What changed in this filing

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Item 1. Financial Statements

2022-11-10 compared with 2022-08-12 · 332 added, 331 removed, 274 unchanged (71% of the section changed)

1 unchanged sentence

Balance Sheets

Cash and cash

September 30, 2022

December 31, 2021

Current Assets:

Cash and cash equivalents

Deferred transaction costs

Payroll tax receivable

current assets

Prepaid assets

Total current assets

Property and equipment, net

Operating lease right-of-use

and Stockholders’ Equity:

Operating lease right-of-use assets

Liabilities and Stockholders’ Equity:

Current Liabilities:

Accounts payable

1 unchanged sentence

Operating lease liabilities

current liabilities

Accrued expenses

Total current liabilities

Finance lease liabilities

1 unchanged sentence

Note payable, non-current

Stockholders’

Total Liabilities

Commitments and Contingencies (Note 4)

Stockholders’ Equity:

Preferred stock, $ 0.001 par value:

2,500,000 shares authorized;

issued and outstanding as of June 30, 2022 and December 31, 2021

0 shares issued and outstanding as of September 30, 2022 and December 31, 2021

Common stock, $ 0.001 par value:

30,000,000 and 25,000,000 shares authorized

as of June 30, 2022 and December 31, 2021, respectively;

14,941,334 and 14,918,887 shares issued and outstanding as of June 30, 2022

and December 31, 2021, respectively

65,000,000 and 25,000,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively;

14,942,958 and 14,918,887 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

2 unchanged sentences

( 55,926,847 )

Stockholders’ Equity

Liabilities and Stockholders’ Equity

accompanying notes to the financial statements

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

See accompanying notes to the financial statements

Statements of Operations

Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses:

Research and development

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Interest expense

( 1,428,108 )

Interest income

Loss on sale of fixed

Other income (expense),

loss before income taxes

Loss on sale of fixed assets

Other income (expense), net

( 1,036,807 )

Net loss before income taxes

( 10,893,721 )

1 unchanged sentence

( 28,788,694 )

( 22,851,766 )

Income tax benefits

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Net loss per share, basic and diluted

Weighted average common shares outstanding,

basic and diluted

Weighted average common shares outstanding, basic and diluted

accompanying notes to the financial statements

Statements of Changes in Stockholders’ Equity

and Six Months Ended June 30, 2022

and Nine Months Ended September 30, 2022

Additional Paid-In

Balance at December 31, 2021

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Stock-based compensation

Exercise of common stock options, net of shares withheld for exercise

Exercise of common stock options, net of shares withheld for exercise price

( 7,934,447 )

at March 31, 2022 (unaudited)

Balance at March 31, 2022 (unaudited)

$ 125,386,089

2 unchanged sentences

Employee stock purchases

Exercise of common stock options, net of shares withheld for exercise

Exercise of common stock options, net of shares withheld for exercise price

( 9,960,526 )

at June 30, 2022 (unaudited)

Balance at June 30, 2022

$ 126,995,610

$ ( 73,821,820 )

Stock-based compensation

Exercise of common stock options, net of shares withheld for exercise price

( 10,893,721 )

Balance at September 30, 2022 (unaudited)

$ 128,225,939

$ ( 84,715,541 )

accompanying notes to the financial statements

Statements of Changes in Stockholders’ Equity

and Six Months Ended June 30, 2021

and Nine Months Ended September 30, 2021

Additional Paid-In

Balance at December 31, 2020

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Exercise of common stock warrants

Exercise of common stock options, net of shares withheld for exercise

Issuance of common stock upon closing of follow-on

offering, net of underwriting discounts and offering costs

Issuance of common stock in an at-the-market

(“ATM”) offering

Exercise of common stock options, net of shares withheld for exercise price

Issuance of common stock upon closing of follow-on offering, net of underwriting discounts and offering costs

Issuance of common stock in an at-the-market (“ATM”) offering

Issuance costs associated with ATM offering

1 unchanged sentence

( 2,791,668 )

at March 31, 2021 (unaudited)

Balance at March 31, 2021 (unaudited)

$ ( 29,113,249 )

1 unchanged sentence

Employee stock purchases

Exercise of common stock options, net of shares withheld for exercise

Exercise of common stock options, net of shares withheld for exercise price

Issuance of common stock warrants, note payable

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( 14,032,852 )

at June 30, 2021 (unaudited)

Balance at June 30, 2021 (unaudited)

$ ( 43,146,101 )

Stock-based compensation

Exercise of common stock options, net of shares withheld for exercise price

Issuance of common stock upon closing of follow-on offering, net of underwriting discounts and offering costs

( 6,027,246 )

Balance at September 30, 2021 (unaudited)

$ 123,632,827

$ ( 49,173,347 )

accompanying notes to the financial statements

Statements of Cash Flows

Months Ended June 30,

flows from operating activities:

Nine Months Ended September 30,

Cash flows from operating activities:

$ ( 28,788,694 )

$ ( 22,851,766 )

Adjustments to reconcile net loss to net cash

used for operations:

Adjustments to reconcile net loss to net cash used for operations:

Stock-based compensation

Issuance of common stock,

licensing agreement

Amortization of debt issuance

costs and discount

Issuance of common stock, licensing agreement

Amortization of debt issuance costs and discount

Payment-in-Kind interest

Non-cash operating lease, net

Loss on sale of fixed assets

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Accrued expenses

operating lease, net

cash used for operating activities

Net cash used for operating activities

( 26,528,911 )

