2019Q3false--12-310001659617P4YP12MP5YP3YP6MP5YP5YP3Y00016596172019-01-012019-09-30xbrli:shares00016596172019-11-08iso4217:USD00016596172019-09-3000016596172018-12-31iso4217:USDxbrli:shares00016596172019-07-012019-09-3000016596172018-07-012018-09-3000016596172018-01-012018-09-3000016596172017-12-3100016596172018-09-300001659617us-gaap:CommonStockMember2018-12-310001659617us-gaap:AdditionalPaidInCapitalMember2018-12-310001659617us-gaap:RetainedEarningsMember2018-12-310001659617us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-3100016596172019-01-012019-03-310001659617us-gaap:CommonStockMembermbx:March2019IssuanceMember2019-01-012019-03-310001659617us-gaap:AdditionalPaidInCapitalMembermbx:March2019IssuanceMember2019-01-012019-03-310001659617mbx:March2019IssuanceMember2019-01-012019-03-310001659617mbx:LincolnParkSaleMemberus-gaap:CommonStockMember2019-01-012019-03-310001659617us-gaap:AdditionalPaidInCapitalMembermbx:LincolnParkSaleMember2019-01-012019-03-310001659617mbx:LincolnParkSaleMember2019-01-012019-03-310001659617us-gaap:CommonStockMember2019-01-012019-03-310001659617us-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-310001659617us-gaap:RetainedEarningsMember2019-01-012019-03-310001659617us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-03-310001659617us-gaap:CommonStockMember2019-03-310001659617us-gaap:AdditionalPaidInCapitalMember2019-03-310001659617us-gaap:RetainedEarningsMember2019-03-310001659617us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-03-3100016596172019-03-3100016596172019-04-012019-06-300001659617mbx:AprilOfferingsMemberus-gaap:CommonStockMember2019-04-012019-06-300001659617mbx:AprilOfferingsMemberus-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-300001659617mbx:AprilOfferingsMember2019-04-012019-06-300001659617us-gaap:CommonStockMember2019-04-012019-06-300001659617us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-300001659617us-gaap:RetainedEarningsMember2019-04-012019-06-300001659617us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-04-012019-06-300001659617us-gaap:CommonStockMember2019-06-300001659617us-gaap:AdditionalPaidInCapitalMember2019-06-300001659617us-gaap:RetainedEarningsMember2019-06-300001659617us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-3000016596172019-06-300001659617mbx:LincolnParkSaleMemberus-gaap:CommonStockMember2019-07-012019-09-300001659617us-gaap:AdditionalPaidInCapitalMembermbx:LincolnParkSaleMember2019-07-012019-09-300001659617mbx:LincolnParkSaleMember2019-07-012019-09-300001659617mbx:LicenceRightsMemberus-gaap:CommonStockMember2019-07-012019-09-300001659617us-gaap:AdditionalPaidInCapitalMembermbx:LicenceRightsMember2019-07-012019-09-300001659617mbx:LicenceRightsMember2019-07-012019-09-300001659617us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-300001659617us-gaap:RetainedEarningsMember2019-07-012019-09-300001659617us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300001659617us-gaap:CommonStockMember2019-09-300001659617us-gaap:AdditionalPaidInCapitalMember2019-09-300001659617us-gaap:RetainedEarningsMember2019-09-300001659617us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-300001659617us-gaap:CommonStockMember2017-12-310001659617us-gaap:AdditionalPaidInCapitalMember2017-12-310001659617us-gaap:RetainedEarningsMember2017-12-310001659617us-gaap:CommonStockMember2018-01-012018-03-310001659617us-gaap:AdditionalPaidInCapitalMember2018-01-012018-03-3100016596172018-01-012018-03-310001659617us-gaap:RetainedEarningsMember2018-01-012018-03-310001659617us-gaap:CommonStockMember2018-03-310001659617us-gaap:AdditionalPaidInCapitalMember2018-03-310001659617us-gaap:RetainedEarningsMember2018-03-310001659617us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-03-3100016596172018-03-3100016596172018-04-012018-06-300001659617mbx:June2018IssuanceMemberus-gaap:CommonStockMember2018-04-012018-06-300001659617mbx:June2018IssuanceMemberus-gaap:AdditionalPaidInCapitalMember2018-04-012018-06-300001659617mbx:June2018IssuanceMember2018-04-012018-06-300001659617us-gaap:AdditionalPaidInCapitalMember2018-04-012018-06-300001659617us-gaap:RetainedEarningsMember2018-04-012018-06-300001659617us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-04-012018-06-300001659617us-gaap:CommonStockMember2018-06-300001659617us-gaap:AdditionalPaidInCapitalMember2018-06-300001659617us-gaap:RetainedEarningsMember2018-06-300001659617us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-06-3000016596172018-06-300001659617us-gaap:AdditionalPaidInCapitalMember2018-07-012018-09-300001659617us-gaap:RetainedEarningsMember2018-07-012018-09-300001659617us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-07-012018-09-300001659617us-gaap:CommonStockMember2018-09-300001659617us-gaap:AdditionalPaidInCapitalMember2018-09-300001659617us-gaap:RetainedEarningsMember2018-09-300001659617us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-09-30xbrli:pure0001659617mbx:AnimalLifeScienceMember2019-09-30