What changed in this filing

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Item 1. Financial Statements

2022-05-11 compared with 2021-11-10 · 170 added, 445 removed, 373 unchanged (62% of the section changed)

3 unchanged sentences

(in thousands, except for share and per share data)

September 30,

Current assets:

23 unchanged sentences

Total liabilities

11,271  

Commitments and contingencies (Note 7)

4 unchanged sentences

100,000,000 shares authorized;

28,577,088 and 11,536,720 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

28,578,338 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

1 unchanged sentence

151,733  

Subscription Receivable

Accumulated other comprehensive income

11 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating expenses:

17 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

14 unchanged sentences

Proceeds from exercise of warrants

Payment of tax liability for vested restricted stock units

Proceeds from sale of common stock, net of issuance costs

6 unchanged sentences

Cash paid for taxes

Non-cash investing and financing activities:

Purchases of property and equipment in accounts payable and accrued liabilities

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands, except for shares)

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Common Stock Subscribed

Accumulated  

Par Value Amount

6 unchanged sentences

Balance, December 31, 2021

11,536,720  

26,966  

$ 74,671  

$ ( 56,916 )  

$ ( 129 )  

$ 17,760  

Issuance of common stock, net of issuance costs of $ 6,159

16,883,420  

( 26,966 )  

74,537  

74,684  

Reverse stock split

14,285  

( 60 )  

Warrants exercised

10,000  

Stock-based compensation

Consolidated net loss

( 4,445 )  

Cumulative translation adjustment

Balance, March 31, 2022

28,444,425  

$ 149,788  

$ ( 61,361 )  

$ 88,516  

Issuance of common stock in connection with equity purchase agreement, net of issuance costs of $ 403

107,788  

Subscription of common stock in connection with Consulting Agreement

( 10 )  

Stock-based compensation

Consolidated net loss

( 4,244 )  

Cumulative translation adjustment

Balance, June 30, 2021

28,552,213  

$ 150,231  

$ ( 65,605 )  

$ ( 10 )  

$ 84,700  

Issuance of common stock in connection with Consulting Agreement

( 2,500 )  

( 10 )  

Common stock issued upon vesting of restricted stock units (net of shares withheld for payment of tax liability)

21,125  

( 23 )  

Stock-based compensation

Consolidated net loss

( 4,379 )  

Cumulative translation adjustment

( 16 )  

Balance, September 30, 2021

28,577,088  

$ 151,175  

$ ( 69,984 )  

$ 81,259  

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Common Stock Subscribed

11 unchanged sentences

$ ( 56,916 )  

Issuance of common stock, net of issuance costs of $ 709

$ ( 129 )  

Stock-based compensation

Consolidated net loss

$ 17,760  

Cumulative translation adjustment

( 33 )  

Balance, March 31, 2020

8,871,338  

$ 56,011  

Issuance of common stock, net of issuance costs of $ 6,159

16,883,420  

1 unchanged sentence

74,537  

Issued for cash - sale of common stock, net of issuance costs of $ 336

74,684  

Reverse stock split

14,285  

1 unchanged sentence

Warrants exercised

Stock-based compensation

Consolidated net loss

10,000  

Cumulative translation adjustment

Balance, June 30, 2020

10,067,250  

$ 66,428  

$ ( 50,882 )  

$ 15,629  

Issued for cash - sale of common stock, net of issuance costs of $ 135

216,855  

Common stock issued upon vesting of restricted stock units (net of shares withheld for payment of tax liability)

( 17 )  

Stock-based compensation

2 unchanged sentences

Cumulative translation adjustment

Balance, September 30, 2020

Balance, March 31, 2021

28,444,425  

5 unchanged sentences

Notes to the Unaudited Condensed Consolidated Financial Statements

Nature of Business 

The terms "MBI" or "the Company", "we", "our", and "us" are used herein to refer to Moleculin Biotech, Inc.

MBI is a clinical-stage pharmaceutical company, organized as a Delaware corporation in July 2015.

The Company's focus is on the treatment of highly resistant cancers and viruses through the development of its drug candidates.

These candidates are based substantially on discoveries licensed from The University of Texas System on behalf of the MD Anderson Cancer Center, which we refer to as MD Anderson.

MBI is a clinical-stage pharmaceutical company, organized as a Delaware corporation in July 2015, with its focus is on the treatment of highly resistant cancers and viruses through the development of its drug candidates, based substantially on discoveries licensed from The University of Texas System on behalf of the MD Anderson Cancer Center, which the Company refers to as MD Anderson.

MBI formed Moleculin Australia Pty.

Ltd., (MAPL), a wholly owned subsidiary in June 2018, to perform certain preclinical development in Australia.

This has enabled the Company to realize the benefits of certain research and development tax credits in Australia. In July 2021, MBI formed Moleculin Amsterdam B.V., a wholly owned subsidiary, primarily to act as its legal representative for clinical trials in Europe for Moleculin Biotech, Inc. 

In 2019, the Company sublicensed essentially all of the rights to its technologies in 29 countries in Europe and Asia to WPD Pharmaceuticals Sp.z o.o.

In 2019, the Company sublicensed essentially all of the rights to its technologies in over 25 countries in Europe and Asia to WPD Pharmaceuticals Sp.z o.o.

(WPD or WPD Pharmaceuticals) in exchange for a minimum amount of externally funded collaboration on development in Europe over a certain amount of time.

This sublicense was last amended in December 2021.

Also in 

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As part of this agreement, ALI issued to the Company a 10 % interest in ALI.

The Company has three core technologies:

1 ) Annamycin, which the Company refers to as a "next generation" anthracycline;

2 ) a portfolio of Immune/Transcription Modulators, of which WP1066 is one of the lead molecules;

and 3 ) a portfolio of Metabolism/Glycosylation Inhibitors, of which WP1122 is the lead molecule.

The Company has five  drug candidates, representing all three core technologies, and three of those have shown human activity in clinical trials.

As of the end of 2020, those three drug candidates accounted for five clinical trials in the United States (U.S.) and Europe.

Two of those trials are externally funded studies of WP1066 in brain tumors.

Two internally funded Phase 1 clinical trials, Annamycin in acute myeloid leukemia (AML), and WP1220 in cutaneous T-cell lymphoma (CTCL), were successfully concluded.

An additional internally funded Phase 1/2 clinical trial of Annamycin in AML is currently ongoing in Poland.

In the second quarter of 2021, the Company commenced enrollment and dosed the first subject in its U.S. Phase 1b/2 clinical trial evaluating Annamycin for the treatment of soft tissue sarcoma (STS) lung metastases.

Enrollment in that trial is also ongoing.

The Company anticipates that the externally funded WP1066 trial in brain tumors at MD Anderson will be terminated this year and expects to commence a similar WP1066 externally funded trial elsewhere in 2022.

Additionally, MBI expects a second, grant funded Phase 1b/2 clinical trial of Annamycin in STS lung metastases to be primarily investigator-funded in Poland.

MBI also plans to begin a Phase 1/2 clinical trial of Annamycin in combination with Ara-C for the treatment of AML in Europe by seeking approval for its own clinical trial and, possibly, a second, similar grant funded trial through its sublicensee, WPD Pharmaceuticals in Poland.

In October 2021, the Company received authorization from regulatory authorities in the United Kingdom (U.K.) to commence a Phase 1a clinical trial of WP1122 in healthy volunteers with the intent to progress t o COVID- 19 patients either there or i n locations where the prevalence of COVID- 19 will adequately support recruitment.

The Company intends to internally fund the initial trials of WP1122 but may seek external funding opportunities if encouraging activity is seen in COVID- 19 patients.

Additionally, the Company is pursuing filing an Investigative New Drug application (IND) in the U.S. with WP1122 for the treatment of certain cancers prior to the end of 

Finally, the Company continues to seek opportunities to collaborate on a potential Phase 2 clinical study of WP1220 in CTCL.

The Company has three core technologies, based substantially on discoveries made at and licensed from MD Anderson.

Having six drug candidates, three of which have now shown human activity in clinical trials, the Company believes that success in its lead program, Annamycin, has allowed and will allow further pipeline expansion into multiple high-value oncology indications.

The Company's core technologies consist of the following:

a) Annamycin;

b) WP1066 Portfolio;

and c) WP1122 Portfolio.

The Company has six  drug candidates, representing all three core technologies, and three of those have shown human activity in clinical trials.

