The following discussion of our financial condition and results of operations should be read together with our financial statements and the notes thereto and other information included elsewhere in this Annual Report on Form 10-K.

Overview

We are a developer of next-generation biopharmaceuticals and pioneer of the sustainable FastPharming Manufacturing System. The Company applies its licensed and owned technologies to develop novel products to treat or prevent fibrotic diseases, cancers, and infectious diseases. We use our FastPharming Manufacturing System ("FastPharming" or the "FastPharming System") and Glycaneering Services TM to more rapidly build a portfolio of high quality biologic drug candidates in human clinical trials. We are also using the FastPharming System to create proteins for others by contract or via the Company's catalog.



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We operate in two segments: (i) Biopharmaceuticals: which includes development and licensing in two business units; Therapeutics (focused on oncology, as well as fibrotic and infectious diseases) and Vaccines (human and animal health vaccines), and (ii) Bioprocessing which includes Services (FastPharming Process Development and Manufacturing, as well as Bioanalytical and other services) and Products (growth factors, lectins, and monoclonal antibodies) for research and further manufacturing uses, collectively known as our Research & Bioprocess products ("RBP").



Results of Operations

Revenue

Gross revenue for 2021 and 2020 was approximately $2.4 million and $1.6 million respectively, an increase of 50% The increase is primarily attributable to the timing of the completion of deliverables for individual customers. We do not have recurring contracts, so revenue can be highly variable year to year. In 2021, the Company entered into a Master Manufacturing Services and Supply Agreement ("MSA") with Lung Bio to produce recombinant human collagen-based bioinks for 3D-bioprinted organ transplants. Revenue earned from the MSA totaled $0.9 million. This MSA is in the process of being terminated. Additionally in 2021, Revenue earned from four other third-party customers totaled $1.5 million. In 2020, we entered into a strategic relationship with CC-Pharming earning $1.3 million in revenue in 2020 with an additional $.3 million generated from other customers.

Significant quarter-to-quarter revenue variability is commonplace for early-stage pharma services companies, given the relatively small number of contracts and timing of revenue recognition. Based upon the current outlook, iBio expects a sequential decline in revenue during the first half of fiscal 2022 compared to the second half of fiscal 2021, followed by higher growth in the second half of fiscal 2022. Irrespective of quarterly fluctuations, continued year-on-year revenue growth is anticipated.

Research and Development Expenses

Research and development expenses for 2021 and 2020 were approximately $10.0 million and $3.6 million, respectively, an increase of $6.4 million. The increase primarily related to the ramp up of activities related to our internal pipeline including an increase in research and development personnel and consulting costs of approximately $2.6 million, an increase in lab consumables of $2.8 million, and other various expense increases. While iBio expects R&D will continue to grow in fiscal 2022, it anticipates a slower growth rate compared to fiscal 2021.

General and Administrative Expenses

General and administrative expenses for 2021 and 2020 were approximately $22.0 million and $11.4 million respectively, an increase of $10.6 million. General and administrative expenses principally include officer and employee salaries and benefits, depreciation and amortization, professional fees, facility repairs and maintenance, rent, utilities, consulting services, operational costs and other costs associated with being a publicly traded company. The increase is primarily attributable to additional personnel costs of $2.7 million, facility repair and maintenance of $2.3 million, consulting fees of $2.0 million, legal fees of $1.6 million, and recruiting expense of $1.3 million. While iBio expect SG&A will continue to grow in fiscal 2022, it anticipates a slower growth rate compared to fiscal 2021.

Other Income (Expense)

Other income (expense) for 2021 and 2020 was $7.9 million and ($2.4) million, an increase of $10.3 million. The increase is primarily attributable to Settlement Income of $10.2 million related to the Fraunhofer IP settlement.

Net Loss Attributable to Noncontrolling Interest

This represents the share of the loss in iBio CDMO for the Eastern Affiliate in 2021 and 2020.



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Liquidity and Capital Resources

As of June 30, 2021, we had cash of $77.4 million as compared to $55.1 million as of June 30, 2020. Given that our total cash and investment in debt securities as of June 30, 2021, approximated $97.0 million, we believe that our current cash will be sufficient to support our current operations through the first quarter of calendar year 2023.

The following equity transactions occurred during Fiscal 2021:

On June 17, 2020, as amended on July 29, 2020, the Company entered into an

equity distribution agreement with UBS Securities, LLC ("UBS") as sales agent

pursuant to which the Company could sell from time to time shares of its

1. common stock through UBS, for the sale of up to $72,000,000 of shares of the


    Company's common stock. This "At-The-Market" facility included the remaining
    portion of the Lincoln Park facility. The offering was terminated by the
    Company on November 25, 2020. The Company issued 30.2 million shares of the
    Company's common stock for net proceeds of approximately $68.83 million


    On December 8, 2020, we entered into an underwriting agreement (the
    "Underwriting Agreement") with Cantor Fitzgerald as underwriter, pursuant to
    which we (i) issued and sold in a public offering (the "Offering") 29,661,017
    shares of common stock to Cantor Fitzgerald and (ii) granted Cantor Fitzgerald
    an option for 30 days to purchase up to an additional 4,449,152 shares of

2. common stock that may be sold upon the exercise of such option by Cantor


    Fitzgerald. In January 2021, Cantor Fitzgerald notified us of its decision to
    partially exercise the option, and on January 11, 2021, we issued an
    additional 4,240,828 shares of common stock to satisfy the underwriter's
    option exercise for an additional net proceeds of approximately $4.6 million.
    We issued a total of 33.9 million shares of common stock for net proceeds of
    approximately $36.9 million.


    On February 24, 2021, Cantor Fitzgerald sold as sales agent pursuant to the

3. Sales Agreement 113,200 shares of common stock. The Company received net

proceeds of approximately $238,000.

On May 7, 2021, Cantor Fitzgerald sold as sales agent pursuant to the Sales

4. Agreement 1,716,800 shares of common stock. The Company received net proceeds

of approximately $2.995 million.

Net Cash Used in Operating Activities

In Fiscal 2021, net cash used in operating activities was $30.1 million, compared to net cash used in operating activities of $13.3 million in Fiscal 2020. The increase in cash used in operating activities in 2021 as compared to 2020 was attributable to increased expenditures to support our business strategy.

Net Cash Used in Investing Activities

In Fiscal 2021, net cash used in investing activities was $26.5 million, which primarily consisted of the purchase of debt securities and the purchase of fixed assets offset by redemptions of debt securities. In Fiscal 2020, our net cash used in investing activities was $1.1 million, which primarily consisted of the purchase of fixed assets.

Net Cash Provided by Financing Activities

In Fiscal 2021, net cash provided by financing activities was $78.8 million, compared to net cash provided by financing activities of $65.2 million in Fiscal 2020. Net cash generated by financing activities in 2021 and 2021 was primarily the result of the issuance of common stock.



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Funding Requirements

We have incurred significant losses and negative cash flows from operations since our spin-off from Integrated BioPharma in August 2008. As of June 30, 2021, our accumulated deficit was approximately $173.6 million, and we used approximately $30.1 million of net cash for operating activities for Fiscal 2021.

We plan to fund our future business operations using cash on hand, through proceeds realized in connection with the commercialization of our technologies and proprietary products, license and collaboration arrangements and the operation of iBio CDMO, through the collection or proceeds from our settlement with Fraunhofer, through potential proceeds from the sale or out-licensing of assets, and through proceeds from the sale of additional equity or other securities. We cannot be certain that such funding will be available on favorable terms or available at all. To the extent that the Company raises additional funds by issuing equity securities, its stockholders may experience significant dilution. If we are unable to raise funds when required or on favorable terms, this assumption may no longer be operative, and we may have to: a) significantly delay, scale back, or discontinue the product application and/or commercialization of our proprietary technologies; b) seek collaborators for our technology and product candidates on terms that are less favorable than might otherwise be available; c) relinquish or otherwise dispose of rights to technologies, product candidates, or products that we would otherwise seek to develop or commercialize; or d) possibly cease operations.

Off-Balance Sheet Arrangements

As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (SPEs), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually limited purposes. As of June 30, 2021, we were not involved in any SPE transactions.

Critical Accounting Policies and Estimates

A critical accounting policy is one that is both important to the portrayal of a company's financial condition and results of operations and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Our consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). All applicable U.S. GAAP accounting standards effective as of June 30, 2021 have been taken into consideration in preparing the consolidated financial statements. The preparation of consolidated financial statements requires estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. Some of those estimates are subjective and complex, and, consequently, actual results could differ from those estimates. The following accounting policies and estimates have been highlighted as significant because changes to certain judgments and assumptions inherent in these policies could affect our consolidated financial statements:

? valuation of intellectual property;

? revenue recognition;

? legal and contractual contingencies;

? research and development expenses; and

? share-based compensation expenses.

We base our estimates, to the extent possible, on historical experience. Historical information is modified as appropriate based on current business factors and various assumptions that we believe are necessary to form a basis for making judgments about the carrying value of assets and liabilities. We evaluate our estimates on an ongoing basis and make



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changes when necessary. Actual results could differ from our estimates. See Note 3 to the consolidated financial statements in this Annual Report for a complete discussion of our significant accounting policies and estimates.

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