mbx:technologymbx:candidatembx:drugmbx:clinicalTrialmbx:project0001659617us-gaap:EuropeanUnionMember2019-01-012019-09-300001659617mbx:FoodAndDrugAdministrationMember2019-01-012019-09-30mbx:segment0001659617us-gaap:FairValueMeasurementsRecurringMember2019-09-300001659617us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2019-09-300001659617us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001659617us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-09-300001659617us-gaap:FairValueMeasurementsRecurringMember2018-12-310001659617us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2018-12-310001659617us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2018-12-310001659617us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2018-12-310001659617mbx:WarrantLiabilityCurrentMemberus-gaap:FairValueInputsLevel3Member2019-06-300001659617mbx:WarrantLiabilityLongtermMemberus-gaap:FairValueInputsLevel3Member2019-06-300001659617mbx:WarrantLiabiltyMemberus-gaap:FairValueInputsLevel3Member2019-06-300001659617mbx:WarrantLiabilityCurrentMemberus-gaap:FairValueInputsLevel3Member2019-07-012019-09-300001659617mbx:WarrantLiabilityLongtermMemberus-gaap:FairValueInputsLevel3Member2019-07-012019-09-300001659617mbx:WarrantLiabiltyMemberus-gaap:FairValueInputsLevel3Member2019-07-012019-09-300001659617mbx:WarrantLiabilityCurrentMemberus-gaap:FairValueInputsLevel3Member2019-09-300001659617mbx:WarrantLiabilityLongtermMemberus-gaap:FairValueInputsLevel3Member2019-09-300001659617mbx:WarrantLiabiltyMemberus-gaap:FairValueInputsLevel3Member2019-09-300001659617mbx:WarrantLiabilityCurrentMemberus-gaap:FairValueInputsLevel3Member2018-12-310001659617mbx:WarrantLiabilityLongtermMemberus-gaap:FairValueInputsLevel3Member2018-12-310001659617mbx:WarrantLiabiltyMemberus-gaap:FairValueInputsLevel3Member2018-12-310001659617mbx:WarrantLiabilityCurrentMemberus-gaap:FairValueInputsLevel3Member2019-01-012019-09-300001659617mbx:WarrantLiabilityLongtermMemberus-gaap:FairValueInputsLevel3Member2019-01-012019-09-300001659617mbx:WarrantLiabiltyMemberus-gaap:FairValueInputsLevel3Member2019-01-012019-09-300001659617us-gaap:WarrantMember2019-09-300001659617us-gaap:WarrantMember2019-04-012019-04-300001659617us-gaap:WarrantMember2019-03-012019-03-310001659617us-gaap:WarrantMember2018-06-012018-06-300001659617us-gaap:WarrantMember2018-02-012018-02-280001659617us-gaap:WarrantMember2017-02-012017-02-280001659617us-gaap:WarrantMember2018-12-310001659617srt:MinimumMemberus-gaap:WarrantMember2018-12-310001659617srt:MaximumMemberus-gaap:WarrantMember2018-12-310001659617us-gaap:WarrantMember2018-01-012018-12-310001659617us-gaap:WarrantMember2019-01-012019-09-300001659617srt:MinimumMemberus-gaap:WarrantMember2019-01-012019-09-300001659617srt:MaximumMemberus-gaap:WarrantMember2019-01-012019-09-300001659617srt:MinimumMemberus-gaap:WarrantMember2019-09-300001659617srt:MaximumMemberus-gaap:WarrantMember2019-09-300001659617mbx:AprilOfferingsMemberus-gaap:CommonStockMember2019-04-250001659617mbx:AprilOfferingsMemberus-gaap:WarrantMember2019-04-250001659617mbx:AprilOfferingsMemberus-gaap:WarrantMember2019-04-252019-04-250001659617mbx:AprilOfferingsMembermbx:UnderwitersMemberus-gaap:CommonStockMember2019-04-250001659617mbx:March2019RegisteredDirectOfferingsMemberus-gaap:CommonStockMember2019-03-290001659617mbx:March2019RegisteredDirectOfferingsMemberus-gaap:CommonStockMember2019-03-292019-03-290001659617mbx:March2019RegisteredDirectOfferingsMembermbx:UnderwitersMemberus-gaap:CommonStockMember2019-03-290001659617srt:MinimumMemberus-gaap:WarrantMember2018-01-012018-12-310001659617srt:MaximumMemberus-gaap:WarrantMember2018-01-012018-12-3100016596172018-10-042018-10-040001659617mbx:LincolnParkSaleMember2018-10-042018-10-040001659617mbx:CommitmentSharesMembermbx:LincolnParkSaleMember2018-10-042018-10-040001659617mbx:LincolnParkSaleMember2018-10-012018-12-310001659617mbx:CommitmentSharesMembermbx:LincolnParkSaleMember2018-10-012018-12-310001659617mbx:CommitmentSharesMembermbx:LincolnParkSaleMember2019-01-012019-03-310001659617mbx:LincolnParkSaleMember2019-04-012019-06-300001659617mbx:CommitmentSharesMembermbx:LincolnParkSaleMember2019-04-012019-06-300001659617mbx:CommitmentSharesMembermbx:LincolnParkSaleMember2019-07-012019-09-300001659617srt:MaximumMembermbx:RothCapitalPartnersLLCAndNationalSecuritiesCorporationMembermbx:AtMarketIssuanceSalesAgreementMemberus-gaap:CommonStockMember2017-09-300001659617mbx:AtMarketIssuanceSalesAgreementMember2017-09-012017-09-300001659617mbx:OppenheimerCoIncMembermbx:AtMarketIssuanceSalesAgreementMemberus-gaap:CommonStockMember2019-07-230001659617mbx:OppenheimerCoIncMembermbx:AtMarketIssuanceSalesAgreementMemberus-gaap:CommonStockMember2019-07-232019-07-230001659617mbx:StockPlanMember2019-09-3000016596172018-01-012018-12-310001659617us-gaap:EmployeeStockOptionMember2019-01-012019-09-300001659617us-gaap:EmployeeStockOptionMember2018-01-012018-09-300001659617srt:MinimumMemberus-gaap:EmployeeStockOptionMember2019-01-012019-09-300001659617srt:MaximumMemberus-gaap:EmployeeStockOptionMember2019-01-012019-09-300001659617srt:MinimumMemberus-gaap:EmployeeStockOptionMember2018-01-012018-09-300001659617srt:MaximumMemberus-gaap:EmployeeStockOptionMember2018-01-012018-09-300001659617us-gaap:GeneralAndAdministrativeExpenseMember2019-07-012019-09-300001659617us-gaap:GeneralAndAdministrativeExpenseMember2018-07-012018-09-300001659617us-gaap:GeneralAndAdministrativeExpenseMember2019-01-012019-09-300001659617us-gaap:GeneralAndAdministrativeExpenseMember2018-01-012018-09-300001659617us-gaap:ResearchAndDevelopmentExpenseMember2019-07-012019-09-300001659617us-gaap:ResearchAndDevelopmentExpenseMember2018-07-012018-09-300001659617us-gaap:ResearchAndDevelopmentExpenseMember2019-01-012019-09-300001659617us-gaap:ResearchAndDevelopmentExpenseMember2018-01-012018-09-300001659617us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-09-300001659617us-gaap:RestrictedStockUnitsRSUMember2019-09-3000016596172017-07-292017-07-290001659617mbx:TheWarrantsMember2017-07-290001659617mbx:GSKConsultingAgreementWarrantOneMember2017-07-290001659617mbx:GSKConsultingAgreementWarrantTwoMember2017-07-290001659617mbx:TheWarrantsMember2017-07-292017-07-290001659617mbx:ConsultingAgreementWarrantThreeMember2018-04-012018-04-300001659617mbx:ConsultingAgreementWarrantThreeMember2018-04-300001659617mbx:TheWarrantsMember2019-01-012019-09-300001659617mbx:TheWarrantsMember2019-07-082019-07-080001659617mbx:TheWarrantsMember2019-07-080001659617mbx:TheWarrantsMember2019-08-080001659617mbx:TheWarrantsMember2019-07-012019-09-300001659617mbx:TheWarrantsMember2018-07-012018-09-300001659617mbx:SecuritiesPurchaseAgreementMember2018-02-012018-02-280001659617us-gaap:CommonStockMembermbx:SecuritiesPurchaseAgreementMember2018-02-280001659617mbx:SecuritiesPurchaseAgreementMember2018-02-2800016596172018-06-012018-06-300001659617mbx:June2018RegisteredDirectOfferingMember2018-06-012018-06-300001659617mbx:June2018RegisteredDirectOfferingMember2018-06-300001659617mbx:March2019RegisteredDirectOfferingsMember2019-03-012019-03-310001659617mbx:March2019RegisteredDirectOfferingsMemberus-gaap:CommonStockMember2019-03-012019-03-310001659617mbx:March2019RegisteredDirectOfferingsMember2019-03-310001659617mbx:UnderwriterMembermbx:March2019RegisteredDirectOfferingsMember2019-03-310001659617mbx:AprilOfferingsMember2019-04-012019-04-300001659617mbx:AprilOfferingsMemberus-gaap:CommonStockMember2019-04-012019-04-300001659617mbx:AprilOfferingsMember2019-04-300001659617us-gaap:WarrantMemberus-gaap:CommonStockMember2016-05-012016-05-310001659617us-gaap:WarrantMemberus-gaap:CommonStockMember2016-05-310001659617mbx:IPXMemorialDriveInvestorsLLCMembermbx:LeaseAgreementForCorporateOfficeSpaceMember2018-03-220001659617mbx:IPXMemorialDriveInvestorsLLCMembermbx:LeaseAgreementForCorporateOfficeSpaceMember2018-03-222018-03-220001659617mbx:OlympiaDriveWBellfortLLCMember2019-08-310001659617mbx:OlympiaDriveWBellfortLLCMember2019-08-312019-08-310001659617mbx:HoustonPharmaceuticalsIncMember2019-08-310001659617mbx:OlympiaDriveWBellfortLLCMember2019-01-012019-09-300001659617mbx:OlympiaDriveWBellfortLLCMember2019-09-300001659617srt:MaximumMembermbx:MdAndersonMember2019-01-012019-09-300001659617srt:MaximumMembermbx:MdAndersonMember2019-09-300001659617srt:MaximumMembermbx:SubmissionOfNDAAndReceiptOfFirstMarketingApprovalForSaleOfALicensedProductMembermbx:MdAndersonMember2019-09-300001659617srt:MaximumMember2019-01-012019-09-300001659617us-gaap:LicenseMembermbx:MdAndersonMember2019-07-012019-09-300001659617us-gaap:LicenseMembermbx:MdAndersonMember2018-07-012018-09-300001659617us-gaap:LicenseMembermbx:MdAndersonMember2019-01-012019-09-300001659617us-gaap:LicenseMembermbx:MdAndersonMember2018-01-012018-09-3000016596172016-05-022016-05-020001659617mbx:HoustonPharmaceuticalsIncMember2019-04-302019-04-300001659617us-gaap:LicenseMembermbx:HoustonPharmaceuticalsIncMember2019-07-012019-09-300001659617us-gaap:LicenseMembermbx:HoustonPharmaceuticalsIncMember2018-07-012018-09-300001659617us-gaap:LicenseMembermbx:HoustonPharmaceuticalsIncMember2019-01-012019-09-300001659617us-gaap:LicenseMembermbx:HoustonPharmaceuticalsIncMember2018-01-012018-09-300001659617mbx:MdAndersonMember2017-01-012017-12-310001659617mbx:MdAndersonMember2018-09-012018-09-300001659617mbx:MdAndersonMember2019-06-012019-06-300001659617mbx:MdAndersonMemberus-gaap:SubsequentEventMember2019-10-012019-10-310001659617mbx:MdAndersonMember2019-07-012019-09-300001659617mbx:MdAndersonMember2018-07-012018-09-300001659617mbx:MdAndersonMember2019-01-012019-09-300001659617mbx:MdAndersonMember2018-01-012018-09-300001659617mbx:DerminMember2015-01-012015-12-310001659617mbx:DerminMember2019-07-300001659617mbx:DerminMember2019-08-080001659617mbx:WPDPharmaceuticalsMember2019-02-192019-02-190001659617mbx:WPDPharmaceuticalsMembermbx:PeriodOneMember2019-02-190001659617mbx:WPDPharmaceuticalsMembermbx:PeriodTwoMember2019-02-19


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
 or
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from                  to                 
Commission File Number: 001-37758

mbx-20190930_g1.jpg
MOLECULIN BIOTECH, INC.
(Exact name of registrant as specified in its charter)
Delaware
2834
47-4671997
(State or Other Jurisdiction of
Incorporation or Organization)
(Primary Standard Industrial
Classification Code Number)
(IRS Employer
Identification Number)
5300 Memorial Drive,
Suite 950
HoustonTX77007
(Address of principal executive offices)
(Zip Code)
 713-300-5160
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Registration S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filer
Smaller reporting company
Non-accelerated filer
Emerging growth company
Accelerated filer
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes No

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol (s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareMBRXThe NASDAQ Stock Market LLC

The registrant had 45,727,700 shares of common stock outstanding at November 8, 2019.

1



Moleculin Biotech, Inc.

Table of Contents
 

 
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2


PART 1 FINANCIAL INFORMATION
 
Item 1. Financial Statements
Moleculin Biotech, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except for share and per share data)
(unaudited)
September 30,December 31,
20192018
Assets
Current assets:
   Cash and cash equivalents
$15,409  $7,134  
   Prepaid expenses and other current assets
3,177  840  
Total current assets18,586  7,974  
Furniture and equipment, net358  463  
Intangible assets11,148  11,148  
Operating lease right-of-use asset306  —  
          Total assets$30,398  $19,585  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$3,188  $1,246  
Accrued expenses and other current liabilities
1,111  2,452  
Warrant liability - current
6,820  180  
          Total current liabilities11,119  3,878  
Operating lease liability - long-term, net of current portion304  —  
  Deferred rent - long-term—  107  
  Warrant liability - long-term  1,328  
          Total liabilities11,423  5,313  
Commitments and contingencies (Note 7)
Stockholders' equity
Preferred stock, $0.001 par value; 5,000,000 shares authorized, no shares issued or outstanding
    
Common stock, $0.001 par value; 100,000,000 and 75,000,000 shares authorized as of September 30, 2019 and December 31, 2018, 45,727,700 and 28,528,663 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively
46  29  
Additional paid-in capital
54,673  40,564  
Accumulated other comprehensive income
19  35  
Accumulated deficit
(35,763) (26,356) 
          Total stockholders’ equity18,975  14,272  
          Total liabilities and stockholders’ equity$30,398  $19,585  
 

See accompanying notes to unaudited condensed consolidated financial statements.


3




Moleculin Biotech, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
(unaudited)
  
Three Months Ended September 30,Nine Months Ended September 30,
2019201820192018
Revenues$  $  $  $  
Operating expenses:
Research and development
2,785  1,332  7,816  6,801  
General and administrative
1,672  1,248  4,748  3,859  
Depreciation and amortization
51  11  147  27  
Total operating expenses
4,508  2,591  12,711  10,687  
Loss from operations(4,508) (2,591) (12,711) (10,687) 
Other income (expense):
Gain from change in fair value of warrant liability
124  573  3,059  1,614  
Other income (expense)5  (21) 5  (23) 
Interest income, net5  1  10  5  
Net loss before taxes(4,374) (2,038) (9,637) (9,091) 
Income tax benefit229    229    
Net loss$(4,145) $(2,038) $(9,408) $(9,091) 
Net loss per common share - basic and diluted$(0.09) $(0.08) $(0.24) $(0.36) 
Weighted average common shares outstanding: Basic and diluted45,464,746  26,861,497  39,034,303  25,373,634  
Net Loss$(4,145) $(2,038) $(9,408) $(9,091) 
Other comprehensive income (loss):
Foreign currency translation
(3) 15  (16) 21  
Comprehensive loss$(4,148) $(2,023) $(9,424) $(9,070) 
 
See accompanying notes to unaudited condensed consolidated financial statements.
4


Moleculin Biotech, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

 
Nine Months Ended September 30,
20192018
Cash flows from operating activities:
Net loss$(9,408) $(9,091) 
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
147  27  
Stock-based compensation
1,155  825  
License rights expense settled in stock490    
Gain from change in fair value of warrant liability
(3,059) (1,614) 
Operating lease, net(10) —  
Loss on foreign currency transactions  23  
Changes in operating assets and liabilities:
    Prepaid expenses and other current assets
(2,337) (172) 
 Accounts payable
1,942  (25) 
   Accrued expenses and other current liabilities(1,441) 923  
Other long-term liabilities   11  
Net cash used in operating activities(12,521) (9,093) 
Cash flows from investing activities:
Purchase of fixed assets
(42) (303) 
Net cash used in investing activities(42) (303) 
Cash flows from financing activities:
Proceeds from exercise of stock options5    
Proceeds from exercise of warrants
1,557  15  
Proceeds from sale of common stock, net of issuance costs
19,292  10,269  
Net cash provided by financing activities20,854  10,284  
Effect of exchange rate changes on cash and cash equivalents(16) $(2) 
Net change in cash and cash equivalents8,275  886  
Cash and cash equivalents, at beginning of period7,134  7,714  
Cash and cash equivalents, at end of period$15,409  $8,600  
Supplemental disclosures of cash flow information:
Cash paid for interest
$1  $3  
Cash paid for taxes
$15  $20  
Property and equipment in accrued liabilities$21  $136  
Leasehold improvements paid by landlord$  $82  
Research and development expense settled in stock$490  $  
  
See accompanying notes to unaudited condensed consolidated financial statements.
5


Moleculin Biotech, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in thousands, except for shares)
(unaudited)

Common Stock Shares  Common Stock Amount  Additional Paid-In Capital  Accumulated Deficit  Accumulated Other Comprehensive Income (Loss) Stockholders' Equity  
Balance, December 31, 201828,528,663  $29  $40,564  $(26,356) $35  $14,272  
Issued for cash - sale of common stock, net of issuance costs of $617
5,250,000  5  3,221  —  —  3,226  
Issued to Lincoln Park - sale of common stock605,367  —  883  —  —  883  
Stock options exercised25,000  —  5  —  —  5  
Stock-based compensation—  —  348  —  —  348  
Consolidated net loss—  —  —  (4,041) —  (4,041) 
Cumulative translation adjustment—  —  —  —  (11) (11) 
Balance, March 31, 201934,409,030  $34  $45,021  $(30,397) $24  $14,682  
Issued for cash - sale of common stock, net of issuance costs of $1,300
9,375,000  9  3,575  —  —  3,584  
Warrants exercised1,413,018  2  4,729  —  —  4,731  
Stock-based compensation—  —  318  —  —  318  
Consolidated net loss—  —  —  (1,221) —  (1,221) 
Cumulative translation adjustment—  —  —  —  (2) (2) 
Balance, June 30, 201945,197,048  $45  $53,643  $(31,618) $22  $22,092  
Issued to Lincoln Park - sale of common stock, net of issuance costs of $59
100,674  —  52  —  —  52  
Common stock issued for license rights429,978  1  489  —  —  490  
Stock-based compensation—  —  489  —  —  489  
Consolidated net loss—  —  —  (4,145) —  (4,145) 
Cumulative translation adjustment—  —  —  —  (3) (3) 
Balance, September 30, 201945,727,700  $46  $54,673  $(35,763) $19  $18,975  
See accompanying notes to unaudited condensed consolidated financial statements.
6


