20-F: Tiziana Life Sciences Reports 2024 Financials, Advances Foralumab in Neurodegenerative Disease Trials Amidst Funding Needs and Governance Disclosures

Tiziana Life Sciences Ltd has released its 2024 annual report, detailing a net loss of $12.0 million and significant progress with its lead candidate Foralumab for MS and Alzheimer's, while also highlighting a going concern uncertainty and a material weakness in internal controls.

Summary

• Tiziana Life Sciences Ltd is a clinical-stage biotechnology company focused on developing transformative therapies for neurodegenerative and neuroinflammatory diseases, with its lead candidate being Foralumab (TZLS-401).
• Foralumab, the only fully human anti-CD3 monoclonal antibody in clinical development, is being primarily developed for Non-Active Secondary Progressive Multiple Sclerosis (na-SPMS), Alzheimer's disease, and Amyotrophic Lateral Sclerosis (ALS) using intranasal administration.
• For the fiscal year ended December 31, 2024, Tiziana reported a net loss of $12.0 million, an improvement from a $17.8 million net loss in 2023.
• Research and development (R&D) expenses decreased to $5.2 million in 2024 from $8.1 million in 2023, while general and administrative (G&A) expenses increased to $10.6 million from $9.8 million over the same period.
• The company held $3.7 million in cash and cash equivalents as of December 31, 2024, and its auditors have expressed substantial doubt about its ability to continue as a going concern without securing additional funding, as current cash is projected to last until March 2026.
• Significant clinical advancements in 2024 included FDA Fast Track designation for intranasal foralumab for na-SPMS, expansion of the Phase 2 trial for this indication, dosing of the first Alzheimer's patient in an Expanded Access (EA) program, and FDA clearance for an Investigational New Drug (IND) application for intranasal foralumab in Alzheimer's disease.
• The company also filed an IND for a Phase 2 trial in ALS and received a grant from the ALS Association for this trial.
• A material weakness in internal control over financial reporting was identified related to the failure to timely develop and communicate an employee handbook.
• The company also disclosed that certain past share sales under an expired registration statement might be subject to rescission rights.

Sentiment

Score: 3

Explanation: While there are positive clinical developments with Foralumab, including FDA Fast Track status and trial advancements, these are heavily overshadowed by critical financial concerns (going concern, low cash), a material weakness in internal controls, and a significant legal risk from past share sales under an expired registration. The company's survival hinges on securing substantial new funding.

Positives

• Foralumab is uniquely positioned as the only fully human anti-CD3 mAb in clinical development, potentially offering superior safety and reduced immunogenicity.
• Positive clinical data from Expanded Access programs for intranasal foralumab in na-SPMS patients demonstrated reduced microglial activation and improvements in clinical measures, including fatigue.
• The FDA's Fast Track designation for intranasal foralumab in na-SPMS could accelerate its development and review pathway.
• Progress is being made in advancing Foralumab into Phase 2 trials for na-SPMS and Alzheimer's disease, alongside plans for a Phase 2 trial in ALS.
• Preclinical studies indicated that intranasal anti-CD3 (foralumab) ameliorated disease in a mouse model of Alzheimer's and showed potential in a model of intracerebral hemorrhage.
• A new patent application was filed in January 2024 for combining GLP-1ra and foralumab for Type 2 Diabetes and obesity, supported by positive preclinical data.
• The na-SPMS Expanded Access Program was successfully expanded from 10 to 30 patients in April 2024, indicating continued interest and tolerability.
• The company's net loss decreased in 2024 compared to 2023.
• The FDA permitted at-home self-administration of intranasal Foralumab for MS patients in the Expanded Access program in October 2023, enhancing patient convenience.
• An income tax credit of $4.9 million was recognized in 2024, primarily from R&D tax credits.

Negatives

• The company continues to incur significant net losses, with $12.0 million reported for 2024, and has a substantial accumulated deficit of $146 million.
• A low cash balance of $3.7 million as of December 31, 2024, has led auditors to express substantial doubt about the company's ability to continue as a going concern without securing further capital.
• The company is heavily reliant on the clinical and commercial success of its single lead product candidate, Foralumab, having scaled back or paused other programs.
• Tiziana has a limited operating history and no revenue-generating products, making its long-term viability uncertain.
• The inherent risks of drug development, including high costs, long timelines, and high failure rates, apply to all of the company's programs.
• The company has a history of Nasdaq non-compliance notices regarding its minimum bid price, although compliance has been regained each time, including most recently in March 2025.
• A material weakness in internal control over financial reporting was identified related to the employee handbook, indicating deficiencies in control processes.
• A past sale of 2,600,942 common shares for approximately $3.6 million occurred under an expired registration statement, creating potential legal and financial liabilities from rescission rights and regulatory penalties.

