Monopar Therapeutics 10-Q for FY2020 Q3
Monopar Therapeutics (MNPR)
10-Q
2020-11-12
For: 2020-09-30
View Original
Added on
April 10, 2026
About this 10-Q
Monopar Therapeutics filed this 10-Q on November 12, 2020, covering the quarter ended September 30, 2020 (FY2020 Q3).
Headline figures
Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $1.64M
- compared with a net loss of $736.08K a year earlier
s
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended September 30, 2020
☐
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from
to
Commission File Number: 001-39070
MONOPAR THERAPEUTICS INC.
(Exact name of registrant as specified in its charter)
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DELAWARE
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32-0463781
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. employer
identification number)
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1000 Skokie Blvd., Suite 350, Wilmette, IL
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60091
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(Address of principal executive offices)
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(zip code)
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(847) 388-0349
(Registrant’s telephone number, including area
code)
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.001 par value
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MNPR
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The Nasdaq Stock Market LLC
(Nasdaq Capital Market)
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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, a
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
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☒
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Emerging growth company
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☒
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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
Act). Yes ☐ No ☒
The number of shares outstanding with respect to each of the
classes of our common stock, as of October 31, 2020, is set forth
below:
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Class
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Number of shares outstanding
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||
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Common Stock, par value $0.001 per share
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11,452,177
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MONOPAR THERAPEUTICS INC.
TABLE OF CONTENTS
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FINANCIAL
INFORMATION
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Page
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Item 1.
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2
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2
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3
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4
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6
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7
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Item 2.
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20
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Item 4.
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32
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OTHER
INFORMATION
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Item 1A.
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33
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Item 6.
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34
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35
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Forward-Looking Statements
This
Quarterly Report on Form 10-Q contains “forward-looking
statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Act”) and
Section 21E of the Securities Exchange Act of 1934, as amended. All
statements other than statements of historical facts included in
this Quarterly Report on Form 10-Q are forward-looking statements.
The words “hopes,” “believes,”
“anticipates,” “plans,”
“seeks,” “estimates,”
“projects,” “expects,”
“intends,” “may,” “could,”
“should,” “would,” “will,”
“continue,” and similar expressions are intended to
identify forward-looking statements. The following uncertainties
and factors, among others, could affect future performance and
cause actual results to differ materially from those matters
expressed in or implied by forward-looking statements:
●
our ability to
raise sufficient funds by mid-2021 in order for us to start the
Phase 3 portion of our Validive Phase 2b/3 clinical trial and
thereafter in order to complete the trial, support further
development of camsirubicin in and beyond the Phase 2 clinical
trial, support further development of potential
radio-immuno-therapeutics to treat severe COVID-19 (patients with
SARS-CoV-2 infection) and generally to support our current and any
future product candidates through completion of clinical trials,
approval processes and, if applicable,
commercialization;
●
our ability to find
a suitable pharmaceutical partner to further our development
efforts, if we are unable to raise sufficient additional
financing;
●
risks and
uncertainties associated with our research and development
activities, including our clinical trials;
●
estimated
timeframes for our clinical trials and regulatory reviews for
approval to market products;
●
plans to research,
develop and commercialize our current and future product
candidates;
●
the rate and degree
of market acceptance and the competitive clinical efficacy and
safety of any products for which we receive marketing
approval;
●
the difficulties of
commercialization, marketing and manufacturing capabilities and
strategy;
●
uncertainties of
intellectual property position and strategy;
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challenging future
financial performance;
●
the risks inherent
in our estimates regarding expenses, capital requirements and need
for additional financing;
●
the uncertain
impact of government laws and regulations;
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our ability to
attract and retain key personnel;
●
the impact of the
COVID-19 pandemic on our ability to advance our clinical programs
and raise additional financing; and
●
uncertainty of
financial and operational projections.
Although
we believe that the expectations reflected in such forward-looking
statements are appropriate, we can give no assurance that such
expectations will be realized. Cautionary statements are disclosed
in this Quarterly Report on Form 10-Q. All subsequent written and
oral forward-looking statements attributable to us or persons
acting on our behalf are expressly qualified in their entirety by
the cautionary statements. We undertake no obligation to update any
statements made in this Quarterly Report on Form 10-Q or elsewhere,
including without limitation any forward-looking statements, except
as required by law.
Any forward-looking statements in this
Quarterly Report reflect our current views with respect to future
events or to our future financial performance and involve known and
unknown risks, uncertainties and other factors that may cause our
actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by these forward-looking statements.
Information that is based on estimates, forecasts, projections,
market research or similar methodologies is inherently subject to
uncertainties and actual events or circumstances may differ
materially from events and circumstances reflected in this
information.
1
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Monopar Therapeutics Inc.
Condensed Consolidated
Balance Sheets
(Unaudited)
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September 30, 2020
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December 31, 2019*
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Assets
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Current
assets:
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Cash
and cash equivalents
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$
17,982,672
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$
13,213,929
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Other
current assets
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104,550
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15,711
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Total
current assets
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18,087,222
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13,229,640
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Other
non-current assets
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68,858
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122,381
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Total
assets
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$
18,156,080
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$
13,352,021
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Liabilities and Stockholders’ Equity
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Current
liabilities:
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Accounts payable,
accrued expenses and other current liabilities
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$
542,068
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$
724,165
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Current
portion of bank loan
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67,772
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—
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Total
current liabilities
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609,840
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724,165
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Long-term
liabilities:
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Non-current portion
of bank loan
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54,628
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—
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Total
long-term liabilities
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54,628
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—
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Total
liabilities
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664,468
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724,165
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Commitments
and contingencies (Note 6)
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Stockholders’
equity:
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Common
stock, par value of $0.001 per share, 40,000,000 authorized,
11,452,177 and 10,587,632 shares issued and outstanding at
September 30, 2020 and December 31, 2019, respectively
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11,452
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10,587
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Additional paid-in
capital
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47,546,915
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38,508,825
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Accumulated other
comprehensive loss
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(10,044)
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(10,970)
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Accumulated
deficit
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(30,056,711)
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(25,880,586)
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Total
stockholders' equity
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17,491,612
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12,627,856
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Total
liabilities and stockholders' equity
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$
18,156,080
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$
13,352,021
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*
Derived from the Company’s audited consolidated financial
statements.
The
accompanying notes are an integral
part of
these condensed consolidated financial statements.
2
Monopar Therapeutics Inc.
Condensed Consolidated
Statements of Operations and Comprehensive Loss
(Unaudited)
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Three Months Ended September 30,
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Nine Months Ended September 30,
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2020
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2019
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2020
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2019
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Operating
expenses:
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Research and
development
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$
1,255,916
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$
219,846
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$
2,432,826
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$
1,384,740
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General
and administrative
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392,063
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539,602
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1,815,299
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1,714,126
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Total
operating expenses
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1,647,979
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759,448
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4,248,125
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3,098,866
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Loss
from operations
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(1,647,979)
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(759,448)
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(4,248,125)
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(3,098,866)
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Other
income:
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Interest income,
net
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8,541
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23,368
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72,000
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80,851
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Net loss
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(1,639,438)
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(736,080)
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(4,176,125)
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(3,018,015)
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Other
comprehensive income
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Foreign
currency translation gain (loss)
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1,510
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(8,739)
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926
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(9,799)
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Comprehensive
loss
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$
(1,637,928)
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$
(744,819)
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$
(4,175,199)
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$(3,027,814)
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Net
loss per share:
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Basic
and diluted
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$
(0.15)
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$
(0.08)
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$
(0.39)
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$
(0.32)
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Weighted
average shares outstanding:
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Basic
and diluted
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11,116,409
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9,291,421
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10,792,413
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9,291,421
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The
accompanying notes are an integral
part of
these condensed consolidated financial statements.
3
Monopar Therapeutics Inc.
Condensed Consolidated Statements of
Stockholders’ Equity
Nine Months Ended September 30, 2019
(Unaudited)
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Common
Stock
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Shares
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Amount
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Additional Paid-in Capital
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Accumulated Other Comprehensive Loss
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Accumulated Deficit
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Total Stockholders' Equity
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Balance at January 1, 2019
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9,291,421
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$ 9,291
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$ 28,567,221
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$ (2,396)
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$ (21,655,712)
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$ 6,918,404
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Stock-based
compensation (non-cash)
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—
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—
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233,776
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—
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—
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233,776
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Net
loss
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—
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—
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—
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—
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(1,376,235)
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(1,376,235)
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Accumulated
other comprehensive loss
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—
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—
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—
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(2,127)
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—
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(2,127)
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Balance at March 31, 2019
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9,291,421
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9,291
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28,800,997
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(4,523)
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(23,031,947)
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5,773,818
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Stock-based
compensation (non-cash)
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—
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—
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257,633
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—
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—
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257,633
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Net
loss
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—
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—
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—
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—
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(905,700)
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(905,700)
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Accumulated
other comprehensive gain
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—
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—
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—
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1,067
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—
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1,067
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Balance at June 30, 2019
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9,291,421
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9,291
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29,058,630
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(3,456)
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(23,937,647)
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5,126,818
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Stock-based
compensation (non-cash)
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—
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—
|
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242,956
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—
|
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—
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242,956
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|
Net
loss
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—
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—
|
|
—
|
|
—
|
|
(736,080)
|
|
(736,080)
|
|
|
Accumulated
other comprehensive loss
|
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—
|
|
—
|
|
—
|
|
(8,739)
|
|
—
|
|
(8,739)
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|
|
Balance at September 30, 2019
|
|
9,291,421
|
|
$ 9,291
|
|
$ 29,301,586
|
|
$ (12,195)
|
|
$ (24,673,727)
|
|
$ 4,624,955
|
|
The
accompanying notes are an integral part of these condensed
consolidated financial statements.
4
Monopar Therapeutics Inc.