In the US and Europe, the Company has conducted, are currently, or plans in the near term to be conducting clinical trials for its drug candidates - Annamycin, WP1066, WP1220, and WP1122.

All trials are or were in the Phase 1 portion except the WP1220 trial, which was a proof-of-concept trial.

In 2021 and early 2022, there were also three "right-to-try" (or their foreign equivalent) uses of Annamycin and WP1066.

The Company plans to conduct additional trials and is in the process of obtaining the appropriate regulatory approval and beginning those trials. The Company utilizes its own internal resources and funds to conduct some of these trials and also has trials being conducted via physician-sponsored trials which utilizes primarily external funds, usually grant funds, which are not presented in the financial statements.

The Company does not have manufacturing facilities and all manufacturing activities are contracted out to third parties.

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The Company’s overall strategy is to seek potential outlicensing opportunities with development/commercialization strategic partners who are better suited for the marketing, sales and distribution of its drugs, if approved.

COVID- 19 and Worldwide Supply Chain Issues  - In M arch 2020, the World Health Organization declared the outbreak of a novel Coronavirus (COVID- 19 ) as a pandemic, which continues to spread throughout the world.

The spread of COVID- 19 has caused significant volatility in U.S.

and international markets, including Poland, where MBI conducts some of its clinical trials and Italy, where its Annamycin drug supply is produced.

There has been limited interruption of its drug supply, and most Polish clinics where the Company is conducting trials are limiting access for monitoring activities.

Additionally, MBI believes COVID- 19  materially slowed the recruitment of patients for its clinical trials, but it is now beginning to see an increase in recruitment. This could worsen or be alleviated at any time.

Furthermore, there is significant uncertainty around the breadth and duration of business disruptions related to COVID- 19, as well as its impact on the U.S.

and international economies and, as such, the Company is unable to determine if it will have a material impact to its operations.

Additionally, the Company believes that the potential for impact to its supply chain due to COVID- 19 will be reduced as vaccine production normalizes throughout the industry.

In the third quarter, worldwide supply chain issues began delaying certain shipments.

The supply chain for the manufacturing of the Company's drug candidates and supplies for clinical trials can be complicated and involves several parties.

If the Company were to experience any supply chain issues, including as a result of the COVID- 19 pandemic, the Company's product supply could be disrupted.

The Company believes that its operations have not been materially impacted to date.

In view of current worldwide trends with respect to COVID- 19 and worldwide supply chain issues, MBI does not expect either issue to materially further impact recruitment for or the operation of current or future clinical trials.

However, the Company cannot be certain that these trends will continue and there is the possibility they may reverse.

Basis of presentation, principles of consolidation, significant accounting policies and liquidity

Reverse Stock Split - On January 29, 2021, the Company filed a Certificate of Amendment to the amended and restated certificate of incorporation with the Secretary of State and the State of Delaware to effect a reverse stock split of all the issued and outstanding shares of the Company's common stock at a ratio of 1 for 6.

The accompanying consolidated financial statements and notes to the consolidated financial statements give retroactive effect to the reverse stock split for all periods presented.

Reverse Stock Split - On January 29, 2021, the Company filed a Certificate of Amendment to its amended and restated certificate of incorporation with the Secretary of State and the State of Delaware to effect a reverse stock split of all the issued and outstanding shares of the Company's common stock at a ratio of 1 for 6.

The accompanying condensed consolidated financial statements and notes to the condensed consolidated financial statements give retroactive effect to the reverse stock split for all periods presented.

Certain amounts in the financial statements, the notes thereto, and elsewhere in the Form 10 -Q 

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Interim results are not necessarily indicative of the results for the full year.

These interim condensed unaudited consolidated financial statements should be read in conjunction with the audited financial statements of the Company as of 

These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company as of 

December 31, 2021 and notes thereto contained in the Form 10 -K filed with the SEC on March 24, 2022.

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Significant Accounting Policies - The Company's significant accounting policies are described in Note 2, Basis of Presentation, principles of consolidation and significant accounting policies , to the consolidated financial statements included in the Company's Annual Report on Form 10 -K for the year ended December 31, 2021 .

There have been no material changes to the significant accounting policies during the nine months ended September 30, 2021 , other than those noted below.

There have been no material changes to the significant accounting policies during the three months ended March 31, 2022 , other than those noted below.

Use of Estimates - The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

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fair value estimates on intangible assets, warrants, and stock-based compensation expense, as well as accrued expenses and taxes. 

Liquidity and Financial Condition - The Company is an early stage and emerging growth company (EGC) and has not generated any revenues to date.

As such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

Liquidity and Financial Condition - The Company is an early stage company and has not generated any revenues to date.

As such, the Company is subject to all of the risks associated with early stage companies.

Since inception, the Company has incurred losses and negative cash flows from operating activities.

For the nine months ended September 30, 2021  and 2020 , the Company incurred net losses of 

$ 13.1  million an d 

$ 14.7  million, respectively, and had net cash flows used in operating activities o f 

For the three months ended March 31, 2022  and 2021 , the Company incurred net losses of 

$ 6.9  million an d  $ 4.4 million, respectively, and had net cash flows used in operating activities o f 

$ 4.8  million and $ 3.6  million, r espectively.

At September 30, 2021 , the Company had an accumulated deficit of 

At March 31, 2022 , the Company had an accumulated deficit of 

$ 79.7  million a nd cash and cash equivalents of $ 66.1  million. 

The Company expects its cash on hand as of September 30, 2021  will be sufficient to fund the Company's operations beyond the near term.

The Company expects its cash on hand as of March 31, 2022  will be sufficient to fund the Company's operations beyond the near term.

Such projections are subject to changes in the Company’s internally funded preclinical and clinical activities, including unplanned preclinical and clinical activity.

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The Company’s management does not believe the Company is exposed to significant credit risk at this time due to the financial condition of the financial institution where its cash is held.

Prepaid Expenses and Other Current Assets - Prepaid expenses and other current assets consist of the following (in thousands):

March 31, 2022

December 31, 2021

Vendor prepayments and deposits

Prepaid sponsored research

Prepaid insurance

Related party receivables

Non-trade receivables

Total prepaid expenses and other current assets

$ 1,156  

$ 1,594  

Fair Value of Financial Instruments - The Company's financial instruments consist primarily of non-trade receivables, accounts payable, accrued expenses and its warrant liability.

11 unchanged sentences

The Company’s financial assets and liabilities recorded at fair value on a recurring basis include the fair value of warrant liability discussed in Note 4.

The following table provides liabilities reported at fair value and measured on a recurring basis at September 30, 2021 and December 31, 2020 (in thousands): 

Fair value of warrant liability as of September 30, 2021:

The following table provides liabilities reported at fair value and measured on a recurring basis at March 31, 2022 and December 31, 2021 (in thousands): 

Fair value of warrant liability as of March 31, 2022:

$ 1,252  

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The table below of Level 3 liabilities (in thousands) begins with the valuation as of the beginning of the 

third quarter and then is adjusted for changes in fair value that occurred during the third  quarter.

The ending balance of the Level 3 financial instrument presented above represents the Company's best estimates and may not be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments.

Three Months Ended September 30, 2021

Warrant Liability Long-Term

Warrant Liability Total

Balance, June 30, 2021

$ 5,390  

Change in fair value - net

( 1,678 )  

Balance, September 30, 2021

$ 3,712  

The table below of Level 3 liabilities (in thousands) begins with the valuations as of December 31, 2020  and is adjusted for the exercises and for changes in fair value that occurred during the nine months ended September 30, 2021 .

first quarter and then is adjusted for changes in fair value that occurred during the first  quarter.

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Warrant Liability Long-Term

3 unchanged sentences

$ 1,412  

Exercise of warrants

( 52 )  

Change in fair value - net

( 160 )  

Balance, September 30, 2021

Balance, March 31, 2022

$ 1,252  

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In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be antidilutive.

For the three months ended September 30, 2021 and 2020 , approximately 4.5  million and approximately 3.8  million, respectively, of potentially dilutive shares were excluded from the computation of diluted earnings per share due to their antidilutive effect.

For the 

nine months ended September 30, 2021 and 2020 , approximately  

4.1  million a nd 3.4  million, respectively, of potentially dilutive shares were excluded from the computation of diluted earnings per share due to their antidilutive effect.

For the three months ended March 31, 2022 and 2021 , approximately 4.8  million and ap proximately 3.8  million, respectively, of potentially dilutive shares were excluded from the computation of diluted earnings per share due to their antidilutive effect. 

