Monopar Therapeutics: Form 10-Q for the period ended Sep 30, 2023

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis are set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing activities, includes forward-looking statements that involve risks and uncertainties.

Overview

We are a clinical stage biopharmaceutical company focused on developing innovative treatments for cancer patients. We are building a drug development pipeline through the licensing and acquisition of therapeutics in late preclinical or in clinical development stages. We leverage our scientific and clinical experience to help reduce the risk of and accelerate the clinical development of our drug product candidates.

Financial Status

Our cash, cash equivalents and investments as of September 30, 2023, were $8.5 million. As discussed further below and elsewhere in this Quarterly Report, we expect that our current funds will be sufficient at least through November 2024 for us to obtain topline results from our ongoing open-label Phase 1b camsirubicin clinical trial by mid-2024 (but as discussed below, this may not be the case if camsirubicin reaches even higher dose levels than we are anticipating and topline results are deferred as dosing continues beyond mid-2024), advance our MNPR-101 radiopharmaceutical program into its first-in-human clinical trial, and close out our terminated Validive Phase 2b/3 (VOICE) clinical program. We will require additional funding to further advance our clinical and preclinical programs and we anticipate that we will seek to raise additional capital within the next 12 months to fund our future operations.

Our primary funding source over the past three years was sales of shares of our common stock under at-the-market sales programs through Capital on Demand™ Sales Agreements with JonesTrading Institutional Services LLC (“Jones Trading”). For the nine months ended September 30, 2023, we sold 1,125,479 shares of our common stock at an average gross price per share of $1.60 for net proceeds of $1,760,197, after fees and commissions of $45,161. In addition, we incurred and accrued legal, accounting and other fees totaling $27,241 for net proceeds after fees, commissions and expenses of $1,732,956.

Discontinuation of Validive Development

On March 27, 2023, we announced the completion of a pre-specified interim analysis for our Validive Phase 2b/3 VOICE trial for the prevention of severe oral mucositis (“SOM”) in patients undergoing chemoradiotherapy (“CRT”) for oropharyngeal cancer (“OPC”). The interim analysis included the first approximately 50% of the total planned patients to be enrolled. It was conducted by an independent Data Safety Monitoring Board (“DSMB”), which informed us that the trial did not meet the pre-defined threshold for efficacy of a 15% absolute difference in SOM prevention between Validive and placebo. The DSMB also reported that there were no safety concerns attributed to Validive. Based on not meeting the pre-specified efficacy threshold, in March 2023 we terminated the study and discontinued the development of Validive.

Camsirubicin Clinical Update

The Phase 1b open-label, dose-escalating clinical trial of camsirubicin in patients with advanced soft tissue sarcoma (“ASTS”) is currently ongoing and is in the fifth dose-level cohort (650 mg/m2), which is nearly 2.5x the highest dose evaluated in any prior camsirubicin clinical trial (265 mg/m2). We have dosed two patients in the fifth dose cohort so far, and both experienced reductions in their tumor dimensions, one of approximately 18% and the other of approximately 20%.

To date, 9 out of the 14 patients that have been enrolled into the Phase 1b trial have achieved stable disease (“SD”, as defined by RECIST 1.1 criteria) after camsirubicin treatment, including all patients in the fourth (520 mg/m2) and fifth dose cohorts. One patient in the fourth dose cohort went from having what was initially determined to be an unresectable cancer to, after several cycles of camsirubicin treatment and a corresponding 21% reduction in tumor dimensions, being determined to be resectable. This changed the course of treatment for this patient, who subsequently underwent successful surgical resection of the cancer with clear margins. The Phase 1b data to date show an improvement in median progression free survival from what was observed in the prior camsirubicin Phase 2 trial (265 mg/m2). No dose-limiting toxicity, as defined in the protocol, has been observed in the Phase 1b trial to-date. A medically complex patient in the fifth dose cohort has an ongoing left ventricular ejection fraction (“LVEF”) decrease and is being assessed for potential anthracycline (camsirubicin) induced cardiotoxicity. This patient has a BMI of 42.5, one kidney, hypertension, a long-standing heart murmur, and a maternal history of heart failure.

