What changed in this filing

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Item 1. Financial Statements

2023-08-10 compared with 2023-05-10 · 301 added, 180 removed, 382 unchanged (56% of the section changed)

34 unchanged sentences

100,000,000 shares authorized;

29,600,323 and 28,627,827 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

29,789,322 and 28,627,827 shares issued and outstanding at June 30, 2023 and December 31, 2022, 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:

4 unchanged sentences

Loss from operations

( 8,354 )  

Other income:

2 unchanged sentences

Interest income, net

$ ( 7,915 )  

Net loss per common share - basic and diluted

$ ( 0.28 )  

Weighted average common shares outstanding, basic and diluted

28,749,974  

28,578,338  

$ ( 7,915 )  

Other comprehensive loss:

1 unchanged sentence

Comprehensive loss

$ ( 7,919 )  

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

9 unchanged sentences

Prepaid expenses and other current assets

Accounts payable

( 757 )  

Accounts payable

Accrued expenses and other current liabilities

( 410 )  

Net cash used in operating activities

2 unchanged sentences

Purchase of fixed assets

( 15 )  

Net cash used in investing activities

( 15 )  

Cash flows from financing activities:

Payment of tax liability for vested restricted stock units

( 21 )  

Proceeds from sale of common stock, net of issuance costs

Net cash provided by financing activities

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

11 unchanged sentences

(in thousands, except for shares)

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Par Value Amount

9 unchanged sentences

Balance, March 31, 2023

Three Months Ended March 31, 2022

Issuance of common stock with equity purchase agreement

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

Stock-based compensation

Consolidated net loss

Cumulative translation adjustment

Balance, June 30, 2023

Six Months Ended June 30, 2022

Par Value Amount

7 unchanged sentences

Balance, March 31, 2022

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

Stock-based compensation

Consolidated net loss

Cumulative translation adjustment

Balance, June 30, 2022

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

Notes to the 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, with clinical programs for hard-to-treat cancers and viruses.

MBI is a Phase 2 clinical-stage pharmaceutical company, organized as a Delaware corporation in July 2015, with clinical programs for hard-to-treat cancers and viruses.

The Company has three core technologies, each of which have had one or more drugs successfully complete a Phase 1 clinical trial, based substantially on discoveries made at and licensed from The University of Texas System on behalf of the MD Anderson Cancer Center (MD Anderson) in Houston, Texas. The Company has two wholly owned subsidiaries, Moleculin Australia Pty.

3 unchanged sentences

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

On May 5, 2023, 

the Company received a letter from NASDAQ notifying the Company that for the last 

30  consecutive business days the bid price for the Company's common stock had closed below the minimum $ 1.00  per share requirement for continued inclusion on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 

5550 (a)( 2 ) (the "Bid Price Rule").

The deficiency letter does 

not  result in the immediate delisting of the Company's common stock from the Nasdaq Capital Market.

In accordance with Nasdaq Listing Rule 

5810 (c)( 3 )(A), the Company has been provided an initial period of 

180  calendar days, or until 

November 1, 2023, 

to regain compliance with the Bid Price Rule.

If, at any time before November 1, 2023, 

the bid price for the Company's common stock closes at $ 1.00  or more for a minimum of 

10  consecutive business days, the Nasdaq Staff will provide written notification to the Company that it complies with the Bid Price Rule, unless the Staff exercises its discretion to extend this 

10  day period pursuant to Nasdaq Listing Rule 

5810 (c)( 3 )(G).

If the Company is 

not  in compliance with the Bid Price Rule by November 1, 2023, 

the Company 

be afforded a 

second  

180  calendar day period to regain compliance.

To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, except for the minimum bid price requirement.

In addition, the Company would be required to notify Nasdaq of its intent to cure the minimum bid price deficiency, which 

include, if necessary, implementing a reverse stock split.

If the Company does 

not  regain compliance with the Bid Price Rule by November 1, 2023, 

not  eligible for an additional compliance period at that time, the Nasdaq Staff will provide written notification to the Company that its common stock 

The Company would then be entitled to appeal the Nasdaq Staff’s determination to a NASDAQ Listing Qualifications Panel and request a hearing.

There can be 

no  assurance that, if the Company does appeal a delisting determination by the Nasdaq Staff to the NASDAQ Listing Qualifications Panel, that such appeal would be successful. The Company intends to monitor the closing bid price of its common stock and 

may ,  if appropriate, consider available options to regain compliance with the Bid Price Rule, which could include effecting a reverse stock split.

However, there can be 

no  assurance that the Company will be able to regain compliance with the Bid Price Rule.

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

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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, 2022 .

There have been no material changes to the significant accounting policies during the three months ended March 31, 2023 .

There have been no material changes to the significant accounting policies during the six months ended June 30, 2023 .

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 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 three months ended March 31, 2023  and 2022 , the Company incurred net losses of 

$ 7.9  million and $ 6.9  million, respectively, and had net cash flows used in operating activities o f 

$ 6.0  million a nd $ 4.8  million, respectively.

At March 31, 2023 , the Company had an accumulated deficit o f 

$ 109.8  million and cash and cash equivalents of 

$ 37.3  million. T he Company expects its cash on hand as of March 31, 2023  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.

The Company does not expect to experience positive cash flows from operating activities in the near future and anticipates incurring operating losses for the next few years as it supports the development of its core technologies to the point of generating revenue, most likely via out-licensing, and continues to invest in research and development for additional applications of the Company's core technologies and potentially increase its pipeline of drug candidates.

If the Company needs to raise additional capital in order to continue to execute its business plan, there is no assurance that additional financing will be available when needed or that management will be able to obtain financing on terms acceptable to the Company.

A failure to raise sufficient capital could adversely impact the Company's ability to achieve its intended business objectives and meet its financial obligations as they become due and payable. In March 2022, the Company received a subpoena from the SEC requesting information and documents, including materials related to certain individuals ( none of which are the Company's officers or directors) and entities, and materials related to the development of and statements regarding the Company's drug candidate for the treatment of COVID- 19.

Going Concern - These condensed consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business.

The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain necessary equity financing to continue operations and the attainment of profitable operations.

June 30, 2023 , the Company had an accumulated defici t of 

$ 115.7  million since inception and had not yet generated any revenues from operations.

Additionally, management anticipates that its cash on hand of 

$ 32.2  million 

as of June 30, 2023  is sufficient to fund its planned operations into but not beyond the near term.

These factors raise substantial doubt regarding the Company's ability to continue as a going concern. These unaudited condensed consolidated financial statements do 

not  include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company 

seek additional funding through a combination of equity offerings, debt financings, government or other 

third -party funding, commercialization, marketing and distribution arrangements, other collaborations, strategic alliances and licensing arrangements and delay planned cash outlays or a combination thereof.

Management cannot be certain that such events or a combination thereof can be achieved. 

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

The Company has received, and expects to continue to receive, periodic further requests from the SEC staff with respect to this matter.

3 unchanged sentences

The Company 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 three months ended March 31, 2023 and 2022 , the Company has expensed approximately $ 0.5  million 

and $ 0.1 million, respectively, in related general and administrative fees and expenses.

The Company expensed approximatel y $ 0.4  million and $ 0.8 million in related general and administrative fees and expenses for the three months ended 

June 30, 2023 and 2022 , respectively, and $ 0.9 million and $ 0.8 milli on for the six months ended June 30, 2023 and 2022 , respectively.

 The Company is in the process of filing a claim with its insurance carriers related to this loss which may cover a portion of the related expenses but not all.

The claim is currently under review by the insurance company.

The claim has 

not yet been approved nor has a reimbursement amount been determined.

Accordingly, the Company has not recorded any provision for insurance reimbursement.

The Company expects to record the insurance reimbursement at the time that the amount to be reimbursed is determined and approved by the insurance carrier. 

Cash and Cash Equivalents - Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents.

2 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 (table in thousands):

June 30, 2023

December 31, 2022

Prepaid insurance and other

$ 1,220  

$ 1,028  

Prepaid sponsored research

Vendor prepayments and deposits

Non-trade receivables

Related party receivables

Total prepaid expenses and other current assets

$ 3,208  

$ 2,451  

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 3.

The following table provides the financial liabilities reported at fair value and measured on a recurring basis at March 31, 2023 and December 31, 2022 (table in thousands): 

Fair value of warrant liability as of March 31, 2023:

The following table provides the financial liabilities reported at fair value and measured on a recurring basis at June 30, 2023 and December 31, 2022 (table in thousands): 

Fair value of warrant liability as of June 30, 2023:

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

The table below of Level 3 liabilities (table 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.

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, 2023

Three Months Ended June 30, 2023

Warrant Liability Long-Term

Balance, March 31, 2023

Change in fair value - net

Balance, June 30, 2023

The table below of Level 

3  liabilities (table in thousands) begins with the valuation as of 

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

six months ended June 30, 2023 .

The ending balance of the Level 

3  financial instrument presented above represents the Company's best estimates and 

not  be substantiated by comparison to independent markets and, in many cases, could 

not  be realized in immediate settlement of the instruments. 

Six Months Ended June 30, 2023

Warrant Liability Long-Term

Balance, December 31, 2022

Change in fair value - net

Balance, March 31, 2023

Balance, June 30, 2023

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 anti-dilutive.

For the three months ended March 31, 2023 and 2022 , approximatel y 

6.2  million and 

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

For the three months ended June 30, 2023 and 2022 , approximatel y 6.4  million and 

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

For the six months ended June 30, 2023 and 2022 , approximately 6.3  million and 4.8  million, respectively, of potentially dilutive shares were excluded from the computation of diluted earnings per share due to their anti-dilutive effect.

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

1 unchanged sentence

Recent Accounting Pronouncements 

- There are no recently issued accounting standards updates that are currently expected to have a material impact on the Company. 

Liability Classified Warrants

5 unchanged sentences

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

March 31, 2023

June 30, 2023

December 31, 2022

6 unchanged sentences

Dividend yield

A summary of the Company's liability classified warrant activity during the three months ended March 31, 2023 and related information follows: 

A summary of the Company's liability classified warrant activity during the six months ended June 30, 2023 and related information follows: 

Number of Shares

6 unchanged sentences

Balance at January 1, 2023

2,656,296  

$ 6.30  

$ 16.80  

$ 9.49  

Expired warrants

Balance at March 31, 2023

Exercisable at March 31, 2023

For a summary of the changes in fair value associated with the Company's warrant liability for the three months ended March 31, 2023 , see Note 2 - Basis of presentation, principles of consolidation and significant accounting policies - Fair Value of Financial Instruments.

( 26,914 )  

$ 13.92  

$ 16.80  

$ 16.22  

Balance at June 30, 2023

2,629,382  

$ 6.30  

$ 16.80  

$ 9.42  

Exercisable at June 30, 2023

2,629,382  

$ 6.30  

$ 16.80  

$ 9.42  

For a summary of the changes in fair value associated with the Company's warrant liability for the six months ended June 30, 2023 , see Note 2 - Basis of presentation, principles of consolidation and significant accounting policies - Fair Value of Financial Instruments.

Equity Classified Warrants

At March 31, 2023 , the Company had 646,501  eq uity classified warrants outstanding and 404,434  warrants were exercisable.

In June 2023, the Company granted equity-classified warrants to purchase 150,000 shares of common stock with a ten -year term and an exercise price of $ 0.60 vesting annually over four years while services are being performed. 

At June 30, 2023 , the Company had 796,501  eq uity classified warrants outstanding and 420,509  warrants were exercisable.

December 31, 2022 , the Company had 646,501 equity classified warrants outstanding and 400,859 warrants were exercisable.

The Company recorded stock compensation expense for the non-employee consulting agreements o f $ 46,000  a nd $ 83,000 for the three months ended 

March 31, 2023 and 2022 , respectively. At 

March 31, 2023 , there was $ 391,000  of unrecognized stock compensation expense related to the Company's equity classified warrants.

June 30, 2023 and 2022 , respectively, and $ 92,000  

a nd $ 166,000 for the 

six months ended June 30, 2023 and 2022 , respectively.

June 30, 2023 , there was $ 410,000  of unrecognized stock compensation expense related to the Company's equity classified warrants.

Lincoln Park Equity Line

During the three months ended March 31, 2023 , pursuant to the 2021 Lincoln Park purchase agreement, the Company issued to Lincoln Park 150,381  shares of common stock for gross proceeds of $ 0.1  million and in 

April 2023, the Company issued an additional 

75,187  shares of common stock, resulting in gross proceeds of $ 0.1 million.

The 2021 Lincoln Park Agreement, which has $ 19.8 million available, terminates in June 2024.

During the six months ended June 30, 2023 , pursuant to the 2021 Lincoln Park purchase agreement, the Company issued to Lincoln Park 225,568 shares of common stock for gross proceeds of $ 0.2  million.

The 2021 Lincoln Park Agreement, which has $ 19.8 million available as of June 30, 2023 , terminates in June 2024.

Other Components of Equity

1 unchanged sentence

Pursuant to the termination, the Company agreed to pay WPD (or its designees) $ 700,000 in cash and shares of its common stock valued at $ 800,000 .

March 2023, the Company issued 822,115 shares of common stock to WPD (or its designee) to satisfy this commitment.

March 2023, the Company issued 822,115 shares of common stock to WPD (or its designee) as part of satisfying this commitment.

See Note 6  - Commitments and Contingencies.

In addition, during the six months ended June 30, 2023 , the Company issued 113,812 shares of common stock related to the vesting of restricted stock units.

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 to employees, non-employee directors and consultants.

As of March 31, 2023 , there wer e 

752,296  shar es remaining to be issued under the 2015 Stock Plan. 

Stock-based compensation expense for the three months ended March 31, 2023 and 2022 , respectively, is as follows (table in thousands): 

Three Months Ended March 31,

In May 2023 and 2022, the 2015 Stock Plan (the Plan) was amended to authorize an additional 1,750,000 shares and 2,000,000 shares, respectively, such that 5,500,000 total shares may be issued under the Plan. As of June 30, 2023 , there wer e 26,919  shar es remaining to be issued under the 2015 Stock Plan. 

Stock-based compensation expense for the three and six months ended June 30, 2023 and 2022 , respectively, is as follows (table in thousands): 

Three Months Ended June 30,

Six Months Ended June 30,

General and administrative

1 unchanged sentence

Total stock-based compensation expense

$ 1,012  

$ 1,041  

During the six months ended June 30, 2023 , the Company granted 1,496,000 stock options with a weighted average fair value of $ 0.49 per share and 979,376 shares of restricted stock units with a weighted average fair value of $ 0.60 per share.

These stock options have a weighted average exercise price of $ 0.60 and vest over a one to four year period from the grant date on a straight-line basis over the requisite service period.

The restricted stock units vest annually in four equal installments. 

Income Taxes  

1 unchanged sentence

The Company does not expect to pay any significant federal, state, or foreign income taxes in 2023  as a result of the losses recorded during the 

three months ended March 31, 2023 and the additional losses expected for the remainder of 2023  and cumulative net operating loss carryforwards.

three and six months ended June 30, 2023 and the additional losses expected for the remainder of 2023  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, 2023  and 

As a result, as of June 30, 2023  and 

December 31, 2022 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, 2023 and 2022 , respectively.

The effective tax rate for the three months ended March 31, 2023 and 2022  is nil .

The Company recorded no income tax provision for the three and six months ended June 30, 2023 and 2022 , respectively.

The effective tax rate for the six months ended June 30, 2023 and 2022  is nil .

The income tax rates vary from the federal and state statutory rates primarily due to the change in fair value of the stock warrants, Internal Revenue Code Section 162 (m) limitations and ISO activity, as well as the valuation allowances on the Company’s deferred tax assets.

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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, 2023 .

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, 2023 .

Lease Obligations Payable

The following summarizes quantitative information about the Company's operating leases for the three months ended March 31, 2023 and 2022 , respectively (table 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, 2023 and 2022 , respectively (table in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Operating lease cost

1 unchanged sentence

In June 2022, the Company extended the lab lease until September 30, 2027, with no further right or option to renew.

The Company recorded approximately $ 12,000  and $ 10,000  i n sublease income from a related party for the three months ended March 31, 2023 and 2022 , respectively.

The Company recorded approximately  $ 12,000  and $ 10,000  i n sublease income from a related party for the three months ended June 30, 2023 and 2022 , respectively, and  $ 25,000  and $ 21,000  for the 

six months ended June 30, 2023 and 2022 , 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 $ 38,000  a nd $ 35,000 for the three months ended 

March 31, 2023 and 2022 , respectively.

June 30, 2023 and 2022 , respectively, and $ 75,000  and $ 70,000 for the six months ended June 30, 2023 and 2022 , respectively.

Licenses 

MD Anderson - Total expenses related to the Company's license agreements with MD Anderson were  $ 64,000  and $ 76,000 f or the three months ended March 31, 2023 and 2022 , respectively.

MD Anderson - Total expenses related to the Company's license agreements with MD Anderson we re $ 64,000  and $ 56,000 f or the three months ended June 30, 2023 and 2022 , respectively, and $ 129,000  and $ 133,000 for the 

six months ended June 30, 2023 and 2022 , respectively.

HPI - The Company has two agreements with a related party, Houston Pharmaceuticals, Inc.

(HPI) with total expenses of 

$ 59,000 for 

(HPI) with total expenses of $ 59,000  for 

each of the 

three months ended March 31, 2023 and 2022

three months ended June 30, 2023 and 2022 , respectively, and $ 117,000  for the 

six months ended June 30, 2023 and 2022 , respectively.

Sponsored Research Agreements - The Company has a sponsored research agreement with MD Anderson expiring December 31, 2024.

In April 2023, the Company entered into an amendment to the Sponsored Research Agreement with MD Anderson for total payment of $ 0.7  million to support the continuation of the project.

In June 2023 and April 2023, the Company entered into amendments to the Sponsored Research Agreement with MD Anderson for total payments of $ 0.8  million 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.

The expenses recognized under the agreements were $ 155,000  a nd $ 187,000 for the three months ended March 31, 2023 and 2022 , respectively.

The expenses recognized under the agreements were $ 176,000  a nd $ 313,000 for the three months ended June 30, 2023 and 2022 , respectively, and $ 331,000  and $ 500,000 for the 

six months ended June 30, 2023 and 2022 , respectively.

License Terminations 

Since February 2019, 

The Company was party to a sublicense agreement with WPD Pharmaceuticals (WPD), pursuant to which it sublicensed to WPD certain intellectual property rights, including rights to Annamycin, its WP1122 portfolio, and its WP1066 portfolio (as amended, the “WPD Agreement”).

2 unchanged sentences

In March 2023, the Company and WPD agreed to terminate the WPD Agreement and agreed to pay WPD (or its designee) $ 700,000 in cash and shares of its common stock valued at $ 800,000 .

March 2023, the Company issued 822,115 shares of common stock to WPD's designee to satisfy this commitment. With the termination of the WPD Agreement, the Company now has acquired the rights in certain territories previously sub-licensed to WPD to all of its licensed intellectual property, other than the rights related to non-human animals.

March 2023, the Company issued 822,115 shares of common stock to WPD's designee as part of satisfying this commitment. With the termination of the WPD Agreement, the Company now has acquired the rights in certain territories previously sub-licensed to WPD to all of its licensed intellectual property, other than the rights related to non-human animals.

Additionally, the Company acquired the in-process research and development that WPD has created during the term of the agreement.

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. Total expenses, reflected in research and development expenses, related to the Company's license terminations were $ 1.5 million and $ 0.4 million for the three months ended March 31, 2023 and 2022 , respectively.

(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. Total expenses, reflected in research and development expenses, related to the Company's license terminations were $ 1.5 million and $ 0.4 million for the three and six  months ended June 30, 2023 and 2022 , respectively.

Subsequent Events

In addition to the subsequent events discussed elsewhere in these notes, see below for a discussion of subsequent events occurring after March 31, 2023 .

On May 5, 2023, 

the Company received a letter from NASDAQ notifying the Company that for the last 

5550 (a)( 2 ) (the "Bid Price Rule").

The deficiency letter does 

not  result in the immediate delisting of the Company's common stock from the Nasdaq Capital Market.

In accordance with Nasdaq Listing Rule 

5810 (c)( 3 )(A), the Company has been provided an initial period of 

180  calendar days, or until 

November 1, 2023, 

to regain compliance with the Bid Price Rule.

If, at any time before November 1, 2023, 

the bid price for the Company's common stock closes at $ 1.00  or more for a minimum of 

10  consecutive business days, the Nasdaq Staff will provide written notification to the Company that it complies with the Bid Price Rule, unless the Staff exercises its discretion to extend this 

10  day period pursuant to Nasdaq Listing Rule 

5810 (c)( 3 )(G).

If the Company is 

not  in compliance with the Bid Price Rule by November 1, 2023, 

the Company 

be afforded a 

second  

180  calendar day period to regain compliance.

In addition, the Company would be required to notify Nasdaq of its intent to cure the minimum bid price deficiency, which 

include, if necessary, implementing a reverse stock split.

If the Company does 

not  regain compliance with the Bid Price Rule by November 1, 2023, 

not  eligible for an additional compliance period at that time, the Nasdaq Staff will provide written notification to the Company that its common stock 

The Company would then be entitled to appeal the Nasdaq Staff’s determination to a NASDAQ Listing Qualifications Panel and request a hearing.

There can be 

may ,  if appropriate, consider available options to regain compliance with the Bid Price Rule, which could include effecting a reverse stock split.

However, there can be 

no  assurance that the Company will be able to regain compliance with the Bid Price Rule.

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 subsequent events occurring after June 30, 2023 .

In August 2023, the Company entered into an agreement with an entity to provide services.

In connection with the services to be provided, the Company agreed to issue the entity a five -year warrant to purchase up to 100,000 shares of Company common stock with an exercise price of $0.62, which was equal to the market price of the Company's common stock on the effective date of the agreement.

The warrant vests based on performance of certain services.

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;

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anthracycline designed to be different than currently approved anthracyclines, which are limited in utility because of cardiotoxicity risks and their susceptibility to multidrug resistance mechanisms.

Annamycin was designed to avoid multidrug resistance and has shown no cardiotoxicity 1  in subjects treated in clinical trials to date.

Annamycin was designed to avoid multidrug resistance and to be non-cardiotoxic and has shown no cardiotoxicity in subjects treated in clinical trials to date.

Furthermore, we have demonstrated safe dosing beyond the dose limitations imposed by regulatory authorities upon currently prescribed anthracyclines due to their inherent cardiotoxicity;

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c) our WP1122 Portfolio, which contains compounds (including WP1122, WP1096, and 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 viruses that depend upon glycolysis and glycosylation to infect and replicate.

1  In discussions of “no cardiotoxicity”

of Annamycin, management’s beliefs are based on an expert’s opinion based their review of certain clinical trial subject data including LVEF, ECHO strain analyses, and cardiac biomarkers –

troponin’s I & T

In discussions regarding Annamycin’s lack of cardiotoxicity, we rely on our expert's assessment of certain clinical trial subject data including LVEF, ECHO strain analyses, and cardiac biomarkers –

troponins I & T and our pre-clinical and clinical data, some of which are preliminary and subject to change.

Our Focus  

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1) Annamycin for the treatment of Soft Tissue Sarcoma metastasized to the lungs (STS lung metastases or STS lung mets)

2) Annamycin in combination with Cytarabine (also known as Ara-C, the combination with Annamycin of which is referred to as AnnAraC) for the treatment of Relapsed or Refractory Acute Myeloid Leukemia (R/R AML or AML).

2) Annamycin in combination with Cytarabine (also known as Ara-C, the combination with Annamycin is referred to as AnnAraC) for the treatment of Relapsed or Refractory Acute Myeloid Leukemia (R/R AML or AML).

3) A better formulation for delivery of WP1066 to further support current and possibly future externally funded oncology clinical trials. 

We have also recently established a Recommended Phase 2 Dose (RP2D) for WP1122 to potentially enable future externally funded oncology and virology trials.

Beyond this, we support development of our core technologies through several externally funded clinical trials with the potential for others in the near-term.

Beyond this, we support development of our core technologies through several externally funded clinical trials and primarily externally funded non-clinical research, with the potential for further studies in the near-term.

Our Clinical Trials

In the US and Europe, we or independent investigators have approval to begin, are currently conducting or have completed eleven internally or externally funded clinical trials for four of our drug candidates –

Annamycin, WP1066, WP1220, and WP1122 since inception.

In the US and Europe, since our inception, we or independent investigators have approval to begin, are currently conducting or have completed eleven internally or externally funded clinical trials for four of our drug candidates –

Annamycin, WP1066, WP1220, and WP1122.

All clinical trials are or were in the Phase 1 or 2 stage.

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Moving into 2023, we are actively recruiting in three clinical trials in a Phase 1b or Phase 2 stage and have recently concluded one trial.

These three currently active clinical trials are open label so we expect to be able to periodically announce human activity that is being demonstrated in these trials during 2023. In February 2023, the externally funded Phase 1 clinical trial with WP1066 for the treatment of pediatric brain tumors concluded.

We expect up to three externally funded Phase 1b/2 clinical trials for WP1066 in the treatment of GBM and other brain tumors in 2023.

During 2022, we or independent investigators filed applications, began recruiting or are currently recruiting for six internally or externally funded clinical trials in the US and Europe.

Annamycin - A clinical trial application (CTA) in Poland for a Phase 1b/2 trial of Annamycin in combination with Cytarabine or AnnAraC for the treatment of AML (MB-106) was allowed in 2022.

These three currently active clinical trials are open label so we intend to periodically announce human activity that is being demonstrated in these trials during 2023. In February 2023, the externally funded Phase 1 clinical trial with WP1066 for the treatment of pediatric brain tumors concluded.

We expect up to two externally funded Phase 1b/2 clinical trials for WP1066 in the treatment of GBM and other brain tumors in 2023.

One more pediatric clinical trial may occur later subject to the results of the other two possible clinical trials.

During 2022 and 2023, we or independent investigators filed applications, began recruiting or are currently recruiting for six internally or externally funded clinical trials in the US and Europe.

Annamycin - A clinical trial application (CTA) in Poland for a Phase 1b/2 trial of Annamycin in combination with Cytarabine for the treatment of AML (MB-106) was allowed in 2022.

This trial was later approved to expand into Italy in 2022 and dosing subjects began there in March 2023.

With preclinical data in mice demonstrating a 68% improvement in activity in AML with AnnAraC over Annamycin alone and having concluded our single agent trials of Annamycin in AML showing 80% activity in the highest dosing cohort we are now focusing our efforts in AML exclusively on this combination trial.

Annamycin - We are currently recruiting a Phase 2 clinical trial using Annamycin for the treatment of STS lung mets (MB-107).

This multicenter trial is being conducted in the US, with the Phase 2 portion expected to recruit 25 subjects.

Annamycin - We are currently in a Phase 2 clinical trial using Annamycin for the treatment of STS lung mets (MB-107).

This multicenter trial is being conducted in the US, with the Phase 2 portion expected to recruit up to 25 subjects.

Annamycin - An investigator sponsored trial (externally funded) was initiated in Poland in 2022 to study an alternative dosing regimen for Annamycin in the treatment of STS lung mets.

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This may lead to an investigator-initiated trial (IIT) in oncology.

Additionally, an investigator independently filed a CTA in Brazil in 2022 to study WP1122 for the treatment of moderate to severe COVID-19.

Based on current COVID-19 epidemiology, we do not expect this externally funded trial to be conducted.

Additionally, an investigator independently filed a CTA in Brazil in 2022 to study WP1122 for the treatment of moderate to severe COVID-19 (Clinicaltrials.gov ID:

NCT NCT05365321).

We do not expect this externally funded trial to be conducted.

Additionally, we are in discussions with research institutions in the US, Asia, and South America regarding possible externally funded trials or programs involving WP1066 and WP1122.

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Annamycin 

MB-106 Annamycin in Combination with Cytarabine for the Treatment of AML

MB-106 Annamycin in Combination with Cytarabine for the Treatment of AML ( “

5+3 Therapy ”

On May 2, 2023, we announced successful completion of the first cohort in our Phase 1b portion of our Phase 1b/2 clinical trial using Annamycin in combination with Cytarabine for the treatment of AML (MB-106).

In this cohort three subjects were treated, all of whom are believed to be relapsed from multiple prior therapies.

Annamycin was dosed at 190 mg/m 2 , along with Cytarabine at 2.0 g/m2/day for 5 days (total dose of 10g/m 2 ), consistent with the familiar 7+3 regimen.

We, at the recommendation of the safety review committee, deemed the first cohort dose as safe and opened the second cohort with the Annamycin dose being increased to 230 mg/m 2 .

This study is utilizing a “5+3”

regimen where Annamycin is administered with the three days of infusion along with the five days of infusion of Cytarabine.

This combination strategy is similar to the familiar “7+3”

induction therapy that is considered to be a standard of care in AML, where seven days of Cytarabine infusions are paired with 3 days of an approved anthracycline (typically, daunorubicin). In the first cohort three subjects were treated, all of whom were relapsed from multiple prior therapies.

Annamycin was dosed at 190 mg/m 2 , along with Cytarabine at 2.0 g/m 2 /day for 5 days (total dose of 10g/m 2 .

We, at the recommendation of the safety review committee, deemed the first cohort dose as safe and opened the second cohort with the Annamycin dose being increased to 230 mg/m 2 . 

The median of prior therapies for these three subjects were 5 (1 to 7).

the subjects, who was 78 years of age at the time of the study initiation with 2 prior 

multi-year therapies, was preliminary recorded as a complete response or CR per the protocol and it was confirmed that the CR was durable after four weeks.

One of the subjects, who was 78 years of age at the time of the study initiation and enrolled after a single prior multi-year therapy, achieved a CR that has continued to be durable at five months. The other two subjects were shown to have disease progression.

On August 7, 2023, we successfully completed the second cohort at 230 mg/m 2 of Annamycin in this combination study.

Four subjects were treated in this cohort, one who is believed to be relapsed from one or more prior therapies and three of whom are believed to be refractory from up to three prior therapies. One subject was replaced due to a Serious Adverse Event (SAE) experienced on Day 1 of dosing. The SAE was determined to be unrelated to Annamycin and definitively related to Cytarabine.

We, at the recommendation of the safety review committee, deemed the second cohort dose as safe and opened recruitment, including for both first line therapy and for subjects who are refractory to or relapsed after induction therapy, to the Phase 2 portion of the trial.

The median of prior therapies for the three evaluable subjects in the second cohort were two (one to three) and the median age was 67.

One of the subjects, who was 64 years of age at the time of the study initiation with one prior therapy, was preliminary recorded as a complete response with an incomplete recovery of the bone marrow or CRi per the protocol.

The other two subjects were shown to have disease progression.

Subjects have already been identified as potential candidates for the second cohort which is now recruiting.

This brings the total CR or CRi out of the Phase 1b portion of this combination trial to two out of six subjects or 33%.

The median age of these subjects was 66.

All data presented above from the MB-106 trial are preliminary and subject to change.

MB-107 Annamycin Monotherapy for the Treatment of STS Lung Mets

In our MB-107 clinical trial treating STS lung mets with Annamycin as monotherapy, thirteen subjects have been recruited to date for this Phase 2 trial and treated at the confirmed Recommended Phase 2 Dose (RP2D) of 330 mg/m 2 .

Two subjects left the study due to infusion related reactions to the initial dose of the study drug.

Ten subjects have received two cycles and had their end of cycle 2 scan.

One subject has received their initial dose and has not received cycle 2 scans.

To date, six or 60% have exhibited stable disease (SD) after receiving two cycles.

Three are continuing with the study drug.

One such subject has received six cycles after their end of cycle 4 scan exhibited stable disease.

For the three subjects with SD not continuing with the study drug, they are being followed for progression free survival and, for all subjects, overall survival is being monitored.

This data is preliminary and subject to change.

Other Trial and Publications

The Phase 1b/2 investigator sponsored trial (externally funded) was initiated in Poland in 2022 to study an alternative dosing regimen for Annamycin in the treatment of STS lung mets.

In our MB-107 Phase 2 clinical trial treating STS lung mets with Annamycin as monotherapy, fifteen subjects have been enrolled and treated.

Thirteen subjects have been treated with at least two cycles of therapy at the confirmed Recommended Phase 2 Dose (RP2D) of 330 mg/m 2 and are evaluable for efficacy.

One subject was withdrawn from the study prior to receiving a scan due to the clinician’s assessment.

Per the protocol, follow-up imaging or scans and RECIST evaluation is required for a subject to be included in the efficacy population.

One subject is pending initiation of the cycle 2 treatment.

Including the three subjects treated at the same dose in the Phase 1b portion of this trial, this equates to fifteen total subjects measurable for efficacy at the 330 mg/m 2 dose level.

Including all measurable subjects at all dose levels in the Phase 1b portion of the trial, there have been thirty-one subjects treated with at least one cycle in this study and twenty-six have received two cycles of treatment.

For these subjects, the median time to entering the MB107 trial from the time of initial diagnosis is estimated to be approximately 20 months, and these subjects have been mostly heavily treated previously for STS lung mets prior to entering our study.

To date, 67% of the fifteen subjects receiving 330 mg/m 2 and that have received end of cycle 2 scans in Phase 1b and Phase 2 have exhibited stable disease (SD) after receiving two cycles.

We have one subject in the study who has not received end of cycle 2 scans and remains to be evaluated.

Of the thirty-one subjects in the Phase 1b and Phase 2 portions of the study, 73% (n=26) have exhibited stable disease (SD) after receiving two cycles.

Some subjects are continuing with the study so stable disease continues to be monitored, and overall survival is being followed for the study.

We plan a more in-depth presentation of the topline data on progression free survival, overall survival after entering our study, overall survival, and other data on this study in the third quarter of this year.

All data presented above from the MB-107 trial are preliminary and subject to change. 

We continue discussions with two US academic institutions and another foreign academic institution for externally funded trials for the use of WP1066 for the treatment of glioblastomas and/or pediatric brain tumors.

We expect to finalize agreements with Northwestern University and FDA filings in the second half of this year (Clinicaltrials.gov ID:

NCT05879250).

We do not expect the pediatric study to begin until an adult brain tumor trial commences and generates additional data.

Regarding an intravenous formula for WP1066, we continue to work towards and we believe we will be able to announce progress regarding an IV formulation by the end of 2023.

With the data generated from the MB-301 clinical trial setting an RP2D for WP1122 and additional sponsored research, we continue to explore avenues of external funding for further development of this portfolio.

Other Trials and Publications

Externally Funded Annamycin Trial

A Phase 1b/2 investigator sponsored trial (externally funded) was initiated in Poland in 2022 to study an alternative dosing regimen for Annamycin in the treatment of STS lung mets.

This trial has enrolled and treated two subjects with two cycles in the first cohort of the Phase 1b portion of the study.

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After two cycles the subjects will receive their end of cycle 2 scan.

At the end of two cycles both subjects treated to date demonstrated progressive disease.

This is early in where Annamycin is being dosed weekly.

Preclinical data demonstrated a benefit to weekly dosing of Annamycin versus traditional chemotherapy dosing of every three weeks.

We announced in April the presentation of positive pharmacokinetics and tissue-organ distribution data demonstrating high antitumor activity of Annamycin in preclinical cancer models, which sponsored research data was presented at the American Association for Cancer Research (AACR) Annual Meeting 2023.

At the end of two cycles both subjects treated to date demonstrated progressive disease. Preclinical data demonstrated a benefit to weekly dosing of Annamycin versus traditional chemotherapy dosing of every three weeks.

Publication of Data from Successful European Phase 1 Trial Evaluating Annamycin as Single Agent Treatment of Relapsed or Refractory AML

On July 13, 2023, we announced the publication of data from our completed MB-105 European Phase 1 clinical trial assessing the safety and efficacy of Annamycin as a single agent for the treatment of adults with relapsed or refractory AML.

The manuscript titled, “

Results of a Phase 1 Study of Liposomal Annamycin for the Treatment of Relapsed or Refractory AML Patients After Induction Therapy ,”

was published in the peer-reviewed 

British Journal of Cancer Research .

AACR Annamycin Presentation

We announced in April 2023 a presentation at the American Association for Cancer Research (AACR) Annual Meeting 2023 of positive pharmacokinetics and tissue-organ distribution data demonstrating high antitumor activity of Annamycin in preclinical cancer models, such data was based on research sponsored by us.

In this research, Annamycin demonstrated increased penetration and accumulation in the liver, which correlated with high antitumor activity in HEPA 1-6 hepatocellular carcinoma and CT26 colon cancer liver metastasis models .

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The poster outlined results from the analysis of the pharmacokinetics of two formulations of Annamycin, liposome formulated drug product (L-ANN) and free Annamycin (ANN), in the liver in comparison with doxorubicin (DOX) and to determine its tumoricidal potential in a hepatocellular carcinoma (HCC) model in situ and in experimental models of liver metastasis.

We expect to finalize agreements in the second quarter with at least one of these institutions and begin trials in the second half of 2023.

During the June 2023 meeting of the IV World Congress of Polish Physicians in Olsztyn, Poland.

Waldemar Priebe, Chair of our Science Advisory Board was invited to lecture.

He presented the above referenced AACR presentation “

Discovery and Development of Novel Organotropic Anticancer Therapies ”.

WPD Licensing Agreement

Since February 2019, we were party to a sublicense agreement with WPD Pharmaceuticals (WPD), pursuant to which we sublicensed to WPD certain intellectual property rights, including rights to Annamycin, its WP1122 portfolio, and its WP1066 portfolio (as amended, the “WPD Agreement”).

Since February 2019, we were party to a sublicense agreement with WPD Pharmaceuticals (WPD), pursuant to which we sublicensed to WPD certain intellectual property rights, including rights to Annamycin, our WP1122 portfolio, and our WP1066 portfolio (as amended, the “WPD Agreement”).

WPD is affiliated with Dr.

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Pursuant to the termination, we agreed to pay WPD (or its designee) $700,000 in cash and shares of our common stock valued at $800,000.

In March 2023, we issued 822,115 shares of common stock to WPD's designee to satisfy this commitment. With the termination of the WPD Agreement, we now have acquired the rights in certain territories previously sub-licensed to WPD to all of our licensed intellectual property, other than the rights related to non-human animals.

In March 2023, we issued 822,115 shares of common stock to WPD's designee as part of the satisfaction of this commitment. With the termination of the WPD Agreement, we now have acquired the rights in certain territories previously sub-licensed to WPD to all of our licensed intellectual property, other than the rights related to non-human animals.

Additionally, we acquired the in-process research and development that WPD has created during the term of the agreement.

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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, 2023 Compared to Three Months Ended March 31, 2022

Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022

Research and Development Expense.

Research and development (R&D) expense was $5.7 million and $4.6  million for the three months ended March 31, 2023 and 2022 , respectively.

The increase of $1.1 million is mainly related t o the WPD sublicense termination. 

Research and development (R&D) expense was $3.9 million and $4.2  million for the three months ended June 30, 2023 and 2022 , respectively.

The decrease 

of $0.3  million is mainly related t o the timing of costs incurred for clinical trials and timing of sponsored research payments.

General and Administrative Expense.

General and administrative e xpense was $2.5 million and 

$2.4  million for the three months ended March 31, 2023 and 2022 , respectively.

$3.2  million for the three months ended June 30, 2023 and 2022 , respectively.

The decrease  of 

$0.7  million is mainly related to a decrease in regulatory and legal services, and consulting & advisory fees.

Gain from Change in Fair Value of Warrant Liability.

We recorded a net gain of $0.04 million in the second quarter of 2023 as compared to a net gain of $0.6 million in the second quarter of 2022, 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.

Interest income, net.

 Interest income, ne t increased by approximately $0.4 million f or the comparable quarterly periods due to rising interest rates during the past year.

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022

Research and Development Expense.

Research and development (R&D) expense was 

$9.6  million and $8.8 

million for the six months ended June 30, 2023 and 2022 , respectively.

The increase of 

$0.2  million is mainly related to an increase in regulatory and legal services, and consulting & advisory fees.

$0.8 million is mainly related t o the WPD sublicense termination, which enabled the reacquisition of our intellectual property rights in certain territories including parts of the European Union.

General and Administrative Expense.

General and administrative e xpense was 

$5.1  million and $5.6 

million for the six months ended June 30, 2023 and 2022 , respectively.

The decrease 

of $0.5 

million is mainly related to a decrease in regulatory and legal services, and consulting & advisory fees.

Gain from Change in Fair Value of Warrant Liability.

We recorded a net gain of $0.04 million in the first quarter of 2023 as compared to a net gain of $0.2 million in the first quarter of 2022, 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 of $0.08 

million in the six months ended June 30, 2023 as compared to a net gain of $0.8 million in the six months ended June 30, 2022, 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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Interest income, net.

 Interest income, net increased by approximately $0.4 million for the comparable quarterly periods due to rising interest rates during the past year.

 Interest income, n et increased by approximately $0.7 million for the comparable quarterly periods due to rising interest rates during the past year.

Liquidity and Capital Resources

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

Three Months Ended March 31,

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 in cash and cash equivalents

As of March 31, 2023, 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.

As of June 30, 2023, 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 w as $6.0 million for the three months ended March 31, 2023 .

This $1.2 million increase over the prior year period of $4.8 million was primarily due to payments for increased clinical trial activity, costs related to the WPD sublicense termination, 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 by fin ancing activities

During the three months ended March 31, 2023, utilizing the Lincoln Park Equity Line, we issued 1 50,381 shares of common stock (including commitment shares), at an average price of $0.94 per share, resulting in gross proceeds of $0.1 million .

Subsequent to March 31, 2023, we issued to Lincoln Park an additional 75,187 shares of common stock, (including commitment shares), at an average price of $0.93 per share, resulting in gross proceeds of $0.1 million. 

We believe that our existing cash and cash equivalents as of March 31, 2023 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.

These factors raise uncertainties about our ability to fund operations in future years.

If we need to raise additional capital in order to continue to execute our business plan, there is no assurance that additional financing will be available when needed or that we will be able to obtain financing on terms acceptable to us.

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.

Cash used in operations w as $11.1 million for the six months ended June 30, 2023 .

This $1.7 million decrease over the prior year period of $12.8 million was primarily due to an increase in accounts payable and license rights settled in stock . 

Cash provided by fin ancing activities 

During the six months ended June 30, 2023, utilizing the Lincoln Park Equity Line, we issued 225,568  shares of common stock (including commitment shares), at an average price of $0.94 per share, resulting in gross proceeds of $0.2 million . 

We believe that our existing cash and cash equivalents as of June 30, 2023 will be sufficient to fund our planned operations, which include our current Phase 2 clinical programs and preparations for future clinical trials, into the third quarter of 2024, without the issuance of additional equity for cash. The continuation of our Company as a going concern is dependent upon our ability to obtain necessary equity financing to continue operations and the attainment of profitable operations.

We may seek additional funding through a combination of equity offerings, debt financings, government or other third-party funding, commercialization, marketing and distribution arrangements, other collaborations, strategic alliances and licensing arrangements and delay planned cash outlays or a combination thereof.

We cannot be certain that such events or a combination thereof can be achieved. 

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.

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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 three months ended March 31, 2023 and 2022, we have expended approximately $0.5 million and  $0.1 

million, respectively, in related legal fees and expenses. 

We expensed approximate ly $0.4 million and $0.8 million in related general and administrative fees and expenses for the three months ended 

June 30, 2023 and 2022 , respectively, and $0.9 millio n and $0.8 million for the six months ended June 30, 2023 and 2022, respectively. 

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