Subsequent Events - The Company’s management reviewed all material events through the date of these unaudited condensed consolidated financial statements.

See notes and specifically Note 8 - Subsequent Events.

See Note 8 - Subsequent Events. 

Recent Accounting Pronouncements

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GAAP for certain financial instruments with characteristics of both liabilities and equity, including convertible instruments and contracts in an entity's own equity.

The guidance is effective for the Company beginning on January 1, 2022 and prescribes different transition methods for the various provisions. The Company is currently evaluating the impact that this standard will have, if any, on its consolidated financial statements.

The guidance is effective for the Company beginning on January 1, 2022 and prescribes different transition methods for the various provisions. The Company's adoption of this pronouncement effective January 1, 2022 did not have a material impact on the Company's condensed consolidated financial statements.

In May 2021, 

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Early adoption is permitted for all entities, including adoption in an interim period.

The Company is currently evaluating the potential impact this standard will have, if any, on its consolidated financial statements.

The Company's adoption of this pronouncement effective January 1, 2022 did not have a material impact on the Company's condensed consolidated financial statements.

The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying condensed consolidated financial statements.

1 unchanged sentence

Accrued expenses and other current liabilities consist of the following components (in thousands): 

September 30, 2021

March 31, 2022

December 31, 2021

Accrued research and development

$ 1,322  

Accrued legal, regulatory, professional and other

Accrued payroll and bonuses

Accrued legal, regulatory, professional and other

Accrued liabilities due to related party

Operating lease liability - current

Accrued related party

Total accrued expenses and other current liabilities

$ 2,266  

$ 1,791  

Additionally, accounts payable includes 

$ 48,000 as of September 30, 2021  and December 31, 2020 , respectively, for a related party payable. 

$ 21,000  and $ 48,000  

as of March 31, 2022  and December 31, 2021 , respectively, for a related party payable. 

Liability Classified Warrants

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Estimated volatility is a measure of the amount by which the Company's stock price is expected to fluctuate each year during the expected life of the warrants.

Beginning in 2020, only the volatility of the Company's own stock is used in the Black-Scholes option pricing model as it now has sufficient historic data in its stock price. 

Only the volatility of the Company's own stock is used in the Black-Scholes option pricing model. 

The assumptions used in determining the fair value of the liability classified warrants are as follows:

September 30, 2021

March 31, 2022

December 31, 2021

Risk-free interest rate

0.0 % to 0.7 %  

0.1 % to 0.3 %  

41.2 % to 123.1 %  

113.7 % to 127.4 %  

1.5 % to 2.4 %

0.1 % to 1.1 %

50.0 % to 112.2 %

71.8 % to 114.5 %

Expected life (years)

0.4 to 3.9  

1.1 to 4.6  

Dividend yield

A summary of the Company's liability classified warrant activity during the nine months ended September 30, 2021 and related information follows: 

A summary of the Company's liability classified warrant activity during the three months ended March 31, 2022 and related information follows: 

Number of Shares

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Balance at January 1, 2022

2,733,645  

$ 6.30  

$ 16.80  

$ 9.45  

( 10,000 )  

Balance at September 30, 2021

2,723,645  

$ 6.30  

$ 16.80  

$ 9.46  

Exercisable at September 30, 2021

2,723,645  

$ 6.30  

$ 16.80  

$ 9.46  

For a summary of the changes in fair value associated with the Company's warrant liability for the nine months ended September 30, 2021 , see Note 2 - Basis of presentation, principles of consolidation and significant accounting policies - Fair Value of Financial Instruments.

Balance at March 31, 2022

Exercisable at March 31, 2022

For a summary of the changes in fair value associated with the Company's warrant liability for the three months ended March 31, 2022 , see Note 2 - Basis of presentation, principles of consolidation and significant accounting policies - Fair Value of Financial Instruments.

Equity Classified Warrants

In April 2021, the Company granted equity-classified warrants to purchase 71,500  shares of common stock with a five -year term and an exercise price of $ 3.63  vesting quarterly over five years while services are being performed.

In August 2021, the Company entered into a portfolio development advisory agreement with a related party entity and in connection with the agreement, the Company granted equity-classified warrants to purchase 250,000 shares of common stock with a ten -year term and an exercise price of $ 3.08 .

In August 2021, the Company entered into a portfolio development advisory agreement with a related party entity, associated with Dr.

Waldemar Priebe, and in connection with the agreement, the Company granted equity-classified warrants to purchase 250,000 shares of common stock with a ten -year term and an exercise price of $ 3.08 .

The August 2021 warrants vest as follows:

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and August 2021 warrants vest in full if there is a change of control event, as defined in the agreement.

At September 30, 2021 , the Company had 396,502  equity classified warrants outstanding and 182,985  warrants were exercisable.

December 31, 2020 , the Company had 109,639 equity classified warrants outstanding and 85,472 warrants were exercisable.

At March 31, 2022 , the Company ha d 396,502  e quity classified warrants outstanding an d 190,135  w arrants were exercisable.

December 31, 2021 , the Company had 396,502 equity classified warrants outstanding and 186,560  warrants were exercisable.

The Company recorded stock compensation expense for eq uity classified warrants of $ 83,000 and zero  for the three months ended 

September 30, 2021 and 2020 , respectively, and $ 432,000  and $5,000 during the 

nine months ended September 30, 2021 and 2020 , respectively.

September 30, 2021 , there was 

$ 632,000 of unrecognized stock compensation expense related to the Company's equity classified warrants.

March 31, 2022 and 2021 , respectively.

March 31, 2022 , there was $ 465,000 of unrecognized stock compensation expense related to the Company's equity classified warrants.

2022 Stock Issuances

In June 2021, the Company entered into an At Market Issuance Sales Agreement ( 2021 ATM Agreement) with Oppenheimer & Co.

Pursuant to the terms of the 2021 ATM Agreement, the Company may offer and sell, from time to time through Oppenheimer shares of the Company's common stock with an aggregate sales price of up to $ 50.0 mil lion.

As of the date of this report, there have been no issuances under the 2021 ATM Agreement.

In June 2021, the Company entered into a Purchase Agreement with Lincoln Park Capital Fund.

Pursuant to the terms of the Purchase Agreement, Lincoln Park agreed to purchase from the Company up to $ 20.0 million of common stock (subject to certain limitations) from time to time during the term of the Purchase Agreement.

Pursuant to the terms of the Purchase Agreement, at the time the Company signed the Purchase Agreement, the Company issued 107,788 shares of common stock to Lincoln Park as an initial fee for its commitment to purchase shares of the Company's common stock under the Purchase Agreement, and has agreed to issue Lincoln Park up to an additional 53,893 shares of common stock as commitment shares pro-rata when and if Lincoln Park purchases (at our discretion) the $ 20.0 million aggregate commitment.

The initial commitment shares issued in June 2021 were valued at $ 0.4 million, recorded as an addition to equity for the issuance of common stock and treated as a reduction to equity as a cost of capital to be raised under the Purchase Agreement.

There have been no additional shares issued to date under this agreement.

The Company did not make any stock issuances in the 

three months ended March 31, 2022.

2021 Stock Issuances

In February 2021, the Company entered into an underwritten public offering for the sale by the Company of 14,273,684 shares of its common stock at a public offering price of $ 4.75 per share and granted the underwriters a 30 -day option to purchase up to an additional 2,141,052 shares of common stock offered in the public offering, which was exercised.

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The 2015 Stock Plan provides for the grant of stock options, stock awards, stock unit awards, and stock appreciation rights.

As of September 30, 2021 , there wer e 43,628  s hares remaining to be issued under the 2015 Stock Plan. 

Stock-based compensation for the three and nine months ended September 30, 2021 and 2020 , respectively (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

As of March 31, 2022 , there wer e 19,961 sh ares remaining to be issued under the 2015 Stock Plan. 

Stock-based compensation for the three months ended March 31, 2022 and 2021 , respectively (in thousands):

Three Months Ended March 31,

General and administrative

$ 1,085  

$ 1,029  

Research and development

Total stock-based compensation expense

$ 1,817  

$ 1,265  

During the nine months ended September 30, 2021 , the Company granted 532,865 stock options with a weighted average fair value of $ 3.24 per share at the date of grant and 150,000 shares of restricted stock units with a weighted average fair value of $ 3.73 per share at the date of grant.

These stock options have a weighted average exercise price of $ 3.75 per share and vest over a one to three -year period from the grant date on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards.

These restricted stock units vest annually in four equal installments.