MNPR-101 for Radiopharmaceutical Use, Development Update

Pursuant to our 50/50 cost-sharing collaboration agreement with NorthStar Medical Radioisotopes, LLC (“NorthStar”) to develop potential radioimmunotherapeutics based on MNPR-101 (“MNPR-101 RITs”), we have coupled MNPR-101, a highly selective antibody against the urokinase plasminogen activator receptor ("uPAR"), to imaging and therapeutic radioisotopes. The resulting conjugates, MNPR-101-Zr and MNPR-101-PCTA-Ac225, are designed to be highly selective agents that have the potential to image and kill certain cancer cells. By eradicating these cancer cells with a uPAR-targeted RIT (“uPRIT”), the therapeutic goal is to spare healthy cells while quickly killing the cancer cells.

Based on promising preclinical imaging results with MNPR-101-Zr showing high and tumor-specific uptake across multiple tumor types, and with preclinical therapeutic efficacy and biodistribution studies utilizing the radioisotopes actinium-225 (“Ac-225”) and lutetium-177 (“Lu-177”), we and NorthStar committed to additional funding with the aim of initiating a first-in-human imaging study with MNPR-101-Zr as early as end of this year. MNPR-101-Zr is a zirconium-89 labeled version of MNPR-101. Positron emission tomography (“PET”) imaging of preclinical mouse models for triple-negative breast, colorectal, and pancreatic tumors displayed high, selective, and durable uptake of MNPR-101-Zr in these uPAR-expressing tumors. Additionally, preclinical triple-negative breast and pancreatic cancer mouse model studies with Ac-225 radiolabeled MNPR-101 have shown a promising dose-dependent-anti-cancer-effect. Favorable biodistribution profiles have been shown for Ac-225 and Lu-177 labeled MNPR-101. These proof-of-concept studies provide support for a first-in-human PET imaging study with MNPR-101-Zr and a future therapeutic study using Ac-225 or Lu-177 labeled MNPR-101 RIT. Overall, the imaging and therapeutic results demonstrate the potential utility of MNPR-101 as a precision targeting agent for both imaging and treatment in multiple cancer indications.

In July 2023, we announced a collaboration with the Cancer Science Institute of Singapore (“CSI Singapore”), one of Asia's premier cancer research centers, at the National University of Singapore (“NUS”) (consistently ranked as one of the world's top universities) to evaluate radiopharmaceutical versions of MNPR-101 in several aggressive cancers. Dr. Anand Jeyasekharan, MBBS MRCP (UK) PhD, of CSI Singapore, NUS, will be the Principal Investigator on the collaboration. Dr. Jeyasekharan is a physician-scientist who runs a research laboratory investigating the molecular and biological responses of cancer cells to oncology drugs, as well as treats cancer patients and leads early phase oncology clinical trials at NUS. In this collaboration, Dr. Jeyasekharan will initially investigate uPAR expression levels in tissue samples from patients with various subtypes of ASTS. Studies have shown uPAR to be a promising target for ASTS, which is a cancer Dr. Jeyasekharan specializes in treating. He plans to assess retrospective patient samples to identify which subtypes of ASTS have the highest expression of uPAR, thus making them the most promising to pursue in a human clinical trial.

MNPR-202 and Related Analogs Updates

In June 2021, we entered into a collaboration agreement with CSI Singapore, at NUS to evaluate the activity of MNPR-202 and related analogs in multiple types of cancer. MNPR-202 was designed to retain the same potentially non-cardiotoxic backbone as camsirubicin but is modified at other positions which may enable it to work in certain cancers that are resistant to camsirubicin and doxorubicin. In collaboration with Dr. Anand Jeyasekharan of CSI Singapore, we presented an abstract and poster of the preclinical data of MNPR-202 at the American Society of Hematology 64th Annual Meeting in New Orleans, LA. The poster presented the following promising data about MNPR-202:

• has a similar cytotoxic potency to doxorubicin
• generates increased DNA damage in the cancer cells compared to doxorubicin
• has a unique immune activation profile versus doxorubicin
• demonstrates increased apoptosis (programmed cell death) compared to doxorubicin
• causes a distinct set of genes to be upregulated and downregulated versus doxorubicin and
• may also be superior to doxorubicin in certain combination treatment regimens.

