Panbela Therapeutics(PBLA) - 2023 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited condensed consolidated financial statements for Q3 2023, detailing financial position, operations, and cash flows Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (In thousands): | Item | Sep 30, 2023 | Dec 31, 2022 | | :-------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $907 | $1,285 | | Total current assets | $1,886 | $1,777 | | Total assets | $10,628 | $4,978 | | Total current liabilities | $8,917 | $7,833 | | Total liabilities | $13,111 | $13,027 | | Total stockholders' deficit | $(2,483) | $(8,049) | - Total assets increased significantly from $4,978 thousand at December 31, 2022, to $10,628 thousand at September 30, 2023[10] - Stockholders' deficit improved from $(8,049) thousand at December 31, 2022, to $(2,483) thousand at September 30, 2023[10] Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Operations and Comprehensive Loss (In thousands): | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | General and administrative | $1,107 | $1,294 | $4,102 | $4,349 | | Research and development | $6,739 | $2,329 | $14,501 | $24,563 | | Operating loss | $(7,846) | $(3,623) | $(18,603) | $(28,912) | | Net loss | $(7,831) | $(4,402) | $(18,789) | $(30,198) | | Comprehensive loss | $(7,450) | $(3,675) | $(18,177) | $(28,958) | | Basic and diluted net loss per share | $(2.69) | $(257.36) | $(14.35) | $(2,255.96) | | Weighted average shares outstanding | 2,914,600 | 17,107 | 1,309,137 | 13,386 | - Net loss for the three months ended September 30, 2023, increased to $7,831 thousand from $4,402 thousand in the prior year period, primarily due to a significant increase in R&D expenses[13] - Net loss for the nine months ended September 30, 2023, decreased to $18,789 thousand from $30,198 thousand in the prior year period, largely due to a decrease in R&D expenses compared to 2022 which included a large IPR&D write-off[13] Condensed Consolidated Statements of Stockholders' (Deficit) Equity Changes in Stockholders' (Deficit) Equity (In thousands) for Nine Months Ended September 30, 2023: | Item | Common Stock (Shares) | Common Stock (Amount) | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total Stockholders' (Deficit) Equity | | :-------------------------------- | :-------------------- | :-------------------- | :------------------------- | :------------------ | :------------------------------------- | :----------------------------------- | | Balance as of January 1, 2023 | 34,761 | $0 | $82,286 | $(91,094) | $759 | $(8,049) | | Proceeds from sale of Common Stock | 2,246,088 | $2 | $23,070 | $0 | $0 | $23,072 | | Net loss | 0 | $0 | $0 | $(18,789) | $0 | $(18,789) | | Foreign currency translation adjustment | 0 | $0 | $0 | $0 | $612 | $612 | | Balance as of September 30, 2023 | 2,996,334 | $3 | $106,026 | $(109,883) | $1,371 | $(2,483) | - The company's total stockholders' deficit improved from $(8,049) thousand at January 1, 2023, to $(2,483) thousand at September 30, 2023, primarily due to proceeds from common stock sales[17] - Common stock shares outstanding increased significantly from 34,761 to 2,996,334, reflecting public offerings and warrant exercises, adjusted for reverse stock splits[17] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (In thousands) for Nine Months Ended September 30: | Item | 2023 | 2022 | | :-------------------------------- | :----- | :----- | | Net cash used in operating activities | $(22,169) | $(10,273) | | Net cash provided by (used) in investing activities | $400 | $(656) | | Net cash provided by financing activities | $21,393 | $5 | | Net change in cash | $(378) | $(10,926) | | Cash and cash equivalents at end of period | $907 | $941 | - Net cash used in operating activities more than doubled to $22,169 thousand in 2023 from $10,273 thousand in 2022, driven by increased R&D costs and long-term deposits[23][117] - Net cash provided by financing activities significantly increased to $21,393 thousand in 2023, primarily from the sale of common stock and warrants, compared to $5 thousand in 2022[23][119] Notes to Condensed Consolidated Financial Statements 1. Business - Panbela Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing disruptive therapeutics for urgent unmet medical needs, primarily utilizing pharmacotherapies to reduce or normalize increased disease-associated polyamines[26] - Lead candidates include ivospemin (SBP-101), licensed worldwide from the University of Florida Research Foundation, and Flynpovi™ (eflornithine and sulindac) and eflornithine (CPP-1X) alone, licensed from the Arizona Board of Regents[26] - The sublicense agreement to develop and commercialize Flynpovi in North America was terminated by the licensee on April 4, 2023[26] 2. Risks and Uncertainties - The company has incurred cumulative losses of $109.9 million since inception and a net loss of $18.8 million for the nine months ended September 30, 2023, with negative cash flows from operating activities of $22.2 million[29] - As of September 30, 2023, the company had cash of $0.9 million, a working capital deficit of $7.0 million, and a stockholders' deficit of $2.5 million, raising substantial doubt about its ability to continue as a going concern[29][30] - Future operations are dependent on obtaining additional financing, successful development efforts, and marketing approval for product candidates, with no assurance of securing funds on acceptable terms[30][35][36] 3. Basis of Presentation - The interim condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and SEC regulations, reflecting all necessary adjustments for fair presentation[32] - These statements do not include all information and footnotes required for complete annual financial statements and should be read in conjunction with the most recent Annual Report on Form 10-K[32] 4. Liquidity and Business Plan - The company completed registered public offerings in June 2023 and January 2023, generating net proceeds of approximately $7.7 million and $13.8 million, respectively, from common stock, pre-funded warrants, and warrants[33][34] - An additional $1.6 million in net proceeds was received in Q1 2023 from the ATM Program, though no sales occurred in Q2 2023[34] - The company requires additional capital to support current business plans and future operations, with no assurance of securing sufficient funds on acceptable terms, which could lead to scaling back operations or ceasing business[35][36] 5. Summary of Significant Accounting Policies Principles of consolidation - The condensed consolidated financial statements include assets, liabilities, and expenses of Panbela Therapeutics, Inc. and its direct and indirect subsidiaries, with all significant intercompany transactions eliminated[38] Use of estimates - Preparation of financial statements requires management to make estimates and assumptions, which may differ from actual results, especially given current economic uncertainties[39] Research and development costs - R&D costs, including clinical trial expenses, third-party services, sponsored research, manufacturing development, consulting, personnel, and intellectual property licensing, are expensed as incurred[40] - Clinical trial costs are accrued based on contracted amounts and milestone achievement, with estimates adjusted quarterly based on performance monitoring[41] - R&D costs for 2022 included a write-off of In-Process Research and Development (IPR&D) acquired from CPP[42] Stock-based compensation - Stock-based compensation expense for employee and non-employee services is measured and recognized based on the fair value of awards at the grant date, using the Black-Scholes option pricing model[44][45] - Compensation cost is recognized ratably over the vesting period, with performance-based awards recognized when performance is probable[44] Foreign currency translation adjustments - Assets, liabilities, and equity transactions of Panbela Therapeutics Pty Ltd (functional currency Australian Dollar) are translated into U.S. dollars at period-end exchange rates, with revenues and expenses translated at average rates[46] - Resulting translation gains and losses are recorded as a component of accumulated comprehensive loss within stockholders' equity[46] Comprehensive loss - Comprehensive loss comprises the company's net loss and the effects of foreign currency translation[47] Net loss per share - Basic net loss per share is calculated by dividing net loss by the weighted-average common shares outstanding; diluted net loss per share includes potential common shares unless anti-dilutive[48] Potential Shares of Common Stock Not Included in Diluted Net Loss Per Share (Anti-dilutive): | Item | September 30, 2023 | September 30, 2022 | | :-------------------------------- | :----------------- | :----------------- | | Employee and non-employee stock options | 13,455 | 3,352 | | Common stock issuable under common stock purchase warrants | 4,068,826 | 4,538 | | Total | 4,082,281 | 7,890 | 6. Notes Payable - As of September 30, 2023, CPP had an outstanding balance of approximately $5.4 million (principal and interest) under the Sucampo Note, with a principal balance of $5.2 million bearing 5% simple interest[50] - Scheduled payments include $1.0 million plus accrued interest by January 31, 2024, 2025, and 2026, with the remaining balance due by January 31, 2027. Panbela guarantees CPP's payment obligations[50] - The Tillotts promissory note, with an initial principal of $650,000, was paid in full on January 31, 2023[52] 7. Stockholders' Equity - In June 2023, the company completed a public offering, issuing 586,000 common shares, 1,684,000 pre-funded warrants, and 4,540,000 warrants, generating approximately $7.7 million in net proceeds. All pre-funded warrants were exercised by September 30, 2023[53] - In January 2023, another public offering issued 161,407 common shares, 61,090 pre-funded warrants, and 444,999 warrants, yielding approximately $13.8 million in net proceeds. All pre-funded warrants were exercised by February 3, 2023[56][57] - The company conducted two reverse stock splits: 1-for-30 effective June 1, 2023, and 1-for-40 effective January 13, 2023, to increase per-share market price and maintain Nasdaq listing compliance[61][62] Shares Reserved for Future Issuance as of September 30, 2023: | Item | Shares | | :-------------------------------- | :----- | | Stock options outstanding | 13,455 | | Shares available for grant under equity incentive plan | - | | Warrants outstanding | 4,068,826 | | Total | 4,082,281 | 8. Stock-based Compensation - The company operates under the 2016 Omnibus Incentive Plan, with 12,054 stock options outstanding and no shares remaining for future awards as of September 30, 2023[64] - Stock-based compensation expense for the nine months ended September 30, 2023, totaled $699 thousand, down from $857 thousand in the same period of 2022[68][105] Stock-based Compensation Expense (in thousands) for Nine Months Ended September 30: | Category | 2023 | 2022 | | :-------------------------------- | :----- | :----- | | General and Administrative | $554 | $697 | | Research and Development | $145 | $160 | | Total | $699 | $857 | Stock Options Outstanding, Vested and Expected to Vest as of September 30, 2023: | Per Share Exercise Price | Shares | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | | :----------------------- | :----- | :---------------------------------- | :------------------------------ | | $15 | 10,240 | 9.50 | $15 | | $264 | 1,150 | 7.26 | $264 | | $1,764 - $3,540 | 582 | 5.01 | $3,215 | | $3,810 - $4,908 | 498 | 5.57 | $4,493 | | $5,004 - $7,320 | 428 | 6.14 | $6,102 | | $9,720 - $18,120 | 557 | 4.81 | $12,987 | | Totals | 13,455 | 8.66 | $1,071 | 9. Gain on Sale of Intellectual Property - On July 17, 2023, the company divested certain rights to its eflornithine pediatric neuroblastoma program, entitling it to receive up to $9.5 million in non-dilutive funding[70] - An initial payment of $400,000 was received at closing and recognized as a gain on sale of intellectual property in Q3 2023, with future milestone payments not recognized due to uncertain probability[70] 10. Subsequent Events - On November 2, 2023, the company entered into inducement offer letters with certain warrant holders, who agreed to exercise existing warrants for 2,130,000 shares at a reduced price of $0.78 per share[71][101] - In exchange, the company issued new warrants to purchase up to 4,260,000 shares and made a cash payment of $0.125 per existing warrant share[71][101] - The transaction generated approximately $1.9 million in aggregate gross proceeds, with $115,659 incurred in investment banking fees[71][101] - The company agreed to file a Form S-3 registration statement for the resale of Inducement Warrant Shares and is restricted from issuing common stock or equivalents, or filing other registration statements, until stockholder approval[72][102] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operations, and product development, highlighting capital needs and clinical risks Overview - Panbela Therapeutics, Inc. is a clinical-stage biopharmaceutical company developing disruptive therapeutics for urgent unmet medical needs, focusing on a polyamine platform[77][79] - Lead candidates include ivospemin (SBP-101) and Flynpovi (eflornithine (CPP-1X) and Sulindac), with exclusive worldwide licenses[78] - The company is engaged in sponsored research agreements with Johns Hopkins University School of Medicine and MD Anderson Cancer Center to evaluate polyamines for various diseases[79] Ivospemin (SBP-101) - The FDA accepted the IND application for ivospemin in 2015, and it was adopted as a USAN for SBP-101 in May 2022[80] - A Phase Ia/Ib study of ivospemin combined with gemcitabine and nab-paclitaxel in pancreatic cancer showed a median overall survival of 14.6 months, with some patients demonstrating long-term survival[82] - The ASPIRE trial, a randomized double-blind placebo-controlled Phase II/III trial for metastatic pancreatic cancer, initiated in January 2022, has 81 sites open in 10 countries as of September 30, 2023, with interim analysis expected in early 2024[83][85] - Pre-clinical studies suggest ivospemin in combination with chemotherapy may be effective in ovarian cancer, with further studies planned[86] Flynpovi (eflornithine (CPP-1X) and sulindac) - A Phase III study of Flynpovi for familial adenomatous polyposis (FAP) failed its primary endpoint but showed statistically significant risk reductions for the need for lower gastrointestinal (LGI) surgery in a post-hoc analysis[89] - The FDA issued a complete response letter for the NDA, requiring additional clinical trials demonstrating an effect on a clinical endpoint[89] - The company regained North American rights to develop and commercialize Flynpovi for FAP in April 2023[90] - The PACES trial, a NCI-funded Phase III study of Flynpovi to prevent recurrence of high-risk adenomas and second primary colorectal cancers, passed a pre-planned futility analysis on June 28, 2023[91] Eflornithine (CPP-1X)/eflornithine sachets (CPP-1X-S) - IND applications for eflornithine were accepted by the FDA in 2009 and 2018[92] - A trial evaluating eflornithine sachets in STK11 mutation patients with non-small cell lung cancer is scheduled to begin, and a Phase II trial for early onset Type I diabetes opened in January 2023[93] - On July 17, 2023, the company divested rights to its eflornithine pediatric neuroblastoma program, receiving an initial $400,000 payment and potential future milestone payments up to $9.5 million[94] Financial Overview - The company incurred cumulative losses of $109.9 million since 2011 and a net loss of $18.8 million for the nine months ended September 30, 2023[96] - Cash and cash equivalents decreased by $0.4 million to $0.9 million as of September 30, 2023, primarily due to $21.8 million in negative cash flow from operations, partially offset by $21.4 million from financing activities[97] - Increased R&D costs were driven by approximately $3.1 million for Abraxane supply for the ASPIRE trial and an additional $0.5 million in prepayments for standard of care drugs[97] - The company needs to raise additional capital to continue operations beyond Q3 2023 and execute its business plan, with no assurance of obtaining financing on commercially reasonable terms[98] Warrant Transaction After Period End - On November 2, 2023, the company received approximately $1.9 million in gross proceeds from warrant exercises at a reduced price of $0.78 per share, in exchange for issuing new warrants and a cash payment[101] - The company incurred $115,659 in investment banking fees related to this transaction[101] - The company agreed to file a Form S-3 registration statement for the resale of the new warrant shares and is restricted from certain equity issuances or filings until stockholder approval[102] Results of Operations Comparison of Results of Operations (in thousands): | Item | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | % Change | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | % Change | | :-------------------------------- | :------------------------------ | :------------------------------ | :------- | :----------------------------- | :----------------------------- | :------- | | General and administrative | $1,107 | $1,294 | -14.5% | $4,102 | $4,349 | -5.7% | | Research and development | $6,739 | $2,329 | 189.4% | $14,501 | $24,563 | -41.0% | | Total operating expenses | $7,846 | $3,623 | 116.6% | $18,603 | $28,912 | -35.7% | | Other expense, net | $(4) | $(835) | -99.5% | $(353) | $(1,390) | -74.6% | | Income tax benefit | $19 | $56 | -66.1% | $167 | $104 | 60.6% | | Net Loss | $(7,831) | $(4,402) | 77.9% | $(18,789) | $(30,198) | -37.8% | Three months ended September 30, 2023 and September 30, 2022 - General and administrative (G&A) expenses decreased by 14.5% to $1.1 million in Q3 2023, primarily due to reduced legal and professional services[106] - Research and development (R&D) expenses increased by 189.4% to $6.7 million in Q3 2023, mainly due to a $3.2 million cost for Abraxane supply for the ASPIRE clinical trial[107] - Other expense, net, was approximately $4,000 in Q3 2023, a significant reduction from $0.9 million in Q3 2022, due to a $0.4 million gain on sale of assets and interest income offsetting foreign currency exchange loss and interest expense[108] - Income tax benefit decreased by 66.1% to $19,000 in Q3 2023, primarily from refundable tax credits for R&D activities in Australia[109] Nine months ended September 30, 2023 and September 30, 2022 - G&A expenses decreased by 5.7% to $4.1 million for the nine months ended September 30, 2023, mainly due to lower professional services related to the CPP acquisition in 2022[110] - R&D expenses decreased by 41.0% to $14.5 million for the nine months ended September 30, 2023, primarily due to a $17.7 million IPR&D write-off in Q2 2022. Excluding this, R&D increased by $7.6 million due to Abraxane costs and ASPIRE trial expansion[111] - Other expense, net, decreased by 74.6% to $0.4 million for the nine months ended September 30, 2023, compared to $1.4 million in 2022, due to gain on asset sale and interest income offsetting foreign currency loss and interest expense[112][113] - Income tax benefit increased by 60.6% to $167,000 for the nine months ended September 30, 2023, driven by increased refundable R&D tax credits in Australia due to the ASPIRE trial[114] Liquidity and Capital Resources Liquidity and Capital Resources (in thousands): | Item | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :----------------- | :----------------- | | Cash | $907 | $1,285 | | Working capital (deficit) | $(7,031) | $(6,056) | Cash Flow Data (in thousands) for Nine Months Ended September 30: | Item | 2023 | 2022 | | :-------------------------------- | :----- | :----- | | Operating Activities | $(22,169) | $(10,273) | | Investing Activities | $400 | $(656) | | Financing Activities | $21,393 | $5 | | Net increase (decrease) in cash | $(378) | $(10,926) | Working Capital - Cash and cash equivalents decreased from $1.3 million at December 31, 2022, to $0.9 million at September 30, 2023[116] - The working capital deficit worsened from $6.1 million at December 31, 2022, to $7.0 million at September 30, 2023[116] Cash Flows Net Cash Used in Operating Activities - Net cash used in operating activities increased to $21.8 million for the nine months ended September 30, 2023, from $10.3 million in the prior year, primarily due to net loss, $5.5 million for long-term deposits with CROs, and $3.7 million for standard of care drug supply for the ASPIRE trial[117] Net Cash Provided by Investing Activities - Cash provided by investing activities was $400,000 for the nine months ended September 30, 2023, primarily from the sale of intellectual property[118] - In the prior year, investing activities used $656,000, related to banker and legal costs for the CPP IPR&D acquisition[118] Net Cash Provided by Financing Activities - Net cash provided by financing activities was $21.4 million for the nine months ended September 30, 2023, mainly from the sale of common stock and warrants, partially offset by promissory note payments[119] - In the prior year, financing activities provided only $5,000 from the exercise of stock purchase warrants[119] Capital Requirements - The company expects to incur substantial and increasing losses, generating negative net cash flows, as it continues clinical development for ivospemin and other product candidates[120] - Future capital needs depend on factors such as clinical trial progress, vendor payment terms, development costs for new indications, regulatory approvals, market acceptance, reimbursement arrangements, competitive developments, and patent-related costs[121][129] - Historically, operations have been financed through equity and debt sales, but there's no assurance of obtaining additional financing on commercially reasonable terms[123] Indebtedness - As of September 30, 2023, CPP had an outstanding principal balance of approximately $5.2 million on the Sucampo Promissory Note, bearing 5% simple interest[124] - Panbela guarantees the full amount of the Sucampo Note, with scheduled payments of $1.0 million plus accrued interest due annually until January 31, 2026, and the remainder by January 31, 2027[124][125] Critical Accounting Estimates - The accounting estimates used in the interim fiscal 2023 condensed consolidated financial statements are consistent with those described in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022[126] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exempt from market risk disclosures as a smaller reporting company - The company is exempt from providing disclosures on market risk as it qualifies as a smaller reporting company[127] Item 4. Controls and Procedures Management evaluated disclosure controls and internal control, concluding effectiveness with no material changes Evaluation of Disclosure Controls and Procedures - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2023[129] - The internal control system provides reasonable assurance regarding the preparation and fair presentation of financial statements, with no material weaknesses identified[128] Changes to Internal Control Over Financial Reporting - No changes in internal control over financial reporting were identified during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[130] PART II – OTHER INFORMATION Item 1. Legal Proceedings No legal proceedings were reported for the period - No legal proceedings were reported[132] Item 1A. Risk Factors Updates risk factors, focusing on potential Nasdaq delisting and liquidity issues raising going concern doubts - The company's common stock has traded below $1.00 per share since October 16, 2023, making it ineligible for a compliance cure period if it again fails the Nasdaq Minimum Bid Price Requirement due to prior reverse stock splits[134] - As of September 30, 2023, the company had a stockholders' deficit of $2,483,000, nearing the Nasdaq Minimum Equity Rule of $2,500,000[135] - Auditors have expressed substantial doubt about the company's ability to continue as a 'going concern' due to limited financial liquidity, with cash on hand of $0.9 million as of September 30, 2023[140] - The company's continuation as a going concern is dependent on achieving positive cash flow from operations and securing external financing, with no assurance of obtaining required funding on commercially reasonable terms[142] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities No unregistered sales of equity, use of proceeds, or issuer purchases were reported - No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities were reported[143] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported for the period - No defaults upon senior securities were reported[144] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable - Mine safety disclosures are not applicable[145] Item 5. Other Information No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by directors or officers during Q3 2023[146] Item 6. Exhibits Lists all exhibits filed with Form 10-Q, including corporate documents, certifications, and financial statements Key Exhibits Filed: | Exhibit No. | Description | | :---------- | :---------- | | 3.1 | Restated Certificate of Incorporation | | 3.2 | Certificate of Amendment to Restated Certificate of Incorporation, effective June 1, 2023 | | 3.3 | Amended and Restated Bylaws | | 31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) | | 31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) | | 32.1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 | | 32.2 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 | | 101 | Financial statements from the quarterly report on Form 10-Q formatted in iXBRL | | 104 | Cover Page Data File (formatted as inline XBRL) |