Income Taxes 

During the three months ended March 31, 2022 , the Company granted 21,667 stock options with a weighted average exercise price of $ 1.61  per share that vest over a three to four -year period from the grant date on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. 

Income Taxes  

Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

The Company does not expect to pay any significant federal, state, or foreign income taxes in 2022  as a result of the losses recorded during the 

three and nine months ended September 30, 2021 and the additional losses expected for the remainder of 2021 and cumulative net operating loss carryforwards.

three months ended March 31, 2022 and the additional losses expected for the remainder of 2022  and cumulative net operating loss carryforwards.

Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not”

that some component or all of the benefits of deferred tax assets will not be realized.

As a result, as of September 30, 2021  and 

As a result, as of March 31, 2022  and 

December 31, 2021 the Company maintained a full valuation allowance for all deferred tax assets.

The Company recorded no income tax provision for the three and nine months ended September 30, 2021 and 2020 , respectively.

The effective tax rate for the nine months ended September 30, 2021 and 2020  is 0 %.

The Company recorded no income tax provision for the three months ended March 31, 2022 and 2021 , respectively.

The effective tax rate for the three months ended March 31, 2022 and 2021  is 0 %.

The income tax rates vary from the federal and state statutory rates primarily due to the change in fair value of the stock warrants and valuation allowances on the Company’s deferred tax assets.

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Jurisdictions with a projected loss for the year where no tax benefit can be recognized due to the valuation allowance could result in a higher or lower effective tax rate during a particular quarter depending on the mix and timing of actual earnings versus annual projections.

Commitments and Contingencies

In addition to the commitments and contingencies described elsewhere in these notes, see below for a discussion of the Company's commitments and contingencies as of September 30, 2021 .

Commitments and Contingencies 

In addition to the commitments and contingencies described elsewhere in these notes, see below for a discussion of the Company's commitments and contingencies as of March 31, 2022 .

Lease Obligations Payable

The following summarizes quantitative information about the Company's operating leases for the three and nine months ended September 30, 2021 and 2020 , respectively (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

The following summarizes quantitative information about the Company's operating leases for the three months ended March 31, 2022 and 2021 , respectively (in thousands):

Three Months Ended March 31,

Operating lease cost

Variable lease cost

Short-term lease cost

The Company recorded approximatel y $ 10,000  and $ 31,000  i n sublease income from a related party for the 

three and nine months ended September 30, 2021 and 2020 , respectively.

The Company recorded approximatel y $ 10,000  i n sublease income from a related party for the 

three months ended March 31, 2022 and 2021 , respectively.

Sublease income is recorded as other income, net on the Company's condensed consolidated statement of operations and comprehensive loss.

Operating cash flows from operating leases was $ 35,000 a nd $ 34,000 for the three months ended 

September 30, 2021 and 2020 , respectively, and $ 103,000 and $ 100,000 for the 

nine months ended September 30, 2021 and 2020 , respectively. 

MD Anderson - Total expenses related to the Company's license agreements with MD Anderson were $ 56,000 a nd $ 61,000 for the three months ended September 30, 2021 and 2020 , respectively, and $ 150,000 and $ 183,000 for the nine months ended September 30, 2021 and 2020 , respectively.

Operating cash flows from operating leases w as $ 35,000 a nd $ 34,000 for the three months ended 

March 31, 2022 and 2021 , respectively. 

MD Anderson - Total expenses related to the Company's license agreements with MD Anderson were $ 76,000  a nd $ 38,000 for the three months ended March 31, 2022 and 2021 , respectively.

HPI - On March 16, 2020, the Company entered into two agreements with a related party, Houston Pharmaceuticals, Inc.

The first agreement, which has a term of two years, continues a prior consulting arrangement with HPI on the Company's licensed molecules and requires payments of $ 43,500 per quarter to HPI.

The Company plans to renew the agreement.

The second agreement, which can be cancelled with sixty days' notice by either party, allows the Company's employees access to laboratory equipment owned by HPI for a payment of $ 15,000 per quarter to HPI.

Total expenses related to the Company's agreements with HPI wer e $ 59,000  for the three months ended September 30, 2021 and 2020 , respectively, and $ 176,000 and $ 226,000 for the nine months ended September 30, 2021 and 2020 , respectively.

Sponsored Research Agreements with MD Anderson - MBI has a Sponsored Laboratory Study Agreement with MD Anderson expiring December 31, 2022.

 In July 2021, the Company amended its Sponsored Laboratory Study Agreement with MD Anderson for total payment of $ 175,000 to support the continuation of the project. The expenses recognized under this MD Anderson agreement with regards to the Sponsore d Laboratory Study Agreements wer e $ 220,000 a nd $ 212,000 for the three months ended September 30, 2021 and 2020 , respectively, and $ 498,000 a nd $ 537,000 for the nine months ended September 30, 2021 and 2020 , respectively.

Total expenses related to the Company's agreements with HPI wer e $ 59,000  f or the three months ended March 31, 2022 and 2021 , respectively.

Sponsored Research Agreements - MBI has a Sponsored Laboratory Study Agreement with MD Anderson expiring December 31, 2022.

 In July 2021, the Company amended its Sponsored Laboratory Study Agreement with MD Anderson for a total payment of $ 175,000 to support the continuation of the project.

In addition, 

the Company also has Sponsored Research Agreements with other universities, one in the US and one in Europe. T otal expenses related to the Company's Sponsored Research  Agreements wer e $ 187,000  a nd $ 94,000 for the three months ended March 31, 2022 and 2021 , respectively.

License Terminations 

- In February 2022, the Company and Exploration Invest Pte Ltd.

(Exploration) entered into a license termination agreement pursuant to which the Company agreed to pay Exploration $ 400,000  to terminate certain License Agreements and extend confidentiality requirements until the 10 -year anniversary of the license termination agreement.

Additionally, in March 2021, the Company determined the stability of WP1732, a molecule in the WP1066 Portfolio was less than satisfactory and, as such, in March 2021 the Company terminated its license for WP1732 with MD Anderson.

Total expenses related to the Company's license terminations were $ 400,000 and zero for the three months ended March 31, 2022 and 2021 , respectively.

Subsequent Events

There were no additional subsequent events occurring after September 30, 2021  except those discussed elsewhere in these notes.

In addition to the subsequent events discussed elsewhere in these notes, see below for a discussion of our subsequent events occurring after March 31, 2022.

In April 2022, the Company entered into a clinical trial advisor agreement with SAWO Oncology, Ltd., for Dr.

Wolfram Dempke acting as our Chief Medical Officer - Europe. As part of this agreement the Company will issue 45,000  options, subject to shareholder approval at the Company’s Annual meeting in May 2022. 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Forward-looking statements include, but are not limited to, statements about: 

Our ability to continue our relationship with MD Anderson, including our ability to maintain current licenses and license future intellectual property resulting from our sponsored research agreements with MD Anderson;

The success or the lack thereof, including the ability to recruit patients of our clinical trials through all phases of clinical development;

Our ability to continue our relationship with MD Anderson, including, but not limited to, our ability to maintain current licenses and license future intellectual property resulting from our sponsored research agreements with MD Anderson;

The success or the lack thereof, including the ability to recruit patients, for a variety of reasons, of our clinical trials through all phases of clinical development;

Our ability to satisfy any requirements imposed by the FDA (or its foreign equivalents) as a condition of our clinical trials proceeding or beginning as planned;

The impact of COVID-19 on our clinical trials, clinical drug candidate supplies, preclinical activities and our ability to raise future financing;

World-wide events including the war in Ukraine, the COVID-19 pandemic, and the general supply chain shortages effects on our clinical trials, clinical drug candidate supplies, preclinical activities and our ability to raise future financing;

Our ability to obtain additional funding to commence or continue our clinical trials, fund operations and develop our product candidates;

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Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements.

Overview 

We are a clinical stage pharmaceutical company focused on the treatment of highly resistant cancers and viruses.

We have three core technologies, based substantially on discoveries made at M.D.

Anderson Cancer Center (MD Anderson).

These three core technologies are Annamycin, the WP1066 Portfolio, and the WP1122 Portfolio and include a total of five drug candidates, three of which have now shown human activity in clinical trials.

Three Core Technologies

We consider Annamycin to be a "next generation" anthracycline, unlike any currently approved anthracyclines, as it is designed to avoid multidrug resistance mechanisms with little to no cardiotoxicity (the efficacy of all currently approved anthracyclines is limited by both multidrug resistance and cardiotoxicity).