A combination drug screen with 183 compounds was performed, revealing distinct differences in the synergy profile between doxorubicin versus MNPR-202 when used along with other compounds. For example, MNPR-202 demonstrated a more favorable synergy profile with the experimental anti-cancer agent volasertib compared to doxorubicin. In a preclinical study using a human iPSC cardiomyocyte model to evaluate heart toxicity, cells treated with MNPR-202 maintained a greater contractile amplitude and a more consistent and regular beat rate relative to doxorubicin-treated cells, indicating that MNPR-202 has a broader therapeutic window than doxorubicin with respect to cardiotoxicity.

Our Product Pipeline

Our Strategy

Our management team has extensive experience in developing therapeutics and medical technologies through global regulatory approval and commercialization. In aggregate, companies they co-founded have achieved four drug approvals and three diagnostic medical imaging device approvals in the U.S. and the EU, successfully sold an asset developed by management which went on to have a positive Phase 3 clinical trial, sold two oncology-focused diagnostic imaging businesses to Fortune Global 1000 firms, and completed the clinical and commercial development and ultimately the sale of a commercial biopharmaceutical company for over $800 million in cash. In addition, the team has supported multiple regulatory submissions with the FDA and the European Medicines Agency (“EMA”) and launched multiple drugs in the U.S and the EU. Understanding the preclinical, clinical, regulatory and commercial development processes and hurdles are key factors in successful drug development and the expertise demonstrated by our management team across all of these areas increases the probability of success in advancing the product candidates in our product pipeline. Our strategic goal is to acquire, develop and commercialize promising oncology product candidates that address important unmet medical needs of cancer patients. Five key elements of our strategy to achieve this goal are to:

• Advance the clinical development of camsirubicin, by pursuing indications where doxorubicin has demonstrated efficacy. ASTS will be the first indication, which is anticipated to allow camsirubicin to go head-to-head against doxorubicin, the current first-line treatment. In this indication, camsirubicin previously demonstrated clinical benefit (stable disease or partial response) in 52.6% of patients evaluable for tumor progression in a single-arm Phase 2 study. Clinical benefit was proportional to dose and was consistently observed at higher cumulative doses of camsirubicin (>1000 mg/m2 cumulative dose). Our current ongoing Phase 1b clinical trial continues towards establishing a new, higher recommended dose for the next Phase 2 ASTS clinical trial.
• Continue the development of MNPR-101 for radiopharmaceutical use as a therapeutic as well as a diagnostic imaging agent. We have prioritized our development of radiopharmaceuticals based on promising data from our imaging and efficacy animal model studies in multiple cancers including triple-negative breast and pancreatic cancers. Based on promising preclinical imaging and therapeutic results utilizing radiolabeled MNPR-101, we aim to initiate a first-in-human imaging study with MNPR-101-Zr as early as the end of this year.
• Continue the development of MNPR-202 and related analogs in multiple types of cancers. The 2-pyrrilino camsirubicin analog (MNPR-202) and related analogs represent proprietary compositions of matter designed to retain the non-cardiotoxic backbone of camsirubicin yet exhibit novel features in terms of antitumor activity and mechanism that distinguish these analogs from camsirubicin as well as from doxorubicin, potentially addressing camsirubicin- and doxorubicin-resistant cancers.
• Expand our drug development pipeline through advancing current assets, in-licensing, and acquisition of oncology product candidates. We plan to continue the expansion of our drug development pipeline through acquiring or in-licensing additional oncology product candidates, particularly those that leverage existing scientific and clinical data that helps reduce the risks of the next steps in clinical development. To be executed, such expansion will require additional funds.
• Utilize the expertise and prior experience of our team in the areas of asset acquisition, drug development and commercialization to establish ourselves as a leading biopharmaceutical company. Our senior executive team has relevant experience in biopharmaceutical in-licensing and acquisitions as well as developing product candidates through approval and commercialization. In aggregate, our team has co-founded BioMarin Pharmaceutical (Nasdaq: BMRN), Sensant Corp (acquired by Siemens), American BioOptics (assets acquired by Olympus), Raptor Pharmaceuticals ($800 million sale to Horizon Therapeutics), Wilson Therapeutics (acquired by Alexion in June 2018 for $764 million; Alexion was subsequently acquired by AstraZeneca) and Tactic Pharma, LLC (“Tactic Pharma”).

