GNPX Genprex Inc

Note 1 - Description of Business and Basis of Presentation

Unless the context requires otherwise, references to “Genprex,” the “Company,” “we,” “us” or “our” in this Quarterly Report on Form 10-Q refer to Genprex, Inc. Genprex, incorporated in Delaware in April 2009, is a clinical stage gene therapy company pioneering the development of gene-based therapies for large patient populations with unmet medical needs. The Company’s oncology platform utilizes its systemic, non-viral Oncoprex® Delivery System which uses lipid-based nanoparticles in a lipoplex form to deliver tumor suppressor gene-expressing plasmids to cancer cells.  The product is administered intravenously, where it is taken up by tumor cells that then express tumor suppressor proteins that were deficient in the tumor. The Company’s diabetes technology is designed to work in Type 1 diabetes by transforming alpha cells in the pancreas into functional beta-like cells, which can produce insulin but may be distinct enough from beta cells to evade the body’s immune system. In Type 2 diabetes, the Company’s technology is believed to work by replenishing and rejuvenating exhausted beta cells that make insulin.

Oncology Platform

Genprex’s lead oncology drug candidate, Reqorsa® (quaratusugene ozeplasmid), previously referred to as GPX-001, is a gene therapy initially being developed in combination with prominent, approved cancer drugs to treat Non-Small Cell Lung Cancer (“NSCLC”) and Small Cell Lung Cancer (“SCLC”). REQORSA has multimodal effects on cancer cells.  It harms the metabolism of cancer cells, which leads to reduced cancer cell growth.  It also interrupts cell signaling pathways that cause replication and proliferation of cancer cells, re-establishes pathways for apoptosis, or programmed cell death, in cancer cells, and increases the immune response against cancer cells. In preclinical studies, REQORSA has been shown to be complementary with targeted drugs and immunotherapies. The Company’s strategy is to develop REQORSA in combination with current approved therapies and the Company believes REQORSA’s unique attributes position it to provide treatments that improve on these current therapies for patients with NSCLC, SCLC, and possibly other cancers. 

The TUSC2 gene, which is the key component of REQORSA and plays a vital role in cancer suppression and normal cell metabolism, is one of a series of genes on the short arm of Chromosome 3 whose therapeutic use is covered by the Company’s exclusive worldwide licenses from The University of Texas MD Anderson Cancer Center (“MD Anderson”). Genprex believes that its ONCOPREX Delivery System allows for the delivery of a number of cancer-fighting tumor suppressor genes, alone or in combination with other cancer therapies, to combat multiple types of cancer and the Company is in early stages of discovery programs to identify other cancer candidates. In August 2022, Genprex entered into a three-year sponsored research agreement with MD Anderson to support further preclinical studies of TUSC2 and other tumor suppressor genes. Additionally, the Company is collaborating with MD Anderson to discover, develop and utilize biomarkers to select the patient population most likely to respond to REQORSA and enable decisions on progression of the Company’s drug candidates to the next phase of development. MD Anderson is currently analyzing biomarkers that would indicate lack of response in lung cancer that could enrich the Company’s population of responders in its clinical trials and enhance patient screening and enrollment in order to increase the likelihood of potential success of the Acclaim studies for the Company.

Acclaim-3: The Company is currently enrolling and treating patients in the Phase 1 dose escalation portion of its Phase 1/2 Acclaim-3 clinical trial. The Acclaim-3 clinical trial uses a combination of REQORSA and Genentech, Inc.’s Tecentriq® (atezolizumab) as maintenance therapy in patients with extensive stage small cell lung cancer (“ES-SCLC”) who did not develop tumor progression after receiving Tecentriq and chemotherapy as initial standard treatment. Patients are treated with REQORSA and Tecentriq until disease progression or unacceptable toxicity is experienced. In January 2024, the Company opened the Phase 1 portion of the Acclaim-3 study for enrollment and enrolled and dosed the first patient in May 2024. In October 2024, the Company announced the completion of the 0.09 mg/kg dose group of the Phase 1 portion and that there were no dose limiting toxicities in this dose group.  The Acclaim-3 Safety Review Committee therefore approved escalation to the highest dose group of 0.12 mg/kg, which will now be enrolled. The Company continues to anticipate completion of enrollment in the Phase 1 dose escalation portion of the study and to start the Phase 2 expansion portion of the study in the second half of 2024, dependent on the number of patients needed to be enrolled in the 0.12 mg/kg dose group. The first patient treated in the Phase 1 dose escalation portion of the Acclaim-3 trial experienced an initial positive response after enrollment and dosing commenced in May.  The patient had a partial remission (“PR”), which is defined as at least a thirty percent (30%) decrease in tumor size, from the time the patient had a baseline CT scan after induction therapy and prior to the start of maintenance therapy to the time of the CT scan performed after two cycles of maintenance therapy.  As the maintenance therapy consists of REQORSA and Tecentriq, and the patient had already received four cycles of Tecentriq during induction therapy and thus responses to Tecentriq would likely have occurred earlier, the Company believes this suggests that REQORSA may be providing clinical benefit. A follow-up CT scan, performed after four cycles of maintenance therapy (three months), confirmed that the patient still had a 30% decrease in tumor size in measurable lesions; however, one lesion not previously measurable had grown in size, thus leading to a conclusion of disease progression at three months. In June 2023, the United States Food and Drug Administration (“FDA”) granted Fast Track Designation for the Acclaim-3 treatment combination of REQORSA and Tecentriq as maintenance therapy in patients with ES-SCLC who did not develop tumor progression after receiving Tecentriq and chemotherapy as initial standard treatment.  In August 2023, the FDA granted Orphan Drug Designation to REQORSA for the treatment of SCLC. 

Acclaim-2: The Acclaim-2 trial involved a combination of REQORSA and Merck & Co.’s Keytruda® (pembrolizumab) in patients with late-stage NSCLC whose disease has progressed after treatment with Keytruda. As previously announced in August 2024, based on a number of factors, including enrollment challenges and delays due to competition for investigators and eligible patients with numerous other trials involving the same patient population, the Company decided to cease enrollment of new patients in the Acclaim-2 trial to prioritize its resources and focus on the other two Acclaim trials in SCLC and NSCLC, respectively.  The one patient continuing to receive REQORSA treatment in the Phase 1 dose escalation portion of the study will continue to be treated until disease progression.

