Item 1. Financial Statements
Item 1. Financial Statements
Moleculin Biotech, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except for share and per share data)
(Unaudited)
September 30,
December 31,
2025
2024
Assets
Current assets:
Cash and cash equivalents
$ 6,703 $ 4,278
Prepaid expenses and other current assets
1,182 916
Total current assets
7,885 5,194
Intangible assets
11,148 11,148
Other non-current assets
900 —
Operating lease right-of-use asset
343 424
Furniture and equipment, net
77 159
Total assets
$ 20,353 $ 16,925
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$ 2,116 $ 2,030
Accrued expenses and other current liabilities
3,566 3,329
Total current liabilities
5,682 5,359
Operating lease liability - long-term, net of current portion
258 358
Warrant liability
41,333 —
Total liabilities
47,273 5,717
Commitments and contingencies (Note 7)
Stockholders' equity (deficit)
Preferred stock, $ 0.001 par value; 5,000,000 shares authorized, no shares issued or outstanding
— —
Common stock, $ 0.001 par value; 500,000,000 shares authorized; 49,498,576 and 3,378,895 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively
49 3
Additional paid-in capital
194,631 183,690
Accumulated other comprehensive loss
( 44 ) ( 41 )
Accumulated deficit
( 221,556 ) ( 172,444 )
Total stockholders’ equity (deficit)
( 26,920 ) 11,208
Total liabilities and stockholders’ equity
$ 20,353 $ 16,925
See accompanying notes to condensed consolidated financial statements.
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Moleculin Biotech, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Revenues
$
—
$
—
$
—
$
—
Operating expenses:
Research and development
3,738
4,932
10,774
13,274
General and administrative
2,147
2,172
6,715
6,629
Depreciation and amortization
21
31
81
95
Total operating expenses
5,906
7,135
17,570
19,998
Loss from operations
( 5,906
)
( 7,135
)
( 17,570
)
( 19,998
)
Other income (loss):
Gain from change in fair value of warrant liability
1,591
—
1,031
—
Transaction costs allocated to warrant liabilities
( 530
)
—
( 1,737
)
—
Loss on issuance of warrant liabilities
( 20,609
)
—
( 30,962
)
—
Other income, net
16
9
30
31
Interest income, net
39
102
96
503
Net loss
$
( 25,399
)
$
( 7,024
)
$
( 49,112
)
$
( 19,464
)
Net loss per common share - basic and diluted
$
( 0.68
)
$
( 1.89
)
$
( 2.36
)
$
( 6.69
)
Weighted average common shares outstanding, basic and diluted
37,304,455
3,714,278
20,827,296
2,910,842
Net Loss
$
( 25,399
)
$
( 7,024
)
$
( 49,112
)
$
( 19,464
)
Other comprehensive income (loss):
Foreign currency translation
( 6
)
14
( 3
)
13
Comprehensive loss
$
( 25,405
)
$
( 7,010
)
$
( 49,115
)
$
( 19,451
)
See accompanying notes to condensed consolidated financial statements.
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Moleculin Biotech, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Nine Months Ended September 30,
2025
2024
Cash flows from operating activities:
Net loss
$
( 49,112
)
$
( 19,464
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
81
95
Stock-based compensation
1,205
1,299
Change in fair value of warrant liability
( 1,031
)
—
Loss on issuance of warrant liabilities
30,962
—
Operating lease, net
113
106
Transaction costs allocated to warrant liabilities
1,737
—
Changes in operating assets and liabilities:
Prepaid expenses and other assets
( 1,166
)
522
Accounts payable
43
52
Accrued expenses and other current liabilities
( 201
)
( 1,389
)
Net cash used in operating activities
( 17,369
)
( 18,779
)
Cash flows from investing activities:
Purchase of fixed assets
—
( 13
)
Net cash used in investing activities
—
( 13
)
Cash flows from financing activities:
Proceeds from exercise of warrants
1,121
—
Payment of tax liability for vested restricted stock units
—
( 26
)
Proceeds from sale of common stock, pre-funded and common warrants and warrant inducement, net of issuance and transaction costs
18,676
4,660
Net cash provided by financing activities
19,797
4,634
Effect of exchange rate changes on cash and cash equivalents
( 3
)
13
Net increase (decrease) in cash and cash equivalents
2,425
( 14,145
)
Cash and cash equivalents - beginning of period
4,278
23,550
Cash and cash equivalents - end of period
$
6,703
$
9,405
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
$
351
$
156
Offering costs included in accounts payable and accrued liabilities
$
584
$
42
See accompanying notes to condensed consolidated financial statements.
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Moleculin Biotech, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(in thousands, except for shares)
(Unaudited)
Nine Months Ended September 30, 2025
Common stock - shares
Common stock - Par Value Amount
Additional Paid-In Capital
Accumulated Deficit
Accumulated Other Comprehensive Income (Loss)
Total Stockholders' Equity (Deficit)
Balance, December 31, 2024
3,378,895 $ 3 $ 183,690 $ ( 172,444 ) $ ( 41 ) $ 11,208
Warrant inducement and exercise of common stock warrants at $ 1.00 per share
5,828,570 6 — — — 6
Warrants exercised
3,770,029 4 — — — 4
Issued for cash - sale of common stock, pre-funded and common warrants
1,150,000 1 — — — 1
Stock-based compensation
— — 485 — — 485
Consolidated net loss
— — — ( 5,904 ) — ( 5,904 )
Equity warrants issued
— — 7,988 — — 7,988
Cumulative translation adjustment
— — — — 3 3
Balance, March 31, 2025
14,127,494 $ 14 $ 192,163 $ ( 178,348 ) $ ( 38 ) $ 13,791
Warrants exercised
6,107,974 6 — — — 6
Issued for cash - sale of common stock, pre-funded and common warrants
9,972,026 10 — — — 10
Stock-based compensation
— — 417 — — 417
Consolidated net loss
— — — ( 17,809 ) — ( 17,809 )
Balance, June 30, 2025
30,207,494 $ 30 $ 192,580 $ ( 196,157 ) $ ( 38 ) $ ( 3,585 )
Warrant inducement and exercise of common stock warrants at $ 0.37 per share
16,216,216 16 1,748 — — 1,764
Warrants exercised
2,996,192 3 — — — 3
Common stock issued upon vesting of restricted stock units (net of taxes)
19,889 — — — — —
Issuance of common stock in connection with a consulting agreement
58,785 — — — — —
Stock-based compensation
— — 303 — — 303
Cumulative translation adjustment
— — — — ( 6 ) ( 6 )
Consolidated net loss
— — — ( 25,399 ) — ( 25,399 )
Balance, September 30, 2025
49,498,576 $ 49 $ 194,631 $ ( 221,556 ) $ ( 44 ) $ ( 26,920 )
Nine Months Ended September 30, 2024
Common stock - shares
Common stock - Par Value Amount
Additional Paid-In Capital
Accumulated Deficit
Accumulated Other Comprehensive Income (Loss)
Total Stockholders' Equity
Balance, December 31, 2023
2,227,516
$
33
$
177,300
$
( 146,396
)
$
( 9
)
$
30,928
Issuance of common stock to consultants
6,834
—
37
—
—
37
Reverse stock split
77,186
( 31
)
31
—
—
—
Stock-based compensation
—
—
456
—
—
456
Consolidated net loss
—
—
—
( 6,425
)
—
( 6,425
)
Cumulative translation adjustment
—
—
—
—
( 9
)
( 9
)
Balance, March 31, 2024
2,311,536
$
2
$
177,824
$
( 152,821
)
$
( 18
)
$
24,987
Common stock issued upon vesting of restricted stock units (net of taxes)
19,743
—
( 25
)
—
—
( 25
)
Warrants exercised
229,506
1
—
—
—
1
Stock-based compensation
—
—
453
—
—
453
Consolidated net loss
—
—
—
( 6,015
)
—
( 6,015
)
Cumulative translation adjustment
—
—
—
—
8
8
Balance, June 30, 2024
2,560,785
$
3
$
178,252
$
( 158,836
)
$
( 10
)
$
19,409
Issued for cash - sale of common stock, pre-funded and common warrants
283,000
—
—
—
—
—
Common stock issued upon vesting of restricted stock units (net of taxes)
742
—
( 1
)
—
—
( 1
)
Warrants exercised
157,368
—
—
—
—
—
Stock-based compensation
—
—
353
—
—
353
Consolidated net loss
—
—
—
( 7,024
)
—
( 7,024
)
Equity warrants issued
—
—
4,660
—
—
4,660
Cumulative translation adjustment
—
—
—
—
14
14
Balance, September 30, 2024
3,001,895
$
3
$
183,264
$
( 165,860
)
$
4
$
17,411
See accompanying notes to condensed consolidated financial statements.
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Moleculin Biotech, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1. Nature of Business
The terms “MBI” or “the Company”, “we”, “our” and “us” are used herein to refer to Moleculin Biotech, Inc. MBI is a clinical-stage pharmaceutical company, organized as a Delaware corporation in July 2015. MBI is 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). The Company has two additional portfolios of technologies for hard-to-treat cancers and viruses with clinical and preclinical research funded by investigators at academic institutions.
Each of its three core technologies is based substantially on discoveries made at and licensed from the University of Texas MD Anderson Cancer Center (MD Anderson) in Houston, Texas, and features one or more drugs that have successfully completed a Phase 1 clinical trial. Three of its 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 MBI’s inception, its drugs have completed, are currently in, or have been permitted to proceed in, fourteen clinical trials. Annamycin, in a unique multilamellar lipid formulation, is the Company’s lead molecule, and MBI has recently concluded treatment in several Phase 1B/2 clinical trial for treating AML and has begun treating subjects in its Phase 3 clinical trial for the treatment of R/R AML. Annamycin was in two recently closed or concluded Phase 1B/2 clinical trials for treating Soft Tissue Sarcoma metastasized to the lungs (STS lung metastases, STS lung mets, or Advanced STS), with one physician-sponsored. The Company announced a physician-sponsored trial for Annamycin for the treatment of pancreatic cancer intended to begin in 2026. The one concluded trial has published its clinical study report. Additionally, there is another phase 1B/2 clinical trial that is physician sponsored which is investigating using WP1066 in combination with radiation for the treatment of glioblastoma, a form of brain cancer.
The physician-sponsored trials utilize primarily external funds, such as grant funds, which are not presented in these financial statements. The Company does not have manufacturing facilities, and all manufacturing activities are contracted out to third parties. Additionally, the Company does not have a sales organization. The Company’s overall strategy is to seek potential out-licensing or outsourcing opportunities with development/commercialization strategic partners who are better suited for the marketing, sales and distribution of its drugs, if approved.
In 2019, the Company sublicensed its technologies to Animal Life Sciences, Inc. (ALI), to enable research and commercialization for non-human use and share development data. As part of this agreement, ALI issued to the Company a 10 % equity interest in ALI.
On May 23, 2025, the Company received a letter from the Nasdaq Stock Market LLC (Nasdaq), which notified the Company that it does not presently comply with Nasdaq’s Listing Rule 5550 (b)( 1 ) (the “Equity Rule”), which requires that the Company maintain a minimum of $2.5 million in stockholders’ equity, and that the Company also does not meet the alternatives of market value of listed securities or net income from continuing operations set forth in the Equity Rule. The letter did not have any immediate effect on the listing of the Company’s common stock on the Nasdaq Capital Market, and the Company had 45 calendar days to submit a plan to regain compliance. The Company’s plan was accepted and the Staff granted an extension of up to 180 calendar days from May 23, 2025 through November 19, 2025 to evidence compliance. If the Company is not in compliance on that date, then the Company intends to submit an appeal to extend this date, however, there can be no assurance that such appeal would be successful.
