Genprex(GNPX) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section covers Genprex's unaudited consolidated financial statements and management's analysis of financial condition and operations ITEM 1. FINANCIAL STATEMENTS This section presents Genprex, Inc.'s unaudited consolidated condensed financial statements, including balance sheets, statements of operations, equity, cash flows, and detailed notes for periods ended June 30, 2025, and December 31, 2024 Consolidated Condensed Balance Sheets The company's financial position as of June 30, 2025, shows a decrease in cash, total assets, and stockholders' equity compared to December 31, 2024, while the accumulated deficit grew | Metric | June 30, 2025 | December 31, 2024 | Change | % Change | |:---|:---|:---|:---|:---| | Cash and cash equivalents | $1,346,844 | $1,601,660 | $(254,816) | -15.91% | | Total current assets | $2,056,184 | $2,077,467 | $(21,283) | -1.02% | | Total assets | $3,827,524 | $4,124,325 | $(296,801) | -7.20% | | Total current liabilities | $2,436,329 | $2,504,170 | $(67,841) | -2.71% | | Total stockholders' equity | $1,391,195 | $1,620,155 | $(228,960) | -14.13% | | Accumulated deficit | $(163,438,946) | $(154,799,443) | $(8,639,503) | 5.58% (increase in deficit) | Consolidated Condensed Statements of Operations Genprex reported a reduced net loss for both the three and six months ended June 30, 2025, compared to 2024, driven by significant decreases in general and administrative expenses, despite increased research and development costs for the three-month period Three Months Ended June 30 | Metric | 2025 | 2024 | Change | % Change | |:---|:---|:---|:---|:---| | Research and development | $2,499,495 | $1,666,522 | $832,973 | 50.0% | | General and administrative | $2,182,289 | $4,849,472 | $(2,667,183) | -55.0% | | Total operating expenses | $4,681,784 | $6,518,282 | $(1,836,498) | -28.2% | | Net loss | $(4,674,901) | $(6,495,845) | $1,820,944 | -28.0% | | Net loss per share (basic & diluted) | $(0.17) | $(3.00) | $2.83 | -94.3% | | Weighted average common shares | 27,593,952 | 2,161,961 | 25,431,991 | 1176.3% | Six Months Ended June 30 | Metric | 2025 | 2024 | Change | % Change | |:---|:---|:---|:---|:---| | Research and development | $5,039,489 | $4,940,902 | $98,587 | 2.0% | | General and administrative | $3,611,587 | $7,569,140 | $(3,957,553) | -52.3% | | Total operating expenses | $8,651,076 | $12,515,000 | $(3,863,924) | -30.9% | | Net loss | $(8,639,503) | $(12,464,714) | $3,825,211 | -30.7% | | Net loss per share (basic & diluted) | $(0.40) | $(6.59) | $6.19 | -93.9% | | Weighted average common shares | 21,463,658 | 1,891,773 | 19,571,885 | 1034.6% | Consolidated Condensed Statements of Changes in Stockholders' Equity Stockholders' equity decreased from $1,620,155 at December 31, 2024, to $1,391,195 at June 30, 2025, primarily due to a net loss, partially offset by common stock issuances and share-based compensation - Total stockholders' equity decreased by $228,960 from $1,620,155 at December 31, 2024, to $1,391,195 at June 30, 2025[18] - Net loss for the six months ended June 30, 2025, was $(8,639,503), contributing to the accumulated deficit[18] - Issuance of common stock, pre-funded warrants, and warrants for cash, net of issuance costs, provided $7,770,844 in the six months ended June 30, 2025[18][22] Consolidated Condensed Statements of Cash Flows Net cash used in operating activities significantly decreased by 32% for the six months ended June 30, 2025, compared to 2024, primarily due to clinical trial closure and expense reduction, with increased cash from financing leading to a smaller net decrease in cash | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | % Change | |:---|:---|:---|:---|:---| | Net cash used in operating activities | $(8,025,660) | $(11,867,211) | $3,841,551 | -32.4% | | Net cash provided by investing activities | $0 | $774,645 | $(774,645) | -100.0% | | Net cash provided by financing activities | $7,770,844 | $6,813,961 | $956,883 | 14.0% | | Net decrease in cash and cash equivalents | $(254,816) | $(4,278,605) | $4,023,789 | -94.0% | | Cash and cash equivalents, end of period | $1,346,844 | $2,459,024 | $(1,112,180) | -45.2% | Notes to Unaudited Consolidated Condensed Financial Statements These notes provide critical context to the financial statements, detailing business operations, accounting policies, intellectual