Acclaim-1: The Company is currently enrolling and treating patients in the Phase 2a expansion portion of its Phase 1/2 Acclaim-1 clinical trial. The Acclaim-1 trial uses a combination of REQORSA and AstraZeneca’s Tagrisso® (osimertinib) in patients with late-stage NSCLC that has activating epidermal growth factor receptor (“EGFR”) mutations and progression after treatment with Tagrisso. Following the May 2023 completion of the Phase 1 dose escalation portion of the study, the Acclaim-1 Safety Review Committee (“Acclaim-1 SRC”) approved advancement from the Phase 1 dose escalation portion to the Phase 2a expansion portion of the study. Based on a review of safety data which showed no dose limiting toxicities, the Acclaim-1 SRC determined the recommended Phase 2 dose of REQORSA to be 0.12 mg/kg. This was the highest dose level delivered in the Phase 1 portion of the study and is twice the highest dose level delivered in the Company’s prior clinical trial combining REQORSA with Tarceva® (erlotinib) for the treatment of late-stage lung cancer. There are still two patients originally enrolled in the Phase 1 dose escalation portion of the study who have had prolonged progression-free survival and continue to receive treatment with REQORSA and Tagrisso, one who attained a PR after the second course of REQORSA and Tagrisso and has maintained this response through 41 courses of treatment (approximately 30 months), and one with stable disease without disease progression through 26 courses of treatment (approximately 19 months) who is also continuing to receive REQORSA and Tagrisso treatment.  Genprex opened the Phase 2a expansion portion of the study and enrolled and dosed the first patient in January 2024.  The initial trial design of the Phase 2a expansion portion of the study included two cohorts with half being patients who received only prior Tagrisso treatment and the other half being patients who received prior Tagrisso treatment and chemotherapy.  However, as previously announced in August 2024, based on resource prioritization and to focus on the patients for whom REQORSA is most likely to show a benefit, the Company decided to limit its enrollment efforts moving forward to patients who received only prior Tagrisso treatment and cease enrollment of the second cohort (patients who received prior Tagrisso treatment and chemotherapy). The Phase 2a expansion portion of the trial with one cohort is now expected to enroll approximately 33 patients. The Phase 2b randomized portion of the study, in which patients progressing on prior Tagrisso treatment will be randomized 1:1 to either REQORSA and Tagrisso combination therapy or to platinum-based chemotherapy, will remain unchanged. There will be an interim analysis following the treatment of 19 patients in the Phase 2a portion of the Acclaim-1 study. The Company expects to complete the enrollment of the first 19 patients in the Phase 2a expansion portion of the study and conduct an interim analysis in the first half of 2025. The FDA has granted Fast Track Designation for the Acclaim-1 treatment combination of REQORSA and Tagrisso in NSCLC patients who have progressed after Tagrisso treatment.  

Diabetes Gene Therapy

In diabetes, the Company has exclusively licensed from the University of Pittsburgh of the Commonwealth System of Higher Education (“University of Pittsburgh”) multiple technologies relating to the development of a gene therapy product for each of Type 1 and Type 2 diabetes. The same general novel approach is used in each of Type 1 and Type 2 diabetes whereby an adeno-associated virus (“AAV”) vector containing the Pdx1 and MafA genes is administered directly into the pancreatic duct. In humans, this can be done with a routine endoscopy procedure. The Company’s diabetes product candidates are currently being evaluated and optimized in preclinical studies at the University of Pittsburgh. GPX-002 is being developed using the same construct for the treatment of both Type 1 diabetes and Type 2 diabetes. GPX-002 for Type 1 diabetes is designed to work by transforming alpha cells in the pancreas into functional beta-like cells, which can produce insulin but may be distinct enough from beta cells to evade the body’s immune system. In a similar approach, GPX-002 for Type 2 diabetes (formerly known as GPX-003), where autoimmunity is not at play, is believed to work by replenishing and rejuvenating exhausted beta cells that make insulin. Genprex finalized the components of the diabetes construct to take forward for nonclinical studies and in December 2023, the Company submitted a request to meet with the FDA to obtain their guidance on the nonclinical studies needed to file an Investigational New Drug (“IND”) application and initiate first-in-human studies. As a result of the FDA’s response, the Company will continue with its planned additional nonclinical studies before requesting regulatory guidance for the IND-enabling studies. The Company is currently working with the University of Pittsburgh on species analyses for the animal models as well as on other regulatory and clinical strategic planning and anticipates requesting further regulatory guidance from the FDA in the first half of 2025. In October 2023, Genprex entered into a one-year extension to its August 2022 sponsored research agreement with the University of Pittsburgh for the use of GPX-002 in a non-human primate (“NHP”) model in Type 2 diabetes. The extension includes a revised research plan to encompass the Company’s most recent technologies to which it acquired exclusive rights from the University of Pittsburgh in July 2023. These include using a MafB promoter to drive expression of the Pdx1 and MafA transcription factors that can potentially be used for both Type 1 and Type 2 diabetes. Additionally, in September 2024, Genprex announced that it is considering various strategic alternatives and opportunities to enhance stockholder value, including evaluating ways to optimize its clinical and research programs and operational strategies, such as its intention to potentially transfer the Company’s diabetes clinical development program and its diabetes gene therapy assets into a new, initially wholly-owned subsidiary (“NewCo”).  NewCo would focus on developing and commercializing GPX-002.  The spin-out, if completed as presently contemplated, would result in NewCo focusing on developing GPX-002, while Genprex would retain its oncology clinical development programs and other oncology pipeline assets. The potential formation and transfer of the clinical development program into the wholly-owned subsidiary is currently anticipated to occur by the end of 2024, subject to adequate financing, the satisfaction of customary conditions and final approval from the Genprex management and board of directors.  

