Cellectar Biosciences, Inc. 10-K

Item 8. Financial Statements. FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS FOR CELLECTAR BIOSCIENCES, INC. Page Report of Independent Registered Public Accounting Firm (Baker Tilly US, LLP, Madison, Wisconsin , PCAOB ID No. 23 ) 60 Consolidated Balance Sheets as of December 31, 2023 and 2022 62 Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022 63 Consolidated Statements of Stockholders’ (Deficit) Equity for the Years Ended December 31, 2023 and 2022 64 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022 65 Notes to Consolidated Financial Statements 66 ​ ​ 59 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Cellectar Biosciences, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Cellectar Biosciences, Inc. and Subsidiary (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ (deficit) equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Going Concern Uncertainty The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 of the consolidated financial statements, the Company has recurring losses from operations, an accumulated deficit, expects to incur losses for the foreseeable future and requires additional working capital. These are the reasons that raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not contain any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Accounting for the Preferred Stock and Warrants in connection with the September 2023 Private Placement Critical Audit Matter Description 60 Table of Contents As described in Note 6 to the consolidated financial statements, the Company issued shares of Series E-1 preferred stock, along with Tranche A warrants and Tranche B warrants to purchase Series E-3 and E-4 preferred stock, respectively. The Series E-1 was classified as mezzanine equity at its issuance date, upon requisite shareholder approval this was determined to be classified as permanent equity in the fourth quarter of 2023, and the warrants issued by the Company are classified as liabilities and are recorded at fair value at each reporting period. The principal considerations for our determination that the accounting for these instruments constituted a critical audit matter included the significant complexity of the relevant accounting guidance as well as the extent of management judgments and certain assumptions involved in the application of that guidance. In addition, gathering certain audit evidence of the Company’s valuation of the warrant liability was especially challenging as the fair value is based on the selection of fair value methodologies as well as various inputs, significant assumptions and estimation uncertainty used in that fair value determination. Lastly, the audit effort included the use of firm personnel with relevant expertise to assist in auditing this transaction and the related valuation. How We Addressed the Matter in Our Audit The primary procedures we performed to address this critical audit matter included: ● Assessing the design and implementation of management’s controls over the accounting for these instruments, which included controls over the proper selection of fair value methodologies and assumptions used to determine fair value of warrant liability. ● Reading the agreements and comparing the relevant terms to management’s analysis of the transactions. ● Utilizing the assistance of firm personnel having expertise in the accounting for these instruments, we evaluated management’s conclusions regarding the balance sheet classification and fair value determination of the two separate freestanding instruments included in the capital raise, the Series E preferred stock and the Tranche A and Tranche B warrants. ● Involving firm valuation specialists in evaluating the Company’s determination of fair value, including the appropriateness of the fair value methodologies. ● Testing the Company’s determination of fair value for the transaction, as well as the respective relative fair value allocations. Our testing included assessing the reasonableness of certain assumptions used by the Company, as well as the completeness and accuracy of the data and estimates utilized. ● Performing a sensitivity analysis to evaluate the reasonableness management’s assumptions. ● Assessing the required financial statement disclosures related to the transaction. /s/ Baker Tilly US, LLP We have served as the Company's auditor since 2016. Madison, Wisconsin March 27, 2024 61 Table of Contents CELLECTAR BIOSCIENCES, INC. CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2023 2022 ASSETS ​ ​ CURRENT ASSETS: ​ ​ Cash and cash equivalents ​ $ 9,564,988 ​ $ 19,866,358 Prepaid expenses and other current assets ​ 888,225 ​ 663,243 Total current assets ​ 10,453,213 ​ 20,529,601 Fixed assets, net ​ 1,090,304 ​ 418,641 Right-of-use asset, net ​ 502,283 ​ 560,334 Long-term assets ​ 23,566 ​ 75,000 Other assets ​ 6,214 ​ 6,214 TOTAL ASSETS ​ $ 12,075,580 ​ $ 21,589,790 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY ​ ​ ​ ​ CURRENT LIABILITIES: ​ ​ ​ ​ Accounts payable and accrued liabilities ​ $ 9,178,645 ​ $ 5,478,443 Warrant liability ​ ​ 3,700,000 ​ ​ — Lease liability ​ ​ 58,979 ​ ​ 50,847 Total current liabilities ​ 12,937,624 ​ ​ 5,529,290 Lease liability, net of current portion ​ ​ 494,003 ​ ​ 552,981 TOTAL LIABILITIES ​ 13,431,627 ​ ​ 6,082,271 COMMITMENTS AND CONTINGENCIES (Note 10) ​ ​ STOCKHOLDERS’ (DEFICIT) EQUITY: ​ ​ Series D preferred stock, 111.11 shares authorized; 111.11 shares issued and outstanding as of December 31, 2023 and 2022 ​ 1,382,023 ​ ​ 1,382,023 Series E-2 preferred stock, 1,225.00 shares authorized; 319.76 and 0.00 shares issued and outstanding as of December 31, 2023 and 2022, respectively ​ ​ 4,677,632 ​ ​ — Common stock, $ 0.00001 par value; 170,000,000 shares authorized; 20,744,110 and 9,385,272 shares issued and outstanding as of December 31, 2023 and 2022, respectively ​ 207 ​ ​ 94 Additional paid-in capital ​ 210,066,630 ​ ​ 193,624,445 Accumulated deficit ​ ( 217,482,539 ) ​ ​ ( 179,499,043 ) Total stockholders’ (deficit) equity ​ ( 1,356,047 ) ​ ​ 15,507,519 TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY ​ $ 12,075,580 ​ $ 21,589,790 ​ See report of independent registered public accounting firm and accompanying notes to the consolidated financial statements. ​ ​ 62 Table of Contents CELLECTAR BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ COSTS AND EXPENSES: ​ ​ Research and development ​ $ 28,211,460 ​ $ 19,219,603 General and administrative ​ 10,749,183 ​ 9,594,170 Total costs and expenses ​ 38,960,643 ​ 28,813,773 ​ ​ ​ ​ ​ ​ ​ LOSS FROM OPERATIONS ​ ( 38,960,643 ) ​ ( 28,813,773 ) ​ ​ ​ ​ ​ ​ ​ OTHER INCOME (EXPENSE): ​ ​ ​ ​ Warrant issuance expense ​ ( 470,000 ) ​ — Gain on valuation of warrants ​ ​ 1,000,000 ​ ​ — Interest income, net ​ 387,147 ​ 152,519 Total other income, net ​ 917,147 ​ 152,519 LOSS BEFORE INCOME TAXES ​ ​ ( 38,043,496 ) ​ ​ ( 28,661,254 ) ​ ​ ​ ​ ​ ​ ​ INCOME TAX BENEFIT ​ ​ ( 60,000 ) ​ ​ ( 60,000 ) ​ ​ ​ ​ ​ ​ ​ NET LOSS ​ $ ( 37,983,496 ) ​ $ ( 28,601,254 ) BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE ​ $ ( 3.11 ) ​ $ ( 4.05 ) SHARES USED IN COMPUTING BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS PER COMMON SHARE ​ 12,221,571 ​ 7,055,665 ​ See report of independent registered public accounting firm and accompanying notes to the consolidated financial statements. ​ ​ 63 Table of Contents CELLECTAR BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Preferred Stock ​ Common Stock ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ Par ​ Additional ​ Accumulated ​ Stockholders’ ​ Shares Amount Shares Amount Paid-In Capital Deficit (Deficit) Equity BALANCE AT DECEMBER 31, 2021 111.11 ​ $ 1,382,023 ​ 6,110,125 ​ $ 61 ​ $ 182,560,859 ​ $ ( 150,897,789 ) ​ $ 33,045,154 Issuance of common stock, pre-funded warrants and warrants, net of issuance costs — ​ ​ — ​ 3,275,153 ​ ​ 33 ​ ​ 9,610,622 ​ ​ — ​ ​ 9,610,655 Stock-based compensation — ​ ​ — ​ — ​ ​ — ​ ​ 1,452,964 ​ ​ — ​ ​ 1,452,964 Retired shares — ​ ​ — ​ ( 6 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — Net loss — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 28,601,254 ) ​ ​ ( 28,601,254 ) BALANCE AT DECEMBER 31, 2022 111.11 ​ $ 1,382,023 ​ 9,385,272 ​ $ 94 ​ $ 193,624,445 ​ $ ( 179,499,043 ) ​ $ 15,507,519 Stock-based compensation — ​ ​ — ​ — ​ ​ — ​ ​ 2,410,288 ​ ​ — ​ ​ 2,410,288 Exercise of warrants into common stock — ​ ​ — ​ 1,197,622 ​ ​ 12 ​ ​ 789,630 ​ ​ — ​ ​ 789,642 Issuance of preferred stock, net of issuance costs (Note 6) 1,225.00 ​ ​ 17,920,000 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 17,920,000 Conversion of preferred stock to common stock ( 905.24 ) ​ ​ ( 13,242,368 ) ​ 9,947,684 ​ ​ 99 ​ ​ 13,242,269 ​ ​ — ​ ​ — Stock awards (Note 7) — ​ ​ — ​ 213,532 ​ ​ 2 ​ ​ ( 2 ) ​ ​ — ​ ​ — Net loss — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ ( 37,983,496 ) ​ ​ ( 37,983,496 ) BALANCE AT DECEMBER 31, 2023 430.87 ​ ​ 6,059,655 ​ 20,744,110 ​ ​ 207 ​ ​ 210,066,630 ​ ​ ( 217,482,539 ) ​ $ ( 1,356,047 ) ​ See report of independent registered public accounting firm and accompanying notes to the consolidated financial statements. ​ ​ 64 Table of Contents CELLECTAR BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM OPERATING ACTIVITIES: ​ ​ Net loss ​ $ ( 37,983,496 ) ​ $ ( 28,601,254 ) Adjustments to reconcile net loss to cash used in operating activities: ​ ​ ​ ​ ​ Depreciation and amortization ​ 192,375 ​ ​ 148,435 Stock-based compensation ​ 2,410,288 ​ ​ 1,452,964 Loss on disposal of asset ​ ​ — ​ ​ 3,386 Costs to issue warrants ​ ​ 470,000 ​ ​ — Gain on valuation of warrants ​ ​ ( 1,000,000 ) ​ ​ — Noncash lease expense ​ 58,051 ​ ​ 90,432 Changes in: ​ ​ ​ ​ ​ Prepaid expenses and other current assets ​ ​ ( 173,548 ) ​ ​ 204,242 Accounts payable and accrued liabilities ​ 3,700,202 ​ ​ 1,623,529 Lease liability ​ ​ ( 50,846 ) ​ ​ ( 144,035 ) Cash used in operating activities ​ ( 32,376,974 ) ​ ​ ( 25,222,301 ) CASH FLOWS FROM INVESTING ACTIVITIES: ​ ​ Purchases of fixed assets ​ ( 864,038 ) ​ ​ ( 225,971 ) Cash used in investing activities ​ ( 864,038 ) ​ ​ ( 225,971 ) CASH FLOWS FROM FINANCING ACTIVITIES: ​ ​ Proceeds from issuance of preferred stock and warrants, net of issuance costs ​ 22,150,000 ​ ​ 9,610,655 Proceeds from exercise of warrants ​ 789,642 ​ ​ — Cash provided by financing activities ​ 22,939,642 ​ ​ 9,610,655 DECREASE IN CASH AND CASH EQUIVALENTS ​ ( 10,301,370 ) ​ ​ ( 15,837,617 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ​ 19,866,358 ​ ​ 35,703,975 CASH AND CASH EQUIVALENTS AT END OF PERIOD ​ $ 9,564,988 ​ $ 19,866,358 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION ​ ​ ​ ​ ​ Conversion of preferred stock to common stock ​ $ 13,242,368 ​ $ — Conversion of mezzanine equity to permanent equity (Note 6) ​ $ 17,920,000 ​ $ — ​ See report of independent registered public accounting firm and accompanying notes to the consolidated financial statements. ​ 65 Table of Contents CELLECTAR BIOSCIENCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. NATURE OF BUSINESS AND ORGANIZATION Cellectar Biosciences, Inc. (Cellectar or the Company) is a late-stage clinical biopharmaceutical company focused on the discovery, development and commercialization of drugs for the treatment of cancer, leveraging our proprietary phospholipid drug conjugate™ (PDC™) delivery platform that specifically targets cancer cells and delivers improved efficacy and better safety as a result of fewer off-target effects. The Company has incurred losses since inception in devoting substantially all of its efforts toward research and development and has an accumulated deficit of approximately $ 217,483,000 as of December 31, 2023. During the year ended December 31, 2023, the Company generated a net loss of approximately $ 37,983,000 and the Company expects that it will continue to generate operating losses for the foreseeable future. The Company believes that its cash balance as of December 31, 2023, when combined with funds generated by the exercise of warrants in January 2024 (see Note 13), is adequate to fund its basic budgeted operations into the fourth quarter of 2024. The Company’s ability to execute its current operating plan depends on its ability to obtain additional funding via the sale of equity and/or debt securities, a strategic transaction or other source of capital. The Company plans to continue actively pursuing financing alternatives, however, there can be no assurance that it will obtain the necessary funding, raising substantial doubt about the Company’s ability to continue as a going concern within one year of the date these financial statements are issued. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying consolidated financial statements reflect the application of certain accounting policies, as described in this note and elsewhere in the notes to the consolidated financial statements. Principles of Consolidation — The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All inter-company accounts and transactions have been eliminated in consolidation. Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and judgments that may affect the reported amounts of assets, liabilities and expenses and disclosure of contingent assets and liabilities. On an on-going basis, management evaluates its estimates including those related to potential accrued liabilities, valuation of warrant and equity-based instruments, and share-based compensation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from those estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known. Cash and Cash Equivalents — All short-term investments purchased with original maturities of three months or less are considered to be cash equivalents. Fixed Assets — Property and equipment are stated at cost. Depreciation on property and equipment is provided using the straight-line method over the estimated useful lives of the assets ( 3 to 10 years ). Leasehold improvements are depreciated over 64 months (their estimated useful life), which represented the full term of the lease at the time the leasehold improvements were capitalized. Our only long-lived assets are property, equipment and Right-of-Use (ROU) assets. The Company periodically, and at a minimum annually, evaluates long-lived assets for potential impairment. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Such analyses necessarily involve judgement. The Company did not experience any events or changes in circumstances that indicate the carrying amount of the assets may not be recoverable as of December 31, 2023. There were no fixed asset impairment charges recorded during the years ended December 31, 2023 or 2022. Right-of-Use Asset and Lease Liability — The Company accounts for all material leases in accordance with FASB Accounting Standards Codification (ASC) Topic 842, Leases . ROU assets are amortized over their estimated useful life, which represents the full term of the lease. See Note 11. 66 Table of Contents Stock-Based Compensation — The Company uses the Black-Scholes option-pricing model to calculate the grant-date fair value of stock option awards. The resulting compensation expense, net of expected forfeitures, for awards that are not performance-based, is recognized on a straight-line basis over the service period of the award, which for 2023 and 2022 ranged from twelve months to three years . Research and Development — Research and development costs are expensed as incurred. The Company recognizes revenue and cost reimbursements from government grants when it is probable that the Company will comply with the conditions attached to the grant arrangement and the grant proceeds will be received. Government grants are recognized on a systematic basis over the periods in which the Company recognizes the related costs for which the government grant is intended to compensate. Specifically, when government grants are related to reimbursements for cost of revenues or operating expenses, the government grants are recognized as a reduction of the related expense. Income Taxes — Income taxes are accounted for using the liability method of accounting. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial statement basis and tax basis of assets and liabilities and net operating loss and credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when it is more-likely-than-not that some portion of the deferred tax assets will not be realized. Management has provided a full valuation allowance against the Company’s net deferred tax asset. Tax positions taken or expected to be taken in the course of preparing tax returns are required to be evaluated to determine whether the tax positions are more-likely-than-not to be sustained by the applicable tax authority. Tax positions deemed to not meet a more-likely-than-not threshold would be recorded as tax expense in the current year. There were no uncertain tax positions that require accrual to or disclosure in the consolidated financial statements as of December 31, 2023 and 2022. Fair Value of Financial Instruments — The guidance under FASB ASC Topic 825, Financial Instruments , requires disclosure of the fair value of certain financial instruments. Financial instruments in the accompanying consolidated financial statements consist of cash equivalents, prepaid expenses and other assets, accounts payable, warrant liabilities and long-term obligations. The carrying amount of cash equivalents, prepaid expenses, other current assets and accounts payable approximate their fair value as a result of their short-term nature. See Note 11 regarding long-term obligations . Warrants — The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. Valuation changes, as well as the cost to issue the warrants, are included in Other (Expense) Income in the accompanying Consolidated Statements of Operations. If these instruments are initially classified as liabilities and subsequently meet the requirements for equity classification, the Company reclassifies the fair value to equity. Preferred Stock — The Company accounts for preferred stock based upon their specific terms and the authoritative guidance in ASC 480 and ASC 815, including whether they are freestanding instruments, whether any redemption or conversion aspects exist and how they are required to be settled (particularly if there is a cash settlement aspect), whether they contain characteristics that are predominantly debt-like or equity-like, whether they have embedded derivatives, and if they have redemption features. Based upon analysis of these criteria, the preferred stock will be classified as either debt, temporary (or “mezzanine”) equity, or permanent equity. The resultant classification is then evaluated quarterly to determine whether any change to the classification is required. Concentration of Credit Risk — Financial instruments that subject the Company to credit risk consist of cash and cash equivalents on deposit with financial institutions. The Company’s excess cash as of December 31, 2023 and 2022 is on deposit in interest-bearing accounts with well-established financial institutions. At times, such amounts may exceed the Federal Deposit Insurance Corporation (FDIC) insurance limits. As of December 31, 2023, uninsured cash balances totaled approximately $ 9,123,000 . Recently Adopted Accounting Pronouncements — For the fiscal year beginning January 1, 2022, management adopted ASU 2021-10, Government Assistance (Topic 832), which aims to provide increased transparency by requiring business entities to disclose 67 Table of Contents information about certain type of government assistance they receive in the notes to the financial statements. Reimbursements of eligible expenditures pursuant to government assistance programs are recorded as reductions of operating costs when there is reasonable assurance that the Company will comply with the conditions attached to the grant arrangement and when the reimbursement has been claimed. The determination of the amount of the claim, and accordingly the receivable amount, requires management to make calculations based on its interpretation of eligible expenditures in accordance with the terms of the programs. The reimbursement claims submitted by the Company are subject to review by the relevant government agencies . The Company currently has a cancer treatment research award through the National Cancer Institute (NCI) totaling approximately $ 2.0 million over a period of approximately three years. In September 2022, the Company was awarded $ 1.98 million in additional grant funding to expand our ongoing Phase 1 study of iopofosine I 131 in children and adolescents with inoperable relapsed or refractory high-grade gliomas (HGGs). The grant was awarded by the NCI based upon the initial signals of efficacy in the Phase 1 study, which is an international, open-label, dose escalation, safety study. The funding allows for an expansion from Part 1a into the Part 1b portion of our ongoing Phase 1 pediatric study. During the twelve months ended December 31, 2023, the Company received approximately $ 1,759,000 in NCI grant funding under the grants described above, all of which was reported as a reduction of research and development (R&D) expenses. During the twelve months ended December 31, 2022, the Company received approximately $ 697,000 in NCI grant funding under the grants described above, all of which was reported as a reduction of research and development (R&D) expenses. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (ASU 2023-09), which is intended to enhance the transparency and decision usefulness of income tax disclosures. Public business entities are required to adopt this standard for annual fiscal periods beginning after December 31, 2024, and early adoption is permitted. The Company is evaluating the impact the adoption of this guidance will have on its consolidated financial statements and related disclosures. The Company evaluates all Accounting Standards Updates (ASUs) issued by the FASB for consideration of their applicability to our consolidated financial statements. We have assessed all ASUs issued but not yet adopted and concluded that those not disclosed are not relevant to the Company or are not expected to have a material impact. 3. FAIR VALUE In accordance with Fair Value Measurements and Disclosures Topic of the FASB ASC 820, the Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded, and the reliability of the assumptions used to determine fair value. ● Level 1: Input prices quoted in an active market for identical financial assets or liabilities. ● Level 2: Inputs other than prices quoted in Level 1, such as prices quoted for similar financial assets and liabilities in active markets, prices for identical assets, and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data. ● Level 3: Input prices quoted that are significant to the fair value of the financial assets or liabilities which are not observable or supported by an active market. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The carrying value of cash and cash equivalents approximates fair value as maturities are less than three months. The carrying amounts reported for other current financial assets and liabilities approximate fair value because of their short-term nature. In September 2023 the Company issued warrants to purchase shares of preferred stock which, on an as-converted basis, represent an aggregate of 21,025,641 shares of common stock (the September 2023 Warrants) (see Note 6). The fair value of the September 2023 Warrants was determined using a probability-weighted expected return method (PWERM) with a scenario-based Monte Carlo simulation and Black-Scholes model. The PWERM is a scenario-based methodology that estimates the fair value of the Company’s different classes of equity based upon an analysis of future values for the Company, assuming various outcomes. Under both models, assumptions and estimates are used to value the preferred stock warrants. The Company assesses these assumptions and estimates on a quarterly basis as additional information that impacts the assumptions is obtained. The quantitative elements associated with the inputs 68 Table of Contents impacting the fair value measurement of the September 2023 Warrants include the value per share of the underlying common stock, the timing, form and overall value of the expected exits for the stockholders, the risk-free interest rate, the expected dividend yield and the expected volatility of the Company’s shares. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrants. The Company estimated a 0 % dividend yield based on the expected dividend yield and the fact that the Company has never paid or declared cash dividends. Expected volatility was determined based upon the historical volatility of the Company’s common stock. These warrants are classified within the Level 3 hierarchy because of the nature of these inputs and the valuation technique utilized. The Warrant Liability of $ 3,700,000 presented on the accompanying balance sheet as of December 31, 2023, consists entirely of the estimated value of the September 2023 Warrants. The following table summarizes the modified option-pricing assumptions used on September 8, 2023, which was the date of issuance, and December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ September 8 December 31 Volatility 83.0 - 84.0 % 82.0 - 83.0 % Risk-free interest rate 4.39 - 5.53 % 3.80 - 5.40 % Expected life (years) 0.4 - 5.0 0.3 - 4.7 ​ Dividend 0 % 0 % ​ The following table summarizes the changes in the fair market value of the warrants which are classified within the Level 3 fair value hierarchy from September 8, 2023, which was the date of issuance, through December 31, 2023: ​ ​ ​ ​ ​ ​ Level 3 Beginning fair value of warrants ​ $ 4,700,000 Gain from change in fair value ​ ( 1,000,000 ) December 31, 2023 fair value of warrants ​ $ 3,700,000 ​ ​ 4. FIXED ASSETS Fixed assets consisted of the following as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ Office and laboratory equipment ​ $ 1,661,316 ​ $ 797,278 Computer software ​ 4,000 ​ ​ 4,000 Leasehold improvements ​ 309,897 ​ ​ 309,897 Total fixed assets ​ 1,975,213 ​ ​ 1,111,175 Less– accumulated depreciation and amortization ​ ( 884,909 ) ​ ​ ( 692,534 ) Fixed assets, net ​ $ 1,090,304 ​ $ 418,641 ​ For the years ended December 31, 2023 and 2022, the Company recorded approximately $ 192,000 and $ 148,000 of fixed asset depreciation and amortization expense, respectively. 69 Table of Contents 5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consist of the following as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ Incentive compensation $ 2,069,000 ​ $ 916,000 Accounts payable ​ ​ 5,620,000 ​ ​ 2,558,000 Clinical project costs ​ ​ 1,252,000 ​ ​ 1,637,000 Professional fees ​ ​ 153,000 ​ ​ 359,000 Other ​ ​ 85,000 ​ ​ 8,000 ​ $ 9,179,000 ​ $ 5,478,000 ​ ​ ​ 6. STOCKHOLDERS’ EQUITY September 2023 Private Placement On September 8, 2023, in a private placement with certain institutional investors, the Company issued 1,225 shares of Series E-1 preferred stock, along with Tranche A warrants to purchase 2,205 shares of Series E-3 preferred stock and Tranche B warrants to purchase 1,715 shares of Series E-4 preferred stock. Shares of Series E preferred stock were issued at a fixed price of $ 20,000 per share, resulting in gross proceeds of $ 24.5 million and net proceeds of approximately $ 22.2 million after placement agent fees and other customary expenses. The conversion prices for the preferred stock are as follows: for the Series E-1 or E-2 preferred stock, $ 1.82 per share of common stock, or a total of 13,461,538 