property, equity, commitments, and segment reporting, with updates on clinical trials, a new subsidiary, and ongoing capital efforts amidst liquidity concerns Note 1 - Description of Business and Basis of Presentation Genprex is a clinical-stage gene therapy company focused on oncology and diabetes, advancing REQORSA® in NSCLC and SCLC trials and GPX-002 for diabetes, but faces significant capital requirements and liquidity challenges, raising substantial doubt about its going concern ability beyond August 2025 - Genprex is a clinical stage gene therapy company developing gene-based therapies for oncology (REQORSA® gene therapy) and diabetes (GPX-002)[24][25][35] - REQORSA is in Phase 2a expansion for Acclaim-1 (NSCLC with Tagrisso) and Phase 2 expansion for Acclaim-3 (ES-SCLC with Tecentriq), both having received FDA Fast Track Designation. Acclaim-2 (NSCLC with Keytruda) enrollment ceased due to challenges[27][29][32][33][34] - GPX-002 for Type 1 and Type 2 diabetes is in preclinical studies, with plans to seek FDA guidance on IND-enabling studies in H2 2025. A new subsidiary, Convergen Biotech, Inc., was formed to focus the diabetes program[35][37] - The company has sustained substantial losses and expects current cash to fund operations only through August 2025, raising substantial doubt about its ability to continue as a going concern without additional capital[38][39][40][41] Note 2 - Summary of Significant Accounting Policies This note outlines the company's accounting practices, including unaudited consolidated condensed financial statements in accordance with US GAAP, a voluntary change to expense intellectual property costs, a retroactive adjustment for a 1-for-40 reverse stock split, and the treatment of cash equivalents, net loss per share, and stock-based compensation - Financial statements are prepared in accordance with US GAAP for interim reporting, consolidating Genprex and its wholly-owned subsidiary, Convergen Biotech, Inc.[43][46] - The company voluntarily changed its accounting principle to expense, rather than capitalize, intellectual property costs, effective for the year ended December 31, 2024[47] - A 1-for-40 reverse stock split was completed on February 2, 2024, with all per-share information retroactively adjusted[48] - The company manages its operations as a single segment and recognizes stock-based compensation at fair value over the vesting period[53][61] Note 3 - Intellectual Property Genprex holds exclusive licenses for 12 granted patents and 25 pending patent applications globally, covering oncology and diabetes technologies, with recent agreements including an amended license with the University of Pittsburgh for diabetes gene therapy and new licenses for REQORSA applications in lung cancer, mesothelioma, and glioblastoma - Genprex owns or has exclusive licenses for 12 granted patents and 25 pending patent applications worldwide[69] - An amended and restated Exclusive License Agreement with the University of Pittsburgh was signed on February 17, 2025, for Type 1 and Type 2 diabetes gene therapy[70] - New exclusive license agreements were entered into with the University of Michigan (REQORSA with ALK-inhibitors for lung cancer), NYU (REQORSA for mesothelioma), and UTHealth Houston (REQORSA for glioblastoma) in late 2024 and early 2025[72][73][74] Note 4 - Equity This note details Genprex's equity activities, including a 1-for-40 reverse stock split in February 2024, capital raised through a registered direct offering and an At-The-Market (ATM) facility, a new Equity Line of Credit (ELOC) in June 2025, significantly increased common stock outstanding, and various stock-based compensation plans - A 1-for-40 reverse stock split was completed on February 2, 2024, retroactively adjusting all per-share information[75] - In the six months ended June 30, 2025, the company sold 16,940,454 shares for $6,895,947 net proceeds via its 2023 ATM Facility and 5,244,709 shares for $874,897 net proceeds via its 2025 ELOC Facility[77][82] - As of June 30, 2025, 33,145,048 shares of common stock were outstanding, up from 10,860,655 at December 31, 2024[86] - Total share-based compensation for the six months ended June 30, 2025, was approximately $0.6 million, including $0.1 million in R&D and $0.5 million in G&A expense[105] Note 5 - 401(k) Savings Plan Genprex maintains a 401(k) savings plan with an employer matching program, with matching contributions