Moleculin Biotech, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Continued) 
(in thousands, except for shares)
(unaudited)
Common Stock Shares  Common Stock Amount  Additional Paid-In Capital  Accumulated Deficit  Accumulated Other Comprehensive Income (Loss) Stockholders' Equity  
Balance, December 31, 201721,469,109  $21  $31,577  $(14,480) $—  $17,118  
Warrants exercised9,752  —  15  —  —  15  
Issued for cash - sale of common stock, net of issuance costs of $809
4,290,000  5  5,117  —  —  5,122  
Stock-based compensation—  —  242  —  —  242  
Consolidated net loss—  —  —  (1,927) —  (1,927) 
Balance, March 31, 201825,768,861  $26  $36,951  $(16,407) $  $20,570  
Issued for cash - sale of common stock, net of issuance costs of $232
1,092,636  1  957  —  —  958  
Stock-based compensation—  —  339  —  —  339  
Consolidated net loss—  —  —  (5,125) —  (5,125) 
Cumulative translation adjustment—  —  —  —  6  6  
Balance, June 30, 201826,861,497  $27  $38,247  $(21,532) $6  $16,748  
Stock-based compensation—  —  244  —  —  244  
Consolidated net loss—  —  —  (2,038) —  (2,038) 
Cumulative translation adjustment—  —  —  —  15  15  
Balance, September 30, 201826,861,497  $27  $38,491  $(23,570) $21  $14,969  
  
See accompanying notes to unaudited condensed consolidated financial statements.

7


Moleculin Biotech, Inc.
Notes to the Unaudited Condensed Consolidated Financial Statements

 
1. Nature of Business and Liquidity
 
The terms "MBI" or "the Company", "we", "our", and "us" are used herein to refer to Moleculin Biotech, Inc. MBI is a clinical-stage pharmaceutical company, organized as a Delaware corporation in July 2015, with its focus on the treatment of highly resistant cancers via the development of its oncology drug candidates, all of which are based on license agreements with The University of Texas System on behalf of the M.D. Anderson Cancer Center, which we refer to as MD Anderson. MBI formed Moleculin Australia Pty. Ltd., (MAPL), a wholly owned subsidiary in June 2018, to begin preclinical development in Australia for WP1732, an analog of WP1066. This enables the Company to enjoy the benefits of certain research and development tax credits in Australia. In February 2019, the Company entered into an agreement with Animal Life Sciences, LLC ("ALI"), where the Company has granted a sublicense to ALI to research, develop, make, have made, use, offer to sell, sell, export or import and commercialize certain licensed products for non-human use and share development data. ALI issued to the Company a 10% interest in ALI. ALI converted into a corporation and became Animal Life Sciences, Inc.

Core Technologies - MBI has three core technologies with six drug candidates, all of which are based on discoveries made at MD Anderson. These core technologies are 1) Annamycin, 2) its STAT3 Immune/Transcription Modulators, or simply "Immune/Transcription Modulators" WP1066 portfolio and 3) its Metabolism/Glycosylation Inhibitor portfolio, WP1122. The Company’s clinical stage drugs are Annamycin, an anthracycline being studied for the treatment of relapsed or refractory acute myeloid leukemia, or AML and WP1066, an Immune/Transcription Modulator targeting brain tumors, pancreatic cancer and AML. We have completed full enrollment and begun treating patients with WP1220, an analog of WP1066, for the topical treatment of cutaneous T-cell lymphoma ("CTCL"), a form of skin cancer, in a clinical trial approved by Polish regulators in January 2019. MBI is also engaged in preclinical development of additional drug candidates, including other Immune/Transcription Modulators, as well as Metabolism/Glycosylation Inhibitors. With the approval of the Polish clinical trial in January 2019 for WP1220 for the treatment of CTCL, the Company now has three drugs in four clinical trials.

The Company believes Annamycin is a "Next Generation Anthracycline" since it is designed to avoid the multidrug resistance mechanisms that typically defeat currently approved anthracyclines, as well as to be non-cardiotoxic, which is the dose limiting toxicity of all currently approved anthracyclines. Annamycin is currently in two Phase I/II clinical trials, and preliminary clinical data suggests that it may have the potential to become the first therapy suitable for the majority of relapsed or refractory AML patients regardless of gene mutations. Additionally, preclinical research in animal models at MD Anderson demonstrated that Annamycin is able to significantly improve survival in an aggressive form of triple negative breast cancer metastasized to the lungs. Coupled with research demonstrating that Annamycin is capable of accumulating in the lungs at very high levels, this suggests that Annamycin may be well suited to become a treatment for lung-localized tumors.

WP1066 is one of several Immune/Transcription Modulators that appear capable of stimulating immune response to tumors by inhibiting the errant activity of Regulatory T-Cells ("TRegs") while also inhibiting key oncogenic transcription factors, including p-STAT3, c-Myc and HIF-1α. These transcription factors are widely sought targets that may also play a role in the lack of efficacy of immune checkpoint inhibitors in certain resistant tumors.

The Company is also developing new prodrugs to exploit the potential uses of inhibitors of glycolysis and glycosylation. Its lead Metabolism/Glycosylation Inhibitor compound, WP1122, provides an opportunity to cut off the fuel supply of tumors by taking advantage of their overdependence on glucose as compared with healthy cells. New research also points to the potential for the glucose decoy ("2-DG") within WP1122 to be capable of enhancing the usefulness of checkpoint inhibitors.