shares of common stock; for the Series E-3 preferred stock, $ 3.185 per share of common stock, or a total of 13,846,154 shares of common stock; and for the Series E-4 preferred stock, $ 4.7775 per share of common stock, or a total of 7,179,487 shares of common stock, in each case subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization. The warrants are exercisable as follows: ● Tranche A warrants, for an aggregate exercise price of $ 44.1 million, exercisable for Series E-3 preferred stock until the earlier of September 6, 2026, or 10 trading days after the Company's announcement of positive topline data from the Waldenstrom's macroglobulinemia CLOVER WaM pivotal trial; and, ● Tranche B warrants, for an aggregate exercise price of $ 34.3 million, exercisable for Series E-4 preferred stock until the earlier of September 6, 2028, or 10 days following the Company’s public announcement of its receipt of written approval from the FDA of its New Drug Application for iopofosine I 131. The Tranche A and Tranche B warrants do not qualify as derivatives; however, they do not meet the requirements necessary to be considered indexable in the Company’s stock. As a result, and in accordance with the guidance in FASB ASC 815, the warrants continue to be deemed liabilities. All such liabilities are required to be presented at fair value, with changes reflected in financial results for the period. When issued, the Series E-1 preferred stock had a redemption feature; therefore, it was classified as mezzanine equity as of September 30, 2023. The Series E-1 preferred stock also had a liquidation preference, which was calculated as an amount per share equal to the greater of (i) two times (2X) the Original Per Share Price, together with any declared, unpaid dividends, or (ii) such amount per share as would have been payable had all shares of Series E-1 preferred stock been converted into Common Stock immediately prior to such Liquidation. While the Series E-1 preferred was outstanding, this resulted in both the Tranche A and Tranche B warrants being considered puttable by virtue of the liquidation preference impacting the disposition of these warrants in the event of a liquidation. In accordance with the guidance in Accounting Standards Codification section 480, a puttable warrant is deemed to be a liability. These features only applied to the Series E-1 preferred stock when it was outstanding; upon stockholder approval of the transaction, which was obtained by the Company at a special meeting of stockholders held on October 25, 2023, the Series E-1 preferred stock immediately converted into either Series E-2 preferred stock and/or common stock, dependent upon the beneficial ownership position of the holder. The net proceeds from the September 2023 Private Placement were allocated first to the fair value of the Tranche A and Tranche B warrants, which had a fair value upon issuance of $ 4,700,000 , with the remainder, or $ 17,920,000 , allocated to the Series E-1 preferred stock. Upon stockholder approval of the transaction, the entire amount that had been assigned to mezzanine equity was 70 Table of Contents reclassified to Series E-2 preferred stock and is a component of permanent equity, as is reflected in the financial statements. As a result of the stockholder approval, Series E-1 preferred stock was fully extinguished in accordance with the terms of the financing. Series E-2 preferred stock is convertible to common stock at the request of the holder, subject to the holder not exceeding certain beneficial ownership percentages as stipulated in the financing agreement. Subsequent to the issuance of the Series E-2 preferred stock and prior to December 31, 2023, preferred holders converted 905.24 shares of preferred stock into 9,947,684 shares of common stock at the stated rate of $ 1.82 per common share. October 2022 Public Offering and Private Placement On October 25, 2022, the Company completed a registered direct offering of 3,275,153 shares of the Company’s common stock at $ 2.085 per share and warrants to purchase up to an aggregate of 3,275,153 shares of common stock in a concurrent private placement priced at-the-market under Nasdaq rules. In a separate concurrent private placement transaction, the Company offered and sold pre-funded warrants to purchase an aggregate of 1,875,945 shares of common stock and warrants to purchase an aggregate of 1,875,945 shares of common stock. The warrants are immediately exercisable at an exercise price of $ 1.96 per share and will expire on the fifth anniversary of the closing date. Each pre-funded warrant had a purchase price of $ 2.08499 , is immediately exercisable at an exercise price of $ 0.00001 per share and will not expire until exercised in full. The registered direct offering and private placements resulted in total gross proceeds of approximately $ 10.7 million with net proceeds to the Company of approximately $ 9.6 million after deducting estimated offering expenses. During the twelve months ended December 31, 2023, 355,235 pre-funded warrants were converted into 355,235 shares of common stock. During the twelve months ended December 31, 2023, 177,877 common warrants were exercised for proceeds of $ 348,638 . There were no common warrants exercised during the twelve months ended December 31, 2022. In accordance with the concept of FASB ASC 820 regarding the October 2022 public offering, the Company allocated the value of the proceeds to the common stock, common warrants, and pre-funded warrants utilizing a relative fair value basis. Using the closing trading price for our stock on October 20, 2022, the Company computed the fair value of the shares sold. This valuation did not impact the total gross increase to Stockholders’ Equity of $ 10.7 million, but is an internal, proportionate calculation allocating gross proceeds of approximately $ 4.0 million to common stock, $ 4.4 million to common warrants and $ 2.3 million to pre-funded warrants. 2022 Reverse Stock Split At the annual stockholders’ meeting held on June 24, 2022, the Company’s stockholders approved an amendment to the Company’s certificate of incorporation to effect a reverse split of the Company’s common stock at a ratio between 1 -for-5 to 1 -for-10 in order to satisfy requirements for continued listing of the Company’s common stock on Nasdaq. The board of directors authorized the 1 -for-10 ratio of the reverse split on June 27, 2022, and effective at the close of business on July 21, 2022, the Company’s certificate of incorporation was amended to effect a 1 -for-10 reverse split of the Company’s common stock (the “Reverse Stock Split”). The accompanying consolidated financial statements and notes to consolidated financial statements give retroactive effect to the Reverse Stock Split for all periods presented. Authorized Share Increase At a special meeting of stockholders held on October 25, 2023, the Company’s stockholders approved an amendment of the Company’s Second Amended and Restated Certificate of Incorporation, as amended, to increase the authorized common stock from 160,000,000 shares to 170,000,000 shares. 