For the transition period from
toCommission File Number: 001-37758
MOLECULIN BIOTECH, INC. | |||||||||||||
(Exact name of registrant as specified in its charter) | |||||||||||||
Delaware | 2834 | 47-4671997 | |||||||||||
(State or Other Jurisdiction of Incorporation or Organization) | (Primary Standard Industrial Classification Code Number) | (IRS Employer Identification Number) | |||||||||||
5300 Memorial Drive, | Suite 950 | ||||||||||||||
Houston, | TX | 77007 | |||||||||||||
(Address of principal executive offices) | (Zip Code) | ||||||||||||||
713-300-5160
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
Indicate by check mark whether the registrant has submitted electronically and posted to its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Registration S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.filer, a smaller reporting company or an emerging growth company. See definitiondefinitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and large accelerated filer”“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | Smaller reporting company | |||||||
Non-accelerated filer | Emerging growth company | |||||||
Accelerated filer ☐ | ||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol (s) | Name of each exchange on which registered | ||||||
Common Stock, par value $0.001 per share | MBRX | The NASDAQ Stock Market LLC |
The registrant had 21,136,059had 28,578,338 shares of common stock outstanding at November 1, 2017.May 4, 2022.
Table of Contents Page Item 1. Condensed Consolidated Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021 Notes to Condensed Consolidated Financial Statements (unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Item 4. Item 1. Item 1A. Item 2. Item 3. Item 4. Item 5. Item 6.Form 10-QFor the quarterly period ended September 30, 2017
Condensed Consolidated Balance Sheets (in thousands, except for (unaudited) March 31, December 31, 2022 2021 Prepaid expenses and other current assets Furniture and equipment, net Operating lease right-of-use asset Accounts payable Accrued expenses and other current liabilities Operating lease liability - long-term, net of current portion Warrant liability - long-term Stockholders' equity Preferred stock, $0.001 par value; 5,000,000 shares authorized, no shares issued or outstanding Common stock, $0.001 par value; 100,000,000 shares authorized; 28,578,338 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively Accumulated other comprehensive income See accompanying notes to Condensed Consolidated Statements of Operations (in thousands, except share and per share (unaudited) Three Months Ended March 31, 2022 2021 Revenues Operating expenses: Research and development General and administrative Depreciation and amortization Total operating expenses Loss from operations Other income: Gain from change in fair value of warrant liability Other income, net Interest income, net Net loss Net loss per common share - basic and diluted Weighted average common shares outstanding, basic and diluted Net Loss Other comprehensive income (loss): Foreign currency translation Comprehensive loss See accompanying notes to Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Three Months Ended March 31, 2022 2021 Cash flows from operating activities: Net loss Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization Stock-based compensation Change in fair value of warrant liability Operating lease, net Changes in operating assets and liabilities: Prepaid expenses and other current assets Accounts payable Accrued expenses and other current liabilities Net cash used in operating activities Cash flows from investing activities: Purchase of fixed assets Net cash used in investing activities Cash flows from financing activities: Proceeds from exercise of warrants Proceeds from sale of common stock, net of issuance costs Net cash provided by financing activities Effect of exchange rate changes on cash and cash equivalents Net change in cash and cash equivalents Cash and cash equivalents, at beginning of period Cash and cash equivalents, at end of period Supplemental disclosures of cash flow information: Cash paid for taxes See accompanying notes to Condensed Consolidated Statements of Stockholders’ Equity (in thousands, except for (unaudited) Three Months Ended March 31, 2022 Common Stock Common Stock Subscribed Shares Par Value Amount Shares Par Value Amount Additional Paid-In Capital Accumulated Deficit Other Comprehensive Income (Loss) Subscription Receivable Stockholder's Equity Balance, December 31, 2021 Stock-based compensation Consolidated net loss Cumulative translation adjustment Balance, March 31, 2022 Three Months Ended March 31, 2021 Common Stock Common Stock Subscribed Accumulated Shares Par Value Amount Shares Par Value Amount Additional Paid-In Capital Accumulated Deficit Other Comprehensive Income (Loss) Subscription Receivable Stockholders' Equity Balance, December 31, 2020 Issuance of common stock, net of issuance costs of $6,159 Reverse stock split Warrants exercised Stock-based compensation Consolidated net loss Cumulative translation adjustment Balance, March 31, 2021 See accompanying notes to Notes to the Unaudited Condensed Consolidated Financial Statements 1. Nature of Business The terms In 2019, the Company sublicensed essentially all of the rights to its technologies in over 25 countries in Europe and Asia to WPD Pharmaceuticals Sp.z o.o. (WPD or WPD Pharmaceuticals) in exchange for a minimum amount of externally funded collaboration on development in Europe over a certain amount of time. This sublicense was last amended in December 2021. Also in 2019, the Company sublicensed its technologies to Animal Life Sciences, Inc. (ALI), to enable research and commercialization for non-human use and share development data. As part of this agreement, ALI issued to the Company a 10% interest in ALI. The Company has three core technologies, based substantially on discoveries made at and licensed from MD Anderson. Having six drug candidates, three of which have The Company's core technologies consist of the following: a) Annamycin; b) WP1066 Portfolio; and c) WP1122 Portfolio. The Company has six drug candidates, representing all three The Company does not have manufacturing facilities and all manufacturing activities are contracted out to third parties. Additionally, the Company does not have a 2. Basis of Reverse Stock Split - On January 29, 2021, the Company filed a Certificate of Amendment to Basis of Presentation – Unaudited Interim Condensed Consolidated Financial Information - Principles of Consolidation - The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP. The Company views its operations and manages its business in one operating segment. All long-lived assets of the Company reside in the U.S. Significant Accounting Policies - The Company's significant accounting policies are described in Note 2,Basis of Presentation, principles of consolidation and significant accounting policies, to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to the significant accounting policies during the three months ended March 31, 2022, other than those noted below. Use of Estimates Liquidity and Financial Condition - Cash and Cash Equivalents - Financial instruments that potentially subject the Company to a Prepaid Expenses and March 31, 2022 December 31, 2021 Vendor prepayments and deposits Prepaid sponsored research Prepaid insurance Related party receivables Non-trade receivables Total prepaid expenses and other current assets Fair Value of Financial Instruments - The Company has categorized Assets and liabilities recorded in the balance sheets at fair value are categorized based on a hierarchy of inputs as follows: Level 1 – Unadjusted quoted prices in active markets of identical assets or liabilities. Level 2 – Quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 – Unobservable inputs for the asset or liability. The Company’s financial assets and liabilities recorded at fair value on a recurring basis include the fair value of The following table provides Description Fair Value Level 1 Level 2 Level 3 Fair value of warrant liability as of March 31, 2022: Fair value of warrant liability as of December 31, 2021: The Three Months Ended March 31, 2022 Warrant Liability Long-Term Warrant Liability Total Balance, December 31, 2021 Change in fair value - net Balance, March 31, 2022 Loss Per Common Share - Basic net loss per common share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding during the period. For purposes of this calculation, options to purchase common stock, restricted stock units subject to vesting and warrants to purchase common stock are considered to be common stock equivalents. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be Subsequent Events - Recent Accounting Pronouncements In In The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying condensed consolidated financial statements. 3. Accrued expenses and other current liabilities consist of the March 31, 2022 December 31, 2021 Accrued research and development Accrued payroll and bonuses Accrued legal, regulatory, professional and other Accrued liabilities due to related party Operating lease liability - current Total accrued expenses and other current liabilities Additionally, accounts payable includes $21,000 and 4. Liability The Company The assumptions used in determining the March 31, 2022 December 31, Risk-free interest rate 1.5% to 2.4% 0.1% to 1.1% Volatility 50.0% to 112.2% 71.8% to 114.5% Expected life (years) 0.9 to 3.4 0.1 to 3.6 Dividend yield —% —% A summary of Number of Shares Range of Warrant Exercise Weighted Average Weighted Average Remaining Contractual Under Warrant Price per Share Exercise Price Life (Years) Balance at January 1, 2022 Expired Balance at March 31, 2022 Exercisable at March 31, 2022 For a summary of Equity Classified Warrants In April 2021, the Company At March 31, 2022, the Company The Company recorded stock compensation expense for 5. Equity 2022 Stock Issuances The Company did not make any stock issuances in the 2021 Stock Issuances In February 2021, the Company entered into an Stock-Based Compensation and Outstanding Awards The 2015 Stock Plan provides for the grant of stock options, stock awards, stock unit awards, and stock appreciation rights. As of March 31, 2022, there were 19,961 shares remaining to be issued under the 2015 Stock Plan. Stock-based compensation for the three months ended March 31, 2022 and 2021, respectively (in thousands): Three Months Ended March 31, 2022 2021 General and administrative Research and development Total stock-based compensation expense During the three months ended March 31, 2022, the Company granted 21,667 stock options with a weighted average exercise price of $1.61 per share that vest over a three to four-year period from the grant date on a straight-line basis over the requisite service period for each separately vesting portion of the 6. Income Taxes Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company does not expect to pay any significant federal, state, or The Company recorded 7. Commitments and Contingencies In addition to the commitments and contingencies described elsewhere in these notes, see below for a discussion of the Company's commitments and contingencies as of March 31, 2022. Lease Obligations Payable The Three Months Ended March 31, 2022 2021 Lease cost: Operating lease cost Variable lease cost Total The Company recorded approximately $10,000 in sublease income from a related party for the three months ended March 31, 2022 and 2021, respectively. Sublease income is recorded as other income, net on the Company's condensed consolidated statement of operations and comprehensive loss. Operating cash flows from operating leases was $35,000 and $34,000 for the three months ended March 31, 2022 and 2021, respectively. Licenses MD Anderson - Total expenses related to HPI - On March 16, 2020, the Company entered into Sponsored Research Agreements - MBI has a Sponsored Laboratory Study Agreement License Terminations - In February 2022, the Company and Exploration Invest Pte Ltd. (Exploration) entered into a license termination agreement pursuant to which the Company agreed to pay Exploration $400,000 to terminate certain License Agreements and extend confidentiality requirements until the 10-year anniversary of 8. Subsequent Events In addition to the subsequent events discussed elsewhere in these notes, see below for a discussion of our In April 2022, the Company This Form 10-Q, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations, Forward-looking statements include, but are not limited to, statements about: • World-wide events including the war in Ukraine, the COVID-19 pandemic, and the general supply chain shortages effects on our clinical trials, clinical drug candidate supplies, preclinical activities and our ability to raise future financing; • Our ability to obtain additional funding to commence or continue our clinical trials, fund operations and develop our product candidates; • The need to obtain and retain regulatory approval of our drug candidates, both in the United States and in Europe, and in countries deemed necessary for future trials; • Our ability to complete our clinical trials in a timely fashion and within our expected budget and resources; • Compliance with obligations under intellectual property licenses with third parties; • Any delays in regulatory review and approval of drug candidates in clinical development; • Our ability to commercialize our drug candidates; • Market acceptance of our drug candidates; • Competition from existing therapies or new therapies that may emerge; • Potential product liability claims; • Our dependency on third-party manufacturers to successfully, and timely, supply or manufacture our drug candidates for our preclinical work and our clinical trials; • Our ability to establish or maintain collaborations, licensing or other arrangements; • The ability of our sublicense partners to successfully develop our product candidates in accordance with our sublicense agreements; • Our ability and third parties’ abilities to protect intellectual property rights; • Our ability to adequately support future growth; and • Our ability to attract and retain key personnel to manage our business effectively. We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements. Our Business We are a Core Technologies Our core technologies consist of the following: a) Annamycin, a “next generation” anthracycline designed to Recent Business Developments Below are recent business developments. Annamycin Received Allowance to Proceed with Phase 1/2 Study of Annamycin in On May 5, 2022, we announced that we received allowance from the Update on our MB-107 Phase 1b/2 Study of Annamycin in patients with soft tissue sarcomas metastatic to the lung As of May 2, 2022, we have five US sites active in the MB-107 trial. Enrollment continues in the 390 mg/m2 dose level cohort, with two subjects enrolled to date in the cohort expansion (5 of 6 total in the cohort enrolled and treated). One subject remains in screening with intent to initiate therapy in the mid-May timeframe, as long as all eligibility criteria have been met. Presentation of Positive Preclinical Annamycin Data at the AACR 2022 Annual Meeting On April 8, 2022, we announced that preclinical data of Annamycin tested in syngeneic models of metastatic colorectal cancer established in lungs or liver was accepted for poster presentation at the American Association for Cancer Research (AACR) Annual Meeting 2022, which was held April 8-13, 2022, in New Orleans, Louisiana. The objective of this animal study was to assess the efficacy of Annamycin in experimental colorectal cancer liver and lung metastasis