expense decreasing to $53,332 for the six months ended June 30, 2025, from $73,919 in the prior year period 401(k) Matching Contributions Expense | Period | 2025 | 2024 | |:---|:---|:---| | Three Months Ended June 30 | $26,944 | $36,529 | | Six Months Ended June 30 | $53,332 | $73,919 | Note 6 - Related Party Transactions The company has an Assignment and Collaboration Agreement with Introgen Research Institute (IRI), a related party, providing exclusive commercialization rights to intellectual property, with no amounts incurred or due under this agreement as of June 30, 2025, or December 31, 2024 - Genprex has an Assignment and Collaboration Agreement with Introgen Research Institute (IRI), a company formed by the former CEO, for exclusive commercialization rights to intellectual property[109] - No amounts were incurred or due under this agreement as of June 30, 2025, and December 31, 2024[109] Note 7 - Commitments and Contingencies Genprex has various commitments, including sponsored research agreements with MD Anderson, annual maintenance fees, and potential milestone payments for intellectual property licenses from multiple universities, along with a contingent royalty obligation to NIH upon FDA approval, and a terminated development services agreement with a CDMO - Commitments include a sponsored research agreement with MD Anderson (August 2022 SRA) with a total commitment of approximately $2.76 million, of which $2.1 million has been paid as of June 30, 2025[110] - The company has various license agreements with MD Anderson, NYU, University of Michigan, University of Pittsburgh, and UTHealth Houston, involving initial fees, annual maintenance fees, running royalties, and potential milestone payments totaling several millions[112][114][115][117][118] - A contingent royalty obligation to NIH of $400,000 (as of June 30, 2025) will be recognized upon probable FDA regulatory approval[113] - A three-year development services agreement with a CDMO was terminated by mutual agreement on June 30, 2024, with $1.3 million returned to the company[119] Note 8 - Segment Reporting Genprex operates as a single segment focused on gene therapies, with the CEO assessing performance and allocating resources based on the consolidated net loss, which decreased to $8,639,503 for the six months ended June 30, 2025, from $12,464,715 in the prior year, with significant expenses in clinical, manufacturing, research, and general and administrative support - The company manages its operations as a single segment focused on the discovery and development of gene therapies[121] Segment and Net Loss | 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 | |:---|:---|:---|:---|:---| | Clinical and regulatory | $1,659,513 | $1,971,538 | $3,366,218 | $4,105,576 | | Manufacturing | $472,598 | $(252,279) | $955,663 | $519,839 | | Research | $328,991 | $(243,915) | $637,317 | $(3,845) | | General and administrative support | $1,761,765 | $2,968,623 | $3,048,188 | $5,273,733 | | Non-cash expenses | $458,917 | $2,074,315 | $643,690 | $2,619,698 | | Segment and net loss | $4,674,901 | $6,495,845 | $8,639,503 | $12,464,715 | Note 9 - Subsequent Events Subsequent to June 30, 2025, Genprex issued 5,000 shares of common stock for services and sold 316,736 shares for $70,315 net proceeds under its 2025 ELOC Facility, having utilized the full share capacity under the ELOC's Exchange Cap, requiring stockholder approval for further sales - On July 1, 2025, Genprex issued 5,000 shares of common stock for services[123] - From July 1, 2025, through the filing date, 316,736 shares were sold under the 2025 ELOC Facility for $70,315 net proceeds[123] - The company has utilized the full 5,561,455 share capacity under the Exchange Cap of the 2025 ELOC Facility, requiring stockholder approval for additional sales[123] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on Genprex's financial condition and operational results, highlighting its clinical-stage gene therapy programs in oncology and diabetes, detailing REQORSA trials, strategic focus on diabetes, critical need for additional capital, key accounting estimates, and a comparison of financial performance for the three and six months ended June 30, 2025, versus 2024 Overview Genprex is a clinical-stage gene therapy company focused on developing treatments for oncology and diabetes, utilizing its ONCOPREX® Delivery System for REQORSA® gene