WP1066 is one of several Immune/Transcription Modulators, designed to stimulate the immune response to tumors by inhibiting the errant activity of Regulatory T-Cells (TRegs) while also inhibiting key oncogenic transcription factors, including p-STAT3 (phosphorylated signal transducer and activator of transcription 3), c-Myc (a cellular signal transducer named after a homologous avian virus called Myelocytomatosis) and HIF-1α

(hypoxia inducible factor 1α).

These transcription factors are widely sought targets that are believed to contribute to an increase in cell survival and proliferation, and the angiogenesis (coopting vasculature for blood supply), invasion, metastasis and inflammation associated with tumors.

They may also play a role in the inability of immune checkpoint inhibitors to affect more resistant tumors. WP1220 is a close analog to WP1066 that we have developed as a potential topical therapy for skin-related diseases.

Our third core technology is centered on new compounds designed to target the roles of glycolysis and glycosylation in both cancer and viral diseases. As an example, 2-deoxy-D-glucose (2-DG) is a glucose decoy that is capable of inhibiting glycolysis, thereby cutting off the primary fuel supply for both cancer cells and viral host cells by taking advantage of their high level of dependence on glucose in comparison to healthy cells.

In addition, 2-DG is capable of altering glycosylation, a process by which, when coopted by tumors, cancer cells are believed to evade the body’s immune response. In the case of viruses like SARS-CoV-2 (the virus responsible for COVID-19), glycosylation forms the glycoprotein spikes surrounding the coronavirus that give it its name and enable both evasion of the immune response and the ability to infect new host cells. One of the limitations of 2-DG, however, is how rapidly it is metabolized, resulting in a short circulation time and limited tissue/organ distribution characteristics.

Our lead Metabolism/Glycosylation Inhibitor, WP1122, is a prodrug of 2-DG that appears to improve the drug-like properties of 2-DG by increasing its circulation time and improving tissue/organ distribution.

Recent published research has identified that 2-DG has antiviral potential against SARS-CoV-2 in vitro and, based on publicly available information, a recently completed Phase 2 clinical trial by an unrelated company in India has reported efficacy in COVID-19 patients, resulting in the Emergency Use Authorization of 2-DG by the Drugs Controller General of India. New research also points to the potential for 2-DG to be capable of enhancing the usefulness of checkpoint inhibitors.

Considering that WP1122 generally outperforms 2-DG alone in both in vitro and in vivo tumor models and in viral in vitro models, we believe WP1122 has the potential to become an important drug to potentiate existing therapies, including checkpoint inhibitors.

We are also engaged in preclinical development of additional antimetabolites (WP1096 and WP1097) targeting glycolysis and glycosylation.

Clinical Trials

During 2020, three of our drug candidates accounted for five clinical trials in the U.S.

Two of those trials are ongoing externally funded studies of WP1066 in brain tumors.

Two of our internally funded Phase 1 clinical trials have concluded.

trial for Annamycin in acute myeloid leukemia (AML) successfully met its safety endpoint, and the trial for WP1220 in cutaneous T-cell lymphoma (CTCL) demonstrated an objective response rate of 45% and a clinical benefit rate of 100%.

An additional Phase 1/2 clinical trial of Annamycin in AML is also internally funded and is currently ongoing.

In 2021, we have initiated two additional clinical trials and we anticipate the initiation of two or more n ew clinical trials in addition to the three trials continuing from 2020, as discussed further below.

The brain tumor trial at MD Anderson will be terminated this year, as the original lead physician investigator moved to another institution, and we expect a new, similar externally funded trial to begin elsewhere in 2022.

Below we use certain terms to describe our clinical trials. By "internally funded”

we mean that the primary costs of the preclinical activity and clinical trials are funded by us.

“Externally funded”

drug candidates include those for which preclinical work is funded and performed by external collaborators and/or for which clinical trials are physician sponsored.

For externally funded research, any grant funds that support such preclinical work or clinical trials and most of the associated expenses are not reflected in our financial statements.

However, the costs of drug product and other minor supporting activities that we provide for externally funded preclinical activities and clinical trials are included in our financial statements.

Recently reported data from our sponsored research demonstrates that in AML mouse models, the combination of Annamycin with Ara-C (a chemotherapy drug commonly used in AML patients) has a synergistic effect, suggesting that this combination may be more beneficial for AML patients than Annamycin as a single agent. Accordingly, and as one of the possible trials to be initiated mentioned above in 2021, we plan to begin a Phase 1/2 clinical trial of Annamycin in combination with Ara-C for the treatment of AML in Europe, by seeking approval for our own internally funded clinical trial in Europe and possibly a second, similar trial through our sublicensee, WPD Pharmaceuticals, in Poland. Furthermore, we received U.S.

Food and Drug Administration (FDA) clearance in late 2020 to proceed with a Phase 1b/2 clinical trial of Annamycin for the treatment of soft tissue sarcoma (STS) lung metastases and we began this internally funded trial in the U.S.

in the second quarter of 2021.

Additionally, we expect in 2021 a second Phase 1b/2 clinical trial of Annamycin in sarcoma lung metastases to be primarily investigator-funded in Europe.

WP1066 is currently in two U.S.

physician-sponsored Phase 1 trials, one at MD Anderson for the treatment of glioblastoma (GBM) in adults and another at Emory University for the treatment of pediatric brain tumors (including DIPG and medulloblastoma).

The brain tumor trial at MD Anderson will be terminated this year and we expect a new, similar externally funded trial to begin elsewhere in 2022.

We began and completed a "proof-of-concept" Phase 1 clinical trial in 2020 in Poland for a third drug, WP1220 (a molecule in the WP1066 Portfolio), for the topical treatment of cutaneous T-cell lymphoma (CTCL).

We are actively seeking collaboration with a strategic partner in the near term for external funding for the continued development of WP1220 in a Phase 2 clinical trial as a topical therapy for CTCL, and based on the pace of current discussions, we do not anticipate this trial to begin this year.

If we are not successful in this outreach, we may choose to use internal funds to generate additional human data to facilitate such outreach efforts.

Finally, we received authorization from regulatory authorities in the United Kingdom (U.K.) to commence a Phase 1a clinical trial of WP1122 in healthy volunteers with the intent to progress to COVID-19 patient s either there o r in locations where the prevalence of COVID-19 will adequately support recruitment.

We intend to internally fund the initial trials of WP1122 but may seek external funding opportunities.

Additionally, we are planning to file an IND in the U.S.

for the treatment of certain cancers with WP1122.

In summary, we had five clinical trials underway or concluded in 2020 and we now expect up t o six clinic al trials to be underway or approved in 2021, including externally funded trials, with more expected to begin in 2022.

Update on Clinical Trials and Licensing

Annamycin is currently in one Phase 1/2 clinical trial in Europe, and the Phase 1 portion of another Phase 1/2 AML trial in the U.S.

has been concluded, subject to final database closure, which should occur prior to the end of 2021.

The trial in Poland is in its fifth cohort, where patients are being treated at 240 mg/m2.

Patient 2 in this cohort experienced certain elevated liver enzymes (AST and ALT), which under the original clinical trial protocol, were considered a dose limiting toxicity (DLT). In this instance, the DLT was secondarily related to concomitant medication not being withheld.

Although that DLT resolved, in accordance with the trial protocol, the cohort was expanded and has now enrolled a total of five patients.

In March 2021, patient 4 in this cohort experienced a similar DLT, which also resolved.

Although treatment was discontinued for Patients 2 and 4, a total of three patients in this cohort received the full dose of Annamycin without any DLTs and, based on preliminary data, all three responded to treatment, with one relapsed patient experiencing a partial response , a refractory patient experiencing a partial response (PR) and another relapsed patient completely clearing circulating blasts.

With this preliminary data, 67% of the patients receiving a full course of treatment at 240 mg/m2 experienced clinical benefit.

It is also noteworthy that the patient with a PR was refractory to prior induction therapy and, as such, a response to single agent therapy is generally not expected.

Although the elevated liver enzymes described above meet the test of a “Dose Limiting Toxicity”

per the original clinical trial protocol, our medical advisors have determined that these instances were transient and self-limited with no evidence of serious sequalae (related longer-term negative effects) and, therefore, should not be considered DLTs in future patients unless these elevated enzyme levels do not return to near baseline (baseline or less than or equal to grade 1) within a reasonable time or if there is other evidence of serious sequalae. Based on this new data, we amended the protocol for this trial in Poland to change the DLT criteria as it relates to transient grade 3 elevations of liver enzymes to allow us to dose three additional patients in the 240 mg/m2 cohort.

