Item
1. FINANCIAL STATEMENTS
BIO-PATH HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
(Unaudited)
|
|
As of September 30,
|
|
|
As of December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
15,382
|
|
|
$
|
1,004
|
|
Prepaid drug product for testing
|
|
|
765
|
|
|
|
332
|
|
Other current assets
|
|
|
739
|
|
|
|
803
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
16,886
|
|
|
|
2,139
|
|
|
|
|
|
|
|
|
|
|
Fixed assets
|
|
|
|
|
|
|
|
|
Furniture, fixtures & equipment
|
|
|
1,029
|
|
|
|
998
|
|
Less accumulated depreciation
|
|
|
(708
|
)
|
|
|
(592
|
)
|
|
|
|
321
|
|
|
|
406
|
|
|
|
|
|
|
|
|
|
|
Right of use operating assets
|
|
|
388
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
17,595
|
|
|
$
|
2,545
|
|
|
|
|
|
|
|
|
|
|
Liabilities & Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
522
|
|
|
$
|
587
|
|
Accrued expenses
|
|
|
618
|
|
|
|
740
|
|
Current portion of lease liabilities
|
|
|
79
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
1,219
|
|
|
|
1,327
|
|
|
|
|
|
|
|
|
|
|
Noncurrent lease liabilities
|
|
|
352
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
1,571
|
|
|
|
1,327
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
|
Preferred stock, $.001 par value; 10,000 shares authorized; no shares issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, $.001 par value; 200,000 shares authorized; 2,884 and 680 shares issued and outstanding, respectively
|
|
|
3
|
|
|
|
1
|
|
Additional paid in capital
|
|
|
69,971
|
|
|
|
48,957
|
|
Accumulated deficit
|
|
|
(53,950
|
)
|
|
|
(47,740
|
)
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity
|
|
|
16,024
|
|
|
|
1,218
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities & Shareholders' Equity
|
|
$
|
17,595
|
|
|
$
|
2,545
|
|
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
BIO-PATH HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
|
|
Three Months Ended September 30
|
|
|
Nine Months Ended September 30
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
1,375
|
|
|
$
|
2,342
|
|
|
$
|
3,296
|
|
|
$
|
4,101
|
|
General and administrative
|
|
|
896
|
|
|
|
740
|
|
|
|
2,984
|
|
|
|
2,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
2,271
|
|
|
|
3,082
|
|
|
|
6,280
|
|
|
|
6,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating loss
|
|
$
|
(2,271
|
)
|
|
$
|
(3,082
|
)
|
|
$
|
(6,280
|
)
|
|
$
|
(6,680
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
29
|
|
|
|
1
|
|
|
|
70
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income
|
|
|
29
|
|
|
|
1
|
|
|
|
70
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,242
|
)
|
|
$
|
(3,081
|
)
|
|
$
|
(6,210
|
)
|
|
$
|
(6,674
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted
|
|
$
|
(0.78
|
)
|
|
$
|
(5.38
|
)
|
|
$
|
(2.51
|
)
|
|
$
|
(11.73
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average number of common shares outstanding
|
|
|
2,872
|
|
|
|
573
|
|
|
|
2,471
|
|
|
|
569
|
|
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
BIO-PATH HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
|
|
Nine Months Ended September 30,
|
|
|
|
2019
|
|
|
2018
|
|
Cash flow from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(6,210
|
)
|
|
$
|
(6,674
|
)
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
522
|
|
|
|
416
|
|
Amortization of technology license
|
|
|
-
|
|
|
|
121
|
|
Amortization of right of use assets
|
|
|
75
|
|
|
|
-
|
|
Depreciation
|
|
|
116
|
|
|
|
198
|
|
(Increase) decrease in operating assets
|
|
|
|
|
|
|
|
|
Prepaid drug product for testing
|
|
|
(433
|
)
|
|
|
860
|
|
Other current assets
|
|
|
64
|
|
|
|
72
|
|
Increase (decrease) in operating liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
(187
|
)
|
|
|
166
|
|
Lease liabilities
|
|
|
(63
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(6,116
|
)
|
|
|
(4,841
|
)
|
|
|
|
|
|
|
|
|
|
Cash flow from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of furniture, fixtures & equipment
|
|
|
-
|
|
|
|
(17
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
(17
|
)
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from sale of common stock
|
|
|
19,411
|
|
|
|
1,179
|
|
Net proceeds from exercise of warrants
|
|
|
1,083
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
20,494
|
|
|
|
1,179
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
14,378
|
|
|
|
(3,679
|
)
|
|
|
|
|
|
|
|
|
|
Cash, beginning of period
|
|
|
1,004
|
|
|
|
5,965
|
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
|
$
|
15,382
|
|
|
$
|
2,286
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing activities
|
|
|
|
|
|
|
|
|
Non-cash leasehold improvements
|
|
$
|
(31
|
)
|
|
$
|
-
|
|
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
BIO-PATH HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
SHAREHOLDERS’ EQUITY
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Paid in
|
|
|
Accumulated
|
|
|
|
|
Description
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2018
|
|
|
567
|
|
|
$
|
1
|
|
|
$
|
47,486
|
|
|
$
|
(42,750
|
)
|
|
$
|
4,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock, net of fees
|
|
|
98
|
|
|
|
-
|
|
|
|
1,179
|
|
|
|
-
|
|
|
|
1,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
153
|
|
|
|
-
|
|
|
|
153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,081
|
)
|
|
|
(3,081
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2018
|
|
|
665
|
|
|
$
|
1
|
|
|
$
|
48,818
|
|
|
$
|
(45,831
|
)
|
|
$
|
2,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2019
|
|
|
2,831
|
|
|
$
|
3
|
|
|
$
|
69,618
|
|
|
$
|
(51,708
|
)
|
|
$
|
17,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants, net of fees
|
|
|
53
|
|
|
|
-
|
|
|
|
169
|
|
|
|
-
|
|
|
|
169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
184
|
|
|
|
-
|
|
|
|
184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,242
|
)
|
|
|
(2,242
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2019
|
|
|
2,884
|
|
|
$
|
3
|
|
|
$
|
69,971
|
|
|
$
|
(53,950
|
)
|
|
$
|
16,024
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Paid in
|
|
|
Accumulated
|
|
|
|
|
Description
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2017
|
|
|
567
|
|
|
$
|
1
|
|
|
$
|
47,223
|
|
|
$
|
(39,157
|
)
|
|
$
|
8,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock, net of fees
|
|
|
98
|
|
|
|
-
|
|
|
|
1,179
|
|
|
|
-
|
|
|
|
1,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
416
|
|
|
|
-
|
|
|
|
416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,674
|
)
|
|
|
(6,674
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2018
|
|
|
665
|
|
|
$
|
1
|
|
|
$
|
48,818
|
|
|
$
|
(45,831
|
)
|
|
$
|
2,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2018
|
|
|
680
|
|
|
$
|
1
|
|
|
$
|
48,957
|
|
|
$
|
(47,740
|
)
|
|
$
|
1,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock, net of fees
|
|
|
1,794
|
|
|
|
2
|
|
|
|
19,409
|
|
|
|
-
|
|
|
|
19,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants, net of fees
|
|
|
410
|
|
|
|
-
|
|
|
|
1,083
|
|
|
|
-
|
|
|
|
1,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
522
|
|
|
|
-
|
|
|
|
522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(6,210
|
)
|
|
|
(6,210
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2019
|
|
|
2,884
|
|
|
$
|
3
|
|
|
$
|
69,971
|
|
|
$
|
(53,950
|
)
|
|
$
|
16,024
|
|
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
BIO-PATH
HOLDINGS, INC.
