ to ~~obtain~~September ~~regulatory approval for lenzilumab prior to the expiration of the shelf life at that time~~30, ~~the~~2021. ~~remaining~~We ~~inventory~~have ~~will~~agreed ~~not~~in beprinciple ~~available~~on ~~for~~a ~~commercial~~conditional ~~use.~~resolution ~~Catalent has notified us that it claims we are in breach~~ of ~~our~~the ~~manufacturing~~matters ~~agreement~~being disputed with ~~Catalent~~Eversana and ~~has~~are ~~stopped~~negotiating ~~all~~a ~~manufacturing activities~~formal ~~being~~settlement ~~performed under the~~ agreement. ~~The~~See ~~parties~~Note ~~are~~9 ~~negotiating~~to athe ~~resolution; however, approximately 630,000 lenzilumab~~Condensed ~~vials~~Consolidated atFinancial ~~Catalent~~Statements ~~may~~of ~~not~~this beQuarterly ~~released~~Report ifon weForm ~~are~~10-Q ~~unable~~for toadditional ~~reach an agreement with Catalent~~information.

~~Another~~Manufacturing 594,000 lenzilumab vials are in production at one of our other CMOs, Thermo Fisher Scientific, Inc. (“Thermo”), for which material has not yet been released by us because the batches produced are out of specification. Nonetheless, Thermo has notified us that they have stopped production and have recently filed a lawsuit against us in Delaware Superior Court for $25.9 million. We deny Thermo’s claims and assertions and will vigorously defend against them.Agreements

~~See~~We ~~Notes~~entered 6into agreements with several CMOs to manufacture bulk drug substance (“BDS”) and 10fill/finish/drug product (“DP”) for our lenzilumab clinical trial activities. We also entered into agreements for packaging of the drug. These agreements provided for upfront amounts prior to commencement of manufacturing and progress payments through the ~~Condensed~~course ~~Consolidated~~of the manufacturing process and payments for technology transfer. Certain of ~~Financial~~these ~~Statements~~CMOs were unsuccessful in ~~this~~their ~~Quarterly~~efforts ~~Report~~to onmanufacture ~~Form~~some ~~10-Q~~batches of lenzilumab to our specifications for various reasons. We have amended, and in some cases canceled, certain of these agreements. In addition, we have sought to mitigate our financial commitments by ceasing additional manufacturing of lenzilumab in connection with our realignment plan and, more recently, we have settled our disputes with two of our CMOs. See Note 11 to the Consolidated Financial Statements in the 2022 Annual Report for more information on these ~~disputes~~settlement agreements.

~~Please~~We ~~see~~believe we have sufficient supply to conduct our ~~Form~~contemplated ~~10-K~~clinical ~~for~~development efforts. We have discontinued the ~~year~~manufacturing ~~ended~~of ~~December 31~~lenzilumab, ~~2021,~~with ~~Part~~the I,exception ~~Item~~of 1Aone -batch ~~Risk~~in process ~~Factors—“Risks~~at ~~Related~~one toof ~~Our~~our ~~Efforts~~CMOs, toCatalent ~~Develop~~Pharma ~~Lenzilumab~~Solutions, ~~for~~LLC ~~COVID-19—~~(“Catalent”). ~~Manufacturing efforts~~If ~~relating~~we are unable to ~~our~~obtain regulatory approval for lenzilumab ~~program~~prior into ~~COVID-19~~the ~~have~~expiration ~~been~~of ~~extremely~~the ~~costly~~shelf ~~and~~life ~~inefficient~~at inthat ~~producing~~time, ~~treatments~~the ~~for~~remaining ~~use~~inventory inwill ~~our clinical~~not ~~development~~be ~~program~~available orfor ~~potential~~commercial ~~sale~~use.”

There is significant drug product that was in production at one of our other CMOs, Thermo Fisher Scientific, Inc. (“Thermo”), for which material has not yet been released by us because the batches produced are out of specification. Nonetheless, Thermo has notified us that they have stopped production and have recently filed a lawsuit against us in Delaware Superior Court for $25.9 million. We have filed a countersuit against Thermo for breach of contract seeking more than $37.5 million. We have agreed in principle on a conditional resolution of the matters being disputed with Thermo and are negotiating a formal settlement agreement. See Note 9 to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for additional information.