models. The efficacy of Annamycin was tested in syngeneic models of metastatic colorectal cancer established in lungs or liver. Annamycin exhibited robust antitumor activity in both models. We believe that this study demonstrating efficacy of Annamycin in colorectal cancer models provides compelling evidence for further preclinical development aimed at initiation of clinical studies in metastatic colorectal cancer patients. WP1066 Received IND Clearance to Conduct Phase 1 Study of WP1066 On April 21, 2022, we announced that we received allowance from the WP1122 Received Approval from the UK’s Medicines and Healthcare Products Regulatory Agency (MHRA) for Protocol Amendment to We announced on May 10, 2022 that Corporate Licensing We are currently in discussions with MD Anderson regarding an amendment to Engages Wolfram C. M. Dempke, MD, PhD, MBA as On Results of Operations The following table sets forth, for the periods indicated, data derived from our statement of Moleculin Biotech, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended March 31, 2022 2021 Revenues Operating expenses: Research and development General and administrative Depreciation and amortization Total operating expenses Loss from operations Other income: Gain from change in fair value of warrant liability Other income, net Interest income, net Net loss Three Months Ended Research and Development Expense. General and Administrative Expense. Gain from Change in Fair Value of Warrant Liability. Liquidity and Capital Resources The following table sets forth our primary sources and uses of cash for the period Three Months Ended March 31, 2022 2021 Net cash used in operating activities Net cash used in investing activities Net cash provided by financing activities Effect of exchange rate changes on cash and cash equivalents Net (decrease) increase in cash and cash equivalents As of March 31, 2022, there was $0.3 million of cash on hand in a bank account in Australia and we know of no related limitations impacting our liquidity in Australia. Cash used in operating activities Cash used in Cash provided in financing activities We did not issue any stock in the In February 2021, we completed an underwritten public offering In January 2021, we issued 468,684 shares for gross proceeds of $2.9 million using our 2020 ATM Agreement with Oppenheimer & Co., Inc. We terminated the 2020 ATM Agreement on February 2, 2021. Additionally, during the first quarter of 2021, 10,000 shares were issued due to the exercise of warrants We believe that our existing cash and cash equivalents as of March 31, 2022 will be sufficient to meet our projected operating requirements, which include a potential increase over our current R&D rate of expenditures, into the Critical Accounting Policies and Significant Judgments and Estimates There have been no material Not applicable Evaluation of Disclosure Controls and We maintain disclosure controls and procedures designed to ensure that material information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that material information is accumulated and communicated to our management, including our Chief Executive Officer Changes in There For information regarding factors that could affect our results of operations, financial condition and liquidity, refer to the section entitled “Risk Factors” in Part I, Item 1A in our annual report on Form 10-K for the year ended December 31, We may be required to make significant payments under our license agreements with MD Anderson. Under our agreements with MD Anderson associated with Annamycin, the WP1122 Portfolio and the WP1066 Portfolio, we are responsible for certain license, milestone and royalty payments over the course of the agreements. Annual license fees can cost as high as $0.1 million depending upon the anniversary, milestone payments for the commencement of phase II and phase III clinical trials can cost as high as $0.5 million. Other milestone payments for submission of an NDA to the FDA and receipt of first marketing approval for sale of a license product can be as high as $0.6 million. Royalty payments can range in the single digits as a percent of net sales on drug products or flat fees as high as $0.6 million, depending upon certain terms and conditions. If these milestone or other non-royalty obligations become due, we may not have sufficient funds available to meet our obligations. If we fail to meet our payment obligations, our license agreements could be terminated, which would materially and adversely affect our business operations and financial condition. We will not be able to protect our intellectual property rights throughout the world. We are dependent on patents licensed with MD Anderson. Filing, prosecuting and defending patents in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States may be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we will not be able to prevent third parties from practicing our inventions in all countries outside the United States or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These infringing products may compete with the product candidates we may develop, without any available recourse. The laws of some other countries do not protect intellectual property rights to the same extent as the laws of the United States. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries. In addition, the legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection. As a result, many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. Because the legal systems of many foreign countries do not favor the enforcement of patents and other intellectual property protection, it could be difficult for us to stop the infringement, misappropriation or violation of our patents or our licensors’ patents or marketing of competing products in violation of our proprietary rights. Proceedings to enforce our intellectual property and other proprietary rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents or the patents of our licensors at risk of being invalidated or interpreted narrowly, could put our patent applications or the patent applications of our licensors at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license. None. Not applicable. None. Exhibit Description 31.1* Certification of Principal Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 31.2* 32.1* 32.2* 101.INS* Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document * Filed herewith. Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MOLECULIN BIOTECH, INC. Date: May 11, 2022 By: /s/ Walter V. Klemp Walter V. Klemp, Chief Executive Officer and Chairman (Principal Executive Officer) By: /s/ Jonathan P. Foster, Executive (Principal Financial and Accounting Officer)1.1 FINANCIAL INFORMATIONStatements.parshare and per share amounts)data) September 30, 2017 December 31, 2016 (Unaudited) Assets Current assets: Cash and cash equivalents $ 8,736 $ 5,007 $ 66,104 $ 70,903 Prepaid expenses and other 727 215 1,156 1,594 Total current assets 9,463 5,222 67,260 72,497 Furniture and equipment, net of accumulated depreciation of $14 and $6, respectively 22 23 312 338 Intangible assets 11,148 11,148 11,148 11,148 81 107 Total assets $ 20,633 $ 16,393 $ 78,801 $ 84,090 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable and accrued expenses $ 1,089 $ 1,069 Convertible notes payable — 276 Warranty liability 743 — $ 2,224 $ 1,364 2,610 2,258 Total current liabilities 1,832 1,345 4,834 3,622 Long-term deferred compensation – related party 150 88 50 63 1,252 1,412 Total liabilities 1,982 1,433 6,136 5,097 Commitments and contingencies (Note 7) — — Stockholders’ equity Preferred stock, $0.001 par value; 5,000,000 shares authorized, no shares issued or outstanding — — Common stock, $0.001 par value; 75,000,000 shares authorized, 20,822,214 issued outstanding at September 30, 2017 and 12,164,852 issued and outstanding at December 31, 2016 21 12 0 0 29 29 Additional paid-in capital 29,925 19,623 152,260 151,733 53 41 Accumulated deficit (11,295 ) (4,675 ) (79,677 ) (72,810 ) Total stockholders’ equity 18,651 14,960 72,665 78,993 Total liabilities and stockholders’ equity $ 20,633 $ 16,393 $ 78,801 $ 84,090 theunaudited condensed consolidated financial statements.(Unaudited)amounts) $ 0 $ 0 4,620 4,105 2,422 1,939 32 44 7,074 6,088 (7,074 ) (6,088 ) 160 1,577 5 9 42 57 $ (6,867 ) $ (4,445 ) $ (0.24 ) $ (0.20 ) 28,578,338 21,808,565 $ (6,867 ) $ (4,445 ) 12 (4 ) $ (6,855 ) $ (4,449 ) Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Revenues $ — $ — $ — $ — Operating expenses: Research and development 1,061 497 2,260 616 General and administrative 1,338 924 2,987 1,848 Depreciation 5 1 13 2 Total operating expenses 2,404 1,422 5,260 2,466 Loss from operations (2,404 ) (1,422 ) (5,260 ) (2,466 ) Other income (expense): Loss from change in fair value of warrant liability (470 ) — (2,753 ) — Gain from settlement of liability — — 149 — Gain from expiration of warrants — — 1,238 — Other income 9 — 8 — Interest expense (1 ) (10 ) (2 ) (37 ) Net loss $ (2,866 ) $ (1,432 ) $ (6,620 ) $ (2,503 ) Net loss per common share – basic and diluted $ (0.14 ) $ (0.12 ) $ (0.37 ) $ (0.28 ) Weighted average common shares outstanding – basic and diluted 20,534,720 11,579,239 17,683,441 9,066,804 theunaudited condensed consolidated financial statements.(Unaudited) $ (6,867 ) $ (4,445 ) 32 44 527 405 (160 ) (1,577 ) 90 113 438 299 860 799 275 738 (4,805 ) (3,624 ) (6 ) 0 (6 ) 0 0 63 0 74,685 0 74,748 12 (4 ) (4,799 ) 71,120 70,903 15,173 $ 66,104 $ 86,293 $ 109 $ 0 Nine Months Ended September 30, 2017 2016 Cash Flows from Operating Activities: Net loss $ (6,620 ) $ (2,503 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 13 2 Stock-based compensation 487 209 Deferred CEO compensation 62 88 Change in fair value of warrant liability 2,753 — Gain in settlement of liability (149 ) — Gain from expiration of warrants (1,238 ) — Other (9 ) — Changes in operating assets and liabilities: Prepaid expenses (518 ) (245 ) Accounts payable and accrued expenses 285 (147 ) Net Cash Used in Operating Activities (4,934 ) (2,596 ) Cash Flows from Investing Activities: Purchase of fixed assets (12 ) (10 ) Purchase paid for acquisition of Moleculin, LLC, net with cash acquired — (100 ) Net Cash Used in Investing Activities (12 ) (110 ) Cash Flows from Financing Activities: Proceeds from notes payable — 165 Payments on note payable — (470 ) Proceeds from exercise of warrants 3,808 — Proceeds from sale of common stock units, net of cash stock issuance costs 4,867 9,167 Net Cash Provided by Financing Activities 8,675 8,862 Net change in cash and cash equivalents 3,729 6,156 Cash and cash equivalents, at beginning of period 5,007 28 Cash and cash equivalents, at end of period $ 8,736 $ 6,184 Supplemental disclosures of cash flow information: Cash paid for interest $ 2 $ 48 Cash paid for income taxes $ — $ — Supplemental disclosure of non-cash investing and financing activities: Common stock issued for conversion of debt $ 302 $ 342 Common stock issued for services provided $ 89 $ — Common stock issued to acquire Moleculin, LLC $ — $ 9,774 theunaudited condensed consolidated financial statements.(Unaudited)shares and per unit) Common Stock Number Amount Balance at December 31, 2016 12,164,852 $ 12 $ 19,623 $ (4,675 ) $ 14,960 Issued for cash – sale of units at $1.35 per unit, net of stock issuance costs of $550 3,710,000 4 313 317 Warrants exercised, net of issuance costs of $80 2,703,434 3 8,753 8,756 Issued for cash - sale of common stock in ATM offering, net of issuance costs of $47 154,121 — 360 360 Stock-based compensation 487 487 Issued for convertible debt 2,010,640 2 300 302 Issued for settlement of service 79,167 — 89 89 Net loss (6,620 ) (6,620 ) Balance at September 30, 2017 20,822,214 $ 21 $ 29,925 $ (11,295 ) $ 18,651 Accumulated 28,578,338 $ 29 0 $ 0 $ 151,733 $ (72,810 ) $ 41 $ 0 $ 78,993 — 0 — 0 527 0 0 0 527 — 0 — 0 0 (6,867 ) 0 0 (6,867 ) — 0 — 0 0 0 12 0 12 28,578,338 $ 29 0 $ 0 $ 152,260 $ (79,677 ) $ 53 $ 0 $ 72,665 11,536,720 $ 69 26,966 $ 0 $ 74,671 $ (56,916 ) $ 65 $ (129 ) $ 17,760 16,883,420 18 (26,966 ) 0 74,537 0 0 129 74,684 14,285 (60 ) 0 0 60 0 0 0 0 10,000 1 0 0 115 0 0 0 116 — 0 — 0 405 0 0 0 405 — 0 — 0 0 (4,445 ) 0 0 (4,445 ) — 0 — 0 0 0 (4 ) 0 (4 ) 28,444,425 $ 28 0 $ 0 $ 149,788 $ (61,361 ) $ 61 $ 0 $ 88,516 theunaudited condensed consolidated financial statements.(Unaudited)and Liquidity“MBI”"MBI" or the “Company”"the Company", “we”"we", “our”"our", and “us”"us" are used herein to refer to Moleculin Biotech, Inc. MBI is a clinical stageclinical-stage pharmaceutical company, organized as a Delaware corporation in July 2015, towith its focus is on the treatment of highly resistant cancers and viruses through the development of anti-cancerits drug candidates, some of which are based substantially on license agreements withdiscoveries licensed from The University of Texas System on behalf of the M.D.MD Anderson Cancer Center, which we referthe Company refers to as MD Anderson.We currently MBI formed Moleculin Australia Pty. Ltd., (MAPL), a wholly owned subsidiary in June 2018, to perform certain preclinical development in Australia. This has enabled the Company to realize the benefits of certain research and development tax credits in Australia. In July 2021, MBI formed Moleculin Amsterdam B.V., a wholly owned subsidiary, primarily to act as its legal representative for clinical trials in Europe. fournow shown human activity in clinical trials, the Company believes that success in its lead program, Annamycin, has allowed and will allow further pipeline expansion into multiple high-value oncology indications. substantially different approaches core technologies, and three of those have shown human activity in clinical trials. In the US and Europe, the Company has conducted, are currently, or plans in the near term to treating cancer. Liposomalbe conducting clinical trials for its drug candidates - Annamycin, WP1066,WP1220, and WP1122. All trials are or were in the Phase 1 portion except the WP1220 trial, which we referwas a proof-of-concept trial. In 2021 and early 2022, there were also three "right-to-try" (or their foreign equivalent) uses of Annamycin and WP1066. The Company plans to as Annamycin,conduct additional trials and is in the process of obtaining the appropriate regulatory approval and beginning those trials. The Company utilizes its own internal resources and funds to conduct some of these trials and also has trials being conducted via physician-sponsored trials which utilizes primarily external funds, usually grant funds, which are not presented in the financial statements.chemotherapy designedsales organization. The Company’s overall strategy is to inhibitseek potential outlicensing opportunities with development/commercialization strategic partners who are better suited for the replicationmarketing, sales and distribution of DNAits drugs, if approved.rapidly dividing cells. WP1122 is an inhibitorpresentation, principles of glycolysis intendedconsolidation, significant accounting policies and liquiditycutits amended and restated certificate of incorporation with the Secretary of State and the State of Delaware to effect a reverse stock split of all the issued and outstanding shares of the fuel supplyCompany's common stock at a ratio of tumor cells, which are often overly dependent on glycolysis1 for 6. The accompanying condensed consolidated financial statements and notes to the condensed consolidated financial statements give retroactive effect to the reverse stock split for all periods presented. Certain amounts in the financial statements, the notes thereto, and elsewhere in the Form 10-Q may be slightly different than previously reported due to rounding up of fractional shares as compared