Condensed Consolidated Statements of Stockholders’
Equity
Nine Months Ended September 30, 2020
(Unaudited)
|
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Common
Stock
|
|
|
|
|
|
|
|
|
||
|
|
|
Shares
|
|
Amount
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Accumulated Deficit
|
|
Total Stockholders' Equity
|
|
Balance at January 1, 2020
|
|
10,587,632
|
|
$ 10,587
|
|
$ 38,508,825
|
|
$ (10,970)
|
|
$ (25,880,586)
|
|
$ 12,627,856
|
|
Issuance of common stock under a Capital on
DemandTM Sales Agreement with JonesTrading Institutional
Services LLC, net of commissions and fees of
$16,284
|
|
33,903
|
|
34
|
|
526,109
|
|
—
|
|
—
|
|
526,143
|
|
Issuance
of common stock to non-employee directors pursuant to vested
restricted stock units
|
|
1,288
|
|
1
|
|
(1)
|
|
—
|
|
—
|
|
—
|
|
Stock-based
compensation (non-cash)
|
|
—
|
|
—
|
|
338,497
|
|
—
|
|
—
|
|
338,497
|
|
Offering
costs
|
|
—
|
|
—
|
|
(2,161)
|
|
—
|
|
—
|
|
(2,161)
|
|
Net
loss
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,090,877)
|
|
(1,090,877)
|
|
Accumulated
other comprehensive loss
|
|
—
|
|
—
|
|
—
|
|
(4,041)
|
|
—
|
|
(4,041)
|
|
Balance at March 31, 2020
|
|
10,622,823
|
|
10,622
|
|
39,371,269
|
|
(15,011)
|
|
(26,971,463)
|
|
12,395,417
|
|
Issuance of common
stock under a Capital on DemandTM Sales Agreement
with Jones Trading Institutional Services LLC, net of commissions
and fees of $29,425
|
|
111,858
|
|
113
|
|
950,577
|
|
—
|
|
—
|
|
950,690
|
|
Issuance of common
stock to non-employee directors pursuant to vested restricted stock
units
|
|
1,292
|
|
1
|
|
(1)
|
|
—
|
|
—
|
|
—
|
|
Stock-based
compensation (non-cash)
|
|
—
|
|
—
|
|
367,358
|
|
—
|
|
—
|
|
367,358
|
|
Offering
costs
|
|
—
|
|
—
|
|
(116,605)
|
|
—
|
|
—
|
|
(116,605)
|
|
Net
loss
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,445,810)
|
|
(1,445,810)
|
|
Accumulated
other comprehensive income
|
|
—
|
|
—
|
|
—
|
|
3,457
|
|
—
|
|
3,457
|
|
Balance at June 30, 2020
|
|
10,735,973
|
|
10,736
|
|
40,572,598
|
|
(11,554)
|
|
(28,417,273)
|
|
12,154,507
|
|
Issuance of common
stock under a Capital on DemandTM Sales Agreement
with Jones Trading Institutional Services LLC, net of commissions
and fees of $207,326
|
|
714,916
|
|
715
|
|
6,697,743
|
|
—
|
|
—
|
|
6,698,458
|
|
Issuance of common
stock to non-employee directors pursuant to vested restricted stock
units
|
|
1,288
|
|
1
|
|
(1)
|
|
—
|
|
—
|
|
—
|
|
Stock-based
compensation (non-cash)
|
|
—
|
|
—
|
|
283,713
|
|
—
|
|
—
|
|
283,713
|
|
Offering
costs
|
|
—
|
|
—
|
|
(7,138)
|
|
—
|
|
—
|
|
(7,138)
|
|
Net
loss
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,639,438)
|
|
(1,639,438)
|
|
Accumulated other
comprehensive income
|
|
—
|
|
—
|
|
—
|
|
1,510
|
|
—
|
|
1,510
|
|
Balance at September 30, 2020
|
|
11,452,177
|
|
$ 11,452
|
|
$ 47,546,915
|
|
$ (10,044)
|
|
$ (30,056,711)
|
|
$ 17,491,612
|
The
accompanying notes are an integral part of these condensed
consolidated financial statements.
5
Monopar Therapeutics Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
|
|
|
Nine Months Ended September 30,
|
||
|
|
|
2020
|
|
2019
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net
loss
|
|
$
(4,176,125)
|
|
$
(3,018,015)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
Stock-based
compensation expense (non-cash)
|
|
989,568
|
|
734,365
|
|
Changes in operating assets and liabilities, net
|
|
|
|
|
|
Other
current assets
|
|
(45,649)
|
|
(4,630)
|
|
Accounts payable,
accrued expenses and other current liabilities
|
|
(189,372)
|
|
(60,695)
|
|
Net
cash used in operating activities
|
|
(3,421,578)
|
|
(2,348,975)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Cash proceeds from the sales of
common stock under a Capital on DemandTM
Sales Agreement with Jones Trading
Institutional Services LLC, net of cash commissions and fees of
$253,035
|
|
8,175,290
|
|
—
|
|
Offering
costs
|
|
(108,430)
|
|
(39,458)
|
|
PPP
forgivable bank loan
|
|
122,400
|
|
—
|
|
Net
cash provided by (used in) financing activities
|
|
8,189,260
|
|
(39,458)
|
|
Effect
of exchange rates
|
|
1,061
|
|
(9,799)
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
4,768,743
|
|
(2,398,232)
|
|
Cash and cash equivalents at beginning of period
|
|
13,213,929
|
|
6,892,772
|
|
Cash and cash equivalents at end of period
|
|
$
17,982,672
|
|
$
4,494,540
|
The
accompanying notes are an integral
part of
these condensed consolidated financial statements.
6
MONOPAR THERAPEUTICS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
September 30, 2020
Note 1 - Nature of Business and
Liquidity
Nature of Business
Monopar Therapeutics Inc. (“Monopar”
or the “Company”) is a clinical-stage
biopharmaceutical company primarily focused on developing
proprietary therapeutics designed to extend life or improve quality
of life for cancer patients. Monopar currently has three compounds
in development: 1) Validive®
(clonidine mucobuccal tablet;
clonidine MBT), a Phase 2b/3 clinical stage, first-in-class
mucoadhesive buccal tablet for the prevention and treatment of
radiation induced severe oral mucositis (“SOM”) in
oropharyngeal cancer patients; 2) camsirubicin (generic name for
MNPR-201, GPX-150; 5-imino-13-deoxydoxorubicin), a proprietary
Phase 2 clinical stage topoisomerase II-alpha selective analog of
doxorubicin engineered specifically to retain anticancer activity
while minimizing toxic effects on the heart; and 3) a preclinical
stage uPAR targeted antibody, MNPR-101, for advanced cancers and
severe COVID-19.
Liquidity
The
Company has incurred an accumulated deficit of approximately $30.1
million as of September 30, 2020. To date, the Company has
primarily funded its operations with the net proceeds from the
Company’s initial public offering of its common stock on
Nasdaq, private placements of convertible preferred stock and of
common stock, from the cash provided in the camsirubicin asset
purchase transaction, from sales of its common stock in the public
market under a Capital on DemandTM Sales Agreement.
Management believes that currently available resources will provide
sufficient funds to enable the Company to meet its planned
obligations through December 2021. The Company’s ability to
fund its future operations, including the clinical development of
Validive and camsirubicin, is dependent upon its ability to execute
its business strategy, to obtain additional funding and/or to
execute collaborative research agreements. There can be no
certainty that future financing or collaborative research
agreements will occur at a time needed to maintain operations, if
at all.
In
December 2019, a novel strain of coronavirus
(“COVID-19”) surfaced in China and spread to
essentially all of the remaining world. By March 2020 COVID-19 was
designated a global pandemic, resulting in government-mandated
travel restrictions and temporary shutdowns or limitations of
non-essential businesses in many states in the United States. The
Company is able to remain open but has allowed their employees to
work from home, if required by local authorities. Due to the
volatility of the stock markets resulting from travel restrictions
and indeterminate but temporary business limitations, the Company
faces challenges in raising substantial cash in the near-term.
In response to the current COVID-19
pandemic and its effects on clinical trials, Monopar has modified
the original adaptive design Phase 3 clinical trial for its lead
product candidate, Validive, to be a Phase 2b/3 clinical trial to
better fit the types of trials which can enroll patients in the
current environment. This modification will allow the
Company to initiate the clinical trial without requiring near-term
financing. The decision to proceed to the Phase 3 portion of the
clinical trial without a delay will largely be dependent on the
Company’s cash position closer to that time, anticipated to
be in the second half of 2021. To initiate and complete the Phase 3
portion of the clinical trial, Monopar will require additional
funding in the millions or tens of millions of dollars (depending
on if the Company has consummated a collaboration or partnership or
neither for Validive), which it is planning to pursue in the next
12 months. Due to many uncertainties, the Company is unable to
estimate the pandemic’s financial impact or duration at this
time, or its potential impact on the Company’s planned
clinical trials including the pandemic’s effect on drug
candidate manufacturing, shipping, patient recruitment at clinical
sites and regulatory agencies around the globe.
Note 2 - Significant Accounting Policies
Basis of Presentation
These
condensed consolidated financial statements include the financial
results of Monopar Therapeutics Inc., its wholly-owned French
subsidiary, Monopar Therapeutics, SARL, and its wholly-owned
Australian subsidiary, Monopar Therapeutics Australia Pty Ltd, and
have been prepared in accordance with accounting principles
generally accepted in the United States (“GAAP”) and
include all disclosures required by GAAP for interim financial
reporting. All intercompany accounts have been eliminated. The
principal accounting policies applied in the preparation of these
condensed consolidated financial statements are set out below and
have been consistently applied in all periods presented. The
Company has been primarily involved in performing research
activities, developing product candidates, and raising capital to
support and expand these activities.
7
MONOPAR THERAPEUTICS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
The
accompanying unaudited condensed consolidated financial statements
contain all normal, recurring adjustments necessary to present
fairly the Company’s condensed consolidated financial
position as of September 30, 2020 and as of December 31, 2019, the
Company’s condensed consolidated results of operations and
comprehensive loss for the three and nine months ended September
30, 2020 and 2019, and the Company’s condensed consolidated
cash flows for the nine months ended September 30, 2020 and 2019.
The condensed consolidated results of operations and comprehensive
loss and condensed consolidated cash flows for the periods
presented are not necessarily indicative of the consolidated
results of operations or cash flows which may be reported for the
remainder of 2020 or for any future period. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with GAAP have been condensed or
omitted. The accompanying unaudited interim condensed
consolidated financial statements should be read in conjunction
with the audited financial statements and notes thereto for the
year ended December 31, 2019, included in the Company’s
Annual Report on Form 10-K filed with the United States Securities
and Exchange Commission (the “SEC”) on March 27,
2020.
Functional Currency
The
Company's consolidated functional currency is the U.S. Dollar. The
Company's Australian subsidiary and French subsidiary use the
Australian Dollar and European Euro, respectively, as their
functional currency. At each quarter-end, each foreign subsidiary's
balance sheets are translated into U.S. Dollars based upon the
quarter-end exchange rate, while their statements of operations and
comprehensive loss and statements of cash flows are translated into
U.S. Dollars based upon an average exchange rate during the
period.
Comprehensive Loss
Comprehensive loss
represents net loss plus any gains or losses not reported in the
condensed consolidated statements of operations and comprehensive
loss, such as foreign currency translations gains and losses that
are typically reflected on the Company’s condensed
consolidated statements of stockholders’ equity.
Use of Estimates
The
preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities, and reported amounts of revenues
and expenses in the condensed consolidated financial statements and
accompanying notes. Actual results could differ from those
estimates.
Going Concern Assessment
The
Company applies Accounting Standards Codification 205-40
(“ASC 205-40”), Disclosure of Uncertainties about an
Entity’s Ability to Continue as a Going Concern, which
the Financial Accounting Standards Board (“FASB”)
issued to provide guidance on determining when and how reporting
companies must disclose going concern uncertainties in their
financial statements. ASC 205-40 requires management to perform
interim and annual assessments of an entity’s ability to
continue as a going concern within one year of the date of issuance
of the entity’s financial statements (or within one year
after the date on which the financial statements are available to
be issued, when applicable). Further, a company must provide
certain disclosures if there is “substantial doubt about the
entity’s ability to continue as a going concern.” In
October 2020, the Company analyzed its cash requirements through
December 2021 and has determined that, based upon the
Company’s current available cash, the Company has no
substantial doubt about its ability to continue as a going
concern.
8
MONOPAR THERAPEUTICS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
Cash Equivalents
The
Company considers all highly liquid investments purchased with a
maturity of 90 days or less on the date of purchase to be cash
equivalents. Cash equivalents as of September 30, 2020 and December
31, 2019 consisted of one money market account.
Deferred Offering Costs
Deferred offering
costs represent legal, auditing, travel and filing fees related to
fundraising efforts that have not yet been concluded.
