CERENOME, INC. 10-Q

Item 1. Financial Statements PLUS THERAPEUTICS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (in thousands, except share and par value data) September 30, 2021 December 31, 2020 Assets Current assets: Cash and cash equivalents $ 21,280 $ 8,346 Other current assets 817 829 Total current assets 22,097 9,175 Property and equipment, net 1,646 1,820 Operating lease right-of-use assets 559 636 Goodwill 372 372 Intangible assets, net 60 86 Other assets 16 16 Total assets $ 24,750 $ 12,105 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable and accrued expenses $ 2,630 $ 2,081 Operating lease liability 106 123 Term loan obligations, net of discount 6,752 6,335 Total current liabilities 9,488 8,539 Noncurrent operating lease liability 504 528 Warrant liability 3 7 Total liabilities 9,995 9,074 Commitments and contingencies (Note 7) Stockholders’ equity: Preferred stock, $ 0.001 par value; 5,000,000 shares authorized; 1,952 and 1,954 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively — — Common stock, $ 0.001 par value; 100,000,000 shares authorized; 15,360,025 and 6,749,028 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively 15 7 Additional paid-in capital 457,495 436,535 Accumulated deficit ( 442,755 ) ( 433,511 ) Total stockholders’ equity 14,755 3,031 Total liabilities and stockholders’ equity $ 24,750 $ 12,105 See Accompanying Notes to these Consolidated Condensed Financial Statements 4 PLUS THERAPEUTICS, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except share and per share data) For the Three Months Ended September 30, For the Nine Months Ended September 30, 2021 2020 2021 2020 Development revenues: Government contracts and other $ — $ — $ — $ 303 Operating expenses: Research and development 1,491 336 3,724 1,604 In process research and development acquired from NanoTx — — — 781 General and administrative 1,990 1,060 4,811 4,107 Loss on disposal of property and equipment 18 — 18 — Total operating expenses 3,499 1,396 8,553 6,492 Loss from operations ( 3,499 ) ( 1,396 ) ( 8,553 ) ( 6,189 ) Other income (expense): Interest income 5 2 13 47 Interest expense ( 232 ) ( 253 ) ( 708 ) ( 854 ) Change in fair value of warrants 2 ( 81 ) 4 2,342 Total other income (expense) ( 225 ) ( 332 ) ( 691 ) 1,535 Net loss $ ( 3,724 ) $ ( 1,728 ) $ ( 9,244 ) $ ( 4,654 ) Net loss per share, basic and diluted $ ( 0.28 ) $ ( 0.39 ) $ ( 0.84 ) $ ( 1.13 ) Basic and diluted weighted average shares used in calculating net loss per share attributable to common stockholders 13,264,230 4,402,221 10,961,284 4,113,928 See Accompanying Notes to these Consolidated Condensed Financial Statements 5 PLUS THERAPEUTICS, INC. CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (in thousands) Convertible Additional Total preferred stock Common stock paid-in Accumulated stockholders’ Shares Amount Shares Amount capital deficit equity Balance at December 31, 2019 1,959 $ — 3,880,588 $ 4 $ 426,426 $ ( 425,270 ) $ 1,160 Stock-based compensation — — — — 12 — 12 Net loss — — — — — ( 1,087 ) ( 1,087 ) Balance at March 31, 2020 1,959 $ — 3,880,588 $ 4 $ 426,438 $ ( 426,357 ) $ 85 Issuance of common stock for exercise of warrants — — 162,500 — 366 — 366 Reclassification of warrant liabilities — — — — 4,264 — 4,264 Issuance of common stock for in process research and development acquired from NanoTx Therapeutics — — 230,769 — 381 — 381 Share-based compensation — — — — 43 — 43 Net loss — — — — — ( 1,839 ) ( 1,839 ) Balance at June 30, 2020 1,959 $ — 4,273,857 $ 4 $ 431,492 $ ( 428,196 ) $ 3,300 Issuance of common stock for exercise of warrants — — 317,521 1 714 — 715 Reclassification of warrant liabilities — — — — 240 — 240 Conversion of Series B convertible preferred stock into common stock ( 5 ) — 37 — — — — Share-based compensation — — — — 94 — 94 Net loss — — — — — ( 1,728 ) ( 1,728 ) Balance at September 30, 2020 1,954 $ — 4,591,415 $ 5 $ 432,540 $ ( 429,924 ) $ 2,621 Balance at December 31, 2020 1,954 $ — 6,749,028 $ 7 $ 436,535 $ ( 433,511 ) $ 3,031 Stock-based compensation — — — — 107 — 107 Sale of common stock, net of offering cost — — 2,534,879 2 7,076 — 7,078 Conversion of Series B Convertible Preferred Stock into common stock ( 2 ) — 118 — — — — Issuance of common stock for exercise of warrants — — 896,500 1 2,016 — 2,017 Net loss — — — — — ( 2,720 ) ( 2,720 ) Balance at March 31, 2021 1,952 $ — 10,180,525 $ 10 $ 445,734 $ ( 436,231 ) $ 9,513 Sale of common stock, net of offering cost — — 1,907,000 2 5,092 — 5,094 Share-based compensation — — — — 138 — 138 Net loss — — — — — ( 2,800 ) ( 2,800 ) Balance at June 30, 2021 1,952 $ — 12,087,525 $ 12 $ 450,964 $ ( 439,031 ) $ 11,945 Sale of common stock, net of offering cost — — 3,272,500 3 6,351 — 6,354 Share-based compensation — — — — 180 — 180 Net loss — — — — — ( 3,724 ) ( 3,724 ) Balance at September 30, 2021 1,952 $ — 15,360,025 $ 15 $ 457,495 $ ( 442,755 ) $ 14,755 See Accompanying Notes to these Consolidated Condensed Financial Statements 6 PLUS THERAPEUTICS, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) For the Nine Months Ended September 30, 2021 2020 Cash flows used in operating activities: Net loss $ ( 9,244 ) $ ( 4,654 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 266 273 Amortization of deferred financing costs and debt discount 417 428 Loss on disposal of property and equipment 18 — In process research and development acquired from NanoTx Therapeutics — 781 Non-cash lease expenses 36 2 Change in fair value of warrants ( 4 ) ( 2,342 ) Stock-based compensation expense 425 149 Increases (decreases) in cash caused by changes in operating assets and liabilities: Accounts receivable — 1,169 Other current assets 12 516 Other assets — 54 Accounts payable and accrued expenses 418 ( 1,586 ) Net cash used in