What changed in this filing

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Item 1. Financial Statements

2023-11-13 compared with 2023-08-10 · 364 added, 220 removed, 463 unchanged (56% of the section changed)

3 unchanged sentences

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

September 30,

Current assets:

29 unchanged sentences

100,000,000 shares authorized;

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

29,810,443 and 28,627,827 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

1 unchanged sentence

153,985  

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

Accumulated deficit

10 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses:

Research and development

12,855  

14,790  

General and administrative

1 unchanged sentence

Total operating expenses

20,712  

23,592  

Loss from operations

( 5,947 )  

( 9,084 )  

( 20,712 )  

Other income:

2 unchanged sentences

Interest income, net

$ ( 5,609 )  

$ ( 8,611 )  

$ ( 19,500 )  

Net loss per common share - basic and diluted

$ ( 0.19 )  

$ ( 0.30 )  

$ ( 0.66 )  

Weighted average common shares outstanding, basic and diluted

29,809,236  

28,627,610  

29,419,904  

28,596,501  

$ ( 5,609 )  

$ ( 8,611 )  

$ ( 19,500 )  

Other comprehensive loss:

Foreign currency translation

( 10 )  

( 19 )  

( 15 )  

Comprehensive loss

$ ( 5,619 )  

$ ( 8,630 )  

$ ( 19,515 )  

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

$ ( 13,891 )  

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

3 unchanged sentences

Change in fair value of warrant liability

( 75 )  

Operating lease, net

1 unchanged sentence

Prepaid expenses and other current assets

( 757 )  

Accounts payable

Accrued expenses and other current liabilities

( 410 )  

Net cash used in operating activities

( 11,143 )  

Cash flows from investing activities:

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 (used in) provided by financing activities

Net cash provided by (used in) provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents

( 10,973 )  

Cash and cash equivalents, - beginning of period

43,145  

70,903  

Cash and cash equivalents, - end of period

$ 32,172  

$ 57,999  

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands, except for shares)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Common Stock  

Accumulated  

Par Value Amount

4 unchanged sentences

Balance, December 31, 2022

28,627,827  

$ 153,985  

$ ( 101,835 )  

$ 52,191  

Issuance of common stock with equity purchase agreement

150,381  

Common stock issued for license rights

822,115  

Stock-based compensation

( 7,915 )  

Cumulative translation adjustment

Balance, March 31, 2023

29,600,323  

$ 155,396  

$ ( 109,750 )  

$ 45,684  

Issuance of common stock with equity purchase agreement

75,187  

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

113,812  

( 21 )  

Stock-based compensation

Consolidated net loss

( 5,976 )  

Cumulative translation adjustment

Balance, June 30, 2023

Six Months Ended June 30, 2022

29,789,322  

$ 155,957  

$ ( 115,726 )  

$ 40,268  

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

21,121  

Stock-based compensation

Consolidated net loss

( 5,609 )  

Cumulative translation adjustment

( 10 )  

Balance, September 30, 2023

29,810,443  

$ 156,446  

$ ( 121,335 )  

$ ( 3 )  

$ 35,138  

Nine Months Ended September 30, 2022

Common Stock  

Accumulated  

Par Value Amount

4 unchanged sentences

Balance, December 31, 2021

28,578,338  

$ 151,733  

$ ( 72,810 )  

$ 78,993  

Stock-based compensation

( 6,867 )  

Cumulative translation adjustment

Balance, March 31, 2022

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  

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

21,121  

( 11 )  

Stock-based compensation

Consolidated net loss

( 8,611 )  

Cumulative translation adjustment

( 19 )  

Balance, September 30, 2022

28,627,827  

$ 153,450  

$ ( 95,065 )  

$ 58,417  

See accompanying notes to condensed consolidated financial statements.

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Additionally, the Company does not have a sales organization.

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 

the Company received a letter from the Nasdaq Capital Market (Nasdaq) notifying the Company that for the prior 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 Nasdaq 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.

The deficiency letter did 

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

In accordance with Nasdaq Listing Rule 

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

180  calendar days, or until 

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

180  calendar days, until 

November 1, 2023, 

to regain compliance with the Bid Price Rule.

If, at any time before November 1, 2023, 

to regain compliance with the Bid Price Rule. In addition, the Company was required to notify Nasdaq of its intent to cure the minimum bid price deficiency, which 

include, if necessary, implementing a reverse stock split. 

On November 2, 

2023, the Company received a 180 -calendar day extension, until 

April 29, 2024, from the Nasdaq to regain compliance with Bid Price Rule.

The Company will continue to monitor the closing bid price of its common stock and plans to pursue available options to regain compliance with the Bid Price Rule, including potentially the Company’s Board of Directors authorizing a reverse stock split, as discussed further below.

If the Company authorizes a reverse stock split, it will plan to effectuate the split no later than ten business days prior to the end of the extension in order to timely regain compliance. If, at any time before April 29, 2024, 

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

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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.

On October 3, 2023, the Company held a Special Meeting of Stockholders (the "Special Meeting").

The Company's stockholders granted the Board of Directors the authority to effect an amendment to the Company’s amended and restated certificate of incorporation to effect a reverse stock split of the outstanding shares of the Company’s common stock, at a reverse stock split ratio of between 1 -for- 5 and 1 -for- 20 as determined by the Board in its sole discretion, prior to the one -year anniversary of the Special Meeting.

The Board of Directors has taken no action with regard to this matter.

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 

not  regain compliance with the Bid Price Rule by April 29, 2024, 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.

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. 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 six months ended June 30, 2023 .

There have been no material changes to the significant accounting policies during the nine months ended September 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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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 

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

$ 121.3  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.

$ 24.6  million a s of September 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 

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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.

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 expensed approximatel y $ 0.4  million and $ 1.1  million in related general and administrative fees and expenses for the three months ended 

September 30, 2023 and 2022 , respectively, and $ 1.4  million and $ 1.9  milli on for the nine months ended September 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.

8 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 4.

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:

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

Fair value of warrant liability as of September 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 

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

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

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

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Warrant Liability Long-Term

Balance, March 31, 2023

Change in fair value - net

Balance, June 30, 2023

Change in fair value - net

Balance, September 30, 2023

The table below of Level 

1 unchanged sentence

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

six months ended June 30, 2023 .

nine months ended September 30, 2023 .

The ending balance of the Level 

2 unchanged sentences

not  be realized in immediate settlement of the instruments. 

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Warrant Liability Long-Term

1 unchanged sentence

Change in fair value - net

Balance, June 30, 2023

Balance, September 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 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.

For the three months ended September 30, 2023 and 2022 , approximatel y 8.5  million and 6.0  million, respectively, of potentially dilutive shares were excluded from the computation of diluted earnings per share due to their anti-dilutive effect.

For the nine months ended September 30, 2023 and 2022 , approximately 7.0  million and 5.2  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.

 Accrued expenses and other current liabilities

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

September 30, 2023

December 31, 2022

Accrued research and development

$ 1,337  

Accrued legal, regulatory, professional and other

Accrued payroll and bonuses

Operating lease liability - current

Accrued liabilities due to related party

Total accrued expenses and other current liabilities

$ 1,880  

$ 2,724  

Additionally, accounts payable includes $ 64,000 as of September 30, 2023  and December 31, 2022 , respectively, for related party payables.

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:

June 30, 2023

September 30, 2023

December 31, 2022

6 unchanged sentences

Dividend yield

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

A summary of the Company's liability classified warrant activity during the nine months ended September 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

( 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.

Balance at September 30, 2023

Exercisable at September 30, 2023

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

Equity Classified Warrants

In August 2023, the Company granted equity-classified warrants to purchase up to 100,000 shares of Company common stock with a five -year term and an exercise price of $ 0.62 .

The warrants vest based on performance of certain services.

As of September 30, 2023 , no related vesting criteria were met.

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.

At September 30, 2023 , the Company had 896,501  eq uity classified warrants outstanding an d 424,084  w arrants 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 $ 50,000  a nd $ 232,000 for the three months ended 

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

September 30, 2023 and 2022 , respectively, and $ 142,000  

a nd $ 398,000 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.

nine months ended September 30, 2023 and 2022 , respectively.

September 30, 2023 , there was $ 446,000  of unrecognized stock compensation expense related to the Company's equity classified warrants.

Lincoln Park Equity Line

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

In March 2023, the Company and WPD agreed to terminate the WPD Agreement.

During the nine months ended September 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  milli on.

The 2021 Lincoln Park Agreement, which h as $ 19.8  mi llion available as of September 30, 2023 , terminates in June 2024.

Other Components of Equity 

In March 2023, the Company and WPD Pharmaceuticals (WPD) agreed to terminate the WPD Agreement (defined below).

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 .

1 unchanged sentence

See Note 7  - 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.

In addition, during the nine months ended September 30, 2023 , the Company issued 134,933 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.

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,

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 September 30, 2023 , there wer e 27,752  shar es remaining to be issued under the 2015 Stock Plan. 

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

Three Months Ended September 30,

Nine Months Ended September 30,

General and administrative

$ 1,094  

$ 1,089  

Research and development

2 unchanged sentences

$ 1,740  

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.

During the nine months ended September 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 o ne 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. 

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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 and six months ended June 30, 2023 and the additional losses expected for the remainder of 2023  and cumulative net operating loss carryforwards.

three and nine months ended September 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 June 30, 2023  and 

As a result, as of September 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 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 Company recorded no income tax provision for the three and nine months ended September 30, 2023 and 2022 , respectively.

The effective tax rate for the nine months ended September 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 June 30, 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 September 30, 2023 .

Lease Obligations Payable

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,

The following summarizes quantitative information about the Company's operating leases for the three and nine months ended September 30, 2023 and 2022 , respectively (table in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Operating lease cost

Variable lease cost

I n September 2023, th e Company executed an amendment to extend the corporate office lease until August 31, 2029, with an option to renew.

The Company is required to remit base monthly rent of a pproximately $ 4,700  which will increase at an average approximate rate of 2 % 

The Company is also required to pay additional rent in the form of its pro-rata share of certain specified operating expenses of the building. 

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 June 30, 2023 and 2022 , respectively, and  $ 25,000  and $ 21,000  for the 

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

The Company recorded approximately  $ 12,000  i n sublease income from a related party for the three months ended September 30, 2023 and 2022 , respectively, and $ 37,000  and $ 32,000  for the 

nine months ended September 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 

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

Operating cash flows from operating leases w as $ 34,000  and $ 21,000 for the three months ended 

September 30, 2023 and 2022 , respectively, and $ 109,000  a nd $ 91,000 for the nine months ended September 30, 2023 and 2022 , respectively.

Licenses 

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.

MD Anderson - Total expenses related to the Company's license agreements with MD Anderson w ere $ 64,000  and $ 56,000 for the three months ended September 30, 2023 and 2022 , respectively, and $ 193,000  

and $ 189,000 for the 

nine months ended September 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 

each of the 

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 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.

(HPI) with total expenses o f $ 59,000  for e ach of the 

three months ended September 30, 2023 and 2022 , respectively, and $ 176,000 for the 

nine months ended September 30, 2023 and 2022 , respectively.

Sponsored Research Agreements - In October 2023, the Company entered into an amendment to the Sponsored Research Agreement with MD Anderson for total payments of $ 0.8  million to support the continuation of the project through December 31, 2025. 

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 $ 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.

The expenses recognized under the agreements were $ 221,000  and $ 315,000 for the three months ended September 30, 2023 and 2022 , respectively, and $ 552,000  and $ 815,000 for the 

nine months ended September 30, 2023 and 2022 , respectively.

License Terminations 

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”).

The Company was party to a sublicense agreement with 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”).

WPD is affiliated with Dr.

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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 and six  months ended June 30, 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 nine months ended September 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 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.

In addition to the subsequent events discussed elsewhere in these notes, no other subsequent events were noted as occurring after September 30, 2023 .

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

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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;

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

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

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

We are a clinical stage pharmaceutical company with a growing pipeline, including Phase 2 clinical programs for hard-to-treat cancers and viruses. We have three core technologies, each of which have had one or more drugs successfully complete a Phase 1 clinical trial (subject to publishing final Clinical Study Report), based substantially on discoveries made at and licensed from MD Anderson Cancer Center (MD Anderson) in Houston, Texas.

We are a clinical stage pharmaceutical company with a growing pipeline, including Phase 2 clinical programs for hard-to-treat cancers and viruses. We have 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 MD Anderson Cancer Center (MD Anderson) in Houston, Texas.

Three of our six drug candidates have shown human activity in clinical trials and are currently in Phase 1B/2 or Phase 2 clinical trials.

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a) Annamycin or L-Annamycin is a “next generation”

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.

anthracycline (one of the most common forms of chemotherapy), 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 to be non-cardiotoxic and has shown no cardiotoxicity in subjects treated in clinical trials to date.

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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 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 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 and primarily externally funded non-clinical research, with the potential for further studies in the near-term.

Our Clinical Trials

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This increased to six active or recently completed trials in 2022 involving Annamycin, WP1066, and WP1122.

In 2021 and 2022, there were five “right-to-try”

(or their foreign equivalent) uses of Annamycin and WP1066.

Three of the six clinical trials active in 2022 are internally funded trials of Annamycin and one is an internally funded Phase 1 clinical trial for WP1122 establishing an RP2D.

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 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.

Starting in 2021 through 2023, there have been seven "right-to-try" (or their foreign equivalent) uses of Annamycin and WP1066.

Three of the six clinical trials active in 2022 were internally funded trials of Annamycin and one was an internally funded Phase 1 clinical trial for WP1122 establishing an RP2D.

Moving into 2023 with our internally funded trials focused on Annamycin, we were actively recruiting in two Phase 1B/2 stage clinical trials and have concluded one Phase 1 trial.

We have recently concluded recruitment and treatment in one of the Phase 1B/2 trials but are still monitoring progression free survival and overall survival.

This now leaves only one Phase 1B/2 clinical trial active with regard to recruiting and treatment.

Both of these Phase 1B/2 clinical trials are open label, so we periodically announce safety and efficacy data.

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 the first half of 2024.

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.

Annamycin - A clinical trial application (CTA) in Poland for a Phase 1B/2 trial of Annamycin in combination with Cytarabine (the combination of which is referred to as AnnAraC) 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 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.

With preclinical data in mice demonstrating a 68% improvement in activity in AML with AnnAraC as compared to 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.

This trial is currently recruiting and treating subjects via 9 clinical sites throughout Poland and Italy.

Annamycin - We are currently in a Phase 1B/2 clinical trial (MB-107) using Annamycin for the treatment of soft tissue sarcoma lung metastasese (STS lung mets).

This multicenter trial is being conducted in five clinical sites throughout the US.

We have concluded recruitment and treatment but are still monitoring progression free survival and overall survival.

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.

This trial began administering drug to subjects in late 2022. 

This trial began administering drug to subjects in late 2022 and is currently recruiting and treating subjects.

WP1066 - In 2022, an investigational new drug (IND) application we filed in the US for a Phase 1 clinical trial studying WP1066 for treating glioblastoma multiforme (GBM) in adults went into effect.

Consistent with our strategy of leveraging external funding for many of our clinical trials, we intend to capitalize on external funding opportunities for investigator-initiated clinical trials in adult cancer patients in 2023.

We supplied drug product to an externally funded pediatric brain tumor trial with WP1066 up to its conclusion in February 2023.

We anticipate that clinics associated with academic institutions or other health care systems may utilize this IND to begin their own externally funded trials with WP1066.

We supplied drug product to an externally funded pediatric brain tumor trial with WP1066 up to its conclusi on in February 2023.

WP1122 - Our Phase 1a clinical trial of WP1122 in the United Kingdom for the treatment of COVID-19 (MB-301) began recruiting in 2022, and we completed the trial in late 2022, establishing an RP2D.

We are in the process of completing this trial - locking the database and finalizing a clinical study report (CSR).

This RP2D will possibly aid in future externally funded trials for the treatment of certain viruses and cancers as we look for investigator led studies.

We completed this trial, and we have issued a clinical study report (CSR).

The RP2D established in this trial may possibly aid in future externally funded trials for the treatment of certain viruses and cancers as we look for investigator led studies.

WP1122 - In 2022, we filed an IND with the FDA that then went into effect, allowing us to proceed with a clinical trial using WP1122 for the treatment of GBM.

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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.

We do not expect this externally funded COVID-19 trial to be conducted.

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

Recent Business Developments 

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Annamycin 

New Positive Independent Report of No Cardiotoxicity in Annamycin

In September 2023, we received a new independent assessment for the absence of cardiotoxicity in subjects treated with Annamycin.

We now have independent assessments covering 62 subjects that have been treated with Annamycin in four different clinical trials in the U.S.

and Europe with no evidence of cardiotoxicity.

50 of all 66 subjects treated to date (which includes the 62 subjects independently assessed) were treated above the FDA’s lifetime maximum anthracycline limit of 550 mg/m 2 , with 1 subject having been treated with 3420 mg/m 2 (or roughly six times the FDA approved lifetime anthracycline exposure) of standard anthracyclines and Annamycin with no evidence of cardiotoxicity.

Data from all subjects in our completed and all evaluable subjects in our ongoing clinical trials (a total of 62 subjects as of the most recent report) were made available to an expert in chemotherapy who is affiliated with a leading research institute in assessing chemotherapy-related cardiotoxicity.

After review of this data, the independent expert, in their most recent report, concluded that there was no evidence of cardiotoxicity.

The data made available included left ventricular ejection fraction (LVEF) as determined by echocardiograms, ECHO strain imaging, and Troponin levels.

“ECHO strain imaging”

is a method in echocardiography (medical ultrasound) for measuring regional or global deformation (contraction or beating) of the myocardium (heart muscle).

By strain rate imaging, the simultaneous function of different regions can be displayed and measured.

Cardiac health biomarkers such as blood Troponin levels are considered an indicator of potential long-term heart damage.

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).

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).

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.

regimen where Annamycin is administered with 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 .

induction therapy that is considered to be a standard of care in AML, where seven days of Cytarabine infusions are paired with three days of an approved anthracycline (typically, daunorubicin). In the first cohort 3 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 five 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).

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.

The median number of prior therapies for these 3 subjects in the first cohort was five (range of one to ten).

1 subject, 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 approximately eight months. This subject has received a second course of treatment at the direction of the treating physician and as allowed per the protocol.

The other 2 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.

4 subjects were treated in this cohort, 1 is believed to be relapsed from one or more prior therapies and 3 are believed to be refractory from up to three prior therapies. 1 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.

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.

The median number of prior therapies for the 3 evaluable subjects in the second cohort was two (range of one to three) and the median age was 67.

1 subject, who was 64 years of age at the time of enrollment into the study with one prior therapy, was preliminarily recorded as a complete response with an incomplete recovery of the bone marrow or CRi per the protocol.

This has since been deemed a CR (complete response), which has shown to be durable for approximately three months, which has allowed this subject to proceed to a bone marrow transplant.

The other 2 subjects were shown to have disease progression. Du rability of CRs is confirmed by repeat bone marrow aspirates (BMA's). 

The total CRs in the Phase 1B portion of this combination trial represent 33% (n=6).

Notably, these CRs are considered durable. The median age of these subjects was 66.

On October 2, 2023, we announced the initial subjects had been treated in the Phase 2 portion of MB-106.

The data below are as reported by the investigation sites as of November 9, 2023.

We have recruited, treated, and evaluated 3 subjects in the Phase 2 portion of the trial.

1 subject has been evaluated and determined to be a CR.

We will assess durability in the near future.

Another subject in the Phase 2 portion died from a stroke (deemed not be related to Annamycin) prior to being re-biopsied to determine disease status. The third has undergone a re-biopsy which shows zero blasts in the marrow and that data is now being assessed by the investigator.

This latest subject is not included in the chart below.

The median age of the first two subjects is 69 years (range of 69 to 70) and the median number of prior therapies for these subjects is three (both are three).

Other subjects in the Phase 2 portion of the trial are in the process of screening and treatment.

We intend to treat up to 21 subjects in this Phase 2 portion of the trial.

We may recruit an additional 3 subjects depending on recruitment.

At our rate of recruitment plus the addition of another three sites for the trial, we expect to complete recruitment by early 2024.

The total CR response rate in both Phases to date in MB-106 is 38% (n=8), and although sufficient time has not passed to assess durability for the latest of these CRs, the 2 earliest CRs have now shown durability.

The median baseline bone marrow assessments for the 3 CRs was 74.2 (range of 20 to 80). CRc is used to denote composite complete responses including CRs and CRis.

Below in Table 1 is a summary of the above responses in MB-106 and in the concluded MB-105 monotherapy trial on AML.

Table 1 – Summary of Annamycin Responses in AML Studies

Study MB-105 Monotherapy – Last Cohort at 240 mg/m 2  (RP2D)

Study MB-106 Combination Therapy – Phase 1B (Annamycin at 190-230 mg/m 2 )

Study MB-106 Combination Therapy – Phase 2 To Date (Annamycin at 230 mg/m 2 )

Study MB-106 Combination Therapy – Phase 1B/2 To Date (Annamycin at 190-230 mg/m 2 )

Annamycin – Single Agent

Ara-C + Annamycin “5+3+

Subjects To date

Total Response(s) or CRcs

Complete Response (CR) Rate

Overall Response (CRc) Rate

Median Prior Therapies (Months of Therapy))

Median Age - Years (Range)

Durability of CRs

Approximately 8 and 3 months, respectively, to date for the 2 CRs

Not Available at This Time

See Data to Left

N/A - (Not available)

For subjects receiving a full course of Annamycin

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 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.

On September 21, 2023, we announced the completion of enrollment in the Phase 2 portion of our U.S.

Phase 1B/2 clinical trial evaluating Annamycin as monotherapy for the treatment of soft tissue sarcoma lung metastases (MB107).

Subjects who had stable disease at the time of study discontinuation will continue to be followed for progression free response and overall survival. All subjects had pulmonary metastasis from soft tissue sarcoma and at least one prior therapy.

There was no limit on how many prior therapies a subject could have prior to entering this study.

Most subjects were heavily treated with other therapies prior to entering our trial with our treatment representing the fourth median therapy for all subjects in the Phase 1B and Phase 2 portion of the trial (range of two to twelve).

As of November 6, 2023, as reported by the investigation sites, most subjects in Phase 2 are alive so overall survival data are not available at this time.

Below in Table 2 is a summary of progression free survival for evaluable subjects, as discussed further below, by groupings and median overall survival for all subjects evaluable in Phase 1B:

Table 2 

MB-107 Summary as of November 9, 2023

Free Survival

with 2 or Fewer

Prior Therapies

( <  2PT)

All Subjects <

330 mg/m 2  &

Median Prior Therapies (Range)

Median O/S mos

Overall survival (OS);

Not available for Phase 2 subjects at this time, as data continues to develop (N/A)

In the Phase 1B portion of the trial subjects were treated from 210 mg/m 2 to 390 mg/m 2 .

In the Phase 2 portion of the trial, an exploratory RP2D of 360 mg/m 2  

was initiated for the first 3 subjects and a final RP2D of 330 mg/m 2 was determined and 14 subjects were treated.

Including the 3 subjects treated at the same dose in the Phase 1B portion of this trial, this equates to 17 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, 32 subjects were treated with at least one cycle in this study and 27 received at least two cycles of treatment.

For the Phase 2 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.

Once all data are collected, we plan a more in-depth presentation of the topline data for this study in 2024. The above information in Table 2 was shared with our investigators in a meeting held during the Connective Tissue Oncology Society Annual Meeting (CTOS) in Dublin, Ireland in early November 2023.

Based on the data as shown in Table 2 above, we believe the following observations are in order:

Very few trials for subjects with such advanced (median = 20 months from initial diagnosis;

all with lung metastases in MB-107) disease progression have been published, making comparisons to historical performance difficult.

With this in mind, median OS for subjects in the Phase 1B portion of this study is currently at 11 months, which we believe is notable.

Overall median Progression Free Survival (PFS) for the trial is 2.2 months (range 1.2 to 6.9 months) with 7 subjects discontinuing early due to thrombocytopenia.

5 of these subjects negatively impacted this median PFS, which we believe was exacerbated by the extreme advanced stage of the patients and their being weakened by prior therapies.

Median PFS improved to 3.4 months for lower doses of Annamycin ( ≤

330 mg/m 2 ) versus the maximum dose used in the trial and for subjects who had fewer prior therapies (<2).

These data suggest to us that Annamycin may be best positioned as a first line alternative to the current standard of care with an anthracycline and where the combination of high patient response rate, significant improvement in OS and the absence of cardiotoxicity may improve patient outcomes.

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

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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.

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 near the end of 2023 or in early 2024.

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

For this study, we have submitted the final clinical study report in late October 2023.

Other Trials and Publications 

Presented Poster at the 2023 Connective Tissue Oncology Society (CTOS) Annual Meeting

We presented preliminary efficacy findings from the Phase 2 portion of our ongoing MB-107 in an abstract titled, “A Phase 1b/2 Study of Liposomal Annamycin (ANN) in Subjects with Previously Treated Soft-Tissue Sarcomas (STS) with Pulmonary Metastases,”

was presented by Brian Andrew Van Tine, MD, PhD, Professor of Medicine, Washington University School of Medicine in a poster presentation at the 2023 CTOS Annual Meeting held November 1-4, 2023 in Dublin, Ireland.

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.

There will be three subjects per cohort with the first cohort treating subjects with 35 mg/m 2 of Annamycin per week (3 weeks on and 1 week off per cycle).

This trial has enrolled and begun treatment with subjects in the Phase 1B portion of the study.

There will be 3 subjects per cohort with the first cohort treating subjects with 35 mg/m 2 of Annamycin per week (3 weeks on and 1 week off per cycle).

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

We expect a detailed update on this trial in early 2024.

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

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Condensed Consolidated Statements of Operations

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses:

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Interest income, net

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

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

Research and Development Expense.

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.

Research and development (R&D) expense was $3.3 million and $6.0  million for the three months ended September 30, 2023 and 2022 , respectively.

The decrease 

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General and administrative e xpense was $2.6 million and 

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

$3.1  million for the three months ended September 30, 2023 and 2022 , respectively.

The decrease of 

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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 recorded a net gain of $0.001 million in the third quarter of 2023 as compared to a net gain of $0.4 million in the third quarter of 2022, for the change in fair value on revaluation of our warrant liability associated with our warrants issued in conjunction with certain of our previous 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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 Interest income, ne t increased by approximately $0.3 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

Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 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 

$0.8 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.

$12.9  million and 

$14.8  million for the nine months ended September 30, 2023 and 2022 , respectively.

The decrease  of 

$1.9 million is mainly related t o the timing of costs incurred for clinical trials and timing of sponsored research payments.

These decreases were slightly offset by 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.

$7.8  million and 

$8.7  million for the nine months ended September 30, 2023 and 2022 , respectively.

The decrease of 

$0.9  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 $0.08 

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.

We recorded a net gain of 

$0.08  million in th e nine months ended September 30, 2023 as compared to a net gain of $1.2 million in the nine months ended September 30, 2022, for the change in fair value on revaluation of our warrant liability associated with our warrants issued in conjunction with certain of our previous stock offerings.

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

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash used in operating activities

Net cash used in investing activities

Net cash (used in) provided by financing activities

Net cash provided by (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 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.

As of September 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 $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 used in operations was $18.7 million for the nine months ended September 30, 2023 .

This $1.7 million decrease over the prior year period of $20.4 million was primarily due to an overall decrease in expenses, as well as 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.

During the nine months ended September 30, 2023, utilizing the Lincoln Park Equity Line, we issue d 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 September 30, 2023 will be sufficient to fund our planned operations, which include our current Phase 1B/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.

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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.

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. 

We expensed approximate ly $0.4 million and $1.1 million in related general and administrative fees and expenses for the three months ended 

September 30, 2023 and 2022 , respectively, and $1.4  millio n and $1.9 million for the nine months ended September 30, 2023 and 2022, respectively. 

Critical Accounting Policies and Significant Judgments and Estimates

5 unchanged sentences

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