( 14,187,938 )

flows from investing activities:

Cash flows from investing activities:

Purchases of property and equipment

Proceeds from sale of

property and equipment

cash used for investing activities

flows from financing activities:

Proceeds from sale of property and equipment

Net cash used for investing activities

Cash flows from financing activities:

Proceeds from exercise of common stock warrants

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Proceeds from employee stock purchases

Proceeds from follow-on offering, net of underwriting

discounts and offering costs

Proceeds from note payable, net of debt issuance

costs and discount of $ 652,061

Proceeds from follow-on offering, net of underwriting discounts and offering costs

Proceeds from note payable, net of debt issuance costs and discount of $ 652,061

Payments for debt issuance costs

Gross proceeds from an ATM offering

Payments for secondary registration statement

Payments for secondary registration statement costs

Payments for finance leases

Net cash provided by financing

Net change in cash and

cash equivalents

Net cash (used for) provided by financing activities

Net change in cash and cash equivalents

( 26,802,605 )

and cash equivalents:

Cash and cash equivalents:

Beginning of period

End of period

Supplemental disclosure

of cash flow information:

Supplemental disclosure of cash flow information:

Interest paid

disclosures of non-cash investing and financing activities:

Offering and registration statement costs included

in accounts payable

Offering and registration statement costs included

in accrued expenses

Issuance of common stock warrants and final

fee recognized as discount to note payable

Supplemental disclosures of non-cash investing and financing activities:

Property and equipment included in accounts payable

Offering and registration statement costs included in accounts payable

Deferred financing costs and offering and registration statement costs included in accrued expenses

Issuance of common stock warrants and final fee recognized as discount to note payable

accompanying notes to the financial statements

TO CONDENSED FINANCIAL STATEMENTS (unaudited)

the Three and Six Months Ended June 30, 2022 and 2021)

the Three and Nine Months Ended September 30, 2022 and 2021)

Inc., a Delaware corporation (the “Company”), is a clinical-stage biotechnology company focused on development of targeted

therapies for hormonally driven cancers.

The company’s lead therapeutic candidate is gedatolisib, a potent, reversible dual inhibitor

that selectively targets all Class I PI3K isoforms and mTOR.

Its mechanism of action and pharmacokinetic properties are highly differentiated

from other currently approved and investigational therapies that target PI3K or mTOR alone or together.

The company expects to initiate

a Phase 3 study evaluating gedatolisib in patients with HR+/HER2- advanced breast cancer in 2022.

Its CELsignia companion diagnostic

platform is uniquely able to analyze live patient tumor cells to identify new groups of cancer patients likely to benefit from already

approved targeted therapies.

therapies for multiple solid tumor indications.

The Company’s lead therapeutic candidate is gedatolisib, a potent, reversible dual

inhibitor that selectively targets all Class I PI3K isoforms and mTOR.

Its mechanism of action and pharmacokinetic properties are highly

differentiated from other currently approved and investigational therapies that target PI3K or mTOR alone or together.

The Company initiated a Phase 3 study evaluating gedatolisib in patients with HR+/HER2- advanced breast cancer in 2022.

Its CELsignia companion

diagnostic platform is uniquely able to analyze live patient tumor cells to identify new groups of cancer patients likely to benefit

from already approved targeted therapies.

The Company was co-founded in 2012 by Brian F.

Sullivan and Dr.

Laing and is based in Minnesota.

Laing and is based

in Minnesota.

The Company has not generated any revenues to date.

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and the related footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

results for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected during the remainder

of the current year or for any future period.

results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected during the

remainder of the current year or for any future period.

uses estimates and assumptions in preparing these unaudited condensed financial statements in accordance with U.S.

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which adoption of such standards is required for public companies that are not emerging growth companies.

The Company’s emerging

growth company filer status will cease on its Form 10-K filing for the year ended December 31, 2022.

Adopted Accounting Pronouncements

May 2021, the FASB issued ASU No.

2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified

Written Call Options, which provides guidance on how an issuer should account for modifications made to equity-classified written call

The guidance in the ASU requires the issuer to treat the modification of an equity-classified warrant that does not cause the

warrant to become liability-classified as an exchange of the original warrant for a new warrant.

The issuer should measure the effect

of a modification as the difference between the fair value of the modified warrant and the fair value of that warrant immediately before

modification.

The standard is effective for all entities for all fiscal years beginning after December 15, 2021.

The Company adopted

this accounting standard effective January 1, 2022, and based on the standard, determined that the Representative’s Warrant amendment

was equity-classified, treated as a deemed dividend within Additional Paid-in Capital, and the estimated incremental fair value of the

modification for the Representative’s Warrant at the date of amendment was $ 271,988 .

Net Loss Per Common Share

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calculate both basic and diluted loss per common share is the same.

the three and six months ended June 30, 2022 and 2021, potentially dilutive securities excluded from the computations of diluted weighted-average

shares outstanding were options to purchase 1,782,782 and 1,023,513 shares of common stock, respectively, warrants to purchase 377,652

and 378,442 shares of common stock, respectively, and 3,273 and 2,964 shares of restricted common stock, respectively.

the three and nine months ended September 30, 2022 and 2021, potentially dilutive securities excluded from the computations of diluted

weighted-average shares outstanding were options to purchase 1,919,114 and 1,184,721 shares of common stock, respectively, warrants to

purchase 309,652 and 378,442 shares of common stock, respectively, and 3,273 and 2,964 shares of restricted common stock, respectively.

accordance with ASU 2021-04, for purposes of calculating basic and diluted net loss per share for the three- and nine-month periods ended

September 30, 2022, the reported net loss was increased by approximately $ 272,000 related to the deemed dividend resulting from the amendment

to the warrant agreement as further discussed in Note 5.