71 Table of Contents Common Stock Warrants The following table summarizes the outstanding warrants to purchase common stock as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ ​ ​ ​ ​ Shares Issuable ​ ​ ​ ​ ​ ​ ​ ​ Upon ​ ​ ​ ​ ​ ​ ​ ​ Exercise of ​ ​ ​ ​ ​ ​ ​ ​ Outstanding ​ Exercise ​ ​ ​ Offering Warrants Price Expiration Date ​ 2023 Tranche A Preferred Warrants ​ 13,846,154 ​ $ 3.185 ​ September 8, 2026 (1) 2023 Tranche B Preferred Warrants ​ 7,179,487 ​ $ 4.7775 ​ September 8, 2028 (1) 2022 Common Warrants 4,748,221 ​ $ 1.96 ​ October 25, 2027 ​ 2022 Pre-Funded Warrants 1,079,136 ​ $ 0.00001 ​ N/A ​ June 2020 Series H Warrants ​ 720,796 ​ $ 12.075 ​ June 5, 2025 ​ May 2019 Series F Warrants ​ 195,700 ​ $ 24.00 ​ May 20, 2024 ​ May 2019 Series G Warrants ​ 201,800 ​ $ 24.00 ​ May 20, 2024 ​ October 2017 Series D Warrants 31,085 ​ $ 178.00 ​ October 14, 2024 ​ Total 28,002,379 ​ ​ ​ ​ (1) These warrants are described further under the caption “September 2023 Private Placement” above. ​ ​ ​ 7. STOCK-BASED COMPENSATION Accounting for Stock-Based Compensation 2021 Stock Incentive Plan The Company maintains the 2021 Stock Incentive Plan (the “2021 Plan”). The Company utilizes stock-based compensation incentives as a component of its employee and non-employee director and officer compensation philosophy. A committee of the Board of Directors determines the terms of the awards granted and may grant various forms of equity-based incentive compensation. Currently, these incentives consist principally of stock options and restricted shares. All outstanding awards under the 2015 Stock Incentive Plan (the “2015 Plan”) remained in effect according to the terms of the 2015 Plan. Any shares that are currently available under the 2015 Plan and any shares underlying 2015 Plan awards which are forfeited, cancelled, reacquired by the Company or otherwise terminated are added to the shares available for grant under the 2021 Plan. Under the current stock option award program, all options become exercisable between one and three years after issuance and expire after ten years. The fair value of each stock option award is estimated on the grant date using the Black-Scholes option-pricing model. Volatility is based on the Company’s historical common stock volatility. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time. The expected term of stock options granted is based on an estimate of when options will be exercised in the future. Forfeitures are recorded as they occur. No dividends have been recorded historically. At the annual meeting of stockholders held on June 23, 2023, the Company’s stockholders approved an increase in the number of shares of common stock available for issuance under our 2021 Stock Incentive Plan by 1,100,000 to 2,368,000 . 72 Table of Contents During the twelve-months ended December 31, 2023 and 2022, stock options granted were 1,617,000 and 440,250 , respectively. The following table summarizes amounts charged to expense for stock-based compensation related to employee and director stock option grants: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve Months Ended ​ ​ December 31, ​ 2023 2022 Employee and director stock option and stock grants: ​ ​ ​ ​ Research and development ​ $ 505,155 ​ $ 165,461 General and administrative ​ 1,905,133 ​ ​ 1,287,502 Total stock-based compensation ​ $ 2,410,288 ​ $ 1,452,964 ​ In January 2023, the Company granted 609,000 non-statutory stock option awards at an exercise price of $ 1.68 per share to employees. These grants were contingent upon the approval of the increase in the number of shares available for issuance under the 2021 Plan that was approved by the stockholders at the Annual Meeting of Stockholders held on June 23, 2023. In accordance with the removal of the contingency, the Company began recognizing the expense for these awards beginning in June 2023. ​ In December 2023, the Company granted 2,776,000 contingent, non-statutory stock option awards at an exercise price of $ 2.65 per share to our employees and our directors. Each of these grants is contingent on approval of an increase in the shares available in the 2021 Stock Incentive Plan that is to be voted on by the stockholders at the annual meeting of stockholders expected to be held in June 2024. Until such time that the contingent non-statutory stock option awards are approved by stockholders, no expense will be recognized by the Company. In December 2023, the Company awarded $ 434,132 in cash and 213,532 shares of stock, valued at $ 565,868 , to certain employees as a result of the attainment of milestones established and approved by a committee of the Board of Directors. Due to the contingent nature of those awards, which were fully vested upon milestone attainment, the expense was recognized by the Company upon grant. Assumptions Used in Determining Fair Value Valuation and amortization method . The fair value of each stock award is estimated on the grant date using the Black-Scholes option-pricing model. The estimated fair value of employee stock options is amortized to expense using the straight-line method over the required service period which is generally the vesting period. The estimated fair value of the non-employee options is amortized to expense over the period during which a non-employee is required to provide services for the award (usually the vesting period). Volatility. The Company estimates volatility based on the Company’s historical volatility since its common stock has been publicly traded. Risk-free interest rate . The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term assumption. Expected term . The expected term of stock options granted is based on an estimate of when options will be exercised in the future. The Company applied the simplified method of estimating the expected term of the options, as described in the SEC’s Staff Accounting Bulletins 107 and 110, as the historical experience is not indicative of the expected behavior in the future. The expected term, calculated under the simplified method, is applied to groups of stock options that have similar contractual terms. Using this method, the expected term is determined using the average of the vesting period and the contractual life of the stock options granted. The Company applied the simplified method to non-employees who have a truncation of term based on termination of service and utilizes the contractual life of the stock options granted for those non-employee grants which do not have a truncation of service. Forfeitures. The Company only records stock-based compensation expense for those awards that are expected to vest. The Company accounts for forfeitures as they occur. Dividends. The Company has not historically issued dividends. 