This amendment was approved and granted allowance by regulatory authorities in Poland in July 2021.

If no DLT is experienced with these next three patients, we will escalate dosing in new cohorts by 30 mg/m2 instead of the 60 mg/m2 previously planned, and with a de-escalation of 15 mg/m2 at the DLT dose if future patients experience a DLT.

As of the end of October, one of the three patients needed to complete the cohort was admitted to the trial and began dosing.

Additionally, our sublicense partner, WPD Pharmaceuticals Sp.z o.o.

(WPD), recently announced that it was conditionally awarded a reimbursement grant of approximately $6.7 million (20.4 million PLN) from the Polish National Center for Research and Development (NCRD), for the development of Annamycin.

The funds may be used for the continued development of Annamycin, including a possible clinical trial of Annamycin in combination with Ara-C for which this grant is expected to cover the reimbursement of about 60% of planned costs.

WPD is a sub-licensee of certain technologies from us in 29 countries in Europe and Asia.

We plan to commence a similar trial combining Annamycin with Ara-C for the treatment of AML prior to the end of 2021 and possibly prior to this grant funded trial s tarting.

The grant-funded trial should begin in the near term and sinc e this is an externally funded trial subject to ongoing granting authority oversight, we cannot provide any assurance as to when or if it will commence.

Regarding our ongoing U.S.

clinical trial of Annamycin for the treatment of STS lung metastases, we currently have three sites  open and active in the study and expect a total of five sites to be active by the first quarter of 2022.

In the second quarter of 2021 this trial began enrolling and dosing patients.

The three sites open are as follows:

1) Sarcoma Oncology Research Center in Santa Monica, CA;

2) Rutgers, The State University in New Brunswick, NJ;

and 3) Washington University in St.

On August 12, 2021, we announced that patients were treated in the first cohort at a dose level of 210 mg/m 2  with no drug-related adverse events constituting a dose limiting toxicity (DLT) during the 21-day DLT evaluation period, including no signs of cardiotoxicity.

The results for all three patients were reviewed in the Cohort Review Meeting, which determined that the trial could progress to the next higher dose level of 270 mg/m 2 .

On October 18, 2021, we announced that the second cohort had concluded safely and that the next cohort at the next higher dose level of 330 mg/m 2 would open.

Additionally, we reported that four of the five patients that have completed scans to date (from cohort one and two) demonstrated a response to treatment, including three with extended and, in one case, continuing stable disease and one patient with a substantial (>30%) reduction in tumor size, constituting a PR under the protocol.

The third cohort was opened the following week and one patient has enrolled and started treatment.

Two other patients have been identified.

 Further updates on patients will be announced at the end of the third cohort.

Earlier in 2021, we announced that the Agencja Badań

Medycznych (The Medical Research Agency) a Polish state agency responsible for development of sc ientific research in the field of medical and health sciences, awarded a grant equivalent to $1.5 million to the Maria Sklodowska-Curie National Research Institute to fund a Phase 1b/2 clinical trial of Annamycin for the treatment of STS lung metastases. The grant-funded clinical trial will be led by Prof.

Piotr Rutkowski, MD, PhD, Head of Department of Soft Tissue/Bone Sarcoma and Melanoma at the Maria Sklodowska-Curie National Research Institute of Oncology in Warsaw, Poland.

Piotr Rutkowski will be assisted, in part, by WPD who will provide support in preparation for and conduct of the clinical trial , which is expected to begin befor e the end of the first quarter of 2022.

As this is a grant funded trial, we have limited input and control over timing.

As a part of the collaboration between Moleculin and Prof.

Rutkowski, Moleculin will be supplying the drug product and other ancillary services necessary for the clinical trial, but Moleculin will not participate in conducting the clinical trial.

This trial is independent from and will be in addition to the U.S.

clinical trial Moleculin is planning to conduct with Annamycin in STS lung metastases. As an important point of differentiation, the clinical protocol for the Polish trial provides for a different dosing regimen than the U.S.

The clinical trial of WP1066 for the treatment of adult brain tumors at MD Anderson has completed the fourth cohort at 8mg/kg in the dose escalation phase.

In the first quarter of 2021, we were notified that the physician sponsoring this trial would be leaving MD Anderson.

As a result, and as expected, MD Anderson has notified us that they will be closing this trial.

Several additional institutions have expressed an interest in sponsoring similar research on WP1066 in brain tumors, so to help ensure the potential continuation of this important research, regardless of the sponsoring institution, we hav e requested the right to reference the MD Anderson IND, a s provided for under our Clinical Trial Agreement with MD Anderson, in our own IND. We are working to continue this research in additional physician-sponsored trials in 2022.

One patient has been treated in the third cohort of t he Phase 1 dose escalation portion of physician-sponsored clinical trial at Emory University for the treatment of pediatric brain tumors with WP1066 at the dose level of 8mg/kg.

Two more patients will be treated at this dose level.

Emory University has amended its protocol to allow dosing at 16 mg/kg after these two additional patients have been dosed, and the third cohort dosing has been deemed safe.

Based on previously announced data demonstrating the antiviral potential of our lead antimetabolite molecule, WP1122, we intend to test the drug candidate for the potential treatment of COVID-19. Although we have previously disclosed that antiviral clinical trials in the U.S.

will be dependent upon demonstrating efficacy in an appropriate COVID-19 animal model, the Medicines and Healthcare Products Regulatory Agency (MHRA) in the United Kingdom (U.K.) is not making such animal data a requirement for a clinical trial application (CTA) for a Phase 1a clinical trial beginning with healthy volunteers in that country.

Based on their feedback, in August 2021 we submitted a CTA for a Phase 1a clinical trial of WP1122 for the treatment of COVID-19 in the U.K.

On October 19, 2021, we announced that we received authorization from regulatory authorities in the U.K.

to commence a Phase 1a clinical trial of WP1122 in healthy volunteers with the intent to progress to COVID-19 pati ents either there or in loca tions where the prevalence of COVID-19 will adequately support recruitment.

We intend to internally fund the initial trials of WP1122 but may seek external funding opportunities.

The preclinical work to evaluate molecules within the WP1122 portfolio of antimetabolites (which include molecules capable of inhibiting glycolysis and altering glycosylation) for viral indications is mostly similar to the preclinical work we originally planned as part of developing WP1122 for cancer indications.

Accordingly, we believe the preclinical work we have completed for WP1122 will also support an IND application or its equivalent in other countries for cancer-related clinical trials.

We continue to plan to submit such an IND in the U.S.

COVID-19 and Worldwide Supply Chain Issues 

In March 2020, the World Health Organization declared the outbreak of a novel Coronavirus (COVID-19) as a pandemic, which continues to spread throughout the world.

The spread of COVID-19 has caused significant volatility in U.S.

and international markets, including Poland, where we conduct some of our clinical trials and Italy, where our Annamycin drug supply is produced.

There has been limited interruption of our drug supply, and most Polish clinics where we are conducting trials are limiting access for monitoring activities.

Additionally, we believe COVID-19 materially slowed the recruitment of patients for our clinical trials, but we are now beginning to see an increase in recruitment. This could worsen or be alleviated at any time.

Furthermore, there is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S.

and international economies and, as such, we are unable to determine if it will have a material impact to our operations.

Additionally, we believe that the potential for impact to our supply chain due to COVID-19 will be reduced as vaccine production normalizes throughout the industry.

In the third quarter, worldwide supply chain issues began delaying certain shipments.

The supply chain for the manufacturing of our drug candidates and supplies for clinical trials can be complicated and involves several parties.

If we were to experience any supply chain issues, including as a result of the COVID-19 pandemic our product supply could be disrupted.

We believe that our operations have not been materially impacted to date.

In view of current worldwide trends with respect to COVID-19 and worldwide supply chain issues, we do not expect either issue to materially further impact recruitment for or the operation of current or future clinical trials.

However, we cannot be certain that these trends will continue and there is the possibility they may reverse. 

We receive requests for compassionate use (or its foreign equivalent) of our drug candidates in the ordinary course of business.

WP1066 and Annamycin have both been involved with such requests.

As we have very limited involvement in the treatment of such patients, we do not ordinarily report the details on such uses.

We are currently in discussions with MD Anderson regarding amendments to existing licenses and new licenses related to Annamycin and WP1122 and expect to execute the related amendments and new licenses by the end of 2021.