This adjustment increased the basic and diluted net loss per share by $ .02 for

the three- and nine-month periods ended September 30, 2022.

and Finance Leases

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In July 2021, the Company signed the second amendment to extend this lease through April 30, 2023.

This amendment

provides for monthly rent, real estate taxes and operating expenses.

The Company recorded an incremental $ 193,517 in the operating right-of-use

(“ROU”) asset and lease liability pertaining to this amendment.

The second amendment also includes the option to extend the

term for one additional year.

The option to extend is at the Company’s discretion and because the Company has not determined if

the option to extend will be exercised, the extended lease term is not included in the ROU assets and lease liabilities.

regularly evaluates the renewal options and when it is reasonably certain of exercise, the Company will include the renewal period in

its lease term.

amendment provides for monthly rent, real estate taxes and operating expenses.

As a result of the lease amendment, the Company recorded

an incremental $ 193,571 in the operating right-of-use (“ROU”) asset and lease liability.

In July 2022, the Company signed

the third amendment to extend this lease through April 30, 2024.

This amendment provides for monthly rent, real estate taxes and operating

The Company recorded an incremental $ 195,437 in the operating right-of-use (“ROU”) asset and lease liability pertaining

to this amendment.

May 2018, the Company entered into a non-cancelable finance lease agreement for office equipment with a five-year term.

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date in determining the present value of the lease payments.

balance sheet information consisted of the following at June 30, 2022:

of Supplemental Balance Sheet Information Related to Leases

Operating Lease

Operating lease liability

short term portion

Finance Lease

Furniture and equipment

Accumulated depreciation

book value of property and equipment under finance lease

Finance lease liability

short term portion

analysis under lease agreements consisted of the following as of June 30, 2022:

of Maturity Analysis Under Lease Agreements

minimum lease payments

Present value discount

amount representing services

value of net minimum lease payments

Weighted Average

Operating lease

Finance lease

costs for the period ended June 30, 2022:

Schedule of Lease Costs

Operating lease cost

Finance lease cost:

Variable lease cost

cash flow information related to leases period ended June 30, 2022:

of Supplemental Cash Flow Information Related to Leases

Cash paid for amounts included in operating

and finance leases:

Operating cash

outflow from operating leases

Operating cash outflow

from finance leases

cash outflow from finance leases

cash paid for amounts included in operating and finance leases

Research Studies

Company enters into contracts in the normal course of business to conduct research and development programs internally and through

third parties that include, among others, arrangements with vendors, consultants, CMOs, and CROs.

The Company currently has

five Phase 2 clinical trial agreements in place to evaluate targeted therapies selected with one of our CELsignia tests.

milestone payments related to the Phase 2 clinical trials are uncertain and the contracts generally provide for termination

following a certain period after notice, therefore the Company believes that non-cancelable obligations under the agreements are not

The Company also has a license agreement in place with Pfizer to research, develop, manufacture and commercialize

In conjunction with the license agreement, the Company continued a Phase 1b study – B2151009 related to

These patients subsequently transitioned to an Expanded Access study – CELC-G-001.

Contracts related to the Phase

1b study and the Expanded Access study, are generally based on time and material.

In addition, contracts related to the

Company’s forthcoming Phase 3 clinical study (VIKTORIA-1) are generally cancelable with

reasonable notice within 120 days and the Company’s obligations under these contracts are primarily based on services

performed through termination dates plus certain cancelation charges, if any, as defined in each of the respective agreements.

addition, these agreements may, from time to time, be subjected to amendments as a result of any change orders executed by the

As of June 30, 2022, the Company had only one material non-cancelable contractual commitment with respect to these arrangements,

which totaled approximately $ 2,600,000 .

Stockholders’ Equity

Company enters into contracts in the normal course of business to conduct research and development programs internally and through third

parties that include, among others, arrangements with vendors, consultants, CMO’s, and CRO’s.

The Company currently has five

Phase 2 clinical trial agreements in place to evaluate targeted therapies selected with one of our CELsignia tests.

Timing of milestone

payments related to the Phase 2 clinical trials are uncertain and the contracts generally provide for termination following a certain

period after notice, therefore the Company believes that non-cancelable obligations under the agreements are not material.

also has a license agreement in place with Pfizer to research, develop, manufacture and commercialize gedatolisib.

In conjunction with

the license agreement, the Company continued a Phase 1b study – B2151009 related to gedatolisib.

These patients subsequently transitioned

to an Expanded Access study – CELC-G-001.

Contracts related to the Phase 1B study and the Expanded Access study, are generally

based on time and material.

In addition, contracts related to the Company’s Phase 3 clinical study (VIKTORIA-1) are

generally cancelable with reasonable notice within 120 days and the Company’s obligations under these contracts are primarily based

on services performed through termination dates plus certain cancelation charges, if any, as defined in each of the respective agreements.

In addition, these agreements may, from time to time, be subjected to amendments as a result of any change orders executed by the parties.

As of September 30, 2022, the Company had only one material non-cancelable contractual commitment with respect to these arrangements,

which totaled approximately $ 2.5 million.