operating activities ( 7,656 ) ( 5,210 ) Cash flows used in investing activities: Purchases of property and equipment ( 134 ) ( 37 ) Proceeds from sale of property and equipment 50 — In process research and development acquired from NanoTx Therapeutics — ( 400 ) Net cash used in investing activities ( 84 ) ( 437 ) Cash flows provided by (used in) financing activities: Principal payments of long-term obligations - ( 5,307 ) Payment of financing lease liability ( 8 ) ( 93 ) Proceeds from exercise of warrants 2,017 1,081 Proceeds from sale of common stock, net 18,665 — Net cash provided by (used in) financing activities 20,674 ( 4,319 ) Net increase (decrease) in cash and cash equivalents 12,934 ( 9,966 ) Cash and cash equivalents at beginning of period 8,346 17,592 Cash and cash equivalents at end of period 21,280 7,626 Supplemental disclosure of cash flows information: Cash paid during period for: Interest $ 292 $ 470 Supplemental schedule of non-cash investing and financing activities: Unpaid offering cost $ 139 $ 12 Right-of-use asset obtained in exchange for lease liabilities $ 81 $ — Issuance costs paid in common stock $ — $ 463 Common stock issued in payment for in process research and development $ — $ 381 See Accompanying Notes to these Consolidated Condensed Financial Statements 7 PLUS THERAPEUTICS, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS September 30, 2021 (UNAUDITED) 1. Basis of Presentation and New Accounting Standards The accompanying unaudited consolidated condensed financial statements as of September 30, 2021 and for the nine months ended September 30, 2021 and 2020 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. The consolidated condensed balance sheet at December 31, 2020 has been derived from the audited financial statements at December 31, 2020, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations of Plus Therapeutics, Inc., and its subsidiaries (collectively, the “Company”) have been included. Operating results for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. These financial statements should be read in conjunction with the consolidated financial statements and notes therein included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on February 22, 2021. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The standard amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction in carrying value of the asset. Entities will no longer be permitted to consider the length of time that fair value has been less than amortized cost when evaluating when credit losses should be recognized. This new guidance is effective in the first quarter of 2023 for calendar-year SEC filers that are smaller reporting companies as of the one-time determination date. Early adoption is permitted beginning in 2019. The Company plans to adopt the new guidance on January 1, 2023, and it does not expect that adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. Recently Adopted Accounting Pronouncement In December 2019, the FASB issued ASU No. 2019-12, Income Taxes, Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The new guidance eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. ASU 2019-12 became effective for the Company on January 1, 2021 . Adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated financial statements. In August 2020, the FASB issued ​ASU No. 2020-06​, ​Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)​ (“ASU 2020-06”). ​ASU 2020-06 eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, ASU 2020-06 modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments in ASU 2020-06 are effective for smaller reporting companies as defined by the SEC for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The Company adopted ASU 2020-06 as of January 1, 2021 , which did not have a material impact on its consolidated financial statements. 2. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company’s most significant estimates and critical accounting policies involve reviewing assets for impairment, determining the assumptions used in measuring stock-based compensation expense and valuing warrants. Actual results could differ from these estimates. Management’s estimates and assumptions are reviewed regularly, and the effects of revisions are reflected in the consolidated financial statements in the periods they are determined to be necessary. 8 3. Liquidity and Going Concern The Company incurred net losses of $ 9.2 million for the nine months ended September 30, 2021. The Company had an accumulated deficit of $ 442.8 million as of September 30, 2021. Additionally, the Company used net cash of $ 7.7 million to fund its operating activities for the nine months ended September 30, 2021. These factors raise substantial doubt about the Company’s ability to continue as a going concern. T he Company continues to seek additional capital through strategic transactions and from other financing alternatives. Without additional capital, the Company’s current working capital will not provide adequate funding to make debt repayments or support its research and product development activities at their current levels. If sufficient capital is not raised, the Company will at a minimum need to significantly reduce or curtail its research and development and other operations, and this would negatively affect its ability to achieve corporate growth goals. On October 23, 2020, the Company entered into an Equity Distribution Agreement (the “Distribution Agreement”) with Canaccord Genuity LLC (“Canaccord”) pursuant to which it could issue and sell, from time to time, shares of its common stock having an aggregate offering price of up to $ 10,000,000 (the “ATM Shares”), depending on market demand, with Canaccord acting as an agent for sales. Sales of the ATM