Form 10-Q - Quarterly report [Sections 13 or 15(d)]
2024年11月7日 - 6:30AM
Edgar (US Regulatory)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 000-50549
Oncternal Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
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Delaware |
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62-1715807 |
(State or other jurisdiction of incorporation or organization) |
|
(IRS Employer Identification No.) |
12230 El Camino Real, Suite 230
San Diego, CA 92130
(858) 434-1113
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common Stock, $0.001 par value |
ONCT |
The Nasdaq Capital Market |
Securities registered pursuant to Section 12(g) of the Act: None
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
☐ |
|
Accelerated filer |
☐ |
Non-accelerated filer |
☒ |
|
Smaller reporting company |
☒ |
Emerging growth company |
☐ |
|
|
|
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 ☐ No ☒
As of November 1, 2024, the registrant had 2,959,645 shares of common stock outstanding.
Oncternal Therapeutics, Inc.
FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Oncternal Therapeutics, Inc.
Condensed Consolidated Balance Sheets
(Unaudited; in thousands, except par value)
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September 30,
2024 |
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December 31,
2023 |
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Assets |
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|
|
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Current assets: |
|
|
|
|
|
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Cash and cash equivalents |
|
$ |
13,079 |
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$ |
6,697 |
|
Short-term investments |
|
|
1,499 |
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|
|
27,558 |
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Prepaid and other |
|
|
869 |
|
|
|
1,804 |
|
Total current assets |
|
|
15,447 |
|
|
|
36,059 |
|
Right-of-use asset |
|
|
154 |
|
|
|
258 |
|
Other assets |
|
|
— |
|
|
|
412 |
|
Total assets |
|
$ |
15,601 |
|
|
$ |
36,729 |
|
Liabilities and Stockholders’ Equity |
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|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
1,198 |
|
|
$ |
1,148 |
|
Accrued liabilities |
|
|
5,064 |
|
|
|
3,877 |
|
Lease, current |
|
|
191 |
|
|
|
173 |
|
Total current liabilities |
|
|
6,453 |
|
|
|
5,198 |
|
Deferred compensation |
|
|
— |
|
|
|
1,334 |
|
Lease, net of current |
|
|
— |
|
|
|
145 |
|
Total liabilities |
|
|
6,453 |
|
|
|
6,677 |
|
Commitments and contingencies (Note 4) |
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|
Stockholders’ equity: |
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|
|
|
Preferred stock, $0.001 par value, authorized shares – 5,000; issued shares – none |
|
|
— |
|
|
|
— |
|
Common stock, $0.001 par value; authorized shares – 120,000; issued and outstanding
shares – 2,960 and 2,948 at September 30, 2024 and December 31, 2023, respectively |
|
|
3 |
|
|
|
3 |
|
Additional paid-in capital |
|
|
232,334 |
|
|
|
227,825 |
|
Accumulated comprehensive income |
|
|
1 |
|
|
|
3 |
|
Accumulated deficit |
|
|
(223,190 |
) |
|
|
(197,779 |
) |
Total stockholders’ equity |
|
|
9,148 |
|
|
|
30,052 |
|
Total liabilities and stockholders’ equity |
|
$ |
15,601 |
|
|
$ |
36,729 |
|
See accompanying notes.
Oncternal Therapeutics, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited; in thousands, except per share data)
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|
|
|
|
|
|
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Three Months Ended
September 30, |
|
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Nine Months Ended
September 30, |
|
|
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2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Grant revenue |
|
$ |
494 |
|
|
$ |
179 |
|
|
$ |
1,864 |
|
|
$ |
488 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
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Research and development |
|
|
6,448 |
|
|
|
7,475 |
|
|
|
19,119 |
|
|
|
23,083 |
|
General and administrative |
|
|
2,727 |
|
|
|
3,094 |
|
|
|
9,068 |
|
|
|
9,483 |
|
Total operating expenses |
|
|
9,175 |
|
|
|
10,569 |
|
|
|
28,187 |
|
|
|
32,566 |
|
Loss from operations |
|
|
(8,681 |
) |
|
|
(10,390 |
) |
|
|
(26,323 |
) |
|
|
(32,078 |
) |
Interest income |
|
|
217 |
|
|
|
528 |
|
|
|
912 |
|
|
|
1,763 |
|
Net loss |
|
$ |
(8,464 |
) |
|
$ |
(9,862 |
) |
|
$ |
(25,411 |
) |
|
$ |
(30,315 |
) |
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on available-for-sale securities, net |
|
|
4 |
|
|
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6 |
|
|
|
(2 |
) |
|
|
(9 |
) |
Comprehensive loss |
|
$ |
(8,460 |
) |
|
$ |
(9,856 |
) |
|
$ |
(25,413 |
) |
|
$ |
(30,324 |
) |
Net loss per share, basic and diluted |
|
$ |
(2.86 |
) |
|
$ |
(3.35 |
) |
|
$ |
(8.58 |
) |
|
$ |
(10.32 |
) |
Weighted-average shares outstanding, basic and diluted |
|
|
2,960 |
|
|
|
2,948 |
|
|
|
2,960 |
|
|
|
2,937 |
|
See accompanying notes.