Stockholders’

September 13, 2022, the Company entered into a First Amendment to Representative’s Warrant (the “Warrant Amendment”)

with Craig-Hallum Capital Group LLC (“Craig-Hallum”), amending the terms of that certain Representative’s Warrant,

dated September 22, 2017 (the “Representative’s Warrant”) issued by the Company to Craig-Hallum in connection with

the Company’s initial public offering.

Under the terms of the Warrant Amendment, (i) the number of shares of the Company’s

common stock issuable upon exercise of the Representative’s Warrant was reduced from 138,000 shares to 70,000 shares, and (ii)

the exercise period of the Representative’s Warrant was extended three years to September 19, 2025 .

There were no other material

amendments or modifications to the Representative’s Warrant.

The estimated incremental fair value of the Representative’s

Warrant at the date of amendment was $ 271,988 .

As the Company has an accumulated deficit balance in Retained Earnings, the incremental

impact will be recorded as a deemed dividend, classified within Additional Paid-in Capital.

September 1, 2022, the Company held a Special Meeting of Stockholders, at which the Company’s stockholders approved a proposal

to amend the Company’s Certificate of Incorporation to increase the authorized number of the Company’s Common Stock from

30,000,000 shares to 65,000,000 shares.

May 15, 2022, the Company entered into a securities purchase agreement with certain institutional and other accredited investors for

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For each share of common stock and each 1/10 of a share of preferred stock purchased, investors will receive

a warrant initially exercisable for preferred stock equivalent to 0.40 shares of common stock on an as converted basis.

price of the warrants will be at a 40 % premium to the price paid by investors for the initial shares of common stock purchased in the

private placement.

The preferred stock will be convertible into common stock at the holder’s election, subject to certain limitations

such as beneficial ownership and the approval by the Company’s stockholders to increase the number of authorized shares of common

stock sufficient to cover the shares of common stock issuable upon conversion of (i) the preferred stock purchased in the private placement

and (ii) the shares of preferred stock that may be issued upon exercise of warrants purchased in the private placement.

are initially exercisable for preferred stock and will convert into warrants to purchase common stock if the proposed increase in the

Company’s authorized common stock is approved by stockholders.

The closing of the private placement is conditioned on, among other

customary items, the first patient enrolled in the Company’s forthcoming Phase 3 clinical study (VIKTORIA-1) having received their

first dose of treatment at a clinical site located in the United States, provided that such date must occur on or before December 31,

The Company also entered into a customary registration rights agreement with the investors pursuant to which it agreed to file

a registration statement with the SEC registering the resale of (i) the shares of common stock to be issued and sold in the private placement,

(ii) the shares of common stock issuable upon conversion of the preferred stock purchased in the private placement and (iii) the shares

of common stock issuable upon conversion of the shares of preferred stock that may be issued upon exercise of warrants purchased in the

private placement.

a warrant exercisable for 0.40 shares of common stock.

The exercise price of the warrants will be at a 40 % premium to the price paid

by investors for the initial shares of common stock purchased in the private placement.

The preferred stock will be convertible into

common stock at the holder’s election, subject to certain limitations such as beneficial ownership.

The closing of the private

placement is conditioned on, among other customary items, the first patient enrolled in the Company’s Phase 3 clinical

study (VIKTORIA-1) having received their first dose of treatment at a clinical site located in the United States, provided that if such

date does not occur on or before December 31, 2022, each investor will have the right to terminate its obligation to purchase securities

under the securities purchase agreement.

The Company also entered into a customary registration rights agreement with the investors pursuant

to which it agreed to file a registration statement with the SEC registering the resale of (i) the shares of common stock to be issued

and sold in the private placement, (ii) the shares of common stock issuable upon conversion of the preferred stock purchased in the private

placement and (iii) the shares of common stock issuable upon conversion of the shares of preferred stock that may be issued upon exercise

of warrants purchased in the private placement.

As of September 30, 2022, the Company has incurred $ 142,241 in fees related to the transaction.

February 4, 2022, the Company entered into an Open Market Sale Agreement SM with Jefferies LLC, as agent (“Jefferies”),

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of such shares.

To date, the Company has not yet made any sales under this arrangement.

On October 12, 2022, pursuant to the above agreement, the Company sold 500,000 shares of common stock in a single transaction

at a price of $ 10.35 per share, generating gross proceeds of $ 5.2 million ($ 4.8 million net of commissions and offering expenses).

July 1, 2021, the Company completed a follow-on offering whereby it sold 2,250,000 shares of common stock at a public offering price

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through the Agent.

Placement Shares were registered under the Securities Act of 1933, as amended, pursuant to the Registration Statement on Form S-3 (File

333-227466), which was originally filed with the SEC on September 21, 2018 and declared effective by the SEC on October 4, 2018,

the base prospectus contained within the Registration Statement, and a prospectus supplement that was filed on June 5, 2020.

the Company’s common stock under this prospectus supplement were able to be made by any method deemed to be an “at the market

offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended.

the six months ended June 30, 2022 and 2021, the Company sold 0 and 3,082 shares, respectively, of common stock pursuant to the ATM Agreement,

at an average selling price of $ 12.64 per share.

February 23, 2021, in conjunction with the Company’s follow-on offering, the ATM Agreement was terminated.

the nine months ended September 30, 2022 and 2021, the Company sold 0 and 3,082 shares, respectively, of common stock pursuant to the

ATM Agreement, at an average selling price of $ 12.64 per share.

On February 23, 2021, in conjunction with the Company’s follow-on

offering, the ATM Agreement was terminated through the Agent.

