Moleculin Biotech, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Form 10-Q, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains certain forward-looking statements. Historical results may not indicate future performance. Our forward-looking statements reflect our current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. Forward-looking statements include, but are not limited to, statements about: • Our ability to continue our relationship with the University of Texas MD Anderson Cancer Center (MD Anderson), including, but not limited to, our ability to maintain current licenses and license future intellectual property resulting from our sponsored research agreements with MD Anderson; • The success or the lack thereof, including the ability to recruit subjects and onboard new clinical trial sites on a timely basis, for a variety of reasons, of our clinical trials through all phases of clinical development; • Our ability to satisfy any requirements imposed by the United States (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 geopolitical conflicts, public health emergencies, and global supply chain disruptions that may affect 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; • The need to obtain and retain regulatory approval of our drug candidates, both in the United States and in Europe, and in countries deemed necessary for future trials; • Our ability to complete our clinical trials in a timely fashion in line with our stated milestones and within our expected budget and resources; • Our ability to maintain compliance with the continued listing requirements of the Nasdaq Capital Market; • Our ability to source our drug products at reasonable prices; • Compliance with obligations under intellectual property licenses with third parties; • Any delays in regulatory review and approval of drug candidates in clinical development; • Potential efficacy of our drug candidates; • Our ability to commercialize our drug candidates; • Market acceptance of our drug candidates; • Competition from existing therapies or new therapies that may emerge; • Potential product liability claims; • Our dependency on third-party manufacturers to successfully, and timely, supply or manufacture our drug candidates for our preclinical work and our clinical trials; • Our ability to establish or maintain collaborations, licensing or other arrangements; • Our ability and third parties’ abilities to protect intellectual property rights; • Our ability to adequately support future growth; and • Our ability to attract and retain key personnel to manage our business effectively. 13 Table of Contents We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements. Our Business We are a late-stage pharmaceutical development company currently conducting a pivotal Phase 3 trial evaluating Annamycin (also known by its non-proprietary name "naxtarubicin") in combination with Cytarabine for the treatment of subjects with relapsed/refractory (R/R) acute myeloid leukemia (AML). This Phase 3 trial should have an interim unblinding of data by the end of 2025, less than a year from its commencement, and an additional unblinding in the first half of 2026. We believe such early visibility for a pivotal registration-enabling trial is highly unique in that stakeholders will receive preliminary safety and efficacy data in the “MIRACLE” trial (derived from M olecul i n R /R AML A nnAraC Cl inical E valuation) within one year of dosing the first subject. Additionally, we have two portfolios of technologies for hard-to-treat cancers and viruses with clinical and preclinical research funded by investigators at academic institutions. Each of our three core technologies is based substantially on discoveries made at and licensed from MD Anderson in Houston, Texas, and features one or more drugs that have successfully completed a Phase 1 clinical trial. 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. One Phase 2B/3 trial is currently underway. Since our inception, our drugs have completed, are currently in, or have been permitted to proceed in, fourteen clinical trials. Annamycin is in a class of drugs referred to as Anthracyclines, which are inhibitors of topoisomerase II, enabling them to cause DNA damage in rapidly replicating tumor cells. Annamycin, in a unique multilamellar lipid formulation, is our lead molecule and we have recently concluded treating subjects in 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 has also been 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). Our Phase 1B/2 STS lung mets trial MB-107 is completed, and a clinical study report has been issued. The other trial is an investigator initiated Advanced STS trial which is closed to recruitment. One of our core management beliefs is that anthracyclines represent one of the most important treatments 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. We believe that such a benefit could be disruptive to the competitive landscape for these markets. This belief, coupled with our limited resources, leads us to currently focus mainly on the development of Annamycin. We intend to advance our other drug candidates via investigator led studies – both clinically and preclinically. Focus and Core Technologies Our core technologies consist of the following programs: 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, with intensive cardiac monitoring, has shown no cardiotoxicity in subjects treated in our five Annamycin clinical trials to date. Furthermore, we have demonstrated safe dosing significantly beyond the lifetime dose limitations imposed by regulatory authorities upon commonly prescribed anthracyclines due to their inherent cardiotoxicity. 