Oncternal Therapeutics, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited; in thousands)
|
|
|
|
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Nine Months Ended
September 30, |
|
|
|
2024 |
|
|
2023 |
|
Cash flows from operating activities |
|
|
|
|
|
|
Net loss |
|
$ |
(25,411 |
) |
|
$ |
(30,315 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Stock-based compensation |
|
|
4,596 |
|
|
|
5,282 |
|
Accretion of discounts on short-term investments |
|
|
(625 |
) |
|
|
(1,266 |
) |
Non-cash lease expense |
|
|
104 |
|
|
|
149 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Prepaid and other assets |
|
|
1,347 |
|
|
|
2,241 |
|
Accounts payable |
|
|
50 |
|
|
|
(784 |
) |
Accrued liabilities |
|
|
(280 |
) |
|
|
(1,810 |
) |
Deferred compensation |
|
|
133 |
|
|
|
856 |
|
Change in lease liability |
|
|
(127 |
) |
|
|
(98 |
) |
Net cash used in operating activities |
|
|
(20,213 |
) |
|
|
(25,745 |
) |
Cash flows from investing activities |
|
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|
|
|
|
Purchases of available-for-sale securities |
|
|
(16,318 |
) |
|
|
(52,541 |
) |
Maturities of available-for-sale securities |
|
|
43,000 |
|
|
|
55,000 |
|
Net cash provided by investing activities |
|
|
26,682 |
|
|
|
2,459 |
|
Cash flows from financing activities |
|
|
|
|
|
|
Proceeds from issuance of common stock, net |
|
|
— |
|
|
|
1,224 |
|
Repurchases of common stock for tax withholding obligations |
|
|
(87 |
) |
|
|
(155 |
) |
Net cash provided by (used in) financing activities |
|
|
(87 |
) |
|
|
1,069 |
|
Net decrease in cash and cash equivalents |
|
|
6,382 |
|
|
|
(22,217 |
) |
Cash and cash equivalents at beginning of period |
|
|
6,697 |
|
|
|
37,142 |
|
Cash and cash equivalents at end of period |
|
$ |
13,079 |
|
|
$ |
14,925 |
|
Supplemental disclosure of non-cash financing activities: |
|
|
|
|
|
|
Right-of-use assets obtained in exchange for operating lease liabilities |
|
$ |
— |
|
|
$ |
353 |
|
See accompanying notes.
Oncternal Therapeutics, Inc.
Condensed Consolidated Statements of Stockholders' Equity
(Unaudited; in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2024 |
|
|
Common Stock |
|
|
Additional
Paid-In |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total
Stockholders’ |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Comprehensive Income (Loss) |
|
|
Deficit |
|
|
Equity |
|
Balance at June 30, 2024 |
|
2,960 |
|
|
$ |
3 |
|
|
$ |
230,480 |
|
|
$ |
(3 |
) |
|
$ |
(214,726 |
) |
|
$ |
15,754 |
|
Unrealized loss on available-for-sale securities |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
|
|
— |
|
|
|
4 |
|
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
1,854 |
|
|
|
— |
|
|
|
— |
|
|
|
1,854 |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8,464 |
) |
|
|
(8,464 |
) |
Balance at September 30, 2024 |
|
2,960 |
|
|
$ |
3 |
|
|
$ |
232,334 |
|
|
$ |
1 |
|
|
$ |
(223,190 |
) |
|
$ |
9,148 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2023 |
|
|
Common Stock |
|
|
Additional
Paid-In |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total
Stockholders’ |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Comprehensive Income (Loss) |
|
|
Deficit |
|
|
Equity |
|
Balance at June 30, 2023 |
|
2,936 |
|
|
$ |
3 |
|
|
$ |
223,941 |
|
|
$ |
(6 |
) |
|
$ |
(178,753 |
) |
|
$ |
45,185 |
|
Issuance of common stock upon vesting of restricted stock units |
|
18 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Shares repurchased for settlement of minimum statutory tax withholdings |
|
(6 |
) |
|
|
— |
|
|
|
(49 |
) |
|
|
— |
|
|
|
— |
|
|
|
(49 |
) |
Unrealized gain on available-for-sale securities |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
|
|
6 |
|
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
1,717 |
|
|
|
— |
|
|
|
— |
|
|
|
1,717 |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9,862 |
) |
|
|
(9,862 |
) |
Balance at September 30, 2023 |
|
2,948 |
|
|
$ |
3 |
|
|
$ |
225,609 |
|
|
$ |
— |
|
|
$ |
(188,615 |
) |
|
$ |
36,997 |
|
See accompanying notes.
Oncternal Therapeutics, Inc.