Stock-Based Compensation

following table summarizes the activity for all stock options outstanding for the six months ended June 30:

following table summarizes the activity for all stock options outstanding for the nine months ended September 30:

of Stock Options Activity

Exercise Price

Options outstanding at beginning

Balance at June 30

Options exercisable

Weighted Average Grant Date Fair Value for

options granted during the period:

following table summarizes additional information about stock options outstanding and exercisable at June 30, 2022:

Weighted Average Exercise Price

Options outstanding at beginning of year

Balance at September 30

Options exercisable at September 30:

Weighted Average Grant Date Fair Value for options granted during the period:

following table summarizes additional information about stock options outstanding and exercisable at September 30, 2022:

of Stock Options Outstanding and Exercisable

Average Remaining Contractual Life

Average Exercise Price

Intrinsic Value

Average Exercise Price

Intrinsic Value

Company recognized stock-based compensation expense for stock options of $ 1,460,031 and $ 520,361 for the three months ended June 30,

2022 and 2021, respectively and $ 2,169,540 and $ 938,553 for the six months ended June 30, 2022 and 2021, respectively.

In May 2022, the

Company modified the exercise price on 776,324 stock option awards to $ 5.50 , the closing market price on the Nasdaq Capital Market on

May 17, 2022.

The effect of this modification on stock-based compensation was $ 428,343 for the three- and six-months ending June 30,

The effect of this modification on stock-based compensation over the remaining service period will be approximately $ 444,000 .

December 2021, the Company modified the exercise price on 311,000 stock option awards to $ 13.44 , the closing market price on the Nasdaq

Capital Market on December 15, 2021.

No director or officer awards were modified.

The effect of this modification on stock-based compensation

was $ 25,755 and $ 0 for the three months ended June 30, 2022 and 2021, respectively and $ 53,784 and $ 0 for the six months ended June 30,

2022 and 2021, respectively.

The effect of this modification on stock-based compensation over the remaining service period will be approximately

In May 2020, the Company modified the exercise price on 203,750 stock option awards to $ 5.10 , the closing market price on the

Nasdaq Capital Market on May 14, 2020.

No director or officer awards were modified.

The effect of this modification on stock-based compensation

was $ 11,601 and $ 12,790 for the three months ended June 30, 2022 and 2021, respectively and $ 23,216 and $ 26,239 for the six months ended

June 30, 2022 and 2021.

The effect of this modification on stock-based compensation over the remaining service period will be approximately

Black-Scholes option-pricing model was used to estimate the fair value of equity-based awards with the following weighted-average assumptions

for the six months ended June 30:

Options Outstanding

Options Exercisable

Options Outstanding

Weighted Average Remaining Contractual Life

Weighted Average Exercise Price

Aggregate Intrinsic Value

Options Exercisable

Weighted Average Exercise Price

Aggregate Intrinsic Value

Company recognized stock-based compensation expense for stock options of $ 1,162,751 and $ 673,022 for the three months ended September

30, 2022 and 2021, respectively and $ 3,329,969 and $ 1,611,575 for the nine months ended September 30, 2022 and 2021, respectively.

May 2022, the Company modified the exercise price on 776,324 stock option awards to $ 5.50 , the closing market price on the Nasdaq Capital

Market on May 17, 2022.

The effect of this modification on stock-based compensation was $ 49,088 for the three months ending September

30, 2022 and $ 477,431 for the nine months ending September 30, 2022.

The effect of this modification on stock-based compensation over

the remaining service period will be approximately $ 389,000 .

In December 2021, the Company modified the exercise price on 311,000 stock

option awards to $ 13.44 , the closing market price on the Nasdaq Capital Market on December 15, 2021.

No director or officer awards were

The effect of this modification on stock-based compensation was $ 21,778 and $ 0 for the three months ended September 30, 2022

and 2021, respectively and $ 75,562 and $ 0 for the nine months ended September 30, 2022 and 2021, respectively.

The effect of this modification

on stock-based compensation over the remaining service period will be approximately $ 219,000 .

In May 2020, the Company modified the exercise

price on 203,750 stock option awards to $ 5.10 , the closing market price on the Nasdaq Capital Market on May 14, 2020.

No director or

officer awards were modified.

The effect of this modification on stock-based compensation was $ 7,681 and $ 12,602 for the three months

ended September 30, 2022 and 2021, respectively and $ 30,897 and $ 34,396 for the nine months ended September 30, 2022 and 2021.

of this modification on stock-based compensation over the remaining service period will be approximately $ 27,000 .

Black-Scholes option-pricing model was used to estimate the grant date fair value of equity-based awards with the following weighted-average

assumptions for the nine months ended September 30:

of Assumptions for Fair Value of Equity-based Awards

Risk-free interest rate

1.68 % - 3.93 %

0.63 % - 1.16 %

Expected volatility

76.2 % - 79.6 %

76.6 % - 76.9 %

Expected life (years)

Expected dividend

Expected dividend yield

inputs for the Black-Scholes valuation model require management’s significant assumptions.

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The risk-free interest rates are based on the rate for U.S.

securities at the date of grant with maturity dates approximately

equal to the expected life at the grant date.

The expected life is based on the simplified method in accordance with the SEC Staff Accounting

Bulletin Nos.

The expected volatility is estimated based on historical volatility information of peer companies that are

publicly available in combination with the Company’s calculated volatility since being publicly traded.

securities at the date of grant with maturity dates approximately equal to the expected life at the grant date.

The expected life is

based on the simplified method in accordance with the SEC Staff Accounting Bulletin Nos.

The expected volatility is estimated

based on historical volatility information of peer companies that are publicly available in combination with the Company’s calculated

volatility since being publicly traded.

assumptions used to calculate the grant date fair value of non-employee options are generally consistent with the assumptions used for

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with the agreements would also be cancelled.

stock awards were granted to members of the Company’s board during the three months ended June 30, 2022 and 2021.

The Company had

3,273 and 2,964 shares of restricted stock outstanding as of June 30, 2022 and 2021, respectively, and 2,964 and 15,686 shares of restricted

stock vested during the three months ended June 30, 2022 and 2021.

The Company recognized stock-based compensation expense for restricted

stock of $ 6,775 and $ 18,112 for the three months ended June 30, 2022 and 2021, respectively and $ 27,119 and $ 38,567 for the six months

ended June 30, 2022 and 2021, respectively.

Company initially reserved a maximum of 750,000

shares of common stock for issuance under the 2017 Amended and Restated Stock Incentive Plan (the “2017 Plan”).

number of shares reserved for issuance was automatically increased by 102,540 , 102,998

shares on January 1, 2020, 2021 and 2022, respectively, and will increase

automatically on January 1 of each of 2023 through 2027 by the number of shares equal to 1.0% of the aggregate number of outstanding

shares of Company common stock as of the immediately preceding December 31 .

However, the Company’s board may reduce the

amount of the increase in any particular year.

At the Annual Meeting held on May 12, 2021 and May 12, 2022, the stockholders

approved a one-time, 500,000

increase each year for a total increase of 1,000,000

to the number of shares reserved for issuance under the 2017 Plan.

The total remaining shares available for grant under the

Company’s 2017 Plan as of June 30, 2022 was 463,925 .

unrecognized compensation cost related to stock options and restricted stock is estimated to be recognized as follows:

Company had 3,273 and 2,964 shares of restricted stock outstanding as of September 30, 2022 and 2021, respectively, and 250 and 0 shares

of restricted stock vested during the three months ended September 30, 2022 and 2021.

The Company recognized stock-based compensation

expense for restricted stock of $ 7,245 and $ 20,792 for the three months ended September 30, 2022 and 2021, respectively and $ 36,686 and

$ 59,359 for the nine months ended September 30, 2022 and 2021, respectively.

Company initially reserved a maximum of 750,000 shares of common stock for issuance under the 2017 Amended and Restated Stock Incentive

Plan (the “2017 Plan”).

The number of shares reserved for issuance was automatically increased by 102,540 , 102,998 and 149,189

shares on January 1, 2020, 2021 and 2022, respectively, and will increase automatically on January 1 each year from 2023 through 2027

by the number of shares equal to 1.0% of the aggregate number of outstanding shares of Company common stock as of the immediately preceding

December 31 .

At the Annual Meeting held on May 12, 2021 and May 12, 2022, the stockholders approved a one-time, 500,000 increase each

year for a total increase of 1,000,000 to the number of shares reserved for issuance under the 2017 Plan.

However, the Company’s

board may reduce the amount of the increase in any particular year.

The total remaining shares available for grant under the Company’s

2017 Plan as of September 30, 2022 was 325,094 .

unrecognized compensation cost related to stock options and restricted stock is estimated to be recognized as follows for the year ended:

of Unrecognized Compensation Cost

estimated compensation cost to be recognized

Total estimated compensation cost to be recognized

Company recognized stock-based compensation expense related to its employee stock purchase plan of $ 53,058 and $ 6,102 for the three months

ended June 30, 2022 and 2021, respectively and $ 79,071 and $ 12,295 for the six months ended June 30, 2022 and 2021, respectively.

Company initially reserved a total of 100,000 shares for issuance under the employee stock purchase plan.

ended September 30, 2022 and 2021, respectively and $ 132,129 and $ 18,397 for the nine months ended September 30, 2022 and 2021, respectively.

The Company initially reserved a total of 100,000 shares for issuance under the employee stock purchase plan.

The number of shares reserved

4 unchanged sentences

in any particular year.

The total remaining shares available for issuance under the employee stock purchase plan as of June 30, 2022

The total remaining shares available for issuance under the employee stock purchase plan as of September 30,

2022 was 208,929 .

Company recognized total stock-based compensation expense as follows for the three and six months ended June 30:

Company recognized total stock-based compensation expense as follows for the three and nine months ended September 30:

Schedule of Stock-based Compensation Expense

Stock-based compensation expense in operating

and administrative

Three Months Ended

Nine Months Ended

September 30,

Stock-based compensation expense in operating expenses:

Research and development

General and administrative

April 8, 2021, the Company entered into a loan and security agreement (the “Loan Agreement”) with Innovatus Life Sciences

4 unchanged sentences

The Company is no longer eligible to draw on the term B loan.

Funding of the term C loan is subject to the Company’s ability to

achieve certain milestones.

The Innovatus Loan Agreement is secured by a lien covering substantially all assets of the Company.

Funding of the term C is subject to the Company’s ability to achieve

certain milestones.

Loan Agreement also contains certain events of default, warranties and covenants of the Company.

In connection with each funding of the

Term Loans, the Company is required to issue Innovatus a warrant (the “Warrants”) to purchase a number of shares of the Company’s

stock equal to 2.5% of the principal amount of the relevant Term Loan funded divided by the exercise price, which will be based on the

lower of (i) $14.40 per share or (ii) the volume weighted

price per share of the Company’s stock for the five-trading day period ending on the last trading day immediately preceding the

funding date of the Term C Loan .

The warrants may be exercised on a cashless basis and are immediately exercisable through the tenth

anniversary of the applicable funding date.

In connection with the first tranche of the Term Loans, the Company issued a warrant to Innovatus

to purchase 26,042 shares of the Company’s common stock at an exercise price of $ 14.40 per share.

The Company evaluated the warrant

under ASC 470, debt, and recognized an additional debt discount of approximately $ 0.3 million based on the relative fair value of the

base instruments and warrants.

The Company calculated the fair value of the warrant using the Black-Scholes model.

Company is also required to maintain a minimum cash balance in agreement with the term loans’ default terms.

Company is entitled to make interest-only payments for thirty-six months, or up to forty-eight months if certain conditions are met.

The Term Loans will mature on the fifth anniversary of the initial funding date and will bear interest at a rate equal to sum of (a)

the greater of (i) Prime Rate (as defined in the Loan Agreement) or (ii) 3.25%, plus (b) 5.70% .

The effective interest rate is 12.85 %.

In connection with each funding of

the Term Loans, the Company is required to issue Innovatus a warrant (the “Warrants”) to purchase a number of shares of

the Company’s stock equal to 2.5% of the principal amount of the relevant Term Loan funded by the exercise price, which will

be based on the lower of (i) $14.40 per share or (ii) the volume weighted price per share of the Company’s stock for the

five-trading day period ending on the last trading day immediately preceding the funding date of the Term C loan .

The warrants may be exercised on a cashless basis and are immediately exercisable through the tenth anniversary of the applicable

funding date.

In connection with the first tranche of the Term Loans, the Company issued a warrant to Innovatus to purchase 26,042 shares

of the Company’s common stock at an exercise price of $ 14.40 per

The company evaluated the warrant under ASC 470, debt, and recognized an additional debt discount of approximately $ 0.3 million

based on the relative fair value of the base instruments and warrants.

The company calculated the fair value of the warrant using

the Black-Scholes model.

In connection with the funding of the first tranche of the Term Loans, a final fee of approximately $ 0.7

million was recorded as additional principal as a debt discount, and a facility fee of approximately $ 0.1

million was recorded as additional debt discount.

The Company is also required to maintain a minimum cash balance in agreement with

the term loans’ default terms.

August 9, 2022, the Company amended the Loan Agreement.

Under the amended Loan Agreement, Innovatus, as Lender, has agreed to loan up

to $ 75 million, a $ 50 million increase from the original Loan Amount, in five tranches consisting of:

(i) a $ 15 million term A loan that

was funded on April 8, 2021 upon entering into the original Loan Agreement, (ii) a $ 20 million term B loan to be funded upon request

of the Company no later than December 31, 2022, with such funding conditioned upon the closing of the Company’s $ 100 million private

placement announced on May 16, 2022, (iii) a $ 10 million term C loan to be funded upon request of the Company no later than April 1,

2024, (iv) a $ 20 million term D loan to be funded upon request of the Company no later than November 1, 2024, and (v) a $ 10 million term

E loan to be funded upon request of the Company no later than February 28, 2025.

Funding of the term B loan is conditioned upon the closing

of the Company’s $ 100 million private placement announced on May 16, 2022, and funding of the term C, D, and E loans are conditioned

upon satisfaction of certain clinical trial milestones and certain financial covenants determined on a pro forma as-funded basis.

the amended Loan Agreement, Innovatus has the right, at its election and until August 9, 2025, the third anniversary of the loan amendment

date, to convert into Common Stock up to (1) 20% of the outstanding principal amount of term A loan, and (ii) an additional 7% of the

amount by which the aggregate principal amount of the funded term B, C, D, and E loans exceed $35 million, provided that the aggregate

outstanding principal amount of all term loans is at least $35 million, which such conversion based upon a price per share equal to $10.00 .

Company is entitled to make interest-only payments for forty-eight months, or up to sixty months from the original Loan Agreement date

if certain conditions are met.

The Term Loans will mature on April 8, 2027, the sixth anniversary of the initial funding date, and will

bear interest at a rate equal to the sum of (a) the greater of (i) Prime Rate (as defined in the amended Loan Agreement) or (ii) 3.25%,

Additionally, the Company elected to make 4.95% of the interest rate as payable in-kind, which shall accrue as principal monthly.

Company is obligated to pay the Lenders (i) a non-refundable facility fee in the amount of 1.00 % of each term loan that is funded (the

“Facility Fee”), and (ii) a final fee equal to 4.50 % of the aggregate amount of the term loans funded (the “Final Fee”).

In connection with the funding of the first tranche of the Term Loans, a final fee of approximately $ 0.7 million was recorded as additional

principal and as a debt discount, and a facility fee of approximately $0.1 million was recorded as additional debt discount.

has the option to prepay the loan at any time following the first anniversary of the loan closing, with tiered prepayment fees ranging

from 0 – 2% based on when the prepayment would occur .

also has the right, at its election, after June 1, 2021 and until the third anniversary of the Loan Agreement, to convert up to 20 % of

the outstanding principal amount of all Terms Loans made under the Loan Agreement into shares of the Company’s common stock at

a price per share equal to the volume weighted average closing price of the Company’s stock for the 5-trading day period ending

on the last trading day immediately preceding the execution of the Loan Agreement (the “Conversion Right”).

connection with the Loan Agreement and the funding of the first tranche of the Term Loans, the Company incurred debt issuance costs of

approximately $ 0.5 million.