Shares could be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made directly on or through the NASDAQ Capital Market. Canaccord was required to use its commercially reasonable efforts to sell the ATM Shares the Company requested to be sold on its behalf, consistent with Canaccord’s normal trading and sales practices, under the terms and subject to the conditions set forth in the Distribution Agreement. The Company did no t have an obligation to sell any of the ATM Shares. The Company could instruct Canaccord not to sell the ATM Shares if the sales could not be effected at or above the price the Company designated from time to time and the Company could at any time suspend sales pursuant to the Distribution Agreement. During the year ended December 31, 2020, the Company issued 1,616,331 shares under the Distribution Agreement for net proceeds of approximately $ 3.2 million. During the nine months ended September 30, 2021, the Company issued 2,179,193 shares under the Distribution Agreement for net proceeds of $ 6.3 million. As of September 30, 2021, there were no remaining shares that may be issued and sold under the Distribution Agreement. On September 30, 2020, the Company entered into a purchase agreement (the “2020 Purchase Agreement”) and a registration rights agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which Lincoln Park committed to purchase up to $ 25.0 million of its common stock. Under the terms and subject to the conditions of the 2020 Purchase Agreement, the Company has the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase up to $25.0 million of its common stock. Such sales of common stock by us, if any, will be subject to certain limitations, and may occur from time to time, at our sole discretion, over the 36 -month period commencing November 6, 2020, subject to satisfaction of certain conditions. The net proceeds under the 2020 Purchase Agreement will depend on the frequency and prices at which the Company sells shares of its common stock to Lincoln Park. During the year ended December 31, 2020, the Company issued 353,113 shares, excluding 180,701 shares issued as commitment fee, under the 2020 Purchase Agreement for net proceeds of approximately $ 0.7 million. During the nine months ended September 30, 2021, the Company issued 5,535,186 shares of its common stock under the 2020 Purchase Agreement for net proceeds of $ 12.3 million. Should the Company fail to raise additional cash from outside sources, this would have a material adverse impact on its operations . The accompanying consolidated condensed financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concer n. 4 . Fair Value Measurements Fair value measurements are market-based measurements, not entity-specific measurements. Therefore, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. The Company follows a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below: • Level 1: Quoted prices in active markets for identical assets or liabilities. • Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets. 9 • Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable in active markets. Warrants issued in an underwritten public offering in September 2019 (“Series U Warrants”) are classified as liability instruments. Because some of the inputs to the Company’s valuation model are either not observable or are not derived principally from or corroborated by observable market data by correlation or other means, the warrant liability is classified as Level 3 in the fair value hierarchy. The Company estimated the fair value of the Series U Warrants with the Black Scholes model. The Series U Warrants will be marked to market as of each balance sheet date until they are exercised or upon expiration, with the changes in fair value recorded as non-operating income or loss in the statements of operations. September 30, 2021 December 31, 2020 Expected term 3 years 3.75 years Common stock market price $ 1.91 $ 2.02 Risk-free interest rate 0.53 % 0.24 % Expected volatility 139 % 149 % Resulting fair value (per warrant) $ 1.25 $ 1.56 The following table summarizes the change in Level 3 warrant liability value for the three and nine months ended September 30, 2021 and 2020 (in thousands): Three Months Ended Nine Months Ended Warrant liability September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020 Beginning balance $ 5 $ 242 $ 7 $ 6,929 Change in fair value ( 2 ) 81 ( 4 ) ( 2,342 ) Reclassification to equity — ( 240 ) — ( 4,504 ) Ending balance $ 3 $ 83 $ 3 $ 83 5 . Term Loan Obligations On May 29, 2015 , the Company entered into the Loan and Security Agreement (the “Loan and Security Agreement”), pursuant to which Oxford Finance, LLC (“Oxford”) funded an aggregate principal amount of $ 17.7 million (the “Term Loan”), subject to the terms and conditions set forth in the Loan and Security Agreement. The Term Loan accrues interest at a floating rate of at least 8.95 % per annum, comprised of a three-month LIBOR rate with a floor of 1.00 % plus 7.95 %. Pursuant to the Loan and Security Agreement, as amended, the Company is required to make interest only payments through May 1, 2021 and thereafter it is required to make payments of principal and accrued interest in equal monthly installments sufficient to amortize the Term Loan through September 1, 2024 , the maturity date. At maturity of the Term Loan, or earlier repayment in full following voluntary prepayment or upon acceleration, the Company is required to make a final payment in an aggregate amount equal to approximately $ 3.2 million. In connection with the Term Loan, on May 29, 2015, the Company issued to Oxford warrants to purchase an aggregate of 188 shares of the Company’s common stock at an exercise price of $ 5,175 per share. These warrants became