What changed in this filing

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Item 1. Financial Statements

2022-08-12 compared with 2022-05-11 · 314 added, 130 removed, 413 unchanged (52% of the section changed)

34 unchanged sentences

100,000,000 shares authorized;

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

28,606,706 and 28,578,338 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

14 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses:

3 unchanged sentences

Total operating expenses

14,507  

11,606  

Loss from operations

( 7,434 )  

( 5,517 )  

( 14,507 )  

Other income:

2 unchanged sentences

Interest income, net

$ ( 6,777 )  

$ ( 4,244 )  

$ ( 13,644 )  

Net loss per common share - basic and diluted

$ ( 0.24 )  

$ ( 0.15 )  

$ ( 0.48 )  

Weighted average common shares outstanding, basic and diluted

Other comprehensive income (loss):

28,583,014  

28,451,532  

28,580,689  

25,148,399  

$ ( 6,777 )  

$ ( 4,244 )  

$ ( 13,644 )  

Other comprehensive loss:

Foreign currency translation

( 31 )  

( 19 )  

Comprehensive loss

$ ( 6,808 )  

$ ( 4,250 )  

$ ( 13,663 )  

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

$ ( 13,644 )  

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

2 unchanged sentences

Change in fair value of warrant liability

( 763 )  

Operating lease, net

1 unchanged sentence

Prepaid expenses and other current assets

( 1,729 )  

Accounts payable

1 unchanged sentence

Net cash used in operating activities

( 12,806 )  

Cash flows from investing activities:

Purchase of fixed assets

( 67 )  

Net cash used in investing activities

( 67 )  

Cash flows from financing activities:

Proceeds from exercise of warrants

Payment of tax liability for vested restricted stock units

( 12 )  

Proceeds from sale of common stock, net of issuance costs

Net cash provided by financing activities

74,685  

Net cash (used in) provided by financing activities

( 12 )  

74,748  

Effect of exchange rate changes on cash and cash equivalents

( 19 )  

Net change in cash and cash equivalents

( 12,904 )  

64,333  

Cash and cash equivalents, at beginning of period

70,903  

15,173  

Cash and cash equivalents, at end of period

$ 57,999  

$ 79,506  

Supplemental disclosures of cash flow information:

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)

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Common Stock Subscribed

Accumulated  

Par Value Amount

6 unchanged sentences

Balance, December 31, 2021

28,578,338  

$ 151,733  

$ ( 72,810 )  

$ 78,993  

Stock-based compensation

Consolidated net loss

( 6,867 )  

Cumulative translation adjustment

Balance, March 31, 2022

Three Months Ended March 31, 2021

28,578,338  

$ 152,260  

$ ( 79,677 )  

$ 72,665  

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

28,368  

( 12 )  

Stock-based compensation

Consolidated net loss

( 6,777 )  

Cumulative translation adjustment

( 31 )  

Balance, June 30, 2022

28,606,706  

$ 152,762  

$ ( 86,454 )  

$ 66,359  

Six Months Ended June 30, 2021

Common Stock Subscribed

32 unchanged sentences

$ 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  

See accompanying notes to unaudited condensed consolidated financial statements.

3 unchanged sentences

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, 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 is a clinical-stage pharmaceutical company, organized as a Delaware corporation in July 2015, which focuses 

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.

15 unchanged sentences

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 the US and Europe, the Company has conducted, is currently conducting, or plans in the near term to conduct clinical trials for its drug candidates - Annamycin, WP1066, WP1220 (which is part of the WP1066 Portfolio), and WP1122.

All trials are or were in the Phase 1 portion except the WP1220 trial, which was a proof-of-concept trial, and one of the Annamycin trials which is moving into its Phase 2 portion of the trial in the second half of 2022.

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 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 utilize 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.

2 unchanged sentences

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 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.

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 of 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.

2 unchanged sentences

Basis of Presentation –

Unaudited Interim Condensed Consolidated Financial Information - The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the U.S.

Unaudited Condensed Consolidated Financial Information - The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the U.S.

GAAP) for financial information, and in accordance with the rules and regulations of the U.S.