Condensed Consolidated Statements of Stockholders' Equity
(Unaudited; in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2024 |
|
|
Common Stock |
|
|
Additional
Paid-In |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total
Stockholders’ |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Comprehensive Income |
|
|
Deficit |
|
|
Equity |
|
Balance at December 31, 2023 |
|
2,948 |
|
|
$ |
3 |
|
|
$ |
227,825 |
|
|
$ |
3 |
|
|
$ |
(197,779 |
) |
|
$ |
30,052 |
|
Issuance of common stock upon vesting of restricted stock units |
|
19 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Shares repurchased for settlement of minimum statutory tax withholdings |
|
(7 |
) |
|
|
— |
|
|
|
(87 |
) |
|
|
— |
|
|
|
— |
|
|
|
(87 |
) |
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
4,596 |
|
|
|
— |
|
|
|
— |
|
|
|
4,596 |
|
Unrealized loss on available-for-sale securities |
|
|
|
|
|
|
|
|
|
|
(2 |
) |
|
|
|
|
|
(2 |
) |
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(25,411 |
) |
|
|
(25,411 |
) |
Balance at September 30, 2024 |
|
2,960 |
|
|
$ |
3 |
|
|
$ |
232,334 |
|
|
$ |
1 |
|
|
$ |
(223,190 |
) |
|
$ |
9,148 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2023 |
|
|
Common Stock |
|
|
Additional
Paid-In |
|
|
Accumulated |
|
|
Accumulated |
|
|
Total
Stockholders’ |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Comprehensive Income |
|
|
Deficit |
|
|
Equity |
|
Balance at December 31, 2022 |
|
2,874 |
|
|
$ |
3 |
|
|
$ |
219,257 |
|
|
$ |
9 |
|
|
$ |
(158,300 |
) |
|
$ |
60,969 |
|
Issuance of common stock upon vesting of restricted stock units |
|
30 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Shares repurchased for settlement of minimum statutory tax withholdings |
|
(11 |
) |
|
|
— |
|
|
|
(155 |
) |
|
|
— |
|
|
|
— |
|
|
|
(155 |
) |
Issuance of common stock, net of issuance cost of $38 |
|
55 |
|
|
|
— |
|
|
|
1,223 |
|
|
|
— |
|
|
|
— |
|
|
|
1,223 |
|
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
5,284 |
|
|
|
— |
|
|
|
— |
|
|
|
5,284 |
|
Unrealized loss on available-for-sale securities |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9 |
) |
|
|
— |
|
|
|
(9 |
) |
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(30,315 |
) |
|
|
(30,315 |
) |
Balance at September 30, 2023 |
|
2,948 |
|
|
$ |
3 |
|
|
$ |
225,609 |
|
|
$ |
— |
|
|
$ |
(188,615 |
) |
|
$ |
36,997 |
|
See accompanying notes.
Oncternal Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited; Dollars in thousands unless otherwise noted)
1.Description of Business, Basis of Presentation and Summary of Significant Accounting Policies
Description of Business
Oncternal Therapeutics, Inc. (the “Company” or “Oncternal”), formerly known as GTx, Inc., was incorporated in Tennessee in September 1997 and reincorporated in Delaware in 2003 and is based in San Diego, California. The Company is a clinical-stage biopharmaceutical company focused on the development of novel oncology therapies for the treatment of cancers with critical unmet medical need. The Company’s clinical pipeline includes ONCT-534, a dual-action androgen receptor inhibitor product candidate for the treatment of castration-resistant prostate and other androgen receptor-driven cancers, ONCT-808, a CAR T (chimeric antigen receptor T-cells) product candidate that targets Receptor Tyrosine Kinase-Like Orphan Receptor 1 (“ROR1”), and zilovertamab, a humanized monoclonal antibody that binds to ROR1. Oncternal’s program activities previously included ONCT-216, an investigational small molecule designed to inhibit the E26 Transformation Specific (“ETS”) family of oncoproteins.
Recent Developments - Strategic Alternatives
On September 12, 2024, the Company announced that its Board decided to discontinue the Company’s clinical trials evaluating ONCT-534 and ONCT-808 as well as all other product development activities, and to begin exploring strategic alternatives to maximize the value of the Company’s assets for its stockholders. The Company commenced a reduction-in-force beginning in September 2024, and is continuing to assess further cost reduction measures as its operational and strategic direction evolves. As part of the review of strategic alternatives, the Company may consider options such as asset sales or out-licensing opportunities for existing programs and merger, reverse merger or other business combination opportunities. There can be no assurance any transaction will result from the evaluation of strategic alternatives.
Principles of Consolidation
The condensed consolidated financial statements (the “financial statements”) include the accounts of the Company and its wholly-owned subsidiaries, Oncternal Oncology, Inc. and Oncternal, Inc. All intercompany accounts and transactions have been eliminated in the preparation of the financial statements.
Going Concern
The financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. From inception, the Company has devoted substantially all of its efforts to drug discovery and development and conducting preclinical studies and clinical trials. The Company has a limited operating history and the sales and income potential of the Company’s business and market are unproven.
As of September 30, 2024, the Company had $14.6 million in cash, cash equivalents, and short-term investments, no debt and an accumulated deficit of $223.2 million. In connection with the Company’s September 12, 2024 announcement regarding the evaluation of strategic alternatives as well as the capital required for continuing development efforts, the Company has discontinued the clinical development of ONCT-534 and ONCT-808, while certain nonclinical research and manufacturing activities continue. As a result, the Company will continue to incur research and development expenses in connection with clinical trial closing costs and the completion of its nonclinical and manufacturing projects. From its inception, the Company has incurred recurring operating losses and negative cash flows from operations. The Company has concluded that the balance of cash, cash equivalents and short-term investments will not be sufficient to fund its planned expenditures and meet its obligations for the twelve months following the financial statement issuance date without raising additional funding, liquidating assets, or making changes to its operating plans or programs to reduce expenses. As a result, there is substantial doubt about the Company’s ability to continue as a going concern for twelve months following the issuance date of these financial statements. The financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.
The Company expects to continue to incur net losses for the foreseeable future. The Company may seek additional funding to support its evaluation or implementation of strategic alternatives, which may be through a combination of public or private equity or debt offerings or other sources, including potential collaborations, strategic alliances and other similar licensing arrangements in both the short term and long term. If the Company is unable to secure adequate additional funding, the Company may be unable to consummate a strategic transaction and it may decide to pursue a dissolution or liquidation.
As of April 2, 2024, the Company’s at-the-market (“ATM”) equity offering program expired. Through April 2, 2024, the Company had sold 457,342 shares of common stock for net proceeds of $10.8 million under the ATM program.