73 Table of Contents Summary. The following table summarizes the assumptions used for stock options granted to employees and directors in the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Volatility ​ 82.02 - 83.28 % ​ 82.47 - 100 % Risk-free interest rate ​ 3.59 - 4.68 % ​ 1.65 - 3.96 % Expected life (years) ​ 6 ​ 6 ​ Dividend ​ 0 % ​ 0 % ​ Exercise prices for all grants made during the twelve months ended December 31, 2023 and 2022 were equal to the market value of the Company’s common stock on the date of grant. ​ Stock Option Activity A summary of stock option activity is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuable ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ Upon ​ ​ ​ ​ Average ​ ​ ​ ​ ​ Exercise ​ Weighted ​ Remaining ​ ​ ​ ​ ​ of ​ Average ​ Contracted ​ Aggregate ​ Outstanding ​ Exercise Term in ​ Intrinsic ​ Options Price Years Value Outstanding as of December 31, 2021 423,820 ​ $ 22.70 ​ Granted 440,250 ​ $ 4.51 ​ ​ Expired ( 6 ) ​ $ 15,000.00 ​ ​ Forfeited ( 117,807 ) ​ $ 12.02 ​ ​ Outstanding as of December 31, 2022 746,257 ​ $ 13.48 8.58 $ — Granted ​ 1,617,000 ​ $ 1.78 ​ ​ ​ ​ ​ Expired ​ ( 8 ) ​ $ 8,325 ​ ​ ​ ​ ​ Forfeited ​ ( 11,346 ) ​ $ 1.92 ​ ​ ​ ​ ​ Outstanding as of December 31, 2023 ​ 2,351,903 ​ $ 5.46 ​ 8.64 ​ $ 1,682,667 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable as of December 31, 2023 514,171 ​ $ 15.68 ​ ​ $ 30,817 Unvested as of December 31, 2023 1,837,732 ​ $ 2.58 ​ ​ $ 1,652,350 ​ The aggregate intrinsic value of options outstanding is calculated based on the positive difference between the estimated per-share fair value of common stock at the end of the respective period and the exercise price of the underlying options. Shares of common stock issued upon the exercise of options are from authorized but unissued shares. At December 31, 2023, we had 116,579 shares available for grant under the 2021 Option Plan. The weighted-average grant-date fair value of options granted during the years ended December 31, 2023 and 2022 was $ 1.35 and $ 3.49 , respectively. The total fair value of shares vested during the years ended December 31, 2023 and 2022 was $ 1,647,355 and $ 712,431 , respectively. The weighted-average grant-date fair value of vested and unvested options outstanding at December 31, 2023 was $ 11.13 and $ 1.81 , respectively. The weighted-average grant-date fair value of vested and unvested options outstanding at December 31, 2022 was $ 19.92 and $ 5.25 , respectively. The weighted average grant date fair value of options forfeited during the years ended December 31, 2023 and 2022 was $ 1.41 and $ 7.33 , respectively. The number of options vested during the years ended December 31, 2023 and December 31, 2022 was 308,144 and 135,986 , respectively. The number of options unvested at January 1, 2023 and January 1, 2022 was 540,223 and 343,996 , respectively. The weighted average grant date fair value of options unvested at January 1, 2023 and January 1, 2022 was $ 5.25 and $ 3.20 , respectively. 74 Table of Contents As of December 31, 2023, there was approximately $ 2,205,192 of total unrecognized compensation cost related to unvested stock-based compensation arrangements. Of this total amount, the Company expects to recognize approximately $ 1,330,233 , $ 775,193 , and $ 99,766 during 2024, 2025 and 2026, respectively. The Company’s expense estimates are based upon the expectation that all unvested options will vest in the future. ​ ​ ​ 8. INCOME TAXES ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ Tax provision (benefit) ​ ​ Current ​ ​ Federal ​ $ — ​ $ — State ​ ( 60,000 ) ​ ​ ( 60,000 ) Total current ​ ( 60,000 ) ​ ​ ( 60,000 ) ​ ​ ​ ​ ​ ​ ​ Deferred ​ ​ ​ ​ ​ Federal ​ ( 12,233,641 ) ​ ​ ( 7,800,350 ) State ​ ( 2,764,638 ) ​ ​ ( 2,633,146 ) Total deferred ​ ( 14,998,279 ) ​ ​ ( 10,433,496 ) ​ ​ ​ ​ ​ ​ ​ Change in valuation allowance ​ 14,998,279 ​ ​ 10,433,496 Total ​ $ ( 60,000 ) ​ $ ( 60,000 ) ​ Deferred tax assets consisted of the following as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ Deferred tax assets ​ ​ Federal net operating loss ​ $ 39,914,591 ​ $ 35,958,687 Federal research and development tax credit carryforwards ​ 15,868,907 ​ ​ 11,484,209 State net operating losses and tax credit carryforwards ​ 7,626,490 ​ ​ 6,186,679 Capitalized research and development expenses ​ 20,203,493 ​ ​ 15,820,893 Stock-based compensation expense ​ 3,710,609 ​ ​ 3,186,702 Other ​ 754,180 ​ ​ 443,693 Total deferred tax assets ​ 88,078,270 ​ ​ 73,080,863 ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities ​ ​ ​ ​ ​ Depreciable assets ​ ( 156,626 ) ​ ​ ( 157,498 ) Total deferred tax liabilities ​ ( 156,626 ) ​ ​ ( 157,498 ) ​ ​ ​ ​ ​ ​ ​ Net deferred tax assets ​ 87,921,644 ​ ​ 72,923,365 Less- valuation allowance ​ ( 87,921,644 ) ​ ​ ( 72,923,365 ) Total deferred tax assets ​ $ — ​ $ — ​ 75 Table of Contents A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2023 2022 Income tax benefit using U.S. federal statutory rate 21.00 % 21.00 % State income taxes 7.81 % 9.35 % Permanent nondeductible items 0.20 % ( 0.01 ) % Federal tax credits 11.50 % 6.57 % Change in valuation allowance ( 40.01 ) % ( 36.40 ) % Other ( 0.32 ) % ( 0.31 ) % Total 0.18 % 0.20 % ​ As of December 31, 2023, the Company had federal net operating loss (NOL) carryforwards of approximately $ 110,069,000 generated as of December 31, 2017, and NOL carryforwards of approximately $ 80,001,000 after December 31, 2017. Federal NOLs generated as of December 31, 2017, will expire in 2023 through 2037 , while NOLs generated during 2018 and later will be carried forward indefinitely until utilized. As of December 31, 2023, the Company had state NOL carryforwards of approximately $ 97,080,000 . State NOL carryforwards will expire in 2029 through 2043 . As of December 31, 2023, the Company had federal research and development (R&D) and orphan drug credit carryforwards of approximately $ 15,869,000 which will expire in 2024 through 2042 . As of December 31, 2023, the Company also had state credit carryforwards of approximately $ 1,045,000 which will expire in 2025 through 2038 . The Company had federal NOLs and R&D credit carryforwards of $ 502,000 and $ 13,000 , respectively, that expired in 2023 . The NOL, R&D and orphan drug credit carryforwards may have, or may become subject to, an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, as well as similar state tax provisions. This could limit the amount of NOLs that the Company can utilize annually to offset future taxable income or tax liabilities. The amount of the annual limitation, if any, will be determined based on the value of the Company immediately prior to an ownership change. Subsequent ownership changes may further affect the limitation in future years. If and when the Company utilizes the NOL carryforwards in a future period, it will perform an analysis to determine the