2 unchanged sentences

GAAP for complete financial statements.

The unaudited interim condensed consolidated financial statements furnished reflect all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented.

The unaudited condensed consolidated financial statements furnished reflect all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented.

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

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

These 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.

4 unchanged sentences

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 three months ended March 31, 2022 , other than those noted below.

There have been no material changes to the significant accounting policies during the six months ended June 30, 2022 .

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.

6 unchanged sentences

Estimates are used in the following areas, among others:

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 company and has not generated any revenues to date.

1 unchanged sentence

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

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 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 March 31, 2022  will be sufficient to fund the Company's operations beyond the near term.

For the six months ended June 30, 2022  and 2021 , the Company incurred net losses of 

$ 13.6  million a n d $ 8.7  million, respectively, and had net cash flows used in operating activities o f 

$ 12.8  million an d $ 10.4  million, r espectively.

At June 30, 2022 , the Company had an accumulated deficit of 

$ 86.5  million and cash and cash equivalents of 

$ 58.0  million. T he Company expects its cash on hand as of June 30, 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.

6 unchanged sentences

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

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

June 30, 2022

December 31, 2021

Vendor prepayments and deposits

Prepaid sponsored research

Prepaid insurance

$ 1,262  

Prepaid sponsored research

Vendor prepayments and deposits

Related party receivables

16 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 March 31, 2022 and December 31, 2021 (in thousands): 

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

$ 1,252  

The following table provides liabilities reported at fair value and measured on a recurring basis at June 30, 2022 and December 31, 2021 (table in thousands): 

Fair value of warrant liability as of June 30, 2022:

Fair value of warrant liability as of December 31, 2021:

1 unchanged sentence

$ 1,412  

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

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

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

second quarter and then is adjusted for changes in fair value that occurred during the second  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 March 31, 2022

Three Months Ended June 30, 2022

Warrant Liability Long-Term

Warrant Liability Total

Balance, December 31, 2021

Balance, March 31, 2022

$ 1,252  

2 unchanged sentences

( 603 )  

Balance, March 31, 2022

Balance, June 30, 2022

The table below of Level 3 liabilities (table in thousands) begins with the valuation as of December 31, 2021  and then is adjusted for changes in fair value that occurred during the six months ended June 30, 2022 .

Six Months Ended June 30, 2022

Warrant Liability Long-Term

Warrant Liability Total

Balance, December 31, 2021

$ 1,412  

Change in fair value - net

( 763 )  

Balance, June 30, 2022

Loss Per Common Share - Basic net loss per common share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding during the period.

2 unchanged sentences

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 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. 

For the three months ended June 30, 2022 and 2021 , approximatel y 

4.9  million and  

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

For the 

six months ended June 30, 2022 and 2021 , approximatel y 4.8  million an d 3.9 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 Note 8 - Subsequent Events. 

Recent Accounting Pronouncements

3 unchanged sentences

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

In May 2021, 

3 unchanged sentences

ASU 2021 - 04 clarifies certain aspects of the current guidance to promote consistency among reporting of an issuer's accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange.

The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

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

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 amendments in this update were effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. 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.

Accrued Expenses and Other Current Liabilities

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

March 31, 2022

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

June 30, 2022

December 31, 2021

Accrued research and development

Accrued payroll and bonuses

$ 1,508  

$ 1,005  

Accrued legal, regulatory, professional and other

Accrued liabilities due to related party

Accrued payroll and bonuses

Operating lease liability - current

Accrued liabilities due to related party

Total accrued expenses and other current liabilities

Additionally, accounts payable includes 

$ 21,000  and $ 48,000  

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

$ 2,675  

$ 2,258  

Additionally, accounts payable includes  $ 48,000  

as of June 30, 2022  and December 31, 2021 , for a related party payable.

Liability Classified Warrants

5 unchanged sentences

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

March 31, 2022

June 30, 2022

December 31, 2021

6 unchanged sentences

Dividend yield

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

A summary of the Company's liability classified warrant activity during the six months ended June 30, 2022 and related information follows: 

Number of Shares

6 unchanged sentences

Balance at January 1, 2022

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.

2,723,645  

$ 6.30  

$ 16.80  

$ 9.46  

( 67,349 )  

Balance at June 30, 2022

2,656,296  

$ 6.30  

$ 16.80  

$ 9.49  

Exercisable at June 30, 2022

2,656,296  

$ 6.30  

$ 16.80  

$ 9.49  

For a summary of the changes in fair value associated with the Company's warrant liability for the six months ended June 30, 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, associated with Dr.

In June 2022, the Company granted equity-classified warrants to purchase 50,000 shares of common stock with a ten -year term and an exercise price of $ 1.49 vesting annually over four years while services are being performed. 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:

(a) 50% vests upon execution of the agreement, provided the advisor does not terminate the agreement prior to the end of the one -year term;

and (b) 50% vests 60 days after the end of the one -year term, subject to the Company's Board of Directors determining that the services provided have been adequately performed. Also, both the April 2021 

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

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

(a) 50% vests upon execution of the agreement, provided the advisor does not terminate the agreement prior to the first anniversary of the agreement;

and (b) 50% vests 60 days after the end of the one -year term, subject to the Company's Board of Directors determining that the services provided have been adequately performed.

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

At June 30, 2022 , the Company ha d 446,502  eq uity classified warrants outstanding an d 193,710  wa rrants 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 

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.

The Company recorded stock compensation expense for eq uity classified warrants of $ 83,000 and $ 11,000 for the three months ended 

June 30, 2022 and 2021 , respectively. The Company recorded stock compensation expense for equity classified warrants of $ 166,000 and $ 11,000 for the six months ended June 30, 2022 and 2021 , respectively. 

June 30, 2022 , there was $ 451,000 of unrecognized stock compensation expense related to the Company's equity classified warrants.

2022 Stock Issuances

The Company did not make any stock issuances in the 

three months ended March 31, 2022.

During the six months ended June 30, 2022 , the Company issued 28,368 shares of common stock related to the vesting of restricted stock units. 

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.

The Company received total proceeds of $ 78.0  million, prior to deducting the underwriting discount and other estimated offering expenses. In January 2021 the Company issued 468,684 shares for gross proceeds of $ 2.9 million using the Company's 2020 At The Market Agreement ( 2020 ATM Agreement) with Oppenheimer & Co., Inc.

The Company terminated the 2020 ATM Agreement on February 2, 2021. 

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 million.

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.

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.

The Company received total proceeds of

$ 78.0  million, prior to deducting the underwriting discount and other estimated offering expenses. In

January 2021 the Company issued

468,684 shares for gross proceeds of

$ 2.9 million using the Company's

2020 At The Market Agreement (

2020 ATM Agreement) with Oppenheimer & Co., Inc.

The Company terminated the

2020 ATM Agreement on

February 2, 2021. 

Stock-Based Compensation and Outstanding Awards

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

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,

The 2015 Stock Plan, as amended and approved by the Company's stockholders in May 2022, provides for the grant of stock options, stock awards, stock unit awards, and stock appreciation rights.

As of June 30, 2022 , there wer e 756,462  sh ares remaining to be issued under the 2015 Stock Plan. 

Stock-based compensation for the three and six months ended June 30, 2022 and 2021 , respectively (table in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

General and administrative

1 unchanged sentence

Total stock-based compensation expense

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. 

$ 1,041  

During the six months ended June 30, 2022 , the Company granted 832,832  stock options with a weighted average fair value of $ 1.26 per share, a weighted average exercise price o f $ 1.49  per sh are that vest over a one 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  

1 unchanged sentence

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

three and six months ended June 30, 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 March 31, 2022  and 

As a result, as of June 30, 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 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 Company recorded no income tax provision for the three and six months ended June 30, 2022 and 2021 , respectively.

The effective tax rate for the six months ended June 30, 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.

1 unchanged sentence

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 March 31, 2022 .

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 June 30, 2022 .

Lease Obligations Payable

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,

The following summarizes quantitative information about the Company's operating leases for the three and six months ended June 30, 2022 and 2021 , respectively (table in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Operating lease cost

Variable lease cost

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.

In June 2022, the Company extended the Lab Lease for its lab space until September 30, 2027, with no further right or option to renew.

The Company will continue to be required to remit base monthly rent which will increase at an average approximate rate of 3 % per year. The Company recorded approximatel y $ 10,000 and $ 21,000  i n sublease income from a related party for the 

three and six months ended June 30, 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 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.

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

June 30, 2022 and 2021 , respectively, and $ 70,000  

and $ 68,000 for the 

six months ended June 30, 2022 and 2021 , respectively.

MD Anderson - Total expenses related to the Company's license agreements with MD Anderson were  $ 56,000  for the three months ended June 30, 2022 and 2021 , respectively, and $ 133,000  

and $ 94,000 for the 

six months ended June 30, 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 Company renewed the agreement in May 2022.

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  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.

Total expenses related to the Company's agreements with HPI wer e  $ 59,000 f or the three months ended June 30, 2022 and 2021 , respectively, and $ 117,000 for the six months ended June 30, 2022 and 2021  respectively.

Sponsored Research Agreements - In June 2022, the Company entered into a new Sponsored Research Agreement with MD Anderson for a total payment of $ 1.3 million to support the continuation of the project through December 31, 2024.

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.

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 $ 313,000  a nd $ 184,000 for the three months ended June 30, 2022 and 2021 , respectively, and $ 500,000  

and $ 278,000 for the six months ended June 30, 2022 and 2021 , respectively.

License Terminations 

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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.

Total expenses related to the Company's license terminations were zero for the three months ended June 30, 2022 and 2021 , respectively, and $ 400,000 and zero for the six months ended June 30, 2022 and 2021 , respectively.

Subsequent Events

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

In addition to the subsequent events discussed elsewhere in these notes, see below for a discussion of a subsequent event occurring after June 30, 2022 .

On December 19, 2021, the Company consented to allow WPD, upon a default to a third -party lender that had advanced funds to WPD (the “Lender”), to assign the WPD Agreement to the Lender, subject to certain conditions, including such assignment occurring prior to December 1, 2022, and subject to the Lender granting us the right to terminate the WPD Agreement upon any assignment as described in such consent.

On August 9, 2022, the Company extended the date by which the assignment must occur until December 31, 2023.

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

This Form 10-Q, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains certain forward-looking statements.

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Our forward-looking statements reflect our current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements.

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

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

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

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;

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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).

and c) our WP1122 Portfolio, which contains compounds (including WP1122, WP1096, WP1097) designed to exploit, amongst other uses, 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.

Concludes Phase 1b and Opens Recruitment in MB-107 Phase 2 Clinical Trial of Annamycin for the Treatment of Soft Tissue Sarcoma Lung Metastases

On July 28, 2022, we announced that with five US sites active in our MB-107 clinical trial, the safety review of the fourth cohort in a dose escalation clinical trial evaluating Annamycin for the treatment of soft tissue sarcoma (STS) lung metastases was completed, thus concluding the Phase 1b portion of our U.S.

Phase 1b/2 clinical trial.

The trial began in June of 2021.

Preliminary results from the study continue to document clinical activity for Annamycin in the treatment of STS.

The safety review committee (SRC) deemed the dose of 390 mg/m 2 to be safe after conclusion of the fourth cohort.

Notwithstanding that this dose level was deemed to be safe, tolerability issues present at the 390 mg/m 2 dose level caused delays in follow-on cycles and the reduction of subsequent doses, suggesting that a Recommended Phase 2 Dose (RP2D) below 390 mg/m 2 was warranted.

Consistent with the recommendation of the SRC, we determined that the RP2D will be 360 mg/m 2 for the first three subjects in the Phase 2 portion of the study.

The SRC will then review the clinical safety data at this dose and determine whether the RP2D should be further reduced to 330 mg/m 2 prior to proceeding with the additional 22 subjects.

In addition to continuing to assess safety, including gathering additional information about short-term side effects and possible risks, this Phase 2 portion of the study will also explore the efficacy of Annamycin as a single agent for the treatment of subjects with STS lung metastases for whom prior chemotherapy has failed, and for whom new chemotherapy is considered appropriate.