The Company's requirement or ability to obtain additional financing (including through collaborating and licensing arrangements) will depend on a number of factors, including, among others, the strategic alternatives the Company is able to identify, the condition of the capital markets and the other risks, many of which are dependent on factors outside of its control. There can be no assurance as to the availability or terms upon which such financing and capital might be available in the future.
Nasdaq Listing and Reverse Stock Split
On April 4, 2023, the Company received a written notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that because the closing bid price for the Company’s common stock had closed below $1.00 per share for 30 consecutive business days, the Company no longer complied with the minimum bid price requirement pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Requirement”).
On January 8, 2024, the Company effected a 1-for-20 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, the Company regained compliance with the Nasdaq listing rules. Each of the Company’s shareholders received one new share of common stock for every 20 shares such shareholder held immediately prior to the effective time of the Reverse Stock Split. The Reverse Stock Split affected all the Company’s issued and outstanding shares of common stock equally. The par value and authorized shares of the Company's common stock was not adjusted as a result of the Reverse Stock Split. The Reverse Stock Split also affected the Company’s outstanding common stock options and warrants, and resulted in the shares underlying such instruments being reduced and the exercise price being increased proportionately. Unless otherwise noted, all common stock shares, common stock per share data, common stock options and warrants included in these financial statements, including the exercise price of such equity instruments, as applicable, have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented.
Basis of Presentation
The accompanying interim financial statements are unaudited. The unaudited financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and with generally accepted accounting principles in the United States of America (“GAAP”). These unaudited financial statements have been prepared on the same basis as the audited, consolidated financial statements and include all adjustments, consisting of only normal recurring accruals, which in the opinion of management are necessary to present fairly the Company’s financial position as of the interim date and results of operations for the interim periods presented. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ materially from those estimates. These unaudited financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2023, filed with the SEC on its Annual Report on Form 10-K on March 7, 2024. The results presented in these unaudited financial statements are not indicative of the results expected for the full fiscal year or any other interim period or any future year or period.
Use of Estimates
The Company’s financial statements are prepared in accordance with GAAP. The preparation of the financial statements and accompanying notes requires the Company to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Significant estimates consist of those used to determine accruals for clinical trial and research and development costs. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of Level 1 financial instruments in the fair value hierarchy (see Note 6 – Fair Value) and include cash in readily available checking accounts, money market accounts and commercial paper.
Short-term Investments
Short-term investments consist of U.S. treasury notes and bills, certificates of deposit, commercial paper and U.S. government sponsored enterprise securities with maturities of less than one year from the balance sheet date and are debt securities considered to be Level 1 and Level 2 financial instruments in the fair value hierarchy (see Note 6 – Fair Value). The Company determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified all of its marketable securities at September 30, 2024 and December 31, 2023 as “available-for-sale” pursuant to ASC 320 Investments – Debt and Equity Securities. The Company records available-for-sale securities at fair value as determined by prices for identical or similar securities, with the unrealized gains and losses included as a separate component of accumulated comprehensive income (loss). In accordance with policy, the Company does not invest in or hold equity securities in its investment portfolio.
The Company adjusts the cost of available-for-sale debt securities for amortization of premiums or accretion of discounts to maturity. The Company includes interest and dividends on securities classified as available-for-sale in interest income. Such amortization and accretion are included in interest income. The cost of securities sold is based on the specific identification method. Realized gains or losses on available-for-sale securities are determined using the specific identification method and net realized gains and losses are included in interest income. The Company records unrealized gains and losses on available-for-sale marketable securities as a component of comprehensive income (loss) within the statements of operations and comprehensive loss and as a separate component of stockholders’ equity on the balance sheets.
The Company elected the practical expedient to exclude the applicable accrued interest from both the fair value and amortized costs basis of available-for-sale securities for purposes of identifying and measuring an impairment. Accrued interest receivable on available-for-sale securities is recorded in short-term investments in the accompanying balance sheets. The Company’s accounting policy is to not measure an allowance for credit loss for accrued interest receivable and to write-off any uncollectible accrued interest receivable as a reversal of interest income in a timely manner, which the Company considers to be in the period in which the Company determines the accrued interest will not be collected.
The Company evaluates short-term investments for other-than-temporary impairment at the balance sheet date. Factors considered in determining whether a loss is other-than temporary include how significant the decline in value is as a percentage of the original cost, the length of time and extent to which fair value has been less than the cost basis, the financial condition of the issuer, and the Company’s intent and ability to hold the investment until recovery of its amortized cost basis. The Company intends, and has the ability, to hold any investments in unrealized loss positions until their amortized cost basis has been recovered. As of September 30, 2024, there were no impairment charges on short-term investments.
The Company obtains the fair value of its available-for-sale marketable securities from a professional pricing service. The fair values of available-for-sale marketable securities are validated by comparing the fair values reported by the professional pricing service to quoted market prices or to fair values obtained from the custodian bank. The service provider values the securities using a hierarchical security pricing model that relies primarily on valuations provided by an industry-recognized valuation service or mathematical calculations. Such valuations may be based on trade prices in active markets for identical assets or liabilities (Level 1 inputs) or valuation models using inputs that are observable either directly or indirectly (Level 2 inputs), such as quoted prices for similar assets or liabilities, yield curves, credit spreads, current market and contractual prices for the underlying instruments or debt, as well as other relevant economic measures.
Deferred Compensation
Deferred compensation represents the accrual of retention bonuses for certain executives and certain other members of senior management. The retention bonuses were entered into in connection with the waiver of annual cash performance bonuses of such personnel for the year ended December 31, 2023 and a temporary reduction of the chief executive officer’s salary from April 2023 through December 2024.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and short-term investments. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash balances due to the financial position of the depository institution in which those deposits are held. Additionally, the Company established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity.
