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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, 2019.2020. The results of operations for the period ended June 30, 2020,March 31, 2021, are not necessarily indicative of the results for a full-year period.

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. Through testing in numerous animal studies and treatment in over 80 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, the Company currently has four antisense drug candidates in development to treat at least five different cancer disease indications.

Bio-Path SubsidiaryThe Company was foundedincorporated in May 20072000 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. Effective December 31, 2014, the Company changed its 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.

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.

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,March 31, 2021 and 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, 2020March 31, 2021 and 2019.2020. The calculation of diluted earnings per share for 2021 did not include 267,321486,408 shares and 429,791 shares issuable pursuant to the exercise of outstanding common stock options and warrants, respectively, as of March 31, 2021 as the effect would be antidilutive. The calculation of diluted earnings per share for 2020 did not include 166,008 shares and 858,698 shares issuable pursuant to the exercise of outstanding common stock options and warrants, respectively, as of June 30,March 31, 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.

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$1.3 million as of December 31, 20192020 pursuant to drug supply contracts for the manufacture and delivery of prexigebersen for testing in twoa Phase 2 clinical trialstrial and Bcl-2BP1002 for testing in a Phase 1 clinical trial. The Company recognized certain expenses and incurred additional installment costs during the first six monthsquarter of 2020,2021, with advanced payments remaining to be expensed totaling $1.1$1.0 million as of June 30, 2020.March 31, 2021.

As of June 30,March 31, 2021, other current assets included prepaid expenses of $0.9 million, comprised primarily of prepayments of $0.6 million made for the Company’s clinical trials for BP1002 in lymphoma and prexigebersen-A in solid tumors as well as prepaid expenses related to insurance, preclinical studies and other prepaid expenses of $0.1 million each. As of December 31, 2020, other current assets included prepaid expenses of $1.4$0.9 million, comprised primarily of prepayments of $0.6 million made for the Company’s clinical trials for prexigebersen in AML, BP1002 in lymphoma and prexigebersen-A in solid tumors of $0.6 million,as well as 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$0.3 million.

As of June 30, 2020,March 31, 2021, current liabilities included accounts payable of $0.7$0.4 million, comprised primarily of amounts owed for external research expenses related todrug supply 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 expensesamounts owed to the Company’s contract research organization for its clinical trial for prexigebersen in AML of $0.1 million. As of December 31, 2019,2020, current liabilities included accounts payable of $0.5$0.1 million, comprised primarily of amounts owed for external researchinvestor relations expenses related to manufacturing costs of $0.3 million and legal and patent fees of $0.2$0.1 million.

As of June 30, 2020,March 31, 2021, current liabilities included accrued expenses of $0.4$1.0 million, comprised primarily of accrued employee vacation and bonus expenses of $0.2$0.5 million, expenses related to the Company’s clinical trial for prexigebersen in AML of $0.3 million, legal and patent fees of $0.1 million and other accrued expenses of $0.1 million. As of December 31, 2019,2020, current liabilities included accrued expenses of $0.7$1.0 million, comprised primarily of expenses related to the Company’s clinical trial for prexigebersen in AML of $0.4 million, accrued employee vacation and bonus expenses of $0.4 million, clinical and preclinicalmanufacturing expenses of $0.2$0.1 million and other accrued expenses of $0.1 million.

Issuances of Common Stock - On January 14, 2019,February 16, 2021, the Company entered into an underwritinga placement agency agreement with H.C. Wainwright & Co.,Roth Capital Partners, LLC relating to an underwrittena public offering of 429,6161,710,600 shares of its common stock for gross proceeds of approximately $1.1$13.0 million under the Company’s shelf registration statement on Form S-3 (File No. 333-231537) (the “2019 UnderwrittenShelf Registration Statement”), which was declared effective by the SEC on June 5, 2019 (the “2021 Registered Direct 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 closedIn addition, 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,February 16, 2021, the Company entered into a securities purchase agreement with certain institutional 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 38,8941,650,000 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 20192021 Registered Direct Offering and the 2019 Private Placement.to such investors. The 20192021 Registered Direct Offering and the 2019 Private Placement closed on January 23, 2019.February 18, 2021. The net proceeds to the Company from the offerings, after deducting the placement agent’s fees and expenses and the Company’s 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$12.2 million.

During the fiscal yearthree months ended DecemberMarch 31, 2019,2021, the Company issued an aggregate of 409,875428,907 shares of its common stock pursuant to the exercise of warrants at a weighted average exercise price of approximately $2.67$9.71 per share. The net proceeds to the Company from the exercise of the warrants were approximately $1.1$4.2 million.

At-The-Market Offering 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 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. 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 of 1933, as amended. 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.

During the three months ended March 31, 2021, the Company offered and sold 278,800 shares of its common stock under the Offering Agreement for net proceeds of approximately $2.3 million.

Stockholders’ Equity totaled $31.4 million as of March 31, 2021 compared to $15.1 million as of December 31, 2020. There were 6,960,164 shares of common stock issued and outstanding as of March 31, 2021. There were no shares of preferred stock issued and outstanding as of March 31, 2021.

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,March 31, 2021 and 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 each of the three months ended June 30,March 31, 2021 and 2020 and 2019 was $0.1 million and $0.2 million, respectively.million. Stock-based compensation expense for personnel involved in the Company’s research and development activities for the three months ended June 30,March 31, 2021 and 2020 was $29,000 and 2019 was $24,000 and $26,000,$21,000, 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 sixthree months ended June 30,March 31, 2021 and 2020, and 2019, respectively:

The following summary represents option activity under the Company’s stock-based compensation plans for the sixthree months ended June 30, 2020:March 31, 2021:

As of June 30, 2020,March 31, 2021, the aggregate intrinsic value of outstanding stock options was $27,000.$0.4 million. The aggregate intrinsic value represents the total pretax intrinsic value (the difference between the Company’s closing stock price on June 30, 2020March 31, 2021 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.March 31, 2021. This amount changes based on the fair value of the Company’s stock.

As of June 30, 2020,March 31, 2021, unamortized stock-based compensation expense for all outstanding options was $1.1$1.9 million, which is expected to be recognized over a remaining weighted average vesting period of 2.83.3 years.

Drug Supplier Project Plan– Total commitments for the Company’s drug supplier project plan are $1.1were $2.6 million as of June 30, 2020,March 31, 2021, comprised of $0.7$1.3 million tofor the manufacturermanufacture of prexigebersen, BP1002, and BP1002BP1003 drug products, $0.3$1.1 million for manufacture of the Company’s Grb2 Bcl-2, and STAT3 drug substances,substance, $0.1 million for manufacturing development and $0.1 million for manufacturing development.testing services. The Company expects to incur $0.7$1.7 million of these commitments over the next 12 months.

As previously disclosed, on June 24, 2015, the Company entered into a Controlled Equity Offering^SM 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, 2019.2020. 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.activity and delays in the manufacture of our drug requirements by contracted third-party manufacturers. 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.developed and deployed. 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, 2019,2020, 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 7080 patients, the Company’sour 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), which targets growth factor receptor-bound protein 2 (Grb2), 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,The interim data released on March 6, 2019 showed that 11 (65%) of the 17 evaluable patients had a response, including five (29%) who achieved complete remission (“CR”), including one CR with incomplete hematologic recovery (“CRi”) and one morphologic leukemia free state, and six (35%) stable disease responses, including two patients who had greater than a 50% reduction in bone marrow blasts. However, DNA hypomethylating agents are now the most frequently used agents in the treatment of elderly AML patients in the U.S. and Europe. As a result, Stage 2 of the Phase 2 trial in AML was amended to remove the combination treatment of prexigebersen and LDAC and replace it with the combination treatment of prexigebersen and decitabine, a DNA hypomethylating agent, for treatment of a second cohort of untreated AML patients was added to the clinical trialpatients. Since decitabine is also used as a treatment 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”)relapsed/refractory AML 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 patients was also added to the study.

The U.S. Food and high risk MDS patients for treatment with prexigebersen and decitabine and (iv) following successful completionDrug Administration (“FDA”) recently granted approval of a safety segment treating AML and MDS patients with prexigebersenvenetoclax in combination with LDAC, decitabine addor azacytidine (the latter two drugs are DNA hypomethylating agents) as frontline therapy for newly diagnosed AML in adults who are 75 years or older, or who have comorbidities precluding intensive induction chemotherapy. We believe this recent approval of the frontline venetoclax toand decitabine combination therapy provides an opportunity for combining prexigebersen with the combination therapy for 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 inde novo AML and MDS patients in Stage 2 of this Phase 2 clinical trial.

In addition, preclinicalpatients. 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 believeswe believe 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,Accordingly, we submitted the amendment forfurther amended 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 combinationvenetoclax.

Bio-Path’s approved amended Stage 2 for this Phase 2 clinical trial currently has three cohorts of prexigebersen and decitabine.patients. The FDA requested that the treatment of MDSfirst two cohorts will treat 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.

venetoclax. 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 havingfirst cohort will include untreated AML patients, and the second havingcohort will include relapsed/refractory AML patients, both treated withpatients. Finally, the triple combination of decitabine, venetoclax and prexigebersen, and a third cohort ofwill treat relapsed/refractory AML patients who are venetoclax resistantvenetoclax-resistant or intolerant, treated-intolerant with the two-drug combination of decitabineprexigebersen and prexigebersen.decitabine. 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 resistantvenetoclax-resistant or intolerant,-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 beis the national coordinating Principal Investigator for the Phase 2 trial. Dr. Roboz is a 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.trial.

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 incorporatesOn April 5, 2021, we announced 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 onesuccessful completion of the most common typesafety run-in of gynecologic malignancies,Stage 2 of the Phase 2 clinical study. In the safety run-in of the triple combination, six evaluable patients were treated with approximately 50%the combination of all cases occurring in women olderprexigebersen, decitabine and venetoclax. These patients included four relapsed/refractory AML patients, and two newly diagnosed AML patients. In the preliminary safety data review, five of the patients (83%) responded to treatment, including four (67%) achieving CR and one (17%) achieving CRi. Recent publications provide that CR rates to combination treatment with decitabine and venetoclax (but without prexigebersen) are 42 to 52% for relapsed/refractory AML patients and 0 to 39% for relapsed/refractory secondary AML patients. Response rates to frontline treatment with decitabine and venetoclax (but without prexigebersen) are 62 to 71% for newly diagnosed AML patients.  These preliminary data showed the treatment was well-tolerated and there were no dose limiting toxicities attributed to prexigebersen. Three patients remained on treatment for more 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.one cycle.

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 INDInvestigational New Drug (“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 bebeing 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 InstituteInstitute. Ian W. Flynn, MD is the national coordinating Principal Investigator for the Phase 1 trial. Dr. Flynn serves as the director of lymphoma research at the Sarah Cannon Research Institute. On November 19, 2020, we announced the enrollment and is now open for enrollment.dosing of the first patient in the Phase 1 clinical trial.

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)(“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 advancedpancreatic cancer patient is about sixthree to 15six months from diagnosis. We expect to complete several IND enabling studies of BP1003 in 2020.2021. If those studies are successful, our goal is to file an IND in late 20202021 for the first-in-humans Phase 1 study of BP1003 in patients with refractory/refractory, metastatic solid tumors, including pancreatic NSCLCcancer and colorectal cancers.NSCLC.

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 IND application to initiate a Phase 1 clinical trial of prexigebersen-A in patients with solid tumors, including ovarian, endometrial, 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 2021.

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

Our patent portfolio currently includes three issued patents in the U.S. for claims related to DNAbilize®:

In addition, the United States Patent and Trademark Office (“USPTO”) issuedhas granted a patent for claims related to DNAbilize®, including itstreatment methods using the Company’s lead product candidate, prexigebersen, in combination with either a cytidine analogue, such as decitabine, or the Bcr-Abl tyrosine kinase inhibitors dasatinib and nilotinib. This patent was issued as U.S. Patent No. 10,927,379 on February 23, 2021. The patent will offer target-specific protection for on-going clinical trials using prexigebersen in combination with decitabine as a treatment for AML. We have four additional pending patent applications for compositions and methods of use in the treatment of cancers, autoimmune diseasesfor specific drug targets. We continue our efforts to build protection around our technology as it safeguards our platform technology and infectious diseases. Thistarget-specific technology, is the second patent issueda deterrent to the Company.would-be competitors and creates value around our core competencies.

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,March 31, 2021, we had an accumulated deficit of $61.7$69.7 million. Our net loss was $2.0$2.4 million and $2.5$3.3 million for the three months ended June 30,March 31, 2021 and 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:

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”).incurred. 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:

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, 2020March 31, 2021 to the Three Months Ended June 30, 2019March 31, 2020

Revenue. We had no revenue for each of the three months ended March 31, 2021 and 2020.

Research and Development Expense. Our research and development expense for the three months ended June 30, 2020March 31, 2021 was $1.0$1.3 million, a decrease of $0.5$0.7 million compared to the three months ended June 30, 2019.March 31, 2020. The decrease in research and development expense was primarily due to decreased preclinical expense related to timing of activities relatedfor BP1003 as well as decreased clinical trial expense due to timing of activities for our Phase 2 clinical trial of prexigebersen in AML.AML and our Phase 1 clinical trial of BP1002 in lymphoma. The following table sets forth our research and development expenses (in thousands):