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 3) among other transcription factors associated with tumor activity. These also stimulate a natural immune response to tumors by inhibiting the errant activity of Regulatory T-Cells (TRegs). c) Our WP1122 Portfolio contains compounds (including WP1122, WP1096, and WP1097) designed to exploit the potential uses of inhibitors of glycolysis such as 2-deoxy-D-glucose (2-DG). We believe such compounds may provide an opportunity to cut off the energy supply of tumors by taking advantage of their high degree of dependence on glucose in comparison to healthy cells, as well as viruses that also depend upon glycolysis and glycosylation to infect and replicate. Annamycin and the Lack of Cardiotoxicity As part of our Annamycin clinical trials, we have engaged an independent expert at the Cleveland Clinic to assess cardiotoxicity associated with chemotherapy (Expert or Independent Expert). 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). By strain rate imaging, the simultaneous function of different regions can be displayed and measured. Cardiac health biomarkers such as blood Troponin levels are considered an indicator of potential long-term heart damage. The Expert issued periodic reports during our MB-106 clinical trial and will also issue updated reports over the course of the MIRACLE trial. Such data from clinical trials where a clinical study report has not yet been issued include some data which are preliminary and subject to change. We received several independent assessments for the absence of cardiotoxicity in subjects treated with Annamycin. We now have independent assessments covering 84 subjects that have been treated with Annamycin in five different clinical trials in the U.S. and Europe with no evidence of cardiotoxicity. To date of the 77 subjects treated in our internally funded trials, 56 were treated above the FDA’s lifetime maximum anthracycline limit of 550 mg/m 2 , including one subject whose repeated Annamycin treatments took that subject to a total cumulative anthracycline exposure of 3,420 mg/m 2 (or roughly five times the FDA approved lifetime anthracycline exposure) and there has been no evidence of cardiotoxicity reported. After review of the data provided, the Independent Expert, in their most recent report and as stated in previous reports, concluded that there was no evidence of drug-related cardiotoxicity in any subjects. We believe the Expert's reports are particularly relevant in light of a recently published retrospective study showing that the incidence of heart failure more than doubles for cancer patients treated with anthracyclines compared to cancer patients not receiving anthracyclines (C Larson, et al. Anthracycline and Heart Failure in Patients Treated for Breast Cancer or Lymphoma, 1985-2010. JAMA Network Open. 2023;6(2):e2254669. doi:10.1001/jamanetworkopen.2022.54669). Given the heart-damaging impact of prior treatment with currently prescribed anthracyclines, and considering that the subject population that we are enrolling in our Annamycin trials (multiple prior therapies, including anthracyclines known to be cardiotoxic, many elderly, and other comorbidities) we believe that there is a high likelihood that a cardiac event will eventually occur in the future that we will not be able to disassociate from Annamycin. We believe that the potential for such future incidences, however, does not outweigh the significant lack of cardiotoxicity to date as reflected in the Expert’s reports. 14 Table of Contents Although we have not definitively concluded that Annamycin is incapable of cardiotoxicity, we discuss Annamycin’s lack of demonstrated cardiotoxicity in this document, corporate presentations and other public communications. Such discussions reflect the information in the preceding paragraphs but in summary are based on the following: 1) Annamycin was initially designed to be non-cardiotoxic; 2) Preclinical studies have demonstrated Annamycin lacks cardiotoxicity as compared to a currently prescribed anthracycline; and, 3) Our Expert’s conclusions from analyzing the data from 84 subjects treated with Annamycin in five clinical studies conducted in the US and in Europe. Our discussions will reflect any additional data or analyses as they become available. Clinical Trials Summary We have multiple active INDs/CTAs ("Investigational New Drug" authorization in the US or "Clinical Trial Authorization" in Europe). These INDs/CTAs are under development, approved, in progress, or completed and comprise a total of fourteen clinical trials, internally and externally funded. With Annamycin, we currently have active two AML clinical trials: MB-106 which is a Phase 1B/2 treating AML with AnnAraC (recruitment is closed and this trial is now in subject long-term follow-up) and MB-108 which is a Phase 2B/3 pivotal clinical trial treating R/R