What changed in this filing

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Item 9A. Controls and Procedures

2025-03-26 compared with 2024-03-18 · 118 added, 235 removed, 748 unchanged (32% of the section changed)

15 unchanged sentences

Other Information .

N o t a pplicable.

Disclosures Regarding Foreign Jurisdictions that Prevent Inspections

1 unchanged sentence

Directors, Executive Officers and Corporate Governance.

The information required by this Item is set forth in our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of December 31, 2023, and is incorporated into this Annual Report on Form 10-K by reference.

The Company has adopted an insider trading policy that governs the purchase, sale, and/or other transactions of our securities by our directors, officers and employees.

A copy of our insider trading policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

In addition, with regard to the Company’s trading in its own securities, it is the Company’s policy to comply with the federal securities laws and the applicable exchange listing requirements.

The remaining information required by this Item is set forth in our Proxy Statement for the 2025 Annual Meeting of Stockholders to be filed with the SEC within 120 days of December 31, 2024, and is incorporated into this Annual Report on Form 10-K by reference.

Executive Compensation.

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Form of Warrant, dated May 6, 2020, by and among the Flame Biosciences, Inc.

and the Warrantholders (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8 - K, as filed on May 15, 2023).

and the Warrantholders (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 10Q, as filed on May 15, 2023).

Exclusive Option and License Agreement dated as of January 3, 2020, by and between the Company and BeiGene, Ltd.

1 unchanged sentence

License Agreement, between Eli Lilly and Company and Dekkun Corporation, effective as of January 3, 2011 (incorporated by reference to Exhibit 10.4 to the Company’s registration statement on Form S-4, as filed on September 26, 2016).

License Agreement, by and between Lonza Sales AG and Healthcare Pharmaceuticals, Inc., dated as of May 28, 2015 (incorporated by reference to Exhibit 10.5 to the Company’s registration statement on Form S-4, as filed on September 26, 2016).

Royalty Agreement, between Leap Therapeutics, Inc.

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Second Amendment to Lease by and between Bulfinch Square Limited Partnership and Leap Therapeutics, Inc.

dated as of October 1, 2021.

dated as of October 1, 2021 (incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed on March 24, 2023).

Third Amendment to Lease by and between Bulfinch Square Limited Partnership and Leap Therapeutics, Inc.

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1 to Leap Therapeutics, Inc.

2022 Equity Incentive Plan

2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed on March 18, 2024)

Continuing Clinical Collaboration Letter Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8 - K, filed with the SEC on March 16, 2023.

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Cynthia Sirard, dated April 3, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8 - K, filed with the SEC on April 7, 2023).

Strategic Partnership and License Agreement, dated August 13, 2021, by and between NovaRock Biotherapeutics Ltd.

and Flame Biosciences, Inc.

(incorporated by reference to Exhibit 10.1 to the Company Quarterly Report on Form 10 - Q for the quarter ended March 31, 2023).

Collaboration Agreement, dated August 10, 2020, by and between Adimab, LLC and Flame Biosciences, Inc.

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(incorporated by reference to Exhibit 10.7 to the Company Quarterly Report on Form 10 - Q for the quarter ended March 31, 2023).

Insider Trading Policy

Subsidiaries of Leap Therapeutics, Inc.

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Leap Therapeutics, Inc.

Compensation Clawback Policy

Compensation Clawback Policy (incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed on March 18, 2024)

The following materials from Leap Therapeutics, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2024, formatted in XBRL (Extensible Business Reporting Language):

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 274)

Consolidated Balance Sheets as of December 31, 2024 and 2023

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Accruals for Clinical Trial Expenses

As described in Note 2 to the consolidated financial statements, at each balance sheet date, the Company estimates its accrued clinical trial expenses resulting from its obligations under contracts with vendors, clinical research organizations and consultants in connection with performing research and development activities, and in making that estimate, may depend on factors such as successful enrollment of certain numbers of patients, site initiation, and the completion of contract milestones.

The Company accounts for research and development expenses based on services that have been performed on the Company’s behalf and estimating the level of service performed and the associated cost incurred for the service when an invoice has not been received or the Company has not otherwise been notified of the actual cost.

The Company estimates the time period over which services will be performed and the level of effort to be expended in each period.

As described in Note 2 to the consolidated financial statements, at each balance sheet date, the Company records its accrued clinical trial expenses resulting from its obligations under contracts with vendors, clinical research organizations and consultants in connection with performing research and development activities, and in making that accrual, may depend on factors such as successful enrollment of certain numbers of patients, site initiation, and the completion of contract milestones.

The Company accounts for research and development expenses based on services that have been performed on the Company’s behalf and the level of service performed and the associated cost incurred for the service when an invoice has not been received.