Capital Requirements, Liquidity and Going Concern Considerations

The Company's unaudited condensed financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has sustained substantial losses from operations since inception and has no current source of revenue. In addition, the Company has used, rather than provided, cash in its operations. Genprex expects to continue to incur significant expenditures to further clinical trials for the commercial development of its patents.

The Company recognizes that it must obtain additional capital resources to successfully commercialize its product candidates. To date, Genprex has received funding in the form of equity and debt, and the Company plans to seek additional funding in the future. However, no assurances can be given that it will be successful in raising additional capital. If the Company is not able to timely and successfully raise additional capital, the timing of its clinical trials, financial condition and results of operations may be materially and adversely affected. These unaudited condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities.

Genprex believes that its current cash and cash equivalents will be sufficient to fund expenditure requirements for its necessary operations and expected clinical trial activities into December 2024. The Company has based these estimates, however, on assumptions that may prove to be wrong, and could spend available financial resources much faster than it currently expects. The Company will need to raise additional funds to continue funding its development and operations. The Company plans to secure such additional funding, although there are no guarantees or commitments for additional funding. 

As a result of its recurring losses from operations and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern. The unaudited condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Note 2 - Summary of Significant Accounting Policies

Genprex’s unaudited condensed financial statements have been prepared in accordance with US GAAP and the requirements of the United States Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that is normally required by US GAAP can be condensed or omitted. Accordingly, they do not include all of the information and footnotes normally included in financial statements prepared in conformity with US GAAP. The December 31, 2023 condensed balance sheet was derived from the December 31, 2023 audited financial statements. Genprex’s unaudited condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s 2023 Annual Report on Form 10-K, filed with the SEC on April 1, 2024 (the “Form 10-K”).

The accompanying condensed financial statements are unaudited and include all adjustments (consisting of normal recurring adjustments) that management considers necessary for a fair presentation of Genprex’s condensed financial position and results of operations for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year.

A summary of Genprex’s significant accounting policies consistently applied in the preparation of the accompanying unaudited condensed financial statements follows.

Note 3 - Intellectual Property

As of September 30, 2024, Genprex owned or had exclusive license agreements on 22 granted patents and 26 pending patent applications worldwide for technologies developed in-house or by researchers at the National Cancer Institute, MD Anderson, the University of Texas Southwestern Medical Center, and the University of Pittsburgh. These patents comprise various therapeutic, diagnostic, technical and processing claims and costs are expensed as incurred. 

University of Pittsburgh

On February 11, 2020, Genprex entered into an exclusive license agreement with the University of Pittsburgh for patented gene therapy technologies relating to the potential treatment of Type 1 and Type 2 diabetes. This license was first amended on August 17, 2022, to extend the milestone related to the filing of a new investigational drug (“IND”) application. This license was amended again on November 3, 2022, to include a new licensed glucagon promoter technology related to Type 1 diabetes and set FDA and clinical milestones related to the glucagon technology (see Note 7 – Commitments and Contingences – Commitments – University of Pittsburgh).

On November 22, 2022, Genprex entered into an exclusive license agreement with the University of Pittsburgh relating to the transformation of macrophages enabling them to reduce autoimmunity activity in Type 1 diabetes. 

On December 29, 2022, Genprex entered into an exclusive license agreement with the University of Pittsburgh relating to the use of an insulin promoter in combination with the Company’s existing gene therapy, including the Pdx1 and MafA transcription factors, as a potential treatment for Type 2 diabetes.

On July 14, 2023, Genprex entered into an exclusive license agreement with the University of Pittsburgh related to a gene therapy for both Type 1 and Type 2 diabetes using a MafB promoter to drive expression of the Pdx1 and MafA transcription factors. 

The University of Texas MD Anderson Cancer Center

On May 4, 2020, Genprex entered into an exclusive worldwide license agreement with The Board of Regents of the University of Texas System on behalf of MD Anderson relating to a portfolio of patent applications and related technology for the treatment of cancer using the Company’s lead drug candidate and immunotherapies.  

Note 4 - Equity

Reverse Stock Split

At Genprex’s special meeting of stockholders held on December 14, 2023, the Company’s stockholders granted the Company’s board of directors the discretion to effect a reverse stock split of the Company’s issued and outstanding common stock through an amendment (the “Certificate of Amendment”) to the Company’s Amended and Restated Certificate of Incorporation, as amended and restated to date, at a ratio of not less than 1-for-10 and not more than 1-for-50, such ratio to be determined by the Company’s board of directors. On January 19, 2024, the Company’s board of directors approved a 1-for-40 reverse stock split and authorized the filing of the Certificate of Amendment for the Reverse Split with the Secretary of State of the State of Delaware. The Reverse Split became effective in accordance with the terms of the Certificate of Amendment on February 2, 2024. The Certificate of Amendment did not change the number of authorized shares of common stock or the par value. All references in these unaudited condensed financial statements to shares, share prices, exercise prices, and other per share information in all periods have been adjusted, on a retroactive basis, to reflect the Reverse Split.

Registered Direct Offerings

On March 1, 2023, Genprex completed a registered direct offering, in which the Company sold to an accredited healthcare-focused institutional investor an aggregate of 95,239 shares of its common stock and warrants to purchase up to 95,239 shares of its common stock, at a combined offering price of $42.00 per share of common stock and accompanying warrant. The warrants are exercisable immediately upon issuance, expire five years from the date of issuance and have an exercise price of $44.00 per share. The Company received net proceeds of approximately $3.6 million after $400,000 of commissions and expenses, excluding any proceeds that may be received in the future from any exercise of the warrants.

On July 21, 2023, Genprex completed a registered direct offering priced at the market under Nasdaq rules, in which the Company sold to accredited healthcare-focused institutional investors an aggregate of (i) 185,644 shares of its common stock, and (ii) warrants to purchase up to 185,644 shares of its common stock, at a combined offering price of $40.40 per share of common stock and accompanying warrant. The warrants are exercisable immediately upon issuance, expire 5 years from the date of issuance and have an exercise price of $35.40 per share.  Also, the Company agreed to issue to H.C. Wainwright & Co., LLC or its designees (the “Placement Agent”) warrants to purchase up to an aggregate of 11,140 shares of the Company’s common stock. The warrants issued to the Placement Agent have substantially the same terms as the warrants issued to the investors except that the Placement Agent warrants have an exercise price of $50.50 per share and expire on July 18, 2028. Genprex received net proceeds of approximately $6.7 million after approximately $800,000 of commissions and expenses, excluding any proceeds that may be received in the future from any exercise of the warrants.