to healthy cells. And, finally, WP1066 and WP1220, have shown capability, in in vivo testing, of altering the cell signaling associated with tumors.Annamycin is an anthracycline being studied for the treatment of relapsed or refractory acute myeloid leukemia, or AML. In August 2015, the Company acquired the rights and prior development data regarding Annamycin and the prior Annamycin investigative new drug application (“IND”) with the U.S. Food and Drug Administration (“FDA”), including all trade secrets, know-how, confidential information and other intellectual property rights. Annamycin had been in clinical trials pursuant to an IND filed with the FDA by a prior drug developer, which was terminated when that developer ceased activity for financial reasons. Our review of that prior clinical data leads us to believe that Annamycin may have greater potential for efficacy and safety in relapsed or refractory AML patients than currently available therapies.Because the prior developer of Annamycin allowed their IND to lapse, we were required to submit a new IND for continued clinical trials with Annamycin, which the FDA was allowed to proceed on September 22, 2017. The Company announced on October 3, 2017 that it had signed an agreement with a hospital in Poland to participate in this trial, which will be our first clinical site, assuming the receipt of regulatory approval in Poland. The data presented in our successful IND submission to FDA were submitted to Polish regulatory authorities on October 23, 2017, in support of our request for Clinical Trial Authorization (“CTA”) in that country. Depending on the timingresult of the CTA approval, we could begin treating patients in a Phase I/II clinical trial, as early as late December of 2017. The Phase I dose-ranging portion of this trial is designed to establish a new Recommended Phase 2 Dosage, or RP2D, which we believe was not adequately explored in previous trials.The Annamycin drug substance is no longer covered by any existing patent protection. On July 18, 2017, the Company announced that it had signed a new technology license agreement with MD Anderson Cancer Center based on new patent applications that the Company intends to file relating to Annamycin. These patent applications are related to the formulation, synthetic process and reconstitution related to our Annamycin drug product candidate, although there is no assurance that we will be successful in obtaining such patent protection.On March 21, 2017, we received notice that the FDA had granted us Orphan Drug designation for Annamycin for the treatment of AML. Orphan Drug status could entitle us to market exclusivity of up to 7 and 10 years from the date of approval of a New Drug Application (“NDA”) in the United States. If we obtain similar designation in the European Union (“EU”), we could be entitled to 10 years of market exclusivity there from the date of approval of a Marketing Authorization Application (“MAA”) in the United States and the European Union (“EU”), respectively. Separately, the FDA may also grant market exclusivity of up to 5 years with the approval of an active moiety (a “new chemical entity,” which we anticipate Annamycin would be), but there can be no assurance that such exclusivity will be granted.Our other drug development projects relate to two distinct portfolios of small molecules, which we refer to as the WP1066 Portfolio, focused on the modulation of key oncogenic transcription factors involved in the progression of cancer, and the WP1122 Portfolio, a suite of molecules targeting the metabolic processes involved in cancer in general, and glioblastoma (the most common form of brain tumor) and pancreatic cancer in particular. We have been granted royalty-bearing, worldwide, exclusive licenses for the patent and technology rights related to our WP1066 Portfolio and WP1122 Portfolio drug technologies, as these patent rights are owned by MD Anderson.During 2017, the Company announced the following progress on these two portfolios: 1) that it engaged a contract research organization (“CRO”) to prepare for a proof-of-concept trial in Poland to study the Company's drug candidate WP1220 (part of the WP1066 portfolio described above) for the treatment of cutaneous T-cell lymphoma; 2) the Company entered into collaborative agreements with the University of Bergen in Norway to test WP1122 in combination with another drug in the treatmentof brain tumors and separately to conduct further analysis on the capability of WP1066 to stimulate anti-tumor immune response: 3) the Company entered into an agreement with the Mayo Clinic to study WP1066 for the treatment of rare pediatric brain tumors: and 4) the Company agreed to assist MD Anderson in submitting an IND for the study of WP1066 in glioblastoma and melanoma that has metastasized to the brain, which MD Anderson filed on November 1, 2017.In accordance with FASB ASC Topic 280, Segment Reporting, we view our operations and manage our business as principally one segment. As a result, the financial information disclosed herein represents all the material financial information related to our principal operating segment.2. Summary of Significant Accounting PoliciesUnited States of America (“U.S. GAAP”)(U.S. GAAP) for financial information, and in accordance with the rules and regulations of the United StatesU.S. Securities and Exchange Commission (the “SEC”)(SEC) with respect to Form 10-Q10-Q and Article 8 of Regulation S-X.S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements furnished reflect all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company as of December 31, 2016 and for the period from July 28, 2015 (inception) to December 31, 20152021 and notes thereto contained in the Form 10-K10-K filed with the SEC on April 3, 2017.March 24, 2022.in Financial Statement Presentation - The preparation of these condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Going Concern Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of financial statements. Estimates are used in the following areas, among others: fair value estimates on intangible assets, warrants, and stock-based compensation expense, as well as accrued expenses and taxes. These financial statements have been prepared on a going concern basis, which assumes The Company is an early stage company and has not generated any revenues to date. As such, the Company will continueis subject to realize its assets and discharge its liabilities in the normal course of business. The continuationall of the Company as a going concern is dependent upon the ability of the Company to obtain necessary equity financing to continue operations and the attainment of profitable operations. As of September 30, 2017,risks associated with early stage companies. Since inception, the Company has incurred losses and negative cash flows from operating activities. For the three months ended March 31, 2022 and 2021, the Company incurred net losses of $6.9 million and $4.4 million, respectively, and had net cash flows used in operating activities of $4.8 million and $3.6 million, respectively. At March 31, 2022, the Company had an accumulated deficit of $11.3$79.7 million since inception,and cash and had not yet generated any revenue from operations. Additionally, management anticipates thatcash equivalents of $66.1 million. The Company expects its cash on hand as of September 30, 2017 isMarch 31, 2022 will be sufficient to fund its plannedthe Company's operations into but not beyond the near term. These factors raise substantial doubt regardingSuch projections are subject to changes in the Company’s internally funded preclinical and clinical activities, including unplanned preclinical and clinical activity. The Company does not expect to experience positive cash flows from operating activities in the near future and anticipates incurring operating losses for the next few years as it supports the development of its core technologies to the point of generating revenue, most likely via outlicensing, and continues to invest in research and development for additional applications of the Company's core technologies and potentially increase its pipeline of drug candidates. If the Company needs to raise additional capital in order to continue to execute its business plan, there is no assurance that additional financing will be available when needed or that management will be able to obtain financing on terms acceptable to the Company. A failure to raise sufficient capital could adversely impact the Company's ability to continueachieve its intended business objectives and meet its financial obligations as they become due and payable.going concern. Theseconcentration of credit risk consist of cash and cash equivalents. The Company maintains cash accounts principally at one financial statements do institution in the U.S., which at times, may exceed the Federal Deposit Insurance Corporation’s limit. The Company has not include experienced any adjustmentslosses from cash balances in excess of the insurance limit. The Company’s management does not believe the Company is exposed to significant credit risk at this time due to the recoverabilityfinancial condition of the financial institution where its cash is held.classificationOther Current Assets - Prepaid expenses and other current assets consist of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company may seek additional funding through a combination of equity offerings, debt financings, government or other third-party funding, commercialization, marketing and distribution arrangements, other collaborations, strategic alliances and licensing arrangements and delay planned cash outlays or a combination thereof. Management cannot be certain that such events or a combination thereof can be achieved. $ 557 $ 486 329 474 243 589 22 22 5 23 $ 1,156 $ 1,594 OurThe Company's financial instruments consist primarily of account payables,non-trade receivables, accounts payable, accrued expenses and aits warrant liability. The carrying amount of non-trade receivables, accounts payablespayable, and accrued expenses approximates their fair value because of the short-term maturity of such.We haveourits assets and liabilities that are valued at fair value on a recurring basis into three-levela three-level fair value hierarchy in accordance with U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1)1) and lowest priority to unobservable inputs (Level 3)3).our warrant liability discussed in Note 4. The fair value of this warrant liability is included in current liabilities on the accompanying financial statements as of September 30, 2017, as warrants are currently being exercised. the financial assets and liabilities reported at fair value and measured on a recurring basis at September 30, 2017:In thousandsDescription Fair value of warrant liability: 2017 $ 743 $ — $ — $ 743 $ 1,252 $ 0 $ 0 $ 1,252 $ 1,412 $ 0 $ 0 $ 1,412 following table provides a summarybelow of Level 3 liabilities (in thousands) begins with the valuation as of the beginning of the first quarter and then is adjusted for changes in fair value associated with the Level 3 liabilities for the quarter ended September 30, 2017:In thousands Balance, June 30, 2017 $ 1,185 $ — $ 1,185 Reclass of liability from long-term to current — — — Change in fair value - net 470 — 470 Expiration of warrants — — — Transfer in and out (exercise of warrants) (912 ) — (912 ) Balance, September 30, 2017 $ 743 $ — $ 743 The following table provides a summary of changes in fair value associated with the Level 3 liabilities for the nine months ended September 30, 2017:In thousands Balance, beginning of period December 31, 2016 $ — $ — $ — Issuances of warrants 2,453 1,690 4,143 Reclass of liability from long-term to current 1,846 (1,846 ) — Change in fair value - net 2,848 (95 ) 2,753 Transfers in and out (exercise of warrants) (5,166 ) 251 (4,915 ) Expiration of warrants (1,238 ) — (1,238 ) Balance, September 30, 2017 $ 743 $ — $ 743 The above table of Level 3 liabilities begins with the initial valuation given the issuances occurred in the first quarter of 2017 and adjusts the balances for changes that occurred during the current quarter and priorfirst quarter. The ending balance of the Level 3 financial instrument presented above represent ourrepresents the Company's best estimates and may not be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. $ 1,412 $ 1,412 (160 ) (160 ) $ 1,252 $ 1,252 anti-dilutive.antidilutive. For the three and nine months ended September 30, 2017, the Company’sMarch 31, 2022 and 2021, approximately 4.8 million and approximately 3.8 million, respectively, of potentially dilutive shares which were not included inexcluded from the calculationcomputation of net lossdiluted earnings per share included optionsdue to purchase 670,000 common shares and warrants to purchase 702,576 common shares as inclusion of these securities would have been anti-dilutive. Reclassifications – A reclassification was made to the December 31, 2016 financial statements to conform to the 2017 presentation. Such reclassification did not affect net loss as previously reported. Historically, accrued interest associated with “convertible notes payable” was included in the line item “accounts payable and accrued expense”. Management believes that these costs are best shown included in the amounts shown for “convertible notes payable” and, as such, a reclassification was made to the balance sheet for the year ended December 31, 2016 by reducing “accounts payable and accrued expenses” and increasing “convertible notes payable” by $0.02 million.Research and Development Costs - Research and development costs are expensed as incurred.statements were issued for subsequent events disclosure consideration and has noted events instatements. See Note 8 below.May 2014, August 2020, the Financial Accounting Standards Board, or FASB, issued Accounting StandardStandards Update, ("ASU"or ASU, No.2020-06, Debt with Conversion and Other Options (Subtopic 470-20) 2014-09, Revenue fromand Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) (ASU 2020-06). ASU 2020-06 simplifies the complexity associated with Customers (Topic 606), which will replace numerous requirements inapplying U.S. GAAP for certain financial instruments with characteristics of both liabilities and equity, including industry-specific requirements,convertible instruments and provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchangeentity's own equity. The guidance is effective for those goods or services. In August 2015, the FASB approved a proposal to defer the effective date of the guidance until annual and interim reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact that this standard will have on its financial statements at the time the Company starts to generate revenue or enters into other contractual arrangements, whichbeginning on January 1, 2022 and prescribes different transition methods for the Company does various provisions. The Company's adoption of this pronouncement effective January 1, 2022 did not expect in have a material impact on the near term.August 2014, May 2021, the FASB issued ASU 2014-15, PresentationNo.2021-04, Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Subtopic 470-50), Compensation - Stock Compensation (Topic 718), and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Issuer's Accounting for Certain Modifications or Exchanges of Financial Statements-Going Concern (Subtopic 205-40): DisclosureFreestanding Equity-Classified Written Call Options. ASU 2021-04 clarifies certain aspects of Uncertainties aboutthe current guidance to promote consistency among reporting of an Entity’s Ability to Continue as a Going Concern. Under the new guidance, management will be required to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosuresissuer's accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in certain circumstances. The provisions of this ASUupdate are effective for annual periods ending after December 15, 2016, and for annual and interim periods thereafter; early adoption is permitted. This disclosure is effective within these financial statements for the year ended December 31, 2016 and thereafter. Such disclosure did not impact the financial statements.In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. ASU 2016-01 is effectiveall entities for fiscal years beginning after December 15, 2017, 2021, including interim periods within those fiscal years. Early adoption is permitted for all entities, including adoption in an interim period. The Company is currently evaluating the impact that this standard will have on its financial statements.In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company is currently evaluating the impact that this standard will have on its financial statements.In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718). The new guidance changes the accounting and simplifies various aspects of the accounting for share-based payments to employees. The guidance allows for a policy election to account for forfeitures as they occur or based on an estimated number of awards that are expected to vest. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, with early adoption permitted. TheCompany's adoption of this standard on pronouncement effective January 1, 2017, 2022 did not have a significantmaterial impact on the Company’sCompany's condensed consolidated financial statements.In August 2016, the FASB issued ASU, Statement of Cash Flows (Topic 230). This ASU applies to all entities that are required to present a statement of cash flows under Topic 230. The amendments provide guidance on eight specific cash flow issues and includes clarification on how these items should be classified in the statement of cash flows and is designed to help eliminate diversity in practice as to where items are classified in the cash flow statement. Furthermore, in November 2016, the FASB issued additional guidance on this Topic that requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with earlier application permitted for all entities. We plan to adopt the provisions of this ASU for our fiscal year beginning January 1, 2018 and are currently evaluating the impact the adoption of this new accounting standard will have on our financial statements.In January 2017, the FASB issued ASU 2017-01 "Business Combinations (Topic 805)," which provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in this update (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments in this update also narrow the definition of the term "output" so that the term is consistent with how outputs are described in Topic 606. Public business entities are required to apply the amendments in this update to annual periods beginning after December 15, 2017, including interim periods within those periods. Early application is permitted. The Company will evaluate the effect of the update at the time of any future acquisition or disposal.In May 2017, the FASB issued ASU 2017-09 "Compensation—Stock Compensation (Topic 718)." This update clarifies the existing definition of the term "modification," which is currently defined as "a change in any of the terms or conditions of a share-based payment award." The update requires entities to account for modifications of share-based payment awards unless the (1) fair value, (2) vesting conditions and (3) classification as an equity instrument or a liability instrument of the modified award are the same as of the original award before modification. Public business entities are required to adopt the amendments in this update for fiscal years and interim periods beginning after December 15, 2017, with early adoption permitted. The Company will adopt the update when it becomes effective. The Company is in the process of determining the impact, if any, this adoption will have on its financial statements. Convertible Notes PayableOn various dates from August 31, 2015 through January 19, 2016, each as amended on March 10, 2016, the Company entered into seven unsecured promissory notes with three separate third party investors. Each note bore interest at 8.0% per annum Accrued Expenses and was to mature on the earlier of September 30, 2016 or the completion of an IPOOther Current LiabilitiesCompany’s securities.Since the completion of the IPO occurred prior to September 30, 2016, these notes were to be automatically converted according to their terms into shares of the Company’s common stock at applicable conversion price upon the Company’s IPO to the extentfollowing components (in thousands): $ 1,035 $ 1,005 869 606 505 442 124 109 77 96 $ 2,610 $ 2,258 provided that no holder of these notes was permitted to convert such notes to the extent that the holder or any of its affiliates would beneficially own in excess of 4.99% of our common stock after such conversion. Due to this 4.99% limitation, a portion of these notes was not converted at the time of the IPO and the remaining unconverted principal and accrued interest amounts of the effected notes remained outstanding and was converted into shares of our common stock at such time as the 4.99% limitation was met. Until such time as the notes were converted into shares of common stock, the maturity date of the notes was automatically extended and we were not required to repay the notes or the accrued interest relating to the notes in cash.The IPO was completed on May 31, 2016. On May 31, 2016, pursuant to the conversion feature of the foregoing notes and with restriction of the 4.99% beneficially owned condition limitation, discussed above, the Company issued 1,166,503 common shares in total, reducing convertible debt principal by $0.18 million and accrued interest by $0.02 million. Subsequent to these transactions and through June 30, 2017, an additional 2,920,738 common shares were issued due to the number of common shares outstanding allowing for conversion of additional shares under the 4.99% beneficially owned condition limitation. This reduced the convertible debt principal by $0.3 million and accrued interest by $0.03 million.On June 22, 2017, pursuant to the conversion feature of the foregoing notes and with restriction of the 4.99% beneficially owned condition limitation discussed above, the Company issued 804,098 common shares in total, which effectively converted all remaining outstanding convertible debt and accrued interest outstanding $48,000 as of that date. This conversion converted the remaining amount of debtMarch 31, 2022 and accrued interest at June 22, 2017 of $0.1 million. Warrant WarrantsOn February 9, 2017, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with Roth Capital Partners, LLC, as representative of the several underwriters identified therein (collectively, the “Underwriters”), pursuant to which we sold in a registered public offering (the “Offering”), 3,710,000 units, priced at a public offering price of $1.35 per unit (the closing price that day was $1.50), with each unit consisting of: (i) one share of common stock, (ii) a five-year Series A warrant to purchase 0.50 of a share of common stock, (iii) a 90-day Series B warrant to purchase one share of common stock, and (iv) a five-year Series C warrant to purchase 0.50 of a share of common stock. The Series C warrants in a unit could only be exercised to the extent and in proportion to a holder of the Series C warrants exercising its Series B warrants included in the unit. The Series A and Series C warrant have an exercise price of $1.50 per share of common stock. The Series B warrant had an exercise price of $1.35 per share of common stock.Under the terms of the Underwriting Agreement, we granted the Underwriters a 45-day option to purchase an additional 556,500 shares of common stock and/or an additional 556,500 warrant combination (comprised of an aggregate of 278,250 Series A warrants, 556,500 Series B warrants and 278,250 Series C warrants), in any combinations thereof, from us to cover over-allotments at the public offering price per share of $1.349 and public offering price per warrant combination of $.001, respectively, less the underwriting discounts and commissions. Upon the closing of the Offering, the Underwriters exercised the over-allotment option with respect to $278,100 warrant combinations. We received approximately $4.5 million in net proceeds from the Offering, after deducting underwriting discounts and commissions and estimated offering expenses.The basis of value is fair value, which is defined pursuant to Accounting Standards Codification (“ASC”) 820 to be “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”. Classified Warrantsestimated the fair value of the Warrants under ASC 820 as of February 14, 2017 for financial reporting purposes. We useduses the Black-Scholes option pricing model (“BSM”) to determine the fair value of its warrants at the Series Adate of issue and Series B Warrants and a Monte Carlo simulation (“MCM”) with regard to the Series C Warrants in consideration of path dependent vesting terms of the contract. Both the BSM and MCM models are acceptable in accordance with GAAP. The BSM requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the weighted average term of the Warrant. The MCM simulates the Company’s common stock price from the valuation date through the Series B Warrant and the unvested Series C Warrant expiration dates using Geometric Browman Motion on a risk-neutral basis – thereby impacting the likelihood that the Series B Warrants would have been exercised and, subsequently, the Series C Warrants would then vest. As disclosed, all Series B and unvested Series C warrants expired on May 15, 2017.whoselinearly interpolated to obtain a maturity period is appropriate forcommensurate with the term of the Warrants and is calculated by using the average daily historical stock prices through the day preceding the grant date.ourthe Company's stock price is expected to fluctuate each year during the expected life of the Warrants. Where appropriate, we usedwarrants. Only the historical volatility of peer entities due to the lackCompany's own stock is used in the Black-Scholes option pricing model. BSM and MCM models forfair value of the Warrantsliability classified warrants are as follows: Nine Months Ended September 30, 2017 Year Ended 2016 2021 1.68%-1.86% — 80.00%-160.11% — 0.5-5.0 — our Warrantthe Company's liability classified warrant activity during the three months ended March 31, 2022 and related information follows:Description Balance at January 1, 2017 — — — — Granted 8,235,923 $1.35-$1.50 $ 1.43 1.6 Exercised (2,703,434 ) — $ 1.46 — Expired (5,087,717 ) — $ 1.40 — Balance at September 30, 2017 444,772 — $ 1.46 4.63 Vested and Exercisable at September 30, 2017 444,772 $1.35-$1.50 $ 1.46 4.63 Warrant Activity During 2017:On February 14, 2017, 8,235,923 Warrants were granted, as discussed above.On March 24, 2017, 596,300 Series B Warrants were exercised for an equivalent amount 2,723,645 $ 6.30 $ 16.80 $ 9.46 2.6 (67,349 ) 8.10 9.00 0 — 2,656,296 $ 6.30 $ 16.80 $ 9.49 2.4 2,656,296 $ 6.30 $ 16.80 $ 9.49 2.4 common shares which vested 298,150 Series C Warrants.On March 31, 2017, the Warrants were revalued with a fair value determination of $3.08 million which included a fair value adjustment of $1.06 million which was included as a gain from the changechanges in fair value ofassociated with the Company's warrant liability in “Other Income” infor the accompanying financial statements.On May 15, 2017, approximately 3.4 millionthree months ended March 31, 2022, see Note 2 - Basis of presentation, principles of consolidation and 1.7 million Series B and Series Csignificant accounting policies - Fair Value of Financial Instruments. respectively, expired, which reduced our warrant liability by $1.24 million in the accompanying financial statements.On June 28, 2017, 1,295,995 Series A Warrants were exercised. On the same date, 295,650 Series C Warrants were exercised.On June 30, 2017, 12,250 Series A Warrants were exercised.On June 30, 2017, the Warrants were revalued with a fair value determination of $1.2 million which included a fair value adjustment of $3.3 million which was included as loss from the change in fair value of warrant liability in “Other income (expense)” in the accompanying financial statements.During the quarter ended September 30, 2017, 500,739 Series A warrants and 2,500 Series C warrants were exercised with cash proceeds of approximately $0.8 million.Series B and Series C WarrantsThe Series B Warrants and the unvested Series C Warrants expired May 15, 2017. Therefore, the associated warranty liability of $1.24 million was extinguished on May 15, 2017 as no other Series B Warrants were exercised prior to that date.5. EquityOn May 2, 2016, amended and restated its certificate of incorporationgranted equity-classified warrants to increase the number of shares authorized to 80,000,000 of which 5,000,000 shares of preferred stock are authorized and 75,000,000purchase 71,500 shares of common stock are authorized.Preferred StockWe are authorized to issue up to 5,000,000 shares of preferred stock. Our certificate of incorporation authorizes the board to issue these shares in one or more series, to determine the designationswith a five-year term and the powers, preferences and relative, participating, optional or other special rights and the qualifications, limitations and restrictions thereof, including the dividend rights, conversion or exchange rights, voting rights (including the number of votes per share), redemption rights and terms, liquidation preferences, sinking fund provisions and the number of shares constituting the series. As of September 30, 2017, there was no issued preferred stock.Common StockOn January 13, 2017, the Company agreed to issue 79,167 shares of common stock to a consultant in full settlement for prior services rendered to the Company. Settlement occurred February 21, 2017 with the issuance of the shares, resulting in a gain on settlement of $0.15 million recorded in gain in settlement of liability on the Statement of Operations. The obligation of $0.24 million had been recorded by the Company in accounts payable and accrued expenses as of December 31, 2016.On February 14, 2017, the Company completed a public offering and sold 3,923,923 shares of the Company’s common stock. The offering price per unit was $1.35. The Company received net cash proceeds of $4.5 million after deducting underwriting discounts, commissions and direct offering expenses payable by us. See Note 4 above regarding Warrant issuances related to our February public offering.During September 2017, the Company sold 154,121 shares of common stock from $2.52 to $2.71 per share with net cash proceeds of $0.4 million.Adoption of 2015 Stock PlanOn December 5, 2015, the Board of Directors of the Company approved the Company’s 2015 Stock Plan, which was amended on April 22, 2016. The expiration date of the plan is December 5, 2025 and the total number of underlying shares of the Company’s common stock available for grant to employees, directors and consultants under the plan is 2,500,000 shares. The awards under the 2015 Stock Plan can be in the form of stock options, stock awards or stock unit awards. The following is a summary of option activities for the nine months ended September 30, 2017: Outstanding, December 31, 2016 510,000 $ 3.40 $ 5.28 9.29 $ 275,500 Granted 160,000 $ 1.52 $ 2.14 Outstanding, September 30, 2017 670,000 $ 2.12 $ 1.78 8.85 $ 144,900 Exercisable, September 30, 2017 85,000 $ 1.66 $ 1.79 7.15 $ 117,300 In January 2017, the Company granted members of its science advisory board options in the aggregate to purchase 20,000 shares of the Company’s common stock with an exercise price of $2.31 per share, a term of 10$3.63 vesting quarterly over five years and a vesting period of 4 years. The exercise price was based upon the closing price of the stock on the day of the grant. The options have an aggregated fair value of $35,196 that was calculated using the Black-Scholes option-pricing model.while services are being performed. In July and August 2017, the Company granted options to the Board and a management member to purchase 140,000 shares of the Company's common stock with exerciseprices of $1.87 and $2.88, respectively, with a term of 10 years and a vesting period of 4 years. The options have an aggregated fair value of $269,592 for the nine months ended September 30, 2017, calculated using the Black-Scholes option-pricing model.Variables used in the Black-Scholes option-pricing model include ranges of: (1) discount of 1.30%-2.24%, (2) expected lives of 5 to 6.25 years, (3) expected volatility of 70.18% to 89.11%, and (4) zero expected dividends. The Company, due to the limited number of participants in the plan and their positions within the Company, uses a 0% estimated forfeiture rate. For the three and nine months ended September 30, 2017, the Company recorded $0.2 million and $0.5 million, respectively in stock-based compensation in relation to the options. As of September 30, 2017, there was $1.6 million of unrecognized compensation cost, net of estimated forfeitures, related to the Company’s non-vested equity awards, which is expected to be recognized over a weighted average period of 3.34 years. The fair value of each stock option is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the above paragraph. The expected term of the options was computed using the “plain vanilla” method as prescribed by the Securities and Exchange Commission Staff Accounting Bulletin 107 because we do not have sufficient data regarding employee exercise behavior to estimate the expected term. The volatility was determined by referring to the average historical volatility of a peer group of public companies because we do not have sufficient trading history to determine our historical volatility. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.GSK Consulting AgreementOn July 29, 2017, 2021, the Company entered into a consultingportfolio development advisory agreement with GSK Strategies, LLC (“GSK”), for its investor relations operations. The consultinga related party entity, associated with Dr. Waldemar Priebe, and in connection with the agreement, covers for a period of twelve months from the date of July 29, 2017. In exchange for the consulting services, the Company agreed to issue twogranted equity-classified warrants (collectively, the “Warrants”) to purchase 100,000 and 50,000250,000 shares of common stock atwith a ten-year term and an exercise pricesprice of $2.41$3.08. The August 2021 warrants vest as follows: (a) 50% vests upon execution of the agreement, provided the advisor does not terminate the agreement prior to the end of the one-year term; and $3.00 per share, respectively,(b) 50% vests 60 days after the end of the one-year term, subject to approval by Nasdaqthe Company's Board of Directors determining that the services provided have been adequately performed. Also, both the April 2021 and August 2021 warrants vest in full if there is a listingchange of additional shares application, which was receivedcontrol event, as defined in August 2017.Each of the Warrants vests over a 12-month period in equal monthly installments starting July 29, 2017, provided that GSK is providing Services toagreement.pursuant tohad 396,502 equity classified warrants outstanding and 190,135 warrants were exercisable. At December 31, 2021, the consulting agreement on each vesting date. The Warrants became initially exercisable on August 8, 2017,Company had 396,502 equity classified warrants outstanding and expire five years from the initial exercise date. 186,560 warrants were exercisable.the non-employee consulting agreementequity classified warrants of $63,000$83,000 and zero for the periodthree months ended September 30, 2017 based onMarch 31, 2022 and 2021, respectively. At March 31, 2022, there was $465,000 of unrecognized stock compensation expense related to the fair value ofCompany's equity classified warrants.warrants vested as of September 30, 2017.At Market Issuance Sales AgreementOn September 15, 2017, three months ended March 31, 2022.At Market Issuance Sales Agreement (the “Agreement”) with Roth Capital Partners, LLC and National Securities Corporation (collectively,underwritten public offering for the “Agents”). Pursuant to the terms of the Agreement,sale by the Company may sell from time to time through the Agentsof 14,273,684 shares of the Company’sits common stock with an aggregate salesat a public offering price of $4.75 per share and granted the underwriters a 30-day option to purchase up to $13.0an additional 2,141,052 shares of common stock offered in the public offering, which was exercised. The Company received total proceeds of $78.0 million, (the “Shares”).Any sales of Shares pursuantprior to deducting the Agreement will be made under the Company’s effective “shelf” registration statement on Form S-3 (File No. 333-219434) which became effective on August 21, 2017underwriting discount and the related prospectus supplement and the accompanying prospectus, as filed with the Securities and Exchange Commission (the “SEC”) on September 15, 2017. Under the Agreement, other estimated offering expenses. In January 2021 the Company may sell Shares through an Agent by any method that is deemed an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”).Sales of the Shares may be made at market prices prevailing at the time of sale, subject to such other terms as may be agreed upon at the time of sale, including a minimum sales price that may be stipulated by the Company’s Board of Directors or a duly authorized committee thereof. The Company or the Agents, under certain circumstances and upon notice to the other, may suspend the offering of the Shares under the Agreement. The offering of the Shares pursuant to the Agreement will terminate upon the sale of Shares in an aggregate offering amount equal to $13.0 million, or sooner if either the Company or the Agents terminate the Agreement pursuant to its terms.The Company agreed to pay a commission to the Agents of 3.0% of theissued 468,684 shares for gross proceeds of $2.9 million using the saleCompany's 2020 At The Market Agreement (2020 ATM Agreement) with Oppenheimer & Co., Inc. The Company terminated the 2020 ATM Agreement on February 2, 2021. $ 361 $ 309 166 96 $ 527 $ 405 Shares sold underaward as if the Agreement and to reimburse the Agents for certain expenses. The Company has also provided the Agents with customary indemnification rights. The Company is not obligated to make any sales of Common Stock under the Agreement.As of September 30, 2017, the Company had sold 154,121 shares with gross proceeds of $0.4 million under this Agreement. We do stateforeign income tax for 2017taxes in 2022 as a result of the losses recorded during the ninethree months ended September 30, 2017March 31, 2022 and the additional losses expected for the remainder of 20172022 and cumulative net operating loss carry forwards from prior years.carryforwards. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits of deferred tax assets will not be realized. As a result, as of September 30, 2017, weMarch 31, 2022 and December 31, 2021 the Company maintained a full valuation allowance for all deferred tax assets.no0 income tax provision for the ninethree months ended September 30, 2017 March 31, 2022 and 2016.2021, respectively. The effective tax rate for the ninethree months ended September 30, 2017 March 31, 2022 and 2016 was2021 is 0%. The income tax rates vary from the federal and state statutory rates primarily due to the change in fair value of the stock warrants and valuation allowances on the Company’s deferred tax assets. The Company estimates its annual effective tax rate at the end of each quarterly period. Jurisdictions with a projected loss for the year where no tax benefit can be recognized due to the valuation exclusionallowance could result in a higher or lower effective tax rate during a particular quarter depending on the mix and timing of actual earnings versus annual projections.WP1122 Portfoliorights following summarizes quantitative information about the Company's operating leases for the three months ended March 31, 2022 and obligations2021, respectively (in thousands): $ 29 $ 29 7 7 $ 36 $ 36 an April 2012 Patent the Company's license agreements with MD Anderson were$76,000 and $38,000 for the three months ended March 31, 2022 and Technology License Agreement2021, respectively.by and between IntertechBio and MD Anderson (the “IntertechBio Agreement”) have been assigned to MBI. Therefore, MBI has obtainedtwo agreements with a royalty-bearing, worldwide, exclusive license to intellectual property, including patent rights, related to our WP1122 Portfolio and to our drug product candidate, WP1122. In consideration, MBI must make payments to MD Anderson including an up-front payment, license documentation fee, annual maintenance fee, milestone payments and minimum annual royalty payments for sales of products developed under the license agreement. Under the agreement, annual maintenance fees are $10,000 on the first anniversary of the effective date of the agreement, $20,000 on the second anniversary of the effective date of the agreement, $40,000 on the third anniversary of the effective date of the agreement, $60,000 on the fourth anniversary of the effective date of the agreement, $80,000 on the fifth anniversary of the effective date of the agreement and $100,000 on the sixth anniversary of the effective date of the agreement, except that such payments will no longer be due upon the first sale of a licensed product. Under the assignment, MBI agrees to make a minimum annual royalty payment in the amount of $200,000 for the first anniversary following the first sale of a licensed product, $400,000 for the second anniversary following the first sale of a licensed product, and $600,000 for the third year following the first sale of a licensed product.One-time milestone payments are due as follows: 1) Upon commencement of a Phase II study for a licensed product - $200,000; 2) Upon commencement of a Phase III study for a licensed product - $250,000; 3) Upon filing of a New Drug Application (“NDA”) for a licensed product - $400,000; and 4) Upon receipt of market approval for sale of a licensed product - $500,000. The rights we have obtained pursuant to the assignment of the IntertechBio Agreement are made subject to the rights of the U.S. government to the extent that the technology covered by the licensed intellectual property was developed under a funding agreement between MD Anderson and the U.S. government.WP1066 PortfolioThe rights and obligations to a June 2010 Patent and Technology License Agreement entered into by and between Moleculin LLC and MD Anderson (the “Moleculin Agreement”) have been assigned to MBI. Therefore, MBI has obtained a royalty-bearing, worldwide, exclusive license to intellectual property rights, including patent rights, related to our WP1066 drug product candidate. In consideration, MBI must make payments to MD Anderson including an up-front payment, milestone payments and minimum annual royalty payments for sales of products developed under the license agreement. Annual Maintenance fee payments will no longer be due upon marketing approval in any country of a licensed product. One-time milestone payments are due upon commencement of the first Phase III study for a licensed product within the United States, Europe, China or Japan; upon submission of the first NDA for a licensed product in the United States; and upon receipt of the first marketing approval for sale of a licensed product in the United States. The rights we have obtained pursuant to the assignment of the Moleculin Agreement are made subject to the rights of the U.S. government to the extent that the technology covered by the licensed intellectual property was developed under a funding agreement between MD Anderson and the U.S.government. The agreement, as amended, has the following the milestone payments: (i) commencement of Phase III Study for first licensed drug/product within the United States, Europe, China or Japan - $150,000; (ii) submission of the first NDA within the United States - $500,000; and (iii) receipt of first marketing approval for sale of a license product in the United States - $600,000.MBI entered into an out-licensing agreement withparty, Houston Pharmaceuticals, Inc. (“HPI”), pursuant(HPI). The first agreement, which has a term of two years, continues a prior consulting arrangement with HPI on the Company's licensed molecules and requires payments of $43,500 per quarter to HPI. The Company plans to renew the agreement. The second agreement, which we have granted certain intellectual property rightscan be cancelled with sixty days' notice by either party, allows the Company's employees access to laboratory equipment owned by HPI including rights covering the potential drug candidate, WP1066 (“HPI Out-Licensing Agreement”). Under the HPI Out-Licensing Agreement we must make quarterly payments totaling $0.75 million for the first twelve quarters following the effective datea payment of May 2, 2016, of the HPI Out-Licensing Agreement in consideration for the right$15,000 per quarter to development dataHPI. Total expenses related to the development of licensed products. Notwithstanding our obligation to makeCompany's agreements with HPI were $59,000 for the foregoing payments, the HPI Out-Licensingthree months ended March 31, 2022 and 2021, respectively.does not obligate HPI to conduct any research or to meet any milestones. Upon payment in the amount of $1.0 million to HPI within three years of the effective date of the HPI Out-Licensing Agreement we will regain all rights to the licensed subject matter and rights to any and all development data and any regulatory submissions including any IND, NDA or ANDA related to the licensed subject matter and can end the license without any other obligation other than the aforementioned quarterly payments.with MD Anderson expiring December 31, 2022. In the event that we do not exercise our right to regain our rights to the licensed subject matter within three years of the effective date of the HPI Out-Licensing Agreement, the license granted to HPI shall convert to an exclusive license upon HPI’s written notice and we shall be obligated to transfer all existing data relating to licensed subject matter including any development data and any IND to HPI.On January 9, 2017, July 2021, the Company amended its Sponsored Laboratory Study Agreement with MD Anderson whereby for a total payment of $175,000 to support the continuation of the project. In addition, the Company would pay $302,500 in 2017, which had been fully paid as of July 31, 2017, and the agreement was extended to October 31, 2018.AnnamycinAs of August 2015, we obtained the rights and obligations of Annamed under a June 2012 Patent and Technology Development and License Agreement by and between Annamed and Dermin (the “Annamed Agreement”). Therefore, certain intellectual property rights, including rights, if any, covering the potential drug product, Annamycin have been licensed to Dermin and Derminalso has been granted a royalty-bearing, exclusive