Xenetic Biosciences, Inc. entered into exclusive sublicense agreement with CLS Therapeutics LTD pursuant to which the company received exclusive license, under certain patent rights and know-how owned or controlled by CLS, to develop and commercialize pharmaceutical products and methods incorporating Deoxyribonuclease (DNase) enzyme for use in treatment of cancer (sublicensed products). under the terms of the sublicense agreement, the company will have sole responsibility for, and shall use commercially reasonable efforts to, among other things, research, develop and obtain marketing approval for the sublicensed products in the United States and certain European markets, and to commercialize such sublicensed products in the relevant market once marketing approval is obtained. In consideration for the license and other rights granted to the company under the sublicense agreement, the company issued to CLS 375,000 shares of the company's common stock (sublicense agreement shares), of which 250,000 sublicense agreement shares were issued directly to OPKO Health, Inc. (OPKO) in lieu of transfer indirectly from CLS to EirGen Pharma Ltd. (EirGen), a wholly owned subsidiary of OPKO, in satisfaction of certain third-party contractual obligations between CLS and EirGen.

Additionally, the company is obligated to pay to CLS up to $13,000,000 in cash in potential milestone payments for the achievement of certain clinical and regulatory milestones, as well as issue an additional 950,000 shares of the Company's common stock to CLS based on the achievement of certain regulatory milestones (additional shares). In addition, the company is obligated to pay tiered royalties ranging from the mid-single to low-double digits on net sales of licensed products falling within the scope of the license during the royalty term (as defined in the sublicense agreement), as well as pay a percentage share in the low-to-mid teens of certain consideration received by the company from any sublicensees. The sublicense agreement will remain in effect on a country-by-country and licensed product-by-licensed product basis until terminated.

The sublicense agreement may be terminated by either party for the other party's failure to cure a default within 60 days after receipt of written notice, CLS, (a) in the event the Company ceases all development activities for a period of 12 consecutive months, and does not cure such cessation within 60 days after receipt of written notice from CLS or (b) immediately upon written notice by CLS in the event of the Company's bankruptcy or insolvency, and the company, at any time, for any reason with three months' prior written notice to CLS. In addition, CLS has the right to terminate the sublicense agreement upon written notice to the company in the event that the company directly or indirectly challenges in a legal or administrative proceeding the patentability, enforceability or validity of any licensed patent or the scope or construction of any valid claim. The Sublicense Agreement also contains customary representations, warranties and covenants, as well as customary provisions relating to indemnification, confidentiality and other matters.

Pursuant to the sublicense agreement, on April 26, 2022, the company entered into subscription agreements with CLS and OPKO pursuant to which the company agreed to issue to CLS and OPKO, and CLS and OPKO agreed to subscribe for, 125,000 and 250,000 of the sublicense agreement shares, respectively. The subscription agreements also contain customary representations, warranties and covenants.