exercisable as of November 30, 2015 and will expire on May 29, 2025 and, following the authoritative accounting guidance, are equity classified and its respective fair value was recorded as a discount to the debt. From September 2017 to March 2019, the Company entered into a total of seven amendments to the Term Loan which, amongst other things, extended the interest only period, required repayment of $ 3.1 million using the proceeds received from sale of the Company’s former UK and Japan subsidiaries in April 2019, increased the final payment, increased the final payment fee upon maturity or early repayment of the Term Loan, and increased the minimum liquidity covenant level to $ 2.0 million. On March 29, 2020, the Company entered into the Ninth Amendment of the Loan and Security Agreement (the “Ninth Amendment”), pursuant to which Oxford agreed to defer the start date of principal repayment from May 1, 2020 to May 1, 2021 and extended the term of the Term Loan from September 1, 2021 to September 1, 2024 . As the Company met the “Second I/O Extension Equity Event,” as defined in the Ninth Amendment, the principal repayment start date has been deferred to November 1, 2021. In addition, pursuant to the Ninth Amendment, on April 1, 2020, the Company made a $ 5.0 million paydown of principal upon execution of the Ninth Amendment and $ 0.3 million of related final payment. After giving effect to this payment, $ 4.3 million of principal remains outstanding under the Term Loan. In addition, an amendment fee of $ 1.0 million will be payable in connection with the Amendment at the earlier of the maturity date, acceleration of the loans and the making of certain prepayments. All other major terms remained consistent. Under authoritative guidance, the Ninth Amendment does not meet the criteria to be accounted for as a troubled debt restructuring. In addition, the Company performed a quantitative analysis and determined that the terms of the new debt and 10 original debt instrument are not substantially different. Accordingly, the Ninth Amendment is accounted for as debt modification. A new effective interest rate that equates the revised cash flows to the carrying amount of the original debt is computed and applied prospectively. The Term Loan, as amended, is collateralized by a security interest in substantially all of the Company’s existing and subsequently acquired assets, including its intellectual property assets, subject to certain exceptions set forth in the Loan and Security Agreement, as amended. The intellectual property asset collateral will be released upon the Company achieving a certain liquidity level when the total principal outstanding under the Loan and Security Agreement is less than $ 3 million. As of September 30, 2021, there was $ 4.3 million principal amount outstanding under the Term Loan, excluding the $ 3.2 million final payment fee, and the Company was in compliance with all of the debt covenants under the Loan and Security Agreement. The Company’s interest expense for the three months ended September 30, 2021 and 2020 was $ 0.2 million and $ 0.3 million, respectively. The Company’s interest expense for the nine months ended September 30, 2021 and 2020 was $ 0.7 million and $ 0.9 million, respectively. Interest expense is calculated using the effective interest method; therefore it is inclusive of non-cash amortization in the amount of $ 0.1 million for each of the three months ended September 30, 2021 and 2020, and $ 0.4 million for each of the nine months ended September 30, 2021 and 2020, respectively, related to the amortization of the debt discount, capitalized loan costs, and accretion of final payment. The Loan and Security Agreement, as amended, contains customary indemnification obligations and customary events of default, including, among other things, the Company’s failure to fulfill certain obligations under the Term Loan, as amended, and the occurrence of a material adverse change, which is defined as a material adverse change in the Company’s business, operations, or condition (financial or otherwise), a material impairment of the prospect of repayment of any portion of the loan. In the event of default by the Company or a declaration of material adverse change by its lender, under the Term Loan, the lender would be entitled to exercise its remedies thereunder, including the right to accelerate the debt, upon which the Company may be required to repay all amounts then outstanding under the Term Loan, which could materially harm the Company’s financial condition. As of September 30, 2021, the Company has not received any notification or indication from Oxford to invoke the material adverse change clause. However, due to the Company’s current cash flow position and the substantial doubt about its ability to continue as a going concern, the entire principal amount of the Term Loan is presented as short-term. The Company will continue to evaluate the debt classification on a quarterly basis and evaluate for reclassification in the future should its financial condition improve. 6 . Loss per Share Basic per share data is computed by dividing net income or loss applicable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted per share data is computed by dividing net income or loss applicable to common stockholders by the weighted average number of common shares outstanding during the period increased to include, if dilutive, the number of additional common shares that would have been outstanding as calculated using the treasury stock method. Potential common shares were related to outstanding but unexercised options, multiple series of convertible preferred stock, and warrants for all periods presented. The following were excluded from the diluted loss per share calculation for the periods presented because their effect would be anti-dilutive: Nine Months Ended September 30, 2021 2020 Outstanding stock options 1,050,890 531,336 Outstanding warrants 2,141,378 3,121,125 Preferred stock 422,985 422,985 Total 3,615,253 4,075,446 7 . Commitments and Contingencies Leases At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company calculates the associated lease liability and corresponding right-of-use asset upon lease commencement using a discount rate based on the rate implicit in the lease or an incremental borrowing rate commensurate with the term of the lease. The Company records lease liabilities within current liabilities or long-term liabilities based upon the length of time associated with the lease payments. The Company records its operating lease right-of-use assets as long-term assets. Right-of-use assets for financing leases are recorded within property and equipment, net in the balance sheet. Leases with an initial term of 12 months 11 or less are not recorded on the b alance s heet. Instead, the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company leases laboratory, office and storage facilities in San Antonio, Texas, under operating lease agreements that expire in 2028 . On October 1, 2021, the operating lease in San Antonio, Texas was amended so that the lease would expire in February 2025 , with a 3 % increase to the previously agreed-on annual minimum lease payments. The Company also leases certain office space in Austin, Texas under a month-to-month operating lease agreement. On March 1, 2021, the Company entered into a lease agreement for office space in Charlottesville, Virginia (the “Charlottesville Lease”). In addition, the Company has entered into leases for certain equipment under various operating and finance leases. As of September 30, 2021, contractual terms of all finance leases had expired and the Company did not have any right-of-use assets or lease liabilities relating to finance leases. The Company’s existing operating lease agreements generally provide for periodic rent increases, and renewal and termination options. The Company’s lease agreements do not contain any material variable lease payments, residual value guarantees or material restrictive covenants. The Charlottesville Lease has a term of 12 months and is renewable for four additional one-year periods. The minimum lease payment is $ 30,000 for the first twelve months, subject to a 3 % annual increase if and when the lease is renewed. The lease commencement date was April 1, 2021 . At lease inception, the Company believed that it was reasonably certain that it would renew the Charlottesville Lease beyond its initial 12 months term to 36 months in total. As a result, the Company recorded the operating lease right-of-use asset and related lease liability related to the Charlottesville Lease as of the lease commencement date, using the applicable discount rate of 8.95 %. Certain leases require the Company to pay taxes, insurance, and maintenance. Payments for the transfer of goods or services such as common area maintenance and utilities represent non-lease components. The Company elected the package of practical expedients and therefore does not separate non-lease components from lease components. The table below summarizes the Company’s operating lease liabilities and corresponding right-of-use assets (in thousands, except years and rates): September 30, 2021 Assets Operating $ 559 Total leased assets $ 559 Liabilities Current: Operating $ 106 Noncurrent: Operating 504 Total lease liabilities $ 610 Weighted-average remaining lease term (years) - operating leases 5.97 Weighted-average discount rate - operating leases 7.0 % The table below summarizes the Company’s lease costs from its unaudited consolidated condensed statement of operations, and cash payments from its unaudited consolidated condensed statement of cash flows during the three and nine months ended September 30, 2021 and 2020 (in thousands): Three Months Ended Nine Months Ended September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020 Lease expense: Operating lease expense $ 58 $ 52 $ 166 $ 160 Finance lease expense: Depreciation of right-of-use assets — 32 7 95 Interest expense on lease liabilities — 1 — 4 Total lease expense $ 58 $ 85 $ 173 $ 259 Cash payment information: Operating cash used for operating leases $ 56 $ 56 $ 162 $ 155 Financing cash used for financing leases — 42 8 93 Total cash paid for amounts included in the measurement of lease liabilities $ 56 $ 98 $ 170 $ 248 12 Total rent expenses for the nine months ended September 30, 2021 and 2020 was $ 170,000 and $ 177,000 , respectively, which includes leases in the table above, month-to-month operating leases, and common area maintenance charges. The Company’s future minimum annual lease payments under operating and financing leases at September 30, 2021 are as follows (in thousands): Operating Leases Remaining 2021 $ 44 2022 154 2023 131 2024 114 2025 108 Thereafter 234 Total minimum lease payments $ 785 Less: amount representing interest ( 175 ) Present value of obligations under leases $ 610 Less: current portion ( 106 ) Noncurrent lease obligations $ 504 Piramal Master Services Agreement O n January 8, 2021 , the Company entered into a Master Services Agreement (the “MSA”) with Piramal Pharma Solutions, Inc. (“Piramal”), for Piramal to perform certain services related to the development, manufacture, and supply of the Company’s RNL-Liposome Intermediate Drug Product. The MSA includes the transfer of analytical methods, development of microbiological methods, process transfer and optimization, intermediate drug product manufacturing, and stability studies for the Company, which has been initiated at Piramal’s facility located in Lexington, Kentucky. The parties contemplate that the MSA will lead to clinical and commercial supply agreements between the Company and Piramal. The MSA has a term of five years and will automatically renew for successive one-year terms unless either party notifies the other no later than six months prior to the original term or any additional terms of its intention to not renew the MSA. The Company has the right to terminate the MSA for convenience upon thirty days’ prior written notice. Either party may terminate the MSA upon an uncured material breach by the other party or upon the bankruptcy or insolvency of the other party. Other commitments and contingencies The Company has entered into agreements with various research organizations for pre-clinical and clinical development studies, which have provisions for cancellation. Under the terms of these agreements, the vendors provide a variety of services including conducting research, recruiting and enrolling patients, monitoring studies and data analysis. Payments under these agreements typically include fees for services and reimbursement of expenses. The timing of payments due under these agreements is estimated based on current study progress. As of September 30, 2021 , the Company did no t have any clinical research study obligations. Legal proceedings On June 22, 2021, the Company was named as a defendant in an action brought by Lorem Vascular, Pte. Ltd. (“Lorem”) in the District Court for the District of Delaware. The complaint alleges false representations were made to Lorem regarding the manufacturing facility in the United Kingdom (the “UK Facility”) that Lorem purchased from the Company under the Equity Purchase Agreement, dated March 29, 2019, between the Company and Lorem (the “Lorem Agreement”). Lorem also claims that false representations were made regarding the UK Facility’s certification to sell and distribute devices in the European Union and export such devices to China. In connection with these allegations, Lorem claims entitlement to at least $ 6,000,000 in compensatory damages and operational costs and expenses (collectively, the “Lorem Claim”). The Company believes that the claims from Lorem are without merit and intends to vigorously defend the case and on August 12, 2021, the Company filed a Motion to Dismiss asking the District Court to dismiss the Lorem Claim. Lorem filed an opposition on September 9, 2021, which we responded to on September 30, 2021. As of October 21, 2021, the Company is waiting for the District Court’s decision on our motion. No liability was accrued as of September 30, 2021. 13 The Company is subject to various claims and contingencies related to legal proceedings. Due to their nature, such legal proceedings involve inherent uncertainties including, but not limited to, court rulings, negotiations between affected parties and governmental actions. Management assesses the probability of loss for such contingencies and accrues a liability and/or discloses the relevant circumstances, as appropriate. 8 . NanoTx License Agreement On March 29, 2020, the Company and NanoTx, Corp. (“NanoTx”) entered into a Patent and Know-How License Agreement (the “NanoTx License Agreement”), pursuant to which NanoTx granted the Company an irrevocable, perpetual, exclusive, fully paid-up license, with the right to sublicense and to make, develop, commercialize and otherwise exploit certain patents, know-how and technology related to the development of radiolabeled nanoliposomes. On May 7, 2020, all closing conditions under the NanoTx License Agreement were satisfied and the Company paid an upfront payment of $ 400,000 in cash and issued 230,769 shares of its common stock to NanoTx. Cash and the fair value of common stock issued totaled $ 781,000 and is recorded as in-process research and development expenses, pursuant to authoritative literature for asset acquisition, in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2020. Pursuant to the terms of the NanoTx License Agreement, the Company may be required to pay up to $ 136.5 million in development and sales milestone payments and a tiered single-digit royalty on U.S. and European sales. 9. Stockholders’ Equity Preferred Stock The Company has authorized 5,000,000 shares of preferred stock, par value $ 0.001 per share. The Company’s Board of Directors is authorized to designate the terms and conditions of any preferred stock the Company issues without further action by the common stockholders. On September 21, 2021 , Series A 3.6% Convertible Preferred Stock was eliminated. There were no shares of Series A 3.6 % Convertible Preferred Stock immediately prior to September 21, 2021, or December 31, 2020. There were 1,014 and 1,016 shares of Series B Convertible Preferred Stock outstanding as of September 30, 2021 and December 31, 2020, respectively. There were 938 shares of Series C Preferred Stock outstanding as of each of September 30, 2021 and December 31, 2020. As of September 30, 2021, there were 938 outstanding shares of Series C Preferred Stock that can be converted into an aggregate of 416,889 shares of common stock, and 1,014 shares of Series B Convertible Preferred Stock that can be converted into an aggregate of 5,978 shares of common stock. Warrants On September 25, 2019, the Company completed an underwritten public offering. The Company issued 289,000 shares of its common stock, along with pre-funded warrants to purchase 2,711,000 shares of its common stock and Series U Warrants to purchase 3,450,000 shares of its common stock at $ 5.00 per share. The Series U Warrants have a term of five years from the issuance date. In addition, the Company issued warrants to H.C. Wainwright & Co., LLC, as representatives of the underwriters, to purchase 75,000 shares of its common stock at $ 6.25 per share with a term of 5 years from the issuance date, in the form of Series U Warrants (the “Representative Warrants”). In accordance with authoritative guidance, the pre-funded warrants are classified as equity. The Series U Warrants and the Representative Warrants are classified at issuance as liabilities due to a contingent obligation for the Company to settle the Series U Warrants with cash upon certain change in control events. Between April and September 2020, the Company entered into revised warrant agreements with the holders of 3,447,500 Series U Warrants (the “Warrant Amendments”). In return for reducing the strike price of the warrants to $ 2.25 per share, the warrant holders agreed to amend the settlement provisions upon a fundamental transaction such that the warrants would meet the requirements to be classified within stockholders’ equity. In September 2020, the Company entered into revised warrant agreements for the Representative Warrants that reduced the strike price of the warrants to $ 2.81 per share, and the warrant holders agreed to amend the settlement provisions upon a fundamental transaction such that the Representative Warrants would meet the requirements to be classified within stockholders’ equity. Accordingly, approximately $ 4.5 million of warrant liability was reclassified to stockholders’ equity on the respective effective date of the Warrant Amendments. In addition, approximately $ 0.7 million of other income representing change in the fair value of amended warrants from April 1, 2020 to the respective effective date of the Warrant Amendments is recorded in the consolidated statement of operations for the year ended December 31, 2020. As of September 30, 2021, there were 2,141,000 outstanding Series U Warrants which can be exercised into an aggregate of 2,141,000 shares of common stock. 14 Common Stock Lincoln Park Purchase Agreement On September 30, 2020, the Company entered into the 2020 Purchase Agreement and registration rights agreement pursuant to which Lincoln Park committed to purchase up to $ 25.0 million of the Company’s common stock. Under the terms and subject to the conditions of the 2020 Purchase Agreement, the Company has the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase up to $ 25.0 million of the Company’s common stock. Such sales of common stock by the Company are subject to certain limitations, and may occur from time to time, at the Company’s sole discretion, over the 36-month period commencing on November 6, 2020, subject to the satisfaction of certain conditions. The 2020 Purchase Agreement provides that the number of shares the Company may sell to Lincoln Park on any single business day in a regular purchase is 50,000 , but that amount may be increased up to 100,000 shares, depending upon the market price of the Company’s common stock at the time of sale and subject to a maximum limit of $ 500,000 per regular purchase. The purchase price per share for each such regular purchase is based on prevailing market prices of the Company’s common stock immediately preceding the time of sale as computed under the 2020 Purchase Agreement. In addition to regular purchases, the Company may also direct Lincoln Park to purchase other amounts as accelerated purchases or as additional accelerated purchases if the closing sale price of the common stock exceeds certain threshold prices as set forth in the 2020 Purchase Agreement. There are no trading volume requirements or restrictions under the Lincoln Park Purchase Agreement. There is no upper limit on the price per share that Lincoln Park must pay for common stock under a regular purchase or an accelerated purchase and in no event will shares be sold to Lincoln Park on a day when the Company’s common stock closing sale price is less than $ 0.25 per share. On June 16, 2020, the Company received stockholder approval to permit issuances of the Company’s common stock (including the issuance of more than 19.99 % of the Company’s common stock) to Lincoln Park pursuant to the 2020 Purchase Agreement. Based on the closing price of the Company’s common stock of $ 1.05 per share on March 16, 2020, the maximum number of shares the Company can issue and sell under the 2020 Purchase Agreement is approximately 23.8 million shares. Accordingly, the Company requested and received stockholder approval for the issuance of up to 23.8 million shares of the Company’s common stock under the 2020 Purchase Agreement. The Company would seek additional stockholder approval before issuing more than 23.8 million shares. Lincoln Park has no right to require the Company to sell any shares of common stock to Lincoln Park, but Lincoln Park is obligated to make purchases as the Company directs, subject to certain conditions. Actual sales of shares of common stock to Lincoln Park under the 2020 Purchase Agreement will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the common stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations. The net proceeds under the 2020 Purchase Agreement to the Company will depend on the frequency and prices at which the Company sells shares of its stock to Lincoln Park. During the year ended December 31, 2020, the Company issued 353,113 shares, excluding 180,701 shares issued as a commitment fee, of common stock under the 2020 Purchase Agreement for total net proceeds of approximately $ 0.7 million. During the nine months ended September 30, 2021, the Company issued 5,535,186 shares of its common stock under the 2020 Purchase Agreement for net proceeds of approximately $ 12.3 million. At-the-market Issuances On October 23, 2020, the Company entered into the Distribution Agreement with Canaccord Genuity LLC (“Canaccord”), pursuant to which the Company issued and sold the ATM Shares, depending on market demand, with Canaccord acting as an agent for sales. The Company had no obligation to sell any of the ATM Shares and it could instruct Canaccord not to sell the ATM Shares if the sales could not be effected at or above the price the Company designated from time to time and the Company could at any time suspend sales pursuant to the Distribution Agreement. During the year ended December 31, 2020, the Company issued 1,616,331 shares under the Distribution Agreement for net proceeds of approximately $ 3.2 million. During the nine months ended September 30, 2021, the Company issued 2,179,193 shares under the Distribution Agreement for net proceeds of $ 6.3 million . As of September 30, 2021, there were no remaining shares that may be issued and sold under the Distribution Agreement. 