license to manufacture, have manufactured, use, import, offer to sell and/or sell productsSponsored Research Agreements with other universities, one in the field of human therapeutics under the licensed intellectual propertyUS and one in the countries of Poland, Ukraine, Czech Republic, Hungary, Romania, Slovakia, Belarus, Lithuania, Latvia, Estonia, Netherlands, Turkey, Belgium, Switzerland, Austria, Sweden, Greece, Portugal, Norway, Denmark, Ireland, Finland, Luxembourg, Iceland, Kazakhstan, Russian Federation, Uzbekistan, Georgia, Armenia, Azerbaijan and Germany (“Annamed licensed territories”). MBI is obligated to develop and provide a dossier containing dataEurope. Total expenses related to the licensed subject matter to Dermin. In consideration, Dermin will payCompany's Sponsored Research Agreements were $187,000 a royaltynd $94,000 for the salethree months ended March 31, 2022 and 2021, respectively.any licensed productthe license termination agreement. Additionally, in March 2021, the Company determined the stability of WP1732, a molecule in the Annamed licensed territoriesWP1066 Portfolio was less than satisfactory and, pay all out-of-pocketas such, in March 2021 the Company terminated its license for WP1732 with MD Anderson. Total expenses incurred by MBI in filing, prosecuting and maintaining the licensed patents for which the license has been granted. Dermin also agrees to provide a percentage of certain consideration that Dermin receives pursuant to sublicense agreements.8. Subsequent EventsSubsequent to September 30, 2017 and through the date of filing of these financial statements, approximately 25,000 additional Series A warrants related to the Company's license terminations were $400,000 and 0 for the three months ended March 31, 2022 and 2021, respectively.February 2017 public offering of common stock have been exercised, leaving approximately 420,000 Series A and Broker warrants outstanding. As a result of this exercise, subsequent events occurring after March 31, 2022.received approximately $0.04 million.Additionally, under the At Market Issuance Sales Agreement mentioned in Note 5 and subsequent to September 30, 2017, the Company sold approximately 345,000 sharesentered into a clinical trial advisor agreement with gross proceeds of approximately $0.8 million.On October 3, 2017, the Board of Directors, after researching comparable companies and using a leading industry survey, approved the issuance of 10-year options, with 4-year vesting, to purchase 590,000 shares, in the aggregate, of the Company’s common stock, under the Company’s 2015 Stock Plan, to its executive officers and other employees. The options had an exercise price of $2.49 per share.On October 31, 2017, the Company added Sandra Silberman, M.D.SAWO Oncology, Ltd., PH.D.,for Dr. Wolfram Dempke acting as our Chief Medical Officer - New Products. The BoardEurope. As part of Directors approvedthis agreement the issuance of 10-yearCompany will issue 45,000 options, with 4-year vesting,subject to purchase 75,000 shares ofshareholder approval at the Company’s common stock, under the Company’s 2015 Stock Plan to Dr. Silberman. The options had an exercise priceAnnual meeting in May 2022. On November 1, 2017, the Board of Directors approved the issuance of 10-year options, with 4-year vesting, to purchase 10,000 shares, each, of the Company’s common stock, under the Company’s 2015 Stock Plan to two potential new members of the Science Advisory Board, subject to the approval process of their respective institutions. The options had an exercise price of $1.95 per share. (“MD&A”) contains certain forward-looking statements. Historical results may not indicate future performance. Our forward-looking statements reflect our current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements.Our ability to obtain additional funding to develop our product candidates;The need to obtain regulatory approval of our product candidates;The success of our clinical trials through all phases of clinical development;Our ability to complete our clinical trials in a timely fashion and within our expected budget;Compliance with obligations under intellectual property licenses with third parties;Any delays in regulatory review and approval of product candidates in clinical development;Our ability to commercialize our product candidates;Market acceptance of our product candidates;Competition from existing products or new products that may emerge;Potential product liability claims;Our dependency on third-party manufacturers to supply or manufacture our product candidates;Our ability to establish or maintain collaborations, licensing or other arrangements;Our ability and third parties’ abilities to protect intellectual property rights;Our ability to adequately support future growth; andOur ability to attract and retain key personnel to manage our business effectively.• Our ability to continue our relationship with MD Anderson, including, but not limited to, our ability to maintain current licenses and license future intellectual property resulting from our sponsored research agreements with MD Anderson; • The success or the lack thereof, including the ability to recruit patients, for a variety of reasons, of our clinical trials through all phases of clinical development; • Our ability to satisfy any requirements imposed by the FDA (or its foreign equivalents) as a condition of our clinical trials proceeding or beginning as planned; • Potential efficacy of our drug candidates; Highlightsclinical-stageclinical stage pharmaceutical development company organized aswith a Delaware corporationgrowing pipeline of clinical programs for the treatment of highly resistant cancers and viruses. We have three core technologies, based substantially on discoveries made at and licensed from MD Anderson Cancer Center (MD Anderson) in July 2015 to focus on the development of anti-cancer drug candidates.Houston, Texas. We currently have foursix drug candidates, representing three substantially different approachesof which have now shown human activity in clinical trials.treating cancer. Liposomal Annamycin,eliminate the cardiotoxicity associated with currently prescribed anthracyclines (Annamycin has no material cardiotoxicity noted by a specialist in subjects treated and reviewed to date in Moleculin’s clinical trials), while also significantly increasing, as shown in animal studies, drug accumulation in certain key targeted organs (such as the lungs, pancreas and liver) and avoiding multidrug resistance mechanisms when compared in non-human studies with doxorubicin (one of the most commonly used anthracyclines); b) our WP1066 Portfolio, which includes WP1066 and WP1220, two of several Immune/Transcription Modulators in the portfolio designed to inhibit p-STAT3 (phosphorylated signal transducer and activator of transcription) among other transcription factors associated with tumor activity, while also stimulating a natural immune response to tumors by inhibiting the errant activity of Regulatory T-Cells (TRegs); and c) our WP1122 Portfolio, which contains compounds (including WP1122, WP1096, WP1097) designed to exploit the potential uses of inhibitors of glycolysis such as 2-deoxy-D-glucose (2-DG), which we refer to as Annamycin, is a chemotherapy designed to destroy the DNA of rapidly replicating tumor cells. WP1122 isbelieve may provide an inhibitor of glycolysis intendedopportunity to cut ofoff the fuel supply of tumor cells, which are often overly dependenttumors by taking advantage of their high level of dependence on glycolysis as comparedglucose in comparison to healthy cells. And, finally, WP1066cells, as well as target the roles of glycolysis and WP1220, have shown capability,glycosylation in vivo testing, of altering the cell signaling associatedCombination with tumors.Annamycin is an anthracycline being studiedCytarabine for the treatmentTreatment of relapsed or refractory acute myeloid leukemia, or AML. In August 2015,Acute Myeloid Leukemia (AML)Company acquiredPolish Department of Registration of Medicinal Products (URPL), as well as the rights and prior development data regarding Annamycin and the prior Annamycin investigative new drug application (“IND”) with the U.S. Food and Drug Administration (“FDA”), including all trade secrets, know-how, confidential information and other intellectual property rights. Annamycin had been in clinical trials pursuant to an IND filed with the FDA by a prior drug developer, which was terminated when that developer ceased activity for financial reasons. Our review of that prior clinical data leads us to believe that Annamycin may have greater potential for efficacy and safety in relapsed or refractory AML patients than currently available therapies.Because the prior developer of Annamycin allowed their IND to lapse, we were required to submit a new IND for continued clinical trials with Annamycin, which the FDA allowedrequisite Ethics Committee approval, to proceed on September 22, 2017. The Company announced on October 3, 2017 that it had signed an agreement with a hospital in Poland to participate in this trial, which will be our firstits Phase 1/2 clinical site, assuming the receipt of regulatory approval in Poland. The data presented in our successful IND submission to FDA were submitted to Polish regulatory authorities on October 23, 2017 in support of our request for Clinical Trial Authorization (“CTA”) in that country. Depending on the timing of the CTA approval, we could begin treating patients in a Phase I/II clinical trial as early as late December of 2017. The Phase I dose-ranging portion of this trial is designed to establish a new Recommended Phase 2 Dosage, or RP2D, which we believe was not adequately explored in previous trials.The Annamycin drug substance is no longer covered by any existing patent protection. On July 18, 2017, the Company announced that it had signed a new technology license agreement with MD Anderson Cancer Center based on new patent applications that the Company intends to file relating to Annamycin. These patent applications are related to the formulation,synthetic process and reconstitution related to our Annamycin drug product candidate, although there is no assurance that we will be successful in obtaining such patent protection.On March 21, 2017, we received notice that the FDA had granted us Orphan Drug designation for Annamycin for the treatment of AML. Orphan Drug status could entitle us to market exclusivity of up to 7 and 10 years from the date of approval of a New Drug Application (“NDA”) in the United States. If we obtain similar designation in the European Union (“EU”), we could be entitled to 10 years of market exclusivity there from the date of approval of a Marketing Authorization Application (“MAA”), in the United States and the European Union (“EU”), respectively. Separately, the FDA may also grant market exclusivity of up to 5 years with the approval of an active moiety (a “new chemical entity,” which we anticipate Annamycin would be), but there can be no assurance that such exclusivity will be granted.Our other drug development projects relate to two distinct portfolios of small molecules, which we refer to as the WP1066 Portfolio, focused on the modulation of key oncogenic transcription factors involved in the progression of cancer, and the WP1122 Portfolio, a suite of molecules targeting the metabolic processes involved in cancer in general, and glioblastoma (the most common form of brain tumor) and pancreatic cancer in particular. We have been granted royalty-bearing, worldwide, exclusive licenses for the patent and technology rights related to our WP1066 Portfolio and WP1122 Portfolio drug technologies, as these patent rights are owned by MD Anderson.During 2017, the Company announced the following progress on the WP1066 and WP1122 portfolios: 1) that it engaged a contract research organization (“CRO”) to prepare for a proof-of-concept trial in Poland to study the Company’s drug candidate WP1220 (part of the WP1066 portfolio described above) for the treatment of cutaneous T-cell lymphoma, 2) the Company entered into collaborative agreements with the University of Bergen in Norway to test WP1122Annamycin (L-ANN) in combination with another drugCytarabine (Ara-C) in the treatment of brain tumors and separatelysubjects with acute myeloid leukemia (AML) who are refractory to conduct further analysisor relapsed after induction therapy. The Phase 1/2 L-ANN /ARA-C combination (AnnAraC) trial (MB-106), an open label trial, builds on the capabilitysafety and dosage data from the two successfully concluded single agent Annamycin AML Phase 1 trials (MB-104 and MB-105) in the U.S. and Europe and the preclinical data from its sponsored research studies. The clinical trial is expected to commence patient enrollment in the first half of 2022. to stimulate anti-tumor immune response, 3)for the Company entered into an agreement withTreatment of Recurrent Malignant GliomaMayo ClinicFood & Drug Administration (FDA) for our Investigative New Drug (IND) application to study WP1066 for the treatment of rarerecurrent malignant glioma. With this IND now cleared, we plan to evaluate strategic partnerships and collaborations to conduct a Phase 1 open label, single arm, dose escalation study of the safety, pharmacokinetics and efficacy of oral WP1066 in adult patients with recurrent malignant glioma. We expect the clearance of this IND to further support the ongoing pediatric brain tumors,studies being conducted by the team at Emory University, and 4)we are evaluating the Company agreedpotential for additional externally funded investigator-initiated studies.assist MD Anderson in submitting an INDPhase 1a Clinical Trial of WP1122 for the studyTreatment of WP1066 in glioblastoma and melanomaCOVID-19 has metastasized to the brain, which MD Anderson filed on November 1, 2017.OverviewMBI was founded in 2015 in order to combine and consolidate the development efforts involving several anti-cancer technologies, some of which are based on license agreements with MD Anderson. This effort began with the acquisition of the Annamycin development project from AnnaMed, Inc., or AnnaMed, followed by the acquisition of the license rights to the WP1122 Portfolio from IntertechBio Corporation, or IntertechBio. Further, on behalf of Moleculin, LLC, we entered into a co-development agreement with Houston Pharmaceuticals, Inc., or HPI, which culminated with the merger of Moleculin, LLC into MBI coincident with our initial public offering allowing us to gain control of the WP1066 Portfolio.Moleculin, LLC was formed in 2006 and was working to develop the WP1066 Portfolio it licensed from MD Anderson. On May 2, 2016, Moleculin, LLC was merged with and into MBI. As a result of the merger, we issued the holders of Moleculin, LLC equity interests and convertible notes an aggregate of approximately 999,931 shares of our common stock. Since Moleculin, LLC commenced operations in 2006, substantially all of its efforts had been focused on research, development and the advancement of the WP1066 Portfolio. Moleculin, LLC did not generate any revenue from product sales and, as a result, incurred significant losses.We do not have manufacturing facilities and all manufacturing activities are contracted out to third parties. Additionally, we do not have a sales organization.Portfolio StatusBelow are important milestones for each drug/portfolio of the Company.AnnamycinReceived Orphan Drug Status for Annamycin - On March 21, 2017, we received noticeapproval from the FDA that we had obtained Orphan Drug designation for AnnamycinUnited Kingdom’s (UK) MHRA to proceed with a first-in-human Phase 1a study to evaluate the safety and pharmacokinetics of