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On June 27, 2025, the Company received another deficiency letter from the Staff of Nasdaq notifying the Company that for the last 30 consecutive business days the bid price for the Company’s common stock had closed below the minimum $1.00 per share requirement for continued inclusion on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550 (a)( 2 ) (the “Bid Price Rule”). The deficiency letter does not result in the immediate delisting of the Company’s common stock from the Nasdaq Capital Market. In accordance with Nasdaq Listing Rule 5810 (c)( 3 )(A) (the “Compliance Period Rule”), the Company has been provided an initial period of 180 calendar days, or until December 24, 2025 ( the “Compliance Date”), to regain compliance with the Bid Price Rule. If, at any time before the Compliance Date, the bid price for the Company’s common stock closes at $1.00 or more for a minimum of 10 consecutive business days as required under the Compliance Period Rule, the Staff is expected to provide written notification to the Company that it complies with the Bid Price Rule, unless the Staff exercises its discretion to extend this 10 day period pursuant to Nasdaq Listing Rule 5810 (c)( 3 )(H). If the Company is not in compliance with the Bid Price Rule by December 24, 2025, the Company may be afforded a second 180 calendar day period to regain compliance. To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, except for the minimum bid price requirement. In addition, the Company would be required to notify Nasdaq of its intent to cure the minimum bid price deficiency, which may include, if necessary, implementing a reverse stock split. If the Company does not regain compliance with the Bid Price Rule by the Compliance Date and is not eligible for an additional compliance period at that time, the Staff will provide written notification to the Company that its common stock may be delisted. The Company would then be entitled to appeal the Staff’s determination to a NASDAQ Listing Qualifications Panel and request a hearing. There can be no assurance that, if the Company does appeal the delisting determination by the Staff to the NASDAQ Listing Qualifications Panel, that such appeal would be successful. The Company intends to monitor the closing bid price of its common stock and may, if appropriate, consider available options to regain compliance with the Bid Price Rule, which could include effecting a reverse stock split. However, there can be no assurance that the Company will be able to regain compliance with the Bid Price Rule.
2. Basis of presentation, principles of consolidation, and significant accounting policies and liquidity
Reverse Stock Split - On March 22, 2024, the Company completed a reverse stock split of all the issued and outstanding shares of the Company’s common stock at a ratio of 1 to 15 . The accompanying consolidated financial statements and notes to the consolidated financial statements give retroactive effect to the reverse stock split for all periods presented. Certain amounts previously reported include rounding up of fractional shares as a result of the reverse stock split.
Basis of Presentation – Condensed Consolidated Financial Information - The accompanying condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the US (US GAAP) for financial information, and in accordance with the rules and regulations of the US Securities and Exchange Commission (SEC) with respect to Form 10 -Q and Article 8 of Regulation S- X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. The condensed consolidated financial statements furnished reflect all normal adjustments, which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company as of December 31, 2024 and for the year then ended, including the notes thereto contained in the Form 10 -K filed with the SEC on March 21, 2025.
Principles of Consolidation - The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company views its operations and manages its business in one operating segment. All material long-lived assets of the Company reside in the United States. In accordance with FASB ASC Topic 280, Segment Reporting, the Company views its operations and manages its business as one segment. As a result, the financial information disclosed herein represents all of the material financial information related to its principal operating segment.
Segment Information - Management has determined that the Company operates in one reportable segment, which is the development and commercialization of drug products. The Company's chief operating decision maker (CODM) is its Chief Executive Officer and Chairman, who reviews financial information presented on a consolidated basis. The CODM primarily uses consolidated net loss, which is also reported on the Consolidated Statements of Operations and Comprehensive Loss as net loss, to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the assessment of segment performance and allocation of resources. The significant expense categories within net loss from operations that the CODM regularly reviews are research and development expenses and general and administrative expenses. The significant expense categories and subcategories are reported on the Consolidated Statements of Operations and Comprehensive Loss. Other expenses included in the Company’s net loss include change in fair value of warrant liabilities, other income (expense), interest income, net, and any additional non-operating expenses that are reported on the Consolidated Statements of Operations and Comprehensive Loss.
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Significant Accounting Policies - The Company's significant accounting policies are described in Note 2, Basis of Presentation, principles of consolidation and significant accounting policies , to the consolidated financial statements included in the Company's Annual Report on Form 10 -K for the year ended December 31, 2024 . There have been no material changes to the significant accounting policies during the nine months ended September 30, 2025 , except as discussed further below under Changes in Accounting Policy.
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. Actual results could differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of financial statements. Estimates are used in the following areas, among others: fair value estimates on intangible assets, warrants, and stock-based compensation expense, as well as accrued expenses and taxes.
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 September 30, 2025 , the Company had an accumulated defici t of $ 221.6 million since inception and had not yet generated any revenues from operations. Additionally, management anticipates that its cash on hand of $ 6.7 million a s of September 30, 2025 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. These unaudited condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company intends to seek additional funding through one or more of the following: 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. There can be no assurance that such events or a combination thereof can be achieved.
In March 2022, the Company received a subpoena from the SEC requesting information and documents, including materials related to certain individuals ( none of which are the Company's officers or directors) and entities, and materials related to the development of and statements regarding the Company's drug candidate for the treatment of COVID- 19. The Company has received, and expects to continue to receive, periodic further requests from the SEC staff with respect to this matter. The Company is 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 it has made, the Company believes in the accuracy and adequacy of such prior disclosures. The correspondence from the SEC transmitting the subpoena to the Company 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. 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's expenses for the three and nine months ended September 30, 2025, were not material. The Company expensed approximately $ 0.1 million and $ 0.2 million in related general and administrative fees and expenses for the three and nine months ended September 30, 2024, respectively. The Company has not hit the retention limits, so no reimbursement is expected. Accordingly, the Company has not recorded any provision for insurance reimbursement as of September 30, 2025 .
Cash and Cash Equivalents - Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. The Company maintains cash accounts principally at one financial institution in the US, which at times, may exceed the Federal Deposit Insurance Corporation’s limit. The Company has not experienced any losses from cash balances in excess of the insurance limit. 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.
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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, 2025, 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 takes 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.
Prepaid Expenses and Other Current Assets - Prepaid expenses and other current assets consist of the following (in thousands):
September 30, 2025
December 31, 2024
Prepaid insurance
$ 786 $ 554
Vendor prepayments and deposits
367 331
Prepaid sponsored research
23 11
Related party receivables
4 4
Non-trade receivables
2 16
Total prepaid expenses and other current assets
$ 1,182 $ 916
Other Non-Current Assets - The Company provided a cash deposit on the MB- 108 trial that is expected to be held as a prepayment until the end of the study in 2029.
Fair Value of Financial Instruments - The Company's financial instruments consist primarily of non-trade receivables, accounts payable, accrued expenses and its warrant liability. The carrying amount of non-trade receivables, accounts payable, and accrued expenses approximates their fair value because of the short-term maturity of such.
The Company has categorized its assets and liabilities that are valued at fair value on a recurring basis into a three -level fair value hierarchy in accordance with US GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. 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 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.
Level 2 – Quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
Level 3 – Unobservable inputs for the asset or liability.
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 September 30, 2025 and December 31, 2024 (table in thousands):
Description
Fair Value
Level 1
Level 2
Level 3
Fair value of warrant liability as of September 30, 2025:
$ 41,333 $ — $ — $ 41,333
Fair value of warrant liability as of December 31, 2024:
$ — $ — $ — $ —
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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 September 30, 2025
Warrant Liability Long-Term
Balance, June 30, 2025
$ 16,830
Warrants issued
30,585
Warrants exercised
( 4,491 )
Change in fair value - net
( 1,591 )
Balance, September 30, 2025
$ 41,333
The table below of Level 3 liabilities (table in thousands) begins with the valuation as of December 31, 2024 and then is adjusted for changes in fair value that occurred during the nine months ended September 30, 2025 . 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.
Nine Months Ended September 30, 2025
Warrant Liability Long-Term
Balance, December 31, 2024
$ —
Warrants issued
46,855
Warrants exercised
( 4,491 )
Change in fair value - net
( 1,031 )
Balance, September 30, 2025
$ 41,333
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. For purposes of this calculation, options to purchase common stock, restricted stock units subject to vesting and warrants to purchase common stock are considered to be common stock equivalents. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. For the three months ended September 30, 2025 and 2024 , approximately 85.7 million and 4.8 m illion, 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, 2025 and 2024 , approximately 41.7 mil lion and 2.7 million, respectively, of potentially dilutive shares were excluded from the computation of diluted earnings per share due to their anti-dilutive effect.
Subsequent Events - The Company’s management reviewed all material events through the date of these unaudited condensed consolidated financial statements. See Note 8. Subsequent Events included in these unaudited condensed financial statements.
Recent Accounting Pronouncements - In November 2024 and January 2025, 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.
In December 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures. ASU 2023 - 09 improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance is effective for the annual periods beginning after the year ended December 31, 2024. There was no material impact upon adoption of ASU 2023 - 09 on the Company's interim disclosures.
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There are no other effective pronouncements, or pronouncements issued but not yet effective, if adopted, that would have a material effect on the accompanying financial statements.
Change in Accounting Policy - During the quarter ended September 30, 2025, the Company changed its accounting policy related to the classification of certain outstanding warrants. Prior to the change in accounting policy, the Company's policy was to account for warrants with a certain contingent settlement provision as liability warrants, initially measuring them at fair value on the date of issuance. The warrants were previously remeasured at fair value at the end of each reporting period, with the related liability reflected on the Company's balance sheet. The changes in fair value during each previous reporting period were recognized as a gain (loss) from change in fair value of warrant liability in the Company's condensed consolidated statement of operations. The Company has changed its policy and warrants that contain this certain contingent settlement provision will now be accounted as equity under ASC 815 - 40 - 15 - 7C through 15 - 7F and ASC 505. The Company concluded that accounting for its warrants as equity instruments is preferable under ASC 250, as equity classification better reflects the economic substance of the arrangement and enhances the clarity and consistency of the Company's financial reporting. As a result of this change in accounting policy, all warrants issued prior to 2025, and certain warrants issued in 2025, that were previously accounted for as liability awards due to the certain contingent settlement provision will now meet the equity classification criteria under ASC 815 - 40 and will be classified as equity instruments. The effects of the change in accounting policy from warrant liabilities to equity have been retrospectively applied to all periods presented in these condensed consolidated financial statements. Certain warrants issued in 2025 will continue to be classified as a liability as these warrants contain features other than the contingent settlement provision that cause liability classification. See also Note 4 - Warrants and Equity .
As a result of the change in accounting policy, the Company adjusted accumulated deficit, and additional paid-in capital to reverse previously recorded mark-to-market fair value changes of the liability-classified warrants. Warrants classified as liability warrants were adjusted retrospectively from January 2017 to June 2025, and beginning balances have been adjusted for the policy change to equity warrant classifications. Accumulated deficit as of January 1, 2024, changed from $ 131.6 million, as reported under the liability classification, to $ 146.4 million under the equity classification.
The following financial statement line items were impacted by the change in accounting policy, as shown in the tables below (in thousands, except per common share data):
September 30, 2025
December 31, 2024
As Reported
Effect of
As Reported
As Adjusted
Effect of
Under Old Policy Under New Policy Change Under Old Policy Under New Policy Change
Condensed Consolidated Balance Sheets
Warrant liability - long-term
$ 48,660 $ 41,333 $ ( 7,327 ) $ 5,229 $ — $ ( 5,229 )
Total liabilities
54,600 47,273 ( 7,327 ) 10,946 5,717 ( 5,229 )
Additional paid-in capital
162,337 194,631 32,294 159,384 183,690 24,306
Accumulated deficit
( 196,589 ) ( 221,556 ) ( 24,967 ) ( 153,367 ) ( 172,444 ) ( 19,077 )
Total stockholders' equity (deficit)
( 34,247 ) ( 26,920 ) 7,327 5,979 11,208 5,229
Total liabilities and stockholders' equity (deficit)
20,353 20,353 — 16,925 16,925 —
March 31, 2025
June 30, 2025
As Reported
As Adjusted
Effect of
As Reported
As Adjusted
Effect of
Under Old Policy
Under New Policy
Change
Under Old Policy
Under New Policy
Change
Condensed Consolidated Balance Sheets
Warrant liability - long-term
$ 13,749 $ — $ ( 13,749 ) $ 20,553 $ 16,973 $ ( 3,580 )
Total liabilities
20,971 7,222 ( 13,749 ) 28,758 25,178 ( 3,580 )
Additional paid-in capital
159,869 192,163 32,294 160,286 192,580 32,294
Accumulated deficit
( 159,803 ) ( 178,348 ) ( 18,545 ) ( 167,443 ) ( 196,157 ) ( 28,714 )
Total stockholders' equity (deficit)
42 13,791 13,749 ( 7,165 ) ( 3,585 ) 3,580
Total liabilities and stockholders' equity (deficit)
21,013 21,013 — 21,593 21,593 —
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Three Months Ended Three Months Ended
September 30, 2025
September 30, 2024
As Reported
Effect of
As Reported
As Adjusted
Effect of
Under Old Policy
Under New Policy
Change
Under Old Policy
Under New Policy
Change
Condensed Consolidated Statement of Operations
Gain (loss) from change in fair value of warrant liability
$ ( 2,157 ) $ 1,591 $ 3,748 $ ( 1,728 ) $ — $ 1,728
Transaction costs allocated to warrant liabilities
( 530 ) ( 530 ) — ( 993 ) — 993
Loss on issuance of warrant liabilities
( 20,609 ) ( 20,609 ) — ( 847 ) — 847
Net loss
( 29,147 ) ( 25,399 ) 3,748 ( 10,592 ) ( 7,024 ) 3,568
Net loss per common share - basic and diluted
( 0.78 ) ( 0.68 ) 0.10 ( 2.85 ) ( 1.89 ) 0.96
Other comprehensive income (loss)
( 29,153 ) ( 25,405 ) 3,748 ( 10,578 ) ( 7,010 ) 3,568
Nine Months Ended Nine Months Ended
September 30, 2025
September 30, 2024
As Reported
Effect of
As Reported
As Adjusted
Effect of
Under Old Policy
Under New Policy
Change
Under Old Policy
Under New Policy
Change
Condensed Consolidated Statement of Operations
Gain (loss) from change in fair value of warrant liability
$ 16,506 $ 1,031 $ ( 15,475 ) $ 1,423 $ — $ ( 1,423 )
Transaction costs allocated to warrant liabilities
( 3,525 ) ( 1,737 ) 1,788 ( 993 ) — 993
Loss on issuance of warrant liabilities
( 38,760 ) ( 30,962 ) 7,798 ( 847 ) — 847
Net loss
( 43,223 ) ( 49,112 ) ( 5,889 ) ( 19,881 ) ( 19,464 ) 417
Net loss per common share - basic and diluted
( 2.08 ) ( 2.36 ) ( 0.28 ) ( 6.83 ) ( 6.69 ) 0.14
Other comprehensive income (loss)
( 43,226 ) ( 49,115 ) ( 5,889 ) ( 19,868 ) ( 19,451 ) 417
Three Months Ended
Three Months Ended
June 30, 2025
June 30, 2024
As Reported
As Adjusted
Effect of
As Reported
As Adjusted
Effect of
Under Old Policy
Under New Policy
Change
Under Old Policy
Under New Policy
Change
Condensed Consolidated Statement of Operations
Gain (loss) from change in fair value of warrant liability
$ 9,609 $ ( 560 ) $ ( 10,169 ) $ 1,696 $ — $ ( 1,696 )
Transaction costs allocated to warrant liabilities
( 1,207 ) ( 1,207 ) — — — —
Loss on issuance of warrant liabilities
( 10,352 ) ( 10,352 ) — — — —
Net loss
( 7,640 ) ( 17,809 ) ( 10,169 ) ( 4,319 ) ( 6,015 ) ( 1,696 )
Net loss per common share - basic and diluted
( 0.49 ) ( 1.15 ) ( 0.66 ) ( 1.70 ) ( 2.37 ) ( 0.67 )
Other comprehensive loss
( 7,640 ) ( 17,809 ) ( 10,169 ) ( 4,311 ) ( 6,007 ) ( 1,696 )
Six Months Ended
Six Months Ended
June 30, 2025
June 30, 2024
As Reported
As Adjusted
Effect of
As Reported
As Adjusted
Effect of
Under Old Policy Under New Policy Change Under Old Policy Under New Policy Change
Condensed Consolidated Statement of Operations
Gain (loss) from change in fair value of warrant liability
$ 18,663 $ ( 560 ) $ ( 19,223 ) $ 3,151 $ — $ ( 3,151 )
Transaction costs allocated to warrant liabilities
( 2,995 ) ( 1,207 ) 1,788 — — —
Loss on issuance of warrant liabilities
( 18,150 ) ( 10,352 ) 7,798 — — —
Net loss
( 14,076 ) ( 23,713 ) ( 9,637 ) ( 9,289 ) ( 12,440 ) ( 3,151 )
Net loss per common share - basic and diluted
( 1.13 ) ( 1.90 ) ( 0.77 ) ( 3.71 ) ( 4.97 ) ( 1.26 )
Other comprehensive loss
( 14,073 ) ( 23,710 ) ( 9,637 ) ( 9,290 ) ( 12,441 ) ( 3,151 )
Three Months Ended
Three Months Ended
March 31, 2025
March 31, 2024
As Reported
As Adjusted
Effect of
As Reported
As Adjusted
Effect of
Under Old Policy
Under New Policy
Change
Under Old Policy
Under New Policy
Change
Condensed Consolidated Statement of Operations
Gain from change in fair value of warrant liability
$ 9,054 $ — $ ( 9,054 ) $ 1,455 $ — $ ( 1,455 )
Transaction costs allocated to warrant liabilities
( 1,788 ) — 1,788 — — —
Loss on issuance of warrant liabilities
( 7,798 ) — 7,798 — — —
Net loss
( 6,436 ) ( 5,904 ) 532 ( 4,970 ) ( 6,425 ) ( 1,455 )
Net loss per common share - basic and diluted
( 0.69 ) ( 0.63 ) 0.06 ( 2.02 ) ( 2.61 ) ( 0.59 )
Other comprehensive loss
( 6,433 ) ( 5,901 ) 532 ( 4,979 ) ( 6,434 ) ( 1,455 )
The change in accounting policy did not have a material effect on the statement of cashflows for any current or prior period presented.
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3. Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following components (in thousands):
September 30, 2025
December 31, 2024
Research and development
$ 1,413 $ 858
Payroll and bonuses
1,352 1,817
Legal, regulatory, professional and other
669 404
Operating lease liability - current
132 120
Due to related party
— 130
Total accrued expenses and other current liabilities
$ 3,566 $ 3,329
Additionally, accounts payable - due to related party was $ 19,000 and $ 20,000 at September 30, 2025 and December 31, 2024 , respectively,
4. Warrants and Equity
Warrant and Stock Issuances
In August 2025, the Company entered into a warrant exercise inducement offer letter with holders of certain existing warrants pursuant to which the holders agreed to exercise Series E warrants to purchase up to 16,216,216 shares of common stock with an exercise price of $ 0.37 per shares in exchange for the Company issuing new Series F warrants to purchase 64,864,864 shares of the Company's common stock. Each Series F warrant had an exercise price of $0.55 per share and is exercisable as of the date of issuance to October 16, 2030. The Company received gross proceeds of $ 6.0 million. In addition, during August and September 2025, 2,996,192 shares of Series E warrants were exercised for $ 1.1 million. The Series F warrants are classified as liability warrants within these consolidated condensed interim financial statements.
In June 2025, the Company closed a public offering of (i) 9,972,026 shares of the Company’s common stock; (ii) pre-funded warrants to purchase up to an aggregate of 6,107,974 shares of common stock; and (iii) Series E warrants to initially purchase up to an aggregate of 48,240,000 shares of common stock (of which Series E warrants to purchase 16,216,216 shares of common stock were exercised as described in the above paragraph). The combined purchase price for the securities was $ 0.37 per share of common stock (or pre-funded warrant in lieu thereof). Each pre-funded warrant was exercisable for one share of common stock at an exercise price of $ 0.001 per share. All of the pre-funded warrants were exercised during the three months ended June 30, 2025. Each Series E warrant has an initial exercise price of $ 0.37 per share and became exercisable beginning on the effective date of stockholder approval on August 18, 2025, at the Company's Annual Meeting. The Company also received approval at the Annual Meeting to increase its authorized shares of common stock to 500,000,000 , such that it can issue all shares of common stock required under the Series E warrants upon any future adjustments to the exercise price of the Series E warrants. The Series E warrants provide that if, while the Series E warrants are outstanding, the Company sells any common stock and/or common stock equivalents other than in connection with certain exempt issuances (as defined in the Series E warrant agreement), at a purchase price per share less than the exercise price of the Series E warrants in effect immediately prior to such sale, then immediately after such sale the exercise price of the Series E warrants then in effect will be reduced to an amount equal to such new issuance price, and, the number of shares issuable upon exercise of the Series E warrants will be proportionately adjusted such that the aggregate price will remain unchanged, subject to the floor price of $ 0.12 (Down Round Feature). In addition, the Series E warrants provide that if at any time on or after the date of issuance there occurs any share split, share dividend, share combination recapitalization or other similar transaction involving the common stock and the lowest daily volume weighted average price during the period commencing five consecutive trading days immediately preceding and the five consecutive trading days commencing on the date of such event is less than the exercise price of the Series E common warrants then in effect, then the exercise price of the Series E warrants will be reduced to the lowest daily volume weighted average price during such period and, the number of shares issuable upon exercise will be proportionately adjusted such that the aggregate price will remain unchanged, subject to the floor price of $ 0.12 . The Series E warrants expire on August 18, 2030. As of November 10, 2025, the Company had received gross proc eeds of $7.5 million and may receive up to an additional approximately $ 10.3 million in gros s proceeds if the Series E warrants are fully exercised for cash. Proceeds of offerings are allocated between common shares and Series E warrants first by allocating to the Series E 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. The fair value of the Series E warrants was $ 16.3 million on the issuance date. Because the fair value of the liability classified warrants issued in the June 2025 offering exceeded the total proceeds, no consideration was allocated to the common stock or pre-funded warrants. The full proceeds from the June 2025 offering were recorded as warrant liabilities, and the Company recognized a $ 10.4 million loss on the issuance of the Series E warrants. The Company also incurred $ 1.2 million in transaction costs related to the June 2025 public offering.
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In February 2025, the Company 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 was exercisable for one share of common stock at an exercise price of $ 0.001 per share. All of the pre-funded warrants were exercised during the three months ended March 31, 2025. Each Series D warrant will expire five years from the initial exercise date. The Company received gross proceeds of $ 3.5 million. Based on the change in accounting policy as noted in Note 2, these Series D warrants are classified within equity for all periods presented within these condensed consolidated interim financial statements.
In February 2025, the Company 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 pursuant to which the holder agreed to exercise for cash their existing warrants at a reduced exercise price of $ 1.00 in exchange for the Company's agreement to issue the inducement warrants to purchase up to 11,657,140 shares (Series C warrants) of the Company's common stock. Each Series C warrant has an exercise price of $ 0.75 and was exercisable as of the date of issuance and may be exercised for a period of five years. The Company received gross proceeds of $ 5.8 million. Total gross proceeds received in the two February 2025 transactions were $ 9.3 million. Based on the change in accounting policy as noted in Note 2, these Series C warrants are classified within equity for all periods presented within these condensed consolidated interim financial statements.
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). In August 2024, the Company entered into a warran t 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. Based on the change in accounting policy as noted in Note 2, the August 2024 warrants are classified within equity for all periods presented within these condensed consolidated interim financial statements.
Liability Classified Warrants
The Company applies a Monte Carlo simulation model to appropriately reflect the impact of the Down Round Feature to both the Series E and Series F Warrants. The risk-free interest rate assumption is based upon observed interest rates on zero coupon US Treasury bonds linearly interpolated to obtain a maturity period commensurate with the term of the warrants. 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.
The assumptions used in determining the fair value of the Company's outstanding liability classified warrants are as follows:
September 30, 2025
Risk-free interest rate
3.7 % to 3.7 %
Volatility
111.1 % to 112.7 %
Expected life (years)
4.9 to 5.0
Dividend yield
—%
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A summary of the Company's liability classified warrant activity during the nine months ended September 30, 2025 and related information follows:
Number of Shares
Range of Warrant Exercise
Weighted Average
Weighted Average Remaining Contractual
Under Warrant
Price per Share
Exercise Price
Life (Years)
Balance at January 1, 2025
— $ — $ — $ — —
Granted
113,104,864 $ 0.37 $ 0.55 $ 0.47 —
Exercised
( 19,212,408 ) $ 0.37 $ 0.37 $ 0.37 —
Balance at September 30, 2025
93,892,456 $ 0.37 $ 0.55 $ 0.49 5.0
Exercisable at September 30, 2025
93,892,456 $ 0.37 $ 0.55 $ 0.49 5.0
For a summary of the changes in fair value and the impact of changes in accounting policy associated with the Company's warrant liability for the nine months ended September 30, 2025 , see Note 2 - Basis of presentation, principles of consolidation and significant accounting policies. Subsequent to September 30, 2025, Series E warrants to purchase 1,175,351 shares of common stock were exercised at $ 0.37 per share.
Equity Classified Warrants
A summary of the Company's equity classified warrant activity during the nine months ended September 30, 2025 and related information follows:
Number of Shares Range of Warrant Exercise
Under Warrant
Price per Share
Balance at January 1, 2025
7,810,033 $ — $ —
Granted
19,966,089 $ 0.43 $ 1.64
Exercised
( 7,477,570 ) $ 0.00 $ 2.23
Expired warrants
( 67,670 ) $ 94.50 $ 94.50
Balance at September 30, 2025
20,230,882 $ 0.00 $ 0.55
Exercisable at September 30, 2025
18,976,140 $ 0.75 $ 54.45
The equity awards granted primarily consist of Series C and Series D warrants granted during the quarter ended March 31, 2025. Additionally, equity awards exercised during the nine months ended September 30, 2025 , primarily consisted of the Series A and B warrants exercised during the period.
In September 2025, the Company granted equity-classified warrants to purchase up to 375,000 shares of Company common stock with a ten -year term and an exercise price of $ 0.43 . The warrants vest annually over four years while services are being performed. In July 2025, the Company issued 200,000 warrants to a consultant, of which 100,000 vested immediately and 100,000 will vest upon the signing of a letter of intent or the closing of a licensing deal with a value of $ 10 million or more. In January 2025, the Company granted equity-classified warrants to two consultants to purchase up to 50,000 shares each of Company common stock with a ten -year term and an exercise price of $ 1.64 . The first 50,000 of these warrants vest based on performance of certain services, and the other 50,000 vest annually over four years.
In March 2024, the Company granted equity-classified warrants to purchase up to 3,334 shares of Company common stock with a ten -year term and an exercise price of $9.15. The warrants vest annually over four years while services are being performed.
Other Components of Equity and Share Issuances
During the nine months ended September 30, 2025 , all remaining pre-funded warrants were exercised, leaving no remaining pre-funded warrants outstanding as of September 30, 2025 . In July 2025, the Company issued 58,785 shares of common stock to a consultant in exchange for services provided. The Company issued 19,889 shares of common stock upon the vesting of RSUs in July 2025 pertaining to the prior quarter.
At Market Issuance Sales Agreement (ATM)
In July 2025, the Company entered into a certain At Market Issuance Offering Agreement ( 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 and either party may cancel upon two business days notice. The Company agreed to pay a commission to Roth of 3.0 % of the gross proceeds of any shares of common stock sold under the 2025 ATM Agreement, in addition to the reimbursement of certain expenses. The 2025 ATM Agreement terminates upon the sale of shares in the aggregate amount in the agreement.
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5. Stock-Based Compensation
As of September 30, 2025 , there wer e 4,677,666 shar es remaining to be issued under the Company's equity compensation plans.
Stock-based compensation expense for the three and nine months ended September 30, 2025 and 2024 , respectively, is as follows (table in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
General and administrative
$ 203 $ 259 $ 866 $ 980
Research and development
100 94 339 319
Total stock-based compensation expense
$ 303 $ 353 $ 1,205 $ 1,299
The Company recorded stock compensation expense for the equity classified warrants relating to non-employee consulting agreements o f $ 30,000 a nd $ 26,000 for the three months ended September 30, 2025 and 2024 , respectively, and $ 88,000 and $ 94,000 for the nine months ended September 30, 2025 and 2024 , respectively, which are included in the table above. At September 30, 2025 , there was $ 440,000 of unrecognized stock compensation expense related to the Company's equity classified warrants. In September 2025, the Company issued 1,441,500 stock options to employees and contractors at $ 0.43 per shares which have a ten -year term and vest over 4 years.
6. Income Taxes
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 2025 as a result of the losses recorded during the three and nine months ended September 30, 2025 and the additional losses expected for the remainder of 2025 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 September 30, 2025 and December 31, 2024 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, 2025 and 2024 , respectively. The effective tax rate for the nine months ended September 30, 2025 and 2024 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. The Company estimates its annual effective tax rate at the end of each quarterly period. Jurisdictions with a projected loss for the year where no tax benefit can be recognized due to the valuation allowance could result in a higher or lower effective tax rate during a particular quarter depending on the mix and timing of actual earnings versus annual projections.
On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act, which changes existing US tax laws, including extending or making permanent certain provisions of the Tax Cuts and Jobs Act, repealing certain clean energy initiatives, in addition to other changes. The Company continues to evaluate the impact the new legislation will have on the consolidated financial statements, but does not anticipate a significant impact due to the Company’s valuation allowance position.
7. 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 September 30, 2025 .
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Lease Obligations Payable
The following summarizes quantitative information about the Company's operating leases for the three and nine months ended September 30, 2025 and 2024 , respectively (table in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2025
2024
2025
2024
Lease cost:
Operating lease cost
$ 38 $ 37 $ 112 $ 112
Variable lease cost
7 7 22 17
Total
$ 45 $ 44 $ 134 $ 129
I n September 2023, th e Company executed an amendment to extend the corporate office lease until August 31, 2029, with an option to renew. The Company is required to remit base monthly rent of a pproximately $ 4,700 which will increase at an average approximate rate of 2 % each year. The Company is also required to pay additional rent in the form of its pro-rata share of certain specified operating expenses of the building.
In June 2022, the Company extended the lab lease until September 30, 2027, with no further right or option to renew. The Company recorded approximately $ 12,000 in sublease income from a related party for the three months ended September 30, 2025 and 2024 and $ 37,000 for each of the nine months ended September 30, 2025 and 2024 . 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 $ 40,000 and $ 39,000 for the three months ended September 30, 2025 and 2024 , respectively, and $ 119,000 and $ 107,000 for the nine months ended September 30, 2025 and 2024 , respectively .
I n March 2025, the Company terminated the WP1122 license with MD Anderson. The upcoming annual maintenance fee on this license was previously expensed and accrued, as the annual fee is due annually in April.
Licenses
MD Anderson - Total expenses related to the Company's license agreements with MD Anderson w ere $ 32,000 and $ 63,000 for the three months ended September 30, 2025 and 2024 , respectively, and $ 115,000 and $$ 180,000 for the nine months ended September 30, 2025 and 2024 , respectively . In October 2025, the Company entered into two separate options to license certain intellectual property related to WP1122 and a new formulation on WP1066. Such licenses are tied to continue support of sponsored research at MD Anderson discussed below.
HPI - The Company has an agreement with Houston Pharmaceuticals, Inc. (HPI), a related party, with total expenses o f $ 15,000 for each of the three months ended September 30, 2025 and 2024 , and $ 45,000 and $ 176,000 for the nine months ended September 30, 2025 and 2024 , respectively .
Sponsored Research Agreements - The expenses recognized under the agreements were $ 11,000 and $ 767,000 for the three months ended September 30, 2025 and 2024 , respectively, and $ 324,000 and $ 1,300,000 for the nine months ended September 30, 2025 and 2024 , respectively . The Company entered into a research agreement with MD Anderson until 2027. Such research supports the development efforts of the Company's three core technologies.
8. Subsequent Events
On November 12, 2025, the Compensation Committee of our board of directors approved, and we issued, in connection with our 2024/2025 compensation year, to certain of our executive officers and board members and advisors, ten -year options to purchase an aggregate of 2,605,000 shares of our common stock pursuant to the Company’s 2024 Stock Plan with an exercise price of $ 0.49 per share, which vest in four equal annual, except installments subject to the respective individual’s continued service with us as of each such vesting date; and performance stock units to acquire an aggregate of 1,550,000 shares of our common stock, which vest upon the attainment of performance milestones related to our lead clinical trial.
Subsequent to September 30, 2025, 736,549 shares were sold under the ATM Agreement for gross proceeds of $ 0.4 million at prices ranging from $ 0.4349 to $ 0.5601 . Pursuant to the terms of the Series F warrants, the exercise price of the Series F warrants was lowered to $ 0.4349 per share on November 13, 2025, which was the sole date on which sales under the ATM Agreement were made at a price less than $ 0.55 per share.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.