In the second quarter, we amended the WP1122 license to allow for an additional six-month extension to file a U.S.

IND for the application of WP1122 until February 2022 on the condition that we file a similar application in another country.

On August 3, 2021, we filed a CTA for the application of WP1122 in the United Kingdom, which filing satisfied one of the requirements under the license agreement.

In addition, we intend to file a U.S.

IND for the application of WP1122 before the end of 2021, which will satisfy the remaining IND filing requirement.

We retain the right to further extend these dates within the amended agreement.

We are a clinical stage pharmaceutical company with a growing pipeline of clinical programs for the treatment of highly resistant cancers and viruses.

We have three core technologies, based substantially on discoveries made at and licensed from MD Anderson Cancer Center (MD Anderson) in Houston, Texas.

We have six drug candidates, three of which have now shown human activity in clinical trials.

Core Technologies

Our core technologies consist of the following:

a) Annamycin, a “next generation”

anthracycline designed to eliminate the cardiotoxicity associated with currently prescribed anthracyclines (Annamycin has no material cardiotoxicity noted by a specialist in subjects treated and reviewed to date in Moleculin’s clinical trials), while also significantly increasing, as shown in animal studies, drug accumulation in certain key targeted organs (such as the lungs, pancreas and liver) and avoiding multidrug resistance mechanisms when compared in non-human studies with doxorubicin (one of the most commonly used anthracyclines);

b) our WP1066 Portfolio, which includes WP1066 and WP1220, two of several Immune/Transcription Modulators in the portfolio designed to inhibit p-STAT3 (phosphorylated signal transducer and activator of transcription) among other transcription factors associated with tumor activity, while also stimulating a natural immune response to tumors by inhibiting the errant activity of Regulatory T-Cells (TRegs);

and c) our WP1122 Portfolio, which contains compounds (including WP1122, WP1096, WP1097) designed to exploit the potential uses of inhibitors of glycolysis such as 2-deoxy-D-glucose (2-DG), which we believe may provide an opportunity to cut off the fuel supply of tumors by taking advantage of their high level of dependence on glucose in comparison to healthy cells, as well as target the roles of glycolysis and glycosylation in viruses, such as SARS-CoV-2 (the virus responsible for COVID-19).

Recent Business Developments

Below are recent business developments.

Interim Data in Phase 1b/2 Clinical Trial of Annamycin for the Treatment of Soft Tissue Sarcoma Lung Metastases

On October 18, 2021, we announced the interim and preliminary data from the first two cohorts evaluating Annamycin for the treatment of soft tissue sarcoma lung metastases.

The data demonstrated 80% clinical activity, defined as stable disease or better.

We have noted that no DLT’s have been experienced to-date, including cardiotoxicity.

Patient enrollment in third cohort began subsequently. 

Approval to Extend Dose Escalation in Phase 1/2 European Clinical Trial Evaluating Annamycin for the Treatment of Acute Myeloid Leukemia

On July 13, 2021, we announced that we had received approval from the Bioethics Committee of the Medical University of Karol Marcinkiewicz in Poznań

(Ethics Committee) as well as an allowance from the Polish Department of Registration of Medicinal Products (URPL) for a protocol amendment for our Phase 1/2 evaluating Annamycin for the treatment of subjects with acute myeloid leukemia (AML) that is refractory to or relapsed after induction therapy.

First Subject Enrolled and Dosed in Phase 1b/2 Clinical Trial of Annamycin for the Treatment of Sarcoma Lung Metastases

On June 21, 2021, we announced that we commenced enrollment and dosed the first subject in our U.S.

Phase 1b/2 clinical trial evaluating Annamycin for the treatment of STS lung metastases.

Receives Clearance to Commence Phase 1b/2 Clinical Trial of Annamycin for the Treatment of Sarcoma Lung Metastases

On May 25, 2021, we announced that we received clearance to initiate our Phase 1b/2 clinical trial evaluating Annamycin for the treatment of STS lung metastases.

We announced that the first of several planned clinical sites was open and we expected to begin patient enrollment.

FDA Approval of Fast Track Designation for Annamycin in the Treatment of Sarcoma Lung Metastases

On March 30, 2021, we announced that the FDA had approved our request for Fast Track Designation for our drug, Annamycin, for the treatment of soft tissue sarcoma. 

Awarded New Rare Pediatric Disease Designation from U.S.

FDA for WP1066 for the Treatment of Ependymoma

On April 14, 2021, we announced that the FDA had granted Rare Pediatric Disease Designation (RPD) to our p-STAT3 inhibitor, WP1066, for the treatment of ependymoma, one of the four unique indications for which WP1066 now has RPD status.

Receives Authorization from the Medicines and Healthcare Products Regulatory Agency (MHRA) to Commence Phase 1a Clinical Trial of WP1122 for the Treatment of COVID-19

On October 19, 2021, we announced that we received authorization from the MHRA to commence a Phase 1a clinical trial of WP1122 in the United Kingdom.

We also announced we received a favorable opinion from the London - Riverside Research Ethics Committee in the U.K.

to begin the study, which is expected to be conducted at the Medicines Evaluation Unit in Manchester, United Kingdom.

IQVIA to Manage Potential COVID-19 Clinical Trial

On April 6, 2021, we announced the engagement of IQVIA Biotech, a contract research organization (CRO) to manage our efforts to begin potential clinical trials of WP1122 for the treatment of COVID-19.

Inclusion in the Russell 2000 Index

On June 15, 2021, we announced that as part of the annual reconstitution of the Russell stock indexes, we were selected to be added to the Russell 2000 Index effective after the close of the U.S.

equity markets on June 25, 2021.

Received Allowance to Proceed with Phase 1/2 Study of Annamycin in Combination with Cytarabine for the Treatment of Acute Myeloid Leukemia (AML)

On May 5, 2022, we announced that we received allowance from the Polish Department of Registration of Medicinal Products (URPL), as well as the requisite Ethics Committee approval, to proceed with its Phase 1/2 clinical trial in Poland of Annamycin (L-ANN) in combination with Cytarabine (Ara-C) in the treatment of subjects with acute myeloid leukemia (AML) who are refractory to or relapsed after induction therapy.

The Phase 1/2 L-ANN /ARA-C combination (AnnAraC) trial (MB-106), an open label trial, builds on the safety and dosage data from the two successfully concluded single agent Annamycin AML Phase 1 trials (MB-104 and MB-105) in the U.S.

and Europe and the preclinical data from its sponsored research studies.

The clinical trial is expected to commence patient enrollment in the first half of 2022. 

Update on our MB-107 Phase 1b/2 Study of Annamycin in patients with soft tissue sarcomas metastatic to the lung

As of May 2, 2022, we have five US sites active in the MB-107 trial. Enrollment continues in the 390 mg/m 2 dose level cohort, with two subjects enrolled to date in the cohort expansion (5 of 6 total in the cohort enrolled and treated). One subject remains in screening with intent to initiate therapy in the mid-May timeframe, as long as all eligibility criteria have been met. 

Presentation of Positive Preclinical Annamycin Data at the AACR 2022 Annual Meeting

On April 8, 2022, we announced that preclinical data of Annamycin tested in syngeneic models of metastatic colorectal cancer established in lungs or liver was accepted for poster presentation at the American Association for Cancer Research (AACR) Annual Meeting 2022, which was held April 8-13, 2022, in New Orleans, Louisiana.

The objective of this animal study was to assess the efficacy of Annamycin in experimental colorectal cancer liver and lung metastasis models.

The efficacy of Annamycin was tested in syngeneic models of metastatic colorectal cancer established in lungs or liver.

Annamycin exhibited robust antitumor activity in both models.

We believe that this study demonstrating efficacy of Annamycin in colorectal cancer models provides compelling evidence for further preclinical development aimed at initiation of clinical studies in metastatic colorectal cancer patients. 

Received IND Clearance to Conduct Phase 1 Study of WP1066 for the Treatment of Recurrent Malignant Glioma

On April 21, 2022, we announced that we received allowance from the Food & Drug Administration (FDA) for our Investigative New Drug (IND) application to study WP1066 for the treatment of recurrent malignant glioma.

With this IND now cleared, we plan to evaluate strategic partnerships and collaborations to conduct a Phase 1 open label, single arm, dose escalation study of the safety, pharmacokinetics and efficacy of oral WP1066 in adult patients with recurrent malignant glioma.

