What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-08 compared with 2024-08-13 · 120 added, 61 removed, 178 unchanged (50% of the section changed)

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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 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;

World-wide events including the wars in Ukraine and in the Middle East, 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 and 3 clinical programs for hard-to-treat cancers and viruses.

We are a Phase 3 clinical stage pharmaceutical company with a portfolio of technologies 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 the University of Texas 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 or have been in Phase 1B/2 or Phase 2 clinical trials.

Since our inception and as of March 2024, our drugs have completed, are currently in, or have been permitted to proceed in, thirteen clinical trials.

Annamycin is our lead molecule and is in three Phase 1B/2 clinical trials - one for treating Acute Myeloid Leukemia (AML) and two for treating Soft Tissue Sarcoma metastasized to the lungs (STS lung metastases, STS lung mets, or Advanced STS).

Since our inception, our drugs have completed, are currently in, or have been permitted to proceed in, fourteen clinical trials.

Annamycin is our lead molecule and we have recently concluded one Phase 1B/2 clinical trial for treating Acute Myeloid Leukemia (AML) and are embarking on a Phase 3 clinical trial for the treatment of AML, which we believe will be pivotal.

Annamycin is also in two Phase 1B/2 clinical trials for treating Soft Tissue Sarcoma metastasized to the lungs (STS lung metastases, STS lung mets, or Advanced STS).

One of our core management beliefs is that anthracyclines represent the most important treatment for AML and Advanced STS, and we believe Annamycin may, for the first time ever, allow a majority of these patients to benefit from this treatment, mainly due to its lack of cardiotoxicity (which is found in currently prescribed anthracyclines) and its ability to avoid multidrug resistance mechanisms.

This belief, coupled with our limited resources, leads us to currently focus mainly on the development of Annamycin.

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a) Annamycin or L-Annamycin is a “next generation” anthracycline (one of the most widely used classes 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 our clinical trials to date.

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

Annamycin was designed to avoid multidrug resistance and to be non-cardiotoxic and, with intensive cardiac monitoring, has shown no cardiotoxicity in subjects treated in our four Annamycin clinical trials to date.

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

Annamycin has demonstrated efficacy in two of its Phase 1B/2 trials in subjects with AML and Advanced STS.

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As part of our Annamycin clinical trials, we have engaged an independent expert to assess cardiotoxicity associated with chemotherapy at the Cleveland Clinic (Expert or Independent Expert).

The data made available to the Expert includes left ventricular ejection fraction (LVEF) as determined by echocardiograms, and ECHO strain imaging, as well as Troponin levels (a biochemical marker of acute heart damage).

The data made available to the Expert include left ventricular ejection fraction (LVEF) as determined by echocardiograms, and ECHO strain imaging, as well as serum Troponin levels (a biochemical marker of acute heart damage).

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

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In the case of Annamycin, our unique use of lipid technology enables improved tissue/organ distribution, and as demonstrated in multiple clinical trials, dramatically reduced toxicity, including cardiotoxicity.

Annamycin has composition of matter patent protection through 2040.

b) Our WP1066 Portfolio includes WP1066, WP1193 and WP1220, three of several Immune/Transcription Modulators in the portfolio designed to inhibit p-STAT3 (phosphorylated signal transducer and activator of transcription) among other transcription factors associated with tumor activity.

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Below are recent business developments.

Phase 3 MIRACLE Trial

We are in the process of evaluating and visiting potential sites for our Phase 3 pivotal trial for the treatment of AML patients who are refractory to or relapsed after induction therapy (R/R AML) with Annamycin in combination with Cytarabine (also known as “Ara-C” and for which the combination of Annamycin and Ara-C is referred to as “AnnAraC”).

This Phase 3 “MIRACLE” trial (derived from (M)olecul(i)n (R)/(r) AML (A)nnAraC (Cl)inical (E)valuation) will be a global trial.

We plan to focus on sites in the North America, Europe, Eastern Europe, Western Asia, and MENA (Middle East and Africa) for the initial Part A of MIRACLE.

Our initial target will be approximate ly 45 sit es.

We expect that this will enable the enrollment of approximately 45 subjects by the third quarter of 2025 and approximately 90 subjects by the second half of 2026.

The data may also be unblinded after the initial 45 subjects and, as currently planned, the data will be unblinded after approximately 90 subjects complete their efficacy analyses.

We believe that we will have the data for approximately the first 90 subjects by the second half of 2026.

The trial is designed to enable the review of interim analyses for safety and efficacy upon reaching these enrollment milestones.

We held a conference call on August 6, 2024, along with Dr.

Michael Andreeff, a member of our Science Advisory Board, to discuss the results of the most recent meeting with the FDA and the plans for the MIRACLE trial.

Michael Andreeff, a member of our Science Advisory Board, to discuss the results of our most recent meeting with the FDA and the plans for the MIRACLE trial.

That meeting, the MIRACLE trial and the current data from the MB-106 trial are discussed further below.

On August 1, 2024, we announced the discussion in and our resulting plans from our End of Phase 1B/2 (EOP1B/2) meeting held in late June with the FDA supporting the advancement of Annamycin in combination with Cytarabine (also known as “Ara-C” and for which the combination of Annamycin and Ara-C is referred to as “AnnAraC”) to a Phase 3 pivotal trial for the treatment of AML patients who are refractory to or relapsed after induction therapy (R/R AML).

This Phase 3 “MIRACLE” trial (derived from (M)olecul(i)n (R)/(r) AML (A)nnAraC (Cl)inical (E)valuation) will be a global trial, including sites in the US.

Consistent with the FDA’s recommendations, the adaptive Phase 3 trial is expected to rely solely on CR (complete remission) at day 35 (+/- 14 days) as the primary endpoint versus placebo.

On August 1, 2024, we announced the discussion in and our resulting plans from our End of Phase 1B/2 (EOP1B/2) meeting held in late June with the FDA supporting the advancement of Annamycin in combination with Cytarabine (AnnAraC to a Phase 3 pivotal trial for the treatment of AML patients who are refractory to or relapsed after induction therapy (R/R AML).

This Phase 3 “MIRACLE” trial will be a global study, including sites in the US and consistent with the FDA’s recommendations, the adaptive Phase 3 trial is expected to rely solely on CR (complete remission) at day 35 (+/- 14 days) as the primary endpoint versus the control arm.

We plan to utilize a double-blind, placebo-controlled design, where the control arm is high dose cytarabine (HiDAC) plus placebo.

The MIRACLE trial will initially focus on 2 nd line treatment for R/R AML subjects and then follow-up with treatment for 3 rd line R/R AML.

The MIRACLE trial will focus on AnnAraC as a 2 nd line treatment for R/R AML subjects, with a subsequent trial to be focused on AnnAraC as a 3 rd line treatment for R/R AML.

Based on our discussions with the FDA, we intend to amend our current investigational new drug application or IND to allow dosing above the lifetime maximum allowable dose (LTMAD) for currently prescribed anthracyclines in this trial in the US.

The MIRACLE study, subject to appropriate future filings with and potential additional feedback from the FDA and their foreign equivalents, is expected to initially utilize an adaptive design whereby the first 75 subjects will be randomized to receive HiDAC combined with either placebo, 190 mg/m 2 of Annamycin, or 230 mg/m 2 of Annamycin.

At that point, the trial will be unblinded to select the optimum dose for Annamycin.

The MIRACLE study, subject to appropriate future filings with and potential additional feedback from the FDA, their foreign equivalents and/or institutional review boards (IRBs), is expected to initially utilize an adaptive design whereby the first 90 subjects will be randomized to receive HiDAC combined with either placebo, 190 mg/m 2 of Annamycin, or 230 mg/m 2 of Annamycin with such doses recommended by the FDA based on their review of our safety and efficacy data.

At that point, the trial data will be unblinded to select the optimum dose for Annamycin.

For the second half of the trial, approximately 240 subjects will be randomized to receive either HiDAC plus placebo or HiDAC plus the optimum dose of Annamycin.

The selection of the optimum dose will be based not only on the absence of dose limiting toxicities but also on the overall balance of safety, pharmacokinetics and efficacy, consistent with the FDA’s new Project Optimus initiative.

The selection of the optimum dose by the independent Data Monitoring Committee will be based on the overall balance of efficacy, safety, and pharmacokinetics, consistent with the FDA’s new Project Optimus initiative.

We believe the FDA wants to see the durability of response (DoR) and overall survival (OS) as secondary endpoints.

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2025 Q1 – First subject treated in MIRACLE trial

2025 Q4 – Recruitment update (n=40)

Mid 2026 – Interim data (n=75) unblinded and Optimum Dose set for MIRACLE trial

2025 Q4 – Recruitment and interim data (n=~45)

2H 2026 – Interim efficacy and safety data (n=~90) unblinded and Optimum Dose set for MIRACLE trial

2027 – Begin enrollment of 3 rd line subjects in MIRACLE2

2027 – Enrollment ends in 2 nd line subjects

2028 – Final Data for 2 nd line subjects in MIRACLE

2028 – Primary endpoint efficacy data for 2 nd line subjects in MIRACLE

2028 2H – Begin submission of a new drug application (NDA) the treatment of R/R AML for accelerated approval on primary endpoint of CR from MIRACLE

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Data from MB-106 is for Intent To Treat (ITT) subjects;

is as of August 3, 2024;

is as of October 24, 2024;

and, is preliminary and subject to change.

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We believe the results demonstrated by AnnAraC in 2 nd line subjects substantially exceeds the performance reported by any drug currently approved for use in 2 nd line AML.

Median durability of remission (DoR) for the 9 CRcs is approximately 7 months and developing with one death (related to pneumonia) and two relapses to date out of the ten CRcs.

The first subject with a CR (and who has yet to relapse) was treated in February 2023.

Median durability of remission (DoR) for the 9 CRcs is approximately 8 months and developing.

The DoR is being measured from the initiation of treatment to relapse or death.

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No signal of cardiotoxicity has been identified.

Annamycin as Monotherapy for the Treatment of Soft Tissue Sarcoma Lung Metastases

Additionally, we expect to release in the near future the topline data from the MB-107 trial with Annamycin for the monotherapy treatment of soft tissue sarcoma lung metastases.

This Phase 1B/2 clinical trial in the US is for subjects with STS lung metastases after first-line therapy for their disease.

The trial began in the first half of 2021.

The Phase 1B was concluded in July 2022.

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.

Subjects who had stable disease at the time of study discontinuation will continue to be followed for progression free response and overall survival.

The study database is locked and the clinical study report is being written and should be completed in early 2025 and will be released in detail at that time.

The total number of intent to treat subjects in the trial is 36.

U.S Patents for Annamycin

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We have global, exclusive licenses to both patents.

The ‘118 patent provides claims to compositions that contain Annamycin, and the ‘634 patent, when issued, will provide claims to liposomal Annamycin suspension compositions, both with a base patent term extending until June 2040, subject to extension to account for time required to fulfill regulatory requirements for FDA approval.

The ‘118 patent provides claims to compositions that contain Annamycin, and the ‘634 patent, as issued, provides claims to liposomal Annamycin suspension compositions, both with a base patent term extending until June 2040, subject to extension to account for time required to fulfill regulatory requirements for FDA approval.

Moleculin’s novel candidate for the treatment of acute myeloid leukemia (AML) and soft tissue sarcoma lung metastases (STS lung mets) uses a unique lipid-based delivery technology.

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Orphan designation potentially allows companies certain benefits, including reduced regulatory fees, clinical protocol assistance, research grants and up to 10 years of potential market exclusivity in the European Union if approved.

Presentation at the International Association for the Study of Lung Cancer 2024 World Conference on Lung Cancer

On September 23, 2024, we announced positive in vivo efficacy data of Annamycin in orthotopic and experimental lung metastatic models of sarcoma at the International Association for the Study of Lung Cancer (IASLC) 2024 World Conference on Lung Cancer.

Treatment with Annamycin resulted in statistically significant inhibition of tumor growth and extension of survival in orthotopic lung cancer models and continues to be 100% non-cardiotoxic.

The poster titled “ Annamycin:

Opening New Doors for Organotropic Targeting of Primary and Metastatic Lung Cancer , ” authored by Waldemar Priebe, PhD (Founder, Founding Scientist, and Chair of Scientific Advisory Board for Moleculin) and coworkers was presented at the IASLC 2024 World Conference on Lung Cancer.

The presented poster outlined results from the efficacy assessment studies of Annamycin, Moleculin’s next-generation anthracycline in orthotopic models of lung cancer and sarcoma lung metastasis models in comparison with doxorubicin (a commonly prescribed anthracycline.

Key Highlights of the Data Presented:

Annamycin demonstrated high uptake and retention in lung parenchyma of mice and rats.

The therapeutic effects of doxorubicin (DOX) are diminished due to low lung DOX uptake as demonstrated in the tested in vivo models.

In contrast, Annamycin exhibits consistent efficacy in vivo in orthotopic and experimental lung metastatic models of sarcoma, breast, and colon cancer.

This correlated with high Annamycin concentration in lungs, which exceeded DOX levels by 10- to 30-fold.

Preclinical tests clearly demonstrate a better cardiac safety profile of Annamycin when compared to DOX and no cardiotoxicity of Annamycin in the in vivo models.

No cardiotoxicity of Annamycin has been noted in ongoing clinical studies.

The observed organotropic properties of Annamycin, its efficacy in vivo , and its promising safety profile warrant further translational studies to evaluate Annamycin in patients with primary or metastatic lung cancers, as a single agent and in combination with currently used therapeutics.

AACR Presentation of Data Demonstrating High Anti-Cancer Activity of Annamycin and Non-Cardiotoxic Properties

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The presented poster outlined results from the assessment and comparison of the potency of doxorubicin (a commonly prescribed anthracycline) and Annamycin, Moleculin’s next-generation anthracycline, against topoisomerase II-alpha and II-beta and determine their impact on physiology of human cardiomyocytes demonstrating no pathologic changes in mice hearts following chronic in vivo exposure.

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

Of note, we have finalized an agreement with Northwestern University (NU) and NU has begun recruitment in an investigator initiated glioblastoma study.

NU should be treating the first subject in the near-term (Clinicaltrials.gov ID:

NCT05879250).

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

Regarding an intravenous formula for WP1066, we believe that substantial progress has been made and that we will be able to announce a patent application process being initiated and a license to us for an IV formulation in the near term .

We announced on September 9, 2024, the beginning of enrollment and treatment of patients in an investigator-initiated Phase 2 study evaluating WP1066 in combination with radiation therapy for the treatment of adults with glioblastoma (NU 21C06).

The study is being conducted under Northwestern University’s investigative New Drug application (IND) which cross references our own IND, which received clearance from the U.S.

Food and Drug Administration (FDA) in April 2022.

This trial is funded by the National Institutes of Health (NIH) and BrainUp®, a non-profit organization dedicated to bringing awareness to brain cancer.

The NU 21C06 trial is a Phase 2, open-label, multi-arm trial of radiation therapy in combination with WP1066 in newly diagnosed IDH (isocitrate dehydrogenase) wild-type, MGMT-unmethylated glioblastoma patients.

The primary outcome measure for the study is progression-free survival and secondary outcome measures include tumor microenvironment analysis.

Four subjects have been treated as of November 1, 2024.

Regarding an intravenous formula for WP1066, we are pursuing a new patent that is co-owned by us and MD Anderson.

We are in discussions regarding licensing or an option to license the MD Anderson rights to the new formulation.

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.

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

General Business

Science Advisory Board Appointment

We announced on November 4, 2024, the appointment of Daniel D.

Von Hoff, M.D., F.A.C.P., FASCO, FAACR to our Annamycin Scientific Advisory Board.

Von Hoff currently serves as the Distinguished Professor at the Translational Genomics Research Institute (TGen) in Phoenix, Arizona and City of Hope.

August Issuance of Equity

On August 19, 2024, we announced the closing of our previously announced public offering 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 and Series B warrants to purchase up to 2,466,368 shares of common stock, at a combined public offering price of $2.23 per share (or per common stock equivalent in lieu thereof) and accompanying warrants.

The Series A warrants have an exercise price of $2.23, are exercisable immediately upon shareholder approval (which was received in October 2024) and will expire upon the earlier of (i) the 2 year anniversary of the date of stockholder approval or (ii) the 60 th day following the date we release interim data for the first subject group from the MIRACLE trial whereby the complete remission rate for either doses of the Company’s study drug is greater than placebo.

The Series B warrants have an exercise price of $2.23, are exercisable immediately upon shareholder approval (which was received in October 2024) and will expire upon the earlier of (i) the 5 year anniversary of the date of stockholder approval or (ii) the 6 month anniversary following the date we release final topline data from the MIRACLE trial and documented a statistically significant improvement in the primary efficacy endpoint.

Pursuant to Nasdaq Listing Rule 5635(d), the exercise of the Series A warrants and Series B warrants were subject to shareholder approval, which was received.

The gross proceeds from the offering, before deducting the placement agent’s fees and other offering expenses payable by us, were approximately $5.5 million and we would receive up to an additional approximately $11.0 million in gross proceeds if the warrants are fully exercised for cash.

We are using the net proceeds from this offering to advance Annamycin and our other two drug portfolios through clinical development, advance the remainder of our existing portfolio through preclinical studies and into INDs or their equivalent, sponsor research at MD Anderson and HPI, and for working capital.

Results of Operations

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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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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

Interest income, net

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Research and Development Expense.

Research and development (R&D) expense was $4.1 million and $3.9 million for the three months ended June 30, 2024 and 2023 , respectively.

The increase of $0.2 million is mainly related t o sponsored research costs.

Research and development (R&D) expense was $4.9 million and $3.3 million for the three months ended September 30, 2024 and 2023 , respectively.

The increase of $1.6 million is mainly related t o costs incurred for clinical trials (clinical research organization and drug production) and sponsored research costs.

General and Administrative Expense.

General and administrative e xpense was $2.1 million and $2.5 million for the three months ended June 30, 2024 and 2023 , respectively.

General and administrative e xpense was $2.2 million and $2.6 million for the three months ended September 30, 2024 and 2023 , respectively.

The decrease of $0.4 million is mainly related to a decrease in regulatory and legal fees.

Gain from Change in Fair Value of Warrant Liability.

We recorded a net gain of $1.7 million in the second quarter of 2024 as compared to a net gain of $0.04 million in the second quarter of 2023, 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.

(Loss) Gain from Change in Fair Value of Warrant Liability.

We recorded a net loss of $1.7 million in the third quarter of 2024 as compared to a net gain of $0.001 million in the third quarter of 2023, 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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A gain results principally from a decline in our share price during the period and a loss results principally from an increase in our share price.

Transaction costs allocated to warrant liabilities and Loss on issuance of warrant liabilities.

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.

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

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.

Interest income, net.

Interest income, ne t decreased by approximately $0.2 million f or the comparable quarterly periods due to a decreasing cash balance during the past year.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Interest income, ne t decreased by approximately $0.2 million f or the comparable quarterly periods due to a decreasing cash balance and decreasing interest rates during the past year.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Research and Development Expense.

Research and development (R&D) expense was $8.3 million and $9.6 million for the six months ended June 30, 2024 and 2023 , respectively.

The decrease of $1.3 million is mainly rela ted to the WPD sublicense termination in 2023, which enabled the reacquisition of our intellectual property rights in certain territories including parts of the European Union.

The decrease was slightly offset by increased sponsored research costs in 2024 .

Research and development (R&D) expense was $13.3 million and $12.9 million for the nine months ended September 30, 2024 and 2023 , respectively.

The increase of $0.4 million is mainly related to costs incurred for clinical trials (clinical research organization and drug production) and sponsored research costs.

These increases were offset by a $1.5 million decrease mainly related to the WPD sublicense termination in 2023, 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 $4.5 million and $5.1 million for the six months ended June 30, 2024 and 2023 , respectively.

General and administrative e xpense was $6.6 million and $7.8 million for the nine months ended September 30, 2024 and 2023 , respectively.

The decrease of $1.2 million is mainly related to a decrease in regulatory and legal fees.

Gain from Change in Fair Value of Warrant Liability.

We recorded a net gain of $3.2 million in the six months ended 2024 as compared to a net gain of $0.1 million in the six months ended 2023, 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 recorded a net gain of $1.4 million in the nine months ended 2024 as compared to a net gain of $0.1 million in the nine months ended 2023, 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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A gain results principally from a decline in our share price during the period and a loss results principally from an increase in our share price.

Transaction costs allocated to warrant liabilities and Loss on issuance of warrant liabilities.

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.

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

Interest income, net.

Interest income, ne t decreased by approximately $0.4 million f or the comparable quarterly periods due to a decreasing cash balance during the past year.

Interest income, ne t decreased by approximately $0.6 million f or the comparable quarterly periods due to a decreasing cash balance and decreasing interest rates during the past year.

Liquidity and Capital Resources

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

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 financing activities

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents

As of June 30, 2024, there w as $0.4 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, 2024, there w as $0.4 million of cash on hand in a bank account in Australia and we know of no related limitations impacting our liquidity in Australia.

Cash used in operating activities

Cash used in operations was $12.7 million for the six months ended June 30, 2024 .

Cash used in operations was $18.8 million for the nine months ended September 30, 2024 .

This $0.1 million increase over the prior year period of $18.7 million was primarily due to the timing of costs incurred and associated payments for drug production and clinical trial expenses.

Cash provided by fin ancing activities

We did not sell any stock during the six months ended June 30, 2024 .

We believe that our cash on hand and cash equivalents as of June 30, 2024, is sufficient to fund our planned operations into the fourth quarter of this year.

On August 19, 2024, we announced the closing of our previously announced public offering 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 and Series B warrants to purchase up to 2,466,368 shares of common stock, at a combined public offering price of $2.23 per share (or per pre-funded warrant in lieu thereof) and accompanying warrants.

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

We believe that our cash on hand and cash equivalents as of September 30, 2024, is sufficient to fund our planned operations into the first quarter of 2025.

This takes into account cash outlays for preparations for clinical trials beyond the current active trials.

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

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

We must seek additional funding of approximately $15 million to support MIRACLE and our operations into the third quarter of 2025 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 to continue our operations in the near term.

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

An S-1 was recently filed with the SEC indicating our intentions to raise additional cash via the issuance of equity in the amount of $12 million.

We believe that our existing cash and cash equivalents as of June 30, 2024, along with the cash expected from this raise will be sufficient to fund our planned operations into the second quarter of 2025.

The amount of this raise may increase or decrease.

Additionally, there is no guarantee that the Company will be successful in this raise.

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

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ly $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

September 30, 2024 and 2023

, respectively, and approximate

ly $0.1 million and $0.9 million for the six months ended

June 30, 2024 and 2023

ly $0.2 million and $1.4 million for the nine months ended

September 30, 2024 and 2023

, respectively .

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis