Bio-Path(BPTH) - 2024 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION This section details the company's unaudited financial statements and management's analysis of its financial condition Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and shareholders' equity, along with detailed notes explaining significant accounting policies, financial instrument valuations, and recent financing activities Condensed Consolidated Balance Sheets (Unaudited) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific dates | Metric (in thousands) | September 30, 2024 | December 31, 2023 | Change | % Change | | :-------------------- | :------------------ | :----------------- | :----- | :------- | | Cash | $562 | $1,052 | -$490 | -46.5% | | Total Current Assets | $2,899 | $3,042 | -$143 | -4.7% | | Total Assets | $2,965 | $3,220 | -$255 | -7.9% | | Total Current Liabilities | $3,375 | $1,906 | $1,469 | 77.1% | | Warrant Liability | $302 | $863 | -$561 | -65.0% | | Total Liabilities | $3,677 | $2,779 | $898 | 32.3% | | Total Shareholders' (Deficit) Equity | ($712) | $441 | -$1,153 | -261.4% | - The company's cash balance decreased by 46.5% to $562 thousand as of September 30, 2024, from $1,052 thousand at December 31, 2023. Total shareholders' equity shifted from a positive $441 thousand to a deficit of ($712) thousand, a decrease of 261.4%[11] Condensed Consolidated Statements of Operations (Unaudited) This section outlines the company's financial performance over specific periods, detailing revenues, expenses, and net loss Operating Expenses (in thousands) | Expense Category | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | R&D | $1,317 | $2,292 | $5,478 | $9,332 | | G&A | $1,317 | $984 | $3,889 | $3,478 | | Total Operating Expenses | $2,634 | $3,276 | $9,367 | $12,810 | Net Loss and EPS (in thousands, except per share amounts) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Operating Loss | ($2,634) | ($3,276) | ($9,367) | ($12,810) | | Total Other Income | $519 | $77 | $2,226 | $104 | | Net Loss | ($2,115) | ($3,199) | ($7,141) | ($12,706) | | Net Loss per Share | ($0.70) | ($6.36) | ($4.05) | ($29.34) | - Net loss for the three months ended September 30, 2024, decreased by $1.084 million (33.9%) to $2.115 million compared to $3.199 million in the prior year period. For the nine months, net loss decreased by $5.565 million (43.8%) to $7.141 million from $12.706 million[15] - Research and development expenses decreased by $0.975 million (42.5%) for the three months and $3.854 million (41.3%) for the nine months ended September 30, 2024, primarily due to decreased manufacturing expenses[14] - General and administrative expenses increased by $0.333 million (33.8%) for the three months and $0.411 million (11.8%) for the nine months ended September 30, 2024, mainly due to increased legal fees and salaries[14] Condensed Consolidated Statements of Cash Flows (Unaudited) This section details the cash inflows and outflows from operating, investing, and financing activities over specific periods Cash Flow Activities (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :----------------- | :----------------------------- | :----------------------------- | | Operating Activities | ($7,694) | ($9,721) | | Financing Activities | $7,204 | $1,689 | | Net Increase (Decrease) in Cash | ($490) | ($8,032) | | Cash, End of Period | $562 | $2,352 | - Net cash used in operating activities decreased by $2.027 million (20.8%) to $7.694 million for the nine months ended September 30, 2024, compared to $9.721 million in the prior year[17] - Net cash provided by financing activities significantly increased to $7.204 million for the nine months ended September 30, 2024, from $1.689 million in the prior year, primarily due to proceeds from common stock sales[17] Condensed Consolidated Statements of Shareholders' (Deficit) Equity (Unaudited) This section presents changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit Shareholders' (Deficit) Equity Changes (in thousands) | Metric | Balance at Dec 31, 2023 | Balance at Sep 30, 2024 | | :--------------- | :---------------------- | :---------------------- | | Common Shares | 618 | 3,710 | | Stock Amount | $1 | $4 | | Additional Paid in Capital | $108,047 | $114,032 | | Accumulated Deficit | ($107,607) | ($114,748) | | Total Equity | $441 | ($712) | - Total shareholders' equity transitioned from a positive $441 thousand at December 31, 2023, to a deficit of ($712) thousand at September 30, 2024, driven by net losses and common stock issuances[19] - Common shares outstanding increased significantly from 618 thousand at December 31, 2023, to 3,710 thousand at September 30, 2024, primarily due to various stock and warrant issuances[19] Notes to the Unaudited Condensed Consolidated Financial Statements These notes provide essential context to the financial statements, detailing the company's business, significant accounting policies, and specific breakdowns of assets, liabilities, equity, and recent financing activities, including a going concern warning 1. Organization and Business This note describes the company's core business as a clinical and preclinical stage oncology-focused RNAi nanoparticle drug developer - Bio-Path Holdings, Inc. is a clinical and preclinical stage oncology-focused RNAi nanoparticle drug development company[21] - The company utilizes DNAbilize®, a novel drug delivery and antisense technology, for systemic delivery of target-specific protein inhibition in blood diseases and solid tumors[21] - Currently, Bio-Path has four antisense drug candidates in development for at least five different cancer indications, with operations limited to technology development and product candidates[21][23] 2. Significant Accounting Policies This note outlines the key accounting principles and methods applied in preparing the financial statements, including going concern considerations - The company's available cash of $0.6 million at September 30, 2024, along with October 2024 private placement proceeds, will not be sufficient to fund liquidity and capital expenditure requirements for the next 12 months, raising substantial doubt about its ability to continue as a going concern[26] - Warrants are classified as a liability and measured at fair value using Level 3 inputs (Black-Scholes model), with changes recorded in the Condensed Consolidated Statement of Operations[27] - Diluted net loss per share is equal to basic net loss per share as outstanding warrants and stock options would be antidilutive[24][25] 3. Prepaid Drug Product This note details the company's advance payments for manufacturing and raw materials related to its drug candidates - Prepaid drug product decreased from $0.6 million at December 31, 2023, to $0.5 million at September 30, 2024, representing advance payments for manufacturing and raw materials for prexigebersen[29] 4. Other Current Assets This note explains the composition and changes in other current assets, primarily related to clinical trial prepayments - Other current assets increased from $1.4 million at December 31, 2023, to $1.8 million at September 30, 2024, primarily due to increased prepayments for clinical trials (BP1001-A and BP1002) and prepaid insurance[30] 5. Accounts Payable This note details the increase in accounts payable, mainly driven by higher clinical trial and professional fees - Accounts payable increased from $0.5 million at December 31, 2023, to $1.0 million at September 30, 2024, mainly due to higher clinical trial expenses, legal and patent fees, and financing activity expenses[31] 6. Accrued Expense This note explains the increase in accrued expenses, primarily due to higher clinical trial costs and employee-related accruals - Accrued expenses increased from $1.3 million at December 31, 2023, to $2.3 million at September 30, 2024, primarily driven by higher accrued clinical trial expenses ($1.6 million), employee vacation/bonus expenses, and professional fees[32] 7. Warrant Liability This note details the fair value changes of the company's warrant liability, resulting in non-cash income - The fair value of the total warrant liability decreased from $0.9 million at December 31, 2023, to $0.3 million at September 30, 2024[34] - The net change in fair value of warrant liability resulted in non-cash income of $0.5 million for the three months and $2.2 million for the nine months ended September 30, 2024[34] 8. Fair Value Measurements This note describes the valuation methodology and key assumptions used for measuring the fair value of warrant liabilities Warrant Liability Fair Value (in thousands) | Metric | September 30, 2024 | December 31, 2023 | | :----- | :----------------- | :---------------- | | Level 3 Warrant Liability | $302 | $863 | Changes in Level 3 Warrant Liability (in thousands) for Nine Months Ended Sep 30, 2024 | Activity | Amount | | :------- | :----- | | Balance at Dec 31, 2023 | $863 | | Issuance | $1,655 | | Change in fair value | ($2,216) | | Balance at Sep 30, 2024 | $302 | - The company uses the Black-Scholes valuation model for warrants, with key assumptions as of September 30, 2024: risk-free interest rate of 3.58%, expected volatility of 109%, and expected term of 4.4 years[39] 9. Stockholders' Equity This note details the changes in stockholders' equity, including common stock issuances and the impact of net losses - Total Stockholders' (Deficit) Equity was ($0.7) million as of September 30, 2024, a decrease from $0.4 million as of December 31, 2023[47] - The company issued common stock and warrants through several offerings in 2023 and 2024, including the 2023 Public Offering ($1.7 million net proceeds), March 2024 Registered Direct Offering ($0.2 million net proceeds), At The Market Offering ($1.8 million and $1.0 million net proceeds from two tranches), April 2024 Registered Direct Offering ($0.9 million net proceeds), and June 2024 PIPE ($3.3 million net proceeds)[40][42][43][44][45][46] - As of September 30, 2024, there were 3,710,190 shares of common stock issued and outstanding[47] 10. Stock-Based Compensation Plan This note outlines the stock-based compensation expenses and activity related to stock options Stock-Based Compensation Expense (in thousands) | Period | R&D Expense | G&A Expense | Total Expense | | :----- | :---------- | :---------- | :------------ | | 3 Months Ended Sep 30, 2024 | $34 | $94 | $128 | | 3 Months Ended Sep 30, 2023 | $45 | $133 | $178 | | 9 Months Ended Sep 30, 2024 | $114 | $325 | $439 | | 9 Months Ended Sep 30, 2023 | $137 | $417 | $554 | Stock Option Activity (in thousands) | Activity | Options | Weighted-Average Exercise Price | | :------- | :------ | :------------------------------ | | Outstanding at Dec 31, 2023 | 43 | $161.20 | | Granted | 53 | $1.55 | | Outstanding at Sep 30, 2024 | 96 | $71.40 | | Exercisable at Sep 30, 2024 | 34 | $184.17 | - As of September 30, 2024, unamortized stock-based compensation expense was $0.5 million, expected to be recognized over a weighted average vesting period of 1.6 years[53] 11. Commitments and Contingencies This note details the company's contractual obligations, primarily related to drug supplier project plans - Total commitments for the drug supplier project plan were $0.8 million as of September 30, 2024, with $0.7 million expected to be incurred over the next 12 months[54] - Commitments include $0.5 million for prexigebersen and BP1001-A drug products, $0.2 million for Grb2 drug substance, and $0.1 million for testing services[54] 12. Subsequent Events This note describes significant events occurring after the reporting period, including a private placement and lease amendment - On October 8, 2024, the company closed a private placement for approximately $4.0 million in gross proceeds ($3.4 million net), involving pre-funded warrants and Series A/B warrants, and canceled prior warrants from the June 2024 PIPE[55] - In October 2024, the company amended its administrative office lease agreement to extend the term for one year, from November 1, 2024, to October 31, 2025[56] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of the company's clinical-stage oncology drug development, detailing progress on its DNAbilize® platform and drug candidates. It also analyzes financial performance, including revenue, operating expenses, net loss, and liquidity, highlighting the need for additional capital Overview This section introduces the company's drug development focus, proprietary technology, and progress on its lead drug candidates - Bio-Path is an oncology-focused RNAi nanoparticle drug development company utilizing its proprietary DNAbilize® technology for systemic delivery of antisense drugs to treat blood diseases and solid tumors[59] - Prexigebersen (BP1001), the lead drug candidate targeting Grb2, is in an amended Phase 2 clinical trial for AML, now including a triple combination treatment with decitabine and venetoclax. Interim data showed 86% CR/CRi in newly diagnosed AML patients and 57% CR/CRi in relapsed/refractory AML patients, significantly higher than published rates for two-drug combinations[60][61][65] - BP1002 (Liposomal Bcl-2) is in Phase 1 clinical trials for refractory/relapsed lymphoma/CLL and AML (including venetoclax-resistant patients). The first two dose cohorts for AML were successfully completed, and enrollment for the third cohort is complete, with plans to advance to a higher dose in Q4 2024[68][69] - BP1003 (Liposomal STAT3) is in IND-enabling studies for pancreatic cancer, NSCLC, and AML, showing broad antitumor effects in preclinical models. The company aims to file an IND application and initiate a Phase 1 study after completing one additional IND-enabling study[70] - BP1001-A, a modified prexigebersen formulation, is in a Phase 1/1b clinical trial for advanced or recurrent solid tumors. The first dose cohort was completed, and enrollment for the second dose cohort is open, with plans to explore its potential for obesity and related metabolic diseases[71][72][73] Company History and Available Information This section provides historical context, including a recent reverse stock split, and information on company filings - The company completed a 1-for-20 reverse stock split on February 22, 2024, with common stock trading on a split-adjusted basis on Nasdaq from February 23, 2024[79] Recent Accounting Pronouncements This section confirms that no recent accounting pronouncements have a material impact on the company's financial statements - There are no recent accounting pronouncements that have a material impact on the company's condensed consolidated financial statements[80] Financial Operations Overview This section outlines the company's revenue expectations, and the nature of its research and development and general and administrative expenses - The company has not generated significant revenues to date and expects revenue generation to be heavily dependent on successful development and commercialization of drug candidates, which is not anticipated for many years[81] - Research and development expenses are expected to be substantial and increase over time, driven by clinical trials, manufacturing, and regulatory approvals, with significant uncertainties regarding timing and costs[86] - General and administrative expenses primarily consist of salaries, benefits, professional fees (legal, accounting), travel, and facility-related costs[88] Results of Operations The company reported no revenue for both periods. Research and development expenses decreased significantly, while general and administrative expenses increased. Net loss decreased for both the three and nine-month periods, partly due to non-cash income from warrant liability fair value changes Comparisons of the Three Months Ended September 30, 2024 to the Three Months Ended September 30, 2023 This section compares the company's financial performance for the three-month periods, highlighting changes in expenses and net loss - Revenue: $0 for both periods[89] Research and Development Expense (in thousands) | Category | Sep 30, 2024 | Sep 30, 2023 | Change | % Change | | :------- | :----------- | :----------- | :----- | :------- | | R&D Expense | $1,283 | $2,247 | -$964 | -42.9% | | Non-cash Stock-based Comp. | $34 | $45 | -$11 | -24.4% | | Total R&D Expense | $1,317 | $2,292 | -$975 | -42.5% | General and Administrative Expense (in thousands) | Category | Sep 30, 2024 | Sep 30, 2023 | Change | % Change | | :------- | :----------- | :----------- | :----- | :------- | | G&A Expense | $1,223 | $851 | $372 | 43.7% | | Non-cash Stock-based Comp. | $94 | $133 | -$39 | -29.3% | | Total G&A Expense | $1,317 | $984 | $333 | 33.8% | - Net Operating Loss: Decreased by $0.6 million to $2.6 million (Sep 30, 2024) from $3.2 million (Sep 30, 2023)[92] - Change in Fair Value of Warrant Liability: Non-cash income of $0.5 million (Sep 30, 2024)[93] - Net Loss: Decreased by $1.1 million to $2.1 million (Sep 30, 2024) from $3.2 million (Sep 30, 2023)[93] - Net Loss per Share: Decreased to $0.70 (Sep 30, 2024) from $6.36 (Sep 30, 2023)[94] Comparisons of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023 This section compares the company's financial performance for the nine-month periods, detailing changes in expenses and net loss - Revenue: $0 for both periods[96] Research and Development Expense (in thousands) | Category | Sep 30, 2024 | Sep 30, 2023 | Change | % Change | | :------- | :----------- | :----------- | :----- | :------- | | R&D Expense | $5,364 | $9,195 | -$3,831 | -41.7% | | Non-cash Stock-based Comp. | $114 | $137 | -$23 | -16.8% | | Total R&D Expense | $5,478 | $9,332 | -$3,854 | -41.3% | General and Administrative Expense (in thousands) | Category | Sep 30, 2024 | Sep 30, 2023 | Change | % Change | | :------- | :----------- | :----------- | :----- | :------- | | G&A Expense | $3,564 | $3,061 | $503 | 16.4% | | Non-cash Stock-based Comp. | $325 | $417 | -$92 | -22.1% | | Total G&A Expense | $3,889 | $3,478 | $411 | 11.8% | - Net Operating Loss: Decreased by $3.4 million to $9.4 million (Sep 30, 2024) from $12.8 million (Sep 30, 2023)[99] - Change in Fair Value of Warrant Liability: Non-cash income of $2.2 million (Sep 30, 2024)[100] - Net Loss: Decreased by $5.6 million to $7.1 million (Sep 30, 2024) from $12.7 million (Sep 30, 2023)[100] - Net Loss per Share: Decreased to $4.05 (Sep 30, 2024) from $29.34 (Sep 30, 2023)[101] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term obligations and fund operations, highlighting its reliance on external financing - The company's cash balance was $0.6 million as of September 30, 2024, a decrease of $0.5 million from December 31, 2023[103] - The company does not believe its current cash, even with recent private placement proceeds, will be sufficient to meet obligations for the next 12 months, indicating substantial doubt about its ability to continue as a going concern[103] - Net cash provided by financing activities for the nine months ended September 30, 2024, was $7.2 million, significantly higher than $1.7 million in the prior year, primarily from various common stock and warrant offerings[105] - Financing activities in 2024 included the March 2024 Registered Direct Offering ($0.2 million net), At The Market Offering ($1.8 million and $1.0 million net), April 2024 Registered Direct Offering ($0.9 million net), June 2024 PIPE ($3.3 million net), and October 2024 Private Placement ($3.4 million net)[108][109][110][111][112][114] Future Capital Requirements This section discusses the company's anticipated need for additional capital to fund ongoing operations and drug development - The company expects to continue incurring significant operating expenses for clinical trials, manufacturing, and regulatory approval, requiring substantial additional capital[115] - There is no assurance that additional capital will be available when needed or on favorable terms, and the company currently has no lines of credit or other arranged debt financing[115] Off-Balance Sheet Arrangements This section confirms the absence of any material off-balance sheet arrangements as of the reporting date - As of September 30, 2024, the company did not have any material off-balance sheet arrangements[116] Critical Accounting Policies This section states that there have been no significant changes to the company's critical accounting policies - There have been no significant changes to the company's critical accounting policies from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2023[116] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there are no quantitative and qualitative disclosures about market risk applicable to the company - This item is not applicable to the company[117] Item 4. Controls and Procedures This section details management's evaluation of the company's disclosure controls and procedures, concluding their effectiveness, and confirms no material changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures This section confirms management's assessment of the effectiveness of the company's disclosure controls and procedures - Management, including the CEO/CFO, evaluated the effectiveness of disclosure controls and procedures as of September 30, 2024[119] - It was determined that the disclosure controls and procedures were effective to ensure information required by the Exchange Act is recorded, processed, summarized, and reported timely[120] Changes in Internal Control over Financial Reporting This section confirms no material changes in internal control over financial reporting during the reporting period - There were no changes in internal control over financial reporting during the period that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[121] PART II - OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal, risk, and equity matters Item 1. Legal Proceedings This section states that there are no legal proceedings to report - None[123] Item 1A. Risk Factors This section highlights the significant risk of potential delisting from The Nasdaq Capital Market due to non-compliance with the minimum stockholders' equity requirement, and the ongoing appeal process - The company received a delisting determination letter from Nasdaq on September 12, 2024, for not meeting the Stockholders' Equity Requirement[125] - A hearing request was submitted to the Nasdaq Hearings Panel on September 19, 2024, staying the suspension of securities pending the Panel's decision, with the hearing scheduled for November 5, 2024[125] - Delisting could negatively impact stock price, liquidity, access to capital markets, and lead to loss of confidence from stakeholders[126] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section indicates that there were no unregistered sales of equity securities or use of proceeds to report - None[127] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities to report - None[127] Item 4. Mine Safety Disclosures This section states that there are no mine safety disclosures applicable to the company - None[127] Item 5. Other Information This section confirms that no directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the last fiscal quarter - None of the company's directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the last fiscal quarter[129] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including agreements, certificates, and certifications - The report includes various exhibits such as merger agreements, certificates of incorporation, bylaws, forms of warrants, securities purchase agreements, registration rights agreements, and certifications[130] Signature This section provides the official signature and title of the company's authorized officer for the report - The report was signed on November 14, 2024, by Peter H. Nielsen, President, Chief Executive Officer, and Chief Financial Officer of Bio-Path Holdings, Inc.[131]