Prepaid Expenses
Prepayments are
expenditures for goods or services before the goods are used or the
services are received and are charged to operations as the benefits
are realized. Prepaid expenses include payments to development
collaborators in excess of actual expenses incurred by the
collaborator, measured at the end of each reporting period.
Prepayments also include insurance premiums and software costs of
$10,000 or more that are expensed monthly over the life of the
contract. Prepaid expenses are reflected on the Company’s
condensed consolidated balance sheets as other current
assets.
Bank Loans
In May
2020, the Company applied for and received a bank loan pursuant to
the Paycheck Protection Program (“PPP”) established
pursuant to the Coronavirus Aid, Relief, and Economic Security Act,
as administered by the U.S. Small Business Administration
(“SBA”).
The SBA
will forgive the bank loan pursuant to the PPP, if certain
conditions are met, namely the bank loan must be used primarily for
payroll during the 24-week period following receipt of the loan,
without significant staffing reductions during that period. The
Company believes it is eligible and intends to apply for loan
forgiveness by December 2020 when the Company’s bank is able
to process SBA loan forgiveness application. Should the bank loan
not be forgiven, the Company would be required to pay 1% annual
interest on the loan with principal and interest payments beginning
approximately seven months after receipt of the loan with payments
over 18 months. The Company has recorded the PPP loan on the
condensed consolidated balance sheets as of September 30, 2020 as
liabilities titled current (due within 12 months) and non-current
portions of bank loan.
Concentration of Credit Risk
Financial
instruments that potentially subject the Company to concentration
of credit risk consist of cash and cash equivalents. The Company
maintains cash and cash equivalents at two reputable financial
institutions. As of September 30, 2020, the balance at one
financial institution was in excess of the $250,000 Federal Deposit
Insurance Corporation (“FDIC”) insurable limit. The
Company has not experienced any losses on its deposits since
inception and management believes the Company is not exposed to
significant risks with respect to these financial
institutions.
Fair Value of Financial Instruments
For
financial instruments consisting of cash and cash equivalents,
accounts payable, accrued expenses, other current liabilities and
bank loans, the carrying amounts are reasonable estimates of fair
value due to their relatively short maturities.
9
MONOPAR THERAPEUTICS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
ASC 820, Fair Value Measurements and
Disclosures, as amended,
addresses the measurement of the fair value of financial assets and
financial liabilities. Under this standard, fair value is defined
as the price that would be received to sell an asset or paid to
transfer a liability (i.e., the “exit price”) in an
orderly transaction between market participants at the measurement
date.
The
standard establishes a hierarchy for inputs used in measuring fair
value that maximizes the use of observable inputs and minimizes the
use of unobservable inputs by requiring that the most observable
inputs be used when available. Observable inputs reflect
assumptions market participants would use in pricing an asset or
liability based on market data obtained from independent sources.
Unobservable inputs reflect a reporting entity’s pricing an
asset or liability developed based on the best information
available under the circumstances. The fair value hierarchy
consists of the following three levels:
Level 1 - instrument valuations are obtained from
real-time quotes for transactions in active exchange markets
involving identical assets.
Level 2 - instrument valuations are obtained from
readily available pricing sources for comparable
instruments.
Level 3 - instrument valuations are obtained without
observable market values and require a high-level of judgment to
determine the fair value.
Determining
which category an asset or liability falls within the hierarchy
requires significant judgment. The Company evaluates its hierarchy
disclosures each reporting period. There were no transfers between
Level 1, 2 or 3 of the fair value hierarchy during the three and
nine months ended September 30, 2020 and the year ended December
31, 2019. The following table presents the assets and liabilities
that are reported at fair value on our condensed consolidated
balance sheets on a recurring basis. No values were recorded in
Level 2 or Level 3 at September 30, 2020 and December 31,
2019.
|
September
30, 2020
|
Level
1
|
Total
|
|
Assets
|
|
|
|
Cash
equivalents(1)
|
$17,736,266
|
$17,736,266
|
|
Total
|
$17,736,266
|
$17,736,266
|
|
December
31, 2019
|
Level
1
|
Total
|
|
Assets
|
|
|
|
Cash
equivalents(1)
|
$13,083,536
|
$13,083,536
|
|
Total
|
$13,083,536
|
$13,083,536
|
(1)
Cash equivalents
represent the fair value of the Company’s investment in a
money market account.
Net Loss per Share
Net
loss per share for the three and nine months ended September 30,
2020 and 2019 is calculated by dividing net loss by the
weighted-average shares of common stock outstanding during the
period. Diluted net loss per share for the three and nine months
ended September 30, 2020 and 2019 is calculated by dividing net
loss by the weighted-average shares of the sum of a) weighted
average common stock outstanding (11,116,409 and 10,792,413 shares
for the three and nine months ended September 30, 2020,
respectively; 9,291,421 shares for the three and nine months ended
September 30, 2019) and b) potentially dilutive shares of common
stock (such as stock options and restricted stock units)
outstanding during the period. As of September 30, 2020 and 2019,
potentially dilutive securities included stock-based awards
to purchase up to 1,303,674 and 1,105,896 shares of the
Company’s common stock, respectively. For the three and nine
months ended September 30, 2020 and 2019, potentially dilutive
securities are excluded from the computation of fully-diluted net
loss per share as their effect is
anti-dilutive.
10
MONOPAR THERAPEUTICS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
Research and Development Expenses
Research and
development (“R&D”) costs are expensed as incurred.
Major components of R&D expenses include salaries and benefits
paid to the Company’s R&D staff, fees paid to consultants
and to the entities that conduct certain R&D activities on the
Company’s behalf and materials and supplies which are used in
R&D activities during the reporting period.
The
Company accrues and expenses the costs for clinical trial
activities performed by third parties based upon estimates of the
percentage of work completed over the life of the individual study
in accordance with agreements established with contract research
organizations, service providers, and clinical trial sites. The
Company determines the estimates through discussions with internal
clinical personnel and external service providers as to progress or
stage of completion of trials or services and the agreed upon fee
to be paid for such services. Costs of setting up clinical trial
sites for participation in the trials are expensed immediately as
R&D expenses. Clinical trial site costs related to patient
screening and enrollment are accrued as patients are
screened/entered into the trial. During the three and nine months
ended September 30, 2020 and 2019, the Company had no clinical
trials in progress.
Collaborative Agreements
The
Company and its collaborative partners are active participants in
collaborative arrangements and all parties would be exposed to
significant risks and rewards depending on the technical and
commercial success of the activities. Contractual payments to the
other parties in collaboration agreements and costs incurred by the
Company when the Company is deemed to be the principal participant
for a given transaction are recognized on a gross basis in R&D
expenses. Royalties and license payments are recorded as
earned.
During
the three and nine months ended September 30, 2020 and 2019, no
milestones were met and no royalties were earned, therefore, the
Company did not pay or accrue/expense any license or royalty
payments.
Licensing Agreements
The
Company has various agreements licensing technology utilized in the
development of its product or technology programs. The licenses
contain success milestone obligations and royalties on future
sales. During the three and nine months ended September 30, 2020
and 2019, no milestones were met and no royalties were earned,
therefore, the Company did not pay or accrue/expense any license or
royalty payments under any of its license agreements.
Patent Costs
The
Company expenses costs relating to issued patents and patent
applications, including costs relating to legal, renewal and
application fees, as a component of general and administrative
expenses in its condensed consolidated statements of operations and
comprehensive loss.
Income Taxes
On
December 16, 2015, the Company began using an asset and liability
approach for accounting for deferred income taxes, which requires
recognition of deferred income tax assets and liabilities for the
expected future tax consequences of events that have been
recognized in its financial statements but have not been reflected
in its taxable income. Estimates and judgments are required in the
calculation of certain tax liabilities and in the determination of
the recoverability of certain deferred income tax assets, which
arise from temporary differences and carryforwards. Deferred income
tax assets and liabilities are measured using the currently
enacted
tax rates that apply to taxable income in effect for the years in
which those tax assets and liabilities are expected to be realized
or settled.
11
MONOPAR THERAPEUTICS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
The
Company regularly assesses the likelihood that its deferred income
tax assets will be realized from recoverable income taxes or
recovered from future taxable income. To the extent that the
Company believes any amounts are more likely than not to be
realized, the Company records a valuation allowance to reduce the
deferred income tax assets. In the event the Company determines
that all or part of the net deferred tax assets are not realizable
in the future, an adjustment to the valuation allowance would be
charged to earnings in the period such determination is made.
Similarly, if the Company subsequently determines deferred income
tax assets that were previously determined to be unrealizable are
now realizable, the respective valuation allowance would be
reversed, resulting in an adjustment to earnings in the period such
determination is made.
Internal Revenue
Code Section 382 (“Section 382”) provides that, after
an ownership change, the amount of a loss corporation’s net
operating loss (“NOL”) for any post-change year that
may be offset by pre-change losses shall not exceed the Section 382
limitation for that year. To date, the Company has not conducted a
Section 382 study, however, because the Company will continue to
raise significant amounts of equity in the coming years, the
Company expects that Section 382 will limit the Company’s
usage of NOLs in the future.
ASC
740, Income Taxes, requires
that the tax benefit of net operating losses, temporary
differences, and credit carryforwards be recorded as an asset to
the extent that management assesses that realization is "more
likely than not." Realization of the future tax benefits is
dependent on the Company's ability to generate sufficient taxable
income within the carryforward period. The Company has reviewed the
positive and negative evidence relating to the realizability of the
deferred tax assets and has concluded that the deferred tax assets
are not more likely than not to be realized with the exception of
its U.S. Federal R&D tax credits which will be utilized to
reduce payroll taxes in future periods. As a result, the Company
recorded a full valuation allowance as of September 30, 2020 and
December 31, 2019. The Company intends to maintain the valuation
allowance until sufficient evidence exists to support its reversal.
The Company regularly reviews its tax positions. For a tax benefit
to be recognized, the related tax position must be more likely than
not to be sustained upon examination. Any amount recognized is
generally the largest benefit that is more likely than not to be
realized upon settlement. The Company’s policy is to
recognize interest and penalties related to income tax matters as
an income tax expense. For the three and nine months ended
September 30, 2020 and 2019, the Company did not have any interest
or penalties associated with unrecognized tax
benefits.
The
Company is subject to U.S. Federal, Illinois and California income
taxes. In addition, the Company is subject to local tax laws of
France and Australia. Tax regulations within each jurisdiction are
subject to the interpretation of the related tax laws and
regulations and require significant judgment to apply. The Company
was incorporated on December 16, 2015 and is subject to U.S.
Federal, state and local tax examinations by tax authorities for
the years ended December 31, 2019, 2018, 2017 and 2016, and for the
short tax period December 16, 2015 to December 31, 2015. The
Company does not anticipate significant changes to its current
uncertain tax positions through September 30, 2020. The Company has
filed its U.S. Federal and state tax returns for the year ended
December 31, 2019 prior to the extended filing deadlines in all
jurisdictions.
Stock-Based Compensation
The
Company accounts for stock-based compensation arrangements with
employees, non-employee directors and consultants using a fair
value method, which requires the recognition of compensation
expense for costs related to all stock-based awards, including
stock option and restricted stock unit (“RSU”) grants.
The fair value method requires the Company to estimate the fair
value of stock-based payment awards on the date of grant using an
option pricing model or the closing stock price on the date of
grant in the case of RSUs.
12
MONOPAR THERAPEUTICS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
Stock-based
compensation costs for awards granted to employees and non-employee
directors are based on the fair value of the underlying instrument
calculated using the Black-Scholes option-pricing model on the date
of grant for stock options and using the closing stock price on the
date of grant for RSUs and recognized as expense on a straight-line
basis over the requisite service period, which is the vesting
period. Determining the appropriate fair value model and related
assumptions requires judgment, including estimating the future
stock price volatility, forfeiture rates and expected terms. The
expected volatility rates are estimated based on the actual
volatility of comparable public companies over recent historical
periods of the same length as the expected term. The Company
selected these companies based on reasonably comparable
characteristics, including market capitalization, stage of
corporate development and with historical share price information
sufficient to meet the expected term (life) of the stock-based
awards. The expected term for options granted to date is estimated
using the simplified method. Forfeitures are estimated at the time
of grant and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates. The Company has not paid
dividends and does not anticipate paying a cash dividend in the
future vesting period and, accordingly, uses an expected dividend
yield of zero. The risk-free interest rate is based on the rate of
U.S. Treasury securities with maturities consistent with the
estimated expected term of the awards. Prior to January 1, 2019,
the measurement of consultant stock-based compensation was subject
to periodic adjustments as the underlying equity instruments vested
and was recognized as an expense over the period in which services
were rendered. Since January 1, 2019, consultant stock-based
compensation is valued on the grant date and is recognized as an
expense over the period in which services are
rendered.
Recent Accounting Pronouncements
In
August 2018, the FASB issued Accounting Standards Updates
(“ASU”) No. 2018-13,
Fair Value Measurement (Topic 820): Disclosure
Framework—Changes to the Disclosure Requirements for Fair
Value Measurement. The ASU modifies, and in certain cases
eliminates, the disclosure requirements on fair value measurements
in Topic 820. The amendments in ASU No. 2018-13 are effective for
all entities for fiscal years, and interim periods within those
fiscal years, beginning after December 15, 2019. The Company
adopted this ASU and has determined that it had no material effect
on its condensed consolidated financial statements and footnote
disclosures for the three and nine months ended September 30,
2020.
Note 3 - Capital Stock
Holders
of the common stock are entitled to receive such dividends as may
be declared by the Board of Directors out of funds legally
available therefor. Upon dissolution and liquidation of the
Company, holders of the common stock are entitled to a ratable
share of the net assets of the Company remaining after payments to
creditors of the Company. The holders of shares of common stock are
entitled to one vote per share for the election of each director
nominated to the board and one vote per share on all other matters
submitted to a vote of stockholders.
The
Company’s amended and restated certificate of incorporation
authorizes the Company to issue 40,000,000 shares of common stock
with a par value of $0.001 per share.
Sales of Common Stock
On
December 23, 2019, the Company closed the initial public offering
of its common stock. The Company sold 1,277,778 shares of its
common stock at a public offering price of $8.00 per share pursuant
to an underwriting agreement with JonesTrading Institutional
Services, LLC (“JonesTrading”). The Company paid
JonesTrading a customary commission and reimbursement of a portion
of their legal fees incurred in connection with the offering, which
in aggregate totaled approximately $0.7 million. Net proceeds on a
cash basis were approximately $9.4 million, after deducting
underwriting discounts and accrued, unpaid offering expenses. The
Company had incurred and paid prior to the initial public offering
approximately $0.6 million of fundraising expenses which were
capitalized on the Company’s balance sheet as deferred
offering costs and were reclassified as offering expenses (a
contra-equity balance sheet account) upon the closing of the
Company’s initial
public offering. After deducting previously paid offering expenses
of approximately $0.6 million, the accrual basis net proceeds were
$8.8 million as reported on the Company’s consolidated
statement of stockholders’ equity as of December 31, 2019
included in the Company’s Annual Report on Form 10-K filed
with the SEC on March 27, 2020. The Company’s common stock
began trading on the Nasdaq Capital Market on December 19,
2019.
13
MONOPAR THERAPEUTICS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
On
January 13, 2020, the Company entered into a Capital on
Demand™ Sales Agreement with JonesTrading, as sales agent,
pursuant to which Monopar may offer and sell (at its discretion),
from time to time, through or to JonesTrading shares of
Monopar’s common stock, having an aggregate offering price of
up to $19.7 million. Pursuant to this agreement, as of September
30, 2020, the Company sold 860,677 shares of its common stock at an
average gross price per share of $9.79 for net proceeds of
$8,175,290, after commissions and fees of $253,035.
As
of September 30, 2020, the Company had 11,452,177 shares of common
stock issued and outstanding.
Note 4 - Stock Incentive Plan
In
April 2016, the Company’s Board of Directors and stockholders
representing a majority of the Company’s outstanding stock at
that time, approved the Monopar Therapeutics Inc. 2016 Stock
Incentive Plan, as amended (the “Plan”), allowing the
Company to grant up to an aggregate 700,000 shares of stock-based
awards in the form of stock options, restricted stock units, stock
appreciation rights and other stock-based awards to employees,
non-employee directors and consultants. In October 2017, the
Company’s Board of Directors voted to increase the stock
award pool to 1,600,000 shares of common stock, which subsequently
was approved by the Company’s stockholders. In April 2020,
the Company’s Board of Directors voted to increase the stock
award pool to 3,100,000 (and increase of 1,500,000 shares of common
stock), which was approved by the Company’s stockholders in
June 2020.
In
January 2020, the Company's Plan Administrator Committee granted
two new hire stock option grants and a consultant stock option
grant to the Company’s acting chief medical office, in
aggregate, for the purchase of 15,125 shares of the Company’s
common stock with exercise prices ranging from $16.80 to $17.75.
The stock options have a 10-year term and vest over 1 to 4
years.
In
February 2020, the Company's Plan Administrator Committee (with
regards to non-officer employees) and the Company's Compensation
Committee, as ratified by the Board of Directors (in the case of
officers and non-employee directors) granted an aggregate of
189,985 stock options with exercise prices ranging from $12.93 to
$14.35 as annual equity grants to executive officers, non-employee
directors and staff. All stock options have a 10-year term and vest
over 1 to 4 years. The annual equity grants also included an
aggregate 45,722 restricted stock units to executive officers,
non-employee directors and staff which vest over 1 to 4
years.
In
May 2020, the Company's Plan Administrator Committee granted stock
option grants to a new hire and an employee, in aggregate, for the
purchase of 4,000 shares of the Company’s common stock with
exercise prices ranging from $7.61 to $7.66. All stock options have
a 10-year term and vest over 4 years.
In
August and September 2020, the Company's Plan Administrator
Committee granted two new hire stock option grants for the purchase
of 7,000 shares of the Company’s common stock with exercise
prices of $4.93 to $5.65. All stock options have a 10-year term and
vest over 4 years.
Under
the Plan, the per share exercise price for the shares to be issued
upon exercise of an option shall be determined by the Plan
Administrator, except that the per share exercise price shall be no
less than 100% of the fair market value per share on the grant
date. Fair market value is established by the Company’s Board
of Directors, using third party valuation reports, recent private
financings or the Company’s closing prices on Nasdaq since
the Company’s listing on December 19, 2019. Stock options
generally expire after 10 years.
14
MONOPAR THERAPEUTICS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
Stock
option activity under the Plan was as follows:
|
|
|
Options Outstanding
|
||
|
|
|
Number of Shares Subject to Options
|
|
Weighted-Average Exercise Price
|
|
Balances at January 1, 2019
|
|
1,105,896
|
|
$ 2.99
|
|
Granted
|
|
—
|
|
—
|
|
Forfeited
|
|
—
|
|
—
|
|
Exercised
|
|
(18,433)
|
|
5.97
|
|
Balances at December 31, 2019
|
|
1,087,463
|
|
2.94
|
|
Granted(1)
|
|
174,357
|
|
14.08
|
|
Forfeited
|
|
—
|
|
—
|
|
Exercised
|
|
—
|
|
—
|
|
Balances at September 30, 2020
|
|
1,261,820
|
|
4.48
|
(1)
174,357 options
vest as follows: options to purchase 145,648 shares of the
Company’s common stock vest 6/48ths on the six-month
anniversary of grant date and 1/48th per month thereafter; options
to purchase 22,584 shares of the Company’s common stock vest
quarterly over one year; and options to purchase 6,125 shares of
the Company’s common stock vest monthly over one year.
Exercise prices are noted in the paragraphs above this
table.
A
summary of options outstanding as of September 30, 2020 is shown
below:
|
Exercise Prices
|
|
Number of Shares Subject to Options Outstanding
|
|
Weighted-Average Remaining
Contractual Term in Years
|
|
Number of Shares Subject to Options Fully Vested and
Exercisable
|
|
Weighted-Average Remaining Contractual Term in Years
|
|
$0.001-$5.00
|
|
557,420
|
|
5.97
years
|
|
526,720
|
|
5.93
years
|
|
$5.01-$10.00
|
|
541,043
|
|
7.79
years
|
|
350,471
|
|
7.72
years
|
|
$10.01-$15.00
|
|
148,232
|
|
9.34
years
|
|
48,327
|
|
9.34
years
|
|
$15.01-$20.00
|
|
15,125
|
|
9.30
years
|
|
6,094
|
|
9.32
years
|
|
|
|
1,261,820
|
|
|
|
931,612
|
|
|
15
MONOPAR THERAPEUTICS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
Restricted stock
unit activity under the Plan was as follows:
|
|
|
Restricted Stock Units
|
|
Weighted-Average Grant Date Fair Value per Unit
|
|
Unvested balance at January 1, 2020
|
|
—
|
|
$
—
|
|
Granted
|
|
45,722
|
|
12.93
|
|
Vested
|
|
(3,868)
|
|
12.93
|
|
Forfeited
|
|
—
|
|
—
|
|
Unvested Balance at September 30, 2020
|
|
41,854
|
|
12.93
|
During the three months ended September 30,
2020 and 2019, the Company recognized
$163,807 and $154,906, respectively, of employee and non-employee
director stock-based compensation expense as general and
administrative expenses and $102,346 and $67,347, respectively, as
research and development expenses. During the nine months
ended September 30, 2020 and
2019, the Company recognized $633,462 and $470,232, respectively,
of employee and non-employee director stock-based compensation
expense as general and administrative expenses and $303,415 and
$202,012, respectively, as research and development expenses. The
stock-based compensation expense is allocated on a departmental
basis, based on the classification of the holder. No income tax
benefits have been recognized in the condensed consolidated
statements of operations and comprehensive loss for stock-based
compensation arrangements.
The Company recognizes as an expense the fair
value of options granted to persons (currently consultants) who are
neither employees nor non-employee directors. Stock-based
compensation expense for consultants which was recorded as research
and development expense for the three months ended September
30, 2020 and 2019 was $17,560 and
$20,704, and for the nine months ended September 30, 2020
and 2019 $52,691 and $62,121,
respectively.