We expect the clearance of this IND to further support the ongoing pediatric studies being conducted by the team at Emory University, and we are evaluating the potential for additional externally funded investigator-initiated studies.

Received Approval from the UK ’

s Medicines and Healthcare Products Regulatory Agency (MHRA) for Protocol Amendment to Phase 1a Clinical Trial of WP1122 for the Treatment of COVID-19

We announced on May 10, 2022 that we received approval from the United Kingdom’s (UK) MHRA to proceed with a first-in-human Phase 1a study to evaluate the safety and pharmacokinetics of WP1122 in healthy volunteers for the treatment of COVID-19 (MB-301).

The approval follows us having submitted a protocol amendment allowing for a higher ratio of diluting excipients to drug substance to facilitate a faster and simpler mixing procedure before drug administration.

We expect this internally funded trial to begin in the first half of 2022.

We are currently in discussions with MD Anderson regarding an amendment to an existing license and a new license related to our core technologies.

Such discussions are in the ordinary course of our business.

Engages Wolfram C.

Dempke, MD, PhD, MBA as its European Chief Medical Officer

On May 4, 2022, we announced that we engaged Wolfram C.

Dempke, MD, PhD, MBA, MRCP as our EU - Chief Medical Officer and part-time contractor for our European clinical trials. Dr.

Dempke currently serves as the Vice President, Scientific Solutions:

Hematology & Oncology, at Worldwide Clinical Trials.

He holds oncology/hematology society memberships in the U.S.

He has published five textbooks and more than 150 peer-reviewed papers.

Dempke continues to teach classes in the Munich University Medical Oncology department, Germany, and he continues to see patients on a monthly basis.

Results of Operations

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Condensed Consolidated Statements of Operations

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating expenses:

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Interest income, net

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

Research and Development Expense.

Research and development (R&D) expense was $4.1 million and $4.4 million for the three months ended September 30, 2021 and 2020, respectively.

The decrease of $0.3 million is mainly related to the timing of costs incurred in 2020 of producing additional drug product for Annamycin clinical trials.

General and Administrative Expense.

General and administrative expense was $2.0 million and $1.7 million for the three months ended September 30, 2021 and 2020, respectively.

The increase of $0.3 million is mainly related to an increase in consulting and advisory fees and an increase in our corporate insurance.

Gain from Change in Fair Value of Warrant Liability.

We recorded a net gain o f $1.7 million in the third quarter of 2021 as compared to a net gain of $2.7 million in the third quarter of 2020, for the change in fair value on revaluation of our warrant liability associated with our warrants issued in conjunction with our stock offerings.

We are required to revalue our liability-classified warrants at the time of each warrant exercise, if applicable, and at the end of each reporting period and reflect in the statement of operations a gain or loss from the change in fair value of the warrant in the period in which the change occurred.

We calculated the fair value of the warrants outstanding using the Black-Scholes model.

A gain results principally from a decline in our share price during the period and a loss results principally from an increase in our share price.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

Research and Development Expense.

Research and development (R&D) expense was $11.2 million and $11.0 million for the nine months ended September 30, 2021 and 2020, respectively.

The increase o f $0.2  million i s mainly related t o increased clinical trial activity as described above, and costs related to manufacturing of additional drug product.

Research and development (R&D) expense was $4.6 million a nd $4.1 million for the three months ended March 31, 2022 and 2021, respectively.

The increase of $0.5  million is mainly related to increased clinical trial activity as described above, a license termination fee, and costs related to manufacturing of additional drug product .

General and Administrative Expense.

General and administrative expense was $6.4 million and $5.1 million for the nine months ended September 30, 2021 and 2020, respectively.

The increase of  

$1.3  million i s mainly related to an increase in consulting and advisory fees and an increase in our corporate insurance.

General and administrative expense was $2.4 million a nd $1.9 million for the three months ended March 31, 2022 and 2021, respectively.

The increase of $0.5  million is mainly related to an increase in regulatory legal services, consulting and advisory fees.

Gain from Change in Fair Value of Warrant Liability.

We recorded a net gain o f $4.4 million in the third quarter of 2021 as compared to a net gain of $1.5 million in the third quarter of 2020, for the change in fair value on revaluation of our warrant liability associated with our warrants issued in conjunction with our stock offerings.

We recorded a net gain o f $0.2 million in the first quarter of 2022 as compared to a net gain of $1.6 million in the first quarter of 2021, for the change in fair value on revaluation of our warrant liability associated with our warrants issued in conjunction with our stock offerings.

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The following table sets forth our primary sources and uses of cash for the period indicated (in thousands): 

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash used in operating activities

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Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents

As of September 30, 2021, there was $0.3 million of cash on hand in a bank account in Australia and we know of no related limitations impacting our liquidity in Australia.

Net (decrease) increase in cash and cash equivalents

As of March 31, 2022, there wa s $0.3 million of cash on hand in a bank account in Australia and we know of no related limitations impacting our liquidity in Australia.

Cash used in operating activities

Cash used in operations was $14.7 million for the nine months ended September 30, 2021.

Thi s $0.1 million increase over the prior year period of $14.6 million was primarily due t o payments for increased consulting and advisory fees as well as an increase in our corporate insurance.

Cash used in operations was $4.8 million for the three months ended March 31, 2022.

Thi s $1.2 million increase over the prior year period of $3.6 million was primarily due t o payments for increased clinical trial activity, costs related to manufacturing of additional drug product, and increased consulting and advisory fees.

These are all a reflection of the ongoing clinical and pre-clinical activity and the associated increase in general and administrative support for our three core drug technologies.

Cash provided in financing activities

In June 2021, we entered into an At Market Issuance Sales Agreement (2021 ATM Agreement) with Oppenheimer & Co.

Pursuant to the terms of the 2021 ATM Agreement, we may offer and sell, from time to time through Oppenheimer shares of our common stock with an aggregate sales price of up to $50.0 million.

As of the date of this report, there have been no issuances under the 2021 ATM Agreement.

In June 2021, we entered into a Purchase Agreement with Lincoln Park Capital Fund (Lincoln Park Agreement).

Pursuant to the terms of the Purchase Agreement, Lincoln Park agreed to purchase from us up to $20.0 million of common stock (subject to certain limitations) from time to time during the term of the Purchase Agreement.

Pursuant to the terms of the Purchase Agreement, at the time we signed the Purchase Agreement, we issued 107,788 shares of common stock to Lincoln Park as an initial fee for its commitment to purchase shares of our common stock under the Purchase Agreement, and have agreed to issue Lincoln Park up to an additional 53,893 shares of common stock as commitment shares pro-rata when and if Lincoln Park purchases (at our discretion) the $20.0 million aggre gate commitment.

To date, we have not used the 2021 ATM Agreement nor the Lincoln Park Agreement to raise additional capital beyond what is described above.

We did not issue any stock in the three months ended March 31, 2022.

In February 2021, we completed an underwritten public offering of an aggregate of 14,273,684 shares of common stock at a public offering price of $4.75 per share.

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Gross proceeds received due to these exercises approximated $63,000.

In February 2020, we entered into subscription agreements with institutional investors to purchase 1,250,000 shares of our common stock and warrants to purchase 937,501 shares of common stock at a combined public offering price of $4.80 per share and related warrant resulting in gross proceeds of $6.0 million.

Each warrant has an exercise price of $6.30 per share and were exercisable six months from the date of issuance and will expire five years from the date they were first exercisable.

In April 2020, we issued 1,195,162 shares of common stock at an average price of $8.65 per share pursuant to the 2020 ATM Agreement.

We received total proceeds of $10.3 million, prior to deducting transaction expenses.

Additionally, during the second quarter of 2020, 750 shares were issued due to the exercise of warrants related to past public offerings.

Gross proceeds received due to these exercises approximated $5,000. 

In July 2020, we issued 216,855 shares of common stock at an average price of $8.82 per share through the ATM Prospectus Supplement.

We received total proceeds of $1.9 million, net of $0.1 million in transaction expenses. 

We believe that our existing cash and cash equivalents as of September 30, 2021 will be sufficient to meet our projected operating requirements, which include a forecasted increase over our current R&D rate of expenditures, into the year 2024.

We believe that our existing cash and cash equivalents as of March 31, 2022 will be sufficient to meet our projected operating requirements, which include a potential increase over our current R&D rate of expenditures, into the year 2024.

Such projections are subject to changes in our internally funded preclinical and clinical activities, including unplanned preclinical and clinical activity.

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

What changed 10-Q

Item 1. Financial Statements