Research and Development Expenses and Accruals
Research and development expenses consist of costs incurred for the Company’s own and for sponsored and collaborative research and development activities. Research and development costs are expensed as incurred and include manufacturing process and development costs, costs associated with preclinical studies and clinical trials, regulatory and medical affairs activities, quality assurance activities, salaries and benefits, including stock-based compensation, fees paid to third-party consultants, license fees and overhead.
The Company has entered into various research and development contracts with research institutions, clinical research organizations, clinical manufacturing organizations and other companies. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and payments made in advance of performance are reflected in the accompanying balance sheets as prepaid expenses and other assets or accrued liabilities. The Company records accruals for estimated costs incurred for ongoing research and development activities and all clinical trial expenses are included in research and development expenses. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the services, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates may be made in determining the prepaid or accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates.
Fair Value Measurements
The accounting guidance defines fair value, establishes a consistency framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. Fair value is defined as an exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Accounting guidance establishes a three-tier fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. These tiers are based on the source of the inputs and are as follows:
Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices in active markets that are observable either directly or indirectly.
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The Company’s financial instruments include cash, cash equivalents, short-term investments, prepaid expenses and other assets, accounts payable, accrued expenses, and accrued compensation. The carrying amounts of the Company’s current financial assets and liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments. The Company has short-term investments that are measured at fair value on a recurring basis. No transfers between levels have occurred during the periods presented (see Note 6).
Net Loss Per Share
Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for potentially dilutive securities and adjusted for the weighted-average number of common shares outstanding that are subject to repurchase. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock and dilutive common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the potentially dilutive securities would be antidilutive.
Potentially dilutive securities not included in the calculation of diluted net loss per share, because to do so would be anti-dilutive, are as follows (in common stock equivalent shares):
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
|
2024 |
|
|
2023 |
|
Warrants to purchase common stock |
|
|
170,521 |
|
|
|
170,521 |
|
Common stock options |
|
|
643,358 |
|
|
|
550,600 |
|
Restricted stock unit awards |
|
|
— |
|
|
|
18,557 |
|
Total |
|
|
813,879 |
|
|
|
739,678 |
|
Accounting Standards Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting – Improvements to Reportable Segment Disclosures (Topic 280), which intends to improve financial reporting primarily through enhanced disclosures about significant segment expenses. Topic 280 includes amendments which a) introduce a new requirement to disclose significant segment expenses regularly provided to the chief operating decision maker(CODM), b) extend certain annual disclosures to interim periods, c) clarify single reportable segment entities must apply ASC 280 in its entirety, d) permit more than one measure of segment profit or loss to be reported under certain conditions, and e) require disclosure of the title and position of the CODM. This update is effective for all public entities beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. ASU 2023-07 will be applied retrospectively and early adoption is permitted. The Company is currently evaluating the impact of this guidance on its financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Tax – Improvements to Income Tax Disclosures, which intends to improve financial reporting primarily through enhanced disclosures about significant segment expenses. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. This update is effective for all public entities beginning after December 15, 2024. ASU 2023-09 can be applied either prospectively or retrospectively and early adoption is permitted. The Company is currently evaluating the impact of this guidance on its financial statements.
Prepaid and other consist of the following:
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September 30, |
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December 31, |
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|
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2024 |
|
|
2023 |
|
Research and development |
|
$ |
— |
|
|
$ |
312 |
|
Clinical trials |
|
|
— |
|
|
|
294 |
|
Insurance |
|
|
507 |
|
|
|
478 |
|
Other prepaid expenses |
|
|
18 |
|
|
|
88 |
|
Related party receivable (see Note 4) |
|
|
81 |
|
|
|
139 |
|
Grant and other receivable |
|
|
263 |
|
|
|
493 |
|
|
|
$ |
869 |
|
|
$ |
1,804 |
|
Accrued liabilities consist of the following:
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|
|
|
|
|
September 30, |
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|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
Research and development |
|
$ |
30 |
|
|
$ |
146 |
|
Clinical trials |
|
|
1,776 |
|
|
|
2,018 |
|
Legal fees |
|
|
164 |
|
|
|
134 |
|
Compensation |
|
|
592 |
|
|
|
1,579 |
|
Severance compensation |
|
|
1,024 |
|
|
|
— |
|
Deferred compensation |
|
|
1,467 |
|
|
|
— |
|
Other |
|
|
11 |
|
|
|
— |
|
|
|
$ |
5,064 |
|
|
$ |
3,877 |
|
The Company invests in available-for-sale marketable securities consisting of money market funds, commercial paper, certificates of deposit, U.S. Treasury securities and U.S. government sponsored enterprise securities.