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Revenues

We are an emerging growth company. We have no approved drugs and have not generated any revenues. To date, we have engaged in acquiring or in-licensing drug product candidates, entering into collaboration agreements for testing and clinical development of our drug product candidates and providing the infrastructure to support the clinical development of our drug product candidates. We do not anticipate commercial revenues from operations until we complete testing and development of one of our drug product candidates and obtain marketing approval or we sell, enter into a collaborative marketing arrangement, or out-license one of our drug product candidates to another party. See “Liquidity and Capital Resources”.

Recently Issued and Adopted Accounting Pronouncements

During the three months ended September 30, 2023, there were no relevant recently issued accounting pronouncements that would impact our financial position and our condensed consolidated statements of operations and comprehensive loss or cashflows.

Critical Accounting Policies and Use of Estimates

While our significant accounting policies are described in more detail in Note 2 of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our condensed consolidated financial statements.

Going Concern Assessment

We apply Accounting Standards Codification 205-40 ("ASC 205-40"), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which the Financial Accounting Standards Board ("FASB") issued to provide guidance on determining when and how reporting companies must disclose going concern uncertainties in their financial statements. ASC-205-40 requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date of issuance of the entity's financial statements (or within one year after the date on which the financial statements are available to be issued when applicable). Further, a company must provide certain disclosures if there is "substantial doubt about the entity's ability to continue as a going concern." In September 2023, we analyzed our cash requirements at least through November 2024 and we have determined that, based upon our current available cash, we have no substantial doubt about our ability to continue as a going concern.

Clinical Trials Accruals

We accrue and expense the costs for clinical trial activities performed by third parties based upon estimates of the percentage of work completed over the life of the individual study in accordance with agreements established with contract research organizations, service providers, and clinical trial sites. We estimate the amounts to accrue based upon discussions with internal clinical personnel and external service providers as to progress or stage of completion of trials or services and the agreed upon fees to be paid for such services. Costs of setting up clinical trial sites for participation in the trials are expensed immediately as research and development expenses. Clinical trial site costs related to patient screening and enrollment are accrued as patients are screened/entered into the trial.

Stock-Based Compensation

We account for stock-based compensation arrangements with employees, non-employee directors and consultants using a fair value method, which requires the recognition of compensation expense for costs related to all stock-based compensation grants, including stock option and restricted stock unit (“RSU”) grants. The fair value method requires us to estimate the fair value of stock-based payment awards on the date of grant using an option pricing model or the closing stock price on the date of grant in the case of RSUs.

Stock-based compensation costs for stock awards granted to our employees, non-employee directors and consultants are based on the fair value of the underlying instruments calculated using the Black-Scholes option-pricing model on the date of grant for stock options and using the closing stock price on the date of grant for RSUs and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. Determining the appropriate fair value model and related assumptions requires judgment, including selecting methods for estimating our future stock price volatility and expected holding term. The expected volatility rates are estimated based on our actual historical volatility over the two-year period from our initial public offering on December 18, 2019, through December 31, 2021 for stock-based awards granted in 2022. The Company did not grant any stock awards during the three months ended September 30, 2023. For awards granted during the nine months ended September 30, 2023, the expected volatility rates are estimated based on our actual historical volatility over the three-year period from our initial public offering on December 18, 2019, through December 31, 2022. The expected term for stock options granted during the three and nine months ended September 30, 2023, and 2022, was estimated using the simplified method. Forfeitures only include actual forfeitures to-date as the Company accounts for forfeitures as they occur due to a limited history of forfeitures. We have not paid dividends and do not anticipate paying a cash dividend in future vesting periods and, accordingly, use an expected dividend yield of zero. The risk-free interest rate is based on the rate of U.S. Treasury securities with maturities consistent with the estimated expected term of the awards.

Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2023 and 2022

The following table summarizes the results of our operations for the three and nine months ended September 30, 2023 and 2022:

(Unaudited)

(Unaudited)

(in thousands)

Research and Development (“R&D”) Expenses

R&D expenses for the three months ended September 30, 2023 were $1,317,000, compared to $1,732,000 for the three months ended September 30, 2022. This represents a decrease of $415,000 attributed to a decrease of $673,000 in Validive clinical trial-related and clinical material manufacturing-related expenses offset by (1) an increase of $161,000 in non-clinical studies related to MNPR-101 uPRIT activity, (2) an increase of $78,000 in camsirubicin clinical trial expenses including patient dosing and manufacturing-related expenses, and (3) a net increase of $19,000 due to other R&D expenses.

R&D expenses for the nine months ended September 30, 2023 were $4,564,000, compared to $5,489,000 for the nine months ended September 30, 2022. This represents a decrease of $925,000 attributed to (1) a decrease of $688,000 in camsirubicin clinical trial expenses including patient dosing and manufacturing-related expenses, (2) a decrease of $503,000 in Validive clinical trial-related and clinical material manufacturing-related expenses, and (3) a net decrease of $13,000 in other R&D expenses offset by an increase of $279,000 in non-clinical studies related to MNPR-101 uPRIT activity.

General and Administrative (“G&A”) Expenses

G&A expenses for the three months ended September 30, 2023 were $749,000, compared to $675,000 for the three months ended September 30, 2022. This represents an increase of $74,000 primarily attributed to an increase in G&A salaries and benefits.

G&A expenses for the nine months ended September 30, 2023 were $2,355,000, compared to $2,139,000 for the nine months ended September 30, 2022. This represents an increase of $216,000 primarily attributed to an increase in G&A salaries and benefits.

Interest Income

Interest income for the three months ended September 30, 2023, increased by $104,000 versus the three months ended September 30, 2022, due to interest earned on treasury bills and money market accounts that yielded higher interest rates.

Interest income for the nine months ended September 30, 2023, increased by $322,000 versus the nine months ended September 30, 2022, due to interest earned on treasury bills and money market accounts that yielded higher interest rates.

Liquidity and Capital Resources

Sources of Liquidity

We have incurred losses and cumulative negative cash flows from operations since we commenced operations resulting in an accumulated deficit of approximately $58.4 million as of September 30, 2023. We anticipate that we will continue to incur losses for the foreseeable future. We expect that our R&D and G&A expenses will increase to enable the execution of our strategic plan. As a result, we anticipate that we will seek to raise additional capital within the next 12 months to fund our future operations. We will seek to obtain needed capital through a combination of equity offerings, including the usage of our Capital on DemandTM Sales Agreement with JonesTrading, debt financings, strategic collaborations and grant funding. To date, we have funded our operations through net proceeds from the initial public offering of our common stock, net proceeds from sales of our common stock through at-the-market sales programs, private placements of our preferred and common stock, and the net receipt of funds related to our acquisition of camsirubicin. We anticipate that the currently available funds as of October 27, 2023, will fund our planned operations at least through November 2024.

We invest our cash equivalents in two money market accounts and U.S. Treasury Bills.

Cash Flows

The following table provides information regarding our cash flows for the nine months ended September 30, 2023 and 2022.

(Unaudited)

(in thousands)

In December 2022, the Company began investing its idle cash due to the rising interest rates. During the nine months ended September 30, 2023 and 2022 we had net cash outflows of $2,671,000 and $5,988,000, respectively, an outflow decrease of $3,317,000. During the nine months ended September 30, 2023, versus the nine months ended September 30, 2022, we had net cash provided by investing activities as certain investments matured (offset by the purchase of additional investments) and we had net cash provided by financing activities as funds were raised from sales of our common stock under an at-the-market sales program.

Cash Flow Used in Operating Activities

The increase of $385,000 in cash flow used in operating activities during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, was primarily a result of changes in accounts payable, accrued expenses and other current liabilities.

Cash Flow Provided by Investing Activities

The cash flow provided by investing activities during the nine months ended September 30, 2023 of $1,957,000 was a result of our investment in U.S. Treasury Bills maturing during the nine months ended September 30, 2023 offset by the purchase of additional U.S. Treasury Bills during the period. During the nine months ended September 30, 2022, idle cash was invested in money market accounts and recorded as cash equivalents.

Cash Flow Provided by (Used in) Financing Activities

The increase in cash flow provided by (used in) financing activities during the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, of $1,798,000 was primarily due to the proceeds from sales of our common stock under an at-the-market sales program during the nine months ended September 30, 2023. We did not have any sales of our common stock during the nine months ended September 30, 2022.

Future Funding Requirements

To date, we have not generated any revenue from product sales. We do not know when, or if, we will generate any revenue from product sales. We do not expect to generate any revenue from product sales or royalties unless and until we obtain regulatory approval of and commercialize any of our current or future drug product candidates or we out-license or sell a drug product candidate to another party. At the same time, we expect our expenses to increase in connection with our ongoing development activities, particularly as we continue the research, development, future preclinical studies and clinical trials of, and seek regulatory approval for, our current and future drug product candidates. If we obtain regulatory approval of any of our current or future drug product candidates, we will need substantial additional funding for commercialization requirements and our continuing drug product development operations.

As a company, we have not completed development through marketing approvals of any therapeutic or imaging products. We expect to continue to incur significant increases in expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially as we:

• advance the clinical development and execute the regulatory strategy for camsirubicin;
• continue the preclinical activities and potentially enter clinical development of MNPR-101-derived radioimmunotherapeutics and companion diagnostics, to image and treat cancer;
• continue the preclinical activities, and potentially later-on enter clinical development, of MNPR-202 (and related analogs) for various cancer indications;
• acquire and/or license additional pipeline drug product candidates and pursue the future preclinical and clinical development and regulatory requirements of such drug product candidates;
• seek regulatory approvals for any of our current and future drug product candidates that successfully complete registration clinical trials;
• establish or purchase the services of a sales, marketing and distribution infrastructure to commercialize any products for which we obtain marketing approval;
• develop, or contract for, manufacturing/quality capabilities- to establish a reliable, high quality supply chain sufficient to support our clinical and specialized radiopharmaceutical requirements and to provide sufficient capacity to launch and supply the market for any product for which we obtain marketing approval; and
• add or contract for required operational, financial, human resources and management information systems and capabilities and other specialized expert personnel to support our drug product candidate development and planned commercialization efforts.

We anticipate that the funds available as of October 27, 2023, will fund our obligations at least through November 2024. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of our drug product candidates, and the extent to which we enter into collaborations with third parties to participate in the development and commercialization of our drug product candidates, we are unable to accurately estimate with high reliability the amounts and timing required for increased capital outlays and operating expenditures associated with our current and anticipated drug product candidate development programs.

Our future capital requirements will depend on many factors, including:

• the progress of clinical development and regulatory interactions and potential approvals of camsirubicin;
• the costs, timing and outcomes of seeking, obtaining, and maintaining FDA and international regulatory approvals;
• the progress of preclinical and potential clinical development of MNPR-101-derived radioimmunotherapeutics and companion diagnostics, to image and treat cancer, including activities through our collaboration with NorthStar;
• the progress of preclinical and potential clinical development of MNPR-202 (and related analogs);
• the number and characteristics of other drug product candidates that we may license, acquire, invent or otherwise pursue;
• the scope, progress, timing, cost and results of research, preclinical development and clinical trials and regulatory requirements for future drug product candidates;

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• the costs associated with establishing or contracting for manufacturing/quality requirements and establishing or contracting for sales, marketing and distribution capabilities;
• our ability and related costs to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make in connection with the licensing, filing, defense and enforcement of any patents or other intellectual property rights;
• our need and ability to hire or contract for additional management, administrative, scientific, medical, sales and marketing, and manufacturing/quality and other specialized personnel or external expertise;
• the effect and timing of entry of competing products or new therapies that may limit market penetration or prevent the introduction of our drug product candidates or reduce the commercial potential of our product portfolio;
• our need to implement additional required internal management, operational, record keeping, and other systems and infrastructure; and
• the economic and other terms, timing and success of our existing collaboration and licensing arrangements and any collaboration, licensing or other arrangements into which we may enter into in the future, including the timing of receipt of or payment to or from others of any license, milestone or royalty payments under these arrangements.

