Moleculin(MBRX) - 2023 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements (Unaudited) Unaudited H1 2023 financial statements reveal a $13.9 million net loss, decreased assets, and a going concern risk due to limited cash Condensed Consolidated Balance Sheets As of June 30, 2023, total assets decreased to $47.1 million due to lower cash, while liabilities rose and equity declined Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $32,172 | $43,145 | | Total current assets | $35,380 | $45,596 | | Total assets | $47,115 | $57,422 | | Liabilities and Stockholders' Equity | | | | Accounts payable | $4,136 | $2,095 | | Total current liabilities | $6,554 | $4,819 | | Total liabilities | $6,847 | $5,231 | | Total stockholders' equity | $40,268 | $52,191 | | Total liabilities and stockholders' equity | $47,115 | $57,422 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company reported a net loss of $6.0 million for Q2 2023 and $13.9 million for H1 2023, with no revenue and increased R&D expenses Condensed Consolidated Statements of Operations (in thousands) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | 2023 | 2022 | 2023 | 2022 | | Revenues | $— | $— | $— | $— | | Research and development | $3,888 | $4,204 | $9,576 | $8,824 | | General and administrative | $2,492 | $3,196 | $5,129 | $5,617 | | Loss from operations | $(6,411) | $(7,434) | $(14,766) | $(14,507) | | Net loss | $(5,976) | $(6,777) | $(13,891) | $(13,644) | | Net loss per common share | $(0.20) | $(0.24) | $(0.48) | $(0.48) | Condensed Consolidated Statements of Cash Flows Net cash used in operations for H1 2023 was $11.1 million, leading to an $11.0 million decrease in cash, ending at $32.2 million Condensed Consolidated Statements of Cash Flows (in thousands) | | Six Months Ended June 30, | | :--- | :--- | | | 2023 | 2022 | | Net cash used in operating activities | $(11,143) | $(12,806) | | Net cash used in investing activities | $(15) | $(67) | | Net cash provided by (used in) financing activities | $190 | $(12) | | Net decrease in cash and cash equivalents | $(10,973) | $(12,904) | | Cash and cash equivalents, - beginning of period | $43,145 | $70,903 | | Cash and cash equivalents, - end of period | $32,172 | $57,999 | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased by $11.9 million to $40.3 million by June 30, 2023, primarily due to the $13.9 million net loss - Total stockholders' equity decreased by $11.9 million during the first six months of 2023, from $52.2 million to $40.3 million[18] - The decrease was primarily due to a net loss of $7.9 million in Q1 and $6.0 million in Q2, totaling $13.9 million for the six months[18] Notes to Condensed Consolidated Financial Statements Notes detail the company's clinical-stage status, $115.7 million accumulated deficit, a going concern warning, NASDAQ delisting notice, and an SEC inquiry - The company is a Phase 2 clinical-stage pharmaceutical company with three core technologies licensed from MD Anderson Cancer Center[20] - A 'going concern' issue is raised, as the company's $32.2 million in cash as of June 30, 2023, is only sufficient to fund planned operations into the near term, not beyond[28] - The company has an accumulated deficit of $115.7 million and has not generated any revenue[28] - On May 5, 2023, the company received a NASDAQ delisting warning for its stock price closing below the $1.00 minimum for 30 consecutive business days[21] - The company is responding to an SEC subpoena received in March 2022 regarding its drug candidate for COVID-19, incurring legal fees of $0.9 million in the first six months of 2023[29] - In March 2023, the company terminated its sublicense agreement with WPD Pharmaceuticals, paying $700,000 in cash and $800,000 in stock (822,115 shares) to reacquire intellectual property rights in certain territories[55] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's clinical pipeline, Annamycin trial results, increased R&D expenses, and reiterates the going concern risk due to limited cash Our Business and Focus The company is a clinical-stage pharmaceutical firm focused on hard-to-treat cancers and viruses, leveraging Annamycin and WP1066/WP1122 portfolios - The company's three core technologies are Annamycin, the WP1066 Portfolio, and the WP1122 Portfolio[63][65] - Current internally funded development is focused on: - Annamycin for Soft Tissue Sarcoma (STS) lung metastases - Annamycin in combination with Cytarabine (AnnAraC) for Relapsed or Refractory Acute Myeloid Leukemia (R/R AML) - A new formulation for WP1066[68][69] - The company is actively recruiting for three clinical trials in Phase 1b or Phase 2 and supports several externally funded trials[72] Recent Business Developments Recent developments include positive clinical trial updates for Annamycin in AML and STS lung mets, and the termination of the WPD sublicense agreement - MB-106 (Annamycin for AML): The Phase 1b portion of the combination trial with Cytarabine resulted in a 33% CR/CRi rate (2 of 6 subjects)[78][82] - MB-107 (Annamycin for STS lung mets): In the Phase 2 trial, 67% of the 15 subjects treated at the 330 mg/m² dose have exhibited stable disease after two cycles[86] - Across all dose levels, 73% of 26 evaluable subjects showed stable disease[86] - WP1066: The company expects to finalize agreements with Northwestern University for an externally funded trial for glioblastomas in the second half of 2023 and is working on an IV formulation[88][89] - WPD License Termination: In March 2023, the company terminated its agreement with WPD, reacquiring rights to Annamycin, WP1122, and WP1066 portfolios in certain territories[95] - The company also gained rights to a grant-supported trial in Poland valued at approximately $1.5 million[95] Results of Operations For H1 2023, R&D expenses increased by $0.8 million to $9.6 million, while G&A expenses decreased by $0.5 million, with no revenue generated Comparison of Operating Expenses (in thousands) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | 2023 | 2022 | 2023 | 2022 | | Research and development | $3,888 | $4,204 | $9,576 | $8,824 | | General and administrative | $2,492 | $3,196 | $5,129 | $5,617 | - Six-Month Change: R&D expense increased by $0.8 million, mainly due to the WPD sublicense termination[102] - G&A expense decreased by $0.5 million due to lower regulatory, legal, and consulting fees[103] - Three-Month Change: R&D expense decreased by $0.3 million due to the timing of clinical trial costs[98] - G&A expense decreased by $0.7 million, also from lower legal and consulting fees[99] Liquidity and Capital Resources As of June 30, 2023, cash was $32.2 million, with $11.1 million used in operations, raising substantial doubt about the company's going concern status without further financing Sources and Uses of Cash (in thousands) | | Six Months Ended June 30, | | :--- | :--- | | | 2023 | 2022 | | Net cash used in operating activities | $(11,143) | $(12,806) | | Net decrease in cash and cash equivalents | $(10,973) | $(12,904) | - Cash and cash equivalents were $32.2 million as of June 30, 2023[109] - Management believes existing cash is sufficient to fund planned operations into the third quarter of 2024[109] - However, this condition raises substantial doubt about the company's ability to continue as a going concern[109] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company qualifies as a smaller reporting company - Not applicable as the company is a smaller reporting company[112] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes in internal control over financial reporting - The CEO and CFO have determined that disclosure controls and procedures were effective as of June 30, 2023[113] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[114] PART II – OTHER INFORMATION Legal Proceedings The company reports no legal proceedings - None[116] Risk Factors There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes from the risk factors previously disclosed in the annual report on Form 10-K for the year ended December 31, 2022[117] Unregistered Sales of Equity Securities and Use of Proceeds During H1 2023, the company issued warrants to purchase 150,000 common shares at $0.60 per share to two consulting entities - Issued warrants to purchase 150,000 shares of common stock at an exercise price of $0.60 per share to two consulting entities[118] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[119] Mine Safety Disclosures This section is not applicable to the company - Not applicable[120] Other Information During the reporting period, none of the company's directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or executive officer has adopted or terminated a Rule 10b5-1 trading arrangement during the period[121] Exhibits This section lists the exhibits filed with the Form 10-Q, including the 2015 Stock Plan, CEO and CFO certifications pursuant to the Sarbanes-Oxley Act, and Inline XBRL data files - Exhibits filed include the 2015 Stock Plan, CEO/CFO certifications (302 and 906), and XBRL files[122]