The debt issuance costs, and the debt discount are amortized to interest expense using the effective interest

method over the life of the Term Loans.

The carrying value of the debt approximates fair value as of June 30, 2022.

The Amended Loan Agreement includes certain other fees, such as a final fee of 4.5% of the funded loan amounts not converted into equity

by the lender, which apply if prepayment, an event of default, or change of control occurs prior to August 9, 2025, the third anniversary

of the Amendment date .

Subject to certain other conditions, no final fee will be payable after August 9, 2025.

The Company has the option

to prepay the loan at any time following the first anniversary of the amended loan agreement date, with tiered prepayment fees ranging

from 0 to 1% based on when the prepayment occurs.

Upon a change in control or event of default, mandatory prepayment will be required,

and if such an event occurs prior to the first anniversary of the Amendment date, an additional prepayment fee of 3.0 % applies.

amended Loan Agreement remains secured by all assets of the Company.

Proceeds will be used for working capital purposes and to fund the

Company’s general business requirements.

The amended Loan Agreement contains customary representations and warranties and covenants,

subject to customary carve outs, and includes financial covenants related to or based upon liquidity, trailing twelve months revenue

and the funded loan amounts.

connection with the original and amended Loan Agreement and the funding of the first tranche of the Term Loans, the Company incurred

debt issuance costs of approximately $ 0.7 million.

The debt issuance costs, and the debt discount are amortized to interest expense using

the effective interest method over the life of the Term Loans.

The carrying value of the debt approximates fair value as of September

debt consisted of the following:

Schedule of Long-term Debt

Payment-in-Kind interest

(added to principal)

unamortized debt

issuance costs

September 30, 2022

Payment-in-Kind interest (added to principal)

unamortized debt issuance costs

unamortized debt discount

2 unchanged sentences

of Long Term Debt Future Principal Payments

License Agreement

April 8, 2021, the Company entered into a license agreement with Pfizer to research, develop, manufacture and commercialize gedatolisib,

21 unchanged sentences

in the event of specified insolvency events involving the other party.

Subsequent Events

July 27, 2022, the Company signed an amendment to exercise the option to extend the operating lease for building space for a period

The commencement of the extended period is May 1, 2023 and will terminate on April 30, 2024.

On August 9, 2022, the

Company amended the Loan Agreement described in Note 7 above.

Under the amended Loan Agreement, Innovatus, as Lender, has agreed to loan

up to $ 75 million, a $ 50 million increase from the original Loan Agreement, in five tranches consisting of:

(i) a $ 15 million term

A loan that was funded on April 8, 2021 upon entering into the original Loan Agreement, (ii) a $ 20 million term B loan to be funded upon

request of the Company no later than December 31, 2022, with such funding conditioned upon the closing of the Company’s $ 100 million

private placement announced on May 16, 2022, (iii) a $ 10 million term C loan to be funded upon request of the Company no later than April

1, 2024, (iv) a $ 20 million term D loan to be funded upon request of the Company no later than November 1, 2024, and (v) a $ 10 million

term E loan to be funded upon request of the Company no later than February 28, 2025.

Funding of the term B loan is conditioned upon

the closing of the Company’s $ 100 million private placement announced on May 16, 2022, and funding of the term C, D and E loans

are conditioned upon satisfaction of certain clinical trial milestones and certain financial covenants determined on a pro forma as-funded

Under the amended Loan Agreement, Innovatus has the

right, at its election and until August 9, 2025, the third anniversary of the loan amendment date, to convert into Common Stock up to:

(i) 20% of the outstanding principal amount of term A loan, and (ii) an additional 7% of the amount by which the aggregate principal amount

of the funded term B, C, D and E loans exceed $35 million, provided that the aggregate outstanding principal amount of all term loans

is at least $35 million, with such conversion based upon a price per share equal to $10.00.

The Company is entitled to make interest-only

payments for forty-eight months, or up to sixty months from the original loan agreement date if certain conditions are met.

Loans will mature on April 8, 2027, the sixth anniversary of the initial funding date, and will bear interest at a rate equal to sum

of (a) the greater of (i) Prime Rate (as defined in the amended Loan Agreement) or (ii) 3.25%,

Additionally, the Company elected to make 4.95% of

the interest rate as payable in-kind, which shall accrue as principal monthly.

The Amended Loan Agreement includes certain other

fees, such as a final fee of 4.5% of the funded loan amounts not converted into equity by the lender, which apply if prepayment, an

event of default, or change of control occurs prior to August 9, 2025, the third anniversary of the Amendment date.

certain other conditions, no final fee will be payable after August 9, 2025.

The Company has the option to prepay the loan at any time

following the first anniversary of the amended loan agreement date, with tiered prepayment fees ranging from 0 – 1% based on

when the prepayment occurs.

Upon a change in control or event of default, mandatory prepayment will be required, and if such an

event occurs prior to the first anniversary of the Amendment date, an additional prepayment fee of 3.0 % applies.

The amended Loan Agreement remains secured by all

assets of the Company.

Proceeds will be used for working capital purposes and to fund the Company’s general business requirements.

The amended Loan Agreement contains customary representations and warranties and covenants, subject to customary carve outs, and includes

financial covenants related to or based upon liquidity, trailing twelve months revenue and the funded loan amounts.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements