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Item 7. Management’s Discussion and Analysis

2026-03-18 compared with 2025-03-21 · 167 added, 127 removed, 114 unchanged (72% of the section changed)

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Our Business Summary

We are a late-stage pharmaceutical development company currently conducting a pivotal Phase 3 trial evaluating Annamycin, a non-cardiotoxic anthracycline, in combination with Cytarabine for the treatment of subjects with relapsed/refractory 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 Moleculin R/R AML AnnAraC Clinical Evaluation) 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 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 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 is currently beginning a Phase 2B/3 trial.

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 an inhibitor 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 one Phase 1B/2 clinical trial for treating Acute Myeloid Leukemia (AML) and are embarking on a Phase 3 clinical trial for the treatment of AML, which we believe will be pivotal.

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

We believe that our lead drug candidate Annamycin has summarily:

Demonstrated significant efficacy in Phase 1 and 2 cancer clinical trials – specifically relapsed and refractory (R/R) AML with complete remission rates significantly above currently approved second line therapies and STS lung mets with overall survival as a median seventh line therapy comparable to overall survival seen with approved first line monotherapies;

Shown encouraging activity in five different clinical trials (most of which are now complete), funded both internally and externally (through investigator initiated trials);

Shown in its clinical trials to be non-cardiotoxic (N=84) with some patients being safely dosed at five times the typical lifetime maximum allowed anthracycline dose, which potentially enables repeated dosing and consolidation;

Demonstrated in preclinical models, to be more potent than and to avoid cross resistance with some of the most common drugs used to treat AML (as well as many other cancers), including currently approved anthracyclines, Cytarabine and Venetoclax;

Composition of matter patent protection thru 2040 and has orphan drug and fast track status;

No vesicant activity, making it safer to handle and administer as compared to other anthracyclines;

Shown a complete response (CR) rate of 50%, a composite complete response (CRc) rate of 60%, durability of CRc’s of approximately 9 months (and climbing), and an overall survival (OS) rate of approximately 11 months (and climbing) (N=10) in combination with Cytarabine for the treatment of R/R AML as second line therapy to date, which is higher than other currently approved second line therapies for R/R AML

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 would be disruptive to the competitive landscape for these markets.

We are a late-stage pharmaceutical development company currently evaluating Annamycin, also known as L-Annamycin and by its generic name “naxtarubicin”, which we believe is a “next-generation” anthracycline and, with it, are conducting a pivotal Phase 3 trial in combination with cytarabine for the treatment of subjects with relapsed/refractory (R/R) acute myeloid leukemia (AML).

We call this the “MIRACLE” trial (derived from Moleculin R/R AML AnnAraC Clinical Evaluation).

A blinded preliminary data readout has already been released for the MIRACLE trial, and we expect to have an interim unblinding of data in mid-2026 and an additional unblinding in the second half of 2026, thereby concluding Part A of the two-part trial.

We believe such early visibility for a pivotal registration-enabling trial is unique in that stakeholders will receive preliminary safety and efficacy data long before the conclusion of the trial.

We have two additional portfolios of technologies for hard-to-treat cancers and viruses with clinical and preclinical research funded by investigators at academic institutions.

One of these portfolios has an ongoing investigator-initiated trial, another one planned and additional active preclinical testing.

Since our inception, drug candidates from each of the three core portfolios are in active planning for, have approval to begin, are currently in or have successfully completed eighteen clinical trials.

Each of our three core technologies is based substantially on discoveries made at, made in conjunction with, and/or licensed from the University of Texas MD Anderson Cancer Center (MD Anderson) in Houston, Texas.

For each of the core technologies, one or more drug candidates have successfully completed a Phase 1 or greater clinical trial.

Three of our drug candidates have shown human activity in clinical trials and are currently or have been in Phase 1B/2, Phase 2, Phase 2B/3 clinical trials.

One of those drug candidates is Annamycin, which is currently in the MIRACLE trial.

We believe Annamycin is the first of its kind DNA binding agent, a “next-generation” anthracycline.

Whereas first- and second-generation anthracyclines are currently used to treat approximately half of all cancers, they carry with them the burden of dangerous cardiotoxicity and efficacy limitations associated with multidrug resistance mechanisms and poor tissue/organ distribution.

Later generation anthracyclines are comprised mainly of attempts to reduce cardiotoxicity or enhance anticancer activity but we believe have failed to deliver the necessary safety and efficacy profiles to win approval or gain market acceptance.

Annamycin is an entirely new chemical entity integrating a new molecular structure intended to enhance its ability to selectively kill cancer cells and reduce toxic side effects.

Annamycin possesses a unique and innovative multilamellar lipid-based delivery system designed to improve bioavailability and to increase therapeutic window.

The result is a next-generation anthracycline that we believe effectively addresses critical problems associated with currently used anthracyclines.

It is our lead drug candidate, and we have concluded a Phase 1B/2 clinical trial for treating AML and are now conducting a Phase 3 clinical trial for R/R AML, which we believe will be registration enabling.

We have also sponsored two Phase 1B/2 clinical trials of Annamycin for treating Soft Tissue Sarcoma metastasized to the lungs (STS lung metastases, STS lung mets, or Advanced STS), the results of which we believe supports the initiation of a pivotal approval trial in this additional indication.

We believe that our lead drug candidate Annamycin has:

The following advantages over early-generation anthracyclines which in their totality support Annamycin’s classification as a “next-generation” anthracycline:

1) demonstrated across five clinical trials to be non-cardiotoxic (n=90) with some patients being safely dosed at five times the typical lifetime maximum allowable anthracycline dose, (which potentially enables repeated dosing, consolidation and even use as a maintenance therapy);

2) exhibits no vesicant activity as well as greater tolerability, making it safer to handle and administer and easier on patients;

3) shown in preclinical models to circumvent multidrug resistance by avoiding MDR1 mechanisms and also to avoid cross-resistance with some of the most commonly used drugs for the treatment of AML (as well as many other cancers), including currently approved early-generation anthracyclines, cytarabine and venetoclax and, 4) exhibited in preclinical models substantially improved tissue/organ distribution;

Demonstrated a complete remission (CR) rate of 50% and a composite complete remission (CRc) rate of 60% in combination with Cytarabine for the treatment of R/R AML as second line therapy (n=10).

On an all comer’s basis (no limit on prior lines of therapy), the population of subjects who achieved a CR (n=8) demonstrated durability of approximately 13 months with median overall survival of 15 months and developing at the time of analysis, with 4 of 8 subjects (50%) censored;

Shown promising blinded safety and efficacy data for the first 30 subjects treated in the MIRACLE trial as we head towards the planned interim unblinding of data for the first 45 subjects treated with efficacy data in Part A of the MIRACLE trial in mid-2026;

Shown encouraging activity in a total of five different clinical trials (most of which are now complete), funded both internally and externally (through investigator-initiated trials);

specifically including relapsed and refractory AML with complete remission rates significantly above currently approved second line therapies and STS lung mets with overall survival as a median seventh line therapy comparable to overall survival seen with approved first line monotherapies;

Obtained composition of matter patent protection through 2040 with the potential to extend as far as 2045 as well as Orphan Drug and Fast Track designation.

One of our core management beliefs is that anthracyclines represent one of the most important treatments available for AML and Advanced STS, as well as many other cancers, and we believe Annamycin may, for the first time ever, allow a majority of these patients to benefit from Annamycin’s improved safety and efficacy by allowing increased dosing (and even maintenance dosing), improved tolerability and allowing access for patients who otherwise would not be eligible for an anthracycline (including the elderly and those with impaired cardiac function).

We believe that such benefits will 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

We are focused on internally funded (“internally” and “externally” funded trials are defined in the Funding Strategy section below) development of our core technologies:

In combination with Cytarabine (also known as Ara-C, the combination with Annamycin of which is referred to as AnnAraC) for the treatment of R/R AML, and

For the treatment of STS metastasized to the lungs.

A better formulation for delivery intravenously of a molecule from the WP1066 portfolio to possibly further support future externally funded oncology clinical trials.

Such a formulation will require additional preclinical work prior to a clinical trial.

We have established a Recommended Phase 2 Dose for WP1122 to potentially enable future externally funded oncology and virology trials.

Beyond this, we support development of our core technologies through several externally funded clinical trials and primarily externally funded non-clinical research, with the potential for further studies in the future.

We seek to advance our other drug candidates via investigator led studies, both clinically and preclinically, and as available resources will allow.

Core Technologies and Focus

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 dose limitations imposed by regulatory authorities upon commonly prescribed anthracyclines due to their inherent cardiotoxicity.

a) Annamycin is what we believe to be 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, tolerability, their susceptibility to multidrug resistance mechanisms and a lack of efficacy in certain tumor models.

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

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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.

In all of our discussions, clinical data, where a CSR or its equivalent has not been published, are considered preliminary and subject to change.

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 total 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 is in subject follow-up) and MB-108 which is a Phase 2B/3 pivotal clinical trial treating R/R AML as 2 nd line therapy and is just starting.

Additionally, there are 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 in combination with radiation treating GBM at Northwestern University that is actively recruiting.

Our Current Clinical Trial Focus

We are focused on Annamycin and WP1066 program’s internally and externally funded (“internally” and “externally” funded trials are defined in the Funding Strategy section below) development of our core technologies as follows:

Internally funded – In combination with Cytarabine (also known as Ara-C, the combination with Annamycin of which is referred to as AnnAraC) for the treatment of R/R AML, and

Externally funded – Advancing beyond our initial Phase 1B/2 internally funded trial for the treatment of STS metastasized to the lungs.

Externally funded – Based on sponsored research, we intend to begin in 2026 a Phase 1B/2 clinical trial with Annamycin as a monotherapy treating 3 rd line pancreatic cancer.

Internally funded – MB-109 utilizing AnnAraC for R/R AML as 3 rd line therapy in adults is planned for 2027.

Externally funded – MB-110 utilizing AnnAraC for R/R AML as 2 nd line therapy in pediatrics is planned for 2027.

We are researching potential sites for a grant funded trial.

Externally funded - An improved formulation for delivery intravenously (IV) of a molecule from the WP1066 portfolio to possibly further support future externally funded oncology clinical trials.

Such a formulation requires additional preclinical work prior to a clinical trial.

Externally funded - Phase 1B/2 trial for WP1066 oral formulation in combination with radiation treating glioblastoma (GBM) both in adults and pediatrics.

An adult clinical trial is in process and a pediatric trial is in the planning stage.

We have established a Recommended Phase 2 Dose for WP1122 to potentially enable future externally funded oncology and virology trials.

Beyond this, we support development of our core technologies through sponsored (internally funded) non-clinical research at MD Anderson.

Moleculin Biotech, Inc.

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Other income:

Gain (loss) from change in fair value of warrant liability

Transaction costs allocated to warrant liabilities

Gain from change in fair value of warrant liabilities

Loss on issuance of warrant liabilities

Other income, net

Transaction costs allocated to warrant liabilities

Loss on extinguishment of warrant liabilities

Other (expense) income, net

Interest income, net

Research and Development Expense

Research and development (R&D) expense w as $17.7 million an d $19.5 million for the years ended December 31, 2024 and 2023, respectively.

The decrease in R&D of $1.8 million is mainly related to the $1.5 million WPD sublicense termination in 2023, which enabled the reacquisition of our intellectual property rights in certain territories, including parts of the European Union.

Research and development (R&D) expense was $15.9 million and $17.7 million for the years ended December 31, 2025 and 2024, respectively.

The decrease in R&D of $1.8 million is primarily attributable to a reduction in sponsored research activities during the current year compared to the prior year.

General and Administrative Expense

General and administrative (G&A) expense was $8.8 million a nd $10.0 million for the years ended December 31, 2024 and 2023, respectively.

Th e decrease in G&A of $1.2 million wa s mainly attributable to a decrease in regulatory and legal services, and consulting & advisory fees.

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

We recorded a gain o f $6.1 million durin g the year ended December 31, 2024 as compared to a loss of $1.0 million, during the year ended December 31, 2023, for the change in fair value on revaluation of our warrant liability associated with our warrants issued in conjunction with our stock offerings.

We are required to revalue certain of the warrants at the time of each warrant exercise 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.

Generally, 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.

The net loss for the year ended December 31, 2024 wa s $21.8 million, which included a non-cash gain of $6.1 million on wa rrants in 2024 as compared to a loss of $1.0 million in the prior year and approximatel y $1.7 million o f stock-based compensation expense in 2024 as compared to $2.0 million in 2023.

General and administrative (G&A) expense was $9.1 million and $8.8 million for the years ended December 31, 2025 and 2024, respectively.

The increase in G&A of $0.3 million was primarily attributable to higher regulatory and legal services, as well as increased consulting and investor relations expenses.

Gain from Change in Fair Value of Warrant Liabilities, Loss on Issuance of Warrant Liabilities and Loss on Extinguishment of Warrant Liabilities

During the year ended December 31, 2025, we recognized a non-cash gain of $24.4 million related to the change in fair value of our warrant liabilities, a non-cash loss of $31.0 million associated with the issuance of warrant liabilities in connection with our equity offerings, and a $0.6 million non-cash loss related to the extinguishment of warrant liabilities that were reclassified to equity.

Certain of our warrants are classified as liabilities and are remeasured at fair value upon issuance and at each reporting date, as well as upon modification or inducement.

Changes in the fair value of these instruments are recognized in the consolidated statements of operations in the period in which they occur.

The fair value of these warrant liabilities is estimated using a Monte Carlo simulation model, which incorporates significant assumptions including expected volatility, expected term, risk-free interest rate, and the contractual terms of the warrants, including path-dependent features.

Because the valuation is sensitive to changes in our stock price and other inputs, the resulting gains or losses can be significant and may fluctuate materially from period to period.

In general, decreases in our stock price during a reporting period result in non-cash gains, while increases in our stock price result in non-cash losses related to the remeasurement of warrant liabilities.

Transaction Costs Allocated to Warrant Liabilities

During the year ended December 31, 2025, we recognized $1.4 million of transaction costs associated with the issuance of Series E and Series F warrant liabilities in June and August 2025, respectively.

Interest Income, Net

Interest income, net decreased by approximately $0.8 million for the comparable period due to a decreasing cash balance, coupled with decreasing interest rates during the past year.

Interest income, net decreased by approximately $0.4 million for the year ended December 31, 2025 from the comparable period in 2024 due to a decreasing cash balance during the past year.

Net loss for the year ended December 31, 2025 was $33.6 million, compared to a net loss of $26.0 million for the prior year.

The current-year net loss includes a $31.0 million non-cash loss related to the issuance of warrant liabilities, a $24.4 million non-cash gain from the change in the fair value of warrant liabilities, and a $0.6 million non-cash loss on the extinguishment of warrant liabilities that were reclassified to equity.

Liquidity and Capital Resources

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We also had $3.5 million of accounts payable and $3.3 million of accrued expenses and other current liabilities.

A significant portion of the accounts payable and accrued expenses are due to work performed in relation to our preclinical activities and our clinical trials.

For the years ended December 31, 2024 and 2023, we used approxima tely $23.9 million and $23.6 million of cash in operating activities, respectively, which represents cash outlays for research and development and general and administrative expenses in such periods.

The slightly increased cash outflows in 2024 was primarily due to timing of payments for sponsored research and other expenses.

F or the year ended December 31, 2024, there were $4.6 million in net proceeds from financing activities.

A significant portion of the accounts payable and accrued expenses were due to work performed in relation to our preclinical activities and our clinical trials.

For the years ended December 31, 2025 and 2024, we used approximately $22.7 million and $23.9 million of cash in operating activities, respectively, which represents cash outlays for research and development and general and administrative expenses in such periods.

The slightly decreased cash outflows in 2025 was primarily due to timing of payments for sponsored research and other expenses.

For the year ended December 31, 2025, there were $27.3 million in net proceeds from financing activities.

In 2024, there were $4.6 million in net proceeds from financing activities.

Cash used in investing activities for the years ended December 31, 2024 and 2023 was approximatel y $0.0 million, and $0.1 million, respectively.

We believe that our cash resources as of December 31, 2024, along with $9.3 m illion in gross proceeds received via our financing activities in the first quarter of 2025 (see Recent Stock Offerings below) will be sufficient to fund our planned operations into the third quarter of 2025, without the issuance of additional equity for cash.

Cash used in investing activities for the years ended December 31, 2025 and 2024 was approximately $0 and $13,000, respectively.

We believe that our cash resources as of December 31, 2025, along with $8.3 million in gross proceeds received via our financing activities in the first quarter of 2026 (see Recent Stock Offerings below) will be sufficient to fund our planned operations into the third quarter of 2026, without the issuance of additional equity for cash.

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 depe ndent upon our ability to obtain necessary financing to continue operations and the attainment of profitable operations.

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

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

We 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.

During the years ended December 31, 2024 and 2023, we have expensed approximately $0.2 million and $1.5 million, respectively, in related legal fees and expenses, which has impacted and may continue to impact our liquidity.

Recent Stock Offerings

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 common 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) and accompanying common warrant.

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.

The Company received gross proceeds of $3.5 million.

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 warrant 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 of the Company's common stock.

Each inducement warrant has an exercise price of $0.75, and was immediately exercisable as of the date of issuance and may be exercised for a period of five years therefrom.

The Company received gross proceeds of $5.8 million.

This brings the total gross proceeds received in February 2025 to $9.3 million.

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) and accompanying warrants.

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.

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

The Company calculated the valuation of the warrant amendment immediately prior to the offering, as well as the valuation of the warrant amendment with the repriced terms, and a 91% probability of obtaining shareholder approval.

The loss on modification of the warrants of $0.4 million was recorded as a loss on issuance of warrant liabilities for the year ended December 31, 2024.

The Company also considered a 91% probability of obtaining shareholder approval in the valuation for the August 2024 warrants for the year ended December 31, 2024.

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

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

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

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

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

Transaction costs related to the offering were correspondingly fully allocated to warrant liabilities, and $1.0 million in related transaction costs were expensed during the year ended December 31, 2024.

We have historically funded our operations through a combination of at-the-market equity sales, public offerings, and warrant exercises, including warrant exercise inducement transactions, and we expect to continue to rely on these sources of capital to support our operations.

On February 19, 2026, we entered into warrant inducement agreements with certain holders of our existing equity-classified Series E and Series F warrants.

Pursuant to these agreements, the holders exercised warrants to purchase an aggregate of 2,122,652 shares of our common stock at an exercise price of $3.90 per share, resulting in gross proceeds of approximately $8.3 million.

In consideration for such exercises, we issued new Series H warrants to purchase up to 6,367,956 shares of common stock.

The Series H warrants are exercisable upon shareholder approval, have a term of five years from such approval, and an exercise price of $2.3976 per share.

The Series H warrants contain customary anti-dilution adjustments and beneficial ownership limitations.

We have agreed to file a resale registration statement covering the shares of common stock issuable upon exercise of the Series H warrants on or before March 31, 2026, and to use commercially reasonable efforts to cause such registration statement to be declared effective by April 30, 2026.

Due to the completion of this transaction, the exercise price of our outstanding Series E warrants was adjusted to $3.00 per share, the exercise price of our outstanding Series F warrants was adjusted to $2.75 per share, and the exercise price of our outstanding Series G and Series H warrants was adjusted to $2.3976 per share.

On December 23, 2025, we increased the maximum aggregate gross sales price of our common stock that may be offered, issued and sold under our at the market equity offering agreement (the “2025 ATM Agreement”) with Roth Capital Partners, LLC (“Roth”), which we initially entered into in July 2025, from $6.5 million to $8.2 million.

Pursuant to the terms of the 2025 ATM Agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to $8.2 million from time to time through or to Roth, acting as sales agent or principal.

Roth may sell shares of our common stock in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices.

We pay Roth a commission equal to 3.0% of the gross proceeds from any shares of common stock sold under the 2025 ATM Agreement.

During the fourth quarter of 2025, we sold 1,130,420 shares of common stock pursuant to the 2025 ATM Agreement for gross proceeds of approximately $1.1 million.

On December 21, 2025, we entered into separate warrant amendment agreements (collectively, the “Warrant Amendment”) with the holders of our Series E, Series F, and Series G warrants (each as defined below, and collectively, the “Warrants”).

Pursuant to the Warrant Amendment, the exercise prices of the Warrants were reduced to $3.90 per share (which was subsequently adjusted as described above).

In addition, the Series E and Series F warrants were amended to eliminate certain price adjustment provisions and to revise the definition of “Black-Scholes Value".

The revised definition of Black-Scholes Value modified the expected volatility input used in the Black-Scholes option pricing model by eliminating the use of 30-day and 365-day historical volatility measures and limiting the volatility input to the greater of (i) 100-day historical volatility, as obtained from Bloomberg, or (ii) 100%.

All other inputs to the Black-Scholes model, including the risk-free interest rate, underlying stock price, expected term, and cost of borrow, remained unchanged.

As a result of the Warrant Amendment, we determined that the Series E and Series F warrants qualified for equity classification prospectively under applicable accounting guidance.

Accordingly, upon the effectiveness of the Warrant Amendment, the Series E and Series F warrants were reclassified from liability to equity.

In connection with the reclassification, we remeasured the Series E and Series F warrant liabilities to fair value immediately prior to reclassification, resulting in the recognition of a $21.5 million gain in the consolidated statement of operations.

We then reclassified approximately $16.0 million of Series E and Series F warrant liabilities to additional paid-in capital.

In addition, we recorded a loss on extinguishment of warrant liabilities of $0.6 million and a warrant-related deemed dividend of $0.1 million, which was recorded within additional paid-in capital and recognized as a reduction to income available to common stockholders.

See Note 5 of our consolidated financial statements in Item 8 in this Annual Report on Form 10-K for further discussion.

If exercised in full, the Warrants could result in gross proceeds to us of up to approximately $29.4 million.

On December 9, 2025, we entered into warrant exercise inducement agreements with holders of certain outstanding Series C, Series D and Series F warrants, pursuant to which such holders agreed to exercise warrants to purchase an aggregate of 1,044,329 shares of our common stock at reduced or existing exercise prices in exchange for the issuance of Series G warrants to purchase up to 2,610,823 shares of common stock, representing 250% of the shares underlying the exercised warrants, with a five-year exercise term.

We received gross proceeds of approximately $6.8 million from the warrant exercises.

Pursuant to ASC 815, and in accordance with our accounting policy, we determined that Series G warrants met the criteria for equity classification as of their issuance date.

Additionally, we utilized our ATM on this date and sold 86,475 shares for gross proceeds of $0.6 million.

In August 2025, we 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 648,649 shares of common stock with an exercise price of $9.25 per share in exchange for our issuing new Series F warrants to purchase 2,594,595 shares of our common stock.

Each Series F warrant had an exercise price of $13.75 per share (which was subsequently adjusted as described above) and is exercisable as of the date of issuance to October 16, 2030.

We received gross proceeds of $6.0 million.

In addition, during August and September 2025, 119,848 shares of Series E warrants were exercised for $1.1 million.

Upon issuance the Series F warrants were initially classified as liability warrants.

Pursuant to the Warrant Amendment described above, the Series F warrants were equity-classified as of December 21, 2025.

In total, we received gross proceeds of $7.1 million.

In June 2025, we completed a public offering for the sale of 398,881 shares of common stock, and 244,319 pre-funded warrants to purchase shares of common stock, and Series E warrants to purchase up to 1,929,600 shares of common stock.

The combined purchase price for the securities was $9.25 per share of common stock (or pre-funded warrant in lieu thereof).

Each Series E warrant expires five years from the initial exercise date, or August 18, 2030.

We received gross proceeds of $5.9 million.

On February 25, 2025, we entered into a securities purchase agreement with an institutional investor for the sale of 46,000 shares of common stock, and 84,841 pre-funded warrants to purchase shares of common stock, and Series D warrants to purchase up to 261,722 shares of common stock.

The combined purchase price for the securities was $26.75 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 $0.025 per share.

All pre-funded warrants were exercised in June 2025.

The Series D warrants expire five years from the initial exercise date, or August 18, 2030.

We received gross proceeds of $3.5 million.

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 233,143 shares of common stock pursuant to which the warrant holder agreed to exercise for cash their existing warrants at a reduced exercise price of $25.00 in exchange for our agreement to issue the inducement warrants to purchase up to 466,286 shares of our common stock.

Each inducement warrant is exercisable as of the date of issuance and may be exercised for a period of five years from the date of issuance.

We received gross proceeds of $5.8 million.

On August 19, 2024, we completed a public offering of 11,320 shares of common stock and 87,355 pre-funded warrants to purchase shares of common stock, Series A warrants to purchase up to 98,655 shares of common stock and Series B warrants to purchase up to 98,655 shares of common stock, at a combined public offering price of $55.75 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.

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

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Net change in cash and cash equivalents

As of December 31, 2024, there was $0.6 million of cas h on hand in a bank account in Australia and we know of no related limitations impacting our liquidity in Australia.

Cash used in operating activities

Net cash used in operating activities was $22.7 million for the year ended December 31, 2025 compared to $23.9 million for the year ended December 31, 2024.

This slight increase in use of cash for operations was mainly due to timing of payments related to sponsored research and other expenses.

This slight decrease in use of cash for operations was mainly due to timing of payments related to sponsored research and other expenses.

Cash used in investing activities

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Cash provided by financing activities

Net cash provided by financing activities was $4.6 million f or the year ended December 31, 2024, consisting of the proceeds from the August 2024 stock offering.

Net cash provided by financing activities was $4.1 million for the year ended December 31, 2023, consisting of the December 2023 stock offering, as well as shares issued utilizing the Lincoln Park Equity Line.

Net cash provided by financing activities was $27.3 million for the year ended December 31, 2025, During 2025, we generated cash from financing activities primarily through at-the-market equity sales, public offerings, and warrant exercises, including warrant exercise inducement transactions.

In the aggregate, these activities generated $27.3 million in net proceeds, including $1.0 million from at-the-market equity sales during the fourth quarter of 2025, $24.8 million from the issuance of common stock as a result of warrant inducement, pre-funded warrants, and common warrants, and $1.5 million from warrant exercises.

Net cash provided by financing activities was $4.6 million for the year ended December 31, 2024, consisting of proceeds from the August 2024 stock offering.

Contractual Obligations

Our contractual obligations and commitments relate primarily to our operating leases and license, sponsored research, consulting, and laboratory access agreements with various research and development centers for the development and commercialization of our drug candidates targeting acute myeloid leukemia and certain hard to treat cancers.

See Note 8 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K for further discussion.

Off-Balance Sheet Transactions

We do not engage in off-balance sheet transactions.

As of December 31, 2025, we did not have any off-balance sheet arrangements.

Recent Accounting Pronouncements

We have implemented all new accounting pronouncements that are in effect and may impact our financial statements and we do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.

Refer to Note 2 for additional discussion.

Refer to Note 2 of our consolidated financial statements in Item 8 in this Annual Report on Form 10-K for additional discussion.

Critical Accounting Policies and Significant Judgments and Estimates

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Accounting for warrants

Upon its issuance of warrants to purchase shares of common stock, the Company evaluates the terms of the warrant issue to determine the appropriate accounting and classification of the warrant issue pursuant to FASB ASC Topic 480, Distinguishing Liabilities from Equity, FASB ASC Topic 505, Equity, FASB ASC 815, Derivatives and Hedging, and ASC 718, Compensation - Stock Compensation.

Warrants are classified as liabilities when the Company may be required to settle a warrant exercise in cash and classified as equity when the Company settles a warrant exercise in shares of its common stock.

We issued warrants to purchase shares of common stock related to equity transactions in 2020, 2021, 2022, 2023, and 2024.

We account for our warrants issued in accordance with Accounting Standards Codification (ASC) Topic 815, Derivatives and Hedging, which requires every derivative instrument within its scope to be recorded on the balance sheet as either an asset or liability measured at its fair value, with changes in fair value recognized in earnings for liability classified warrants.

Based on this guidance, we determined that certain of our warrants to purchase shares of common stock related to equity transactions in 2020 , and 2023 meet the criteria for classification as a liability.

Accordingly, the warrants were classified as a warrant liability and are subject to fair value remeasurement at each transaction and balance sheet date.

The fair value was estimated using the Black-Scholes option pricing model, based on the market value of the underlying common stock at the measurement date, the contractual term of the warrant, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.

Proceeds of the December 2023 and August 2024 Offerings were allocated between common shares and warrants first by allocating proceeds to the warrants classified as a liability based on their fair value and then allocating the residual to the equity instruments, which includes the Pre-Funded Warrants.

Our financial instruments consist primarily of non-trade receivables, accounts payable, accrued expenses, and a 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.

We have categorized our assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy in accordance with 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 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.

Our financial assets and liabilities recorded at fair value on a recurring basis include the fair value of our warrant liability discussed below.

The fair value of this warrant liability associated with the February 2017, February 2018, June 2018, March 2019, April 2019, February 2020, D ecember 2023, and August 2024 Off erings (Offerings) are included in long-term liabilities on the accompanying financial statements as of December 31, 2024 and 2023 respectively.

We estimated the fair value of the warrant liability issued in our Offerings under ASC 820 as of their issuance date for financial reporting purposes.