Notes to the Unaudited Condensed Consolidated
Financial Statements
for the Period Ended September 30, 2019
Unless the context requires otherwise, references in these Notes
to the Condensed Consolidated Financial Statements to “we,” “our,” “us,” “the Company”
and “Bio-Path” refer to Bio-Path Holdings, Inc. and its subsidiary. Bio-Path Holdings, Inc.’s wholly-owned subsidiary,
Bio-Path, Inc., is sometimes referred to herein as “Bio-Path Subsidiary.”
The accompanying interim financial statements have been prepared
in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission
(“SEC”) and, therefore, do not include all information and footnotes necessary for a complete presentation of the Company’s
financial position, results of operations, cash flows, and stockholders’ equity in conformity with generally accepted accounting
principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations
and financial position have been included and all such adjustments are of a normal recurring nature. The unaudited quarterly financial
statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report
on Form 10-K of the Company as of and for the fiscal year ended December 31, 2018. The results of operations for the period ended
September 30, 2019, are not necessarily indicative of the results for a full-year period.
|
1.
|
Organization and Business
|
The Company is a clinical and preclinical stage oncology focused
RNAi nanoparticle drug development company utilizing a novel technology that achieves systemic delivery for target specific protein
inhibition for any gene product that is over-expressed in disease. Our drug delivery and antisense technology, called DNAbilize®,
is a platform that uses P-ethoxy, which is a deoxyribonucleic acid (DNA) backbone modification that is intended to protect the
DNA from destruction by the body’s enzymes when circulating in vivo, incorporated inside of a neutral charged lipid
bilayer. We believe this combination allows for high efficiency loading of antisense DNA into non-toxic, cell-membrane-like structures
for delivery of the antisense drug substance into cells. In vivo, the DNAbilize® delivered antisense drug substances
are systemically distributed throughout the body to allow for reduction or elimination of target proteins in blood diseases and
solid tumors. DNAbilize® is a registered trademark of the Company. Using DNAbilize® as a platform for drug development
and manufacturing, we currently have three antisense drug candidates in development to treat at least five different cancer disease
indications.
Bio-Path Subsidiary was founded in May 2007 as a Utah corporation.
In February 2008, Bio-Path Subsidiary completed a reverse merger with the Company, which at the time was traded over the counter
and had no current operations. The prior name of Company was changed to Bio-Path Holdings, Inc. and the directors and officers
of Bio-Path Subsidiary became the directors and officers of Bio-Path Holdings, Inc. The Company’s operations to date have
been limited to organizing and staffing the Company, acquiring, developing and securing its technology and undertaking product
development for a limited number of product candidates.
In June 2015, the Company established an “at the market”
(“ATM”) program through which it may offer and sell up to $25.0 million of its common stock from time to time, at Bio-Path’s
discretion, through an investment banking firm, acting as sales agent. Sales of Bio-Path common stock under the ATM program will
be made directly on or through The Nasdaq Capital Market, among other methods. The ATM program may be terminated by either the
investment banking firm or the Company upon ten days’ notice. We are subject to certain restrictions on our ability to offer
and sell shares of our common stock under the ATM program. To date, the Company has not offered or sold any shares of its common
stock under the ATM program.
On September 20, 2018, we entered into a securities purchase
agreement with certain investors pursuant to which we agreed to sell an aggregate of 98,454 shares of our common stock and pre-funded
warrants to purchase up to 14,624 shares of our common stock for gross proceeds of approximately $1.5 million under our effective
shelf registration statement on Form S-3 (File No. 333-2152051) (the “2017 Shelf Registration Statement”), which became
effective on January 9, 2017 (the “2018 Registered Direct Offering”). In a concurrent private placement, we also agreed
pursuant to the securities purchase agreement to issue to such investors Series A warrants to purchase up to 113,077 shares of
our common stock (the “2018 Private Placement”). Additionally, we issued warrants to purchase up to 6,785 shares of
our common stock in a private placement to H.C. Wainwright & Co., LLC as compensation for its services as a placement agent
in connection with the 2018 Registered Direct Offering and the 2018 Private Placement. The 2018 Registered Direct Offering and
the 2018 Private Placement closed on September 25, 2018. The net proceeds to the Company from the offerings, after deducting the
placement agent’s fees and expenses, our offering expenses, and excluding the proceeds, if any, from the exercise of the
warrants issued in the offerings, were approximately $1.2 million.
On January 14, 2019, we entered into an underwriting agreement
with H.C. Wainwright & Co., LLC relating to an underwritten public offering of 429,616 shares of our common stock for gross
proceeds of approximately $1.1 million under the 2017 Shelf Registration Statement (the “2019 Underwritten Offering”).
The offering price to the public in the 2019 Underwritten Offering was $2.60 per share, and H.C. Wainwright & Co., LLC agreed
to purchase the shares in the 2019 Underwritten Offering from the Company pursuant to the underwriting agreement at a price of
$2.418 per share. Additionally, we issued warrants to purchase up to 25,777 shares of our common stock in a private placement to
H.C. Wainwright & Co., LLC as compensation for its services as underwriter in connection with the 2019 Underwritten Offering.
The 2019 Underwritten Offering closed on January 17, 2019. The net proceeds to the Company from the 2019 Underwritten Offering,
after deducting the underwriting discounts and commissions and expenses and the Company’s estimated offering expenses, and
excluding the proceeds, if any, from the exercise of the underwriter warrants, were approximately $0.9 million.
On January 17, 2019, we effected a reverse stock split of our
outstanding shares of common stock at a ratio of 1-for-20, and our common stock began trading on the split-adjusted basis on the
Nasdaq Capital Market at the commencement of trading on January 18, 2019. All common stock share and per share amounts in our consolidated
financial statements have been adjusted to give effect to the 1-for-20 reverse stock split.
On January 18, 2019, we entered into a securities purchase agreement
with certain investors pursuant to which we agreed to sell, in a registered direct offering, an aggregate of 648,233 shares of
our common stock for gross proceeds of approximately $1.7 million under the 2017 Shelf Registration Statement (the “January
2019 Registered Direct Offering”). In a concurrent private placement, we also agreed pursuant to the securities purchase
agreement to issue to such investors Series A warrants to purchase up to 324,117 shares of our common stock (the “January
2019 Private Placement”). Additionally, we issued warrants to purchase up to 38,894 shares of our common stock in a private
placement to H.C. Wainwright & Co., LLC as compensation for its services as a placement agent in connection with the 2019 Registered
Direct Offering and the 2019 Private Placement. The 2019 Registered Direct Offering and the 2019 Private Placement closed on January
23, 2019. The net proceeds to the Company from the offerings, after deducting the placement agent’s fees and expenses, our
offering expenses, and excluding the proceeds, if any, from the exercise of the warrants issued in the offerings, were approximately
$1.5 million.