AML as 2 nd line therapy (recruitment has started and additional sites are being added). Additionally, there is one externally funded Phase 1B/2 trial treating STS Lung Mets with Annamycin as monotherapy. This trial is closed and is in follow-up on the trial’s subjects. With WP1066, we have an externally funded Phase 1B/2 trial in combination with radiation treating glioblastoma (GBM) at Northwestern University that is actively recruiting. MIRACLE Trial We have a Phase 3 pivotal trial for the treatment, with Annamycin in combination with Cytarabine, of AML patients who are R/R after induction therapy. This Phase 3 “MIRACLE” trial is a global study. It is an adaptive trial designed with a lead-in Part A portion of the study having three arms (control arm with cytarabine, and two test arms with cytarabine plus two different doses of Annamycin) intended to determine an “optimum dose” to be used in Part B of the study. Once an optimum dose for the Annamycin is determined the study will continue into Part B with two arms (control arm with cytarabine and a test arm with cytarabine plus Annamycin). In some contexts, we refer to Part A as Phase 2B and Part B as Phase 3, however the adaptive design enables the combining of data from Part A (for the optimum dose) with Part B such that data from both parts A and B will comprise Phase 3 data. Recent Business Developments Annamycin Miracle Trial Clinical and Regulatory As of July 25, 2025, we have selected over 35 sites to conduct Part A of the MIRACLE trial in the US, the European Union (EU) and Eastern Europe. Four sites (one each in Ukraine, the country of Georgia, Spain and the US) are actively recruiting, screening and/or treating subjects. Besides these four sites the MIRACLE trial has been submitted to or has been approved by over 25 ethics committees of various clinics in the US and the EU. Eight subjects have been treated as of July 25, 2025 in the randomized, three-arm, blinded MIRACLE trial. This build-up to over 35 sites in the targeted countries of Ukraine, Georgia, US, Romania, Spain, Lithuania, Poland, Italy and Czechia should accelerate in August and September supporting our maintenance of our target for recruiting the first 45 subjects in Part A and unblinding the top line results in the second half of 2025. In November 2024, we amended our existing US investigational new drug application or IND for inclusion of the MIRACLE trial protocol. In the amendment with the new MIRACLE protocol, the trial will allow, for the first time in the US for AML subjects, dosing above the lifetime maximum allowable dose for currently prescribed anthracyclines. Then in February 2025 we received FDA feedback and guidance on that amendment. Such feedback allowed a reduction in the size of our Part B of the Phase 3 pivotal trial protocol to 222 subjects. Guidance from FDA included a recommendation to alter the statistical plan that reduced the initially proposed size of Part B of our trial by approximately 10%. Moreover, the nature of the feedback helps us move forward quickly to open sites in the US, in addition to the non-US sites we are expecting to open. Any reduction in recruitment enables shortening the time for completion of the trial. In February through April of 2025, we received a total of five separate communications from the FDA including additional comments and information requests, all of which we believe we have adequately addressed. These requests focused mainly on safety, subject monitoring, clinical pharmacology, and inclusion/exclusion criteria. None of the requests focused on the overall trial design or dosing of Annamycin. Our last response was submitted on April 18, 2025 and we have not received follow-up communication since that time. However, we cannot be assured that our responses will be adequate for the FDA to continue to allow the amended IND to proceed, or that there will not be additional requests for information. Because we are amending an existing IND, there is no required time for the FDA to respond to our submissions, but neither is a positive FDA response required for us to proceed with the MIRACLE trial. At this time, we will proceed with the MIRACLE trial, as amended, in the US. As with all clinical trials, if at any time the FDA believes there is a safety issue that merits it, the agency may put the MIRACLE trial on clinical hold. Expands Phase 3 MIRACLE Clinical Trial into the Country of Georgia On July 9, 2025, we announced that the Regulation Agency for Medical and Pharmaceutical Activities (RAMPA) in the country of Georgia has approved our Clinical Trial Application (CTA) to conduct the MIRACLE trial, further expanding our active sites beyond Ukraine. Receives European Medicines Agency Approval to Expand Phase 3 MIRACLE Clinical Trial On May 12, 2025, we announced that the European Medicines Agency (EMA) approved its Clinical Trial Application to conduct its MIRACLE trial in all nine countries submitted in the European Union (EU). We received the final Report for the Application and Evaluation Assessment (part of the EMA’s Clinical Trial Information System or CTIS process) of "Acceptable" for Belgium, Czechia, France, Germany, Italy, Lithuania, Poland, Romania, and Spain. Such approval was under the condition that we present results of appropriate nonclinical GLP studies before initiating the Phase 3 portion (Part B) of the MIRACLE study. Such results will be submitted as a substantial modification. Along with the individual country committee and/or ethics approvals for these nine countries in the EU allows us to proceed. While there are minor differences between the US and EU protocols with the FDA and EMA, respectively, we do not view these as a barrier to conducting the study and are working to harmonize the protocols as appropriate. 15 Table of Contents Pediatric Study for Annamycin in Combination Therapy with Cytarabine for the Treatment R/R AML Received Positive FDA Feedback on Pediatric Study Plan for Annamycin in Children with R/R AML We announced on June 18, 2025, we received a written response from the Office of Oncologic Diseases – Pediatric Oncology of the FDA regarding our Initial Pediatric Study Plan (iPSP), which was submitted after a June 2024 end-of-phase 1/2 meeting. The FDA has agreed to a single pediatric approval study in which Annamycin (also known as naxtarubicin) in combination with Cytarabine will be evaluated as second line therapy in pediatric patients with R/R AML. Believing that this is particularly important in pediatric oncology because about 60% of children with cancer are treated with anthracyclines that present a high risk of causing heart damage, we expect to commence this trial in the second half of 2027. As part of the iPSP, we proposed a single-arm study evaluating pharmacokinetics (PK), efficacy, and safety of AnnAraC in patients between 2 and 16 years of age. The FDA response calls for including patients from 6 months of age and older, with no minimum number of patients between 6 months and 2 years old. FDA also clarified that drug concentration exposure and safety profile that are comparable would allow extrapolation from efficacy in adults. Importantly, FDA said we would be able to start the pediatric trial before having the full two years of follow-up data from the adult trial. We processed the updates to our iPSP to incorporate FDA’s recommendations and have received additional FDA comments, which we consider to be minor, to process. MB-107 Annamycin in Monotherapy for the Treatment of STS Lung Mets We recently hosted a Key Opinion Leader (KOL) call announcing and reviewing the final top line data from the MB-107 trial. The MB-107 trial involved Annamycin monotherapy treatment for STS Lung Mets. The final top line results of MB-107 demonstrated median overall survival (OS) of 13.5 months for subjects as median 7th line therapy (n=36). This compares to OS of 8-12 months in standard of care treatments and 13.4 months for experimental treatments for advanced STS as 2nd line (Comandone A, et al; “Salvage Therapy in Advanced Adult Soft Tissue Sarcoma: A Systematic Review and Meta-Analysis of Randomized Trials”; The Oncologist 2017;22:1518–1527). Scientific Presentations of Preclinical Data Promising Preclinical Data of Annamycin in Liver Cancer Treatment Presented at a Symposium at MD Anderson On August 6, 2025, we announced the presentation of encouraging preclinical data for its lead drug candidate, Annamycin which demonstrated significant efficacy against various primary and metastatic liver cancers, including hepatocellular carcinoma (HCC), colorectal liver metastases, and pancreatic ductal adenocarcinoma (PDAC) liver metastases. This is believed to be the result of targeted accumulation in the liver and other organs. These findings were highlighted in a poster titled "Liposomal Annamycin (L-ANN) Efficacy Against Primary and Metastatic Liver Cancers," presented by Dr. Waldemar Priebe, Lead Author and Chairman of the Scientific Advisory Board at Moleculin at the recently held Shelby-Lavine Pancreatic Cancer Symposium at MD Anderson Cancer Center. AACR Presentation of Pre-Clinical Data for Annamycin Market Expansion Potential, including Pancreatic Cancer We announced on April 29, 2025, that new pre-clinical data for Annamycin demonstrating market expansion potential including treatment for pancreatic cancer was presented at the American Association for Cancer Research (AACR) Annual Meeting in Chicago, IL. With five previous or current investigator-initiated clinical trials supporting development of our drug candidates, we believe that our next investigator-initiated trials could be Annamycin for the treatment of pancreatic cancer or advanced soft tissue sarcomas. The study, presented in poster form, was designed to assess the efficacy of Annamycin in combination with approved anticancer agents in order to identify novel potentially highly efficacious clinical applications of Annamycin alone and with a therapeutic partner. Annamycin in its non-liposomal form (free drug; in vitro ) and Liposomal Annamycin (L-ANN; in vivo ) were tested in combination with selected FDA approved drugs. Several of the most efficacious drug combinations from the in vitro studies were then tested using well developed in vivo models of leukemia and solid tumors, including sarcoma and pancreatic cancer. It should be noted that in a separate set of previous experiments, Annamycin activity was tested in vitro , and appeared to be highly active, against drug resistant cell lines, including cells resistant to cytarabine and