Available-for-sale marketable securities with original maturities of more than three months from the date of purchase as of September 30, 2024 and December 31, 2023 have been classified as short-term investments and are measured at a fair value on a recurring basis, and were as follows:
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As of September 30, 2024 |
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|
Maturity (in years) |
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Amortized Cost |
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Gross Unrealized Gains |
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Gross Unrealized Losses |
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Fair Market Value |
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Short-term investments: |
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|
|
|
|
|
|
|
|
|
|
U.S. Treasury debt securities |
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1 or less |
|
$ |
1,499 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,499 |
|
Total short-term investments |
|
|
|
$ |
1,499 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
As of December 31, 2023 |
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|
|
Maturity (in years) |
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Amortized Cost |
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|
Gross Unrealized Gains |
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|
Gross Unrealized Losses |
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|
Fair Market Value |
|
Short-term investments: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury debt securities |
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1 or less |
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$ |
23,840 |
|
|
$ |
4 |
|
|
$ |
— |
|
|
$ |
23,844 |
|
Commercial Paper |
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1 or less |
|
|
2,738 |
|
|
|
— |
|
|
|
(1 |
) |
|
|
2,737 |
|
U.S. Government Agency |
|
1 or less |
|
|
977 |
|
|
|
— |
|
|
|
— |
|
|
|
977 |
|
Total short-term investments |
|
|
|
$ |
27,555 |
|
|
$ |
4 |
|
|
$ |
(1 |
) |
|
$ |
27,558 |
|
The Company determined there were no other-than-temporary declines in the value of any available-for-sale securities as of September 30, 2024 and December 31, 2023. All the Company’s available-for-sale marketable securities mature within one year. The Company has no allowance for credit losses as of September 30, 2024 and December 31, 2023. During the nine months ended September 30, 2024 and 2023, the Company recognized an unrealized loss of $2 and loss of $9, respectively, in the accompanying statements of operations and comprehensive loss. Accrued interest receivable on available-for-sale securities was $10 at September 30, 2024 and $15 at December 31, 2023. The Company has not written off any accrued interest receivable in any of the periods presented in these financial statements.
4.Commitments, Contingencies and Related Party Transactions
Lease
Rent expense was $41 and $81 for the three months ended September 30, 2024 and 2023, respectively.
Since May 2019, the Company leased or subleased office space in San Diego, California. On April 18, 2022, the Company entered into a sublease agreement for office space which expired on July 31, 2023. Base rent under such sublease was approximately $157 annually and the monthly rent expense was recognized on a straight-line basis over the term of the lease. On May 9, 2023, the Company entered into a lease agreement for the same office space which expires on September 30, 2025. Base rent under such lease is approximately $145 annually and the monthly rent expense will be recognized on a straight-line basis over the effective term of the lease.
The lease is included in the accompanying balance sheet at the present value of the lease payments. As such lease does not have an implicit interest rate, the present value reflects a 10.0% discount rate which is the estimated rate of interest that the Company would have to pay in order to borrow an amount equal to the lease payments on a collateralized basis over a similar term and in a similar economic environment. As of September 30, 2024, the Company has an operating lease right-of-use asset of $154 and a lease liability of $191, with a weighted average remaining lease term of 1.0 year.
Maturities of the lease liability due under the lease agreements as of September 30, 2024, are as follows:
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Maturity of lease liabilities |
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Operating
Leases |
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2024 |
|
$ |
50 |
|
2025 |
|
|
150 |
|
Total lease payments |
|
|
200 |
|
Less imputed interest |
|
|
(9 |
) |
Total lease liability |
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|
191 |
|
Less current portion of lease liability |
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|
(191 |
) |
Lease liability, long-term |
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$ |
— |
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Related Party Transactions
Effective in September 2019, the Company and Shanghai Pharmaceutical (USA) Inc. (“SPH USA”) entered into a Materials and Supply and Services Agreement (“SPH USA Services Agreement”), pursuant to which the Company and SPH USA executed various statements of work for the transfer to SPH USA of key reagents and other materials, and for the supply of certain services by the Company to SPH USA, as contemplated under and in furtherance of the License and Development Agreement between the Company and SPH USA effective as of November 2018 (see Note 5). During 2023, the Company sold $520 of materials to SPH USA which was recorded as an offset to ONCT-216 operating expenses. As of September 30, 2024 and December 31, 2023, the Company had $81 and $139, respectively, in amounts receivable from SPH USA related to statements of work. SPH USA is the Company’s largest stockholder and an affiliate of one of the Company’s former directors, who served until the 2024 annual meeting on stockholders on June 20, 2024.
Restructuring Actions
In September 2024, the Company announced a workforce reduction in order to reduce its operating expenses and focus its efforts on strategic alternatives. As a result, the Company made estimates and judgements regarding its future plans, including future employee termination costs to be incurred in conjunction with involuntary separations when such separations are probable and estimable. In the third quarter of 2024, the Company recorded a pre-tax severance expense of $1.1 million, $0.7 million in research and development expense and $0.4 million in general and administrative expenses for the three and nine months ended September 30, 2024. Such amount was paid in October 2024 and is included within accrued liabilities on the Condensed Consolidated Balance Sheets.
5.License, Collaboration and Grant Award/Subaward Agreements
The University of Tennessee Research Foundation (“UTRF”)
In March 2015, and as amended and restated in March 2022 and as amended thereafter, the Company and UTRF entered into a license agreement (the “DAARI License Agreement”) pursuant to which the Company was granted exclusive worldwide rights in all existing technologies owned or controlled by UTRF that make up our dual action androgen receptor inhibitor (“DAARI”) program, including all improvements thereto. Under the DAARI License Agreement, the Company is obligated to employ active, diligent efforts to conduct preclinical research and development activities for the DAARI program to advance one or more lead compounds into clinical development. The Company is also obligated to pay UTRF annual license maintenance fees, low single-digit royalties on net sales of products and additional royalties on sublicense revenues, depending on the state of development of a clinical product candidate at the time it is sublicensed. The Company recorded research and development expense under this agreement of $78 and a nominal amount for the three months ended September 30, 2024 and 2023, respectively, and $0.3 million and $0.1 million for each of the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, the Company believes it had met its obligations under the DAARI License Agreement.