WP1122 in healthy volunteers for the treatment of AML effective March 20, 2017.Possible Improvement in the Recommended Phase II Dose (“RP2D”) in Upcoming Phase I/IIa Clinical Trial - In reviewing prior data, we determined that the prior developer may not have adequately explored the optimum dosing level for Annamycin in AML patients. Accordingly, we planned our clinical trial to begin with a Phase I to establish the RP2D with a follow-on Phase IIa. We believe this change in strategy will add several months to the timeline for eventual final approval of the drug, however, we believe that this extension of time to complete the trial will not prevent us from publicly announcing some, if not all, of the results from our Phase I/II clinical trial sometime in 2018.Received allowance for our IND for Annamycin - On September 26, 2017, we announced that the FDA had allowed the Annamycin IND to go into effect, which allows the Company to move forward with its plans for its Phase I/IIa trial for Annamycin in the treatment of relapsed or refractory AML, both here in the United States and, assuming the receipt of certain additional approvals, in Poland. We anticipate that the IRB (“Institutional Review Board”) approvals and site initiations of various clinical sites participating in our Phase I/II clinical trial of Annamycin should begin occurring later in the fourth quarter of 2017.The Company announced its first hospital contract for its Polish Annamycin Clinical Trial - On October 3, 2017, the Company announced that it had signed an agreement with its first hospital in Poland to participate in this trial, subject to Polish regulatory approval to proceed with a clinical trial.The Company filed its request for Clinical Trial Authorization (“CTA”) in Poland - On October 23, 2017, the Company filed its CTA in Poland which, if granted, will enable a clinical trial to study Annamycin for the treatment of relapsed or refractory AML in Poland. The CTA process in Poland normally takes 60 days. In Poland, a hospital contract is required prior to filing a CTA.Relationship with Dermin - The Company has established relations with a company in a Poland - Dermin Sp. z o. o. (“Dermin”)COVID-19 (MB-301). The Company intends to utilize Dermin’s supply of active pharmaceutical ingredient (“API”) for Annamycin in the upcoming clinical Phase I/II clinical trial. Annamycin was previously licensed to Dermin withinapproval follows us having submitted a limited region in Europe, enabling Dermin to deploy Polish grant funds toward producing Annamycin. We believe Dermin benefits from a data sharing arrangement giving it access to our clinical data necessary for the allowance of the Company's IND will requirethe Company to manufacture, at an estimated cost of $0.2 million, additional drug product using the Dermin API in early 2018.WP1066Physician-Sponsored IND - A clinician at MD Anderson has advised us that MD Anderson has submitted to the FDA an INDprotocol amendment allowing for a physician-sponsored clinical trial involving WP1066 for the treatmenthigher ratio of brain tumors.diluting excipients to drug substance to facilitate a faster and simpler mixing procedure before drug administration. We are participating in a support role, but have no influence on the design or conduct of the clinical trial, or on the IND process. The clinician indicated that the IND was on hold pending further documentation that the WP1066 to be used in the trial was manufactured in accordance with Good Manufacturing Practice or GMP production of WP1066. The Company, on July 25, 2017, announced its intention to provide support to help the clinician address the issue. MD Anderson re-submitted its IND to the FDA on November 1, 2017, with our assistance. We are hopeful that FDA will permitexpect this IND to go into effect in time to allow theinternally funded trial to begin in 2017, subjectthe first half of 2022.allowance byan existing license and a new license related to our core technologies. Such discussions are in the FDA, and will produce useful clinical data in 2018. However, we are not in a position to influence the IND process and we can provide no assurance that such time frame will be achieved.Preparing for a study for the treatmentordinary course of Cutaneous T-cell Lymphoma - The Company announced in September 2017 that it engaged a CRO to prepare for a proof-of-concept trial in Poland to study the Company's drug candidate WP1220 (part of the WP1066 portfolio described above) for the treatment of a form of cutaneous T-cell lymphoma.WP1122Advancement of Preclinical Testing for Brain Tumors with WP1122 - WP1122 is our unique inhibitor of glucose metabolism, which is thought to be an important driver of glycolytic brain tumor progression and survival. A similar chemical structure to that which turns morphine into heroine has been used to allow WP1122 to successfully cross the blood-brain barrier and increase circulation timebusiness.compared to conventional inhibitors of glycolysis. its European Chief Medical OfficerOctober 25, 2016,May 4, 2022, we announced promising initial results of the preclinical toxicology work on WP1122. We believe moving forward with full preclinical toxicology testing is key tothat we engaged Wolfram C. M. Dempke, MD, PhD, MBA, MRCP as our ability to generate a proof of concept in humans. We had previously announced the presentation of preclinical data in July 2016, supporting the potential for using WP1122 as a treatment for glioblastoma.Collaborative AgreementEU - The Company entered into a collaborative agreement in September 2017 with the University of Bergen in Norway to test WP 1122 in combination with another drug in the treatment of brain tumors.Recent Business DevelopmentsCommitment to Supply WP1066 for a potentially grant funded study at the Mayo Clinic - Physician-scientists at the Mayo Clinic have requested and Moleculin has agreed to supply them with WP1066 for testing in a potential grant-funded clinical trial for children with Diffuse Intrinsic Pontine Gliomas (DIPG), a rare and very aggressive form of brain tumor. Animal studies conducted at this center have suggested that DIPG may be particularly sensitive to the inhibition of the activated form of a cell-signaling protein called STAT3, a primary target of WP1066, and their studies have demonstrated significant anti-tumor activity of WP1066 in DIPG in vitro and in vivo tumor models.Announced the Discovery of a Metabolic Inhibitor with the Potential to Treat Pancreatic Cancer - The Company announced on June 21, 2017, that it has received attention from the scientific community for its glucose decoy technology (WP1122 Portfolio, Moleculin Presents Preclinical Data of Novel Inhibitor of Glycolysis at 28th EORTC-NCI-AACR Symposium on Molecular Targets and Cancer Therapeutics, December 13, 2016) as a potential means to starve tumors to death by exploiting their hyper-dependence on glycolysis for energy production. The Company has identified possible new properties of its compound WP1234, a modification to WP1122. In pre-clinical testing, WP1234 has shown improved drug characteristics when compared with WP1122 and a 20 to 50-fold greater ability to kill pancreatic cancer cell lines when compared with traditional inhibitors of glycolysis. The Company believes this discovery now makes WP1234 a promising drug candidate to be studied for the treatment of pancreatic cancer.Moleculin Begins Clinical Testing Site Development Efforts in Poland - On August 3, 2017, the Company announced it appointed Bioscience SA (“Bioscience”), a Polish contract research organization (“CRO”) to begin identifying and preparing clinical testing sites in Poland for its drug Annamycin for the treatment of relapsed or refractory AML. Furthermore, on October 18, 2017, the Company announced that 14 qualified cancer clinics (including sites in both the U.S. and Poland) have requested to participate in its clinical trial.Closing of a Follow-On Public Offering - In February 2017, we completed a public offering of our common stock and warrants, pursuant to which we received $4.5 million in net proceeds, after deducting underwriting discounts and commissions and estimated offering expenses. On March 24, 2017, warrants associated with this offering were exercised generating an additional $0.80 million in net proceeds. During the second quarter of 2017, warrants associated with this offering were exercised generating an additional $2.4 million. In the third quarter, approximately 500,000 warrants were exercised, generating an additional $0.7 million bringing the total net proceeds from this offering to above $3.8 million.At Market Issuance Sales Agreement - On September 15, 2017, the Company entered into an At Market Issuance Sales Agreement (the “Agreement”) with Roth Capital Partners, LLC and National Securities Corporation (collectively, the “Agents”). Pursuant to the terms of the Agreement, the Company may sell from time to time through the Agents shares of the Company’s common stock with an aggregate sales price of up to $13.0 million. As of September 30, 2017, the Company had sold 154,121 shares with gross proceeds of $0.4 million under this Agreement and, additionally, subsequent to September 30, 2017, the Company sold approximately 337,000 shares with gross proceeds of $0.8 million, bringing the total raised from the Agreement to $1.2 million in gross proceeds.Announced Dr. Sandra Silberman as Chief Medical Officer: New Products - On October 31st, the Company added Sandra Silberman, M.D., PH.D., as Chief Medical Officer - New Products. The Compensation Committee approved the issuance of 10-year options, with 4-year vesting, to purchase 75,000 shares of the Company’s common stock, under the Company’s 2015 Stock Plan to Dr. Silberman. The options had an exercise price of $1.92 per share. Dr. Silberman's role will be in addition to that of Dr. Robert Shepard, Moleculin's Chief Medical Officer - Annamycin. Dr. Silberman’s career in clinical development began at Pfizer, Inc., where she oversaw the initiation of Tarceva (TM)and part-time contractor for our European clinical trials. She then led the global development of Gleevec® at Novartis. Sandra was the first Vice President and Global Therapeutic Area Head in Oncology at Eisai, a role in which she advanced five original compounds into Phases I through III, gaining the first approval for Eisai’s proprietary drug, Halavan®. Subsequently, she served as a senior advisor to a number of biopharmaceutical companies, including Bristol-Myers Squibb, AstraZeneca, Imclone, Roche, and numerous biotech companies as an independent industry consultant. She joined Quintiles in 2009Dr. Dempke currently serves as the Vice President, ofScientific Solutions: Hematology & Oncology, and Global Head of Translational Medicineat Worldwide Clinical Trials. He holds oncology/hematology society memberships in the newly formed Innovation division, overseeing drug developmentU.S. and novel technologies for new partnerships with the pharmaceuticalEurope. He has published five textbooks and biotechnology industries. Sandra earned her B.A., Sc.M. and Ph.D. from the Johns Hopkins University School of Arts and Sciences, School of Public Health and School of Medicine, respectively. Her major focus of investigation and doctoral thesis wasmore than 150 peer-reviewed papers. Dr. Dempke continues to teach classes in the burgeoning area of tumor immunology. She received her M.D. from CornellMunich University Medical College, completingOncology department, Germany, and he continues to see patients on a postdoctoral training and her fellowship in hematology/oncology at the Brigham & Women's and the Dana Farber Cancer Institute in Boston. She continued to do research in tumor immunology with a clinical investigator award from the NIH and became an Instructor in Medicine at Harvard Medical School. She then served as an attending physician at Yale University Hospital. Sandra has continued in clinical practice throughout her career in industry, and is currently an attending physician in the Hematology/Oncology clinic at the Duke VA in Durham, NC.monthly basis.operations:In thousands 2017 2016 2017 2016 (in thousands, except share and per share amounts) Revenues $ — $ — $ — $ — Operating Expenses: Research and development 1,061 497 2,260 616 General and administrative 1,338 924 2,987 1,848 Depreciation 5 1 13 2 Total operating expenses 2,404 1,422 5,260 2,466 Loss from operations (2,404 ) (1,422 ) (5,260 ) (2,466 ) Other income (expense): Loss from change in fair value of warrant liability (470 ) — (2,753 ) — Gain from settlement of liability — — 149 — Gain from expiration of warrants — — 1,238 — Other income 9 — 8 — Interest expense (1 ) (10 ) (2 ) (37 ) Net loss $ (2,866 ) $ (1,432 ) $ (6,620 ) $ (2,503 ) $ — $ — 4,620 4,105 2,422 1,939 32 44 7,074 6,088 (7,074 ) (6,088 ) 160 1,577 5 9 42 57 $ (6,867 ) $ (4,445 ) September 30, 2017 comparedMarch 31, 2022 Compared to three months ended September 30, 2016$1.1$4.6 million and $0.5and $4.1 million for the three months ended September 30, 2017March 31, 2022 and 2016,2021, respectively. The increase of approximately $0.6$0.5 million is mainly represents an increase of approximately: $0.1 million related to an increase in R&D associated headcount costs: $0.1 million for sponsored researchincreased clinical trial activity as described above, a license termination fee, and costs related expenses; and, approximately $0.4 million associated with developing and testingto manufacturing of additional drug product as we prepared our IND for Annamycin and for the related clinical trials.