Expenditures may increase in the future for:

• process development, manufacturing costs, clinical trial expenses and clinical database management of camsirubicin in connection with the Phase 1b dose escalation clinical trial and other future clinical development;
• support of the development of MNPR-101-derived radioimmunotherapeutics and companion diagnostics to image and treat cancer, including activities through our collaboration with NorthStar;
• preclinical studies (and if successful, clinical studies) of MNPR-202 (and related analogs);
• increased employee compensation and consultant fees to support the increased scope of activities required for the progress of our product candidate programs including camsirubicin, MNPR-101 RIT (uPRIT and related compounds) and companion diagnostics and MNPR-202 (and related analogs); and
• increased sales, marketing, distribution, quality, medical, pharmacovigilance, regulatory and compliance employees and/or consultants to support any of our programs if approved for marketing in any major market.

Due to the termination of our Validive development, we do not anticipate significant additional expenditures for this program beyond the third quarter of 2023. We have initiated and commenced dosing in our Phase 1b camsirubicin clinical trial, and we are moving towards a first-in-human clinical trial of our MNPR-101-Zr imaging agent as early as end of this year. We intend to continue evaluating drug product candidates for the purpose of growing our pipeline. Identifying and securing high-quality compounds usually takes time and related expenses; however, our spending could be significantly accelerated in the future if additional drug product candidates are acquired and enter clinical development. In this event, we may be required to expand our management team, and pay higher contract manufacturing costs, contract research organization fees, other clinical development costs and insurance costs that are not currently projected. Beyond our need to raise additional funding within the next 12 months, substantial additional long-term funding is needed to further develop camsirubicin, our MNPR-101 RIT and companion diagnostic program and our MNPR-202 program, if successful, and otherwise generally to support our future product candidates through clinical trials, approval processes and, if applicable, commercialization.

Until we can generate a sufficient amount of product revenue to finance our cash requirements, we expect to finance our future cash needs primarily through a combination of equity offerings, including the usage of our Capital on DemandTM Sales Agreement with JonesTrading, debt financings, strategic collaborations and grant funding. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our current stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our current stockholders’ rights. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with other parties, we likely will have to share or relinquish valuable rights to our technologies, future revenue streams, research programs or drug product candidates or grant licenses on terms that may not be favorable to us, which will reduce our future returns and affect our future operating flexibility. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our pipeline product development or commercialization efforts or grant rights to others to develop and market drug product candidates that we would otherwise prefer to develop and market ourselves.

The termination of our Validive clinical trial due to the no-go decision at the end of March 2023 resulted in a decrease in our stock price. The closing bid price of our stock fell below $1.00 for more than 30 consecutive trading days, and on August 28, 2023, we received a notice from Nasdaq stating that we are out of compliance with Nasdaq listing standards giving us 180 days to regain compliance. While we intend to apply for a second 180-day extension to regain compliance, there can be no assurance that we would regain compliance within Nasdaq’s original or proposed extended time limits and requirements. If we don't regain compliance, it may have serious adverse consequences on our ability to raise funds, which may cause us to delay, restructure or otherwise reconsider our operations.

Contractual Obligations and Commitments

License, Development and Collaboration Agreements

Onxeo S.A.

In June 2016, we executed an agreement with Onxeo S.A., a French public company, which gave us the exclusive option to license (on a world-wide exclusive basis) Validive (clonidine hydrochloride mucobuccal tablet; clonidine HCI MBT) a mucoadhesive tablet of clonidine based on the Lauriad mucoadhesive technology. The agreement includes clinical, regulatory, developmental and sales milestones and escalating royalties on net sales. In September 2017, we exercised the option to license Validive from Onxeo for $1 million.

On March 27, 2023, we announced the discontinuation of our Validive Phase 2b/3 VOICE trial based upon the DSMB determination that the trial did not meet the pre-defined threshold for efficacy of a 15% absolute difference in SOM prevention between Validive and placebo. We are planning to terminate the license and do not anticipate any future license or royalty obligations under the Onxeo license agreement.