effect, if any, of these loss limitation rules on the NOL carryforward balances. The Company has evaluated the available evidence supporting the realization of its deferred tax assets, including the amount and timing of future taxable income, and has determined that it is more likely than not that its net deferred tax assets will not be realized. As a result of uncertainties surrounding the realization of the deferred tax assets, the Company maintains a full valuation allowance against all of its net deferred tax assets. When the Company determines that it will be able to realize some portion or all of its deferred tax assets, an adjustment to the valuation allowance on its deferred tax assets would have the effect of increasing net income in the period such determination is made. The Company did not have unrecognized tax benefits or accrued interest and penalties at any time during the years ended December 31, 2023 or 2022, and does not anticipate having unrecognized tax benefits over the next twelve months. The Company is subject to audit by the Internal Revenue Service and state taxing authorities for tax periods commencing January 1, 2018, as a result of its NOLs. However, any adjustment related to these periods would be limited to the amount of the NOL generated in the year(s) under examination. 9. NET LOSS PER SHARE Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock and pre-funded warrants outstanding during the period. The pre-funded warrants are considered common shares outstanding for the purposes of the basic net loss per share calculation because of the nominal cash consideration and lack of other contingencies for issuance of the underlying common shares. Diluted net loss attributable to common stockholders per share is computed by dividing net loss attributable to common stockholders, as adjusted, by the sum of the weighted average number of shares of common stock and the dilutive potential common stock equivalents then outstanding. Potential common stock equivalents consist of stock options, warrants, and convertible preferred shares. Since there is a net loss attributable to common stockholders for the years 76 Table of Contents ended December 31, 2023 and 2022, the inclusion of common stock equivalents in the computation for those periods would be antidilutive. Accordingly, basic and diluted net loss per share is the same for all periods presented. The following potentially dilutive securities have been excluded from the computation of diluted net loss per share since their inclusion would have been antidilutive: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Warrants 28,002,379 ​ 6,714,479 Stock options 2,351,903 ​ 746,257 Convertible preferred shares 3,624,957 ​ 111,111 Total potentially dilutive shares 33,979,239 ​ 7,571,847 ​ ​ ​ 10. COMMITMENTS AND CONTINGENCIES Legal The Company may be involved in legal matters and disputes in the ordinary course of business. We do not anticipate that the outcome of such matters and disputes will materially affect the Company’s financial statements. 11. LEASES Operating Lease Liability In June 2018, the Company executed an agreement for office space in the Borough of Florham Park, Morris County, New Jersey to be used as its headquarters (HQ Lease). The HQ Lease commenced upon completion of certain improvements in October 2018 and terminates in February 2024 with an option to extend the term of the lease for one additional 60 -month period. On December 30, 2022, the Company entered into an Amended Agreement of Lease, with CAMPUS 100 LLC (the “Landlord”). Under the Amended Lease, which was accounted for as a modification of the initial lease, as the Company will continue to lease 3,983 square feet of rentable area on the second floor of a building located at 100 Campus Drive in Florham Park, New Jersey, for the period commencing on March 1, 2023 and ending on April 30, 2029. The Company also has an option to extend the term of the Amended Lease for one additional 60 -month period. Under the terms of the Amended Lease, the Company’s previously paid security deposit of $ 75,000 was reduced to $ 23,566 and the aggregate rent due over the term of the Amended Lease is approximately $ 918,000 , which will be reduced to approximately $ 893,000 after certain rent abatements. The Company will also be required to pay its proportionate share of certain operating expenses and real estate taxes applicable to the leased premises. After certain rent abatements the rent is approximately $ 11,800 per month for the first year and then escalates thereafter by 2 % per year for the duration of the term. The Company has not entered into any leases with related parties. Discount Rate The Company has determined an appropriate interest rate to be used in evaluating the present value of the Amended Lease liability considering factors such as the Company’s credit rating, borrowing terms offered by the U.S. Small Business Administration, amount of lease payments, quality of collateral and alignment of the borrowing term and lease term. The Company considers 14 % per annum as reasonable to use as the incremental borrowing rate for the purpose of calculating the liability under the Amended Lease. In conjunction with the June 2018 lease, the Company had previously used a 10 % per annum incremental borrowing rate. 77 Table of Contents Maturity Analysis of Short-Term and Operating Leases The following table approximates the dollar maturity of the Company’s undiscounted payments for its short-term leases and operating lease liabilities as of December 31, 2023: ​ ​ ​ ​ ​ Years ending December 31, 2024 ​ $ 132,000 2025 ​ 146,000 2026 ​ ​ 150,000 2027 ​ ​ 153,000 2028 ​ ​ 155,000 Thereafter ​ ​ 53,000 Total undiscounted lease payments ​ 789,000 Less: Imputed interest ​ ( 236,000 ) Present value of lease liabilities $ 553,000 ​ ​ 12. EMPLOYEE RETIREMENT PLAN The Company maintains a defined contribution plan under Section 401(k) of the Internal Revenue Code that allows eligible employees to contribute a portion of their annual compensation on a pre-tax basis. The Company has not made any matching contributions under this plan. 13. SUBSEQUENT EVENT In January 2024, the Company released topline data from its pivotal, Phase 2b CLOVER WaM trial. In accordance with the terms of the September 2023 financing, the Tranche A warrant expiration accelerated to 10 trading days after the topline data release. Warrant holders exercised the Tranche A warrants in their entirety, resulting in the Company issuing 2,205 shares of Series E-3 preferred stock, which are convertible to common stock at the stated rate of $ 3.185 per share, and receiving gross proceeds of $ 44.1 million and net proceeds of $ 42.8 million. Additionally, during January and February 2024, 547,177 warrants issued in October 2022 were exercised for net proceeds of approximately $ 1.1 million. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.