On March 21, 2024, the Company completed a registered direct offering priced at the market under Nasdaq rules, in which the Company sold to an institutional investor an aggregate of (i) 165,000 shares of common stock, (ii) pre-funded warrants (the  “March 2024 Pre-Funded Warrants”) exercisable for up to an aggregate of 1,377,112 shares of common stock, and (iii) warrants (the  “March 2024 Common Warrants”) exercisable for up to an aggregate of 1,542,112 shares of common stock.  The offering price for each share of common stock and accompanying March 2024 Common Warrant was $4.215, and the offering price for each March 2024 Pre-Funded Warrant and accompanying March 2024 Common Warrant was $4.2149. The March 2024 Pre-Funded Warrants were exercisable immediately upon issuance at an exercise price of $0.0001 per share and expired when exercised in full. The March 2024 Common Warrants are exercisable immediately upon issuance at an exercise price of $4.09 per share and will expire in five years from the date of issuance. The Company received net proceeds of approximately $5.8 million after commissions and expenses, excluding any proceeds received from any exercise of the March 2024 Common Warrants. In connection with the offering, the Company also amended certain existing warrants to purchase up to an aggregate of 194,248 shares of common stock that were previously issued to investors in March 2023 and July 2023, with exercise prices of $44.00 and $35.40 per share and expiration dates of March 1, 2028 and July 21, 2028 for $0.125 per amended warrant, such that the amended warrants have a reduced exercise price of $4.09 per share and an expiration date of five years from the closing of the March 2024 offering. As of September 30, 2024, all of the 1,377,112  March 2024 Pre-Funded Warrants had been exercised for shares of common stock.

At-The-Market Offering

On December 13, 2023, Genprex entered into an At The Market (“ATM”) Offering Agreement (the “Agreement”) with H.C. Wainwright & Co., LLC, serving as agent (the “Agent”) with respect to an at-the-market offering program (the “2023 ATM Facility”) under which the Company may offer and sell through the Agent, from time to time at its sole discretion, up to such number or dollar amount of shares of its common stock (the “Shares”) as registered on the prospectus supplement covering the 2023 ATM Facility offering, as may be amended or supplemented from time to time. Any Shares offered and sold pursuant to this Agreement will be issued pursuant to the Company’s currently effective shelf Registration Statement on Form S-3 (File No. 333-271386) filed with the SEC on April 21, 2023, which was declared effective on June 9, 2023. The Company has agreed to pay the Agent a commission equal to three percent (3%) of the gross sales proceeds of any Shares sold through the Agent under the Agreement, and also have provided the Agent with customary indemnification and contribution rights. During the three months ended  September 30, 2024, the Company sold 2,149,417 shares of common stock for aggregate net proceeds of $1,215,105 under the 2023 ATM Facility. During the nine months ended  September 30, 2024, the Company sold 2,318,450 shares of common stock for aggregate net proceeds of $2,117,752 under the 2023 ATM Facility (inclusive of the shares issued during the three months ended September 30, 2024, as described in the immediately preceding sentence).

On November 18, 2022, Genprex entered into an Equity Distribution Agreement with JMP Securities LLC (“JMP Securities”) pursuant to which the Company could sell from time to time, at its option, shares of its common stock through JMP Securities, as sales agent (the “2022 ATM Facility”), up to an aggregate offering price of $50 million. Sales of the shares were made under the Company’s previously filed Registration Statement on Form S-3 (Reg. No. 333-239134), by means of ordinary brokers’ transactions on the NASDAQ Global Market or otherwise. Additionally, under the terms of the Equity Distribution Agreement, the shares could be sold at market prices, at negotiated prices or at prices related to the prevailing market price. Genprex agreed to pay JMP Securities a commission of 3.0% of the gross proceeds from the sale of the shares. The Company did not use the 2022 ATM Facility during the three months ended  September 30, 2023. During the nine months ended  September 30, 2023, the Company sold 1,342 shares of common stock for aggregate net proceeds of $78,355 under the 2022 ATM Facility. On December 12, 2023, the Company provided notice to JMP Securities of its termination of the 2022 ATM Facility. The termination of the Equity Distribution Agreement with JMP Securities was effective as of December 13, 2023. 

Stock Issuances

During the three months ended September 30, 2024, Genprex issued (i) 5,000 shares of common stock for services provided to the Company valued at $9,650 to the Chairman of its Scientific Advisory Board, (ii) 779,000 shares of common stock upon the exercise of pre-funded warrants at a nominal price associated with the Company's March 2024 offering, and (iii) 2,149,417 shares of common stock sold for aggregate net proceeds of $1,215,105 under the Company’s 2023 ATM Facility. 

During the nine months ended September 30, 2024, Genprex issued (i) 10,125 shares of common stock for services provided to the Company valued at $25,670 to the Chairman of its Scientific Advisory Board, (ii) 36,250 shares of common stock to service providers of the Company valued at $179,550, (iii) 31,623 shares of common stock upon the vesting of restricted stock units (“RSUs”) valued at $96,460 to Company executives and employees, non-employee directors, and former Company executives (Mr. Varner and Ms. Vaczy) pursuant to the terms of employment and/or separation agreements, (iv) 64,690 shares of common stock due to adjustments related to the Company's Reverse Split, (v) 165,000 shares of common stock sold for aggregate net proceeds of approximately $5.8 million associated with the Company's March 2024 offering, as described above, (vi) 2,318,450 shares of common stock sold for aggregate net proceeds of $2,117,752 under the Company's 2023 ATM Facility, as described above, and (vii) 1,377,112 shares of common stock upon the exercise of pre-funded warrants at a nominal price associated with the Company's March 2024 offering (inclusive of the shares issued during the three months ended  September 30, 2024, as described in the immediately preceding sentence).

