What changed in this filing

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Item 1. Financial Statements

2024-11-08 compared with 2024-08-13 · 152 added, 80 removed, 281 unchanged (45% of the section changed)

3 unchanged sentences

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

September 30,

Current assets:

18 unchanged sentences

Total liabilities

15,915 12,144

Commitments and contingencies (Note 7)

4 unchanged sentences

100,000,000 shares authorized;

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

3,001,895 and 2,227,516 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

158,957 157,653

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Accumulated deficit

1 unchanged sentence

Total stockholders’ equity

17,705 26,073

Total liabilities and stockholders’ equity

4 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:

4 unchanged sentences

Loss from operations

Other income:

Gain from change in fair value of warrant liability

Other income (loss):

(Loss) gain from change in fair value of warrant liability

Transaction costs allocated to warrant liabilities

Loss on issuance of warrant liabilities

Other income, net

2 unchanged sentences

Weighted average common shares outstanding, basic and diluted

Other comprehensive loss:

Other comprehensive income (loss):

Foreign currency translation

4 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

4 unchanged sentences

Change in fair value of warrant liability

Loss on issuance of warrant liabilities

Operating lease, net

Transaction costs allocated to warrant liabilities

Changes in operating assets and liabilities:

8 unchanged sentences

Payment of tax liability for vested restricted stock units

Proceeds from sale of common stock, net of issuance costs

Net cash (used in) provided by financing activities

Proceeds from sale of common stock, pre-funded and common warrants, net of issuance costs

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

2 unchanged sentences

Cash and cash equivalents, - end of period

Supplemental disclosures of cash flow information:

Non-cash investing and financing activities:

Transaction costs related to the sale of common stock, pre-funded and common warrants

Transaction costs included in accounts payable and accrued liabilities

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands, except for shares)

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Par Value Amount

15 unchanged sentences

Balance, June 30, 2024

Six Months Ended June 30, 2023

Issued for cash - sale of common stock, pre-funded and common warrants

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, September 30, 2024

Nine Months Ended September 30, 2023

Common Stock Accumulated

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)

7,588 — ( 21 ) — — ( 21 )

Stock-based compensation

— — 513 — — 513

Consolidated net loss

— — — ( 5,976 ) — ( 5,976 )

Cumulative translation adjustment

— — — — ( 1 ) ( 1 )

Balance, June 30, 2023

1,985,957 $ 30 $ 155,957 $ ( 115,726 ) $ 7 $ 40,268

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

1,409 — ( 4 ) — — ( 4 )

Stock-based compensation

— — 493 — — 493

Consolidated net loss

— — — ( 5,609 ) — ( 5,609 )

Cumulative translation adjustment

— — — — ( 10 ) ( 10 )

Balance, September 30, 2023

1,987,366 $ 30 $ 156,446 $ ( 121,335 ) $ ( 3 ) $ 35,138

See accompanying notes to condensed consolidated financial statements.

5 unchanged sentences

The Company has three core technologies, each of which have had one or more drugs successfully complete a Phase 1 clinical trial, based substantially on discoveries made at and licensed from MD Anderson Cancer Center (MD Anderson) in Houston, Texas.

In July 2024 the Company’s lead program Annamycin completed a Phase 2 trial and has held it End-of-Phase 1/2 meeting with the Food and Drug Administration in the US and in August 2024 announced the preparations for a Phase 3 trial.

The Company has two wholly owned subsidiaries, Moleculin Australia Pty.

34 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 six months ended June 30, 2024 .

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

Intangible Assets – Intangible assets with finite lives are amortized using the straight-line method over their estimated period of benefit.

Acquired intangible assets identified as in-process research and development (IPR&D) assets, are considered indefinite lived until the completion or abandonment of the associated research and development efforts.

If the associated research and development effort is abandoned, the related IPR&D assets will be written-off and the Company will record a noncash impairment loss on its statements of operations.

For those compounds that reach commercialization, the IPR&D assets will be amortized over their estimated useful lives.

Intangible assets are tested for impairment on an annual basis, which was completed as of September 30, 2024, and between annual tests if indicators of potential impairment exist, using a fair-value-based approach.

The Company evaluates the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists.

No impairments of intangible assets have been identified during any of the periods presented.

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 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.

As of September 30, 2024 , the Company had an accumulated defici t of $ 151.5 million since inception and had not yet generated any revenues from operations.

Additionally, management anticipates that its cash on hand of $ 9.4 million a s of September 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.

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 expensed approximately $ 0.1 million and $ 0.4 million in related general and administrative fees and expenses for the three months ended September 30, 2024 and 2023 , respectively, and $ 0.2 million and $ 1.4 milli on for the nine months ended September 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.

3 unchanged sentences

The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1 ) and lowest priority to unobservable inputs (Level 3 ).

Assets and liabilities recorded in the balance sheets at fair value are categorized based on a hierarchy of inputs as follows:

Assets and liabilities recorded in the condensed consolidated balance sheets at fair value are categorized based on a hierarchy of inputs as follows:

Level 1 – Unadjusted quoted prices in active markets of identical assets or liabilities.

2 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, 2024 and December 31, 2023 (table in thousands):

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

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

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

$ 9,932 $ — $ — $ 9,932

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

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

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

Three Months Ended June 30, 2024

Three Months Ended September 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 .

Issuances of warrants

Warrant amendment

Change in fair value - net

Balance, September 30, 2024

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Warrant Liability Long-Term

Balance, December 31, 2023

Issuances of warrants

Warrant amendment

Change in fair value - net

Balance, June 30, 2024

Balance, September 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 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.

For the three months ended September 30, 2024 and 2023 , approximatel y 4.8 million and 0.6 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, 2024 and 2023 , approximately 2.7 million and 0.5 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.

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

Recent Accounting Pronouncements - In November 2024, FASB issued ASU 2024 - 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Disaggregation of Income Statement Expenses, which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses.

The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The amendments should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements.

The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements and related disclosures, but expects additional disclosures upon adoption.

There are no other 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):

June 30, 2024

September 30, 2024

December 31, 2023

7 unchanged sentences

$ 3,043 $ 4,317

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.

Additionally, accounts payable inclu des $ 20,000 and $ 67,000 as of September 30, 2024 and December 31, 2023 , respectively, for related party payables.

Warrants and Equity

2024 Warrant and Stock Issuances

In August 2024, the Company entered into a securities purchase agreement with an institutional investor for the sale by the Company of 283,000 shares of common stock, and 2,183,368 pre-funded warrants to purchase shares of common stock, series A warrants to purchase up to 2,466,368 shares of common stock, series B warrants to purchase up to 2,466,368 shares of common stock, and placement agent warrants.

The combined purchase price for the securities was $ 2.23 per share of common stock (or pre-funded warrant in lieu thereof).

Each pre-funded warrant is exercisable for one share of common stock at an exercise price of $ 0.001 per share.

The pre-funded warrants are exercisable immediately and may be exercised at any time until all of the pre-funded warrants are exercised in full, subject to the beneficial ownership limitation.

Each common warrant has an exercise price of $ 2.23 per share and will be exercisable beginning on the effective date of shareholder approval.

The series A warrants expire on the earlier of (i) two years from the initial exercise date, or (ii) 60 days from the Company's public announcement that it has achieved the series A milestone event.

The series B warrants expire on the earlier of (i) five years from the initial exercise date, or (ii) six months from the Company's public announcement that it has achieved the series B milestone event.

The series A milestone event means the Company releases interim data for the first subject group from the MIRACLE trial whereby the complete remission rate for either dose of the Company's study drug is greater than placebo;

and series B milestone event means the Company releases final topline data from the MIRACLE trial and documented a statistically significant improvement in the primary efficacy endpoint.

In addition, in August 2024, the Company entered into a warrant amendment agreement, pursuant to which the Company agreed that effective upon closing of the offering, and subject to shareholder approval, to amend 895,834 existing warrants originally issued on December 26, 2023 at an exercise price of $ 9.60 per share and a termination date of February 14, 2029, so that the amended warrants would have a reduced exercise price of $ 2.23 per share and would expire five years from the date of shareholder approval.

The Company calculated the valuation of the warrant amendment immediately prior to the offering, as well as the valuation of the warrant amendment with the repriced terms, and a 50% probability of obtaining shareholder approval.

The loss on modification of the warrants of $0.4 million was recorded as a loss on issuance of warrant liabilities in the three and nine months ended September 30, 2024.

The Company also considered a 50% probability of obtaining shareholder approval in the valuation for the August 2024 warrants in the three and nine months ended September 30, 2024.

In October 2024, the Company’s shareholders approved the issuance of both the August 2024 warrants, as well as the warrant amendment.

The Company received gross proceeds of $ 5.5 million, before deducting the placement agent's fees and other offering expenses payable by the Company.

Proceeds of offerings are allocated between common shares and warrants first by allocating to the warrants classified as a liability based on their fair value and then allocating the residual to the equity instruments, which would include pre-funded warrants.

As the fair value of the liability classified warrants in the August 2024 offering exceeded the total proceeds, no consideration was allocated to the Common Shares or Pre-Funded Warrants.

The full proceeds of the August 2024 offering were recorded to warrant liabilities, with an initial liability of $ 6.1 million, and a loss on initial recognition of $ 0.8 million.

Transaction costs related to the offering were correspondingly fully allocated to warrant liabilities, and $ 1.0 million in related transaction costs were expensed during the three and nine months ended September 30, 2024 .

Lincoln Park Equity Line

The Company did not utilize the 2021 Lincoln Park purchase agreement during the nine months ended September 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 nine months ended September 30, 2024 , the Company issued 20,485 shares of common stock related to the vesting of restricted stock units.

Liability Classified Warrants

3 unchanged sentences

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

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

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

Certain assumptions, including the expected term, are subjective and require judgment to develop.

As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our warrant liability could be materially different.

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

June 30, 2024

September 30, 2024

December 31, 2023

6 unchanged sentences

Dividend yield

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

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

Number of Shares

7 unchanged sentences

1,082,895 $ 9.60 $ 157.50 $ 24.32 5.1

5,056,054 $ 2.23 $ 2.79 $ 2.24 2.9

Expired warrants

( 75,909 ) $ 99.00 $ 99.00 $ 99.00 —

Balance at June 30, 2024

Balance at September 30, 2024

6,063,040 $ 2.23 $ 94.50 $ 12.90 3.1

Exercisable at June 30, 2024

Exercisable at September 30, 2024

1,006,986 $ 2.23 $ 94.50 $ 8.75 4.1

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.

For a summary of the changes in fair value associated with the Company's warrant liability for the nine months ended September 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 June 30, 2024 , the Company had 63,105 eq uity classified warrants outstanding an d 40,658 w arrants were exercisable.

At September 30, 2024 , the Company had 2,089,105 equity classified warrants outstanding (including the remaining August 2024 pre-funded warrants) an d 2,066,894 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 $ 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 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

Stock Based Compensation

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 116,667 shares and 133,334 shares, respectively, such that 366,667 total shares may be issued under the Plan.

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,

As of September 30, 2024 , there wer e 2,853 shar es remaining to be issued under the 2015 Stock Plan.

In October 2024, the Company's shareholders approved the 2024 Stock Plan, which authorizes a total of 1,000,000 shares of common stock, which will replace the 2015 Stock Plan.

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

Three Months Ended September 30,

Nine Months Ended September 30,

General and administrative

4 unchanged sentences

$ 353 $ 493 $ 1,299 $ 1,505

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.

The Company recorded stock compensation expense for the equity classified warrants relating to non-employee consulting agreements o f $ 26,000 a nd $ 50,000 for the three months ended September 30, 2024 and 2023 , respectively, and $ 94,000 a nd $ 142,000 for the nine months ended September 30, 2024 and 2023 , respectively, which are included in the table above.

At September 30, 2024 , there was $ 283,000 of unrecognized stock compensation expense related to the Company's equity classified warrants.

In October and November 2024, the Company granted 545,000 stock options, 267,500 shares of restricted stock units, 73,334 shares of performance based restricted stock units, and 36,000 in warrants to employees and contractors.

These stock options have an exercise price ranging from $ 2.45 to $ 2.54 and vest over a one -to- four year period from the grant date on a straight-line basis over the requisite service period.

The restricted stock units vest annually in four equal installments.

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

As a result, as of September 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 nine months ended September 30, 2024 and 2023 , respectively.

The effective tax rate for the nine months ended September 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 June 30, 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 September 30, 2024 .

Lease Obligations Payable

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,

The following summarizes quantitative information about the Company's operating leases for the three and nine months ended September 30, 2024 and 2023 , respectively (table in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Operating lease cost

6 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 June 30, 2024 and 2023 , respectively, and $ 24,000 and $ 25,000 for the six months ended June 30, 2024 and 2023 .

The Company recorded approximately $ 12,000 i n sublease income from a related party for the three months ended September 30, 2024 and 2023 , and $ 37,000 for the nine months ended September 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 $ 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 .

Operating cash flows from operating leases w as $ 39,000 and $ 34,000 for the three months ended September 30, 2024 and 2023 , respectively, and $ 107,000 and $ 109,000 for the nine months ended September 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 September 30, 2024 and 2023 , respectively, and $ 180,000 and $ 193,000 for the nine months ended September 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 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 .

(HPI) with total expenses o f $ 59,000 for e ach of the three months ended September 30, 2024 and 2023 , respectively, and $ 176,000 for the nine months ended September 30, 2024 and 2023 , respectively.

Sponsored Research Agreements - The expenses recognized under the agreements were $ 767,000 and $ 221,000 for the three months ended September 30, 2024 and 2023 , respectively, and $ 1,300,000 and $ 552,000 for the nine months ended September 30, 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 September 30, 2024 .

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