On March 12, 2019, we entered into a securities purchase agreement
with certain investors pursuant to which we agreed to sell, in a registered direct offering, an aggregate of 712,910 shares of
our common stock for gross proceeds of approximately $18.5 million under the 2017 Shelf Registration Statement (the “March
2019 Registered Direct Offering”). Additionally, we issued warrants to purchase up to 42,775 shares of our common stock in
a private placement to H.C. Wainwright & Co., LLC as compensation for its services as a placement agent in connection with
the March 2019 Registered Direct Offering. The March 2019 Registered Direct Offering closed on March 14, 2019. The net proceeds
to us from the offerings, after deducting the placement agent’s fees and expenses, our offering expenses, and excluding the
proceeds, if any, from the exercise of the warrants issued in the offerings, were approximately $17.0 million.
As the Company has not begun its planned principal operations
of commercializing a product candidate, the Company’s activities are subject to significant risks and uncertainties, including
the potential requirement to secure additional funding, the outcome of the Company’s clinical trials, and failing to operationalize
the Company’s current drug candidates before another company develops similar products.
|
2.
|
Significant Accounting Policies
|
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases.
The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease
liability initially measured at the present value of the lease payments on the balance sheet for all leases with terms longer than
12 months. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those
fiscal years. In 2018, the FASB issued ASU 2018-01 and ASU 2018-11, which collectively adds two practical expedients and provides
a second modified retrospective transition method in the year of adoption. Management adopted the new standard on January 1, 2019
using the modified retrospective transition approach with no restatement of prior periods or cumulative adjustment to accumulated
deficit. We elected the “package of practiced expedients”, which permits us not to reassess under the new standard
our prior conclusions about lease identification, lease classification and indirect costs. We also elected the short-term lease
exemption and therefore do not recognize ROU assets or corresponding liabilities for lease agreements with an original term of
12 months or less. Consequently, prior year financials statements have not been updated and the disclosures required under the
new standard have not been provided for periods prior to the adoption date. Upon adoption of the new standards, the Company recognized
$0.1 million for ROU assets and corresponding lease liabilities on the consolidated balance sheet related to leases for office
and lab space. The adoption of these ASU’s on January 1, 2019 did not have a significant impact on our consolidated financial
statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value
Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The new
standard eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose
certain new information and modifies some disclosure requirements. This standard is effective for fiscal years beginning after
December 15, 2019, with early adoption permitted. Management is currently evaluating the impact of future adoption of the new standard
on the Company’s consolidated financial statements.
In November 2018, the FASB issued ASU No. 2018-18, Collaborative
Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606. The new standard provides guidance on
how to assess whether certain transactions between collaborative arrangement participants should be accounted for within the revenue
recognition standard. The update also provides more comparability in the presentation of revenue for certain transactions between
collaborative arrangement participants. The new standard is effective for fiscal years beginning after December 15, 2019, including
interim periods within those fiscal years with early adoption permitted. The Company early adopted this standard effective December
31, 2018 and notes that it did not a significant impact on our consolidated financial statements as the Company currently does
not have significant collaborative agreements in place.
Management has reviewed all other recently issued pronouncements
and has determined they will have no material impact on the Company’s consolidated financial statements.
Correction of Immaterial
Errors in Previously Issued Financial Statements
In evaluating the consolidated
financial statements as of and for the years ended December 31, 2018, the Company subsequently identified immaterial errors within
the Company’s consolidated balance sheets as of December 31, 2018 and consolidated statements of cash flows for the year
ended December 31, 2018. Reclassified amounts were determined to be immaterial and did not have an impact on cash flows from operating
activities or the Company’s results of operations for the year ended December 31, 2018.
|
3.
|
Prepaid Drug Product for Testing
|
Advance payments, including nonrefundable amounts, for goods
or services that will be used or rendered for future clinical development activities are deferred and capitalized. Such amounts
will be recognized as an expense as the related goods are delivered or the related services are performed. The Company recognized
certain expenses and incurred installment costs for its contract drug manufacturing and raw material suppliers with prepayments
totaling $0.3 million through 2018 pursuant to drug supply contracts for the manufacture and delivery of prexigebersen for testing
in two Phase 2 clinical trials and Bcl-2 for testing in a Phase 1 clinical trial. This amount was carried on the Balance Sheet
as of December 31, 2018 at cost as Prepaid Drug Product for Testing. The Company recognized certain expenses and incurred additional
installment costs during 2019, with advanced payments totaling $0.8 million, which are carried on the Balance Sheet as of September
30, 2019 as Prepaid Drug Product for Testing (See Note 9).
As of September 30, 2019, Other Current Assets included prepaid
expenses of $0.7 million, comprised primarily of prepayments made for our clinical trials for prexigebersen in AML and CML of $0.4
million and prepaid insurance of $0.3 million. As of December 31, 2018, Other Current Assets included prepaid expenses of $0.8
million, comprised primarily of prepayments made for our clinical trial for prexigebersen in AML of $0.6 million, prepaid insurance
of $0.1 million and other prepaid expenses of $0.1 million.
As of September 30, 2019, Current Liabilities
included accounts payable of $0.5 million, comprised primarily of amounts owed for external research expenses related to manufacturing
and preclinical studies of $0.4 million and $0.1 million, respectively. As of December 31, 2018, Current Liabilities included accounts
payable of $0.6 million, comprised primarily of preclinical expenses of $0.2 million, amounts owed to the Company’s clinical
research organizations for our clinical trials for prexigebersen in AML and CML of $0.1 million, an annual license maintenance
fee of $0.1 million, manufacturing costs of $0.1 million and other payables of $0.1 million.
As of September 30, 2019, Current Liabilities included accrued
expenses of $0.6 million, comprised primarily of accrued employee vacation and bonus expenses of $0.3 million, clinical and preclinical
expenses of $0.2 million and other accrued expenses of $0.1 million. As of December 31, 2018, Current Liabilities included accrued
expenses of $0.7 million, comprised primarily of accrued clinical and preclinical expenses of $0.5 million, employee vacation and
bonus expenses of $0.1 million and legal and professional fees of $0.1 million.