Agreements with the Regents of the University of California (the “Regents”)
In March 2016, and as amended and restated in August 2018 and August 2024, the Company and the Regents entered into a license agreement (as amended and restated, the “Regents License Agreement”) for the development, manufacturing and distribution rights related to the development and commercialization of ROR1 related naked antibodies, antibody fragments or synthetic antibodies, and genetically engineered cellular therapy. The Regents License Agreement provides for the following: (i) in May 2016, an upfront license fee of $0.5 million was paid and 5,355 shares of common stock were issued, (ii) $25 in annual license maintenance fees commencing in 2017, (iii) reimbursement of certain annual patent costs, (iv) certain development and regulatory milestones aggregating from $20.1 million to $24.5 million, on a per product basis, (v) certain worldwide sales milestones based on achievement of tiered revenue levels aggregating $75.0 million, (vi) low single-digit royalties, including potential future minimum annual royalties, on net sales of each target, and (vii) minimum diligence to advance licensed assets consisting of at least $1.0 million in development
spend annually through 2021. Under the Regents License Agreement, the Company recorded: (a) $30 in license maintenance fees as research and development expense for the three months ended September 30, 2024 and 2023, respectively, and $30 and $35 for each of the nine months ended September 30, 2024 and 2023, respectively, and (b) $36 and none in patent costs as general and administrative expense for the three months ended September 30, 2024 and 2023, respectively, and $0.2 million and a nominal amount for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, the Company believes it has met its obligations under the Regents License Agreement.
The Regents License Agreement will expire upon the later of the expiration date of the longest-lived patent rights or the 15th anniversary of the first commercial sale of a licensed product. The Regents may terminate the Regents License Agreement if: (i) a material breach by the Company is not cured within a reasonable time, (ii) the Company files a claim asserting the Regents licensed patent rights are invalid or unenforceable, and (iii) the Company files for bankruptcy. The Company may terminate the agreement at any time upon at least 60 days’ written notice.
Effective January 1, 2022, the Company entered into a Research Agreement (the “Research Agreement”) with the Regents for further research on the ROR1 therapeutic development program. Under this four-year agreement that expires on December 31, 2025, the Regents will have an aggregate budget of $1.6 million, with quarterly payments of $125 in 2022, $131 in 2023, and $138 in 2024 and 2025. The Company recorded $0.1 million in research and development expenses under the Research Agreement for each of the three months ended September 30, 2024 and 2023, and $0.4 million for each of the nine months ended September 30, 2024 and 2023. Such costs are includable as part of the Company’s annual diligence obligations under the Regents License Agreement.
The National Institutes of Health (“NIH”) Grant Awards
The NIH has awarded the Company three research and development grants for up to $4.1 million to support preclinical activities for the Company’s ONCT-534 and ONCT-216 programs, including $1.0 million payable to subawardees. Under the terms of the grants, the Company is entitled to receive reimbursement in arrears of incurring allowable expenditures. The earned NIH funds are non-refundable and the Company is required to provide periodic progress performance reports. During the nine months ended September 30, 2024, the Company received $2.1 million in award payments, recorded $1.9 million in grant revenue and had $0.3 million in an unbilled grant receivable. During the nine months ended September 30, 2023, the Company received $0.4 million in award payments from the NIH, and recorded $0.5 million in grant revenue, and had $0.2 million in an unbilled grant receivable.
SPH USA, a Related Party
License and Development Agreement (“LDA”)
In November 2018, and as amended in August 2020, the Company entered into the LDA with SPH USA for: (i) the territory of the People’s Republic of China, Hong Kong, Macau, and Taiwan (“Greater China”), and (ii) rights to manufacture, develop, market, distribute and sell all of the Company’s product candidates under the Georgetown License Agreement and the Regents License Agreement (exclusive to Greater China only). Under the LDA, SPH USA is solely responsible for: (a) all preclinical and clinical development activities required in order to obtain regulatory approval in Greater China for such product candidates, (b) any third-party license milestone or royalty payments owed under the Georgetown License Agreement and the Regents License Agreement, and (c) paying the Company a low single digit royalty on net sales in the territory.
The LDA will expire upon the expiration of the last royalty term for the last licensed product. The LDA may be terminated by: (i) SPH USA on a country by country or product by product basis with 180 days written notice, (ii) either party upon material breach that is not cured within 90 days, and (iii) either party in the event the other party declares insolvency or bankruptcy. There has been no significant activity under this agreement for each of the nine months ended September 30, 2024 and 2023 (see Note 4).
Contingent Value Rights Agreement
Pursuant to the GTx merger agreement entered into in June 2019 (the “Merger”), the Company, a representative of holders of the Contingent Value Rights (“CVRs”), and Computershare, Inc. as rights agent, entered into the Contingent Value Rights Agreement (as amended November 1, 2021, the “CVR Agreement”). Pursuant to the CVR Agreement, the Company’s stockholders of record as of immediately prior to the Merger received one CVR for each share of the Company’s common stock held immediately prior to the Merger.
As amended on November 1, 2021, the CVR Agreement entitles holders of CVRs to receive: (i) 50% of certain net proceeds received by the Company during the 15-year period after the closing of the Merger (the “CVR Term”) from a transaction, if any, resulting in the grant, sale, or transfer of DAARI technology to a third party that occurs during the 10-year period after the closing of the Merger (or in the 11th year if based on a term sheet approved during the initial 10-year period); and (ii) 5% of net sales of products
by the Company or its affiliates during the CVR Term incorporating the DAARI technology. Through September 30, 2024, no transactions or net sales relating to the DAARI technology had occurred.