We used the Black-Scholes option pricing model (BSM) to determine the fair value of the warrants.

The BSM model is acceptable in accordance with GAAP.

The BSM requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the weighted average term of the warrant.

The risk-free interest rate assumption is based upon observed interest rates on zero coupon US Treasury bonds whose maturity period is appropriate for the term of the warrants and is calculated by using the average daily historical stock prices through the day preceding the grant date.

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

Beginning in 2020, only the volatility of our stock was used in the BSM as we now have sufficient historic data in our stock price.

Changes in the fair value during the accounting period are shown as other income or expense.

When the Company enters into arrangements pursuant to which warrants are issued, modified, or amended, we evaluate the terms of the warrants to determine the appropriate accounting and classification in accordance with FASB Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”), ASC Topic 505, Equity (“ASC 505”), ASC Topic 815, Derivatives and Hedging (“ASC 815”), and ASC Topic 718, Compensation — Stock Compensation (“ASC 718”).

Warrants that meet the criteria for liability classification under ASC 480, or that do not meet the criteria for equity classification under ASC 815 due to exercise contingencies, settlement provisions, or other contractual terms, are accounted for as derivative liabilities.

These warrants are measured at fair value in accordance with ASC 820, Fair Value Measurement , with changes in fair value recognized in earnings, and are presented as warrant liabilities on the Company’s consolidated balance sheets.

Warrants that meet the criteria for equity classification are recorded in stockholders’ equity.

During the year ended December 31, 2025, we changed our accounting policy related to the classification of certain outstanding warrants.

Prior to the change in accounting policy, our 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 our 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 our consolidated statement of operations.

We changed our policy and warrants that contain this certain contingent settlement provision are now accounted for as equity under ASC 815-40-15-7C through 15-7F and ASC 505.

We concluded that accounting for our 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 our 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 now meet the equity classification criteria under ASC 815-40 and are 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 consolidated financial statements.

See Note 2 and Note 5 of our consolidated financial statements in Item 8 in this Annual Report on Form 10-K for further discussion.

As a result of the change in accounting policy, we adjusted accumulated deficit, and additional paid-in capital to reverse previously recorded mark-to-market fair value changes of the liability-classified warrants.

Valuation of Warrant Liabilities

The fair value of the warrant liabilities is estimated using a Monte Carlo simulation model.

This model is utilized due to certain features of the warrants, including path-dependent or market-based provisions, which cannot be appropriately valued using simpler option pricing models.

The valuation model incorporates assumptions related to:

the market price of our common stock at the measurement date;

the contractual term of the warrants;

expected volatility of our common stock;

risk-free interest rates;

expected dividend yield.

The risk-free interest rate is based on observed interest rates of zero-coupon U.S.

Treasury instruments with maturities corresponding to the expected term of the warrants.

Expected volatility represents the amount by which our stock price is expected to fluctuate over the expected life of the warrants.

Changes in the fair value of warrant liabilities are recorded as other income or expense in the consolidated statements of operations.

Allocation of Warrant Proceeds

For equity offerings during 2025 that included both common stock, equity-classified warrants, and warrants classified as liabilities, we allocated the proceeds first to the warrants based on their fair value at issuance, with the residual proceeds allocated to the equity instruments, including common stock and pre-funded warrants.

Stock-based compensation

Stock based compensation transactions are recognized as compensation expense in the statement of operations based on their fair values on the date of the grant, with the compensation expense recognized over the period in which a grantee is required to provide service in exchange for the award.

We estimate the fair value of options granted using the Black-Scholes option valuation model, and the fair value of restricted stock units using the closing price of our common stock as reported on the date of grant.

We estimate the fair value of options granted using the Black-Scholes option valuation model (BSM), and the fair value of restricted stock units using the closing price of our common stock as reported on the date of grant.

The Black-Scholes estimate uses assumptions regarding a number of inputs that require us to make significant estimates and judgments.

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Recent accounting pronouncements

See Note 2 to the Notes to Consolidated Financial Statements in "Item 8 - Financial Statements and Supplementary Data" in this Annual Report for discussion regarding recent accounting pronouncements.

See Note 2 of our consolidated financial statements in Item 8 in this Annual Report on Form 10-K for discussion regarding recent accounting pronouncements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

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What changed 10-K

Item 7. Management’s Discussion and Analysis