therapy in NSCLC and SCLC, and developing diabetes technology to transform pancreatic alpha cells into insulin-producing beta-like cells for Type 1 diabetes and rejuvenate exhausted beta cells for Type 2 diabetes - Genprex is a clinical stage gene therapy company pioneering gene-based therapies for oncology and diabetes[131] - The oncology platform utilizes the systemic, non-viral ONCOPREX® Delivery System to deliver tumor suppressor gene-expressing plasmids to cancer cells, with REQORSA® gene therapy as the lead candidate for NSCLC and SCLC[131][132] - The diabetes technology aims to transform alpha cells into functional beta-like cells for Type 1 diabetes and replenish/rejuvenate exhausted beta cells for Type 2 diabetes[131] Oncology Platform Genprex's lead oncology candidate, REQORSA gene therapy, is being developed for NSCLC and SCLC, with the Acclaim-1 trial (REQORSA + Tagrisso for NSCLC) in Phase 2a expansion with interim analysis expected in H1 2026 and FDA Fast Track Designation, the Acclaim-2 trial (REQORSA + Keytruda for NSCLC) closed due to enrollment challenges, and the Acclaim-3 trial (REQORSA + Tecentriq for ES-SCLC) in Phase 2 expansion with interim analysis for the first 25 patients expected in Q1 2026 and both FDA Fast Track and Orphan Drug Designations - REQORSA gene therapy is the lead oncology drug candidate, developed in combination with approved cancer drugs for NSCLC and SCLC[132] - Acclaim-1 trial (REQORSA + Tagrisso for NSCLC) is in Phase 2a expansion, with enrollment of the first 19 patients for interim analysis expected by Q1 2026 and interim analysis in H1 2026. It has FDA Fast Track Designation[134][135] - Acclaim-2 trial (REQORSA + Keytruda for NSCLC) was ceased for new patient enrollment in August 2024 due to enrollment challenges and resource prioritization[137] - Acclaim-3 trial (REQORSA + Tecentriq for ES-SCLC) is in Phase 2 expansion, with enrollment of the first 25 patients for interim analysis expected in Q1 2026. It has FDA Fast Track and Orphan Drug Designations[138][139] Diabetes Gene Therapy Genprex's diabetes gene therapy, GPX-002, exclusively licensed from the University of Pittsburgh, is in preclinical development for Type 1 and Type 2 diabetes, aiming to transform pancreatic alpha cells into functional beta-like cells or rejuvenate exhausted beta cells, with plans to seek further FDA guidance on IND-enabling studies in the second half of 2025 - Genprex has exclusively licensed multiple technologies from the University of Pittsburgh for a gene therapy product (GPX-002) for Type 1 and Type 2 diabetes[140] - GPX-002 for Type 1 diabetes aims to transform alpha cells into functional beta-like cells, while for Type 2 diabetes, it aims to replenish and rejuvenate exhausted beta cells[140] - The company plans to seek further FDA guidance on IND-enabling studies in the second half of 2025, following additional nonclinical studies and a new sponsored research agreement with the University of Pittsburgh[140] Recently Issued Accounting Pronouncements The company is evaluating ASU 2023-09, 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures,' effective for annual periods beginning after December 15, 2024, which requires disaggregated information about effective tax rate reconciliation and income taxes paid - The company is evaluating ASU 2023-09, 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures,' which is effective for annual periods beginning after December 15, 2024[67][142] - This standard requires disaggregated information about a reporting entity's effective tax rate reconciliation and information on income taxes paid[67] Critical Accounting Estimates Genprex's critical accounting estimates involve significant judgments and assumptions, particularly for research and development costs, income taxes, impairment of long-lived assets, and modification of equity classified warrants, impacting reported asset and liability amounts and expense recognition, with actual results potentially differing from estimates - Critical accounting estimates include research and development costs, income taxes, impairment of long-lived assets, and modification of equity classified warrants[144][145][147][148][149] - Estimates for R&D costs are based on services provided by third-party providers, with significant judgments made in determining accrued balances[145][146] - A full valuation allowance is provided on deferred tax assets due to a history of operating losses[147] Components of our Results of Operations and Financial Condition Operating expenses are categorized into research and development (R&D), general and administrative (G&A), and depreciation, with R&D expenses expected to increase with advancing clinical trials and expanded research, and G&A expenses also expected to rise with business growth - Operating expenses are classified into research and development, general and administrative, and depreciation[151] - Research and development expenses are recognized as incurred, with expectations to increase due to advancing clinical trials, manufacturing transitions, regulatory pursuits, and expanded research programs[152][153] - General and administrative expenses are expected to increase in future periods due to anticipated business growth and related infrastructure[154] Comparison of the Three and Six Months Ended June 30, 2025 and 2024 Genprex experienced a significant decrease in net loss for both the three and six months ended June 30, 2025, compared to 2024, primarily driven by a substantial reduction in general and administrative expenses due to expense reduction strategies and headcount reductions, and the closing of the Acclaim-2 clinical trial, while research and development expenses increased for the three-month period but remained relatively stable for the six-month period Operating Expenses and Net Loss (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | |:---|:---|:---|:---|:---| | Research and Development | $2,499,495 | $1,666,522 | $832,973 | 50% | | General and Administrative | $2,182,289 | $4,849,472 | $(2,667,183) | -55% | | Net Loss | $(4,674,901) | $(6,495,845) | $1,820,944 | -28% | Operating Expenses and Net Loss (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | % Change | |:---|:---|:---|:---|:---| | Research and Development | $5,039,489 | $4,940,902 | $98,587 | 2% | | General and Administrative | $3,611,587 | $7,569,140 | $(3,957,553) | -52% | | Net Loss | $(8,639,503) | $(12,464,714) | $3,825,211 | -31% | - The decrease in G&A expenses was primarily due to expense reduction strategies, including reduced travel, professional service providers, and headcount (from 8 to 6 G&A staff)[160][161] - The overall decrease in net loss was also attributed to the closing of the Acclaim-2 clinical trial and associated reductions in clinical and manufacturing expenses, alongside a reduction in total company staff from 21 to 15 employees[166][168] Liquidity and Capital Resources Genprex has an accumulated deficit of $163.4 million as of June 30, 2025, and has historically funded operations through equity sales, raising $6.9 million net proceeds from its 2023 ATM Facility and $0.9 million net proceeds from its 2025 ELOC Facility during the six months ended June 30, 2025, with cash and cash equivalents at $1.3 million, and anticipates needing additional capital to fund future operations beyond August 2025, raising substantial doubt about its ability to continue as a going concern - As of June 30, 2025, Genprex had an accumulated deficit of $163,438,946 and $1,346,844 in cash and cash equivalents[169][174] - During the six months ended June 30, 2025, the company raised $6,895,947 net proceeds from its 2023 ATM Facility and $874,897 net proceeds from its 2025 ELOC Facility[171] - Net cash used in operating activities decreased by 32% to $8,025,660 for the six months ended June 30, 2025, compared to $11,867,211 in 2024[178] - The company estimates current cash will fund operations only through August 2025 and will need to raise additional capital, which raises substantial doubt about its ability to continue as a going concern[175][176] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, Genprex is not required to provide quantitative and qualitative disclosures about market risk - Genprex is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a 'smaller reporting company'[181] ITEM 4. CONTROLS AND PROCEDURES Genprex's management concluded that its disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses related to a lack of segregation of duties and insufficient in-house accounting personnel for complex transactions, with remediation plans underway but requiring more time to demonstrate operating effectiveness - Disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses[182] - Material weaknesses include a lack of segregation of duties between