The Company’s accrual for clinical trial expenses of $4,798,000 is included in accrued expenses on the December 31, 2024 consolidated balance sheet.

The amounts recorded for clinical trial expenses represent the Company’s estimate of the unpaid clinical trial expenses based on the information available to the Company at that time.

We identified the accrual for clinical trial expenses as a critical audit matter due to the significant judgment and estimation required by management in determining progress or state of completion of trials or services completed.

This in turn led to a high degree of auditor subjectivity and significant audit effort was required in performing our procedures and evaluating audit evidence relating to estimates made by management.

The amounts accrued for clinical trial expenses represent the unpaid clinical trial expenses based on the information available to the Company at that time.

We identified the accrual for clinical trial expenses as a critical audit matter due to the materiality of the contract values between the Company and certain clinical research organizations and the need to determine progress or state of completion of trials or services completed.

This in turn led to significant audit effort in performing our procedures and evaluating audit evidence relating to accruals made by management.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.

We obtained an understanding and evaluated the design of controls over the Company’s estimation process, including the process of estimating the expenses incurred to date based on the status of the clinical trials.

Our procedures also included, among others, reading agreements and contract amendments entered into with vendors in connection with conducting clinical trials, evaluating the significant assumptions described above and the methods used in developing the clinical trial estimates and calculating the amounts that were unpaid at the balance sheet date.

We confirmed selected liabilities recorded directly with the third parties involved in performing the research and development services on behalf of the Company.

We also made direct inquiries of financial and clinical trial client personnel regarding status and progress towards completion of clinical trials and description of future commitments.

We obtained an understanding and evaluated the design of controls over the Company’s accrual process, including the process of accruing the expenses incurred to date based on the status of the clinical trials.

Our procedures also included, among others, reading agreements and contract amendments entered into with vendors in connection with conducting clinical trials, evaluating the methods used in developing the accrual for clinical trial expenses and calculating the amounts that were unpaid at the balance sheet date.

We confirmed selected amounts and attributes used in determining the accrued clinical trial expenses directly with the third parties involved in performing the research and development services on behalf of the Company.

We also made direct inquiries of financial and clinical trial client personnel regarding status and progress towards completion of clinical trials and descriptions of future commitments.

We also examined invoices issued and payments made to service providers after the consolidated balance sheet date.

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Right of use assets, net

Deferred costs

Other long term assets

Liabilities and Stockholders’ Equity

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Accrued expenses

Income tax payable

Lease liability - current portion

Total current liabilities

Non current liabilities:

Lease liability, net of current portion

Total liabilities

Stockholders’ equity:

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10,000,000 shares authorized;

0 shares issued and outstanding

0 shares issued and outstanding as of December 31, 2024 and 2023, respectively

Common stock, $ 0.001 par value;

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Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

Accumulated deficit

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Interest income

Interest expense

Australian research and development incentives

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Provision for income taxes

Dividend attributable to down round feature of warrants

Net loss attributable to common stockholders

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Year Ended December 31,

Other comprehensive income (loss):

Other comprehensive loss:

Foreign currency translation adjustments

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(In thousands, except share amounts)

Mezzanine Equity

Stockholders Equity

Series X Non Voting Convertible

Preferred Stock

Comprehensive

Stockholders’

Income (Loss)

Balances at December 31, 2022

Issuance of Series X Preferred Stock in connection with Flame merger

Issuance of common stock in connection with Flame merger

Issuance of common stock warrants in connection with Flame merger

Redemption of 2019 Warrants

Issuance of common stock upon vest of restricted stock units

Conversion of Series X preferred stock to common stock

Reclassification of Series X preferred stock warrants to equity

Fractional shares paid in cash

Foreign currency translation adjustment

Issuance of common stock upon exercise of prefunded warrants

Stock-based compensation

6 unchanged sentences

(In thousands, except share amounts)

Mezzanine Equity

Stockholders Equity

Series X Non Voting Convertible

Preferred Stock

Comprehensive

Stockholders’

Income (loss)

Balances at December 31, 2023

Issuance of Series X Preferred Stock in connection with Flame merger

Issuance of common stock in connection with Flame merger

Issuance of common stock warrants in connection with Flame merger

Redemption of 2019 Warrants

Issuance of common stock upon vest of restricted stock units

Conversion of Series X preferred stock to common stock

Reclassification of Series X preferred stock warrants to equity

Fractional shares paid in cash

Issuance of common stock upon exercise of stock options

Issuance of common stock upon exercise of warrants

April 2024 Private Placement (net of issuance costs of $ 2,948 )

Dividend attributable to the down round feature of 2017 Warrants

Foreign currency translation adjustment

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Cash flows from operating activities:

Adjustments to reconcile net loss to net cash

used in operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

In-process research and development costs acquired in connection with the acquisition of Flame

