Note 1 - Organization and Description of Business

6 Months Ended

Jun. 30, 2020

1.	Organization and Description of Business

Diffusion Pharmaceuticals Inc. (“Diffusion” or the “Company”), a Delaware corporation, is a clinical stage biotechnology company developing new treatments for life-threatening conditions by improving the body's ability to bring oxygen to the areas where it is needed most. The Company is developing its lead product candidate, transcrocetinate sodium, also known as trans sodium crocetinate (“TSC”), for use in those life-threatening conditions in which cellular oxygen deprivation (“hypoxia”) is the basis for significant unmet medical needs. TSC is designed to safely and selectively target and re-oxygenate the micro-environment of hypoxic cells, with potential uses in many indications, including COVID-

19,

stroke, oncology, and cardiovascular disease.

The Company intends to begin

first

enrollment in

2020

in its planned international TSC/COVID-

program, designed to test TSC in a total of approximately

424

COVID-

patients with symptoms of impaired respiratory function and low oxygen levels. Low oxygen levels are a frequent result of damage to the lungs, often leading to organ failure, the leading cause of death in COVID-

patients. Diffusion believes TSC's oxygen-enhancing mechanism could provide an important new treatment option.

In stroke, TSC helps promote the diffusion of oxygen into those brain cells in which oxygen-deprivation causes neuronal death resulting in patient mortality or morbidity. In cancer, TSC re-oxygenates treatment-resistant cancerous tissue, making the cancer cells up to

three

times more susceptible to the therapeutic effects of standard-of-care radiation therapy and chemotherapy.

In addition to the TSC programs, the Company is exploring alternatives regarding how best to capitalize upon our product candidate RES-

529,

which

may

include possible out-licensing and other options. RES-

529

is a novel

PI3K/Akt/mTOR

pathway inhibitor which has completed

two

Phase

clinical trials for age-related macular degeneration and is in preclinical development in oncology, specifically GBM. RES-

529

has shown activity in both in vitro and in vivo glioblastoma animal models and has been demonstrated to be orally bioavailable and capable of crossing the blood brain barrier.