During the three months ended September 30, 2023, the Company issued (i) 125 shares of common stock for services provided to the Company valued at $4,800 to the Chairman of our Scientific Advisory Board, (ii) 185,644 shares of common stock sold for aggregate net proceeds of approximately $6.7 million associated with the Company’s July 2023 offering, as described above and (iii) 500 shares of common stock upon the exercise of options by a former board member. During the nine months ended September 30, 2023, the Company issued (i) 375 shares of common stock for services provided to the Company valued at $17,150 to the Chairman of the Company's Scientific Advisory Board (inclusive of the 125 shares issued during the three months ended September 30, 2023, as described in the immediately preceding sentence), (ii) 1,342 shares of common stock for aggregate net proceeds of $78,355 under the 2022 ATM Facility, (iii) 280,883 shares of common stock sold for aggregate net proceeds of approximately $10.5 million associated with the Company's March 2023 and July 2023 offerings, as described above, and (iv) 500 shares of common stock upon the exercise of options by a former board member (inclusive of the shares issued during the three months ended September 30, 2023, as described in the immediately preceding sentence).

Preferred Stock

Genprex is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.001 per share, none of which are outstanding as of  September 30, 2024 and  December 31, 2023.

Common Stock

Genprex is authorized to issue 200,000,000 shares of common stock with a par value of $0.001 per share, all of which are voting common stock. There were 5,489,152 and 1,485,902 shares of its common stock outstanding as of  September 30, 2024 and  December 31, 2023, respectively. 

Common Stock Purchase Warrants

Common stock purchase warrant activity for the three and nine months ended September 30, 2024 and 2023, respectively, is as follows:

The Company (i) did not issue any warrants, and (ii) issued 779,000 shares of common stock associated with the partial exercise of March 2024 Pre-Funded Warrants, during the three months ended  September 30, 2024. During the nine months ended  September 30, 2024, and in connection with the registered direct offering, with an institutional investor, completed on March 21, 2024, Genprex (i) issued pre-funded warrants to purchase up to an aggregate of 1,377,112 shares of common stock at a nominal exercise price of $0.0001 per share, the remaining balance of the purchase price of each share of common stock associated with each pre-funded warrant net of the portion of the subscription price therefor paid at closing, (ii) issued warrants to purchase up to 1,542,112 shares of common stock, at an exercise price of $4.09 per share, (iii) issued warrants to purchase up to 92,527 shares of common stock to H.C. Wainwright & Co., LLC or its designees (“Placement Agent”), at an exercise price of $5.2688 per share, (iv) amended existing warrants to purchase up to an aggregate of 194,248 shares of common stock that were previously issued to the same institutional investor in March 2023 and July 2023, such that the amended warrants have a reduced exercise price of $4.09 per share and an expiration date of five years from the closing of the March 2024 offering, and (v) issued 598,112 shares of common stock associated with the partial exercise of March 2024 Pre-Funded Warrants (inclusive of the shares issued during the three months ended  September 30, 2024, as described in the immediately preceding sentence). During the three and nine months ended September 30, 2024, Genprex recorded share-based compensation of $2,281 and $18,039, respectively, associated with the vesting and issuance of warrants. The Company does not expect to record any additional share-based compensation for time-based vesting through the end of the fiscal year 2024 and $300,000 of share-based compensation based on performance-based vesting in the future with respect to its warrants outstanding as of  September 30, 2024.

The Company issued (i) warrants to purchase up to an aggregate of 3,500 shares of common stock to service providers at exercise prices ranging from $26.00 to $37.94 per share, the fair market value of a share of common stock on the date of issuance, (ii) warrants to purchase up to 185,644 shares of common stock to accredited healthcare-focused institutional investors in connection with the registered direct offering completed on July 21, 2023, at an exercise price of $35.40 per share, and (iii) warrants to purchase up to 11,140 shares of common stock to H.C. Wainwright & Co., LLC or its designees (“Placement Agent”) in connection with the registered direct offering completed on July 21, 2023, at an exercise price of $50.50 per share, during the three months ended  September 30, 2023. During the nine months ended   September 30, 2023, the Company (i) issued warrants to purchase up to an aggregate of 4,250 shares of common stock to service providers at exercise prices ranging from $26.00 to $66.00 per share, the fair market value of a share of common stock on the date of issuance, (ii) issued warrants to purchase up to an aggregate of 292,023 shares of common stock at exercise prices ranging from $29.20 to $66.00 per share to service providers, institutional investors, and the Placement Agent, and (iii) was deemed to cancel warrants to purchase 960 shares of common stock upon termination of warrants previously issued to placement agents associated with our Initial Public Offering in March 2018 (inclusive of the warrants issued during the three-month period ended September 30, 2023, as described in the immediately preceding sentence). During the three and nine months ended September 30, 2023, the Company recorded share-based compensation of $50,853 and $128,164, respectively, associated with the vesting and issuance of warrants. 

As of September 30, 2024, the Company had outstanding warrants to purchase 1,981,079 shares of common stock at a weighted average exercise price of $10.05 that have been issued to various consultants, investors, and placement agents. The warrants are fully vested, are exercisable for a period of up to five years, enable the holders to purchase shares of the Company’s common stock at exercise prices ranging from $4.09 to $288.80 per share and have per-share fair values ranging from $1.21 to $185.00, based on Black-Scholes-Merton pricing models. The following assumptions were used in calculation of fair market value of options via Black-Scholes-Merton pricing models for the three and nine months ended September 30, 2024 and 2023:

2018 Equity Incentive Plan

The Company’s board of directors and stockholders have approved and adopted the Genprex 2018 Equity Incentive Plan (“2018 Plan”), which became effective on the completion of the Company’s IPO on April 3, 2018. The 2018 Plan provides for the grant of incentive stock options that are intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (“ISOs”), nonstatutory stock options, stock appreciation rights, restricted stock awards, RSU awards, performance-based stock awards and performance-based cash awards. ISOs may be granted only to employees. All other awards may be granted to employees, including officers, and to the Company’s non-employee directors and consultants.

A total of 104,000 shares of common stock were initially available under the 2018 Plan, plus a number of shares of common stock (not to exceed 65,719 shares) subject to outstanding awards under the Company’s 2009 Equity Incentive Plan (the “2009 Plan”) as of the IPO that expire, are forfeited or otherwise terminate or that are used to cover the exercise price or applicable tax withholdings. No further grants will be made under the 2009 Plan.

In addition, the number of shares of common stock reserved for issuance under the 2018 Plan automatically increases on January 1 of each year, since  January 1, 2019, by 5% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the Company’s board of directors or a committee of the board of directors appointed to administer the 2018 Plan.

On  January 1, 2023 and 2024, the number of shares of common stock reserved for issuance under the 2018 Plan was increased by an aggregate of 60,132 and 74,294 shares, respectively. As of September 30, 2024, a total of 96,617 shares of common stock remain available for issuance under the 2018 Plan.

2018 Employee Stock Purchase Plan

The Company’s board of directors and stockholders approved and adopted the Genprex 2018 Employee Stock Purchase Plan (“ESPP”), which became effective on April 3, 2018. The ESPP has not yet been utilized as a benefit available to the Company’s employees. The ESPP authorizes the issuance of 5,202 shares of common stock pursuant to purchase rights that may be granted to eligible employees. The number of shares of common stock reserved for issuance under the ESPP is automatically increased on January 1 of each calendar year, beginning on January 1, 2019, by 2% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the administrator of the ESPP. The administrator of the ESPP determined not to increase the number of shares reserved for issuance under the ESPP on  January 1, 2024.

Stock Options

As of September 30, 2024, Genprex had outstanding stock options to purchase 283,792 shares of common stock that have been granted to various executives, employees, non-employee directors, and independent contractors of the Company, including outstanding stock options to purchase 25,417 shares of common stock issued as inducement grants, outside of the 2018 Plan, associated with the hiring of new executives in 2021 and 2023. These options vest immediately or over periods ranging from 12 to 48 months, are exercisable for a period of up to ten years, and enable the holders to purchase shares of the Company’s common stock at exercise prices ranging from $18.00 to $392.00 per share. The per-share fair values of these options range from $12.62 to $317.20. There were no options issued for the three and nine months ended September 30, 2024. Assumptions of the Black-Scholes-Merton pricing model for options issued for the three and nine months ended September 30, 2024, and 2023, respectively, is as follows:

The Company did not issue stock options for the three or nine months ended   September 30, 2024. During the three months ended  September 30, 2024, the Company cancelled stock options to purchase 460 shares of common stock with exercise prices ranging from $54.80 to $59.60 per share in connection with the termination of employees. During the nine months ended  September 30, 2024, the Company cancelled stock options to purchase 2,091 shares of common stock with exercise prices ranging from $32.40 to $80.00 per share in connection with the termination of employees (inclusive of the options cancelled during the three months ended September 30, 2024 described in the immediately preceding sentence).

During the three months ended  September 30, 2023, the Company (i) granted stock options to purchase an aggregate of 5,000 shares of common stock with an exercise price of $18.00 per share to an employee, (ii) cancelled options to purchase 308 shares of common stock at exercise prices ranging from $88.00 to $142.00 per share in connection with the termination of certain employees, and (iii) issued 500 shares of the Company's common stock upon the exercise of options held by a former board member with an exercise price of $12.00 per share. During the nine months ended  September 30, 2023, the Company (i) granted stock options to purchase an aggregate of 8,251 shares of common stock with exercise prices ranging from $18.00 to $60.40 per share to employees, (ii) cancelled options to purchase 308 shares of common stock at exercise prices ranging from $88.00 to $142.00 per share in connection with the termination of certain employees, and (iii) issued 500 shares of the Company's common stock upon the exercise of options held by a former board member with an exercise price of $12.00 per share (inclusive of the options granted or cancelled, and shares issued, during the three months ended September 30, 2023, as described in the immediately preceding sentence).

Stock option activity for the three and nine months ended September 30, 2024 and 2023, respectively, is as follows:

Restricted Stock Units

During the three months ended  September 30, 2024, the Company (i) did not issue RSUs, and (ii) cancelled nine RSUs associated with the termination of employees. During the nine months ended  September 30, 2024, the Company (i) withheld 9,830 RSUs to cover taxes associated with the vesting of employee issued RSUs, (ii) cancelled 275 RSUs associated with the termination of employees, and (iii) issued 31,623 shares of common stock associated with the vesting of RSUs to executives, employees, and non-employee directors (inclusive of the RSUs described in the immediately preceding sentence during the three months ended September 30, 2024).

During the three months ended  September 30, 2023, the Company (i) did not issue RSUs, and (ii) cancelled 257 RSUs associated with the termination of employees. During the nine months ended  September 30, 2023, the Company issued 57,119 RSUs to executives, employees, and non-employee directors.

A summary of the RSU activity under the 2018 Plan during the three and nine months ended  September 30, 2024 and 2023, respectively, is presented below. These amounts include RSUs granted to executives, other employees, and board members. 

Share-Based Compensation

For the three and nine months ended September 30, 2024, the Company’s total share-based compensation was approximately $0.4 million, including $0.2 million of R&D expense and $0.2 million of G&A expense, and $2.7 million, including $0.5 million of R&D expense and $2.2 million of G&A expense, respectively, which represents the expected vesting of options or RSUs issued to executives, other employees, board members, and service providers, as well as the issuance of shares to service providers. As of  September 30, 2024, the Company’s total compensation cost related to non-vested time-based stock option awards and warrants granted to executives, other employees, board members, and service providers and not yet recognized was approximately $0.6 million. The Company expects to record this stock-based compensation expense over the next three years using a graded vesting method. As of September 30, 2024, the weighted average term over which these expenses are expected to be recognized is 0.58 years. 