15 10. Stock-based Compensation Under the Company’s amended 2015 New Employee Incentive Plan (the “2015 Plan”), awards may be granted to employees who were not previously an employee or director of the Company, or following a bona fide period of non-employment, as a material inducement to entering into employment with the Company. As of September 30, 2021, there were 210,389 shares of common stock remaining and available for future issuances under the 2015 Plan. On May 17, 2021, the stockholders of the Company approved an amendment and restatement to the Company’s 2020 Stock Incentive Plan (the “2020 Plan”) to increase the total number of shares of common stock reserved for issuance under the 2020 Plan by 1,000,000 shares. The 2020 Plan provides for the award or sale of shares of common stock (including restricted stock), the award of stock units and stock appreciation rights, and the grant of both incentive stock options to purchase common stock. The 2020 Plan provides for the number of shares available for issuance to be increased to the extent that awards granted under the 2020 Plan and the Company’s 2014 Equity Incentive Plan (as replaced by the 2020 Plan) are forfeited or expire (except as otherwise provided in the 2020 Plan). As of September 30, 2021, there were 640,212 shares remaining and available for future issuances under the 2020 Plan. Generally, options issued under the 2020 Plan are subject to a one-year , two-year or four-year vesting schedule, with options vesting in equal installments on the monthly anniversary of the grant date and have a contractual term of 10 years. A summary of activity for the nine months ended September 30, 2021 is as follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value (in $,000) Outstanding as of December 31, 2020 531,336 $ 10.01 Granted 560,227 $ 2.70 Cancelled/forfeited ( 40,673 ) $ 28.87 Outstanding as of September 31, 2021 1,050,890 $ 5.38 9.1 $ — Vested as of September 30, 2021 293,574 $ 12.67 8.9 $ — Vested and expected to be vested as of September 30, 2021 974,134 $ 5.56 9.1 $ — As of September 30, 2021, the total compensation cost related to non-vested stock options not yet recognized for all the Company’s plans is approximately $ 1.5 million, which is expected to be recognized as a result of vesting under service conditions over a weighted average period of 3.0 years . 11. COVID-19 Pandemic and CARES Act The COVID-19 pandemic has presented substantial public health and economic challenges and is affecting economies, financial markets and business operations around the world. While the Company has implemented additional health and safety precautions and protocols in response to the pandemic and government guidelines, the Company has not experienced a significant impact on its business and operations. However, the Company may experience disruptions that could adversely impact its business operations as well as its preclinical studies and clinical trials. The Company is currently continuing the clinical trials it has underway in sites across the U.S., and, although there has been no significant impact to date, the Company expects that COVID-19 precautions may directly or indirectly impact the timeline for some of its clinical trials. Some of the Company’s clinical trial sites, including those located in areas severely impacted by the pandemic, placed new patient enrollment into clinical trials on hold or, for patients traveling from out-of-state, implemented a 14-day self-quarantine before appointments. In addition, some clinical trial sites imposed limited accessibility to conduct clinical monitoring and training on-site. As the accessibility of vaccines against COVID-19 and the number of adults who have received a vaccine has increased, several of the restrictions have been eased or lifted entirely. The Company considered the impacts of COVID-19 on the assumptions and estimates used to prepare its consolidated financial statements and determined that there were no material adverse impacts on the Company’s results of operations and financial position at September 30, 2021. The full extent to which the COVID-19 pandemic will directly or indirectly impact its business, results of operations and financial condition, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat it, as well as the economic impact on local, regional, national and international markets. 16 In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act, among other things, includes tax provisions relating to refundable payroll tax credits, deferment of employer’s social security payments, net operating loss utilization and carryback periods, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property (QIP). The CARES Act had no material impact on the Company’s income tax provision for the year ended December 31, 2020 or the nine months ended September 30, 2021. The programs under the CARES Act expired on September 6, 2021. 17