As of September 30, 2024 and December 31, 2023, the following fair value hierarchy table presents the Company’s financial assets measured at fair value on a recurring basis:
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Total |
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Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
|
Significant Other Observable Inputs
(Level 2) |
|
|
Significant Unobservable Inputs
(Level 3) |
|
As of September 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury debt securities |
|
$ |
1,499 |
|
|
$ |
— |
|
|
$ |
1,499 |
|
|
$ |
— |
|
Total assets measured at fair value |
|
$ |
1,499 |
|
|
$ |
— |
|
|
$ |
1,499 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
|
Significant Other Observable Inputs
(Level 2) |
|
|
Significant Unobservable Inputs
(Level 3) |
|
As of December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury debt securities |
|
$ |
23,844 |
|
|
$ |
10,912 |
|
|
$ |
12,932 |
|
|
$ |
— |
|
Commercial Paper |
|
|
2,737 |
|
|
|
— |
|
|
|
2,737 |
|
|
|
— |
|
U.S. Government Agency |
|
|
977 |
|
|
|
— |
|
|
|
977 |
|
|
|
— |
|
Total assets measured at fair value |
|
$ |
27,558 |
|
|
$ |
10,912 |
|
|
$ |
16,646 |
|
|
$ |
— |
|
Valuation of short-term investments
The Company classifies its money market funds, treasury notes and treasury bills as Level 1 assets under the fair value hierarchy, as these assets have been valued using quoted market prices for identical assets in active markets without any valuation adjustment. The Company classifies its commercial paper and U.S. government sponsored enterprise securities as Level 2 assets under the fair value hierarchy, as these assets have been valued using information obtained through a third-party pricing service at each balance sheet date, using observable market inputs that may include trade information, broker or dealer quotes, bids, offers, or a combination of these data sources. The Company does not hold any short-term investments classified as Level 3, which are securities valued using unobservable inputs.
The Company’s policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. The Company did not transfer any investment securities between the classification levels during each of the nine months ended September 30, 2024 and 2023.
ATM Program
In December 2021, the Company entered into an Open Market Sale AgreementSM (the “Sales Agreement”) with Jefferies LLC, pursuant to which the Company was able to offer and sell, from time to time in its sole discretion, shares of its common stock having an aggregate offering price of up to $50.0 million. On April 2, 2024, the ATM program expired. During 2024, the Company did not sell shares of common stock under the ATM program. On March 8, 2024, the Company filed a new shelf registration statement on Form S-3 (No. 333-277795) which was declared effective by the Securities and Exchange Commission on May 1, 2024.
Common Stock Warrants
A summary of warrant activity and changes in warrants outstanding is presented below:
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|
|
Number of Shares Underlying Warrants |
|
|
Weighted-Average Exercise Price Per Share |
|
|
Weighted-Average Remaining Contractual Term (in years) |
|
Balance at December 31, 2023 |
|
|
170,521 |
|
|
$ |
74.00 |
|
|
|
1.94 |
|
Issued / Exercised / Forfeited / Expired |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
Balance at September 30, 2024 |
|
|
170,521 |
|
|
$ |
74.00 |
|
|
|
1.18 |
|
As of September 30, 2024 and December 31, 2023, all warrants met the criteria for classification in stockholders’ equity.
Equity Incentive Plans
Stock Option Awards
Contemporaneous with the Merger closing: (i) Oncternal’s 2015 Equity Incentive Plan, as amended (“2015 Plan”) was assumed by the Company, and (ii) the Company adopted the 2019 Incentive Award Plan (“2019 Plan”) under which the sum of: (a) 97,708 shares of common stock, and (b) an annual increase on the first day of each calendar year beginning January 1, 2020, and ending on and including January 1, 2029, equal to the lesser of (A) 5% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of shares of common stock as is determined by the board of directors, are reserved for issuance.
In July 2015, Oncternal adopted the 2015 Plan which provided for the issuance of shares of common stock for incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards and other stock awards to its employees, members of its board of directors and consultants. In general, the options issued under the 2015 Plan expire ten years from the date of grant and vest over a four-year period. Certain grants vested based on the achievement of development or regulatory milestones and the 2015 Plan was terminated as to new grant awards in June 2019.
The 2019 Plan provides for the issuance of shares of common stock for incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards and other stock awards to its employees, members of its board of directors and consultants. In general, the stock options issued under the 2019 Plan expire ten years from the date of grant and vest over a four-year period. Certain stock option grants vest based on the achievement of development or regulatory milestones. The 2019 Plan allows for the early exercise of all stock option grants if authorized by the board of directors at the time of grant.
In February 2021, the Company’s board of directors adopted the 2021 Employment Inducement Incentive Award Plan (the “Inducement Plan”). The Inducement Plan is a non-shareholder approved stock plan adopted pursuant to the “inducement exception” provided under Nasdaq listing rules. As amended in 2021, the Inducement Plan has reserved 140,000 shares of common stock to be used exclusively for the issuance of non-statutory stock options to certain new hires who satisfied the requirements to be granted inducement grants under Nasdaq rules as an inducement material to the individual’s entry into employment with the Company. The terms of the Inducement Plan are substantially similar to the terms of the 2019 Plan.
As of September 30, 2024, 154,314 shares remain available for issuance under the 2019 Plan and Inducement Plan. A summary of the Company’s stock option activity under the 2015 Plan, 2019 Plan and Inducement Plan is as follows: