Moleculin(MBRX) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited financial statements for June 30, 2025, show a $7.2 million stockholders' deficit and a $14.1 million net loss, primarily due to increased warrant liabilities, raising significant going concern doubts with $7.6 million cash on hand Condensed Consolidated Balance Sheets As of June 30, 2025, total assets rose to $21.6 million, but total liabilities surged to $28.8 million due to a $20.6 million warrant liability, resulting in a $7.2 million stockholders' deficit from a prior $6.0 million equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $7,557 | $4,278 | | Total current assets | $9,076 | $5,194 | | Total assets | $21,593 | $16,925 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $7,913 | $5,359 | | Warrant liability | $20,553 | $5,229 | | Total liabilities | $28,758 | $10,946 | | Total stockholders' equity (deficit) | $(7,165) | $5,979 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported no revenue and a widened net loss of $14.1 million for the six months ended June 30, 2025, primarily due to an $18.2 million loss on warrant issuances, despite a partially offsetting $18.7 million gain from fair value changes and decreased R&D expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $0 | $0 | $0 | $0 | | Research and development | $3,600 | $4,090 | $7,036 | $8,342 | | General and administrative | $2,091 | $2,064 | $4,568 | $4,457 | | Loss from operations | $(5,720) | $(6,185) | $(11,663) | $(12,862) | | Gain from change in fair value of warrant liability | $9,609 | $1,696 | $18,663 | $3,151 | | Loss on issuance of warrant liabilities | $(10,352) | $0 | $(18,150) | $0 | | Net loss | $(7,640) | $(4,319) | $(14,076) | $(9,289) | | Net loss per share - basic and diluted | $(0.49) | $(1.70) | $(1.13) | $(3.71) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operations decreased to $10.1 million, while financing activities provided $13.4 million, leading to a $3.3 million net increase in cash, with the period ending at $7.6 million Cash Flow Summary (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(10,146) | $(12,666) | | Net cash used in investing activities | $0 | $(13) | | Net cash provided by (used in) financing activities | $13,422 | $(25) | | Net increase (decrease) in cash and cash equivalents | $3,279 | $(12,705) | | Cash and cash equivalents, end of period | $7,557 | $10,845 | Notes to Condensed Consolidated Financial Statements The notes detail the company's late-stage pharmaceutical focus on Annamycin's Phase 3 trial, disclose Nasdaq non-compliance and a going concern issue due to insufficient cash, and highlight the significant impact of 2025 public offerings and warrant issuances on financials - The company is a late-stage pharmaceutical development company conducting a pivotal Phase 3 trial for Annamycin for the treatment of relapsed/refractory (R/R) acute myeloid leukemia (AML)[19] - The company received notifications from Nasdaq for non-compliance with the minimum stockholders' equity rule ($2.5 million) on May 23, 2025, and the minimum bid price rule ($1.00) on June 27, 2025[23][24] - Management has substantial doubt about the company's ability to continue as a going concern, as its cash on hand of $7.6 million as of June 30, 2025, is not sufficient to fund planned operations for at least one year[33] - In June 2025, the company closed a public offering raising gross proceeds of $5.9 million, with the full proceeds recorded as warrant liabilities, resulting in a $10.4 million loss on issuance[53][54] - In February 2025, the company raised total gross proceeds of $9.3 million through two transactions: a securities purchase agreement and a warrant exercise inducement offer[56][57] Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion highlights the pivotal Phase 3 MIRACLE trial for Annamycin, with interim data expected by year-end 2025, alongside a Q2 2025 net loss of $7.6 million and critical liquidity concerns requiring $10 million in additional financing to extend operations into Q1 2026 Our Business and Recent Developments The company, a late-stage pharmaceutical firm, is focused on its pivotal Phase 3 MIRACLE trial for Annamycin in R/R AML, with interim data expected by year-end 2025, supported by trial expansion, EMA approval, positive FDA feedback, and new patent grants - The company is conducting a pivotal Phase 3 trial (MIRACLE) for Annamycin in R/R AML, with an interim data unblinding expected by the end of 2025[88] - As of July 25, 2025, over 35 sites have been selected for the MIRACLE trial, with four actively recruiting and eight subjects treated[102] - The European