venetoclax. WP1066 Clinical Trial with WP1066 at Northwestern University With our WP1066 oral formula, an externally funded Phase 1B/2 trial in combination with radiation treating GBM, a form of brain cancer, is recruiting and treating subjects at Northwestern University (Northwestern). This is an investigator-initiated trial where our main cost is supplying drug product. To date Northwestern has recruited 7 subjects, of which 5 have completed treatment and are undergoing follow-up while 2 continue with treatment. No data has been released. Preclinical Studies with WP1066 IV Formula at Emory University We have signed an agreement with Emory University whereby Emory will study various WP1066 IV formulations in preclinical studies with the goal of selecting the best molecule to move into a clinical setting towards, most likely, brain cancers such as GBM. Study drug was delivered in April 2025 to Emory with results from such studies expected in the second half of 2025. Other Corporate Additional Patent for Annamycin in the EU On July 30, 2025, we announced that we received a Notice of Intent to Grant for the European patent application titled, " PREPARATION OF PRELIPOSOMAL ANNAMYCIN LYOPHILIZATE ." Such grant should solidify the Company’s European Union exclusivity of Annamycin. The grant is subject to payment of fees and completion of final amendments and formalities. When issued, the patent claims will cover methods of making a preliposomal Annamycin lyophilizate with improved stability and high purity, with a base patent term currently extending until into 2040, subject to extension to account for time required to fulfill requirements for regulatory approval. In addition to the newly expected European patent and previously issued U.S. patents, we have additional patent applications related to Annamycin pending in the U.S., Europe and in major jurisdictions worldwide. 16 Table of Contents World Health Organization Approval of “naxtarubicin” as International Non-Proprietary Name for Annamycin We announced on May 6, 2025 that the International Nonproprietary Names (INN) Expert Committee of the World Health Organization approved “naxtarubicin1” for the non-proprietary name of the Company’s next-generation anthracycline in development, Annamycin. With this INN now given and prior approval by the United States Adopted Names (USAN), we have the ability to establish a universally recognized and conflict-free nonproprietary drug name for Annamycin. This is considered the last step of approvals for non-proprietary names. The use of this name will be merged into our public and clinical documents in the near-term. Commonly referred to as a generic name, each INN is a unique name used to identify pharmaceutical substances or active pharmaceutical ingredients. Each active substance that is to be marketed as a pharmaceutical must be granted a unique name of worldwide acceptability to ensure the clear identification, safe prescription and dispensing of medicines to patients. Nonproprietary names are intended for wide use ranging from labelling and product information to drug regulation and scientific literature. Additional Patents Issued for Annamycin in the US We announced on May 5, 2025, that the U.S. Patent and Trademark Office (USPTO) granted two additional U.S. patents with claims covering Annamycin. U.S. patent number 12,257,261 titled, “ Preparation of Preliposomal Annamycin Lyophilizate ”, has claims covering methods of making liposomal Annamycin and U.S. patent 12,257,262 titled “ Method of Reconstituting Liposomal Annamycin “, has claims covering methods of making liposomal Annamycin suspension. Both patents have a base patent term currently extending until June 2040, subject to adjustment for delays in prosecution and extension to account for time required to fulfill requirements for regulatory approval. Moleculin has additional patent applications related to Annamycin pending in the U.S., Europe and in major jurisdictions worldwide. On March 6, 2025, we announced that we received a Notice of Intent to Grant for the European patent application titled, “ Method of Reconstituting Liposomal Annamycin “. The grant is subject to payment of fees and completion of final amendments and formalities. Such grant will enhance the global exclusivity of Annamycin with the potential to be a next generation, non-cardiotoxic treatment for certain cancers. When issued, the patent claims will cover methods of making liposomal Annamycin suspension as well as the resulting compositions for use in the treatment of cancers, with a base patent term currently extending until June 2040, subject to extension to account for time required to fulfill requirements for regulatory approval. In addition to the expected European patent and previously issued U.S. patents, Moleculin has additional patent applications related to Annamycin pending in the U.S., Europe and in major jurisdictions worldwide. Licenses and Sponsored Research with MD Anderson We have terminated certain licenses related to WP1122 with MD Anderson and are in discussions to execute an option or options on these technologies along with additional technologies where the term of such options will be tied to the term of our Sponsored Research Agreement with MD Anderson. Such actions are in line with our efforts to focus our resources on the development of Annamycin. Results of Operations The following table sets forth, for the periods indicated, data derived from our statement of operations (table in thousands) and such changes in the periods are discussed below in approximate amounts: Moleculin Biotech, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenues $ — $ — $ — $ — Operating expenses: Research and development 3,600 4,090 7,036 8,342 General and administrative 2,091 2,064 4,568 4,457 Depreciation and amortization 29 31 59 63 Total operating expenses 5,720 6,185 11,663 12,862 Loss from operations (5,720 ) (6,185 ) (11,663 ) (12,862 ) Other income (loss): Gain from change in fair value of warrant liability 9,609 1,696 18,663 3,151 Transaction costs allocated to warrant liabilities (1,207 ) — (2,995 ) — Loss on issuance of warrant liabilities (10,352 ) — (18,150 ) — Other income, net 4 11 13 22 Interest income, net 26 159 56 400 Net loss $ (7,640 ) $ (4,319 ) $ (14,076 ) $ (9,289 ) 1 WHO Drug Information, Vol. 39, No. 1, 2025, pg. 217 17 Table of Contents Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 Research and Development Expense. Research and development (R&D) expense was $3.6 million and $4.1 million for the three months ended June 30, 2025 and 2024 , respectively. The decrease of $0.5 million is mainly related to a reduction in the clinical trials activity. General and Administrative Expense. General and administrative e xpense was $2.1 million each for the three months ended June 30, 2025 and 2024 . Gain from Change in Fair Value of Warrant Liability. We recorded a net gain of $9.6 million in the second quarter of 2025 as compared to a net gain of $1.7 million in the second quarter of 2024, 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. We calculated the fair value of the warrants outstanding using the Black-Scholes model. A gain results principally from a decline in our share price during the period and a loss results principally from an increase in our share price. 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 June 2025 offerings exceeded the total proceeds, no consideration was allocated to the common shares or pre-funded warrants. The full proceeds of the June 2025 offering was recorded to warrant liabilities, with an initial liability of $16.4 million, and a loss on initial recognition of $10.4 million. Transaction costs related to the offering were correspondingly fully allocated to warrant liabilities, and $1.2 million in related transaction costs were expensed during the three months ended June 30, 2025. Interest income, net. Interest income, n e t decreased by approximately $0.1 million f or the comparable quarterly periods due to a decreasing cash balance and decreasing interest rates during the past year. Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 Research and Development Expense. Research and development (R&D) expense was $7.0 million and $8.3 million for the six months ended June 30, 2025 and 2024 , respectively. The decrease of $1.3 million is mainly related to a reduction in the clinical trials activity. General and Administrative Expense. General and administrative e xpense was $4.6 million and $4.5 million for the six months ended June 30, 2025 and 2024 , respectively. The increase of $0.1 million is mainly related to a slight overall increase in regulatory and legal fees. Gain from Change in Fair Value of Warrant Liability. We recorded a net gain of $18.7 million in the six months ended June 30, 2025 as compared to a net gain of $3.2 million in the six months ended June 30, 2024, 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. We calculated the fair value of the warrants outstanding using the Black-Scholes model. A gain results principally from a decline in our share price during the period and a loss results principally from an increase in our share price. 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 June 2025 and February 2025 offerings exceeded the total proceeds, no consideration was allocated to the Common Shares or Pre-Funded Warrants. The full proceeds of the June 2025 and February 2025 offerings were recorded to warrant liabilities, with initial liabilities of $35.4 million, and losses on initial recognition of $18.2 million. Transaction costs related to the offering were correspondingly fully allocated to warrant liabilities, and $3.0 million in related transaction costs were expensed during the six months ended June 30, 2025. Interest income, net. Interest income, n e t decreased by approximately $0.3 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, 2025 2024 Net cash used in operating activities $ (10,146 ) $ (12,666 ) Net cash used in investing activities — (13 ) Net cash provided by (used in) financing activities 13,422 (25 ) Effect of exchange rate changes on cash and cash equivalents 3 (1 ) Net increase (decrease) in cash and cash equivalents $ 3,279 $ (12,705 ) As of June 30, 2025, there w as $0.03 million of cash on hand in a bank account in Australia and we know of no related limitations impacting our liquidity in Australia. 18 Table of Contents Cash used in operating activities Cash used in operations was $10.1 million for the six months ended June 30, 2025 . This $2.6 million decrease over the prior year period of $12.7 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 In July 2025, we entered into an at-the-market equity agreement (the 2025 ATM Agreement) with Roth Capital Partners, LLC (Roth). Pursuant to the terms of the 2025 ATM Agreement, the Company may offer and sell shares of our common stock having an aggregate offering price of up to $6.5 million from time to time through or to Roth acting as our sales agent or principal. Roth may also sell shares of our common stock in negotiated transactions at market prices prevailing at the time of sale at prices related to such prevailing market prices. We paid a commission to Roth equal to 3.0% of the gross proceeds from the sale of our common stock under the 2025 ATM Agreement. In June 2025, we completed a public offering for the sale of 9,972,026 shares of common stock, and 6,107,974 pre-funded warrants to purchase shares of common stock, and Series E Warrants to purchase up to 48,240,000 shares of common stock. The combined purchase price for the securities was $0.37 per Share of common stock (or pre-funded warrant in lieu thereof). Each Series E Warrant will be exercisable upon the receipt of shareholder approval, will have an exercise price of $0.37 per share, and expire five years from the initial exercise date. The Company received gross proceeds of $5.9 million and up to an additional approximately $17.8 million in gross proceeds if the warrants are fully exercised for cash. On February 25, 2025, we entered into a securities purchase agreement with an institutional investor for the sale by the Company of 1,150,000 shares of common stock, and 2,121,029 pre-funded warrants to purchase shares of common stock, and series D warrants to purchase up to 6,543,058 shares of common stock. The combined purchase price for the securities was $1.07 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 will be exercisable upon the receipt of shareholder approval, will have an exercise price of $1.07 per share, and expire five years from the initial exercise date. We received gross proceeds of $3.5 million. All prefunded warrants were exercised in June 2025. On February 13, 2025, we entered into a warrant exercise inducement offer letter with a holder of certain existing warrants to receive new warrants to purchase up to a number of shares of common stock equal to 200% of the number of warrant shares issued pursuant to the exercise of such existing warrants to purchase up to 5,828,570 shares of common stock (series C warrants) pursuant to which the Holder agreed to exercise for cash their existing warrants at a reduced exercise price of $1.00 in exchange for our agreement to issue the inducement warrants to purchase up to 11,657,140 shares of the Company's common stock. Each inducement warrant will have an exercise price of $0.75, and will be exercisable as of the date of issuance and may be exercised for a period of five years therefrom. We received gross proceeds of $5.8 million. This brings the total gross proceeds received in February 2025 to $9.3 million. On August 19, 2024, we completed a 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 June 30, 2025, is sufficient to fund our planned operations into the fourth 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 must seek additional funding of approximately $10 million to support MIRACLE and our operations into the first quarter of 2026 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. 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. We have received, and expect to continue to receive, periodic further requests from the SEC staff with respect to this matter. We are not aware of the specific nature of the underlying investigation by the SEC, and to the extent that this investigation relates to prior public disclosures that we have made, we believe in the accuracy and adequacy of such prior disclosures. The correspondence from the SEC transmitting the subpoena to us states that the SEC is trying to determine whether there have been any violations of federal securities laws, but that its investigation does not mean that the SEC has concluded that anyone has violated the law or that the SEC has a negative opinion of any person, entity, or security. We cannot predict when this matter will be resolved or what, if any, action the SEC may take following the conclusion of the investigation. We expensed approximate ly $0.01 million and $0.1 million in related general and administrative fees and expenses for the three months ended June 30, 2025 and 2024 , respectively, and approximate ly $0.03 million and $0.1 million in related general and administrative fees and expenses for the six months ended June 30, 2025 and 2024 , respectively. Critical Accounting Policies and Significant Judgments and Estimates There have been no material changes to our critical accounting policies and use of estimates from those disclosed in our Form 10-K for the year ended December 31, 2024. For a discussion of our critical accounting policies and use of estimates, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Estimates in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024. 19 Table of Contents ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS Not applicable as we are a smaller reporting company.