accounting and other functions and insufficient depth of in-house accounting personnel for complex transactions[182][183] - Remediation efforts include new accounting software, specific review procedures involving legal and manufacturing staff, a formal Disclosure Committee, additional hiring, and training[185][186] - Remediation efforts require additional time to demonstrate operating effectiveness through testing[187] PART II - OTHER INFORMATION This section covers Genprex's legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits ITEM 1. LEGAL PROCEEDINGS Genprex is not currently involved in any material pending litigation, though legal proceedings can be costly and divert management's attention - Genprex does not currently have any pending litigation deemed material[192] - Litigation, regardless of outcome, can be costly, time-consuming, and divert management's attention[192] ITEM 1A. RISK FACTORS This section updates and supplements previously disclosed risk factors, emphasizing the high degree of risk associated with an investment in Genprex, particularly concerning the company's non-compliance with Nasdaq's minimum bid price requirement, which could lead to delisting and negatively impact stock liquidity and capital-raising ability, with the company intending to request a hearing to seek an extension for compliance - An investment in Genprex common stock involves a high degree of risk, with updated and supplemented risk factors[193] - The company is not in compliance with Nasdaq's $1.00 minimum bid price requirement and received a delisting letter on August 12, 2025[194] - Genprex intends to request a hearing before the Nasdaq Hearings Panel to seek an extension for compliance, potentially considering a reverse stock split[194][195] - Delisting from Nasdaq could materially reduce stock liquidity, negatively impact the stock price, and impair the ability to raise capital[196] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS During the three months ended June 30, 2025, Genprex issued 5,000 shares of common stock to the Chairman of its Scientific Advisory Board for services, relying on the Section 4(a)(2) exemption from registration under the Securities Act - On April 1, 2025, Genprex issued 5,000 shares of common stock to the Chairman of its Scientific Advisory Board for services[198] - These securities were issued in reliance on the exemption from registration under Section 4(a)(2) of the Securities Act[199] ITEM 3. DEFAULTS UPON SENIOR SECURITIES There were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred[200] ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to Genprex - Mine Safety Disclosures are not applicable to the company[201] ITEM 5. OTHER INFORMATION Genprex received a delisting letter from Nasdaq on August 12, 2025, for failing to meet the $1.00 minimum bid price requirement and being ineligible for a further extension, with the company intending to request a hearing to seek continued listing and potentially considering a reverse stock split, and no officers or directors adopted or terminated Rule 10b5-1 trading arrangements during the quarter - Genprex received a delisting letter from Nasdaq on August 12, 2025, for non-compliance with the $1.00 minimum bid price requirement and ineligibility for a second 180-day compliance period[202] - The company intends to request a hearing before the Nasdaq Hearings Panel to seek an extension for compliance, potentially including a reverse stock split[203] - No officers or directors adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025[205] ITEM 6. EXHIBITS This section lists all exhibits filed with the Form 10-Q, including organizational documents, material contracts like the Purchase Agreement with Lincoln Park Capital Fund, LLC, and certifications required by the Sarbanes-Oxley Act - Exhibits include Amended and Restated Certificate of Incorporation, Bylaws, and amendments[208] - Material contracts such as the Purchase Agreement and Registration Rights Agreement with Lincoln Park Capital Fund, LLC, dated June 11, 2025, are included[208] - Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002 are filed[208] SIGNATURES The report was duly signed on August 14, 2025, by Ryan M. Confer, serving as both Chief Executive Officer and Chief Financial Officer - The report was signed by Ryan M. Confer, Chief Executive Officer and Chief Financial Officer, on August 14, 2025[211]