Medicines Agency (EMA) approved the MIRACLE trial application for all nine submitted EU countries in May 2025[107] - The FDA has agreed to a single pediatric approval study for Annamycin in combination with Cytarabine for pediatric patients with R/R AML[109] - The company received a Notice of Intent to Grant for a European patent and was granted two additional U.S. patents for Annamycin, with terms extending until 2040[117][121] Results of Operations For Q2 2025, R&D expenses decreased to $3.6 million, while a $9.6 million non-cash gain from warrant fair value changes was offset by a $10.4 million loss on warrant issuance, contributing to a widened net loss for the six-month period Comparison of Operating Expenses (in thousands) | Expense Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $3,600 | $4,090 | $7,036 | $8,342 | | General and administrative | $2,091 | $2,064 | $4,568 | $4,457 | - The decrease in R&D expense for both the three and six-month periods is mainly related to a reduction in clinical trials activity[127][131] - For Q2 2025, the company recorded a $9.6 million gain from the change in fair value of warrant liability, compared to a $1.7 million gain in Q2 2024, principally due to a decline in the company's share price[128] - The June 2025 offering resulted in a $10.4 million loss on issuance of warrant liabilities and $1.2 million in expensed transaction costs allocated to these warrants[129] Liquidity and Capital Resources As of June 30, 2025, the company held $7.6 million in cash, with $10.1 million used in operations and $13.4 million provided by financing, but requires an additional $10 million to fund operations into Q1 2026, raising significant going concern doubts Sources and Uses of Cash (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(10,146) | $(12,666) | | Net cash provided by (used in) financing activities | $13,422 | $(25) | | Net increase (decrease) in cash and cash equivalents | $3,279 | $(12,705) | - The company believes its cash on hand as of June 30, 2025, is sufficient to fund planned operations only into the fourth quarter of 2025[145] - The company must seek additional funding of approximately $10 million to support the MIRACLE trial and operations into Q1 2026[145] - In July 2025, the company entered into an At-The-Market (ATM) agreement to sell up to $6.5 million of its common stock[140] Quantitative and Qualitative Disclosures About Market Risk This section is omitted as the company qualifies as a smaller reporting company, rendering the disclosure not applicable - This disclosure is not applicable as the company is a smaller reporting company[149] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO evaluated disclosure controls and procedures and determined they were effective as of June 30, 2025[150] - No changes in internal control over financial reporting occurred during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[151] PART II – OTHER INFORMATION Legal Proceedings The company reported no legal proceedings during the period - None[153] Risk Factors The company faces significant risks from Nasdaq non-compliance with minimum stockholders' equity and bid price rules, with potential delisting and further dilution from Series E warrants impacting liquidity and capital raising efforts - The company is not in compliance with Nasdaq's continued listing requirements, specifically the Equity Rule (minimum $2.5 million stockholders' equity) and the Bid Price Rule (minimum $1.00 per share)[155][156][160] - If the company is unable to regain compliance, its common stock will be delisted from Nasdaq, which could materially harm its financial condition and stock liquidity[155][165] - The accounting for Series E warrants as a liability may hinder the company's ability to meet the stockholders' equity requirement[158] - Future financing or a reverse stock split could trigger anti-dilution provisions in the Series E warrants, potentially reducing their exercise price and significantly increasing the number of shares issuable upon exercise, causing further dilution to shareholders[167][168][171] Unregistered sales of Equity Securities and Uses of Proceeds The company reported no unregistered sales of equity securities during the period - None[172] Other Information No directors or executive officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the reporting period - No directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or other non-Rule 10b5-1 trading arrangement during the quarter[175] Exhibits This section lists exhibits filed with the Form 10-Q, including warrant forms, an At The Market Offering Agreement, and officer certifications