Risks

• The company's operations are highly dependent on the successful completion of clinical trials and obtaining regulatory approvals for its product candidates, particularly Foralumab, any significant delays or failures would severely impact the business.
• Difficulty in enrolling and retaining patients in clinical trials could lead to increased costs, delays, or termination of development programs.
• Reliance on third-party CROs for clinical trials and CMOs for manufacturing exposes the company to risks related to performance, compliance, and supply disruptions.
• The company requires substantial additional capital to fund its R&D activities and future commercialization efforts; failure to obtain such funding on acceptable terms, or at all, could force it to curtail or cease operations.
• Market acceptance and commercial success of approved products are uncertain and depend on factors like efficacy, safety, cost-effectiveness, and competition.
• The company's intellectual property portfolio is critical; inability to secure or defend patent rights could allow competitors to develop similar products, eroding market position.
• Stringent and evolving government regulations in the pharmaceutical industry could impose significant hurdles and costs for product development and approval.
• The increasing use of Artificial Intelligence (AI) introduces new risks related to regulatory compliance, data security, algorithmic bias, and intellectual property.
• Macroeconomic factors such as global economic uncertainty, inflation, interest rate hikes, and geopolitical instability could negatively affect the company's financing capabilities and operational costs.
• Potential delisting from The Nasdaq Capital Market if the company fails to meet continued listing standards, such as the minimum bid price, could harm liquidity and access to capital.
• As a Foreign Private Issuer, Tiziana is subject to different disclosure and governance standards than U.S. domestic issuers, which might offer fewer protections to investors.
• The identified material weakness in internal controls, if not remediated effectively, could lead to inaccuracies in financial reporting and loss of investor confidence.
• The sale of shares under an expired registration statement creates a contingent liability for potential rescission claims and regulatory actions.

Future Outlook

Tiziana Life Sciences anticipates continued significant expenses and operating losses as it advances Foralumab through more extensive clinical trials for na-SPMS, Alzheimer's disease, and ALS, alongside seeking regulatory approvals and preparing for potential commercialization. The company has explicitly stated the need for substantial additional funding to achieve its business objectives and will likely pursue equity offerings. Key upcoming milestones include topline data from the na-SPMS Phase 2a trial expected by Q4 2025, progression of the Alzheimer's program, and initiation of the ALS Phase 2 trial. The company will also focus on addressing its going concern status and remediating the identified material weakness in internal controls.

Management Comments

• The company's mission is to design and deliver next generation immunotherapies for neurodegenerative and neuroinflammatory diseases.
• Management believes intranasal administration of Foralumab has the potential to reduce inflammation while minimizing the toxicity and related side effects associated with other routes of administration.
• The company has strategically focused on the intranasal administration of foralumab for treating neurodegenerative diseases, particularly SPMS, following positive clinical findings from Expanded Access patients.
• Management's financial forecasts indicate that current cash reserves will be utilized by March 2026 unless additional financing is secured.
• The company is actively pursuing various alternatives to raise necessary funds, including deferred payments, cost reductions, and arranging new short-term and long-term financing.

Industry Context

Tiziana Life Sciences operates within the highly competitive and rapidly evolving biotechnology sector, specifically targeting neurodegenerative and neuroinflammatory diseases like MS, Alzheimer's, and ALS, which represent areas of high unmet medical need and intense research activity. The company's focus on intranasal delivery for its monoclonal antibody, Foralumab, aligns with an industry trend towards developing less invasive and more patient-centric therapeutic administration routes. Its immunological approach to CNS disorders, particularly modulating T-cell response and microglial activation, is a significant area of scientific investigation globally. Tiziana competes with numerous well-established pharmaceutical giants and specialized biotech firms that have greater financial and operational resources, all striving for breakthroughs in these complex diseases. The company's development of a fully human anti-CD3 mAb aims to differentiate its product by potentially offering improved safety and immunogenicity profiles compared to other antibody therapies.

Comparison to Industry Standards

• Tiziana's Foralumab is highlighted as the 'only fully human anti-CD3 monoclonal antibody under clinical development', suggesting a potential differentiation in terms of reduced immunogenicity compared to earlier murine (e.g., Ortho's OKT3) or humanized anti-CD3 mAbs, some of which (otelixizumab, teplizumab) have been explored for Type 1 Diabetes.
• The intranasal delivery of Foralumab for Multiple Sclerosis (MS) is positioned as an innovative approach to modulate the mucosal immune system to treat CNS inflammation, potentially offering advantages over systemic treatments. While other FDA-approved MS drugs like Tysabri (Biogen), Mayzent (Novartis), and Zeposia (Bristol Myers Squibb) have shown effects on microglial activation in animal models, Tiziana notes a lack of longitudinal data on these effects in SPMS patient cohorts, an area its PET imaging studies aim to address.
• For Alzheimer's disease, Tiziana's strategy of targeting microglial activation via nasal anti-CD3 is presented as distinct from many anti-amyloid therapies (e.g., Leqembi by Eisai/Biogen, Donanemab by Eli Lilly), aiming for efficacy independent of amyloid beta deposition and potentially avoiding side effects like ARIA associated with some amyloid-targeting drugs.
• Regarding its anti-IL6R mAb (TZLS-501, development currently paused), Tiziana suggested it could overcome limitations of existing IL-6 pathway inhibitors such as tocilizumab (Actemra by Roche) and sarilumab (Kevzara by Sanofi/Regeneron) due to a potentially higher affinity for the soluble IL-6 receptor.
• The company's R&D spending of $5.2 million in 2024 is modest for a company with multiple active CNS clinical programs, reflecting its stated 'lean and virtual R&D model' but also underscoring its financial constraints when compared to larger competitors like Biogen, Roche, Eli Lilly, and Novartis, which invest billions annually in R&D.
• The reported net loss of $12.0 million and year-end cash of $3.7 million, coupled with a going concern qualification, are indicative of the financial challenges faced by many pre-revenue clinical-stage biotechnology companies that rely on equity markets for funding, a situation exacerbated in difficult market conditions.

Corporate Governance

Legal Proceedings

• The company states it is not currently a party to any material legal proceedings, aside from potential claims incident to the ordinary course of business.
• A significant potential legal issue arises from the sale of 2,600,942 common shares between March 3, 2025, and March 6, 2025, under a shelf registration statement (Form F-3, file number 333-237368) that had expired on March 3, 2025. These sales, generating approximately $3.6 million in gross proceeds, could be deemed unregistered, potentially entitling direct purchasers to rescission rights (recovery of purchase price plus interest) and subjecting the company to enforcement actions or penalties by federal and/or state regulatory authorities.

Related Party Transactions

• Planwise Group Limited is the ultimate controlling party of Tiziana Life Sciences Ltd, through which Mr. Gabriele Cerrone, the Executive Chairman, holds beneficial ownership.
• Tiziana has shared services agreements with Rasna Therapeutics Inc, OKYO Pharma Ltd, and Accustem Sciences Inc, entities where persons with significant influence over Tiziana also have control or significant influence. As of December 31, 2024, amounts owed to Tiziana were $531,000 from Rasna, $744,000 from OKYO, and $1,037,000 from Accustem.
• In October 2023, a loan to OKYO Pharma Ltd ($2.0 million principal plus $1.15 million interest) was converted into 2,100,000 OKYO shares. On July 15, 2024, an additional $402,000 in accrued interest from OKYO was converted into 500,000 OKYO shares.
• The company holds investments in related parties: Accustem Sciences Inc. (fair value $0.6 million at Dec 31, 2024) and OKYO Pharma Ltd. (fair value $3.0 million at Dec 31, 2024).
• Consultancy and director agreements are in place with executive officers and directors. Mr. Gabriele Cerrone received a stock allocation in 2024 as compensation for additional salary ($300,000 for services from August 1, 2023, to July 31, 2024) and a one-off bonus ($100,000).

Stakeholder Impact

• Shareholders face significant risks including potential dilution from future equity financings essential for the company's survival, share price volatility, and the possibility of delisting if Nasdaq compliance issues re-emerge.
• The going concern uncertainty highlighted by auditors directly threatens shareholder investment value and the recoverability of amounts owed to creditors.
• Purchasers of shares sold under the expired registration statement (March 3-6, 2025) may have rescission rights, potentially leading to financial outflows for the company and impacting overall shareholder value if claims are successful or regulatory penalties are imposed.
• Employees' job security and compensation are linked to the company's financial health and the success of its R&D pipeline.
• Patients participating in clinical trials and Expanded Access Programs depend on Tiziana's continued funding and operational capability to receive investigational treatments and for the trials to reach completion.
• The identified material weakness in internal controls, until remediated, could undermine investor confidence in the company's financial reporting.

Next Steps

• Continue and complete the Phase 2a multicenter clinical trial of intranasally-administered Foralumab for non-active Secondary Progressive Multiple Sclerosis (na-SPMS), with topline results anticipated by Q4 2025.
• Advance the clinical development of intranasal Foralumab for Alzheimer's disease, including ongoing patient treatment under an Expanded Access IND and progression of the Phase 2a trial.
• Initiate the Phase 2 clinical trial of intranasal Foralumab in Amyotrophic Lateral Sclerosis (ALS) patients upon FDA clearance of the IND application, supported by a grant from the ALS Association.
• Continue to supply Foralumab for intranasal treatment of up to 30 patients in the Expanded Access Program for na-SPMS.
• Potentially advance investigation of intranasal Foralumab for the treatment of Long COVID, following earlier positive FDA feedback.
• Further explore the therapeutic potential of Foralumab in combination with GLP-1 receptor agonists for Type 2 Diabetes and obesity, based on recent patent filings and preclinical data.
• Actively seek substantial additional funding through equity offerings or other financing mechanisms to support ongoing R&D programs, clinical trials, and operational expenses.
• Implement remedial actions to address the identified material weakness in internal control over financial reporting concerning the employee handbook.
• Manage and address potential liabilities or regulatory actions arising from the sale of common shares under a previously expired registration statement.

Key Dates

Keywords

Foralumab, Intranasal, Anti-CD3, Multiple Sclerosis, Alzheimer's Disease, ALS, Neurodegenerative Diseases, Biotechnology, Clinical Trials, Immunotherapy, Monoclonal Antibody, Nasdaq:TLSA, Drug Development, Neuroinflammation, Expanded Access Program, PET Imaging, Microglial Activation, Going Concern, Material Weakness