In the Phase 1b portion of the study, 15 subjects were enrolled and treated per the protocol in four cohorts to determine the maximum tolerable dose and/or the RP2D.

Each cohort had three subjects, except for the fourth cohort, which (per the protocol) was expanded to six subjects after a dose-limiting toxicity occurred in a single subject.

Up to 28 subjects, to account for potential over enrollment, will be enrolled at the RP2D in Phase 2 to focus more on quantifying efficacy as well as providing additional safety information.

Of the fifteen subjects treated per the protocol, two continue with treatment, and eight subjects have been followed without evidence of disease progression for two months or greater, with three of the eight free of disease progression for 120 days or more.

These data are early-stage, preliminary and subject to change, and there is no guarantee that such results will be replicated in the Phase 2 portion of the trial.

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. 

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 our Phase 1/2 clinical trial in Poland of Annamycin in combination with Cytarabine (also known as “Ara-C”

and for which the combination of Annamycin and Ara-C is referred to as AnnAraC) in the treatment of subjects with acute myeloid leukemia (AML) who are refractory to or relapsed after induction therapy.

The Phase 1/2 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, respectively, and the preclinical data from our sponsored research studies.

The clinical trial is expected to commence patient enrollment in the third quarter of 2022. 

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

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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.

On April 21, 2022, we announced that we received allowance from the 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.

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

Completion of Second Single Ascending Dose (SAD) Cohort in Phase 1a Clinical Trial of WP1122 in the UK

On July 8, 2022, we announced preliminary results from the second cohort of our first-in-human Phase 1a study of WP1122. This cohort consisted of 8 subjects dosed with 16 mg/kg or placebo in the dose escalation trial evaluating the safety and pharmacokinetics (PK) of WP1122 in healthy volunteers in the United Kingdom (UK).

Based on the overall results in Cohort 2, the SRC deemed the second cohort dose safe and well-tolerated and began our SAD Cohort 3 with a dose escalation to 32 mg/kg.

Completion of First Single Ascending Dose (SAD) Cohort in Phase 1a Clinical Trial of WP1122 in the UK

On June 16, 2022, we announced preliminary results from the first cohort of our first-in-human Phase 1a study of WP1122. This cohort consisted of 9 subjects dosed with 8 mg/kg or placebo in the dose escalation trial evaluating the safety and PK of WP1122 in healthy volunteers in the UK.

Based on the overall results in Cohort 1, the SRC deemed the cohort dose safe and well-tolerated and began our SAD Cohort 2 with a dose escalation to 16 mg/kg.

Commenced Dosing in Healthy Volunteers in Phase 1a Clinical Trial of WP1122 for the Treatment of COVID-19

On May 26, 2022, we announced the commencement of dosing in our first-in-human Phase 1a study to evaluate the safety and PK of WP1122 in healthy volunteers for the treatment of COVID-19 (MB-301). 

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).

On May 10, 2022, we announced that we received approval from the UK's 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.

Potential Investigator Led Clinical Trial of Efficacy and Safety of Oral Drug in Adult Patients With COVID-19 (WP1122) Posted on clinicaltrials.gov

On May 9, 2022, Dr.

Andrei Carvalho Sposito, as the sponsor, with the University of Campinas, Brazil, posted with clinicaltrials.gov a possible Phase 1, multi-center, dose escalation study that is to be followed by a Phase 2 randomized, double-blind, placebo-controlled study of the safety and efficacy of WP1122 administered q12h ±1 hr PO in adult patients with COVID-19 who require hospitalization with respiratory support.

The Phase 1 component, if such study occurs, will enroll COVID-19 positive patients who are symptomatic, and the Phase 2 component, if such study occurs, will enroll adults with COVID-19 who require hospitalization for respiratory support and those patients requiring intubation with mechanical ventilation. The initiation of this trial is subject to Brazilian government approvals, contract negotiations with the University of Campinas, and the evolving epidemiology of COVID-19, all of which will determine if we believe that such a study is feasible and inform our decision as to whether to support such a study with drug product and ancillary services.