For the three and nine months ended September 30, 2023, the Company’s total share-based compensation was approximately $1.5 million, including $0.3 million of R&D expense and $1.2 million of G&A expense, and $4.4 million, including $1.0 million of R&D expense and $3.4 million of G&A expense, respectively, nearly all of which represents the expected vesting of options issued to executives, other employees, and service providers and RSUs issued to executives, other employees, and board members. As of  September 30, 2023, the Company’s total compensation cost related to non-vested time-based stock option awards and warrants granted to executives, other employees, board members, and service providers and not yet recognized was approximately $5.9 million. The Company expects to record this stock-based compensation expense over the next three years using a graded vesting method. As of September 30, 2023, the weighted average term over which these expenses are expected to be recognized is 1.37 years. 

As of September 30, 2024, there are no performance-based stock option awards outstanding and one performance-based warrant outstanding issued to a service provider. The Company’s total compensation cost related to the non-vested performance-based warrant not yet recognized was approximately $0.3 million. The entirety of this warrant may be recognized and recorded upon the achievement of certain clinical milestones.

Note 5 - 401(k) Savings Plan

In 2022, Genprex established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code (“401(k) Plan”) and established an employer matching program for participants in the 401(k) Plan. The 401(k) Plan covers all employees who meet defined minimum age and service requirements, and allows participants to defer a portion of their annual compensation on a pre-tax basis. The Company incurred $31,930 and $105,848 of expense for matching contributions to the 401(k) Plan during the three and nine months ended September 30, 2024, respectively. We incurred $29,817 and $120,623 of expense for matching contributions to the 401(k) Plan during the three and nine months ended September 30, 2023, respectively. 

Note 6 - Related Party Transactions

Introgen Research Institute

Introgen Research Institute (“IRI”) is a Texas-based technology company formed by Rodney Varner, the Company’s former President, Chief Executive Officer and Chairman of the Board, who served in such capacity until his death on May 7, 2024, and who was IRI’s sole officer. IRI is owned by trusts of which Mr. Varner's descendants are the sole beneficiaries. In April 2009, prior to Mr. Varner becoming an officer and director of Genprex in August 2012, the Company entered into an Assignment and Collaboration Agreement with IRI, providing Genprex with the exclusive right to commercialize a portfolio of intellectual property. This agreement was amended in 2011 to include additional sublicensing of additional intellectual property made available to IRI from MD Anderson (see Note 7 – Commitments and Contingences – Commitments – MD Anderson Cancer Center). There were no amounts incurred or due under this agreement at September 30, 2024 and December 31, 2023.

Note 7 - Commitments and Contingencies

Commitments

MD Anderson Cancer Center

In July 2018, Genprex entered into a two-year sponsored research agreement with MD Anderson to sponsor preclinical studies focused on the combination of REQORSA with an immunotherapy with a projected total cost of approximately $2 million. This agreement was extended beyond the original expiration date, expiring in May 2022 after giving effect to such extension. In August 2022, the Company entered into a three-year sponsored research agreement with MD Anderson ( “August 2022 SRA”) to sponsor preclinical studies focused on REQORSA and NPRL2 in oncology to resensitize NSCLC and SCLC to targeted therapies and immunotherapies with an initial projected total cost of approximately $2.9 million. On June 7, 2024, the Company amended the August 2022 SRA with MD Anderson to (i) extend the sponsored research program an additional six months, (ii) amend the quarterly budget from approximately $240,000 to $165,000 per quarter, and (iii) amend the total commitment from $2.9 million to approximately $2.75 million. The Company incurred approximately $165,701 of expense from this agreement during the three months ended  September 30, 2024. The Company incurred approximately $645,839 of expense from this agreement during the nine months ended  September 30, 2024 inclusive of the amount stated in the preceding sentence. As of September 30, 2024, the Company has paid approximately $1.2 million toward this $2.76 million commitment.

In 2011, the Company agreed to assume certain contractual and other obligations of IRI in consideration for the sublicense rights, expertise, and assistance associated with certain technologies and intellectual property originally licensed to another party under the 1994 License Agreement with MD Anderson (“Original MD Anderson License Agreement”). These technologies and intellectual property were later sublicensed to IRI (the “IRI Sublicense”). The Company also agreed to pay royalties of 1% on sales of certain licensed products for a period of 21 years following the termination of the later of the Original MD Anderson License Agreement and the IRI Sublicense. The Company assumed patent prosecution costs and an annual minimum royalty of $20,000 payable to the National Institutes of Health ("NIH").

On March 3, 2021, the Company entered into an amendment (the “MD License Amendment”) to the Patent and Technology License Agreement dated May 4, 2020, with MD Anderson. The MD License Amendment grants Genprex a worldwide, exclusive, sublicensable license to an additional portfolio of six patents and one patent application and related technology for methods for treating cancer by administration of a TUSC2 therapy in conjunction with EGFR inhibitors or other anti-cancer therapies in patients predicted to be responsive to TUSC2 therapy. Pursuant to the MD License Amendment, the Company agreed to (i) pay annual maintenance fees ranging from the mid five figures to the low six figures, (ii) total milestone payments of $6,150,000, (iii) a one-time fee in the mid five figures and (iv) certain patent related expenses. The Company incurred no expense for the three months ended September 30, 2024 and 2023, respectively. The Company incurred $50,000 and $45,000 of expense from this agreement during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, the Company has paid approximately $370,000 toward the above-described commitment under this agreement. 

National Institutes of Health

Genprex has a royalty obligation to the National Institutes of Health to be paid upon the Company’s receipt of FDA approval using NIH technology. The $240,000 contingent obligation, which increases annually by $20,000, and is $380,000 and $360,000 as of September 30, 2024 and December 31, 2023, respectively, will be recognized if and when it is probable the Company will obtain regulatory approval (the event that triggers the payment obligation).