Please see our Form 10-K for the year ended December 31, 2022, Part I, Item 1A - Risk Factors—“Risks Related to our Financial Condition, Need for Additional Capital and Ability to Continue as a Going Concern— Currently pending, threatened or future litigation, arbitration, governmental proceedings or inquiries could result in material adverse consequences, including judgments or settlements, and adversely affect our ability to continue as a going concern.”

License Agreements

We are obligated to make future payments to third parties under in-license agreements, including sublicense fees, royalties, and payments that become due and payable on the achievement of certain development and commercialization milestones.

We record upfront and milestone payments made to third parties under licensing arrangements as an expense. Upfront payments are recorded when incurred and milestone payments are recorded when the specific milestone has been achieved.

Outlicensing Agreements

The South Korea Agreement

On November 3, 2020, we entered into a License Agreement (the “South Korea Agreement”) with KPM and Telcon (together, the “Licensee”). Pursuant to the South Korea Agreement, among other things, we granted the Licensee a license under certain patents and other intellectual property to develop and commercialize our lead product candidate, lenzilumab (the “Product”), for treatment of COVID-19 pneumonia, in South Korea and the Philippines (the “Territory”), subject to certain reservations and limitations. The Licensee will be responsible for gaining regulatory approval for, and subsequent commercialization of, lenzilumab in those territories.

As consideration for the license, the Licensee has agreed to pay us (i) an up-front license fee of $6.0 million (or $4.5 million net of withholding taxes and other fees and royalties), payable promptly following the execution of the License Agreement, which was received in the fourth quarter of 2020, (ii) up to an aggregate of $14.0 million in two payments based on our achievement of two specified milestones in the ~~U.S.~~US, of which the first milestone was met in the first quarter of 2021 and $6.0 million (or $4.5 million net of withholding taxes and other fees and royalties) was received in the second quarter of 2021, and (iii) subsequent to the receipt by the Licensee of the requisite regulatory approvals, double-digit royalties on the net sales of lenzilumab in South Korea and the Philippines. The Licensee has agreed to certain development and commercial performance obligations. It is expected that we will supply lenzilumab to the Licensee for a minimum of 7.5 years at a cost-plus basis from an existing or future manufacturer. The Licensee has agreed to certain minimum purchases of lenzilumab on an annual basis.

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Indemnification

In the normal course of business, we enter into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. Our exposure under these agreements is unknown because it involves claims that may be made against us in the future but have not yet been made. To date, we have not paid any claims or been required to defend any action related to our indemnification obligations. However, we may record charges in the future as a result of these indemnification obligations.

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Item 3.

Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are not required to provide the information specified under this item.

Item 4.

Controls and Procedures

We maintain disclosure controls and procedures (as defined in Exchange Act Rule 13a–15(e) and 15d-15(e)) that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the rules and regulations thereunder, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer, who is also acting as our Chief Financial Officer, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Evaluation of disclosure controls and procedures. As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, who is also acting as our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on the foregoing, our Chief Executive Officer, who is also acting as our Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2520

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PART II. OTHER INFORMATION

Item 1.

Legal Proceedings.

Please see Note 109 to the ~~Condensed~~ Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for a summary of legal proceedings ~~and~~ and developments during the ~~nine~~quarter ~~months~~ ended ~~September~~March 3031, ~~2022~~2023.

Item 1A.

Risk Factors.

Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021, which could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. Other than the updated risk factors below, there have been no material changes in our risk factors as previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021. You should review these risk factors, together, for a more complete understanding of the risks associated with an investment in our securities.