Grupo Español de Investigación en Sarcomas (“GEIS”)

In June 2019, we executed a clinical collaboration with GEIS for the development of camsirubicin in patients with advanced soft tissue sarcoma (“ASTS”). Following completion of our Phase 1b clinical trial in the U.S. that we initiated in the third quarter of 2021 with the first patient dosed in October 2021, we continue to expect that GEIS will sponsor and lead a multi-country, randomized, open-label Phase 2 clinical trial to evaluate camsirubicin head-to-head against doxorubicin, the current first-line treatment for ASTS. We will provide study drug and supplemental financial support for the clinical trial. During the three months ended September 30, 2023 and September 30, 2022, no expenses were incurred under the GEIS agreement. We can terminate the agreement by providing GEIS with advance notice, and without affecting our rights and ownership to any related intellectual property or clinical data. In the second quarter of 2021, due to regulatory delays in Spain, we decided to conduct an open-label Phase 1b clinical trial of camsirubicin in the U.S., therefore no expenses were incurred related to the GEIS collaboration beyond March 31, 2021.

XOMA Ltd.

Pursuant to a non-exclusive license agreement with XOMA Ltd. for the humanization technology used in the development of MNPR-101, we are obligated to pay XOMA Ltd. clinical, regulatory and sales milestones which could reach up to $14.925 million if we achieve all milestones for MNPR-101. The agreement does not require the payment of sales royalties. There can be no assurance that we will achieve any milestones. As of October 27, 2023, we had not reached any milestones and had not been required to pay XOMA Ltd. any funds under this license agreement.

Service Providers

In the normal course of business, we contract with service providers to assist in the performance of R&D, including drug product manufacturing, process development, clinical and preclinical development, and G&A including financial strategy, audit, tax and legal support. We can elect to discontinue the work under these agreements at any time. We could also enter into collaborative research and development, contract research, manufacturing and supplier agreements in the future, which may require upfront payments and/or long-term commitments of cash.

Office Lease

We are currently leasing office space for our executive headquarters at 1000 Skokie Blvd., in the Village of Wilmette, Illinois for $4,238 per month through February 2024, and we anticipate that we will lease additional space in the future as we hire additional personnel.

Legal Contingencies

We are currently not, and to date have never been, a party to any adverse material legal proceedings.

Indemnification

In the normal course of business, we enter into contracts and agreements that contain a variety of representations and warranties and provide for general indemnification. Our exposure under these agreements is unknown because it involves claims that may be made against us in the future, but that have not yet been made. To date, we have not paid any claims or been required to defend any action related to our indemnification obligations. However, we may record charges in the future as a result of these indemnification obligations.

In accordance with our Second Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and the indemnification agreements entered into with each officer and non-employee director, we have indemnification obligations to our officers and non-employee directors for certain events or occurrences, subject to certain limits, while they are serving at our request in such capacity. There have been no claims to date.

Our Chief Executive Officer and Chief Financial Officer have provided certifications filed as Exhibits 31.1 and 31.2, respectively, and Exhibit 32.1. Such certifications should be read in conjunction with the information contained in this Item 4 for a more complete understanding of the matters covered by those certifications.

(a) Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of September 30, 2023, pursuant to Rules 13a15(e) and 15d15(e) under the Exchange Act. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures, as of such date, were effective.

(b) Changes in Internal Control over Financial Reporting

We have concluded that the condensed consolidated financial statements and other financial information included in this Quarterly Report on Form 10-Q fairly present in all material respects our financial condition, results of operations and comprehensive loss and cash flows as of, and for, the periods presented.

There have been no changes in our internal control over financial reporting during the three months ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other than the additional risk factors below, there have been no material changes in information regarding our risk factors as described in Item 1A of our Annual Report on Form 10-K as filed with the SEC on March 23, 2023.

The interim analysis for our ongoing Validive Phase 2b/3 clinical program yielded a no-go decision resulting in a reduction of our stock price. If our stock price does not increase before the Nasdaq original or potential extended deadline, our business could be adversely impacted.

The termination of our Validive clinical trial due to the no-go decision at the end of March 2023 resulted in a decrease in our stock price. The closing bid price of our stock fell below $1.00 for more than 30 consecutive trading days and on August 28, 2023 we received a notice from Nasdaq stating that we are out of compliance with Nasdaq listing standards giving us 180 days to regain compliance. While we intend to apply for a second 180-day period to regain compliance, there can be no assurance that we would regain compliance. If we do not regain compliance, we would face delisting and it may have serious adverse consequences on our ability to raise funds, which may cause us to delay, restructure or otherwise reconsider our operations.