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Prepaid expenses and other assets

Deferred tax asset

Research and development incentive receivable

Accounts payable and accrued expenses

Income tax payable

Lease liability

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Cash flows from financing activities:

Proceeds from April 2024 Private Placement

Payment of deferred offering costs

Payment of redemption of 2019 warrants

Payment of fractional shares

Payment of deferred costs

Net cash used in financing activities

Proceeds from the exercise of warrants

Proceeds from the exercise of stock options

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

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Supplemental disclosure of non-cash financing activities:

Deferred costs in accounts payable and accrued expense - January 2023 Flame Merger

Remeasrement of right-of-use asset and lease liability

Remeasurement of right-of-use asset and lease liability

Dividend attributable to the down round feature of 2017 Warrants

Issuance and conversion of Series X Preferred Stock issued in connection with the acquisition of Flame to common stock

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(“Macrocure”), a publicly held, clinical-stage biotechnology company based in Petach Tikva, Israel.

In connection with the merger, the Company applied to be listed on the Nasdaq Global Market.

In connection with the merger, Macrocure became a wholly owned subsidiary of the Company and the Company applied to be listed on the Nasdaq Global Market.

Nasdaq approved the listing, and trading in the Company’s common stock commenced on January 24, 2017, under the trading symbol “LPTX.” On February 1, 2017, Macrocure’s name was changed to Leap Therapeutics Ltd.

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The Company is a biopharmaceutical company developing novel biomarker-targeted antibody therapies designed to treat patients with cancer by inhibiting fundamental tumor-promoting pathways, targeting cancer-specific cell surface molecules, and harnessing the immune system to attack cancer cells.

The Company’s strategy is to identify, acquire, and develop molecules that will rapidly translate into high impact therapeutics that generate durable clinical benefit and enhanced patient outcomes.

The Company’s lead clinical stage program is DKN-01, a monoclonal antibody that inhibits Dickkopf-related protein 1, or DKK1.

The Company is currently studying DKN-01 in multiple ongoing clinical trials in patients with esophagogastric cancer, gynecologic cancers, or colorectal cancer.

It’s second clinical stage program is FL-301, a monoclonal antibody that targets cells that express Claudin18.2 on their cell surface.

The Company also has two preclinical antibody programs, FL-302 and FL-501.

The Company’s strategy is to identify, acquire, and develop molecules that translate into therapeutics that generate durable clinical benefit and enhanced patient outcomes.

The Company’s lead clinical stage program is sirexatamab (DKN-01), a monoclonal antibody that inhibits Dickkopf-related protein 1, or DKK1.

The Company is currently studying sirexatamab in a clinical trial in patients with colorectal cancer.

The Company also has a preclinical antibody program FL-501.

In January 2020, the Company entered into an Option and License Agreement with BeiGene, Ltd., or BeiGene, which granted BeiGene an option to obtain an exclusive license from the Company that would grant to BeiGene the right to develop and commercialize DKN-01 in Asia (excluding Japan), Australia, and New Zealand.

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The accompanying consolidated financial statements of the Company include the accounts of its wholly owned subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Reverse Stock Split

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All fractional shares resulting from the reverse stock split were paid in cash.

Nature of Business, Basis of Presentation and Liquidity (continued)

Since inception, the Company has been engaged in organizational activities, including raising capital, and research and development activities.

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Actual results could differ from those estimates.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Cash and Cash Equivalents

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Cash equivalents consisted of overnight investments and money market funds.

Summary of Significant Accounting Policies (continued)

Research and Development Expense

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The research and development incentive receivable represents an amount due in connection with the above program.

The Company has recorded a research and development incentive receivable of $ 771 and $ 2,099 as of December 31, 2023 and 2022, respectively, in the consolidated balance sheets and other income from Australian research and development incentives of $ 1,101 and $ 2,051 , in the consolidated statements of operations for the years ended December 31, 2023 and 2022, respectively, related to refundable research and development incentive program payments in Australia.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

The Company has recorded a research and development incentive receivable of $ 704 and $ 771 as of December 31, 2024 and 2023, respectively, in the consolidated balance sheets and other income from Australian research and development incentives of $ 1,101 , in the consolidated statements of operations for the year ended December 31, 2023, related to refundable research and development incentive program payments in Australia.

The company did no t record any income from Australian research and development incentives during the year ended December 31, 2024.

