What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-13 compared with 2024-05-10 · 95 added, 70 removed, 266 unchanged (38% of the section changed)

29 unchanged sentences

100,000,000 shares authorized;

2,311,536 and 2,227,516 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

2,560,785 and 2,227,516 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

158,605 157,653

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Accumulated deficit

8 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:

17 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

10 unchanged sentences

Net cash used in operating activities

Cash flows from investing activities:

Purchase of fixed assets

Net cash used in investing activities

Cash flows from financing activities:

Payment of tax liability for vested restricted stock units

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

6 unchanged sentences

(in thousands, except for shares)

Three Months Ended March 31, 2024

Common Stock Accumulated

Six Months Ended June 30, 2024

Par Value Amount

4 unchanged sentences

Balance, December 31, 2023

2,227,516 $ 33 $ 157,653 $ ( 131,604 ) $ ( 9 ) $ 26,073

Issuance of common stock in connection with Consulting Agreements

6,834 — 37 — — 37

Reverse stock split

77,186 ( 31 ) 31 — — —

Stock-based compensation

— — 456 — — 456

— — — ( 4,970 ) — ( 4,970 )

Cumulative translation adjustment

— — — — ( 9 ) ( 9 )

Balance, March 31, 2024

2,311,536 $ 2 $ 158,177 $ ( 136,574 ) $ ( 18 ) $ 21,587

Three Months Ended March 31, 2023

Common Stock Accumulated

Warrants exercised

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, 2024

Six Months Ended June 30, 2023

Par Value Amount

4 unchanged sentences

Balance, December 31, 2022

1,908,522 $ 29 $ 153,985 $ ( 101,835 ) $ 12 $ 52,191

Issuance of common stock with equity purchase agreement

10,026 — 141 — — 141

Common stock issued for license rights

54,808 1 771 — — 772

Stock-based compensation

— — 499 — — 499

— — — ( 7,915 ) — ( 7,915 )

Cumulative translation adjustment

— — — — ( 4 ) ( 4 )

Balance, March 31, 2023

1,973,356 $ 30 $ 155,396 $ ( 109,750 ) $ 8 $ 45,684

Issuance of common stock in connection 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

See accompanying notes to condensed consolidated financial statements.

11 unchanged sentences

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.

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

In 2019, the Company sublicensed its technologies to Animal Life Sciences, Inc.

27 unchanged sentences

Significant Accounting Policies - The Company's significant accounting policies are described in Note 2, Basis of Presentation, principles of consolidation and significant accounting policies , to the consolidated financial statements included in the Company's Annual Report on Form 10 -K for the year ended December 31, 2023 .

There have been no material changes to the significant accounting policies during the three months ended March 31, 2024 .

There have been no material changes to the significant accounting policies during the six months ended June 30, 2024 .

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.

7 unchanged sentences

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

Intangible Assets – The company evaluates the recoverability of intangible assets periodically and takes into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists.

Due to the sustained decline in the Company’s stock price, the Company engaged a third -party valuation firm to complete a quantitative assessment of in-process research and development (IPR&D) asset as of June 30, 2024.

We performed our impairment test by comparing the carrying value of the IPR&D asset to its estimated fair value, which was determined by the income approach, using a discounted cash flow model.

Based on our quantitative assessment, the carrying value of the IPR&D asset did not exceed its estimated fair value, noting no impairment.

Going Concern and Liquidity - 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.

As of March 31, 2024 , the Company had an accumulated defici t of $ 136.6 million since inception and had not yet generated any revenues from operations.

Additionally, management anticipates that its cash on hand of $ 16.8 million a s of March 31, 2024 is not sufficient to fund its planned operations for a period of at least one year from when these consolidated financial statements are issued.

As of June 30, 2024 , the Company had an accumulated defici t of $ 140.9 million since inception and had not yet generated any revenues from operations.

Additionally, management anticipates that its cash on hand of $ 10.8 million a s of June 30, 2024 is not sufficient to fund its planned operations for a period of at least one year from when these consolidated financial statements are issued.

These factors raise substantial doubt regarding the Company's ability to continue as a going concern.

8 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, 2024 and 2023 , the Company expensed approximately $ 0.1 million and $ 0.5 milli on, respectively, in related general and administrative fees and expenses.

The company expensed approximately $ 0.1 million and $ 0.4 million in related general and administrative fees and expenses for the three months ended June 30, 2024 and 2023 , respectively, and $ 0.1 million and $ 0.9 milli on for the six months ended June 30, 2024 and 2023 , 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 (in thousands):

June 30, 2024

December 31, 2023

Prepaid sponsored research

$ 1,277 $ 1,515

Prepaid insurance

Vendor prepayments and deposits

Non-trade receivables

Related party receivables

Total prepaid expenses and other current assets

$ 2,886 $ 2,723

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

8 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 March 31, 2024 and December 31, 2023 (table in thousands):

Fair value of warrant liability as of March 31, 2024:

The following table provides the financial liabilities reported at fair value and measured on a recurring basis at June 30, 2024 and December 31, 2023 (table in thousands):

Fair value of warrant liability as of June 30, 2024:

$ 1,704 $ — $ — $ 1,704

1 unchanged sentence

$ 4,855 $ — $ — $ 4,855

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.

The table below of Level 3 liabilities (table in thousands) begins with the valuation as of the beginning of the second quarter and then is adjusted for changes in fair value that occurred during the second quarter.

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

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Warrant Liability Long-Term

Balance, March 31, 2024

Change in fair value - net

Balance, June 30, 2024

The table below of Level 3 liabilities (table in thousands) begins with the valuation as of December 31, 2023 and then is adjusted for changes in fair value that occurred during the six months ended June 30, 2024 .

Six Months Ended June 30, 2024

Warrant Liability Long-Term

Balance, December 31, 2023

Change in fair value - net

Balance, March 31, 2024

Balance, June 30, 2024

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, 2024 and 2023 , approximatel y 1.7 million and 0.4 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 and six months ended June 30, 2024 and 2023 , approximatel y 1.6 million and 0.4 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.

See Note 8 - Subsequent Events.

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

1 unchanged sentence

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

March 31, 2024

June 30, 2024

December 31, 2023

Accrued research and development

$ 1,565 $ 2,845

Accrued payroll and bonuses

$ 1,157 $ 765

Accrued research and development

Accrued legal, regulatory, professional and other

3 unchanged sentences

$ 2,913 $ 4,317

Additionally, accounts payable inclu des $ 74,000 a nd $ 67,000 as of March 31, 2024 and December 31, 2023 , respectively, for related party payables.

Additionally, accounts payable inclu des $ 20,000 a nd $ 67,000 as of June 30, 2024 and December 31, 2023 , 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:

March 31, 2024

June 30, 2024

December 31, 2023

6 unchanged sentences

Dividend yield

A summary of the Company's liability classified warrant activity during the three months ended March 31, 2024 and related information follows:

A summary of the Company's liability classified warrant activity during the six months ended June 30, 2024 and related information follows:

Number of Shares

9 unchanged sentences

( 75,909 ) $ 99.00 $ 99.00 $ 99.00 —

Balance at March 31, 2024

Balance at June 30, 2024

1,006,986 $ 9.60 $ 94.50 $ — 4.4

Exercisable at March 31, 2024

Exercisable at June 30, 2024

1,006,986 $ 9.60 $ 94.50 $ 15.31 4.4

For a summary of the changes in fair value associated with the Company's warrant liability for the three months ended March 31, 2024 , see Note 2 - Basis of presentation, principles of consolidation and significant accounting policies - Fair Value of Financial Instruments.

For a summary of the changes in fair value associated with the Company's warrant liability for the six months ended June 30, 2024 , see Note 2 - Basis of presentation, principles of consolidation and significant accounting policies - Fair Value of Financial Instruments.

Equity Classified Warrants

1 unchanged sentence

The warrants vest annually over four years while services are being performed.

At March 31, 2024 , the Company had 292,611 eq uity classified warrants outstanding an d 266,591 w arrants were exercisable.

At June 30, 2024 , the Company had 63,105 eq uity classified warrants outstanding an d 40,658 w arrants were exercisable.

At December 31, 2023 , the Company had 289,276 equity classified warrants outstanding and 266,350 warrants were exercisable.

The Company recorded stock compensation expense for the non-employee consulting agreements o f $ 34,000 a nd $ 46,000 for the three months ended March 31, 2024 and 2023 , respectively.

At March 31, 2024 , there was $ 344,000 of unrecognized stock compensation expense related to the Company's equity classified warrants.

The Company recorded stock compensation expense for the non-employee consulting agreements o f $ 35,000 a nd $ 46,000 for the three months ended June 30, 2024 and 2023 , respectively, and $ 68,000 a nd $ 92,000 for the six months ended June 30, 2024 and 2023 , respectively.

At June 30, 2024 , there was $ 309,000 of unrecognized stock compensation expense related to the Company's equity classified warrants.

Lincoln Park Equity Line

The Company did not utilize the 2021 Lincoln Park purchase agreement during the three months ended March 31, 2024 .

The 2021 Lincoln Park Agreement, which h as $ 19.8 mi llion available as of March 31, 2024 , terminates on July 1, 2024.

The Company is in discussions with Lincoln Park Capital to effect the extension of this agreement.

The Company intends to seek an extension of this agreement prior to termination, however no agreement has been reached as of the date these unaudited consolidated financial statements were issued.

In the December 2023 Offering, the Company agreed not to utilize the Lincoln Park Agreement or any such extension thereof, until after June 26, 2024.

The Company did not utilize the 2021 Lincoln Park purchase agreement during the six months ended June 30, 2024 .

The 2021 Lincoln Park Agreement terminated in June 2024.

Other Components of Equity

In March 2024, the Company issued 6,834 shares of common stock to consultants in exchange for services to be provided.

In addition, during the six months ended June 30, 2024 , the Company issued 19,743 shares of common stock related to the vesting of restricted stock units.

Stock-Based Compensation and Outstanding Awards

1 unchanged sentence

In May 2023 and 2022, the 2015 Stock Plan (the Plan) was amended to authorize an additional 116,667 shares and 133,334 shares, respectively, such that 366,667 total shares may be issued under the Plan.

As of March 31, 2024 , there wer e 2,053 shar es remaining to be issued under the 2015 Stock Plan.

Stock-based compensation expense for the three months ended March 31, 2024 and 2023 , respectively, is as follows (table in thousands):

Three Months Ended March 31,

As of June 30, 2024 , there wer e 1,053 shar es remaining to be issued under the 2015 Stock Plan.

Stock-based compensation expense for the three and six months ended June 30, 2024 and 2023 , respectively, is as follows (table in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

General and administrative

$ 340 $ 379 $ 721 $ 748

Research and development

113 134 225 264

Total stock-based compensation expense

On May 8, 2024 the Company issued 1,000 options to purchase the company stock under the 2015 Stock Plan each to two Science Advisory Board members.

$ 453 $ 513 $ 946 $ 1,012

On May 8, 2024 the Company issued 1,000 options to purchase the company stock under the 2015 Stock Plan to a Science Advisory Board member.

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

The Company does not expect to pay any significant federal, state, or foreign income taxes in 2024 as a result of the losses recorded during the three months ended March 31, 2024 and the additional losses expected for the remainder of 2024 and cumulative net operating loss carryforwards.

The Company does not expect to pay any significant federal, state, or foreign income taxes in 2024 as a result of the losses recorded during the three and six months ended June 30, 2024 and the additional losses expected for the remainder of 2024 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, 2024 and December 31, 2023 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, 2024 and 2023 , respectively.

The effective tax rate for the three months ended March 31, 2024 and 2023 is nil.

As a result, as of June 30, 2024 and December 31, 2023 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, 2024 and 2023 , respectively.

The effective tax rate for the six months ended June 30, 2024 and 2023 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.

2 unchanged sentences

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, 2024 .

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, 2024 .

Lease Obligations Payable

The following summarizes quantitative information about the Company's operating leases for the three months ended March 31, 2024 and 2023 , 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, 2024 and 2023 , respectively (table in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Operating lease cost

$ 38 $ 33 $ 75 $ 65

Variable lease cost

$ 45 $ 40 $ 85 $ 79

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.

2 unchanged sentences

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 i n sublease income from a related party for the three months ended March 31, 2024 and 2023 , respectively.

The Company recorded approximately $ 12,000 i n sublease income from a related party for the three months ended June 30, 2024 and 2023 , respectively, and $ 24,000 and $ 25,000 for the six months ended June 30, 2024 and 2023 .

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 $ 29,000 and $ 38,000 for the three months ended March 31, 2024 and 2023 , respectively .

MD Anderson - Total expenses related to the Company's license agreements with MD Anderson w ere $ 54,000 and $ 64,000 for the three months ended March 31, 2024 and 2023 , respectively .

Operating cash flows from operating leases w as $ 38,000 for the three months ended June 30, 2024 and 2023 , respectively, and $ 68,000 and $ 75,000 for the six months ended June 30, 2024 and 2023 , respectively .

MD Anderson - Total expenses related to the Company's license agreements with MD Anderson w ere $ 63,000 and $ 64,000 for the three months ended June 30, 2024 and 2023 , respectively, and $ 117,000 and $ 129,000 for the six months ended June 30, 2024 and 2023 , respectively .

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

(HPI) with total expenses o f $ 59,000 for e ach of the three months ended March 31, 2024 and 2023 , respectively.

Sponsored Research Agreements - The expenses recognized under the agreements were $ 156,000 and $ 155,000 for the three months ended March 31, 2024 and 2023 , respectively .

Subsequent Events

In addition to the subsequent events discussed elsewhere in these notes, no other subsequent events were noted as occurring after March 31, 2024 .

(HPI) with total expenses o f $ 59,000 for e ach of the three months ended June 30, 2024 and 2023 , respectively, and $ 117,000 for the six months ended June 30, 2024 and 2023 , respectively.

Sponsored Research Agreements - The expenses recognized under the agreements were $ 377,000 and $ 176,000 for the three months ended June 30, 2024 and 2023 , respectively, and $ 533,000 and $ 331,000 for the six months ended June 30, 2024 and 2023 , respectively .

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