University of Pittsburgh

Pursuant to an exclusive license agreement dated February 11, 2020, by and between Genprex and the University of Pittsburgh, amended on August 17, 2022, and amended again on  November 3, 2022, the Company agreed to pay (i) an initial licensing fee of $25,000, (ii) annual maintenance fees of $25,000 for the first three years and $40,000 for each subsequent year following the first anniversary of the agreement, (iii) royalties ranging from 1.5% to 3% of net sales of licensed technologies, (iv) an annual minimum royalty payment of $250,000 per year beginning in the year of the first commercial sale of licensed technology, (v) a share of non-royalty sublicense income of 20%, and (vi) an aggregate of $3,975,000 in milestone payments related to the usage of a glucagon promoter and gene therapy technologies to potentially treat Type 1 diabetes. Unless earlier terminated pursuant to its terms, the agreement expires upon the later of (i) 20 years after the first commercial sale of the licensed technology thereunder and (ii) expiration of the last valid claim under the patent rights. The Company incurred no expense from this agreement for the three months ended September 30, 2024, and 2023, respectively. The Company incurred $40,000 and $25,000 of expense from this agreement during the nine months ended September 30, 2024, and 2023, respectively. As of September 30, 2024, the Company has incurred and paid approximately $150,000 toward this commitment. 

Pursuant to an exclusive license agreement dated November 22, 2022, by and between Genprex and the University of Pittsburgh, the Company agreed to pay (i) an initial licensing fee of $25,000, (ii) annual maintenance fees of $25,000 for the first three years and $40,000 for each subsequent year following the first anniversary of the agreement, (iii) royalties ranging from 1.5% to 3% of net sales of licensed technologies, (iv) an annual minimum royalty payment of $250,000 per year beginning in the year of the first commercial sale of licensed technology, (v) a share of non-royalty sublicense income of 20%, and (vi) an aggregate of $3,975,000 in milestone payments related to the usage of a macrophage technology and gene therapy technologies to potentially treat Type 1 diabetes. Unless earlier terminated pursuant to its terms, the agreement expires upon the later of (i) 20 years after the first commercial sale of the licensed technology thereunder and (ii) expiration of the last valid claim under the patent rights. The Company incurred no expense from this agreement during the three and nine months ended September 30, 2024. The Company incurred $0 and $25,000 of expense from this agreement during the three and nine months ended September 30, 2023. As of September 30, 2024, the Company has incurred and paid approximately $50,000 toward this commitment. 

Pursuant to an exclusive license agreement dated December 29, 2022, by and between Genprex and the University of Pittsburgh, the Company agreed to pay (i) an initial licensing fee of $25,000, (ii) annual maintenance fees of $25,000 for the first three years and $40,000 for each subsequent year following the first anniversary of the agreement, (iii) royalties ranging from 1.5% to 3% of net sales of licensed technologies, (iv) an annual minimum royalty payment of $250,000 per year beginning in the year of the first commercial sale of licensed technology, (v) a share of non-royalty sublicense income of 20%, and (vi) an aggregate of $3,975,000 in milestone payments related to the usage of an insulin promoter and gene therapy technologies to potentially treat Type 2 diabetes. Unless earlier terminated pursuant to its terms, the agreement expires upon the later of (i) 20 years after the first commercial sale of the licensed technology thereunder and (ii) expiration of the last valid claim under the patent rights. The Company incurred no expense from this agreement during the three and nine months ended September 30, 2024. The Company incurred $0 and $25,000 of expense from this agreement during the three and nine months ended September 30, 2023. As of September 30, 2024, the Company has incurred and paid approximately $50,000 toward this commitment. 

Pursuant to an exclusive license agreement dated July 14, 2023, by and between Genprex and the University of Pittsburgh, the Company agreed to pay (i) an initial licensing fee of $25,000, (ii) annual maintenance fees of $25,000 for the first year, $50,000 for the second and third years, and $100,000 for the fourth year and each subsequent year following the fourth anniversary of the agreement thereafter until the anniversary prior to the year of the first commercial sale, (iii) royalties ranging from 1.5% to 3% of net sales of licensed technologies, (iv) an annual minimum royalty payment of $250,000 per year beginning in the year of the first commercial sale of licensed technology, (v) a share of non-royalty sublicense income of 20%, and (vi) an aggregate of $4,225,000 in milestone payments related to the usage of an MafB promoter and gene therapy technologies to potentially treat Type 1 and Type 2 diabetes. Unless earlier terminated pursuant to its terms, the agreement expires upon the later of (i) 20 years after the first commercial sale of the licensed technology thereunder and (ii) expiration of the last valid claim under the patent rights. The Company incurred no expense from this agreement during the three months ended September 30, 2024 and 2023, respectively. The Company incurred $25,000 of expense from this agreement during each of the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, the Company has incurred and paid approximately $50,000 toward this commitment. 

Contract Development and Manufacturing Organization

Genprex entered into a three-year development services agreement in July 2022, amended in each of January 2023 and March 2023, with a contract development and manufacturing organization (“CDMO”) to manufacture good manufacturing practices (“GMP”) grade materials for use in the Company’s clinical trials with a projected total cost at inception of approximately $4.5 million. On April 2, 2024, the Company was informed by the CDMO that the CDMO was ceasing certain manufacturing operations subject to the development services agreement. On June 30, 2024, the development services agreement was terminated by mutual agreement and the CDMO agreed to return $1.3 million to the Company and no additional commitments are obligated or owed by the Company. The Company incurred $0 and $2.2 million of expense from this agreement during the nine months ended September 30, 2024 and 2023, respectively. 

Contingencies

From time to time, the Company may become subject to threatened and/or asserted claims arising in the ordinary course of its business. Management is not aware of any pending matters, either individually or in the aggregate, that are reasonably likely to have a material impact on the Company’s financial condition, results of operations or liquidity.

Note 8 - Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and determined that there have been no recognized subsequent events that have occurred that would require adjustments to the Company's disclosures in the condensed financial statements. The following are nonrecognized subsequent events through the filing of this Quarterly Report on Form 10-Q. 

Share Issuances

On October 1, 2024, Genprex issued 5,000 shares of its common stock to the Chairman of its Scientific Advisory Board in consideration for services. Subsequent to September 30, 2024, the Company has sold 3,013,916 shares of its common stock for aggregate net proceeds to the Company totaling $1,286,014 under the 2023 ATM Facility.