There is no assurance that the foregoing trials will be commenced by the University of Campinas or that we will choose to be involved in any such trials.

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

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Results of Operations

The following table sets forth, for the periods indicated, data derived from our statement of operations (in thousands) and such changes in the periods are discussed below in approximate amounts:

The following table sets forth, for the periods indicated, data derived from our statement of operations (table in thousands) and such changes in the periods are discussed below in approximate amounts:

Moleculin Biotech, Inc.

Condensed Consolidated Statements of Operations

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses:

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Interest income, net

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

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

Research and Development Expense.

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 .

Research and development (R&D) expense was $4.2 million a nd $3.0 million for the three months ended June 30, 2022 and 2021, respectively.

The increase of $1.2  million is main ly related to increased clinical trial activity, as described above, and costs related to manufacturing of additional drug product.

General and Administrative Expense.

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.

General and administrative expense was $3.2 million a nd $2.4 million for the three months ended June 30, 2022 and 2021, respectively.

The increase of $0.8  million is mainly relate d to an increase in regulatory and legal services.

Gain from Change in Fair Value of Warrant Liability.

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.

We recorded a net gain o f $0.6 million in the second quarter of 2022 as compared to a net gain of $1.2 million in the second 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.

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.

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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.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Research and Development Expense.

Research and development (R&D) expense was $8.8 

million a nd $7.1 million for the six months ended June 30, 2022 and 2021, respectively.

The increase of $1.7 

million is mainly relat ed 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 $5.6  million a nd $4.4 million for the six months ended June 30, 2022 and 2021, respectively.

The increase of $1.2  million is mainly related to an increase in regulatory and legal services, consulting and advisory fees .

Gain from Change in Fair Value of Warrant Liability.

We recorded a net gain o f $0.8 million during the six months ended June 30, 2022 as compared to a net gain of $2.8 million during the six months ended June 30, 2021, for the change in fair value on revaluation of our warrant liability associated with our warrants issued in conjunction with our stock offerings.

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.

Liquidity and Capital Resources

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

Three Months Ended March 31,

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

Six Months Ended June 30,

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

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.

As of June 30, 2022, there w as $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 $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.

Cash used in operations was $12.8 million for the six months ended June 30, 2022.

Thi s $2.4 million increase over the prior year period of $10.4 million was primarily due t o payments for increased clinical trial activity, costs related to manufacturing of additional drug product, and increased consulting, legal, 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

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

Cash (used in) provided in financing activities

We did not sell any stock during the six months ended June 30, 2022.

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.

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 aggregate commitment. 

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.

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.

We believe that our existing cash and cash equivalents as of June 30, 2022 will be sufficient to meet our projected operating requirements, which include a potential increase over our current R&D rate of expenditures, beyond the second quarter of 2024.

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

We anticipate incurring operating losses for the next several years as we support the preclinical and clinical activities necessary to prepare our drug candidates for successful out licensing, including our efforts to expand our technologies.

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A failure to raise sufficient capital could adversely impact our ability to achieve our intended business objectives and meet our financial obligations as they become due and payable.

In March 2022, we received a subpoena from the SEC requesting information and documents, including materials related to certain individuals (none of which are our officers or directors) and entities, and materials related to the development of and statements regarding our drug candidate for the treatment of COVID-19.

To date, there have been no further information requests. We are not aware of the specific nature of the underlying investigation by the SEC, and to the extent that this investigation relates to prior public disclosures that we have made, we believe in the accuracy and adequacy of such prior disclosures.

The correspondence from the SEC transmitting the subpoena to us states that the SEC is trying to determine whether there have been any violations of federal securities laws, but that its investigation does not mean that the SEC has concluded that anyone has violated the law or that the SEC has a negative opinion of any person, entity, or security. We cannot predict when this matter will be resolved or what, if any, action the SEC may take following the conclusion of the investigation.

During the quarter ended and for the six months ended June 30, 2022, we have expended approximately $0.8 million in related legal fees and expenses.

We estimate that potentially an additional $2 million in legal costs will be recognized in the second half of 2022 in connection with our response to this subpoena.

Critical Accounting Policies and Significant Judgments and Estimates

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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