On May 16, 2017 Xenetic Biosciences, Inc. (NASDAQ: XBIO) ("Xenetic" or the "Company"), a clinical-stage biopharmaceutical company focused on the discovery, research and development of next-generation biologic drugs and novel orphan oncology therapeutics, reported its financial results for the quarter ended March 31, 2017. As previously announced, the Company’s management team will host a quarterly update conference call with a live webcast today, May 16, 2017 at 8:30 AM ET for investors, analysts and other interested parties (details below).

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Xenetic also provided an update on its license deal with Shire plc (LSE: SHP, NASDAQ: SHPG), a significant stockholder of the Company, along with the clinical status of the product candidate SHP656, or PSA-Recombinant Factor VIII ("rFVIII") being developed as a long-acting therapeutic for the treatment of hemophilia utilizing Xenetic’s proprietary PolyXen platform technology. The stated goal of Shire is to introduce an innovative, modified rFVIII protein with a significantly prolonged circulating half-life, with the objective of providing a once weekly treatment or reaching higher trough activity levels for greater efficacy. SHP656 is currently in a Phase 1/2 clinical study. Shire expects to report topline data from this Phase 1/2 study in the second quarter of 2017 and, if the outcome of the trial is successful, Xenetic expects Shire to launch a Phase 3 trial before the end of 2017. Xenetic has the potential to receive from Shire up to $100 million in cash milestones plus royalties linked to sales.

Additionally, Xenetic provided an update to its corporate progress as well as clinical and regulatory status and anticipated milestones for the Company’s lead product candidate, XBIO-101 (sodium cridanimod), a small-molecule immunomodulator and interferon inducer which, in preliminary studies, has been shown to increase progesterone receptor ("PrR") expression in endometrial tumor tissue. The Company is currently on track to commence patient recruitment in the second quarter of 2017 for a Phase 2 clinical study of XBIO-101 in conjunction with progestin therapy for the treatment of progestin resistant endometrial cancer, and has filed a protocol under its existing Investigational New Drug application ("IND") to expand the development of XBIO-101 into a biomarker study in triple negative breast cancer ("TNBC") patients.

Recent Corporate Highlights

Presented case study of PolyXen platform technology at the 13th Annual Protein Engineering Summit ("PEGS") Boston;
Rang Nasdaq Stock Market Opening Bell;
Appointed James F. Parslow, MBA, CPA as Chief Financial Officer;
Filed a protocol under existing IND for a biomarker study of XBIO-101 in TNBC patients;
Expanded its patent portfolio geographically into key markets including areas of Europe, Asia and North America and strengthened the patent portfolio in the US providing robust protection of its platform technology;
Received a $3 million milestone payment from Shire plc related to Shire’s advancing the Phase 1/2 clinical study for SHP656 being developed as a long-acting therapeutic for the treatment of hemophilia; and
Appointed Curtis A. Lockshin, Ph.D. as Chief Scientific Officer.
"We have continued to lay a strong foundation for the Company in the first quarter of 2017, showcasing our commitment to operational excellence and importantly, further positioning ourselves for what we believe will be a truly transformational year. We’ve continued to make corporate advancements with key appointments to our management team, as well as clinical advancements with the preparatory work for our XBIO-101 Phase 2 trial and the filing of a protocol under our existing IND for TNBC. We look forward to the topline data from the Shire Phase 1/2 study of SHP656 in the second quarter, and our team remains focused on advancing our flagship product candidate, XBIO-101, with the launch of patient recruitment in our Phase 2 trial for the treatment of endometrial cancer, both of which are value-driving events for Xenetic," stated M. Scott Maguire, Xenetic’s CEO.

Expected Near-Term Milestones

Commence patient recruitment in Q2 2017 for a Phase 2 clinical study of XBIO-101 in conjunction with progestin therapy for the treatment of endometrial cancer in women with recurrent or persistent disease who have failed progestin monotherapy;
Announce topline data from the Shire Phase 1/2 study of SHP656 in Q2 2017;
Receive milestone payment from Shire if endpoints are achieved in Phase 1/2 study of SHP656; and
Leverage Shire SHP656 program to enter into more industry collaborations involving the PolyXen technology.
Summary of Financial Results for First Quarter 2017

Net loss for the three months ended March 31, 2017, was $2.9 million compared to a net loss of approximately $3.6 million for the same period in 2016. The net loss in the first quarter of 2016 included a net charge of approximately $1.7 million associated with hybrid debt instruments including changes in derivative fair value, issuance losses as well as interest expense associated with the instruments. All hybrid debt instruments were settled in 2016 and none were issued or outstanding during the three months ended March 31, 2017.

The Company ended the quarter with approximately $4.3 million of cash.