The following table shows the change in the research and development incentive receivable from January 1, 2023 to December 31, 2024:

Balance at January 1, 2023

Australian research and development incentive income, net

Cash received for 2022 eligible expenses

Australian research and development incentive income, net

Foreign currency translation

Balance at December 31, 2023

Cash received for 2022 eligible expenses

Australian research and development incentive income, net

Foreign currency translation

Balance at December 31, 2024

Summary of Significant Accounting Policies (continued)

Concentration of Credit Risk

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The income tax returns of the Company for the year ended December 31, 2021 and subsequent years are subject to examination by the Internal Revenue Service and other taxing authorities, generally for three years after the return is filed.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Foreign Currency Translation

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dollars at average rates of exchange in effect during the year.

The resulting cumulative translation adjustments have been recorded as a separate component of stockholders’ deficiency.

The resulting cumulative translation adjustments have been recorded as a separate component of stockholders’ equity.

Foreign currency transaction gains and losses are included in the results of operations.

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Expenditures for repairs and maintenance are charged to expense as incurred.

Summary of Significant Accounting Policies (continued)

Impairment of Long-Lived Assets

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The Company capitalizes certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity financings as deferred costs until such financings are consummated.

After consummation of the equity financing, these costs are recorded in stockholders’ equity (deficiency) as a reduction of additional paid-in capital generated as a result of the offering.

As of December 31, 2022 there was $ 576 of deferred costs.

As of December 31, 2023, the Company did no t have any deferred costs.

After consummation of the equity financing, these costs are recorded in stockholders’ equity as a reduction of additional paid-in capital generated as a result of the offering.

As of December 31, 2024 and 2023, the Company did no t have any deferred costs.

Deposits as of December 31, 2024 and 2023 included $ 823 and $ 966 , respectively, of deposits made by the Company with certain service providers that are to be applied to future payments due under the service agreements or returned to the Company if not utilized.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

The Company will recognize on a prospective basis the value of the effect of the down round feature in the warrants to purchase shares of common stock that were issued in a private placement in November 2017 (the “2017 Warrants”) when it is triggered (i.e., when the exercise price is adjusted downward).

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● Level 1—Quoted prices in active markets for identical assets or liabilities.

Summary of Significant Accounting Policies (continued)

● Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

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Cash equivalents of $ 23,299 and $ 39,065 as of December 31, 2024 and 2023, respectively, consisted of overnight investments and money market funds and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

The carrying value of the research and development incentive receivable, accounts payable and accrued expenses approximate their fair value due to the short-term nature of these assets and liabilities.

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Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components.

Summary of Significant Accounting Policies (continued)

Although separation of lease and non-lease components is required, certain practical expedients are available.

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Segment Information

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.

The Company’s singular focus is developing novel, targeted drugs for the treatment of cancer.

Substantially all of the Company’s tangible assets are held in the United States.

The Company’s chief operating decision maker (“CODM”), the Chief Executive Officer, manages the Company’s business activities as a single operating and reportable segment at the consolidated level.

Accordingly, the Company’s CODM uses consolidated net loss to measure segment loss, allocate resources and assess performance.

Further, the CODM reviews and utilizes functional expenses (research and development and general and administrative) at the consolidated level to manage the Company’s operations.

Other segment items included in consolidated net loss are interest income and foreign currency gain (loss), which are reflected in the consolidated statements of operations and comprehensive loss.

All patent related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure.

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Stock-based compensation is classified in the accompanying consolidated statements of operations based on the function to which the related services are provided.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Summary of Significant Accounting Policies (continued)

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model.

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Subsequent events have been evaluated as required.

Recently Adopted Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) and are early adopted by the Company or adopted as of the specified effective date.

Unless otherwise discussed below, the Company does not believe that the adoption of recently issued standards have or may have a material impact on its consolidated financial statements or disclosures.

In May 2021, FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options.

FASB issued this update to clarify the accounting by issuers for modifications or exchanges of equity-classified warrants.

The updated guidance is effective for the Company for annual periods beginning after December 15, 2021, including interim periods within those fiscal years.

The Company adopted ASU 2021-04 in the first quarter of fiscal 2022 and the Company’s adoption of this standard did not have an effect on the Company’s consolidated financial statements.

In August 2020, FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options, or ASC 470 and Derivatives and Hedging—Contracts in Entity’s Own Equity, or ASC 815.

FASB issued this update to simplify the accounting for certain financial instruments with characteristics of liabilities and equity.

The updated guidance is effective for the Company for annual periods beginning after December 15, 2021, including interim periods within those fiscal years.

The Company adopted ASC 470 in the first quarter of fiscal 2022 and the Company’s adoption of this standard did not have an effect on the Company’s consolidated financial statements.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that the Company adopts as of the specified date.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

ASU 2023-07 will improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an interim and annual basis.

The adoption of this standard did not have a material impact on the Company’s financial statements at adoption date.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

The guidance in ASU 2023-09 improves the transparency of income tax disclosures by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction.

The standard is effective for public companies for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact that the adoption of ASU 2023-09 may have on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, requiring additional disclosure of the nature of expenses included in the income statement.