$1.3$2.4 million and $0.9and $1.9 million for the three months ended September 30, 2017March 31, 2022 and 2016,2021, respectively. The expense increase of approximately $0.4$0.5 million wasis mainly attributablerelated to the an increase in headcount and associated payroll costs of $0.2 million; $0.3 million of stock based compensation; and, approximately $0.1 million inregulatory legal accounting,services, consulting and other professional expenses. This was offset by a reduction in public listing expenses of $0.2 million.Lossadvisory fees. The Company We recorded a net loss of $0.5gain of $0.2 million in the thirdfirst quarter of 20172022 as compared to a net gain of $1.6 million in the first quarter of 2021, for the change in fair value on revaluation of itsour warrant liability associated with itour warrants issued in conjunction with itsour stock offering in February 2017. The Company isofferings. We are required to revalue certain of its 2017our liability-classified warrants at the time of each warrant exercise, if applicable, and at the end of each reporting period and reflect in the statement of operations a gain or loss from the change in fair value of the warrant in the period in which the change occurred. We calculatecalculated the fair value of the warrants outstanding using the Black-Scholes and Monte Carlo Simulation models.model. A gain results principally from a decline in the Company’sour share price during the period and a loss results principally from an increase in the Company’sour share price.Net Loss. The net loss for the three months ended September 30, 2017 was $2.9 million which included non-cash incomeTable of $0.5 million related to a gain recognized on the expiration of warrants. The net loss also included additional noncash charges for $0.5 million for stock based compensation and other stock based expenses.ContentsNine Months Ended September 30, 2017 compared to nine months ended September 30, 2016Research and Development Expense. R&D expense was $2.3 million and $0.6 million for the nine months ended September 30, 2017 and 2016, respectively. The increase of approximately $1.7 million mainly represents an increase of approximately: $0.3 million related to an increase in R&D headcount and associated payroll costs: $0.3 million for sponsored research and related expenses; approximately $0.2 million associated with developing and testing drug product as we prepare for clinical trials: $0.4 million in clinical trial preparation and $0.5 million related to travel, legal, consultants, and other research costs associated in preparing our IND and Orphan Drug applications with the FDA.General and Administrative Expense. General and administrative expense was $3.0 million and $1.8 million for the nine months ended September 30, 2017 and 2016, respectively. The expense increase of approximately $1.2 million was mainly attributable to the increase in headcount and associated payroll costs of $0.5 million; $0.5 million of stock based compensation; approximately $0.3 million in legal, accounting, consulting, and other professional expenses; approximately $0.1 million in insurance expense; and $0.1 million in travel expenses. These costs were offset by a reduction in public listing expenses of $0.3 million.Loss from Change in Fair Value of Warrant Liability. The Company recorded a net loss of $2.8 million in the nine months ended September 30, 2017 for the change in fair value on revaluation of its warrant liability associated with its warrants issued in conjunction with its stock offering in February 2017. The Company is required to revalue certain of its 2017 warrants at the time of each exercise and at the end of each reporting period and reflect in the statement of operations a gain or loss from the change in fair value of the warrant in the period in which the change occurred. We calculate the fair value of the warrants outstanding using the Black-Scholes and Monte Carlo Simulation models. A gain results principally from a decline in the Company’s share price during the period and a loss results principally from an increase in the Company’s share price.Gain from settlement of liability. During the period, the Company settled a previously incurred expense utilizing shares of its common stock with an attributed value of $3 per share. The gain of roughly $0.2 million reflects the difference in the Company’s share price in the open market as of the settlement date and the $3 per share; which was recorded in the first quarter of 2017.Gain from Expiration of Warrants. The Company recorded a gain during the second quarter of $1.2 million related to the expiration of warrants issued as part of the February 2017 stock offering.Interest expense. Interest expense included expense accrued on our convertible promissory notes issued in 2015 and 2016 bearing interest at the rate of 8% per annum. These convertible promissory notes were all converted into common stock during the second quarter of 2017. Net Loss. The net loss for the nine months ended September 30, 2017 was $6.6 million which included non-cash expenses of approximately $3.3 million which included $2.8 million for change in fair value of warrants liability and $0.5 million for stock based compensation and depreciation.As of September 30, 2017, we had $8.7 million in cash and cash equivalents compared to $5.0 million at December 31, 2016. In February 2017, we completed a public offering of our common stock and warrants, pursuant to which we received approximately $4.5 million in net proceeds, after deducting underwriting discounts and commissions and estimated offering expenses. Additionally, through September 30, 2017, $3.3 million in cash was received from the exercise of warrants issued in our February public offering and $0.4 million from the sale of common stock in our ATM offering. Cash used in operations was $4.9 million for the nine months ended September 30, 2017. This increase over prior year of $2.3 million was mainly due to headcount and general company activity increases, as the Company prepared its IND for Annamycin and readies for the related, upcoming clinical trials during 2017. We believe that our existing cash and cash equivalents as of September 30, 2017 and cash generated already in the fourth quarter will be sufficient to fund our planned operations into the third quarter of 2018. Such plans are subject to change depending on clinical enrollment progress and use of drug product.We will not generate revenue from product sales unless and until we successfully complete development of, obtain regulatory approval for and begin to commercialize one or more of our product candidates, which we expect will take a number of years and is subject to significant uncertainty. Accordingly, we anticipate that we will need to raise additional capital to fund our future operations. Until such time that we can generate substantial revenue from product sales, if ever, we expect to finance our operating activities through a combination of equity offerings and debt financings and we may seek to raise additional capital through strategic collaborations. However, we may be unable to raise additional funds or enter into such arrangements when needed on favorable terms, or at all, which would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our development programs or commercialization efforts or grant to others rights to develop or market product candidates that we would otherwise prefer to develop and market ourselves. Failure to receive additional funding could cause us to cease operations, in part or in full. Furthermore, even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital due to favorable market conditions or strategic considerations, which may cause dilution to our existing stockholders.indicated: Nine Months Ended September 30, 2017 2016 Net cash used in operating activities $ (4,934 ) $ (2,596 ) Net cash used in investing activities (12 ) (110 ) Net cash provided by financing activities 8,675 8,862 Net increase in cash and cash equivalents $ 3,729 $ 6,156 $ (4,805 ) $ (3,624 ) (6 ) — — 74,748 12 (4 ) $ (4,799 ) $ 71,120 Net cashoperating activitiesoperations was $4.9$4.8 million for the ninethree months ended September 30, 2017 comparedMarch 31, 2022. This $1.2 million increase over the prior year period of $3.6 million was primarily due to payments for increased clinical trial activity, costs related to $2.6 million formanufacturing of additional drug product, and increased consulting and advisory fees. These are all a reflection of the same period in 2016. Thisongoing clinical and pre-clinical activity and the associated increase in use of cashgeneral and administrative support for operations is due to our becoming operational post IPO in mid-2016. This mainly included payments made for R&D and services related to our becoming a publicly traded company and related filing fees, along with payments made to MD Anderson for license and maintenance fees.Cash used in investing activitiesNet cash used in investing activities was basically nil for the nine months ended September 30, 2017 compared to $0.1 for the nine months ended September 30, 2016.Net cash provided by financing activities was $8.7 million forninethree months ended September 30, 2017 compared to $8.9 million for the nine months ended September 30, 2016. The activity in 2016 is related to our initialMarch 31, 2022.stock issuance which raised a net $8.5 million, issuanceof an aggregate of 14,273,684 shares of common stock at $3a public offering price of $4.75 per share which raised $0.7 million, and issuance of convertible notes which raised $0.2 million. The activity in 2017 is relatedshare. We granted the underwriters a 30-day option to the Company’s follow-on public offeringpurchase up to an additional 2,141,052 shares of common stock offered in the public offering. The offering closed on February 5, 2021 and warrants. Of this latter amount, $3.8gross proceeds of the offering were approximately $67.8 million, is relatedprior to deducting the underwriting discount and other offering expenses. On February 10, 2021, the underwriters of the public offering exercised in full their option to purchase an additional 2,141,052 shares of common stock at the public offering price of $4.75 per share, bringing total gross proceeds to approximately $78.0 million before underwriting discount.postrelated to past public offerings. Gross proceeds received due to these exercises approximated $63,000.follow-on offering.The financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.We believe that the following accounting policies are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.AcquisitionWe acquired Moleculin, LLC on May 2, 2016, and, since such date our financial statements have included the operations of Moleculin, LLC. We account for acquired businesses using the acquisition method of accounting, which requires, among other things, that most assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date and that the fair value of acquired in-process research and development (“IPR&D”) be recorded on the balance sheet. Transaction costs are expensed as incurred. Any excess of the consideration transferred over the assigned values of the net assets acquired will be recorded as goodwill. The Company obtained input from third-parties regarding its tangible and intangible assets and other information necessary to measure the fair value of the assets acquired and liabilities assumed in connection with the acquisition of Moleculin, LLC. Research and Development CostsWe record accrued expenses for estimated costs of our research and development activities conducted by third-party service providers, which include the conducting of pre-clinical studies and the preparation for clinical trials and contract manufacturing activities. We record the estimated costs of research and development activities based upon the estimated amount of services provided but not yet invoiced, and we include these costs in accrued liabilities in the balance sheets and within research and development expense in the statement of operations. These costs are a significant component of our research and development expenses. We record accrued expenses for these costs based on the estimated amount of work completed and in accordance with agreements established with these third parties.We estimate the amount of work completed through discussions with internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services. We make significant judgments and estimates in determining the accrued balance in each reporting period. As actual costs become known, we adjust our accrued estimates. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed may vary from our estimates and could result in us reporting amounts that are too high or too low in any particular period. Our accrued expenses are dependent, in part, upon the receipt of timely and accurate reporting from clinical research organizations and other third-party service providers. To date, theredifferenceschanges to our critical accounting policies and use of estimates from those disclosed in our accrued expensesForm 10-K for the year ended December 31, 2021. For a discussion of our critical accounting policies and use of estimates, refer to actual expenses.ImpairmentManagement’s Discussion and Analysis of Long-Lived AssetsManagement reviews long-lived assetsFinancial Condition and Results of Operations – Critical Accounting Policies and Significant Estimates in Part II, Item 7 of our Annual Report on Form 10-K for impairment whenever events or changes in circumstances indicate that the carrying amount may not be realizable or at a minimum annually during the fourth quarter of the year. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset’s carrying value to determine if an impairment of such asset is necessary. The effect of any impairment would be to expense the difference between the fair value of such asset and its carrying value. to us, as we are a smaller reporting company.Procedures.(“CEO”)(CEO), who is our principal executive officer, and Chief Financial Officer (“CFO”)(CFO), who is our principal financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosures. Our CEO and CFO have evaluated these disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q and have determined that such disclosure controls and procedures were not effective as disclosed below.In light of the material weakness described below, we performed additional procedures during the quarter and additional analysis and procedures post-closing to ensure our financial statements were preparedMarch 31, 2022.accordance with generally accepted accounting principles. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board Auditing Standard 1305) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.During the last quarter of fiscal 2016, and as our operational activities increased, management determined that it does not have sufficient segregation of duties within its accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to maintain effective segregation of duties on our assessment of our internal control over financial reporting and has concluded that the control deficiency represents a material weakness. Management added a full-time controller during the quarter ended September 30, 2017 and intends to further increase its accounting staff, as soon as economically feasible and sustainable, to remediate this material weakness.has beenwas no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15-d-15(f) under the Exchange Act) during our most recent calendar quarterthe three months ended March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.We are not a party to any pending legal proceedings.2016.On July 29, 2017, we agreed to issue two warrants to purchase 100,000 and 50,000 shares of common stock at exercise prices of $2.41 and $3.00 per share, respectively, to a consultant, subject to approval by Nasdaq of a listing of additional shares application, which was received in August 2017. The consultant was an accredited investor.We believe that the issuances were exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act regarding transactions not involving a public offering.On May 31, 2016, we completed our initial public offering, which commenced on May 2, 2016, pursuant to which we sold 1,540,026 shares of our common stock at $6.00 per share with gross proceeds of $9,240,156 and net proceeds of $8,464,183 after deducting underwriting discounts and commissions and offering expenses payable by us. The offer and sale of all the shares in the offering were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-209323), which was declared effective by the SEC on May 2, 2016. Bonwick Capital Partners LLC and Network 1 Financial Securities, Inc. acted as underwriters for the offering.There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus filed with the SEC on May 3, 2016 pursuant to Rule 424(b). No direct or indirect payments were made by us to any of our directors or officers or their associates, to persons owning ten percent or more of our common stock or to their associates, or to our affiliates, other than payments in the ordinary course of business to officers for salaries and those payments disclosed in “Item 1. Business” of our Form 10-K for the fiscal year 2016 with regard to the license arrangements with HPI. Pending the uses described, we intend to invest the net proceeds in short-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.None.Number 10.1 31.1*10.1 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) / MOLECULIN BIOTECH, INC. Date: November 13, 2017May 11, 2022Walter V. KlempJonathan P. Foster Walter V. Klemp, Chief Officer and Chairman(Principal Executive Officer)Date: November 13, 2017By:/s/ Jonathan P. FosterJonathan P. Foster,Executive VPVice President & Chief Financial Officer33