~~Preliminary~~1A, ~~topline~~"Risk ~~results~~Factors" ~~from~~in the ~~ACTIV-5/BET-B~~2022 ~~trial~~Annual ~~did not~~Report, ~~achieve~~which ~~statistical~~could adversely ~~significance~~affect onour ~~the~~business, ~~primary~~financial ~~endpoint.~~condition, Asresults aof ~~result~~operations, wecash ~~have~~flows, ~~recently~~and ~~announced~~the atrading ~~strategic~~price ~~realignment~~ of our ~~pipeline and~~common ~~resources~~stock. ~~Our~~Other than ~~forward-looking~~the ~~business~~updated ~~operations~~risk ~~are~~factors ~~dependent~~below, onthere ~~our~~have ~~ability~~been tono ~~successfully~~material ~~execute~~changes in our ~~strategic~~risk ~~realignment plan,~~factors ~~raise~~as ~~additional~~previously ~~capital~~disclosed ~~and manage our liabilities~~ in aPart ~~way~~I, ~~that~~Item ~~permits~~1A of usthe to2022 ~~continue~~Annual ~~as a going concern~~Report.

AsRisks ~~previously disclosed,~~Related ~~preliminary~~to ~~topline~~Our ~~results~~Continued ~~from~~Listing ~~the ACTIV-5/BET-B trial did not achieve statistical significance~~ on the ~~primary~~Nasdaq ~~endpoint. As~~Capital ~~a result, we will deemphasize the deployment of certain resources for the development of lenzilumab for COVID-19, as described in Part~~Market ~~I, Item 2— Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~

InThe ~~July~~suspension ~~2022, we announced a strategic realignment of our pipeline~~ and ~~resources.~~delisting ~~Key elements~~ of our ~~strategic~~common ~~realignment~~stock ~~plan~~on ~~are~~the ~~further described~~Nasdaq inCapital ~~Part~~Market I,has ~~Item~~been 2—stayed ~~Management’s~~through ~~Discussion~~the ~~and~~extended ~~Analysis~~compliance ofperiod ~~Financial Condition and Results~~ of ~~Operations.~~August ~~Among other things~~21, we2023 ~~plan~~granted toby ~~accelerate~~ the ~~development~~Nasdaq ofHearings ~~lenzilumab~~Panel. inThere ~~CMML,~~can be ano ~~rare~~assurance ~~blood~~that ~~cancer,~~we ~~for~~will ~~which~~be ~~the~~able ~~PREACH-M study is already underway, and~~ to ~~continue~~demonstrate ~~our~~compliance ~~plans~~with ~~for~~ the ~~RATinG~~requirements ~~study~~for inlisting ~~aGvHD~~on ~~that~~the ~~occurs~~Nasdaq inCapital ~~patients~~Market ~~undergoing~~by ~~bone marrow transplant~~August 21, ~~for~~2023. ~~which recruitment~~If iswe ~~temporarily~~do ~~halted~~not ~~due~~demonstrate tocompliance anwith ~~administrative~~the ~~issue~~listing ~~and~~requirements weby ~~are~~August ~~currently~~21, ~~unable~~2023, toour ~~estimate~~common ~~when~~stock ~~the first patient~~ will be ~~enrolled~~subject ~~in the study. We also intend~~ to ~~significantly reduce our go-forward, cash-based~~delisting ~~research~~from ~~and~~the ~~development~~Nasdaq ~~and~~Capital ~~general and administrative expenses~~Market.

~~Our~~On ~~forward-looking~~August 24, 2022, Nasdaq notified us that, for 30 consecutive business ~~operations~~days, ~~are~~the ~~dependent~~bid price for our common stock had closed below the minimum $1.00 per share requirement for continued inclusion on ~~our~~the ~~ability~~Nasdaq Capital Market pursuant to ~~raise~~Nasdaq ~~additional~~Listing ~~capital~~Rule ~~and~~5550(a)(2) ~~manage~~(the ~~our~~“Bid ~~liabilities~~Price Rule”). In accordance with Nasdaq Listing Rule 5810(~~whether~~c)(3)(A) ~~acknowledged~~we were provided an initial period of 180 calendar days, or ~~disputed)~~until toFebruary ~~certain~~20, ~~contract~~2023, ~~manufacturing~~to regain compliance ~~and~~with ~~other~~the ~~partners~~Bid inPrice ~~such~~Rule. We did not regain compliance by February 20, 2023. On February 21, 2023, we received a ~~way~~letter asfrom tothe ~~permit~~Staff of Nasdaq notifying us tothat ~~execute~~we ~~our~~had ~~strategic~~not ~~realignment~~regained ~~plan.~~compliance Ifwith the minimum bid price requirement as of February 20, 2023 and that we ~~are~~were ~~unsuccessful~~not ineligible ~~accomplishing~~for ~~these~~a ~~objectives~~second 180-day extension period, weand ~~may~~that ~~not~~accordingly our common stock would be ~~able~~delisted tounless ~~continue~~we ~~our~~were ~~operations~~to asappeal successfully to a ~~going~~Nasdaq ~~concern~~Hearings Panel. The Nasdaq Staff’s letter specifically noted that the Company does not comply with the stockholders’ equity initial listing requirement for the Nasdaq Capital Market. The total market value of the Company’s listed securities also remains below the $35 million requirement for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(2) (the “MVLS Rule”).

~~Our~~We ~~forward-looking~~appealed ~~business~~the ~~operations~~delisting determination to a Nasdaq ~~will~~Hearings ~~depend~~Panel, which such hearing was held on April 6, 2023. On April 18, 2023, the ~~success~~Nasdaq ofHearings ~~lenzilumab~~Panel asgranted aus ~~therapy~~an ~~for~~extension ~~CMML~~until August 21, ~~aGvHD~~2023, ~~and~~to ~~other~~execute ~~non-COVID-19~~our ~~related~~compliance ~~indications,~~plan and ~~our other~~to ~~product~~demonstrate ~~candidates.~~compliance Wewith ~~cannot~~all beapplicable ~~certain~~criteria ~~that~~for welisting ~~will~~on beThe ~~able~~Nasdaq Capital Market, subject to ~~obtain~~our ~~regulatory~~compliance ~~approval~~with the Nasdaq Hearings Panel’s requirements for, orperiodic ~~successfully~~updates relating to the status of the ~~commercialize,~~Company’s ~~any~~progress against achievement of ~~our~~the ~~product~~compliance ~~candidates~~plan ~~for~~presented ~~these~~at orthe ~~any~~April ~~other~~6, ~~indications~~2023 hearing with the Nasdaq Hearings Panel.

WeIf ~~have a limited pipeline of product candidates and~~ we dofail ~~not plan~~ to ~~conduct~~regain, ~~active~~by ~~research~~August at21, ~~this~~2023, ~~time~~and ~~for discovery of new molecules or antibodies. Since our~~thereafter ~~announcement~~maintain incompliance ~~July~~with ~~2022 that preliminary topline results from~~ the ~~ACTIV-5/BET-B~~requirements ~~trial~~for ~~did~~listing ~~not achieve statistical significance~~ on the ~~primary endpoint,~~Nasdaq ~~our~~Capital ~~primary~~Market, ~~focus has shifted to investing~~ our ~~time~~common ~~and~~stock ~~financial~~will ~~resources~~be onsubject ~~executing~~to ~~our~~suspension ~~strategic realignment plan, which~~from ~~contemplates~~trading ~~investigator-initiated studies of lenzilumab as a therapy for CMML~~ and ~~other non-COVID-19 related indications~~delisting, ~~including aGvHD~~which ~~and~~would ~~CAR-T~~adversely ~~therapy,~~affect ~~and~~the ~~our~~liquidity ~~limited work around iFab. This recent realignment~~ of our ~~pipeline~~common ~~may~~stock ~~make~~and itour ~~more~~ability ~~difficult for investors~~ to beraise ~~able~~additional ~~to evaluate our business and prospects~~capital.