The standard is effective for public companies for annual reporting periods beginning after December 15, 2026.

The Company is currently evaluating the impact that the adoption of ASU 2024-03 may have on its consolidated financial statements.

Acquisition of Flame Biosciences

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Under the terms of the Merger Agreement, Leap held back approximately 15,604 Series X Preferred shares (the “Holdback Shares”), which converted into 1,560,400 shares of common stock out of the aggregate number of shares that the Flame Stockholders otherwise would be entitled to receive pursuant to the Merger so that Leap can have recourse to the Holdback Shares for purposes of satisfying certain claims for indemnification that Leap may have against the Flame Stockholders in connection with the Merger.

In January 2024, Leap released the Holdback Shares to the Flame Shareholders.

On June 16, 2023, the Company obtained Stockholder Approval to convert the Series X Preferred Stock into shares of its common stock, which occurred on June 21, 2023.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Acquisition of Flame Biosciences (continued)

The Company accounted for the acquisition of Flame as an asset acquisition allocating the purchase price under GAAP of $ 79,016 to net assets acquired.

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As the Company concluded that such IPR&D did not have an alternative future use, the relative fair value allocated to acquired IPR&D of $ 29,582 was expensed in research and development expenses within the Company’s consolidated statement of operations during the year ended December 31, 2023.

The following table summarizes the net assets acquired based on their estimated fair values as of January 17, 2023 (in thousands):

Acquired IPR&D

Cash and cash equivalents

Accounts payable and accrued liabilities

Total acquisition value

The fair value assigned to each component of the purchase consideration, including direct costs of the acquisition of $ 1,393 , as of the Effective Date is set forth in the table below (in thousands, except share and per share amounts):

Leap common stock (par value $0.0001 per share)

Leap Series X Preferred Stock (100:1)

Warrants on Leap common stock

Warrants on Leap Series X Preferred Stock (100:1)

Direct and incremental costs of the asset acquisition

In addition, subject to and upon the terms and conditions set forth in the Merger Agreement, the Company may also (i) pay Contingent Merger Consideration (as defined in the Merger Agreement) that may become payable if, and only if, certain assets of Flame related to Flame’s FL-101 program and/or FL-103 program are sold after the consummation of the Merger pursuant to the FL-101/103 Disposition Agreement (as defined in the Merger Agreement), which Contingent Merger Consideration shall be 80 % of the after-tax net proceeds of such sale, if any, and the payment thereof is subject to the terms and conditions set forth in the Merger Agreement and (ii) issue pursuant to the Merger additional shares of Series X Preferred Stock or common stock as a result of any applicable post-closing purchase price adjustment in the event that Flame’s actual Company Net Cash (as defined in the Merger Agreement) as of the Effective Date is determined to be greater than Flame’s estimated Company Net Cash as of the closing.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Acquisition of Flame Biosciences (continued)

Sale of FL-101/FL-103 to AlmataBio, Inc.

3 unchanged sentences

The IPR&D assets sold related to Flame’s FL-101/FL-103 program did not meet the definition of a business and had a carrying value of $ 0 at the time of the sale.

In addition, the Company estimated the likelihood of receiving any milestone payments to be remote.

In addition, the Company estimated the likelihood of receiving any milestone payments to be

As such, management elected the most likely amount method to determine the transaction price of the sale, which included the non-refundable closing date cash payment of $ 500 and future milestone payments of $ 0 .

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The Series X Preferred Stock was converted to common stock on June 21, 2023, and the carrying value of the Series X Preferred Stock was reclassified from mezzanine equity to permanent equity.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Acquisition of Flame Biosciences (continued)

January 2023 Common Stock Warrants and January 2023 Series X Preferred Stock Warrants

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Lab equipment

Furnitures and fixtures

Furniture and fixtures

accumulated depreciation

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Accrued expenses

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

The Company has an operating lease for real estate in the United States and does not have any finance leases.

1 unchanged sentence

Reflected in the right-of-use asset and lease liability on the Company’s consolidated balance sheets are the periods provided by renewal and extension options that the Company is reasonably certain to exercise, as well as the periods provided by termination options that the Company is reasonably certain to not exercise.

The Company’s existing 47 Thorndike Street Lease was set to expire in July 2024.

In January 2024 the Company entered into a fourth amendment with its 47 Thorndike Street Lease (“Fourth Amendment”), extending the lease through July 2025 (see Note 15).

The 47 Thorndike Street Lease includes variable lease and non-lease components that are not included in the right-of-use asset and lease liability and are reflected as an expense in the period incurred.

Such payments primarily include common area maintenance charges and increases in rent payments that are driven by factors such as future changes in an index (e.g., the Consumer Price Index).