Stockholders’ Equity totaled $16.0 million as of September
30, 2019 compared to $1.2 million as of December 31, 2018. There were 2,883,777 shares of common stock issued and outstanding as
of September 30, 2019. There were no preferred shares outstanding as of September 30, 2019.
|
8.
|
Stock-Based Compensation Plan
|
The 2017 Plan – On December 21, 2017, the
Company’s stockholders approved the Bio-Path Holdings, Inc. 2017 Stock Incentive Plan (the “2017 Plan”), which
replaced the First Amended 2007 Stock Incentive Plan, as amended (the “2007 Plan”). The 2007 Plan expired by its terms
in January 2018, and no awards were made under the 2007 Plan from the approval of the 2017 Plan on December 21, 2017 until the
expiration of the 2007 Plan. The 2017 Plan provides for the grant of Incentive Stock Options, Non-Qualified Stock Options, Restricted
Shares, Restricted Share Units, Stock Appreciation Rights, Performance-Based Awards and other stock-based awards, or any combination
of the foregoing to the Company’s employees, non-employee directors and consultants. As of December 31, 2018, the total number
of shares reserved and available for grant and issuance pursuant to the 2017 Plan was 60,000 shares, subject to the terms of the
2017 Plan. Under the 2017 Plan, the exercise price of awards is determined by the Board of Directors or the compensation committee
of the Board of Directors, and for options intended to qualify as qualified Incentive Stock Options, may not be less than the fair
market value as determined by the closing stock price at the date of the grant. Each option and award under the 2017 Plan shall
vest and expire as determined by the Board of Directors or the compensation committee. Options expire no later than ten years from
the date of grant. All grants provide for accelerated vesting if there is a change of control, as defined in the 2017 Plan.
Stock-based compensation expense for both the three months ended
September 30, 2019 and September 30, 2018 was $0.2 million. Of these amounts, stock-based compensation expense for personnel involved
in the Company’s general and administrative activities for the three months ended September 30, 2019 and September 30, 2018
was $0.2 million and $0.1 million, respectively. Stock-based compensation expense for personnel involved in the Company’s
research and development activities for the three months ended September 30, 2019 and September 30, 2018 was $24,000 and $22,000,
respectively.
Stock-based compensation expense for the nine months ended September
30, 2019 and September 30, 2018 was $0.5 million and $0.4 million, respectively. Of these amounts, stock-based compensation expense
for personnel involved in the Company’s general and administrative activities for both the nine months ended September 30,
2019 and September 30, 2018 was $0.4 million. Stock-based compensation expense for personnel involved in the Company’s research
and development activities for both the nine months ended September 30, 2019 and September 30, 2018 was $0.1 million.
The Company utilized the Black-Scholes valuation model for estimating
the fair value of the stock options granted, with the following weighted-average assumptions for options granted in the nine months
ended September 30, 2019 and 2018, respectively:
|
|
2019
|
|
|
2018
|
|
Risk-free interest rate
|
|
|
2.23
|
%
|
|
|
2.70
|
%
|
Expected volatility
|
|
|
126
|
%
|
|
|
90
|
%
|
Expected term in years
|
|
|
6.0
|
|
|
|
6.1
|
|
Dividend yield
|
|
|
-
|
%
|
|
|
-
|
%
|
The following summary represents option activity under the Company’s
stock-based compensation plans for the nine months ended September 30, 2019:
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Exercise
|
|
|
|
Options
|
|
|
Price
|
|
|
|
(in thousands)
|
|
|
|
|
Outstanding at December 31, 2018
|
|
|
37
|
|
|
$
|
112.60
|
|
Granted
|
|
|
35
|
|
|
|
18.40
|
|
Cancelled
|
|
|
(2
|
)
|
|
|
41.28
|
|
Outstanding at September 30, 2019
|
|
|
70
|
|
|
|
67.71
|
|
Exercisable at September 30, 2019
|
|
|
25
|
|
|
$
|
139.48
|
|
As of September 30, 2019, the aggregate intrinsic value of outstanding
stock options was none. The aggregate intrinsic value represents the total pretax intrinsic value (the difference between the Company’s
closing stock price on September 30, 2019 and the exercise price, multiplied by the number of in-the-money options) that would
have been received by the option holders had all option holders exercised their options on September 30, 2019. This amount changes
based on the fair market value of the Company’s stock.
As of September 30, 2019, unamortized stock-based compensation
expense for all outstanding options was $0.8 million, which is expected to be recognized over a weighted average vesting period
of 2.2 years.
|
9.
|
Commitments and Contingencies
|
Drug Supplier Project Plan – The amounts
paid for manufacture of the Company’s Grb2 drug substance, prexigebersen, Bcl-2 drug substance and BP1002 drug product that
have not been expensed total $0.8 million and are carried on the balance sheet as of September 30, 2019 as Prepaid Drug Product
for Testing (See Note 3). Total commitments for the Company’s drug supplier project plan are $1.4 million as of September
30, 2019, comprised of $0.9 million to the manufacturer of prexigebersen and BP1002 drug product, $0.4 million for manufacture
of our Grb2 and Bcl-2 drug substances, and $0.1 million for manufacturing development. We expect to incur $0.8 million of these
commitments over the next 12 months.
In April 2014, the Company entered into a five-year lease agreement
for administrative office space located in Bellaire, Texas. The term of the lease began on August 1, 2014 and was set to expire
on July 31, 2019; however, in May 2019, we entered into an amendment to the lease agreement to extend the term of the lease for
a period of five years, beginning on August 1, 2019 and ending on October 31, 2024.
In April 2016, the Company entered into a three-year lease agreement
for lab space located in Bellaire, Texas that required Bio-Path to pay $2,500 per month over the term of the lease. The term of
lease began on May 1, 2016 and was set to expire on April 30, 2019; however, in December 2018, we entered into an amendment to
the lease agreement to extend the term for a period of three years, beginning on May 1, 2019 and ending on April 30, 2022. The
amendment also amended the monthly rent from $2,500 per month to $2,575 per month over the term of the lease.
At the inception of an agreement, the Company determines if
the agreement is a lease based on the unique facts and circumstances in each agreement. Lease classification, recognition, and
measurement are then determined at the lease commencement date. For agreements that contain a lease, we identify lease and non-lease
components, determine the consideration in the contract, determine whether the lease is an operating or financing lease and recognize
ROU assets and lease liabilities. Lease liabilities and their corresponding ROU assets are recorded based on the present value
of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable
so we use an incremental borrowing rate based on the information available at the lease commencement date, which represents an
estimated rate that would be incurred to borrow over a similar term in a similar economic environment. The incremental borrowing
rate utilized on our lease liabilities as of September 30, 2019 was 8.0%.
Our current leases include options to renew which can impact
the lease term. The exercise of these options is at the Company’s discretion and we do not include any of these options within
the expected lease term as we are not reasonably certain we will exercise these options. Fixed lease payments on operating leases
are recognized over the expected term of the lease on a straight-line basis within our consolidated financial statements. Our leases
are included in ROU assets, current portion of lease liabilities and noncurrent lease liabilities in our consolidated balance sheet
as of September 30, 2019.
The following table summarizes our operating lease assets and
liabilities as of September 30, 2019:
|
|
ROU Assets
and Liabilities
|
|
|
|
|
(in thousands)
|
|
Assets:
|
|
|
|
|
Operating lease assets
|
|
$
|
388
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
Current portion of lease liabilities
|
|
|
79
|
|
Noncurrent lease liabilities
|
|
|
352
|
|
Total operating lease liabilities
|
|
$
|
431
|
|
The following table summarizes our lease related costs for
the nine months ended September 30, 2019:
|
|
Lease Costs
|
|
|
|
|
(in thousands)
|
|
Operating lease costs
|
|
$
|
86
|
|
Variable lease costs
|
|
|
5
|
|
Total lease costs
|
|
$
|
91
|
|
The Company made cash payments for its operating leases of
$74,000 for the nine months ended September 30, 2019. We had $388,000 in non-cash investing and financing activities for the
period ended September 30, 2019 related to the addition of ROU assets and corresponding operating lease liabilities
recorded as part of the adoption of the new lease standard on January 1, 2019. Additionally, the Company recognized $31,000
of non-cash leasehold improvements for the nine months ended September 30, 2019.
The following table summarizes our expected minimum lease payments
as of September 30, 2019:
As of September 30, 2019
|
|
(in thousands)
|
|
2019
|
|
|
22
|
|
2020
|
|
|
115
|
|
2021
|
|
|
117
|
|
2022
|
|
|
98
|
|
2023
|
|
|
89
|
|
2024 and thereafter
|
|
|
76
|
|
Future minimum lease payments
|
|
|
517
|
|
Less: Interest
|
|
|
(86
|
)
|
Present value of operating lease liabilities
|
|
$
|
431
|
|
As of September 30, 2019, the weighted average remaining lease
term was 4.7 years.
ASC 840 Disclosures
The following table summarizes our expected minimum lease payments
as of December 31, 2018:
As of December 31, 2018
|
|
(in thousands)
|
|
2019
|
|
|
82
|
|
2020
|
|
|
31
|
|
2021
|
|
|
31
|
|
2022
|
|
|
10
|
|
2023
|
|
|
-
|
|
2024 and thereafter
|
|
|
-
|
|
Future minimum lease payments
|
|
$
|
154
|
|
The Company recognized $91,000 in rent expense for office and
lab space for the nine months ended September 30, 2019.
Item 2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
When you read this Item of this Quarterly
Report on Form 10-Q, it is important that you also read the unaudited financial statements and related notes included elsewhere
in this Quarterly Report on Form 10-Q and our audited financial statements and notes thereto included in our Annual Report on Form
10-K as of the fiscal year ended December 31, 2018. This Quarterly Report on Form 10-Q contains forward-looking statements that
involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. We use words such as
“anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,”
“expect,” “believe,” “intend,” “may,” “will,” “should,”
“could,” and similar expressions to identify forward-looking statements. Our actual results could differ materially
from those anticipated in these forward-looking statements for many reasons, including the matters discussed in “Item 1A.
Risk Factors” to Part I of our Annual Report on Form 10-K as of the fiscal year ended December 31, 2018, and other risks
and uncertainties discussed in filings made with the SEC. See “Cautionary Note Regarding Forward-Looking Statements”
in this Quarterly Report on Form 10-Q for additional discussion regarding risks associated with forward-looking statements.
Overview
We are a clinical and preclinical stage
oncology focused RNAi nanoparticle drug development company utilizing a novel technology that achieves systemic delivery for target
specific protein inhibition for any gene product that is over-expressed in disease. Our drug delivery and antisense technology,
called DNAbilize®, is a platform that uses P-ethoxy, which is a deoxyribonucleic acid (DNA) backbone modification that is intended
to protect the DNA from destruction by the body’s enzymes when circulating in vivo, incorporated inside of a lipid
bilayer having neutral charge. We believe this combination allows for high efficiency loading of antisense DNA into non-toxic,
cell-membrane-like structures for delivery of the antisense drug substance into cells. In vivo, the DNAbilize® delivered
antisense drug substances are systemically distributed throughout the body to allow for reduction or elimination of target proteins
in blood diseases and solid tumors. Through testing in numerous animal studies and treatment in over 70 patients, the Company’s
DNAbilize® drug candidates have demonstrated an excellent safety profile. DNAbilize® is a registered trademark of the Company.
Using DNAbilize® as a platform for drug
development and manufacturing, we currently have three drug candidates in development to treat at least five different cancer disease
indications. Our lead drug candidate, prexigebersen (pronounced prex” i je ber’ sen), is in the efficacy portion of
a Phase 2 clinical trial for acute myeloid leukemia (AML) in combination with low-dose cytarabine (LDAC) and in combination with
decitabine. On March 6, 2019, we announced intended amendments to this Phase 2 clinical trial to, among other things, add prexigebersen
in combination with decitabine for myelodysplastic syndrome and close prexigebersen in combination with LDAC. On August 26, 2019,
we announced patient dosing in this amended Phase 2 clinical trial, as announced in March 2019. In addition, preclinical efficacy
studies are underway for triple combination prexigebersen, decitabine and venetoclax in AML. Prexigebersen is also being studied
in the safety portion of a Phase 2a clinical trial for chronic myeloid leukemia in combination with dasatinib. Prexigebersen was
shown to enhance chemotherapy efficacy in preclinical solid tumor models, such as ovarian cancer, and we intend to file an Investigational
New Drug (IND) application for prexigebersen in solid tumors in 2019.
Our second drug candidate, Liposomal Bcl-2
(“BP1002”), targets the protein Bcl-2, which is responsible for driving cell survival in up to 60% of all cancers.
We have filed an IND application with the U.S. Food and Drug Administration (FDA) to initiate a Phase 1 clinical trial of BP1002
in refractory/relapsed lymphoma and chronic lymphocytic leukemia patients once we receive approval from the FDA.
Our third drug candidate, Liposomal Stat3
(“BP1003”), targets the Stat3 protein and is currently in preclinical development as a potential treatment of pancreatic
cancer, non-small cell lung cancer (NSCLC) and AML. Preclinical models have shown BP1003 to inhibit cell viability and STAT3 protein
expression in NSCLC and AML cell lines. Further, BP1003 successfully penetrated pancreatic tumors and significantly enhanced the
efficacy of gemcitabine, a treatment for patients with advanced pancreatic cancer, in a pancreatic patient derived tumor model.
Our lead indication for BP1003 is pancreatic cancer due to the severity of this disease and the lack of effective, life-extending
treatments. We intend to have initiated IND enabling studies of BP1003 in 2019 and to file an IND application for a Phase 1 clinical
trial of BP1003 for the treatment of solid tumors, including pancreatic cancer in 2020 and potentially, non-small cell lung cancer.
Our DNAbilize® technology-based products
are available for out-licensing or partnering. We intend to apply our drug delivery technology template to new disease-causing
protein targets as a means to develop new nanoparticle antisense RNAi drug candidates. We have a new product identification template
in place to define a process of scientific, preclinical, commercial and intellectual property evaluation of potential new drug
candidates for inclusion into our drug product development pipeline. As we expand, we will look at indications where a systemic
delivery is needed and antisense RNAi nanoparticles can be used to slow, reverse or cure a disease, either alone or in combination
with another drug. On September 25, 2019, we announced that the United States Patent and Trademark Office issued a patent for claims
related to DNAbilize®, including its use in the treatment of cancers, autoimmune diseases and infectious diseases.
We have certain intellectual property as
the basis for our current drug products in clinical development, prexigebersen, BP1002 and BP1003. We are developing RNAi antisense
nanoparticle drug candidates based on our own patented technology to treat cancer and autoimmune disorders where targeting a single
protein may be advantageous and result in reduced patient adverse effects as compared to small molecule inhibitors with off-target
and non-specific effects. We have composition of matter and method of use intellectual property for the design and manufacture
of antisense RNAi nanoparticle drug products.
As of September 30, 2019, we had an accumulated
deficit of $54.0 million. Our net loss was $2.2 million and $3.1 million for the three months ended September 30, 2019 and 2018,
respectively. Our net loss was $6.2 million and $6.7 million for the nine months ended September 30, 2019 and 2018, respectively.
We expect to continue to incur significant operating losses, and we anticipate that our losses may increase substantially as we
expand our drug development programs and commercialization efforts. To achieve profitability, we must enter into license or development
agreements with third parties, or successfully develop and obtain regulatory approval for one or more of our drug candidates and
effectively commercialize any drug candidates we develop. In addition, if we obtain regulatory approval of one or more of our drug
candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.
Even if we succeed in developing and commercializing one or more of our drug candidates, we may not be able to generate sufficient
revenue and we may never be able to achieve or sustain profitability. We expect to finance our foreseeable cash requirements through
cash on hand, cash from operations, debt financings and public or private equity offerings. We may seek to access the public or
private equity markets whenever conditions are favorable; however, there can be no assurance that we will be able to raise additional
capital when needed or on terms that are favorable to us, if at all. Additionally, we may seek collaborations and license arrangements
for our drug candidates. We currently have no lines of credit or other arranged access to debt financing.
Company History and Available Information
The Company was incorporated in May 2000
as a Utah corporation. In February 2008, Bio-Path Subsidiary completed a reverse merger with the Company, which at the time was
traded over the counter and had no current operations. The prior name of the Company was changed to Bio-Path Holdings, Inc. and
the directors and officers of Bio-Path Subsidiary became the directors and officers of Bio-Path Holdings, Inc. On March 10, 2014,
our common stock ceased trading on the OTCQX and commenced trading on the Nasdaq Capital Market under the ticker symbol “BPTH.”
Effective December 31, 2014, we changed our state of incorporation from Utah to Delaware through a statutory conversion pursuant
to the Utah Revised Business Corporation Act and the Delaware General Corporation Law. Our principal executive offices are located
at 4710 Bellaire Boulevard, Suite 210, Bellaire, Texas 77401, and our telephone number is (832) 742-1357.
On February 8, 2018, we effected a reverse
stock split of our outstanding shares of common stock at a ratio of 1-for-10, and our common stock began trading on the split-adjusted
basis on the Nasdaq Capital Market at the commencement of trading on February 9, 2018. In addition, on January 17, 2019, we effected
a reverse stock split of our outstanding shares of common stock at a ratio of 1-for-20, and our common stock began trading on the
split-adjusted basis on the Nasdaq Capital Market at the commencement of trading on January 18, 2019. All common stock share and
per share amounts in this Quarterly Report on Form 10-Q have been adjusted to give effect to both the 1-for-10 reverse stock split
and the 1-for-20 reverse stock split, retrospectively.
Recent Accounting Pronouncements
See Note 2 to the Unaudited Condensed Consolidated
Financial Statements for a discussion of the impact of a new accounting standards update on the Company’s condensed consolidated
financial statements.
Financial Operations Overview
Revenue
We have not generated significant revenues
to date. Our ability to generate revenues from our drug candidates, which we do not expect will occur for many years, if ever,
will depend heavily on the successful development and eventual commercialization of our drug candidates.
In the future, we may generate revenue from
a combination of product sales, third-party grants, service agreements, strategic alliances and licensing arrangements. We expect
that any revenue we generate will fluctuate due to the timing and amount of services performed, milestones achieved, license fees
earned and payments received upon the eventual sales of our drug candidates, in the event any are successfully commercialized.
If we fail to complete the development of any of our drug candidates or obtain regulatory approval for them, our ability to generate
future revenue will be adversely affected.
Research and development expenses
Research and development expenses consist
of costs associated with our research activities, including the development of our drug candidates. Our research and development
expenses consist of:
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·
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expenses related to research and development personnel, including salaries and benefits, travel and stock-based compensation;
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·
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external research and development expenses incurred under arrangements with third parties, such as contract research organizations, clinical investigative sites, laboratories, manufacturing organizations and consultants; and
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|
·
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costs of materials used during research and development activities.
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Costs and expenses that can be clearly identified
as research and development are charged to expense as incurred in accordance with generally accepted accounting policies (“GAAP”).
Advance payments, including nonrefundable amounts, for goods or services that will be used or rendered for future research and
development activities are deferred and capitalized. Such amounts will be recognized as an expense as the related goods are delivered
or the related services are performed. If the goods will not be delivered, or services will not be rendered, then the capitalized
advance payment is charged to expense.
We expect research and development expenses
associated with the completion of the associated clinical trials to be substantial and to increase over time. The successful development
of our drug candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and estimated
costs of the efforts that will be necessary to complete development of our drug candidates or the period, if any, in which material
net cash inflows from our drug candidates may commence. This is due to the numerous risks and uncertainties associated with developing
drugs, including the uncertainty of:
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·
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the rate of progress, results and costs of completion of ongoing clinical trials of our drug candidates;
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·
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the size, scope, rate of progress, results and costs of completion of any potential future clinical trials and preclinical trials of our drug candidates that we may initiate;
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·
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competing technological and market developments;
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·
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the performance of third-party manufacturers and suppliers;
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·
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the ability of our drug candidates, if they receive regulatory approval, to achieve market success; and
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·
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disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our drug candidates.
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A change in the outcome of any of these
variables with respect to the development of a drug candidate could mean a significant change in the costs and timing associated
with the development of that drug candidate. For example, if the FDA or other regulatory authority were to require us to conduct
clinical trials beyond those which we currently anticipate will be required for the completion of clinical development of a drug
candidate or if we experience significant delays in enrollment in any clinical trials, we could be required to expend significant
additional financial resources and time on the completion of clinical development.
General and administrative expenses
Our general and administrative expenses
consist primarily of salaries and benefits for management and administrative personnel, professional fees for legal, accounting
and other services, travel costs and facility-related costs such as rent, utilities and other general office expenses.
Results of Operations
Comparisons of the Three Months Ended September
30, 2019 to the Three Months Ended September 30, 2018
Research and Development Expense.
Our research and development expense for the three months ended September 30, 2019 was $1.4 million, a decrease of $1.0 million
compared to the three months ended September 30, 2018. The decrease in research and development expense was primarily due to lower
expenses in 2019 related to drug material releases for our Phase 2 clinical trials for prexigebersen in AML and CML. The following
table sets forth our research and development expenses (in thousands):
|
|
Three Months Ended
|
|
|
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September 30,
|
|
|
|
2019
|
|
|
2018
|
|
Research and development expense
|
|
$
|
1,351
|
|
|
$
|
2,320
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Non-cash stock-based compensation expense
|
|
|
24
|
|
|
|
22
|
|
Total research and development expense
|
|
$
|
1,375
|
|
|
$
|
2,342
|
|
General and Administrative
Expense. Our general and administrative expense for the three months ended September 30, 2019 was $0.9 million, an
increase of $0.2 million compared to the three months ended September 30, 2018. The increase in general and administrative
expense was primarily due to increased legal fees and insurance costs. The following table sets forth our general and
administrative expenses (in thousands):
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
General and administrative expense
|
|
$
|
736
|
|
|
$
|
609
|
|
Non-cash stock-based compensation expense
|
|
|
160
|
|
|
|
131
|
|
Total general and administrative expense
|
|
$
|
896
|
|
|
$
|
740
|
|
Net Operating Loss. Our net loss
from operations for the three months ended September 30, 2019 was $2.3 million, a decrease of $0.8 million compared to the three
months ended September 30, 2018.
Net Loss. Our net loss for the three
months ended September 30, 2019 was $2.2 million, a decrease of $0.8 million compared to the three months ended September 30, 2018.
Net Loss per Share. Net loss per
share, both basic and diluted, for the three months ended September 30, 2019 was $0.78 per share, compared to $5.38 per share for
the three months ended September 30, 2018. Net loss per share is calculated using the weighted average number of shares of common
stock outstanding during the applicable periods and excludes stock options and warrants because they are antidilutive.
Comparisons of the Nine Months Ended September
30, 2019 to the Nine Months Ended September 30, 2018
Research and Development Expense.
Our research and development expense for the nine months ended September 30, 2019 was $3.3 million, a decrease of $0.8 million
compared to the nine months ended September 30, 2018. The decrease in research and development expense was primarily due to lower
expenses in 2019 related to drug material releases for our Phase 2 clinical trials for prexigebersen in AML and CML. The following
table sets forth our research and development expenses (in thousands):
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
Research and development expense
|
|
$
|
3,221
|
|
|
$
|
4,042
|
|
Non-cash stock-based compensation expense
|
|
|
75
|
|
|
|
59
|
|
Total research and development expense
|
|
$
|
3,296
|
|
|
$
|
4,101
|
|
General and Administrative Expense.
Our general and administrative expense for the nine months ended September 30, 2019 was $3.0 million, an increase of $0.4 million
compared to the nine months ended September 30, 2018. The increase in general and administrative expense was primarily due to increased
legal fees, insurance costs and stock-based compensation expense. The following table sets forth our general and administrative
expenses (in thousands):
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
2019
|
|
|
2018
|
|
General and administrative expense
|
|
$
|
2,537
|
|
|
$
|
2,222
|
|
Non-cash stock-based compensation expense
|
|
|
447
|
|
|
|
357
|
|
Total general and administrative expense
|
|
$
|
2,984
|
|
|
$
|
2,579
|
|
Net Operating Loss. Our net loss
from operations for the nine months ended September 30, 2019 was $6.3 million, a decrease of $0.4 million compared to the nine
months ended September 30, 2018.
Net Loss. Our net loss for the nine
months ended September 30, 2019 was $6.2 million, a decrease of $0.5 million compared to the nine months ended September 30, 2018.
Net Loss per Share. Net loss per
share, both basic and diluted, for the nine months ended September 30, 2019 was $2.51 per share, compared to $11.73 per share for
the nine months ended September 30, 2018. Net loss per share is calculated using the weighted average number of shares of common
stock outstanding during the applicable periods and excludes stock options and warrants because they are antidilutive.
Liquidity and Capital Resources
Overview
We have not generated significant revenues
to date. Since our inception, we have funded our operations primarily through public and private offerings of our capital stock
and other securities. We expect to finance our foreseeable cash requirements through cash on hand, cash from operations, debt financings
and public or private equity offerings. We may seek to access the public or private equity markets whenever conditions are favorable;
however, there can be no assurance that we will be able to raise additional capital when needed or on terms that are favorable
to us, if at all. Additionally, we may seek collaborations and license arrangements for our drug candidates. We currently have
no lines of credit or other arranged access to debt financing.
We had a cash balance of $15.4 million as
of September 30, 2019, an increase of $14.4 million compared to December 31, 2018. We believe that our available cash at September
30, 2019 will be sufficient to meet obligations and fund our liquidity and capital expenditure requirements for at least the next
12 months.
Cash Flows
Operating Activities. Net cash used
in operating activities for the nine months ended September 30, 2019 was $6.1 million. Net cash used in operating activities consisted
primarily of the net loss for the period of $6.2 million, excluding non-cash stock-based compensation expense of $0.5 million and
depreciation and amortization expenses of $0.2 million, an increase in current assets of $0.4 million and a decrease in current
liabilities of $0.2 million.
Financing Activities. Net cash provided
by financing activities for the nine months ended September 30, 2019 was $20.5 million. Net cash provided by financing activities
consisted primarily of net proceeds of $19.4 million from the 2019 Underwritten Offering, the January 2019 Registered Direct Offering
and January 2019 Private Placement and the March 2019 Registered Direct Offering, each as described below, as well as net proceeds
of $1.1 million from the exercise of warrants to purchase shares of our common stock.
2019 Shelf Registration Statement
On May 16, 2019, we filed a shelf registration
on Form S-3 with the SEC, which was declared effective by the SEC on June 5, 2019 (File No. 333-231537) (the “2019 Shelf
Registration Statement”), at which time the offering of unsold securities under a previous shelf registration statement on
Form S-3 filed with the SEC, which was declared effective by the SEC on January 9, 2017 (File No. 333-215205) (the “2017
Shelf Registration Statement”) was deemed terminated pursuant to Rule 415(a)(6) under the Securities Act. The 2019 Shelf
Registration Statement was filed to register the offering, issuance and sale of (i) up to $125.0 million of our common stock, preferred
stock, warrants to purchase common stock or preferred stock or any combination thereof, either individually or in units, including
offers and sales of our common stock under the Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”)
with Cantor Fitzgerald & Co. (“Cantor Fitzgerald”) described below and (ii) up to 5,149 shares of our common stock
pursuant to the exercise of warrants that were issued in a registered direct offering in 2016. The foregoing does not constitute
an offer to sell or the solicitation of an offer to buy securities, and shall not constitute an offer, solicitation or sale in
any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities
laws of that jurisdiction.
“At the Market” Offering
On June 24, 2015, we entered into the Sales
Agreement with Cantor Fitzgerald, as sales agent, pursuant to which we may offer and sell, from time to time, through Cantor Fitzgerald,
shares of our common stock. Sales of shares of common stock under the Sales Agreement will be made pursuant to the 2019 Shelf Registration
Statement and a related prospectus filed with the SEC on June 6, 2019, for an aggregate offering price of up to $25.0 million.
Under the Sales Agreement, Cantor Fitzgerald may sell shares by any method deemed to be an “at the market” offering
as defined in Rule 415 under the Securities Act. We will pay Cantor Fitzgerald a commission of 3.4% of the aggregate gross proceeds
from each sale of shares under the Sales Agreement and have agreed to provide Cantor Fitzgerald with customary indemnification
and contribution rights. We have also agreed to reimburse Cantor Fitzgerald for certain specified expenses. The Sales Agreement
may be terminated by either Cantor Fitzgerald or the Company upon ten days’ notice. We are subject to certain restrictions
on our ability to offer and sell shares of our common stock under the Sales Agreement. To date, we have not offered or sold any
shares of common stock under the Sales Agreement.
2018 Registered Direct Offering and
2018 Private Placement
On September 20, 2018, we entered into a
securities purchase agreement with certain investors pursuant to which we agreed to sell, in a registered direct offering, an aggregate
of 98,454 shares of our common stock and pre-funded warrants to purchase up to 14,624 shares of our common stock for gross proceeds
of approximately $1.5 million under the 2017 Shelf Registration Statement (the “2018 Registered Direct Offering”).
In a concurrent private placement, we also agreed pursuant to the securities purchase agreement to issue to such investors Series
A warrants to purchase up to 113,077 shares of our common stock (the “2018 Private Placement”). Additionally, we issued
warrants to purchase up to 6,785 shares of our common stock in a private placement to H.C. Wainwright & Co., LLC as compensation
for its services as a placement agent in connection with the 2018 Registered Direct Offering and the 2018 Private Placement. The
2018 Registered Direct Offering and the 2018 Private Placement closed on September 25, 2018. The net proceeds to the Company from
the offerings, after deducting the placement agent’s fees and expenses, our offering expenses, and excluding the proceeds,
if any, from the exercise of the warrants issued in the offerings, were approximately $1.2 million.
2019 Underwritten Offering
On January 14, 2019, we entered into an
underwriting agreement with H.C. Wainwright & Co., LLC relating to an underwritten public offering of 429,616 shares of our
common stock for gross proceeds of approximately $1.1 million under the 2017 Shelf Registration Statement. The offering price to
the public in the 2019 Underwritten Offering was $2.60 per share, and H.C. Wainwright & Co., LLC agreed to purchase the shares
in the 2019 Underwritten Offering from the Company pursuant to the underwriting agreement at a price of $2.418 per share. Additionally,
we issued warrants to purchase up to 25,777 shares of our common stock in a private placement to the H.C. Wainwright & Co.,
LLC as compensation for its services as underwriter in connection with the 2019 Underwritten Offering. The 2019 Underwritten Offering
closed on January 17, 2019. The net proceeds to the Company from the 2019 Underwritten Offering, after deducting the underwriting
discounts and commissions and expenses and the Company’s estimated offering expenses, and excluding the proceeds, if any,
from the exercise of the underwriter warrants, were approximately $0.9 million.
January 2019 Registered Direct Offering
and January 2019 Private Placement
On January 18, 2019, we entered into a securities
purchase agreement with certain investors pursuant to which we agreed to sell, in a registered direct offering, an aggregate of
648,233 shares of our common stock for gross proceeds of approximately $1.7 million under the 2017 Shelf Registration Statement.
In a concurrent private placement, we also agreed pursuant to the securities purchase agreement to issue to such investors Series
A warrants to purchase up to 324,117 shares of our common stock. Additionally, we issued warrants to purchase up to 38,894 shares
of our common stock in a private placement to H.C. Wainwright & Co., LLC as compensation for its services as a placement agent
in connection with the 2019 Registered Direct Offering and the January 2019 Private Placement. The January 2019 Registered Direct
Offering and the January 2019 Private Placement closed on January 23, 2019. The net proceeds to the Company from the offerings,
after deducting the placement agent’s fees and expenses, our offering expenses, and excluding the proceeds, if any, from
the exercise of the warrants issued in the offerings, were approximately $1.5 million.
March 2019 Registered Direct Offering
On March 12, 2019, we entered into a securities
purchase agreement with certain investors pursuant to which we agreed to sell, in a registered direct offering, an aggregate of
712,910 shares of our common stock for gross proceeds of approximately $18.5 million under the 2017 Shelf Registration Statement.
Additionally, we issued warrants to purchase up to 42,775 shares of our common stock in a private placement to H.C. Wainwright
& Co., LLC as compensation for its services as a placement agent in connection with the March 2019 Registered Direct Offering.
The March 2019 Registered Direct Offering closed on March 14, 2019. The net proceeds to us from the offering, after deducting the
placement agent’s fees and expenses, our offering expenses, and excluding the proceeds, if any, from the exercise of the
warrants issued in the offerings, were approximately $17.0 million.
Future Capital Requirements
We expect to continue to incur significant
operating expenses in connection with our ongoing activities, including conducting clinical trials, manufacturing and seeking regulatory
approval of our drug candidates, prexigebersen, BP1002 and BP1003. Accordingly, we will continue to require substantial additional
capital to fund our projected operating requirements. Such additional capital may not be available when needed or on terms favorable
to us. In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe
we have sufficient funds for our current and future operating plan. There can be no assurance that we will be able to continue
to raise additional capital through the sale of our securities in the future. Our future capital requirements may change and will
depend on numerous factors, which are discussed in detail in “Item 1A. Risk Factors” to Part I of our Annual Report
on Form 10-K as of the fiscal year ended December 31, 2018. For more information, see Note 1 to the Unaudited Condensed Consolidated
Financial Statements included herein.
Off-Balance Sheet Arrangements
As of September 30, 2019, we did not have
any material off-balance sheet arrangements.
Critical Accounting Policies
The preparation of financial statements
in conformity with GAAP in the United States has required the management of the Company to make assumptions, estimates and judgments
that affect the amounts reported in the financial statements, including the notes thereto, and related disclosures of commitments
and contingencies, if any. We consider our critical accounting policies to be those that require the more significant judgments
and estimates in the preparation of financial statements. Except as disclosed below, there have been no significant changes to
our critical accounting policies from those disclosed in Note 2 to our Consolidated Financial Statements included in our Annual
Report on Form 10-K as of the year ended December 31, 2018.
In February 2016, the FASB issued ASU No.
2016-02, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record
a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified
as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new
standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into
after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients
available. Effective January 1, 2019 we adopted ASU No. 2016-02, Leases. Management has determined that the Company’s
ROU asset and lease liability did not have a significant impact on the Company’s consolidated financial statements. See Note
2, Recent Accounting Pronouncements, and Note 10, Leases, of the Notes to Consolidated Financial Statements included
in Item 1 of this Quarterly Report on Form 10-Q for additional details regarding the impact of the adoption of this standard.