AsDelisting ~~further~~from ~~described~~Nasdaq incould ~~Part I,~~adversely ~~Item~~affect ~~2— Management’s Discussion and Analysis of Financial Condition and Results of Operations, primary elements of~~ our ~~strategic~~ability ~~realignment~~to ~~plan~~consummate ~~include~~a ~~accelerating~~strategic ~~the development of lenzilumab in CMML~~transaction, aincluding ~~rare~~the ~~blood~~proposed ~~cancer,~~business ~~for~~combination ~~which~~with the ~~PREACH-M~~Partner ~~study is already underway~~Company, and toraise ~~continue~~additional financing ~~our~~through ~~plans for~~ the ~~RATinG~~public ~~study~~or inprivate ~~aGvHD~~sale ~~that~~of ~~occurs~~equity insecurities ~~patients undergoing bone marrow transplant. We also intend to assess~~ and ~~support~~would ~~further~~significantly ~~clinical~~affect ~~assessment~~the ofability ~~lenzilumab for prevention~~ of ~~CAR-T~~investors ~~therapy related toxicities through an investigator-initiated trial. We will need~~ to ~~successfully~~trade ~~enroll and complete clinical trials of lenzilumab for CMML, aGvHD, CAR-T~~our ~~therapy~~securities and ~~other~~negatively ~~non-COVID-19~~affect ~~related~~the ~~indications,~~value and ofliquidity ~~ifabotuzumab, and potentially obtain regulatory approval to market these products. With respect to the ongoing PREACH-M study~~ of ~~lenzilumab~~our ~~for~~common the treatment of high-risk CMML, there can be no assurance that additional patients will be enrolled in the PREACH-M study, that the interim results will be favorable or that regulatory authorities will agree that a modified trial design will be sufficient for registration and approvalstock.

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The future clinical, regulatory and commercial success of our realigned strategic plan for lenzilumab is subject to a number of risks, including the following:

● The sponsors of the studies may not be able to enroll adequate numbers of eligible patients in the clinical trials proposed to be conducted;

● we may not have sufficient financial and other resources to fund our obligations under these collaborations;

● we will not control the conduct, timing or release of data from the studies sponsored by investigators;

● we may not be able to provide acceptable evidence of safety and efficacy for our product candidates;

● the results of our clinical trials or collaborations may not meet the level of statistical or clinical significance, or product safety, required to move to the next stage of development or, ultimately, obtain marketing approval from applicable regulatory authorities;

● we may not be able to obtain, maintain and enforce our patents and other intellectual property rights; and

● we may not be able to obtain and maintain commercial manufacturing arrangements with third-party manufacturers or establish commercial-scale manufacturing capabilities.

We cannot assure you that our product candidates will be successfully developed or commercialized. If we or any future development partners are unable to develop, or obtain regulatory approval for or, if approved, successfully commercialize one or more of our product candidates, we may not be able to generate sufficient revenue to continue our business.

Furthermore, even if we do receive regulatory approval to market any of our product candidates, any such approval may be subject to limitations on the indicated uses for which we may market the product. If any of our product candidates are unsuccessful, that could have a substantial negative impact on our business.

Our development programs in CMML and aGvHD are several years from potential commercialization. We do not anticipate any cash flow from revenues in the foreseeable future. Accordingly, we need to obtain additional financing to fund our operations and, if we are unable to obtain such financing, we may be unable to continue to operate as a going concern.

As previously reported, during 2021 and through July 2022, we incurred significant costs associated with our development program for lenzilumab in COVID-19. Given that the preliminary topline results from the ACTIV-5/BET-B trial showed that lenzilumab did not achieve statistical significance in respect of the primary endpoint of the trial, and with the information currently available, we no longer expect to be positioned to receive an EUA or other regulatory approval for, or to commercialize or receive revenues from, lenzilumab for COVID-19 in the foreseeable future.

As of September 30, 2022, our liabilities exceeded our cash and cash equivalents by $53.6 million. Not included in total liabilities as of September 30, 2022 is approximately $9.3 million in remaining commitments to be incurred under existing agreements.

With our development pipeline in the early stages, we need to obtain additional financing to execute our strategic realignment plan and continue as a going concern. We intend to attempt to finance future cash needs through the Sales Agreement, if trading volumes and market prices support such sales, or other public or private equity offerings, license agreements, grant financing, convertible debt, other debt financings, collaborations, or strategic alliances or licensing arrangements. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. Our ability to raise capital on favorable terms in the near future has been adversely impacted by the results from the ACTIV-5/BET-B trial, which had a material and adverse impact on our stock price. The ability to continue to utilize the Sales Agreement at terms acceptable to us and in sufficient quantities relies on future market conditions that are uncertain and cannot be relied upon.

We also intend to attempt to defer payments, negotiate lower amounts or seek resolution or other courses of action for certain commitments and amounts owed to manufacturing and other partners at September 30, 2022, as further described in Part I, Item 2— Management’s Discussion and Analysis of Financial Condition and Results of Operations. In order to remain a going concern and execute our strategic realignment plan, we must successfully renegotiate these amounts owed and remaining commitments, and settle disputes, including current and potential future arbitration and litigation. There can be no assurance that we will be successful in reducing or deferring amounts owed or that we can remain a going concern long enough to realize the clinical milestones envisioned under the strategic realignment plan, which may in turn allow us to raise additional capital.

Our current capital resources are not sufficient to fund our operations for the next twelve months, making it critical for us to raise additional funds. These conditions raise substantial doubt about our ability to continue as a going concern.

The consolidated financial statements for the three and nine months ended September 30, 2022 were prepared on the basis of a going concern, which contemplates that we will be able to realize our assets and discharge liabilities in the normal course of business. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

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In addition, the presence of the explanatory paragraph about our ability to continue as a going concern in our financial statements could also make it more difficult to raise the capital necessary to address our current needs.

If we fail to regain and maintain compliance with the requirements for continued listing on the Nasdaq Capital Market, our common stock could be delisted from trading, which would adversely affect the liquidity of our common stock and our ability to raise additional capital or enter into strategic transactions.

On August 24, 2022, Nasdaq notified us that, for 30 consecutive business days, the bid price for our common stock had closed below the minimum $1.00 per share requirement for continued inclusion on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A) we were provided an initial period of 180 calendar days, or until February 20, 2023, to regain compliance with the Bid Price Rule. If we do not regain compliance by February 20, 2023, then Nasdaq may grant us a second 180 calendar day period to regain compliance, provided we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Bid Price Rule, and provide written notice of our intention to cure the deficiency during the second compliance period. In order to regain compliance, the bid price of our common stock must close at a price of at least $1.00 per share for a minimum of 10 consecutive trading days. If we do not comply with the Bid Price Rule within the allotted compliance periods, including any extensions granted by the Nasdaq, then Nasdaq will provide notice to us that our common stock will be delisted. We would then be entitled to appeal that determination to a Nasdaq hearings panel. There can be no assurance that we will regain compliance with the minimum bid price requirement during the 180-day compliance period, secure a second period of 180 days to regain compliance or maintain compliance with the other Nasdaq listing requirements.

On October 3, 2022, Nasdaq notified us that, for 30 consecutive business days, our minimum market value of listed securities (“MVLS”) had closed below the minimum requirement of $35 million for continued inclusion on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(2) (the “MVLS Rule”). In accordance with the Nasdaq Listing Rule 5810(c)(3)(C), we were provided 180 calendar days, or until April 3, 2023, to regain compliance with the MVLS Rule. In order to regain compliance, our MVLS must close at or above $35 million for a minimum of 10 consecutive business days. If we do not comply with the MVLS Rule by April 3, 2023, then Nasdaq will give notice to us that our common stock will be subject to delisting. We would then be entitled to appeal that determination to a Nasdaq hearings panel. There can be no assurance that we will regain compliance with the minimum MVLS requirement during the 180-day compliance period.

As of the date of this Quarterly Report on Form 10-Q, we have not yet regained compliance with the Bid Price Rule or the MVLS Rule. Delisting from Nasdaq could adversely affect our ability to consummate a strategic transaction and raise additional financing through the public or private sale of equity securities, and would significantly affect the ability of investors to trade our securities and negatively affect the value and liquidity of our common stock. Delisting could also have other negative results, including the potential loss of confidence by employees and the loss of institutional investor interest.

If our common stock has a closing bid price of $0.10 or less for any ten consecutive trading days our common stock may be subject to immediate delisting from the Nasdaq Capital Market.

While there is a grace period of 180 days to regain compliance with the Bid Price Rule and MVLS Rule, our common stock may be subject to immediate delisting from the Nasdaq Capital Market if our common stock has a closing bid price of $0.10 or less for any ten consecutive trading days. As of November 10, 2022, the closing bid price for our common stock was $0.14.

We may be required to complete a reverse stock split to regain compliance with Nasdaq listing rules and we cannot predict the effect that any reverse stock split will have on the market price for shares of our common stock.

We may complete a reverse stock split in order to regain compliance with the Bid Price Rule. We cannot predict the effect that a reverse stock split will have on the market price for shares of our common stock, and the history of similar reverse stock splits for companies in like circumstances has varied. Some investors may have a negative view of a reverse stock split. Even if a reverse stock split has a positive effect on the market price for shares of our common stock, performance of our business and financial results, general economic conditions and the market perception of our business, and other adverse factors which may not be in our control could lead to a decrease in the price of our common stock following the reverse stock split.

Furthermore, even if the reverse stock split does result in an increased market price per share of our common stock, the market price per share following the reverse stock split may not increase in proportion to the reduction of the number of shares of our common stock outstanding before the implementation of the reverse stock split. Accordingly, even with an increased market price per share, the total market capitalization of shares of our common stock after a reverse stock split could be lower than the total market capitalization before the reverse stock split. Also, even if there is an initial increase in the market price per share of our common stock after a reverse stock split, the market price may not remain at that level.

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If the market price of shares of our common stock declines following a reverse stock split, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of the reverse stock split due to decreased liquidity in the market for our common stock. Accordingly, the total market capitalization of our common stock following the reverse stock split could be lower than the total market capitalization before the reverse stock split.

We are currently exploring strategic alternatives, but there can be no assurance that we will be successful in identifying or completing any strategic alternative or that any such strategic alternative will yield value for our stockholders. If we are unsuccessful in identifying and completing any strategic alternative, we may have to pursue a reorganization under the federal bankruptcy code if we are not able to raise additional capital and/or manage our liabilities in a way that permits us to continue as a going concern.

We have engaged SC&H Capital, an affiliate of SC&H Group, to advise us as we explore strategic alternatives to maximize value around lenzilumab and ifabotuzumab and to address, satisfy, defer or restructure our accounts payable and accrued liabilities to manufacturing and other parties. The process of exploring strategic alternatives may be time consuming, and our board of directors has not set a timetable for the conclusion of its review of strategic alternatives.

We also cannot assure that any potential transaction or other strategic alternative, if identified, evaluated and consummated, will provide greater value to our stockholders than that reflected in our current stock price. Any potential transaction would be dependent upon a number of factors that may be beyond our control, including, among other factors, market conditions, industry trends, the interest of third parties in our business or product candidates and the availability of financing to potential buyers on reasonable terms.

If we are unsuccessful in identifying and completing any strategic alternative, or in addressing, satisfying, deferring or restructuring our accounts payable and accrued liabilities to manufacturing and other parties, we may have to pursue a reorganization under the federal bankruptcy code.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not applicable.

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Item 5.

Other Information

None.

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Item 6.

Exhibits.

		Incorporated by Reference			Filed or
Exhibit No.	Exhibit Description	Form⁺	Date	Number	Furnished Herewith
3.1	Amended and Restated Certificate of Incorporation of the Registrant.	8-K	July 6, 2016	3.1
3.1.1	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Registrant.	8-K	August 7, 2017	3.1
3.1.2	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Registrant, as amended.	8-K	February 28, 2018	3.1
3.1.3	Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Registrant, as amended	8-K	September 11, 2020	3.1
3.2	Second Amended and Restated Bylaws of the Registrant.	8-K	August 7, 2017	3.2
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)or 15d-14(a) of the Securities Exchange Act of 1934, as amended.				X
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended.				X
32.1***	Certification of Chief Executive Officer pursuant to 18 U.S.C. §1350.				X
32.2***	Certification of Chief Financial Officer pursuant to 18 U.S.C. §1350.				X

101.INS		XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

**~~Indicates~~*The ~~management~~certifications ~~contract~~attached as Exhibits 32.1 and 32.2 that accompanies this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Registrant under the Securities Act of 1933, as amended, or ~~compensatory~~the ~~plan~~Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

***The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.22

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HUMANIGEN, INC.
Date: November 14, 2022	By:	/s/ Cameron Durrant
Date: May 15, 2023	By:	/s/ Cameron Durrant
		Cameron Durrant
		Chief Executive Officer
		(Principal Executive Officer)
Date: November 14, 2022	By:	/s/ Cameron Durrant
Date: May 15, 2023	By:	/s/ Cameron Durrant
		Cameron Durrant
		Acting Chief Financial Officer
		(Principal Accounting and Financial Officer)

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