In calculating the present value of future lease payments, the Company utilized its incremental borrowing rate based on the remaining lease term at the date of adoption.

The Company has elected to account for each lease component and its associated non-lease components as a single lease component and has allocated all of the contract consideration across lease components only.

This will potentially result in the initial and subsequent measurement of the balances of the right-of-use asset and lease liability for leases being greater than if the policy election was not applied.

The Company’s existing lease expires in July 2025 and includes variable lease and non-lease components that are not included in the right-of-use asset and lease liability and are reflected as an expense in the period incurred.

Such payments primarily include common area maintenance charges.

In calculating the present value of future lease payments, the Company utilized its incremental borrowing rate based on the lease term.

The Company has an existing net lease in which the non-lease components (e.g.

common area maintenance, maintenance, consumables, etc.) are paid separately from rent based on actual costs incurred and therefore are not included in the right-of-use asset and lease liability and are reflected as an expense in the period incurred.

During the year ended December 31, 2022, the Company extended the term of its operating lease and recorded an additional right-of-use asset and lease liability of $ 609 .

During the year ended December 31, 2024, the Company extended the term of its operating lease to July 31,2025 and recorded an additional right-of-use asset and lease liability of $ 420 .

As of December 31, 2024, a right-of-use asset of $ 262 and lease liability of $ 266 are reflected on the consolidated balance sheet.

The Company recorded operating lease costs of $ 449 and $ 443 , respectively, during the years ended December 31, 2023 and 2022.

The Company recorded rent expense of $ 461 and $ 449 , respectively, during the years ended December 31, 2024 and 2023.

Cash paid for amounts included in the measurement of lease liabilities was $ 463 and $ 452 , respectively, during the years ended December 31, 2024 and 2023.

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Total operating lease liabilities

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

As of December 31, 2024, outstanding warrants to purchase common stock, all of which are classified as equity warrants, consisted of the following:

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2019 Warrants

November 2024

2019 Warrants

February 2026

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February 2025

April 2024 Pre-funded Warrants

2017 Warrants

The 2017 Warrants contain full ratchet anti-dilution protection provisions.

The Company will recognize on a prospective basis the value of the effect of the down round feature in the warrant when it is triggered (i.e., when the exercise price is adjusted downward).

This value is measured as the difference between (1) the financial instrument’s fair value (without the down round feature) using the pre-trigger exercise price and (2) the financial instrument’s fair value (with the down round feature) using the reduced exercise price.

The value of the effect of the down round feature will be treated as a dividend and a reduction to income available to common stockholders in the basic EPS calculation.

In connection with the April 2024 Private Placement, when the 2017 Warrants were repriced from $ 10.55 to $ 2.82 , the Company recorded a dividend of $ 234 during the year ended December 31, 2024.

The 2017 Warrants expired in November 2024.

2019 Warrants

During the year ended December 31, 2023, the Company redeemed 10,000 of the 2019 Warrants at a purchase price of $ 2.90 per share.

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In January 2023, pursuant to the Merger, the warrants held by the Flame Warrant Holders also became exercisable for 443 shares of Series X Preferred Stock (the “January 2023 Series X Preferred Stock Warrants”).

Each share of Series X Preferred Stock converted into 100 shares of common stock, following Stockholder Approval during the year ended December 31, 2023.

Following Stockholder Approval, each share of Series X Preferred Stock converted into 100 shares of common stock, during the year ended December 31, 2023.

The January 2023 Series X Preferred Stock Warrants have an exercise price of $ 6.78 per share and expire in February 2025.

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During the year ended December 31, 2023, upon obtaining Stockholder Approval, the January 2023 Series X Preferred Stock Warrants were converted into common stock warrants and reclassified from liability to equity.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders.

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The Company also issued Series X Preferred Stock to Flame Stockholders pursuant to the Merger (see Note 3).

Private Placement - April 2024

On April 15, 2024, the Company completed a private placement whereby the Company issued 12,660,993 shares of its common stock at a purchase price of $ 2.82 per share, and 1,523,404 prefunded warrants at a purchase price of $ 2.819 per share (which is equal to the price per share less the $ 0.001 exercise price per warrant share).

The aggregate net proceeds received by the Company from the offering was $ 37,051 , net of $ 2,948 of underwriting discounts and commissions and offering expenses payable by the Company.

Stock-Based Compensation

Equity Incentive Plans

In September 2012, the Company adopted the 2012 Equity Incentive Plan (the “2012 Plan”), as amended, which provides designated employees of the Company and its affiliates, certain consultants and advisors who perform services for the Company and its affiliates, and nonemployee members of the Board of Directors of the Company and its affiliates with the opportunity to receive grants of incentive stock options, nonqualified stock options and stock awards.

During the year ended December 31, 2022, the 2012 Equity Plan expired.

