Item
1. FINANCIAL STATEMENTS
BIO-PATH HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
(Unaudited)
|
|
As of June 30,
|
|
|
As of December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
14,411
|
|
|
$
|
20,426
|
|
Prepaid drug product for testing
|
|
|
1,079
|
|
|
|
776
|
|
Other current assets
|
|
|
1,434
|
|
|
|
788
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
16,924
|
|
|
|
21,990
|
|
|
|
|
|
|
|
|
|
|
Fixed assets
|
|
|
|
|
|
|
|
|
Furniture, fixtures & equipment
|
|
|
1,029
|
|
|
|
1,029
|
|
Less accumulated depreciation
|
|
|
(762
|
)
|
|
|
(726
|
)
|
|
|
|
267
|
|
|
|
303
|
|
|
|
|
|
|
|
|
|
|
Right of use operating assets
|
|
|
329
|
|
|
|
367
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
17,520
|
|
|
$
|
22,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities & Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
726
|
|
|
$
|
486
|
|
Accrued expenses
|
|
|
410
|
|
|
|
673
|
|
Current portion of lease liabilities
|
|
|
89
|
|
|
|
85
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
1,225
|
|
|
|
1,244
|
|
|
|
|
|
|
|
|
|
|
Noncurrent lease liabilities
|
|
|
284
|
|
|
|
330
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
1,509
|
|
|
|
1,574
|
|
|
|
|
|
|
|
|
|
|
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;
|
|
|
4
|
|
|
|
4
|
|
3,692 and 3,692 shares issued and outstanding, respectively
|
|
|
|
|
|
|
|
|
Additional paid in capital
|
|
|
77,710
|
|
|
|
77,421
|
|
Accumulated deficit
|
|
|
(61,703
|
)
|
|
|
(56,339
|
)
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity
|
|
|
16,011
|
|
|
|
21,086
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities & Shareholders' Equity
|
|
$
|
17,520
|
|
|
$
|
22,660
|
|
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BIO-PATH HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
|
|
Three Months Ended June 30
|
|
|
Six Months Ended June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
1,030
|
|
|
$
|
1,523
|
|
|
$
|
3,038
|
|
|
$
|
1,921
|
|
General and administrative
|
|
|
1,013
|
|
|
|
966
|
|
|
|
2,349
|
|
|
|
2,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
2,043
|
|
|
|
2,489
|
|
|
|
5,387
|
|
|
|
4,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating loss
|
|
$
|
(2,043
|
)
|
|
$
|
(2,489
|
)
|
|
$
|
(5,387
|
)
|
|
$
|
(4,009
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
3
|
|
|
|
33
|
|
|
|
23
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income
|
|
|
3
|
|
|
|
33
|
|
|
|
23
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,040
|
)
|
|
$
|
(2,456
|
)
|
|
$
|
(5,364
|
)
|
|
$
|
(3,968
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted
|
|
$
|
(0.55
|
)
|
|
$
|
(0.87
|
)
|
|
$
|
(1.45
|
)
|
|
$
|
(1.75
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average number of
common shares outstanding
|
|
|
3,692
|
|
|
|
2,828
|
|
|
|
3,692
|
|
|
|
2,267
|
|
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BIO-PATH HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
|
|
Six Months Ended June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Cash flow from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,364
|
)
|
|
$
|
(3,968
|
)
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
289
|
|
|
|
338
|
|
Amortization of right of use assets
|
|
|
38
|
|
|
|
56
|
|
Depreciation
|
|
|
36
|
|
|
|
99
|
|
(Increase) decrease in operating assets
|
|
|
|
|
|
|
|
|
Prepaid drug product for testing
|
|
|
(303
|
)
|
|
|
(322
|
)
|
Other current assets
|
|
|
(646
|
)
|
|
|
(42
|
)
|
Increase (decrease) in operating liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
(23
|
)
|
|
|
(328
|
)
|
Lease liabilities
|
|
|
(42
|
)
|
|
|
(56
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(6,015
|
)
|
|
|
(4,223
|
)
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from sale of common stock
|
|
|
-
|
|
|
|
19,411
|
|
Net proceeds from exercise of warrants
|
|
|
-
|
|
|
|
914
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
-
|
|
|
|
20,325
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash
|
|
|
(6,015
|
)
|
|
|
16,102
|
|
|
|
|
|
|
|
|
|
|
Cash, beginning of period
|
|
|
20,426
|
|
|
|
1,004
|
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
|
$
|
14,411
|
|
|
$
|
17,106
|
|
SEE
ACCOMPANYING NOTES TO UNAUDITED 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 March 31, 2019
|
|
|
2,814
|
|
|
$
|
3
|
|
|
$
|
69,392
|
|
|
$
|
(49,252
|
)
|
|
$
|
20,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants, net of fees
|
|
|
17
|
|
|
|
-
|
|
|
|
45
|
|
|
|
-
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
181
|
|
|
|
-
|
|
|
|
181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,456
|
)
|
|
|
(2,456
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2019
|
|
|
2,831
|
|
|
$
|
3
|
|
|
$
|
69,618
|
|
|
$
|
(51,708
|
)
|
|
$
|
17,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2020
|
|
|
3,692
|
|
|
$
|
4
|
|
|
$
|
77,591
|
|
|
$
|
(59,663
|
)
|
|
$
|
17,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
119
|
|
|
|
-
|
|
|
|
119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,040
|
)
|
|
|
(2,040
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2020
|
|
|
3,692
|
|
|
$
|
4
|
|
|
$
|
77,710
|
|
|
$
|
(61,703
|
)
|
|
$
|
16,011
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Paid in
|
|
|
Accumulated
|
|
|
|
|
Description
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
357
|
|
|
|
-
|
|
|
|
914
|
|
|
|
-
|
|
|
|
914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
338
|
|
|
|
-
|
|
|
|
338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,968
|
)
|
|
|
(3,968
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2019
|
|
|
2,831
|
|
|
$
|
3
|
|
|
$
|
69,618
|
|
|
$
|
(51,708
|
)
|
|
$
|
17,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019
|
|
|
3,692
|
|
|
$
|
4
|
|
|
$
|
77,421
|
|
|
$
|
(56,339
|
)
|
|
$
|
21,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
289
|
|
|
|
-
|
|
|
|
289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,364
|
)
|
|
|
(5,364
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2020
|
|
|
3,692
|
|
|
$
|
4
|
|
|
$
|
77,710
|
|
|
$
|
(61,703
|
)
|
|
$
|
16,011
|
|
SEE
ACCOMPANYING NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BIO-PATH
HOLDINGS, INC.
Notes to the Unaudited Condensed Consolidated
Financial Statements
for the Period Ended June 30, 2020
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 unaudited condensed interim financial statements
have been prepared in conformity with the authoritative U.S. generally accepted accounting principles (GAAP) for interim financial
information and 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 required by GAAP for complete consolidated
financial statements. 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, 2019. The results of operations
for the period ended June 30, 2020, are not necessarily indicative of the results for a full-year period.
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1.
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Organization and Business
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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. The Company’s 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. The Company believes 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, the Company currently has four 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 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. 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.
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.
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2.
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Significant Accounting Policies
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Net Loss Per Share - Basic net loss per common
share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding
during the period. Although there were warrants and stock options outstanding as of June 30, 2020 and 2019, no potential common
shares are included in the computation of any diluted per share amount, as they would be antidilutive. Consequently, diluted net
loss per share as presented in the condensed consolidated financial statements is equal to basic net loss per share for the three
and six months ended June 30, 2020 and 2019. The calculation of diluted earnings per share did not include 267,321 shares and 858,698
shares issuable pursuant to the exercise of outstanding common stock options and warrants, respectively, as of June 30, 2020 as
the effect would be antidilutive. The calculation of diluted earnings per share for 2019 did not include 71,133 shares and 256,574
shares issuable pursuant to the exercise of outstanding common stock options and warrants, respectively, as of June 30, 2019 as
the effect would be antidilutive.
Fair Value - The fair values of cash and cash
equivalents, accounts payable and accrued liabilities approximate their carrying values because of the short-term maturities of
these instruments.
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3.
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Prepaid Drug Product for Testing
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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 $0.8 million as of December 31, 2019 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. The Company recognized certain expenses
and incurred additional installment costs during the first six months of 2020, with advanced payments remaining to be expensed
totaling $1.1 million as of June 30, 2020.
As of June 30, 2020, other current assets included prepaid expenses
of $1.4 million, comprised primarily of prepayments made for the Company’s clinical trials for prexigebersen in AML, BP1002
in lymphoma and prexigebersen-A in solid tumors of $0.6 million, prepaid insurance of $0.5 million, prepayments for BP1003 manufacturing
activities of $0.2 million and other prepaid expenses of $0.1 million. As of December 31, 2019, other current assets included prepaid
expenses of $0.8 million, comprised primarily of prepayments made for the Company’s clinical trials for prexigebersen in
AML and CML of $0.6 million and prepaid insurance of $0.2 million.
As of June 30, 2020, current liabilities
included accounts payable of $0.7 million, comprised primarily of amounts owed for external research expenses related to manufacturing
costs of $0.3 million, amounts owed to the Company’s clinical research organization for its clinical trials for prexigebersen
in AML and prexigebersen-A in solid tumors of $0.2 million, legal and patent fees of $0.1 million and preclinical expenses of $0.1
million. As of December 31, 2019, current liabilities included accounts payable of $0.5 million, comprised primarily of amounts
owed for external research expenses related to manufacturing costs of $0.3 million and legal and patent fees of $0.2 million.
As of June 30, 2020, current liabilities included accrued expenses
of $0.4 million, comprised primarily of accrued employee vacation and bonus expenses of $0.2 million, legal and patent fees of
$0.1 million and other accrued expenses of $0.1 million. As of December 31, 2019, current liabilities included accrued expenses
of $0.7 million, comprised primarily of accrued employee vacation and bonus expenses of $0.4 million, clinical and preclinical
expenses of $0.2 million and other accrued expenses of $0.1 million.
Issuances of Common Stock - On January 14, 2019,
the Company entered into an underwriting agreement with H.C. Wainwright & Co., LLC relating to an underwritten public offering
of 429,616 shares of its common stock for gross proceeds of approximately $1.1 million (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, the Company issued warrants to purchase up to 25,777 shares of its 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 offering expenses, and excluding
the proceeds, if any, from the exercise of the underwriter warrants, were approximately $0.9 million.
On January 18, 2019, the Company entered into a securities purchase
agreement with certain investors pursuant to which the Company agreed to sell, in a registered direct offering, an aggregate of
648,233 shares of its common stock for gross proceeds of approximately $1.7 million (the “January 2019 Registered Direct
Offering”). In a concurrent private placement, the Company also agreed pursuant to the securities purchase agreement to issue
to such investors Series A warrants to purchase up to 324,117 shares of its common stock (the “January 2019 Private Placement”).
Additionally, the Company issued warrants to purchase up to 38,894 shares of its 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, 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, the Company entered into a securities
purchase agreement with certain investors pursuant to which the Company agreed to sell, in a registered direct offering, an
aggregate of 712,910 shares of its common stock for gross proceeds of approximately $18.5 million (the “March 2019
Registered Direct Offering”). Additionally, the Company issued warrants to purchase up to 42,775 shares of its 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 the Company from the offerings, after deducting the placement agent’s fees and expenses,
offering expenses, and excluding the proceeds, if any, from the exercise of the warrants issued in the offerings, were
approximately $17.0 million.
On November 21, 2019, the Company entered into a securities
purchase agreement with certain investors pursuant to which the Company agreed to sell, in a registered direct offering, an aggregate
of 808,080 shares of its common stock and warrants to purchase up to 606,060 shares of its common stock for gross proceeds of approximately
$8.0 million under the 2019 Shelf Registration Statement (the “November 2019 Registered Direct Offering”). Additionally,
the Company issued warrants to purchase up to 48,485 shares of its common stock to H.C. Wainwright & Co., LLC as compensation
for its services as a placement agent in connection with the November 2019 Registered Direct Offering, which warrants and the common
stock issuable upon exercise of such warrants were registered under the 2019 Shelf Registration Statement. The November 2019 Registered
Direct Offering closed on November 25, 2019. The net proceeds to the Company from the offerings, after deducting the placement
agent’s fees and expenses, offering expenses, and excluding the proceeds, if any, from the exercise of the warrants issued
in the offerings, were approximately $7.3 million.
During the fiscal year ended December 31, 2019, the Company
issued an aggregate of 409,875 shares of its common stock pursuant to the exercise of warrants at a weighted average exercise price
of approximately $2.67 per share. The net proceeds to the Company from the exercise of the warrants were approximately $1.1 million.
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8.
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Stock-Based Compensation Plan
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The 2017 Plan – On December 21, 2017, the
Company’s stockholders approved the Bio-Path Holdings, Inc. 2017 Stock Incentive Plan (as amended, 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. On December 19, 2019,
the Company’s stockholders approved an amendment to the 2017 Plan to increase the number of shares reserved for grant and
issuance pursuant to the 2017 Plan by 600,000 shares to 660,000 shares. 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 the three months ended
June 30, 2020 and 2019 was $0.1 million and $0.2 million, respectively. Of these amounts, stock-based compensation expense for
personnel involved in the Company’s general and administrative activities for the three months ended June 30, 2020 and 2019
was $0.1 million and $0.2 million, respectively. Stock-based compensation expense for personnel involved in the Company’s
research and development activities for the three months ended June 30, 2020 and 2019 was $24,000 and $26,000, respectively.
Stock-based compensation expense for each of the six months
ended June 30, 2020 and 2019 was $0.3 million. Of these amounts, stock-based compensation expense for personnel involved in the
Company’s general and administrative activities for the six months ended June 30, 2020 and 2019 was $0.2 million and $0.3
million, respectively. Stock-based compensation expense for personnel involved in the Company’s research and development
activities for the six months ended June 30, 2020 and 2019 was $45,000 and $0.1 million, respectively.
The Company utilized the Black-Scholes valuation model for estimating
the fair value of the stock options granted, with the following weighted-average assumptions for options granted in the six months
ended June 30, 2020 and 2019, respectively:
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2020
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2019
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Risk-free interest rate
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0.50%
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2.23%
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Expected volatility
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122%
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126%
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Expected term in years
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6.0
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6.0
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Dividend yield
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-%
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-%
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The following summary represents option activity under the Company’s
stock-based compensation plans for the six months ended June 30, 2020:
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Weighted-
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Average
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Exercise
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Options
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Price
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(in thousands)
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Outstanding at December 31, 2019
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68
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$
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68.56
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Granted
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204
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5.01
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Forfeited
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(4
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)
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7.19
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Expired
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(1
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)
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28.54
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Outstanding at June 30, 2020
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267
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20.98
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Exercisable at June 30, 2020
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45
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$
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88.48
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As of June 30, 2020, the aggregate intrinsic value of outstanding
stock options was $27,000. The aggregate intrinsic value represents the total pretax intrinsic value (the difference between the
Company’s closing stock price on June 30, 2020 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 June 30, 2020. This amount
changes based on the fair value of the Company’s stock.
As of June 30, 2020, unamortized stock-based compensation expense
for all outstanding options was $1.1 million, which is expected to be recognized over a remaining weighted average vesting period
of 2.8 years.
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9.
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Commitments and Contingencies
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Drug Supplier Project Plan – Total commitments
for the Company’s drug supplier project plan are $1.1 million as of June 30, 2020, comprised of $0.7 million to the manufacturer
of prexigebersen and BP1002 drug products, $0.3 million for manufacture of the Company’s Grb2, Bcl-2, and STAT3 drug substances,
and $0.1 million for manufacturing development. The Company expects to incur $0.7 million of these commitments over the next 12
months.
As previously disclosed, on June 24, 2015, the Company entered
into a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald &
Co. (“Cantor Fitzgerald”), pursuant to which the Company could offer and sell, at the Company’s option,
shares of its common stock for aggregate gross sales proceeds of up to $25.0 million, from time to time, through an “at the
market” equity offering program under which Cantor Fitzgerald acted as agent. On July 2, 2020, the Company delivered written
notice to Cantor Fitzgerald that it had elected, pursuant to Section 12(b) of the Sales Agreement, to terminate the Sales Agreement
effective as of July 12, 2020, ten (10) days after delivery of the notice. The Company did not incur any material early termination
penalties in connection with the termination of the Sales Agreement. The Company did not sell any shares of common stock pursuant
to the Sales Agreement.
On July 13, 2020, the Company entered into
an At-The-Market Offering Agreement (the “Offering Agreement“) with H. C. Wainwright & Co., LLC (“Wainwright”),
as sales agent and/or principal, pursuant to which the Company may offer and sell, from time to time, through or to Wainwright,
shares of the Company’s common stock. Sales of shares of common stock under the Offering Agreement will be made pursuant
to the Company’s shelf registration statement on Form S-3 filed with the SEC, which was declared effective by the SEC on
June 5, 2019 (File No. 333-231537), and a related prospectus supplement filed with the SEC on July 14, 2020, for an aggregate offering
price of up to $7.0 million, provided that the Company may be limited in the amount of securities that it can sell under the Offering
Agreement pursuant to Instruction I.B.6 to Form S-3 for so long as the Company’s public float remains less than $75.0 million.
Under the Offering Agreement, Wainwright may sell shares by any method deemed to be an “at the market” offering as
defined in Rule 415 under the Securities Act. The Company will pay Wainwright a commission of 3% of the aggregate gross proceeds
from each sale of shares under the Offering Agreement and has agreed to provide Wainwright with customary indemnification and contribution
rights. The Company has also agreed to reimburse Wainwright for certain specified expenses. To date, the Company has not offered
or sold any shares of common stock under the Offering Agreement.
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, 2019. 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 due to the impact, risks and uncertainties related to COVID-19 and actions
taken by governmental authorities or others in connection therewith. To date, COVID-19’s impact on our operations has been
limited to the inability to travel to clinical trial sites and clinical trial sites not allowing nonessential personnel on site
for the purpose of monitoring activity. We anticipate COVID-19 may have an effect on patient recruiting in the near term as social
distancing mandates are in effect. We believe these operational issues can be managed through remote monitoring capabilities currently
being developed. Our actual results could also differ materially from those anticipated in these forward-looking statements for
many other 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, 2019, the matters discussed in “Item 1A. Risk Factors” to Part II of
this Quarterly Report on Form 10-Q, 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 four drug candidates in development to treat at least five different cancer disease
indications. Our lead drug candidate, prexigebersen (pronounced prex” i je ber’ sen), initially started the efficacy
portion of a Phase 2 clinical trial for untreated or de novo acute myeloid leukemia (“AML”) patients in combination
with low-dose cytarabine (“LDAC”). Subsequently, a second cohort of untreated AML patients was added to the clinical
trial for treatment with prexigebersen in combination with decitabine. On March 6, 2019, we announced intended Stage 2 amendments
to this Phase 2 clinical trial to (i) add high risk myelodysplastic syndrome (“MDS”) patients to the untreated AML
cohort being treated with prexigebersen in combination with decitabine, (ii) close the prexigebersen in combination with LDAC treatment
cohort, (iii) add a cohort of relapsed/refractory AML and high risk MDS patients for treatment with prexigebersen and decitabine
and (iv) following successful completion of a safety segment treating AML and MDS patients with prexigebersen in combination with
decitabine, add venetoclax to the treatment combination treating all patient cohorts with prexigebersen in combination with decitabine
and venetoclax. On November 26, 2019, we announced successful completion of safety testing of the treatment combination of prexigebersen
and decitabine in AML and MDS patients in Stage 2 of this Phase 2 clinical trial.
In addition, preclinical efficacy studies
for the triple combination treatment of prexigebersen, decitabine and venetoclax in AML have been successfully completed. In the
preclinical efficacy studies, four AML cancer cell lines were treated with three different combinations of decitabine, venetoclax
and prexigebersen. Decrease in AML cell viability was the primary measure of efficacy. The triple combination of decitabine, venetoclax
and prexigebersen showed significant improvement in efficacy in three of the four AML cell lines. Based on these results, the Company
believes that adding prexigebersen to the treatment combination of decitabine and venetoclax could lead to improved efficacy in
AML patients. Based on the successful completion of these studies, we submitted the amendment for Stage 2 of this Phase 2 clinical
trial to add the triple combination treatment comprised of prexigebersen, decitabine and venetoclax to the U.S. Food and Drug Administration
(“FDA”). We added a third cohort to the amendment submitted, treating relapsed/refractory patients who are venetoclax
resistant or intolerant with the two-drug combination of prexigebersen and decitabine. The FDA requested that the treatment of
MDS patients with the triple combination of prexigebersen, decitabine and venetoclax be conducted in a separate clinical trial.
As a result, the amendment was modified and resubmitted to the FDA for approval.
The required amount of time has passed since
submission to the FDA allowing clearance to proceed with testing under the amendment to Stage 2 of this Phase 2 clinical trial.
The result of these changes is that the approved amended protocol for the Stage 2 of this Phase 2 trial in AML is comprised of
two cohorts, one having untreated AML patients and the second having relapsed/refractory AML patients, both treated with the triple
combination of decitabine, venetoclax and prexigebersen, and a third cohort of relapsed/refractory AML patients, who are venetoclax
resistant or intolerant, treated with the two-drug combination of decitabine and prexigebersen. The full trial design plans have
approximately 98 evaluable patients for the first cohort having untreated AML patients with a preliminary review performed after
19 evaluable patients and a formal interim analysis after 38 evaluable patients. The full trial design plans have approximately
54 evaluable patients for each of the second cohort, having relapsed/refractory AML patients, and the third cohort, having AML
patients who are venetoclax resistant or intolerant, in each case with a review performed after 19 evaluable patients. The study
is anticipated to be conducted at ten clinical sites in the U.S., and Gail J. Roboz, MD will be the national coordinating Principal
Investigator for the Phase 2 trial. Dr. Roboz is professor of medicine and director of the Clinical and Translational Leukemia
Program at the Weill Medical College of Cornell University and the New York-Presbyterian Hospital in New York City. On August 13,
2020, we announced the enrollment and dosing of the first patient in this approved amended Stage 2 of the Phase 2 clinical study.
In addition, a modified product named prexigebersen-A,
Bio-Path’s fourth drug candidate, has shown to enhance chemotherapy efficacy in preclinical solid tumor models. Prexigebersen-A
incorporates the same drug substance as prexigebersen but has a slightly modified formulation designed to enhance nanoparticle
properties. In late 2019, we filed an Investigational New Drug (“IND”) application to initiate a Phase 1 clinical trial
of prexigebersen-A in patients with solid tumors, including ovarian and uterine, pancreatic and breast cancer. Ovarian cancer is
one of the most common type of gynecologic malignancies, with approximately 50% of all cases occurring in women older than 63 years.
This trial is expected to commence after the IND has been cleared by the FDA, which we currently anticipate being in 2020.
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.
On November 21, 2019, we announced that the FDA cleared an IND application for BP1002. An initial Phase 1 clinical trial will evaluate
the ability of BP1002 to treat refractory/relapsed lymphoma and chronic lymphocytic leukemia patients. The Phase 1 clinical trial
is expected to be conducted at several leading cancer centers, including The University of Texas MD Anderson Cancer Center (“MD
Anderson”), the Georgia Cancer Center and the Sarah Cannon Research Institute and is now open for enrollment.
Our third drug candidate, Liposomal STAT3
(“BP1003”), targets the STAT3 protein and is currently in IND enabling studies 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 cancer 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. For example, pancreatic adenocarcinoma is projected to be the second most lethal cancer behind lung cancer by 2030.
Typical survival for a metastatic or advanced patient is about six to 15 months from diagnosis. We expect to complete several IND
enabling studies of BP1003 in 2020. If those studies are successful, our goal is to file an IND in late 2020 for the first-in-humans
Phase 1 study of BP1003 in patients with refractory/metastatic solid tumors, including pancreatic, NSCLC and colorectal cancers.
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 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 (“USPTO”) issued a patent
for claims related to DNAbilize®, including its use in the treatment of cancers, autoimmune diseases and infectious diseases.
This is the second patent issued to the Company.
We have certain intellectual property as
the basis for our current drug products in clinical development, prexigebersen, prexigebersen-A, 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.
On July 13, 2020, we entered into an At-The-Market
Offering Agreement (the “Offering Agreement“) with H. C. Wainwright & Co., LLC (“Wainwright”), as sales
agent and/or principal, pursuant to which we may offer and sell, from time to time, through or to Wainwright, shares of our common
stock. Sales of shares of common stock under the Offering Agreement will be made pursuant to our shelf registration statement on
Form S-3 filed with the SEC, which was declared effective by the SEC on June 5, 2019 (File No. 333-231537), and a related prospectus
supplement filed with the SEC on July 14, 2020, for an aggregate offering price of up to $7.0 million, provided that we may be
limited in the amount of securities that we can sell under the Offering Agreement pursuant to Instruction I.B.6 to Form S-3 for
so long as our public float remains less than $75.0 million. Under the Offering Agreement, Wainwright 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 Wainwright a
commission of 3% of the aggregate gross proceeds from each sale of shares under the Offering Agreement and have agreed to provide
Wainwright with customary indemnification and contribution rights. We have also agreed to reimburse Wainwright for certain specified
expenses.
As of June 30, 2020, we had an accumulated
deficit of $61.7 million. Our net loss was $2.0 million and $2.5 million for the three months ended June 30, 2020 and 2019, respectively.
Our net loss was $5.4 million and $4.0 million for the six months ended June 30, 2020 and 2019, 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
There are no recent accounting pronouncements
that have a material impact on our 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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expenses related to research and development personnel, including salaries and benefits, travel and stock-based compensation;
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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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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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the rate of progress, results and costs of completion of ongoing clinical trials of our drug candidates;
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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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competing technological and market developments;
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the performance of third-party manufacturers and suppliers;
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the ability of our drug candidates, if they receive regulatory approval, to achieve market success;
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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; and
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the impact, risks and uncertainties related to COVID-19 and actions taken by governmental authorities or others in connection therewith.
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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 June 30,
2020 to the Three Months Ended June 30, 2019
Research and Development Expense.
Our research and development expense for the three months ended June 30, 2020 was $1.0 million, a decrease of $0.5 million compared
to the three months ended June 30, 2019. The decrease in research and development expense was primarily due to timing of activities
related to our Phase 2 clinical trial of prexigebersen in AML. The following table sets forth our research and development expenses
(in thousands):
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Three Months Ended
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June 30,
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2020
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2019
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Research and development expense
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$
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1,006
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$
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1,497
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Non-cash stock-based compensation expense
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24
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26
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Total research and development expense
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$
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1,030
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$
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1,523
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General and Administrative Expense.
Our general and administrative expense was $1.0 million for each of the three months ended June 30, 2020 and 2019. The following
table sets forth our general and administrative expenses (in thousands):
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Three Months Ended
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June 30,
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2020
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2019
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General and administrative expense
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$
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918
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$
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811
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Non-cash stock-based compensation expense
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95
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155
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Total general and administrative expense
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$
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1,013
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$
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966
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Net Operating Loss. Our net loss
from operations for the three months ended June 30, 2020 was $2.0 million, a decrease of $0.4 million compared to the three months
ended June 30, 2019.
Net Loss. Our net loss for the three
months ended June 30, 2020 was $2.0 million, a decrease of $0.4 million compared to the three months ended June 30, 2019.
Net Loss per Share. Net loss per
share, both basic and diluted, was $0.55 per share for the three months ended June 30, 2020, compared to $0.87 per share for the
three months ended June 30, 2019. 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 Six Months Ended June 30,
2020 to the Six Months Ended June 30, 2019
Research and Development Expense.
Our research and development expense for the six months ended June 30, 2020 was $3.0 million, an increase of $1.1 million compared
to the six months ended June 30, 2019. The increase in research and development expense was primarily due to the manufacture of
drug material in preparation for our Phase 1 clinical trial of prexigebersen-A in solid tumors and increased preclinical study
expenses. The following table sets forth our research and development expenses (in thousands):
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Six Months Ended
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June 30,
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2020
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2019
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Research and development expense
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$
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2,993
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$
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1,870
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Non-cash stock-based compensation expense
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45
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51
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Total research and development expense
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$
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3,038
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$
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1,921
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General and Administrative Expense.
Our general and administrative expense for the six months ended June 30, 2020 was $2.3 million, an increase of $0.3 million compared
to the six months ended June 30, 2019. The increase in general and administrative expense was primarily due to increased franchise
tax expense. The following table sets forth our general and administrative expenses (in thousands):
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Six Months Ended
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June 30,
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2020
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2019
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General and administrative expense
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$
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2,105
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$
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1,801
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Non-cash stock-based compensation expense
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244
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287
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Total general and administrative expense
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$
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2,349
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$
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2,088
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Net Operating Loss. Our net loss
from operations for the six months ended June 30, 2020 was $5.4 million, an increase of $1.4 million compared to the six months
ended June 30, 2019.
Net Loss. Our net loss for the six
months ended June 30, 2020 was $5.4 million, an increase of $1.4 million compared to the six months ended June 30, 2019.
Net Loss per Share. Net loss per
share, both basic and diluted, was $1.45 per share for the six months ended June 30, 2020, compared to $1.75 per share for the
six months ended June 30, 2019. 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 $14.4 million as
of June 30, 2020, a decrease of $6.0 million compared to December 31, 2019. We believe that our available cash at June 30, 2020
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 six months ended June 30, 2020 was $6.0 million. Excluding non-cash stock-based compensation expense
of $0.3 million, such net cash used in operating activities consisted primarily of the net loss for the period of $5.4 million
and an increase in current assets of $0.9 million. Net cash used in operating activities for the six months ended June 30, 2019
was $4.2 million. Excluding non-cash stock-based compensation expense of $0.3 million and depreciation and amortization expenses
of $0.2 million, such net cash used in operating activities consisted primarily of the net loss for the period of $4.0 million,
an increase in current assets of $0.4 million and a decrease in current liabilities of $0.4 million.
Financing Activities. There were
no financing activities for the six months ended June 30, 2020. Net cash provided by financing activities for the six months ended
June 30, 2019 was $20.3 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 $0.9 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
statement 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, and (ii)
up to 5,149 shares of our common stock pursuant to the exercise of warrants that were issued in connection with a registered direct
offering in 2016. Because our public float is less than $75 million, our ability to offer and sell any securities under the 2019
Shelf Registration Statement is currently limited pursuant to Instruction I.B.6 to Form S-3. For so long as the Company's public
float is less than $75 million, the aggregate market value of securities sold by the Company under the 2019 Shelf Registration
Statement pursuant to Instruction I.B.6 to Form S-3 during any 12 consecutive months may not exceed one-third of the Company’s
public float. 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.
2019 Underwritten Offering
On January 14, 2019, we entered into an
underwriting agreement with Wainwright 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 Wainwright 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 Wainwright 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
(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 Wainwright 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
(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 Wainwright 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.
November 2019 Registered Direct Offering
On November 21, 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 808,080 shares of our common stock and warrants to purchase up to 606,060 shares of our common stock for gross proceeds of approximately
$8.0 million under the 2019 Shelf Registration Statement (the “November 2019 Registered Direct Offering”). Additionally,
we issued warrants to purchase up to 48,485 shares of our common stock to Wainwright as compensation for its services as a placement
agent in connection with the November 2019 Registered Direct Offering, which warrants and the common stock issuable upon exercise
of such warrants were registered under the 2019 Shelf Registration Statement. The November 2019 Registered Direct Offering closed
on November 25, 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
$7.3 million.
At-The-Market Offering Agreement
On July 13, 2020, we entered into the Offering
Agreement with Wainwright, as sales agent and/or principal, pursuant to which we may offer and sell, from time to time, through
or to Wainwright, shares of our common stock. Sales of shares of common stock under the Offering Agreement will be made pursuant
to the 2019 Shelf Registration Statement and a related prospectus supplement filed with the SEC on July 14, 2020, for an aggregate
offering price of up to $7.0 million, provided that we may be limited in the amount of securities that we can sell under the Offering
Agreement pursuant to Instruction I.B.6 to Form S-3 for so long as our public float remains less than $75.0 million. Under the
Offering Agreement, Wainwright 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 Wainwright a commission of 3% of the aggregate gross proceeds from each sale of
shares under the Offering Agreement and have agreed to provide Wainwright with customary indemnification and contribution rights.
We have also agreed to reimburse Wainwright for certain specified expenses. To date, we have not offered or sold any shares of
common stock under the Offering Agreement.
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, prexigebersen-A, 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, 2019. For more information, see Note 1 to the Unaudited
Condensed Consolidated Financial Statements included herein.
Off-Balance Sheet Arrangements
As of June 30, 2020, 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. 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, 2019.