Drug Candidates - Within the Company's core technologies, it currently has six drug candidates representing three substantially different approaches to treating cancer. Annamycin is a chemotherapy designed to inhibit the replication of DNA of rapidly dividing cells and is the Company's most mature drug candidate. Annamycin had been in clinical trials pursuant to an investigational new drug application or IND that had been filed with the FDA. Due to a lack of development activity by a prior drug developer, this IND was terminated. To permit the renewed investigation of Annamycin, the Company resubmitted a new IND for a Phase I/II trial for the treatment of relapsed or refractory AML in August 2017, which the FDA allowed to go into effect in September 2017. The Company has trials open in the US and Poland and is actively recruiting in both countries.

The Company has five other drug development projects, two of which are also in clinical trials:

8


WP1066 has an approved physician-sponsored clinical trial open for enrollment and dosing patients for the treatment of brain tumors and is also being evaluated for another physician-sponsored clinical trial for the potential treatment of pediatric brain tumors, as well as AML and pancreatic cancer,
WP1220 is an analog of WP1066 for which Polish authorities in January 2019 approved the Company's Clinical Trial Application ("CTA") to study the topical treatment of CTCL, which study reached full enrollment in August 2019,
WP1732, another analog of WP1066, is being evaluated along with WP1066 for the potential treatment of AML, pancreatic and other cancers, and MBI has begun pre-clinical work that it expects to generate sufficient data for an IND for an intravenous formulation of one of its STAT3 inhibitors, which filing is expected to be submitted in 2021, and
WP1122 and WP1234 are being evaluated for their potential to treat brain tumors and pancreatic cancer via their ability to inhibit glycolysis.

Clinical Trials - The Company believes that patient recruitment for its Annamycin clinical trial in the US has been slow due to the high number of competitive clinical trials, combined with the FDA’s requirement to set the initial dose level relatively low in comparison with previous Annamycin clinical trials. Additionally, the Company believes that patient recruitment for its clinical trial in Poland has been more successful than in the US due to a comparatively lower number of competitive clinical trials and the protocol there being approved to start at a significantly higher dose than in the US with fewer enrollment screening limitations.

In September 2018, the physician sponsored WP1066 Phase I clinical trial for the treatment of glioblastoma and melanoma metastasized to the brain, which opened for recruitment in July 2018, began treating patients.

In August 2019, the Company completed full enrollment in a proof-of-concept clinical trial in Poland to study WP1220, a part of the WP1066 portfolio, for the treatment of CTCL. Polish authorities approved the Company's CTA for this use in January 2019, and the trial began enrolling patients in March 2019.

Licenses - The Company has been granted royalty-bearing, worldwide, exclusive licenses for the patent and technology rights related to all of MBI's drug technologies, as these intellectual property rights are owned in part or entirely by MD Anderson. The Annamycin drug substance is no longer covered by any existing patent protection, however, the Company filed new patent applications in July 2019 for formulation, synthetic process and reconstitution related to MBI's Annamycin drug product candidate, although there is no assurance that the Company will be successful in obtaining such patent protection. Such technology is also licensed from MD Anderson. Independently from potential patent protection, MBI has received Orphan Drug designation ("ODD") from the FDA for Annamycin for the treatment of AML and for WP1066 for the treatment of glioblastoma. ODD may provide tax and other benefits during product development, and if either product is approved, may lead to a grant of seven-year market exclusivity. Under that exclusivity, which runs from the date of the approval of the New Drug Application ("NDA") in the United States, the FDA generally (there are important exceptions) could not approve another product containing the same drug for the designated indication. The Company also intends to apply for similar status in the European Union ("EU") where market exclusivity could extend to 10 years from the date of Marketing Authorization Application ("MAA") approval. Separately, the FDA may also grant market exclusivity of 5 years for newly approved new chemical entities (which the Company believes Annamycin would be one), which would preclude approval of any other annamycin product, but there can be no assurance that such exclusivity will be granted. In April 2019, FDA approved the Company's request for Fast Track Designation for Annamycin for the treatment of relapsed or refractory AML. Fast Track Designation, the purpose of which is to expedite drug development and approval, is granted to drugs intended to treat serious conditions and where data demonstrate the potential to address an unmet medical need.

Moleculin, LLC - Prior to MBI's initial public offering, the Company acquired Moleculin, LLC which was merged with and into MBI. Moleculin, LLC was the holder of a license agreement with MD Anderson covering technology referred to as the WP1066 Portfolio, which is focused on the modulation of key oncogenic transcription factors.

2. Basis of presentation, principles of consolidation and significant accounting policies
 
Basis of Presentation – Unaudited Interim Condensed Consolidated Financial Information - The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements furnished reflect all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a
9


fair statement of results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These interim condensed unaudited consolidated financial statements should be read in conjunction with the audited financial statements of the Company as of December 31, 2018 and December 31, 2017 and notes thereto contained in the Form 10-K filed with the SEC on February 21, 2019.
 
Principles of consolidation - The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP. The company views its operations and manages its business in one operating segment. All long-lived assets of the Company reside in the United States.

Use of Estimates - The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including: expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of financial statements. Estimates are used in the following areas, among others: fair value estimates on intangible assets, warrants, and stock-based compensation expense, as well as accrued expenses and taxes.

Going Concern - These condensed consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain necessary equity financing to continue operations and the attainment of profitable operations. As of September 30, 2019, the Company has incurred an accumulated deficit of $35.8 million since inception and had not yet generated any revenue from operations. Additionally, management anticipates that its cash on hand as of September 30, 2019, is sufficient to fund its planned operations into but not beyond the near term. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company may seek additional funding through a combination of equity offerings, debt financings, government or other third-party funding, commercialization, marketing and distribution arrangements, other collaborations, strategic alliances and licensing arrangements and delay planned cash outlays or a combination thereof. Management cannot be certain that such events or a combination thereof can be achieved.
 
Cash and Cash Equivalents - The Company considers all highly liquid accounts with original maturities of three months or less at the date of acquisition to be cash equivalents. Periodically in the ordinary course of business, the Company may carry cash balances at financial institutions in excess of the Federally insured limits of $250,000.

Prepaid Expenses and Other Current Assets - Prepaid expenses and other current assets consist of the following (in thousands):

September 30, 2019December 31, 2018
Vendor prepayments and deposits$1,994  $238  
Prepaid insurance560  171  
Non-trade receivables316  56  
Other307  375  
Total prepaid expenses and other current assets$3,177  $840  

Vendor prepayments includes approximately $1.7 million for the expansion of Annamycin production commitments on a commercial scale to be delivered in 2020, which will be used in clinical trials.

Intangible Assets - Intangible assets with finite lives are amortized using the straight-line method over their estimated period of benefit. If an intangible asset is identified as an in-process research & development ("IPR&D") asset, then no
10


amortization will occur until the development is complete. If the associated research and development effort is abandoned, the related assets will be written-off and the Company will record a noncash impairment loss on its statements of operations. For those compounds that reach commercialization, if any, the IPR&D assets will be amortized over their estimated useful lives.

The Company evaluates the recoverability of intangible assets periodically and takes into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. No material impairments of intangible assets have been identified during any of the periods presented. Intangible assets are tested for impairment on an annual basis, and between annual tests if the Company believes indicators of potential impairment exist, using a fair-value-based approach.

Property and Equipment, net - Leasehold improvements, furniture, equipment and software are recorded at cost and are depreciated using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining lease term. Accumulated depreciation on property and equipment was $0.2 million at September 30, 2019, and $0.1 million at December 31, 2018.

Operating Lease Right-of-Use Asset - The Company determines if an arrangement is a lease at contract inception or during modifications or renewal of an existing lease. Operating lease assets represent the Company's right to use an underlying asset for the lease term and operating lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date of the lease based upon the present value of lease payments over the lease term. The lease payments used to determine the Company's operating lease assets may include lease incentives, stated rent increases and escalation clauses linked to rates of inflation when determinable and are recognized in the Company's operating lease assets in the Company's condensed consolidated balance sheet. The Company has elected the practical expedient and will not separate lease components from nonlease components for its leases. The Company's operating leases are reflected in operating lease right-of-use asset ("ROU"), accrued expenses and current liabilities, and operating lease liability - long-term in the Company's condensed consolidated balance sheets. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Short-term leases, defined as leases that have a lease term of 12 months or less at the commencement date, are excluded from this treatment and are recognized on a straight-line basis over the term of the lease. Refer to Note 7 - Commitments and Contingencies - Lease Obligations Payable for additional information related to the Company’s operating leases.

 Cost Method Investment - Our cost method investment consists of an investment in a private company in which we do not have the ability to exercise significant influence over its operating and financial activities. The investment is tested for impairment quarterly.
Fair Value of Financial Instruments - The Company's financial instruments consist primarily of non-trade receivables, account payables, accrued expenses and a warrant liability. The carrying amount of non-trade receivables, accounts payables, and accrued expenses approximates their fair value because of the short-term maturity of such.
 
The Company has categorized its assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy in accordance with U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3).
 
Assets and liabilities recorded in the balance sheets at fair value are categorized based on a hierarchy of inputs as follows:
 
Level 1 – Unadjusted quoted prices in active markets of identical assets or liabilities.
Level 2 – Quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
Level 3 – Unobservable inputs for the asset or liability.
 
The Company’s financial assets and liabilities recorded at fair value on a recurring basis include the fair value of warrant liability discussed in Note 4. In the accompanying interim condensed consolidated financial statements as of September 30, 2019, the fair value of this warrant liability is included in current liabilities for the February 2017 Issuance of Warrants, the February 2018 Issuance of Warrants, the June 2018 Issuance of Warrants, the March 2019 Issuance of Warrants, and the April 2019 Issuance of Warrants. Warrant liabilities will be shown as a current liability on the balance sheet when it is deemed more probable than not by management to be exercised within one year.
11


 
The following table provides assets and liabilities reported at fair value and measured on a recurring basis at September 30, 2019 and at December 31, 2018 (in thousands):
 
Description
Liabilities
Measured at Fair
Value
Quoted Prices
in Active
Markets for
Identical
Assets (Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant Other
Unobservable Inputs
(Level 3)
Fair value of warrant liability as of September 30, 2019:$6,820  $  $  $6,820  
Fair value of warrant liability as of December 31, 2018:$1,508  $  $  $1,508  

The table below (in thousands) of Level 3 liabilities begins with the valuation as of the beginning of the third quarter and then is adjusted for the issuances and exercises that occurred during the third quarter of 2019 and adjusts for balances for changes in fair value that occurred during the current quarter. The ending balance of the Level 3 financial instrument presented above represents our best estimates and may not be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. 

Three Months Ended September 30, 2019Warrant Liability CurrentWarrant Liability Long-TermWarrant Liability Total
Balance, June 30, 2019$6,944  $  $6,944  
Reclass of liability from long-term to current      
Exercise of warrants      
Issuances of warrants      
Change in fair value - net(124)   (124) 
Balance, September 30, 2019$6,820  $  $6,820  


 The table below (in thousands) of Level 3 liabilities begins with the valuation as of December 31, 2018 and then is adjusted for the issuances and exercises, and changes in fair value that occurred during the nine months ended September 30, 2019. The ending balance of the Level 3 financial instrument presented above represents our best estimates and may not be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. 

Nine Months Ended September 30, 2019Warrant Liability Current
Warrant
Liability
Long-Term
Warrant
Liability
Total
Balance, December 31, 2018$180  $1,328  $1,508  
Reclass of liability from long-term to current1,328  (1,328)   
Exercise of warrants(3,174)   (3,174) 
Issuances of warrants11,545    11,545  
Change in fair value - net(3,059)   (3,059) 
Balance, September 30, 2019$6,820  $  $6,820  

Loss Per Common Share - Basic net loss per common share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding during the period. For purposes of this calculation, options to purchase common stock, restricted stock subject to vesting and warrants to purchase common stock were considered to be common stock equivalents. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be antidilutive. For the three months ended September 30, 2019 and 2018,
12


approximately 14.7 million and approximately 6.5 million, respectively, of potentially dilutive shares were excluded from the computation of diluted earnings per share due to their antidilutive effect. For the nine months ended September 30, 2019 and 2018, approximately 11.3 million and approximately 5.0 million, respectively, of potentially dilutive shares were excluded from the computation of diluted earnings per share due to their antidilutive effect.

Reclassifications - A reclassification was made to the prior period financial statements to conform to the 2019 presentation. Such reclassification did not affect net loss as previously reported. Historically, "Deferred compensation - related party" was a separate line item on the balance sheet. Management believes that this balance is best shown included in "accrued expenses and other current liabilities," and, as such, a reclassification was made to the balance sheet for the period ended December 31, 2018 to include "deferred compensation - related party" in with "accrued liabilities and other current liabilities." Additionally, interim disclosures pertaining to stockholders' equity are shown for current and comparative year-to-date periods, with subtotals for each interim period.

Subsequent Events - The Company’s management reviewed all material events through the date these unaudited condensed consolidated financial statements were issued for subsequent events disclosure consideration, see Note 8 - "Subsequent Events".
 
Recent Accounting Pronouncements
 
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. In July 2018, the FASB issued ASU No. 2018-11, Leases Targeted Improvements ("ASU 2018-11"). In March 2019, the FASB issued ASU. No. 2019-01, Leases ("ASU 2019-01"). ASU 2019-01 and 2018-11 assists stakeholders with implementation questions and issues as organizations prepare to adopt the new leases standard. The Company adopted this standard on January 1, 2019 and used the effective date of initial application using the modified retrospective transition method. Upon adoption there was no cumulative-effect adjustment to the opening balance of retained earnings as of January 1, 2019. Therefore, prior period financial information has not been adjusted and continues to be reflected in accordance with the Company's historical accounting policy. The standard establishes a ROU asset model that requires the lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. (see Note 7. Commitments and Contingencies - Lease Obligations Payable).
 
In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718) Improvements to Non-employee Share-Based Payment Accounting ("ASU 2018-07"). ASU 2018-07 affects all entities that enter into share-based payment transactions for acquiring goods and services from non-employees. The amendments in this ASU expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption permitted, but no earlier than an entity's adoption date of Topic 606. The adoption of this pronouncement did not have a material impact on the Company's condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) ("ASU 2018-13"). ASU 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted upon issuance of this ASU. The Company is currently evaluating the impact that this standard will have, if any, on its financial statements.

The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying condensed consolidated financial statements.
  
3. Accrued Expenses and Other Current Liabilities
 
Accrued expenses and other current liabilities consist of the following components (in thousands):
  
13


September 30, 2019December 31, 2018
Accrued clinical testing$349  $95  
Accrued payroll and bonuses249  492  
Accrued other144  227  
Accrued legal and professional fees137  91  
Operating lease liability - current100  —  
Accrued license fees and sponsored research agreements91  1,147  
Accrued drug manufacturing costs41  400  
Total accrued expenses and other current liabilities$1,111  $2,452  


4. Warrant Liability
 
As of September 30, 2019, the Company had 10,256,193 warrants outstanding consisting of 5,250,000 warrants issued in April 2019; 1,585,500 warrants issued in March 2019; 742,991 warrants issued in June 2018; 2,273,700 warrants issued in February 2018; and 404,002 warrants issued in February 2017.

A summary of the Company's warrant activity during the nine months ended September 30, 2019 and related information follows: 
Number of Shares Under WarrantRange of Warrant Exercise Price per ShareWeighted Average Exercise PriceWeighted Average Remaining Contractual Life (Years)
Balance at January 1, 20193,426,711  $1.50  $2.80  $2.48  4.53
Granted8,242,500  $1.10  $1.75  $1.51  —  
Exercised(1,413,018) $1.10  $1.50  $1.10  —  
Expired  $—  $—  $—  —  
Balance at September 30, 201910,256,193  $1.10  $2.80  $1.89  4.29
Vested and Exercisable at September 30, 201910,256,193  $1.10  $2.80  $1.89  4.29

As discussed in Note 5, in connection with the offering that closed on April 25, 2019, the Company issued warrants to purchase 4,687,500 shares of its common stock (each a "Warrant"). The warrants are immediately exercisable at a price of $1.75 per share and expire five years from the date of issuance. In connection with the offering, the Company issued Oppenheimer & Co. Inc. a warrant (the "Underwriter Warrant") to purchase up to 562,500 shares of its common stock with an exercise price of $1.75 per share. The Underwriter Warrant expires on April 23, 2024.

As discussed in Note 5, in connection with the offering that closed on March 29, 2019, the Company issued warrants to purchase 2,625,000 shares of its common stock (each a “Warrant”). The warrants are immediately exercisable at a price of $1.10 per share, subject to adjustment in certain circumstances, and expire five years from the date of issuance. In connection with the offering, the Company issued Oppenheimer & Co. Inc. a warrant (the “Underwriter Warrant”) to purchase up to 367,500 shares of its common stock with an exercise price of $1.10 per share. The Underwriter Warrant expires on March 27, 2024.

The basis of value of the warrant liability is fair value, which is defined pursuant to Accounting Standards Codification (“ASC”) 820 to be “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”. The Company uses the Black-Scholes option pricing model (“BSM”) to determine the fair value of its remaining warrants outstanding.

The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds linearly interpolated to obtain a maturity period commensurate with the term of the warrants.

Estimated volatility is a measure of the amount by which the Company's stock price is expected to fluctuate each year during the expected life of the warrants. Where appropriate, the Company used the historical volatility of peer entities combined with the Company's due to the lack of sufficient historical data of its stock price during the years 2017 to 2019.

14


The assumptions used in the BSM models for its outstanding warrants are as follows:

Nine Months Ended September 30, 2019Year Ended December 31, 2018
Risk-free interest rate1.55 %to1.60 %2.46 %to2.51 %
Volatility90.00 %to97.50 %75.00 %to80.00 %
Expected life (years)2.37to