On January 20, 2017, the Company’s stockholders approved the 2016 Equity Incentive Plan (the “2016 Plan”).

Beginning on January 1, 2018, the number of shares of common stock authorized for issuance pursuant to the 2016 Plan was increased each January 1 by an amount equal to four percent ( 4 %) of the Company’s outstanding common stock as of the end of the immediately preceding calendar year or such other amount as determined by the compensation committee of the Company’s board of directors.

On June 16, 2022, the Company’s stockholders approved the 2022 Equity Incentive Plan (the “2022 Plan”), which provides for a total of 750,000 new shares of the Company’s common stock to be granted.

In addition, on June 16, 2023, stockholders approved 2,250,000 new shares of the Company’s common stock to be added to the 2022 Plan for future issuance.

As of December 31, 2023, there were 1,016,023 shares available for grant under the Company’s Equity Incentive Plans, which excludes the 2012 Plan which expired during the year ended December 31, 2022.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Stock-Based Compensation (continued)

On June 16, 2022, the Company’s stockholders approved the 2022 Equity Incentive Plan (the “2022 Plan”), which provided for a total of 750,000 new shares of the Company’s common stock to be granted.

In addition, on June 16, 2023, and July 2, 2024, stockholders approved new shares of the Company’s common stock to be added to the 2022 Plan for future issuance of 2,250,000 and 2,000,000 , respectively.

As of December 31, 2024, there were 986,563 shares available for grant under the Company’s Equity Incentive Plans.

A summary of stock option activity under the Company’s Equity Incentive Plans is as follows:

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As of December 31, 2024, there was approximately $ 7,527 of unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a remaining weighted-average period of approximately 2.07 years.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Stock-Based Compensation (continued)

Restricted Stock Units

During the year ended December 31, 2022 the Company granted 265,000 restricted stock units (“RSUs”) to employees that will cliff vest and will be settled after three years of continuous service, or upon a change of control of the Company, whichever is earlier, pursuant to the 2016 Plan.

The Company did not grant any RSUs during the year ended December 31, 2023.

During the years ended December 31, 2023 and 2022, the Company recognized $ 1,632 and $ 2,086 , respectively, of stock based compensation expense related to these equity classified RSUs.

The Company did not grant any RSUs during the year ended December 31, 2024 and 2023.

The following table presents RSU activity under the 2016 Plan as of December 31, 2024:

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General and administrative

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

There is no provision for income taxes in the United States because the Company has historically incurred operating losses and maintains a full valuation allowance against its deferred tax assets in these jurisdictions.

A provision for income taxes was recorded in Australia based on the results of the Company’s foreign subsidiary.

Loss before income taxes consisted of the following:

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A summary of the Company’s current and deferred expense for income tax is as follows:

Current expense (benefit):

Total current expense (benefit):

Deferred expense (benefit):

Current expense:

Total current expense:

Deferred expense:

Total deferred expense

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State taxes, net of federal benefit

Flame IPR&D write off

Permanent differences

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Section 382 limitations

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Income Taxes (continued)

The significant components of the Company’s deferred tax assets as of December 31, 2024 and 2023 were as follows:

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State net operating loss carryforwards

Foreign net operating loss carryforwards

Research and development (R&D) tax credits

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As of December 31, 2024 and 2023, the Company has provided a full valuation allowance against its net deferred tax assets, as realization of any associated tax benefit in the future is not more likely than not.

The valuation allowance decreased by $ 42,726 and increased by $ 14,886 during the years ended December 31, 2023 and 2022, respectively.

The decrease in valuation allowance during the year ended December 31, 2023 is due primarily to Section 382 limitations on NOL’s and R&D tax credits.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Income Taxes (continued)

The valuation allowance increased by $ 19,307 and decreased by $ 47,726 during the years ended December 31, 2024 and 2023, respectively.

The Tax Cuts and Jobs Act (“TCJA”) resulted in significant changes to the treatment of R&D expenditures under Section 174.

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The Company follows the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Company to determine whether a tax position of the Company is more likely than not to be sustained upon examination, including resolution of any related appeals of litigation processes, based on the technical merits of the position.

For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon the ultimate settlement with the relevant taxing authority.

For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater

than 50% likelihood of being realized upon the ultimate settlement with the relevant taxing authority.

As of December 31, 2024, the Company has not recorded any uncertain tax positions.

