CERENOME, INC. 10-Q

Item 1. Financial Statements PLUS THERAPEUTICS, INC. CONDENSED BALANCE SHEETS (UNAUDITED) (in thousands, except share and par value data) June 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 18,090 $ 18,400 Other current assets 799 1,324 Total current assets 18,889 19,724 Property and equipment, net 1,560 1,477 Operating lease right-use-of assets 303 341 Goodwill 372 372 Intangible assets, net 131 51 Other assets 16 16 Total assets $ 21,271 $ 21,981 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable and accrued expenses $ 5,259 $ 4,151 Operating lease liability 104 111 Term loan obligation, current 1,608 1,608 Total current liabilities 6,971 5,870 Noncurrent operating lease liability 202 269 Term loan obligation 4,419 5,005 Warrant liability — 1 Total liabilities 11,592 11,145 Commitments and contingencies (Note 7) Stockholders’ equity: Preferred stock, $ 0.001 par value; 5,000,000 shares authorized; 1,952 shares issued and outstanding at June 30, 2022 and December 31, 2021 — — Common stock, $ 0.001 par value; 100,000,000 shares authorized; 22,468,682 and 15,510,025 issued and outstanding at June 30, 2022 and December 31, 2021, respectively 22 16 Additional paid-in capital 465,965 457,730 Accumulated deficit ( 456,308 ) ( 446,910 ) Total stockholders’ equity 9,679 10,836 Total liabilities and stockholders’ equity $ 21,271 $ 21,981 See Accompanying Notes to these Condensed Financial Statements 4 PLUS THERAPEUTICS, INC. CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except share and per share data) For the Three Months Ended June 30, For the Six Months Ended June 30, 2022 2021 2022 2021 Operating expenses: Research and development $ 2,831 $ 1,106 $ 4,615 $ 2,233 General and administrative 2,289 1,469 4,431 2,821 Total operating expenses 5,120 2,575 9,046 5,054 Operating loss ( 5,120 ) ( 2,575 ) ( 9,046 ) ( 5,054 ) Other income (expense): Interest income 19 4 26 8 Interest expense ( 181 ) ( 229 ) ( 379 ) ( 476 ) Change in fair value of liability instruments — — 1 2 Total other expense ( 162 ) ( 225 ) ( 352 ) ( 466 ) Net loss $ ( 5,282 ) $ ( 2,800 ) $ ( 9,398 ) $ ( 5,520 ) Net loss per share, basic and diluted $ ( 0.24 ) $ ( 0.25 ) $ ( 0.43 ) $ ( 0.56 ) Basic and diluted weighted average shares used in calculating net loss per share attributable to common stockholders 22,254,823 11,296,816 21,919,956 9,790,726 See Accompanying Notes to these Condensed Financial Statements 5 PLUS THERAPEUTICS, INC. CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (In thousands, except share data) Convertible Additional Total preferred stock Common stock paid-in Accumulated stockholders’ Shares Amount Shares Amount capital deficit equity 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 — — 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 Stock-based compensation — — — — 138 — 138 Sale of common stock, net — — 1,907,000 2 5,092 — 5,094 Net loss — — — — — ( 2,800 ) ( 2,800 ) Balance at June 30, 2021 1,952 $ — 12,087,525 $ 12 $ 450,964 $ ( 439,031 ) $ 11,945 Balance at December 31, 2021 1,952 $ — 15,510,025 $ 16 $ 457,730 $ ( 446,910 ) $ 10,836 Stock-based compensation — — — — 180 — 180 Sale of common stock, net — — 6,687,610 6 7,736 — 7,742 Net loss — — — — — ( 4,116 ) ( 4,116 ) Balance at March 31, 2022 1,952 $ — 22,197,635 $ 22 $ 465,646 $ ( 451,026 ) $ 14,642 Stock-based compensation — — — — 167 — 167 Sale of common stock, net — — 271,047 — 152 — 152 Net loss — — — — — ( 5,282 ) ( 5,282 ) Balance at June 30, 2022 1,952 $ — 22,468,682 $ 22 $ 465,965 $ ( 456,308 ) $ 9,679 See Accompanying Notes to these Condensed Financial Statements 6 PLUS THERAPEUTICS, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) For the Six Months Ended June 30, 2022 2021 Cash flows used in operating activities: Net loss $ ( 9,398 ) $ ( 5,520 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 302 179 Amortization of deferred financing costs and debt discount 218 283 Change in fair value of liability instruments ( 1 ) ( 2 ) Stock-based compensation expense 347 245 Change of operating lease assets and liabilities ( 36 ) — Non-cash lease expense — 4 Increases (decreases) in cash caused by changes in operating assets and liabilities: Other current assets 525 ( 11 ) Accounts payable and accrued expenses 1,527 ( 583 ) Net cash used in operating activities ( 6,516 ) ( 5,405 ) Cash flows (used in) investing activities: Purchases of property and equipment ( 348 ) ( 80 ) Purchases of intangible assets ( 117 ) — In process research and development acquired ( 250 ) — Net cash used in investing activities ( 715 ) ( 80 ) Cash flows from financing activities: Principal payments of long-term obligations ( 804 ) — Payment of financing lease liability — ( 8 ) Proceeds from exercise of warrants — 2,017 Proceeds from sale of common stock, net 7,725 12,291 Net cash provided by financing activities 6,921 14,300 Net increase (decrease) in cash and cash equivalents ( 310 ) 8,815 Cash and cash equivalents at beginning of period 18,400 8,346 Cash and cash equivalents at end of period $ 18,090 $ 17,161 Supplemental disclosure of cash flows information: Cash paid during period for: Interest $ 168 $ 290 Supplemental schedule of non-cash investing and financing activities: Unpaid offering cost $ 50 $ 119 Right-of-use asset obtained in exchange for lease liabilities $ — $ 81 See Accompanying Notes to these Condensed Financial Statements 7 PLUS THERAPEUTICS, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS June 30, 2022 (UNAUDITED) 1. Basis of Presentation and New Accounting Standards The accompanying unaudited condensed financial statements as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021 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 condensed balance sheet at December 31, 2021 has been derived from the audited financial statements at December 31, 2021, 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 three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. These financial statements should be read in conjunction with the financial statements and notes therein included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on February 24, 2022. 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 financial statements and related disclosures. 2. Use of Estimates The preparation of 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, and determining the assumptions used in measuring stock-based compensation expense. Actual results could differ from these estimates. Management’s estimates and assumptions are reviewed regularly, and the effects of revisions are reflected in the financial statements in the periods they are determined to be necessary. 3. Liquidity The Company incurred net losses of $ 9.4 million for the six months ended June 30, 2022. The Company had an accumulated deficit of $ 456.3 million as of June 30, 2022. Additionally, the Company used net cash of $ 6.5 million to fund its operating activities for the six months ended June 30, 2022. As disclosed in more detail in Note 9, the Company had entered into various financing agreements, and raised capital by issuing its common stock. The Company believes its current cash and cash equivalents will be sufficient to fund its operations for at least the next 12 months from the date these financial statements are issued. The Company continues to seek additional capital through strategic transactions and from other financing alternatives. 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 May 24, 2022, the Company received notice from The Nasdaq Stock Market LLC (“Nasdaq”) that, because the closing bid price for the Company’s common stock had fallen below $ 1.00 per share for 30 consecutive business days, the Company no longer complied with the minimum bid price requirement pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid 8 Requirement”). Nasdaq’s notice has no immediate effect on the listing or trading of the Company’s common stock. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company was provided an initial compliance period of 180 calendar days, or until November 21, 2022, to regain compliance with the Minimum Bid Requirement. To regain compliance, the closing bid price of the Company’s common stock must meet or exceed $ 1.00 per share for a minimum of 10 consecutive business days prior to November 21, 2022. If the Company does not achieve compliance with the Minimum Bid Requirement by November 21, 2022, the Company may be eligible for an additional 180 calendar days to regain compliance. To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other Nasdaq initial listing standards, with the exception of the Minimum Bid Requirement, and provide written notice of its intention to cure the minimum bid price deficiency during the second compliance period by effecting a reverse stock split if necessary. If the Nasdaq staff determines that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible for such additional compliance period, Nasdaq will provide notice that the Company’s common stock will be subject to delisting. In the event the Company receives notice that its common stock is being delisted, Nasdaq rules permit the Company to appeal any delisting determination by the Nasdaq staff. There can be no assurance that the Company will be able to regain compliance with the Minimum Bid Requirement or maintain compliance with the other listing requirements. 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. • Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable in active markets. Certain w arrants issued in an underwritten public offering in September 2019 (“Series U Warrants”) are classified as liability instruments. The Company estimated the fair value of the Series U Warrants with the Black Scholes model. 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. Liability-classified Series U Warrants are 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. As of June 30, 2022, the fair value of the Series U Warrants was immaterial, a nd the change in the fair value of liability classified Series U Warrants during the three and six months ended June 30, 2022 and 2021 was immaterial. 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 made interest only payments through May 1, 2021 and thereafter is required to make payments of principal and accrued interest in equal monthly installments sufficient to amortize the Term Loan through June 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 authoritative accounting guidance, are equity classified and its respective fair value was recorded as a discount to the debt. 9 From September 2017 to July 2019, the Company entered into a total of eight 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 June 1, 2024 . Under authoritative guidance, the Ninth Amendment did 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 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 $ 3.0 million. As of June 30, 2022, there was $ 3.1 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 June 30, 2022 and 2021 was $ 0.2 million. The Company’s interest expense for the six months ended June 30, 2022 and 2021 was $ 0.4 and $ 0.5 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 June 30, 2022 and 2021, and $ 0.2 million and $ 0.3 million for the six months ended June 30, 2022 and 2021, 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 June 30, 2022, the Company has not received any notification or indication from Oxford that it intends to invoke the material adverse change clause. 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: As of June 30, 2022 2021 Outstanding stock options 1,183,873 1,090,890 Preferred stock 422,867 422,867 Outstanding warrants 2,141,189 2,141,378 Total 3,747,929 3,655,135 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 10 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. Lease renewable options are included in the estimation of lease term when it is reasonably certain that the Company will exercise such options. 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 finance leases are recorded within property and equipment, net in the condensed balance sheets. Leases with an initial term of 12 months or less are not recorded on the condensed balance sheets. Instead, the Company recognizes lease expense for these leases on a straight-line basis over the lease term in the condensed statements of operations. The Company leases laboratory, office and storage facilities in San Antonio, Texas, under operating lease agreements that expire in 2025 . The Company also leases certain office space in Austin, Texas under a month-to-month operating lease agreement and certain office space in Charlottesville, Virginia (the “Charlottesville Lease”). The Charlottesville Lease has a term of 12 months and we have the ability to renew for three additional one-year periods. The Charlottesville Lease is currently set to expire on March 31, 2023 . The Company measured the operating lease right-of-use asset and related lease liability related to the Charlottesville Lease as of the lease commencement date of April 1, 2021 . In addition, the Company has entered into leases for certain equipment under various operating and finance leases. During 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 as of June 30, 2022. 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. 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 Company’s operating lease liabilities and corresponding right-of-use assets are included in the condensed balance sheets. As of June 30, 2022, weighted average discount rate used to measure operating lease liabilities and the operating leases remaining term were 9.0 % and 2.52 years, respectively. The table below summarizes the Company’s lease costs from its unaudited condensed statement of operations, and cash payments from its unaudited condensed statement of cash flows during the three and six months ended June 30, 2022 and 2021 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Lease expense: Operating lease expense $ 46 $ 58 $ 92 $ 108 Finance lease expense: Depreciation of right-of-use assets - 3 - 7 Total lease expense $ 46 $ 61 $ 92 $ 115 Cash payment information: Operating cash used for operating leases $ 54 $ 56 $ 91 $ 106 Financing cash used for financing leases - 3 - 8 Total cash paid for amounts included in the measurement of lease liabilities $ 54 $ 59 $ 91 $ 114 Total rent expenses for the six months ended June 30, 2022 and 2021 were $ 119,000 and $ 112,000 , 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 leases at June 30, 2022 are as follows (in thousands): 11 Operating Leases Remainder of 2022 $ 68 2023 137 2024 113 2025 17 Total minimum lease payments $ 335 Less: amount representing interest ( 29 ) Present value of obligations under leases 306 Less: current portion ( 104 ) Noncurrent lease obligations $ 202 Services Agreement and Sales Order with Medidata On March 31, 2022, the Company and Medidata Solutions, Inc. (“Medidata”) entered into a Sales Order (the “Sales Order”), pursuant to which Medidata will build a Synthetic Control Arm ® (SCA) platform that facilitates the use of historical clinical data to incorporate into the Company’s Phase 2 clinical trial of Rhenium-186 NanoLiposome ( 186 RNL) in recurrent glioblastoma (“GBM”). The Sales Order is governed under the terms of a services agreement (the “Services Agreement”), dated November 5, 2021. The Sales Order has a term of six (6) months. The Sales Order may only be terminated for a material breach by either party, if the clinical study is terminated or if the clinical study’s authorization or approval is withdrawn by a regulatory agency. 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 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 June 30, 2022 , 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 Asset and 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 Lorem Claim is without merit and is vigorously defending the case. No liability was accrued as of June 30, 2022. 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. 12 8 . License Agreements UT Health Science Center at San Antonio (“UTHSA”) License Agreement On December 31, 2021, the Company entered into a Patent and Know-How License Agreement (the “UTHSA License Agreement”) with The University of Texas Health Science Center at San Antonio, pursuant to which UTHSA 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 biodegradable alginate microspheres (BAM) containing nanoliposomes loaded with imaging and/or therapeutic payloads. Pursuant to the UTHSA License Agreement, the Company was required to make an upfront payment, which was recorded as in-process research and development acquired in the condensed statement of operations for the year ended December 31, 2021. The upfront payment of $ 250 thousand was paid in cash in January 2022. 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. 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 shares of Series B Convertible Preferred Stock outstanding as of June 30, 2022 and December 31, 2021. There were 938 shares of Series C Preferred Stock outstanding as of June 30, 2022 and December 31, 2021. As of June 30, 2022, 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 were initially 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. In 2020, all but 2,500 Series U Warrants were amended and met the requirements to be classified within stockholder’s equity. As of June 30, 2022, there were 2,141,000 outstanding Series U Warrants which can be exercised into an aggregate of 2,141,000 shares of common stock. 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 had the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park was obligated to purchase up to $ 25.0 million of the Company’s common stock. Such sales of common stock by 13 the Company were subject to certain limitations, and could 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. 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 could 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 had no right to require the Company to sell any shares of common stock to Lincoln Park, but Lincoln Park was 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 depended 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 depended on the frequency and prices at which the Company sold shares of its stock to Lincoln Park. During the year ended December 31, 2021, the Company issued 5,685,186 shares of its common stock under the 2020 Purchase Agreement for net proceeds of approximately $ 12.5 million. During the six months ended June 30, 2022, the Company issued 5,665,000 shares of its common stock under the 2020 Purchase Agreement for net proceeds of approximately $ 7.0 million. The Company no longer has any additional shares of common stock registered to sell under the 2020 Purchase Agreement. At-the-market Issuances On January 14, 2022, the Company entered into an Equity Distribution Agreement (the “2022 Distribution Agreement”) with Canaccord Genuity LLC (“Canaccord”), pursuant to which the Company may issue and sell, from time to time, shares of its common stock having an aggregate offering price of up to $ 5,000,000 shares (the “Shares”), with Canaccord acting as an agent for sales. Canaccord will use its commercially reasonable efforts to sell the Shares requested by the Company to be sold on its behalf. The Company has no obligation to sell any of the Shares. The Company may instruct Canaccord not to sell the Shares if the sales cannot be effected at or above the price designated by the Company from time to time and the Company may at any time suspend sales pursuant to the 2022 Distribution Agreement. During the six months ended June 30, 2022, the Company issued 1,293,657 shares under the 2022 Distribution Agreement for net proceeds of approximately $ 0.9 million. On October 23, 2020, the Company entered into an Equity Distribution Agreement (the “2020 Distribution Agreement”) with Canaccord. 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 2020 Distribution Agreement. During the year ended December 31, 2021, the Company issued 2,179,193 shares under the 2020 Distribution Agreement for net proceeds of $ 6.3 million. The 2020 Distribution Agreement has been terminated after all available registered shares were fully utilized. 14 1 0 . Stock-based Compensation Under the Company’s 2015 New Employee Incentive Plan (the “2015 Plan”), awards may only 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 June 30, 2022, there were 90,389 shares of common stock remaining and available for future issuances under the 2015 Plan. The Company’s 2020 Stock Incentive Plan (the “2020 Plan”), which replaced the Company’s 2014 Equity Incentive 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 to directors, officers, employees and consultants of the Company. The 2020 Plan, as amended, provides for the issuance of up to 3,500,000 shares of common stock, plus the number of shares available for issuance is increased to the extent that awards granted under the 2020 Plan and the Company’s 2014 Equity Incentive Plan are forfeited or expire (except as otherwise provided in the 2020 Plan). As of June 30, 2022, there were 627,212 shares remaining and available for future issuances under the 2020 Plan. Generally, options issued under the 2020 Plan are subject to a two-year or four-year vesting schedule with 25 % of the options vesting on the one year anniversary of the grant date followed by equal monthly installment vesting, and have a contractual term of 10 years. A summary of activity for the six months ended June 30, 2022 is as follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value ('000's) Balance as of December 31, 2021 1,170,890 $ 5.01 9.00 Granted 13,000 $ 0.53 Cancelled/forfeited ( 17 ) $ 24,705.88 Balance as of June 30, 2022 1,183,873 $ 4.60 8.52 $ - Vested and expected to vest at June 30, 2022 1,124,553 $ 4.68 8.50 $ - Exercisable at June 30, 2022 535,889 $ 7.24 8.25 $ - As of June 30, 2022, the total compensation cost related to non-vested stock options not yet recognized for all the Company’s plans is approximately $ 1.2 million, which is expected to be recognized as a result of vesting under service conditions over a weighted average period of 2.63 years . 11. COVID-19 Pandemic and CARES Act A novel strain of coronavirus (COVID-19) was declared a global pandemic by the World Health Organization in March 2020. COVID-19 , including the resurgence of cases relating to the spread of new variants, 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 considered the impacts of COVID-19 on the assumptions and estimates used to prepare its financial statements and determined that there were no material adverse impacts on the Company’s results of operations and financial position at June 30, 2022. 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. In response to the COVID-19 pandemic, the 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. The CARES Act had no material impact on the Company’s income tax provision for the year ended December 31, 2021 or the six months ended June 30, 2022. The Company continues to evaluate the impact of the CARES Act on its financial position, results of operations and cash flows. 15