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Year Ended December 31,

Dividend attributable to down round feature of warrants

Net loss attributable to common stockholders for basic and diluted loss per share

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Net loss per share attributable to common stockholders - basic and diluted

Included within weighted average common shares outstanding for the years ended December 31, 2023 and 2022, are 1,421,768 common shares issuable upon the exercise of the pre-funded warrants and penny warrants, as the warrants are exercisable at any time for nominal consideration, and as such, the shares are considered outstanding for the purpose of calculating basic and diluted net loss per share attributable to common stockholders.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Net Loss Per Share (continued)

Included within weighted average common shares outstanding for the years ended December 31, 2024 and 2023, are 2,945,175 , and 1,421,768 common shares issuable upon the exercise of the pre-funded warrants and penny warrants, as the warrants are exercisable at any time for nominal consideration, and as such, the shares are considered outstanding for the purpose of calculating basic and diluted net loss per share attributable to common stockholders.

The Company’s potentially dilutive securities include RSUs, stock options and warrants.

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However, there can be no assurance that clinical or commercialization success of developed products will occur, and no royalties have been paid or accrued through December 31, 2024.

License Agreement— On May 28, 2015, the Company entered into a license agreement with Lonza Sales AG (“Lonza”), pursuant to which Lonza granted the Company a world-wide, non-exclusive license for certain intellectual property relating to a gene expression system for manufacturing DKN-01.

As defined in the license agreement, the Company would be required to pay royalties to Lonza based on a percentage in the low single digits of net sales of DKN-01, if and when achieved.

However, there can be no assurance that clinical or commercialization success will occur, and no royalties have been paid or accrued through December 31, 2023.

Collaboration Agreement --On August 10, 2020, the Company entered into a collaboration agreement with Adimab, LLC (the “Adimab Agreement”), pursuant to which Adimab will conduct research programs to develop monoclonal antibodies to certain targets identified by the Company and provide it with an option to acquire exclusive rights to such antibodies.

Upon payment of an option fee, on a product-by-product basis, Adimab will grant the Company a world-wide, exclusive license for, or assign ownership to the Company of, certain intellectualproperty rights and grant the Company a non-exclusive license with respect to the Adimab platform technology.

Upon payment of an option fee, on a product-by-product basis, Adimab will grant the Company a world-wide, exclusive license for, or assign ownership to the Company of, certain intellectual property rights and grant the Company a non-exclusive license with respect to the Adimab platform technology.

As defined in the Adimab Agreement, after exercising an option and making the option payment, the Company would be required to pay Adimab milestones upon the completion of clinical development and regulatory milestones, along with a royalty in the low-single digits of net sales of each product, if and when achieved.

However, there can be no assurance that clinical, or commercialization success will occur, and no royalties have been paid or accrued through December 31, 2024.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Commitments and Contingencies (continued)

License Agreement --On August 13, 2021, the Company entered into a strategic partnership and license agreement with NovaRock Biopharmaceuticals, Inc.

(the “NovaRock Agreement”), pursuant to which NovaRock granted the Company a world-wide, excluding the People’s Republic of China, Hong Kong, Macau, and Taiwan, exclusive license for certain intellectual property rights relating to FL-301 and FL-302.

As defined in the license agreement, the Company would be required to pay NovaRock milestones upon the completion of development, regulatory and sales milestones for up to three different products (FL-301, FL-302 and potentially one additional target), along with a royalty in the mid-single digits of net sales of each product in the territory, if and when achieved.

However, there can be no assurance that clinical, or commercialization success will occur, and no royalties have been paid or accrued through December 31, 2023.

Legal Proceedings— At each reporting date, the Company evaluates whether a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.

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The Company made matching contributions of $ 471 and $ 443 for the years ended December 31, 2024 and 2023, respectively.

LEAP THERAPEUTICS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except share and per share amounts)

Related Party Transactions

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Subsequent Events

On January 3, 2024, the Company entered into a Fourth Amendment.

Under the Fourth Amendment, the Company extended the term of the 47 Thorndike Street Lease through July 31, 2025.

Under the Fourth Amendment, the Company will continue to pay the current monthly base rent amount of $ 38,335 contemplated by the 47 Thorndike Street Lease through July 31, 2024, with an increase commencing on August 1, 2024 adjusting the monthly base rent amount to approximately $ 38,974 through July 31, 2025.

In January 2024, the Company released the Holdback Shares to the Flame Shareholders (see Note 3).

Prefunded Warrant Exercises

During the first quarter of 2025, there were 824,718 March 2020 Pre-funded Warrants that were cashless exercised, resulting in the issuance of 809,558 common shares of the Company’s common stock and 591,603 September 2021 Pre-funded warrants that were cashless exercised, resulting in the issuance of 590,424 common shares of the Company’s common stock.

Also during the first quarter of 2025, there were 1,523,404 April 2024 Pre-funded Warrants that were cashless exercised, resulting in the issuance of 1,521,059 common shares of the Company’s common stock.

January 2023 Common Stock Warrants

The January 2023 Common Stock Warrants expired in February 2025.

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-K

Item 9A. Controls and Procedures