The
fair value of options granted from inception to September 30, 2020
was based on the Black-Scholes option-pricing model assuming the
following factors: 5.3 to 6.1 years expected term, 55% to 85%
volatility, 0.4% to 2.9% risk free interest rate and zero
dividends. The expected term for options granted to date was
estimated using the simplified method. There were 7,000 and 216,110
stock option grants during the three and nine months ended
September 30, 2020, respectively. For the three and nine months
ended September 30, 2020 the weighted average grant date fair value
was $3.87 per share and $9.05 per share, respectively. There were
no stock option grants during the three and nine months ended
September 30, 2019. For the three months ended September 30, 2020
and 2019, the fair value of shares vested was $0.3 million and $0.2
million, respectively. For the nine months ended September 30, 2020
and 2019, the fair value of shares vested was $0.9 million and $0.6
million, respectively. At September 30, 2020, the aggregate
intrinsic value of outstanding stock options was approximately $3.0
million of which approximately $2.8 million was vested and
approximately $0.2 million is expected to vest (representing
options to purchase up to 330,208 shares of the Company's common
stock), and the weighted-average exercise price in aggregate was
$4.48 which includes $3.11 for fully vested stock options and $8.32
for stock options expected to vest. At September 30, 2020, the
unamortized unvested balance of stock-based compensation was
approximately $2.1 million to be amortized over 2.67
years.
16
MONOPAR THERAPEUTICS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
Note 5 - Related Party Transactions
In
December 2019, Tactic Pharma, LLC (“Tactic Pharma”),
purchased 125,000 shares of Monopar’s common stock in
Monopar’s initial public offering at $8 per share for an
aggregate $1 million, at which time its beneficial ownership in
Monopar was 41.6%. As of September 30, 2020, Tactic Pharma
beneficially owned 38.4% of Monopar’s common
stock.
During
the three and nine months ended September 30, 2020 and 2019, the
Company was governed by six members of its Board of Directors
(“Related Parties”). The Related Parties are also
current common stockholders (owning approximately an aggregate 3%
of the common stock outstanding as of September 30, 2020). None of
the Related Parties received compensation other than market-rate
salary, market-rate stock-based compensation and benefits and
performance-based bonus or in the case of non-employee directors,
market-rate Board fees and market-rate stock-based compensation.
Three of the Board members are also Managing Members of Tactic
Pharma as of September 30, 2020. Chandler D. Robinson is the
Company’s Co-Founder, Chief Executive Officer, common
stockholder, Managing Member of Tactic Pharma, former Manager of
the predecessor LLC, Manager of CDR Pharma, LLC and Board member of
Monopar as a C Corporation. Andrew P. Mazar is the Company’s
Co-Founder, Executive Vice President of Research and Development,
Chief Scientific Officer, common stockholder, Managing Member of
Tactic Pharma, former Manager of the predecessor LLC and Board
member of Monopar as a C Corporation. Michael Brown is a Managing
Member of Tactic Pharma (as of February 1, 2019 with no voting
power as it relates to the Company), a previous managing member of
Monopar as an LLC, common stockholder and Board member of Monopar
as a C Corporation. Christopher M. Starr is the Company’s
Co-Founder, Executive Chairman of the Board of Directors, common
stockholder, former Manager of the predecessor LLC and Board member
of Monopar as a C Corporation.
During
the quarter ended March 31, 2019, the Company paid or accrued
approximately $33,725 in legal fees to a large national law firm,
in which a family member of the Company’s Chief Executive
Officer was a law partner through January 31, 2019. The family
member personally billed a de
minimis amount of time on the Company’s legal
engagement with the law firm in this period.
Note
6 – Commitments and Contingencies
License,
Development and Collaboration Agreements
Onxeo S.A.
In June
2016, the Company executed an option and license agreement with
Onxeo S.A. (“Onxeo”), a public French company, which
gave Monopar the exclusive option to license (on a world-wide
exclusive basis) Validive to pursue treating severe oral mucositis
in patients undergoing chemoradiation treatment for head and neck
cancers. The pre-negotiated Onxeo license agreement for Validive as
part of the option agreement includes clinical, regulatory,
developmental and sales milestones that could reach up to $108
million if the Company achieves all milestones, and escalating
royalties on net sales from 5% to 10%. On September 8, 2017, the
Company exercised the license option, and therefore paid Onxeo the
$1 million fee under the option and license agreement.
17
MONOPAR THERAPEUTICS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
Under
the agreement, the Company is required to pay royalties to Onxeo on
a product-by-product and country-by-country basis until the later
of (1) the date when a given product is no longer within the scope
of a patent claim in the country of sale or manufacture, (2) the
expiry of any extended exclusivity period in the relevant country
(such as orphan drug exclusivity, pediatric exclusivity, new
chemical entity exclusivity, or other exclusivity granted beyond
the expiry of the relevant patent), or (3) a specific time period
after the first commercial sale of the product in such country. In
most countries, including the U.S., the patent term is generally 20
years from the earliest claimed filing date of a non-provisional
patent application in the applicable country, not taking into
consideration any potential patent term adjustment that may be
filed in the future or any regulatory extensions that may be
obtained. The royalty termination provision pursuant to (3)
described above is shorter than 20 years and is the least likely
cause of termination of royalty payments.
The
Onxeo license agreement does not have a pre-determined term, but
expires on a product-by-product and country-by-country basis; that
is, the agreement expires with respect to a given product in a
given country whenever the Company’s royalty payment
obligations with respect to such product have expired. The
agreement may also be terminated early for cause if either the
Company or Onxeo materially breach the agreement, or if either the
Company or Onxeo become insolvent. The Company may also choose to
terminate the agreement, either in its entirety or as to a certain
product and a certain country, by providing Onxeo with advance
notice.
The
Company plans to internally develop Validive with the near-term
goal of commencing a Phase 2b/3 clinical trial, which, if
successful, may allow the Company to apply for marketing approval
within the next several years. The Company will need to raise
significant funds or enter into a collaboration partnership to
support the further development of Validive. As of September 30,
2020, the Company had not reached any of the pre-specified
milestones and has not been required to pay Onxeo any funds under
this license agreement other than the $1 million one-time license
fee.
Grupo Español de Investigación en Sarcomas
(“GEIS”)
In
June 2019, the Company executed a clinical collaboration agreement
with GEIS for the development of camsirubicin in patients with
advanced soft tissue sarcoma (“ASTS”). GEIS will be the
study sponsor and will lead a multi-country, randomized, open-label
Phase 2 clinical trial to evaluate camsirubicin head-to-head
against the current 1st-line treatment for ASTS, doxorubicin.
Enrollment of the trial is anticipated to begin at the end of 2020
or early 2021, and will include approximately 170 ASTS patients.
The Company will provide study drug and supplemental financial
support for the clinical trial averaging approximately $2 million
to $3 million per year. During the three and nine months ended
September 30, 2020, the Company incurred $400,320 and $612,304,
respectively, in expenses under the GEIS agreement and other
clinical-related expenses including clinical material manufacturing
and database management expenses in support of GEIS’s Phase 2
camsirubicin clinical trial. During the three and nine months ended
September 30, 2019, the Company incurred nominal expense related to
the GEIS collaboration. The Company can terminate the agreement by
providing GEIS with advance notice, and without affecting the
Company’s rights and ownership to any intellectual property
or clinical data.
XOMA
Ltd.
The
intellectual property rights contributed by Tactic Pharma, LLC
(“Tactic Pharma”) to the Company included the
non-exclusive license agreement with XOMA Ltd. for the humanization
technology used in the development of MNPR-101. Pursuant to such
license agreement, the Company is obligated to pay XOMA Ltd.
clinical, regulatory and sales milestones for MNPR-101 that could
reach up to $14.925 million if the Company achieves all milestones.
The agreement does not require the payment of sales royalties.
There can be no assurance that the Company will reach any
milestones under the XOMA agreement. As of September 30, 2020, the
Company had not reached any milestones and has not been required to
pay XOMA Ltd. any funds under this license agreement.
18
MONOPAR THERAPEUTICS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
Operating Leases
Commencing
January 1, 2018, the Company entered into a lease for its executive
headquarters at 1000 Skokie Blvd., Suite 350, Wilmette, Illinois.
The lease term was January 1, 2018 through December 31, 2019, at
which time the lease was on a month-to-month basis. In addition,
effective February 2019, the Company leased additional office space
in the same building on a month-to-month basis.
During
the three months ended September 30, 2020 and 2019, the Company
recognized operating lease expenses of $13,462 and $13,462,
respectively. During the nine months ended September 30, 2020 and
2019, the Company recognized operating lease expenses of $41,565
and $38,427, respectively.
Effective
January 1, 2019, the Company adopted ASU 2016-02, as amended by ASU
2018-10, which requires the Company to record leases on its
condensed consolidated balance sheet as (a) a lease liability and
(b) a right-of-use asset. Because the Company had no lease
obligation (other than on a month-to-month basis) past December 31,
2019, the Company had no lease liability and right-of-use asset on
its condensed consolidated balance sheet as of September 30, 2020
or December 31, 2019.
Legal Contingencies
The
Company may be subject to claims and assessments from time to time
in the ordinary course of business. No claims have been asserted to
date.
Indemnification
In
the normal course of business, the Company enters into contracts
and agreements that contain a variety of representations and
warranties and provide for general indemnification. The
Company’s exposure under these agreements is unknown because
it involves claims that may be made against the Company in the
future, but that have not yet been made. To date, the Company has
not paid any claims nor been required to defend any action related
to its indemnification obligations. However, the Company may record
charges in the future as a result of future claims against these
indemnification obligations.
In
accordance with its second amended and restated certificate of
incorporation, amended and restated bylaws and the indemnification
agreements entered into with each officer and non-employee
director, the Company has indemnification obligations to its
officers and non-employee directors for certain events or
occurrences, subject to certain limits, while they are serving at
the Company’s request in such capacities. There have been no
claims to date.
Paycheck
Protection Program (“PPP”) Bank Loan
In May
2020, the Company applied for and received a $122,400 PPP bank loan
established pursuant to the Coronavirus Aid, Relief, and Economic
Security Act, as administered by the U.S. Small Business
Administration (“SBA”).
The SBA
will forgive the bank loan pursuant to the PPP, if certain
conditions are met, namely the bank loan must be used primarily for
payroll during the 24-week period following receipt of the loan,
without significant staffing reductions during that period. The
Company believes it is eligible and intends to apply for loan
forgiveness in December 2020 when the bank is able to process SBA
loan forgiveness application. Should the bank loan not be forgiven,
the Company would be required to pay 1% annual interest on the loan
with principal and interest payments beginning approximately seven
months after receipt of the loan with payments over 18 months. The
Company has recorded the PPP loan on the balance sheet as of
September 30, 2020 as a liability as current (due within 12 months)
and non-current portions of bank loan, although the Company
anticipates to reclassify the liability to a contra-expense account
on the Company’s statements of operations and comprehensive
loss at year-end, if the Company’s PPP bank loan is fully
forgiven by the SBA.
19
Item 2. Management's Discussion and
Analysis of Financial Condition and Results of
Operations.
You
should read the following discussion and analysis of our financial
condition and results of operations together with our condensed
consolidated financial statements and related notes contained in
this Quarterly Report.
Overview
We are
a clinical stage biopharmaceutical company primarily focused on
developing proprietary therapeutics designed to extend life or
improve quality of life for cancer patients. We are building a drug
development pipeline through the licensing and acquisition of
oncology therapeutics in late preclinical and clinical development
stages. We leverage our scientific and clinical experience to help
reduce the risk and accelerate the clinical development of our drug
product candidates.
In
December 2019, we closed our initial public offering. We sold
1,277,778 shares of our common stock at a public offering price of
$8.00 per share. Net proceeds were approximately $9.4 million,
after deducting underwriting discounts and accrued, unpaid offering
expenses. Our common stock began trading on the Nasdaq Capital
Market on December 19, 2019.
In
January 2020, we entered into a Capital on DemandTM Sales Agreement
with JonesTrading Institutional Services, LLC
(“JonesTrading”), as sales agent, pursuant to which we
may offer and sell (at our discretion), from time to time, through
or to JonesTrading shares of our common stock, having an aggregate
offering price of up to $19.7 million. Pursuant to this agreement,
as of September 30, 2020, we have sold 860,677 shares of our common
stock at an average gross price per share of $9.79 for net proceeds
of $8,175,290, after commissions of $253,035.
In June
2020, we entered into a 50/50 collaboration development agreement
with NorthStar Medical Radioisotopes, LLC (“NorthStar”)
to develop potential Radio-Immuno-Therapeutics (“RITs”)
to treat severe COVID-19 (patients with SARS-CoV-2 infection).
NorthStar is a commercial producer and supplier of medical
radioisotopes. This collaboration combines NorthStar’s
expertise in the innovative production, supply, and distribution of
important medical radioisotopes with our expertise in therapeutic
drug development and our pre-IND stage humanized urokinase
plasminogen activator receptor (“uPAR”) targeted
monoclonal antibody known as MNPR-101, along with a proprietary
portfolio of related monoclonal antibodies that target uPAR or its
ligand uPA. uPAR seems to be selectively expressed on aberrantly
activated immune cells. In response to coronavirus infection, these
rogue immune cells produce pro-inflammatory cytokines that can
cause runaway inflammation throughout the body, commonly referred
to as a cytokine storm. It is this systemic hyper-inflammatory
state that is thought to be largely responsible for the severe lung
injury and multiple organ damage that contributes to poor outcomes
and death in patients with severe COVID-19.
In this
collaboration, we plan to couple MNPR-101 to a therapeutic
radioisotope supplied by NorthStar in order to create a highly
selective agent that has the potential to kill aberrantly activated
cytokine-producing immune cells. By eradicating these cells with a
uPAR-targeted RIT, the goal is to spare healthy cells while quickly
reducing the cytokine storm and its harmful systemic effects.
Through September 30, 2020, we have incurred immaterial amounts of
expenses related to the NorthStar collaboration.
In
November 2020, we announced a series of recently issued patents for
our Phase 2b/3 clinical-stage lead product candidate, Validive
(clonidine HCl mucobuccal tablet). These patents, including U.S.
Patent No. 10,675,271, provide claims covering “Clonidine
and/or clonidine derivatives for use in the prevention and/or
treatment of adverse side effects of chemotherapy”. These
patents expand the potential use of Validive in cancer patients,
beyond the earlier allowed claims for the prevention of oral
mucositis in patients receiving chemoradiotherapy. Specifically,
they provide protection for the potential ability of Validive to
prevent or treat common chemotherapy-associated side effects such
as gastrointestinal disorders, respiratory disorders, fatigue and
headache, and would provide protection should we determine in the
future to conduct additional Validive development activities
related to adverse side effects of chemotherapy beyond
oropharyngeal cancer.
Given
the COVID-19 pandemic and its effects on clinical trials and
fundraising, we have adjusted our clinical development plans
accordingly to fit what is feasible in the current environment. We
have simplified the design of the previously planned Phase 3
clinical trial for our lead product candidate, Validive (clonidine
mucobuccal tablet; clonidine MBT), to a seamless design Phase 2b/3
that will allow us to minimize touch points with patients and
sites. This seamless design will allow us to advance to the Phase 3
portion of the trial if supported by the interim data at the end of
the Phase 2b portion of the trial. We are aiming to enroll the
first patient in the Phase 2b portion of the trial in the fourth
quarter of 2020. This modification in design allows us to initiate
the clinical trial without requiring near-term financing. The
decision to open the Phase 3 portion of the clinical trial will
largely be dependent on our cash position closer to that time,
anticipated to be in late 2021. To open and complete the Phase 3
portion of the clinical trial, we will require additional funding
in the millions or tens of millions of dollars (depending on if we
have consummated a collaboration or partnership or neither for
Validive), which we are planning to pursue in the next 12
months.
We are
continuing to devote a portion of the net proceeds from our initial
public offering to support the camsirubicin Phase 2 clinical trial
for which we signed a collaboration agreement in June 2019 with
Grupo Español de Investigación en Sarcomas
(“GEIS”), discussed in further detail below. We believe
we have funds sufficient to enable GEIS to commence its open label
Phase 2 clinical trial at the end of 2020 or early 2021 and to
obtain results from the run-in portion of the trial.
20
Our Product Candidates
Validive
Validive is
designed to be used prophylactically to reduce the incidence, delay
the time to onset, and decrease the duration of severe oral
mucositis (“SOM”) in patients undergoing
chemoradiotherapy (“CRT”) for oropharyngeal cancer
(“OPC”). SOM is a painful and debilitating inflammation
and ulceration of the mucous membranes lining the oral cavity and
oropharynx in response to chemoradiation. The majority of patients
receiving CRT to treat their OPC develop SOM, which remains one of
the most common and devastating side effects of treatment in this
indication. The potential clinical benefits to patients of reducing
or delaying the incidence of SOM, or reducing the duration of SOM,
include: reduced treatment discontinuations leading to potentially
improved overall survival outcomes; reduced mouth and throat pain
avoiding the need to receive enteral (feeding tube) or parenteral
(intravenous) nutrition; and decreased long-term and often
permanent debilitation arising from swallowing difficulties, neck
and throat spasms, and lung complications due to food aspiration.
Our mucobuccal tablet (“MBT”) formulation is a novel
delivery system for clonidine that allows for prolonged and
enhanced local delivery of drug in the regions of mucosal radiation
damage in patients with OPC. Validive has been granted fast track
designation in the U.S., orphan drug designation in the EU, and has
global intellectual property patent protection through mid-2029 not
accounting for possible extensions.
In
September 2017, we exercised an option to license Validive from
Onxeo S.A., the company that developed Validive through its Phase 2
clinical trial. In the completed Phase 2 clinical trial, Validive
demonstrated clinically meaningful efficacy signals within the
64-patient OPC population randomized to placebo, Validive 50
µg dose and Validive 100 µg dose. The absolute incidence
of SOM in OPC patients who received a dose of Validive 100 µg
once per day was reduced by 26.3% (incidence rate of 65.2% in
placebo, 45.0% in Validive 50 µg group, and 38.9% in Validive
100 µg group). The median time to onset of SOM was 37 days in
the placebo cohort; 45 days in the Validive 50 µg cohort and
no median time of onset was reached in the Validive 100 µg
group since fewer than half of this cohort of patients developed
SOM. There was also a 37.8% reduction in the median duration of the
SOM for the Validive 100 µg group versus placebo (41.0 days
placebo group, 34.0 days Validive 50 µg group, and 25.5 days
Validive 100 µg group) in patients that developed SOM. Median
duration of SOM across all patients, inclusive of both those that
did and did not develop SOM, was 17 days in the placebo group and 0
days in each of the Validive 50 and 100 µg groups. A positive
dose response was seen in each of these three clinical endpoints.
Additionally, patients in the Validive cohorts in the Phase 2
clinical trial demonstrated a safety profile similar to that of
placebo. While not designed by us, Onxeo’s promising
preclinical studies and Phase 2 clinical trial have informed the
design and conduct of what we believe will be an effective Phase
2b/3 clinical trial.
SOM
typically arises in the immune tissue at the back of the tongue and
throat, which comprise the oropharynx, and consists of acute severe
tissue damage and pain that prevents patients from swallowing,
eating and drinking. Validive stimulates the alpha-2 adrenergic
receptor (alpha-2AR) on macrophages (white blood cells present in
the immune tissues of the oropharynx) suppressing pro-inflammatory
cytokine expression. Validive exerts its effects locally in the
oral cavity and oropharynx over a prolonged period of time through
its unique MBT formulation. Patients who develop SOM are also at
increased risk of developing late onset toxicities, including
trismus (jaw, neck, and throat spasms), dysphagia, and lung
complications, which are often irreversible and lead to increased
hospitalization and the need for further interventions sometimes
years after completion of chemoradiotherapy. We believe that a
reduction in the incidence and duration of SOM by Validive will
have the potential to reduce treatment discontinuation and/or
treatment delays potentially leading to improved survival outcomes,
and reducing or eliminating these long-term morbidities resulting
from CRT.
The OPC
target population for Validive is the most rapidly growing segment
of head and neck cancer (“HNC”) patients, estimated to
exceed 40,000 new cases of OPC in the U.S alone in 2020. The growth
in OPC is driven by the increasing prevalence of oral human
papilloma virus (“HPV”) infections in the U.S. and
around the world. Despite the availability of a
pediatric/adolescent HPV vaccine, the rate of OPC incidence in
adults is not anticipated to be materially reduced for many decades
due to low adoption of the vaccine to date. As a result, the
incidence of HPV-driven OPC is projected to increase for many years
to come and will continue to support a clinical need for Validive
for the prevention of CRT-induced SOM in patients with OPC since
CRT is the standard of care treatment, and we do not anticipate
this changing for years to come.
A
pre-Phase 3 meeting with the FDA was held and based on the meeting
discussion, a Phase 3 clinical protocol and accompanying
statistical analysis plan (“SAP”) was submitted to the
FDA for review and comments. We have also received protocol
assistance and advice on our Phase 3 protocol and SAP from the
European Medicines Agency Committee on Human Medicinal Products
(EMA/CHMP/SAWP). Based on comments and guidance provided by FDA and
EMA, and our analysis of the current COVID-19 pandemic and its
effects on clinical trials, we have modified our original adaptive
design Phase 3 clinical trial to be a seamless Phase 2b/3 clinical
trial to better fit the current clinical research environment. The
primary endpoint, absolute incidence of SOM, remains the same, but
the overall design of the trial has been simplified and the touch
points with the healthcare system have been minimized. Our aim is
to commence the Phase 2b/3 clinical trial in the fourth quarter of
2020, with the interim (completion of Phase 2b) reached
approximately 12 months from first patient dosed, and the Phase 3
enrollment completed in the fourth quarter of 2022. Opening the
Phase 3 portion of the trial will be subject to the interim (Phase
2b) results and our ability to raise additional funding or find a
suitable pharmaceutical partner.
21
Camsirubicin
Our
second product candidate, camsirubicin, is a novel analog of
doxorubicin which has been designed to reduce the cardiotoxic side
effects generated by doxorubicin while retaining anti-cancer
activity. Camsirubicin is not metabolized to the derivatives that
are believed to be responsible for doxorubicin’s cardiotoxic
effects. A Phase 2 clinical trial for camsirubicin has been
completed in patients with advanced (e.g. unresectable or
metastatic) soft tissue sarcoma (“ASTS”). Average life
expectancy for these patients is 12-15 months. In this study, 52.6%
of patients evaluable for tumor progression demonstrated clinical
benefit (partial response or stable disease), which was
proportional to dose and consistently observed at higher cumulative
doses of camsirubicin (>1000 mg/m2). Camsirubicin was very well
tolerated in this study and underscored the ability to potentially
administer camsirubicin without restriction of cumulative dose in
patients with ASTS. Doxorubicin is limited to a lifetime cumulative
dose maximum of 450 mg/m2. Even if a patient is responding, they
are pulled off of doxorubicin treatment once this cumulative dose
has been reached.
Based
on encouraging clinical results to date, we plan to continue the
development of camsirubicin as 1st-line treatment in patients with
ASTS, where the current first line treatment is doxorubicin. The
aim is to administer camsirubicin without restricting cumulative
dose, thereby potentially improving efficacy beyond that of
doxorubicin by keeping patients who are responding on treatment. In
June 2019, we entered into a clinical collaboration with GEIS. GEIS
will lead a multi-country, randomized, open-label Phase 2 clinical
trial evaluating camsirubicin head-to-head against doxorubicin in
patients with ASTS. GEIS is an internationally renowned non-profit
organization focused on the research, development and management of
clinical trials for sarcoma, that has worked with many of the
leading biotech and global pharmaceutical companies. Enrollment of
the trial is currently anticipated to begin at the end of 2020 or
early 2021, and to include approximately 170 ASTS patients, an
interim analysis, and take around two years to enroll. The trial
will begin with a dose escalation (“run-in”) prior to
the randomization portion of the trial. The primary endpoint of the
trial will be progression-free survival, with secondary endpoints
including overall survival, response rate and incidence of
treatment-emergent adverse events. In November 2019, the European
Commission granted orphan drug designation for camsirubicin for the
treatment of soft tissue sarcoma in the EU.
MNPR-101
Our third program, MNPR-101, is a
novel first-in-class humanized monoclonal antibody to the urokinase
plasminogen activator receptor (“uPAR”) for the
treatment of advanced cancers and severe COVID-19. We have entered
into a collaboration development agreement with NorthStar to
develop potential RITs to treat severe COVID-19. This collaboration
combines NorthStar’s expertise in the innovative production,
supply, and distribution of important medical radioisotopes with
our expertise in therapeutic drug development. NorthStar and we
plan to couple MNPR-101 along with a proprietary portfolio of
related monoclonal antibodies that target uPAR or its ligand uPA
with a therapeutic radioisotope. uPAR seems to be selectively
expressed on aberrantly activated immune cells. In response to
coronavirus infection, these rogue immune cells produce
pro-inflammatory cytokines that can cause runaway inflammation
throughout the body, commonly referred to as a cytokine storm. It
is this systemic hyper-inflammatory state that is thought to be
largely responsible for the severe lung injury and further multiple
organ damage that contributes to poor outcomes and death in
patients with severe COVID-19.
In
collaboration with NorthStar, we have filed a provisional patent
application entitled “Precision Radioimmunotherapeutic
Targeting of the Urokinase Plasminogen Activator Receptor (uPAR)
for Treatment of Severe COVID-19 Disease” with the U.S.
Patent and Trademark Office (“USPTO”). This application
covers novel compositions and uses of cytotoxic radioisotopes
attached to antibodies that bind to uPAR, thereby creating
precision targeted radiotherapeutics, also known as uPRITs, for the
treatment of severe COVID-19 and other respiratory diseases.
Advanced COVID-19 patients frequently develop severe,
life-threatening, pulmonary inflammation as a result of a viral
induced cytokine storm. The development of this cytokine storm is
associated with a high rate of mortality in severe COVID-19
patients, even with oxygen support and mechanical ventilation.
uPRITs have been designed with the goal of selectively eliminating
the aberrantly activated immune cells responsible for causing the
cytokine storm. By eradicating these cells with a targeted RIT, the
goal is to spare healthy cells while quickly reducing the cytokine
storm and its harmful systemic effects. The co-inventors of the
provisional patent application are James Harvey, Chief Scientific
Officer of NorthStar, and Andrew P. Mazar, our Chief Scientific
Officer. We have also entered into collaborations with
IsoTherapeutics, LLC and Aragen Bioscience, Inc. to generate and
evaluate candidate uPRIT conjugates for activity against uPAR with
the goal of identifying one to two development candidates by the
end of 2020.
22
Revenues
We
are an emerging growth company, have no approved drugs and have not
generated any revenues. To date, we have engaged in acquiring
pharmaceutical drug product candidates, licensing rights to drug
product candidates, entering into collaboration agreements for
testing and clinical development of our drug product candidates and
providing the infrastructure to support the clinical development of
our drug product candidates. We do not anticipate commercial
revenues from operations until we complete testing and development
of one of our drug product candidates and obtain marketing approval
or we sell, enter into a collaborative marketing arrangement, or
out- license one of our drug product candidates to another party.
See “Liquidity and Capital Resources”.
Recently Issued and Adopted Accounting Pronouncements
A
description of recently issued accounting pronouncements that may
potentially impact our financial position and condensed
consolidated results of operations is disclosed in Note 2 to our
condensed consolidated financial statements appearing elsewhere in
this Quarterly Report on Form 10-Q.
Critical Accounting Policies and Use of Estimates
While
our significant accounting policies are described in more detail in
Note 2 of our condensed consolidated financial statements included
elsewhere in this Quarterly Report on Form 10-Q, we believe the
following accounting policies to be critical to the judgments and
estimates used in the preparation of our condensed consolidated
financial statements.
Stock-Based Compensation
We
account for stock-based compensation arrangements with employees,
non-employee directors and consultants using a fair value method,
which requires the recognition of compensation expense for costs
related to all stock-based awards, including stock option grants
and RSUs. The fair value method requires us to estimate the fair
value of stock-based payment awards on the date of grant using an
option pricing model or the closing stock price on date of grant in
the case of RSUs.
Stock-based compensation costs for stock awards
granted to our employees and non-employee directors are based on
the fair value of the underlying instruments calculated using the
Black-Scholes option-pricing model on the date of grant for stock
options and using the closing stock price on the date of
grant for RSUs and recognized as
expense on a straight-line basis over the requisite service period,
which is the vesting period. Determining the appropriate fair value
model and related assumptions requires judgment, including
selecting methods for estimating the Company’s future stock
price volatility, forfeiture rates and expected term. The expected
volatility rates are estimated based on the actual volatility of
comparable public companies over recent historical periods of the
same length as the expected term. We generally selected these
companies based on reasonably comparable characteristics, including
market capitalization, risk profiles, stage of corporate
development and with historical share price information sufficient
to meet the expected term of the stock-based awards. The expected
term for stock options granted during the three and nine months
ended September 30, 2020 and 2019 was estimated using the
simplified method. Forfeitures are estimated at the time of grant
and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates. We have not paid dividends
and do not anticipate paying a cash dividend in future vesting
periods and, accordingly, use an expected dividend yield of zero.
The risk-free interest rate is based on the rate of U.S. Treasury
securities with maturities consistent with the estimated expected
term of the awards. Prior to January 1, 2019, the measurement of
consultant stock-based compensation was subject to periodic
adjustments as the underlying equity instruments vested and was
recognized as an expense over the period in which services were
rendered. Since January 1, 2019, consultant stock-based
compensation is valued on the grant date and is recognized as an
expense over the period in which services are
rendered.
23
Results of Operations
Comparison of the Three Months and Nine Months Ended September 30,
2020 and September 30, 2019
The
following tables summarize the results of our operations for the
three and nine months ended September 30, 2020 and
2019:
|
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||
|
|
(Unaudited)
|
(Unaudited)
|
||||
|
(in
thousands)
|
2020
|
2019
|
Variance
|
2020
|
2019
|
Variance
|
|
|
|
|
|
|
|
|
|
Research and
development expenses
|
$1,256
|
$220
|
$1,036
|
$2,433
|
$1,385
|
$1,048
|
|
General and
administrative expenses
|
392
|
539
|
(147)
|
1,815
|
1,714
|
101
|
|
Total
operating expenses
|
1,648
|
759
|
889
|
4,248
|
3,099
|
1,149
|
|
Operating
loss
|
(1,648)
|
(759)
|
(889)
|
(4,248)
|
(3,099)
|
(1,149)
|
|
Interest income,
net
|
9
|
23
|
(14)
|
72
|
81
|
(9)
|
|
Net
loss
|
$(1,639)
|
$(736)
|
$(903)
|
$(4,176)
|
$(3,018)
|
$(1,158)
|
|
|
|
|
|
|
|
|
Research and Development Expenses
Research and
Development (“R&D”) expenses for the three months
ended September 30, 2020 were approximately $1,256,000, compared to
approximately $220,000, for the three months ended September 30,
2019. This represents an increase of approximately $1,036,000
primarily attributed to increases in expenses for the planning of
the camsirubicin Phase 2 clinical trial including manufacturing of
$380,000, increases in Validive clinical trial planning and
manufacturing costs of approximately $325,000, an increase in the
allocation of the CEO's salary and benefits for the three months to
R&D expenses of $224,000, annual R&D personnel salary
increases, annual (non-cash) equity grants and salaries and
benefits of three new R&D personnel of approximately $134,000,
partially offset by a decrease in other R&D expenses of
$27,000.
R&D
expenses for the nine months ended September 30, 2020 were
approximately $2,433,000, compared to approximately $1,385,000, for
the nine months ended September 30, 2019. This represents an
increase of approximately $1,048,000 primarily attributed to
increases in expenses for the planning of the camsirubicin Phase 2
clinical trial including manufacturing of $590,000, annual R&D
personnel salary increases, annual (non-cash) equity grants and
salaries and benefits of three new R&D personnel of
approximately $324,000, an increase to
the allocation of the CEO's salary and benefits to R&D expenses
of $306,000, partially offset by a decreases in Validive clinical
trial planning and manufacturing costs of approximately $138,000
and other R&D expenses of $34,000.
24
General and Administrative Expenses
General
and Administrative (“G&A”) expenses for the three
months ended September 30, 2020 were approximately $392,000,
compared to approximately $539,000, for the three months ended
September 30, 2019. This represents a decrease of approximately
$147,000 primarily attributed to the CEO's salary and benefits
allocated from G&A expenses to R&D expenses of $224,000,
decreases in stock-based compensation for non-employee directors
(non-cash) of $22,000, and patent fees of $13,000, partially offset
by increases in stock-based compensation for annual (non-cash)
equity grants and annual G&A personnel salary increases of
$76,000, external fees related to public company compliance of
$14,000, and net increases in other G&A expenses of
$22,000.
G&A
expenses for the nine months ended September 30, 2020 were
approximately $1,815,000, compared to approximately $1,714,000, for
the nine months ended September 30, 2019. This represents an
increase of approximately $101,000 primarily attributed to net
increases in stock-based compensation for annual (non-cash) equity
grants and annual G&A personnel salary increases of $318,000,
increases in legal and audit fees related to public company
compliance of $116,000, and net increases in general costs of
operations of $45,000, partially offset by the CEO's salary and
benefits allocated from G&A expenses to R&D expenses of
$306,000, and decreases in stock-based compensation for
non-employee directors (non-cash) of $72,000.
Interest Income
Interest income for
the three months ended September 30, 2020 compared to the three
months ended September 30, 2019 decreased by approximately $14,000,
due to a significant decrease in bank interest rates partially
offset by an increase in bank balances resulting from our initial
public offering in December 2019 and funds raised in our Capital on
DemandTM
Sales Agreement with JonesTrading.
Interest income for
the nine months ended September 30, 2020 compared to the nine
months ended September 30, 2019 decreased by approximately $9,000,
due to a significant decrease in bank interest rates partially
offset by an increase in bank balances resulting from our initial
public offering in December 2019 and funds raised in our Capital on
DemandTM
Sales Agreement with JonesTrading.
Liquidity
and Capital Resources
Sources of Liquidity
We have
incurred losses and cumulative negative cash flows from operations
since our inception in December 2014 resulting in an accumulated
deficit of approximately $30.1 million as of September 30, 2020. We
anticipate that we will continue to incur losses for the
foreseeable future. We expect that our research and development and
general and administrative expenses will increase to enable the
execution of our strategic plan. As a result, we anticipate that we
will need to raise additional capital to fund our future
operations. We will seek to obtain needed capital through a
combination of equity offerings, debt financings, strategic
collaborations and grant funding. To date, we have funded our
operations through private placements of our preferred and common
stock, the net receipt of funds related to the acquisition of
camsirubicin, net proceeds from the initial public offering of our
common stock and net proceeds from sales under our Capital on
Demand™ Sales Agreement. We anticipate that the currently
available funds as of October 31, 2020, will fund our operations
through December 2021.
We
invest our cash equivalents in a money market account.
25
Cash Flows
The
following table provides information regarding our cash flows for
the nine months ended September 30, 2020 and 2019.
|
|
Nine
Months Ended
|
Nine
Months ended September 30, 2020 versus
|
|
|
|
September
30,
|
Nine
Months ended September 30, 2019
|
|
|
(in
thousands)
|
2020
|
2019
|
Variance
|
|
|
|
|
|
|
Net cash used in
operating activities
|
$(3,421)
|
$(2,349)
|
$(1,072)
|
|
Net cash provided
by (used in) financing activities
|
8,189
|
(39)
|
8,228
|
|
Effect of exchange
rates
|
1
|
(10)
|
11
|
|
Net increase
(decrease) in cash and cash equivalents
|
$4,769
|
$(2,398)
|
$7,167
|
Cash Flow Used in Operating Activities
The
increase of approximately $1,072,000 in cash flow used in operating
activities during the nine months ended September 30, 2020,
compared to the nine months ended September 30, 2019, was primarily
a result of increased R&D and G&A cash operating
expenses.
Cash Flow Used in Investing Activities
There
was no cash flow used in investing activities for the nine months
ended September 30, 2020 and 2019.
Cash Flow Provided by (Used in) Financing Activities
The increase of approximately $8,228,000 in cash
flow provided by financing activities for the nine months ended
September 30, 2020 compared to the nine months ended September 30,
2019, was a result of sales of our common stock under our Capital
on DemandTM Sales Agreement with JonesTrading and the receipt
of the PPP forgivable bank loan.
26
Future Funding Requirements
To
date, we have not generated any revenue from product sales. We do
not know when, or if, we will generate any revenue from product
sales. We do not expect to generate any revenue from product sales
unless and until we obtain regulatory approval of and commercialize
any of our current or future drug product candidates or we
out-license or sell a drug product candidate to another party. At
the same time, we expect our expenses to increase in connection
with our ongoing development activities, particularly as we
continue the research, development, future preclinical studies and
clinical trials of, and seek regulatory approval for, our current
and future drug product candidates. If we obtain regulatory
approval of any of our current or future drug product candidates,
we will need substantial additional funding for commercialization
requirements and our continuing drug product development
operations.
As a
company, we have not completed development through marketing
approvals of any therapeutic products. We expect to continue to
incur significant increases in expenses and increasing operating
losses for the foreseeable future. We anticipate that our expenses
will increase substantially as we:
●
advance the
clinical development and execute the regulatory strategy for
Validive;
●
continue the
clinical development and execute the regulatory strategy for
camsirubicin;
●
continue the
preclinical activities and potentially enter clinical development
of MNPR-101 for severe COVID-19;
●
acquire and/or
license additional pipeline drug product candidates and pursue the
future preclinical and/or clinical development of such drug product
candidates;
●
seek regulatory
approvals for any of our current and future drug product candidates
that successfully complete registration clinical
trials;
●
establish or
purchase the services of a sales, marketing and distribution
infrastructure to commercialize any products for which we may
obtain marketing approval;
●
develop our
manufacturing/quality capabilities or establish a reliable, high
quality supply chain sufficient to support our clinical
requirements and to provide sufficient capacity to launch and grow
the sales of any product for which we obtain marketing approval;
and
●
add or contract for
required operational, financial and management information systems
and capabilities and other specialized expert personnel to support
our drug product candidate development and planned
commercialization efforts.
27
We
anticipate that the funds available as of October 31, 2020, will
fund our planned operations through December 2021. We have based
this estimate on assumptions that may prove to be wrong, and we
could use our available capital resources sooner than we currently
expect. Because of the numerous risks and uncertainties associated
with the development and commercialization of our drug product
candidates, and the extent to which we enter into collaborations
with third parties to participate in the development and
commercialization of our drug product candidates, we are unable to
accurately estimate with high reliability the amounts and timing
required for increased capital outlays and operating expenditures
associated with our current and anticipated drug product candidate
development programs. Our future capital requirements will depend
on many factors, including:
●
the progress of
regulatory interactions and clinical development of
Validive;
●
the progress of
clinical development and regulatory outcomes of
camsirubicin;
●
the progress of
preclinical and clinical development of MNPR-101 including through
our collaboration with NorthStar;
●
the number and
characteristics of other drug product candidates that we may
license, acquire or otherwise pursue;
●
the scope,
progress, timing, cost and results of research, preclinical
development and clinical trials of current and future drug product
candidates;
●
the costs, timing
and outcomes of seeking and obtaining FDA and international
regulatory approvals;
●
the costs
associated with manufacturing/quality requirements and establishing
sales, marketing and distribution capabilities;
●
our ability to
maintain, expand and defend the scope of our intellectual property
portfolio, including the amount and timing of any payments we may
be required to make in connection with the licensing, filing,
defense and enforcement of any patents or other intellectual
property rights;
●
our need and
ability to hire or contract for additional management,
administrative, scientific, medical, sales and marketing, and
manufacturing/quality and other specialized personnel or external
expertise;
●
the effect of
competing products or new therapies that may limit market
penetration or prevent the introduction of our drug product
candidates or reduce the commercial potential of our product
portfolio;
●
our need to
implement additional internal systems and infrastructure;
and
●
the economic and
other terms, timing and success of our existing collaboration and
licensing arrangements and any collaboration, licensing or other
arrangements into which we may enter in the future, including the
timing of receipt of or payment to or from others of any milestone
or royalty payments under these arrangements.
28
Funding Requirements in the Fourth Quarter of 2020 and
Onward
Expenditures
are expected to increase in the fourth quarter of 2020 and onward
for:
●
contract research
services and clinical site fees for the Validive Phase 2b/3
clinical trial;
●
process
development, manufacturing costs and clinical database management
of camsirubicin in connection with the GEIS Phase 2 clinical
trial;
●
supporting the
NorthStar collaboration;
●
GEIS collaboration
milestone fees; and
●
employee
compensation and consulting fees to support the planning and
initiation of our Validive Phase 2b/3 clinical trial.
We are
aiming to enroll the first patient in our Phase 2b/3 clinical trial
for Validive in the fourth quarter of 2020. We will proceed to the
Phase 3 portion of the clinical trial based on an interim analysis
of the Phase 2b portion, pending our ability to raise sufficient
funds. To commence the Phase 3 portion of the trial, we will
require additional funding in the millions or tens of millions of
dollars (depending on if we have consummated a collaboration or
partnership or neither for Validive), or find a suitable
pharmaceutical partner, both of which we are planning to pursue in
the next 12 months. There can be no assurance that any such events
will occur. We intend to continue evaluating drug product
candidates for the purpose of growing our pipeline. Identifying and
securing high quality compounds usually takes time and related
expenses; however, our spending could be significantly accelerated
in the fourth quarter of 2020 and onward if additional drug product
candidates are acquired and enter clinical development. In this
event, we may be required to expand our management team, and pay
higher contract manufacturing costs, contract research organization
fees, other clinical development costs and insurance costs that are
not currently projected. The anticipated operating cost increases
in the fourth quarter of 2020 and onward are expected to be
primarily driven by the funding of our planned Validive Phase 2b/3
clinical trial and in support of the GEIS Phase 2 clinical trial of
camsirubicin. Beyond our need to raise additional funding in the
next 12 months to start the Validive Phase 3 portion of the trial,
we will also need significant additional funding thereafter in
order to complete the clinical trial, support further development
of camsirubicin in and beyond the Phase 2 trial, to support our
collaboration with NorthStar, if successful, and generally to
support our current and any future product candidates through
completion of trials, approval processes and, if applicable,
commercialization.
Until
we can generate a sufficient amount of product revenue to finance
our cash requirements, we expect to finance our future cash needs
primarily through a combination of equity offerings, debt
financings, strategic collaborations and grant funding. To the
extent that we raise additional capital through the sale of equity
or convertible debt securities, the ownership interest of our
current stockholders will be diluted, and the terms of these
securities may include liquidation or other preferences that
adversely affect our current stockholders’ rights. Debt
financing, if available, may involve agreements that include
covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making
capital expenditures or
declaring dividends. If we raise additional funds through marketing
and distribution arrangements or other collaborations, strategic
alliances or licensing arrangements with other parties, we may have
to relinquish valuable rights to our technologies, future revenue
streams, research programs or drug product candidates or grant
licenses on terms that may not be favorable to us, which will
reduce our future returns and affect our future operating
flexibility. If we are unable to raise additional funds through
equity or debt financings when needed, we may be required to delay,
limit, reduce or terminate our pipeline product development or
commercialization efforts or grant rights to others to develop and
market drug product candidates that we would otherwise prefer to
develop and market ourselves.
29
Contractual Obligations and Commitments
License, Development and Collaboration Agreements
Onxeo S.A.
In June
2016, we executed an agreement with Onxeo S.A., a French public
company, which gave us the exclusive option to license (on a
world-wide exclusive basis) Validive (clonidine mucobuccal tablet;
clonidine MBT a mucoadhesive tablet of clonidine based on the
Lauriad mucoadhesive technology) to pursue treating severe oral
mucositis in patients undergoing chemoradiation treatment for head
and neck cancers. The agreement includes clinical, regulatory,
developmental and sales milestones that could reach up to $108
million if we achieve all milestones, and escalating royalties from
5% to 10% on net sales. In September 2017, we exercised the option
to license Validive from Onxeo for $1 million, but as of October
31, 2020, we have not been required to pay Onxeo any other funds
under the agreement. We anticipate the need to raise significant
funds to support the completion of clinical development and
marketing approval of Validive.
Under
the agreement, we are required to pay royalties to Onxeo on a
product-by-product and country-by-country basis until the later of
(1) the date when a given product is no longer within the scope of
a patent claim in the country of sale or manufacture, (2) the
expiry of any extended exclusivity period in the relevant country
(such as orphan drug exclusivity, pediatric exclusivity, new
chemical entity exclusivity, or other exclusivity granted beyond
the expiry of the relevant patent), or (3) a specific time period
after the first commercial sale of the product in such country. In
most countries, including the U.S., the patent term is generally 20
years from the earliest claimed filing date of a non-provisional
patent application in the applicable country, not taking into
consideration any potential patent term adjustment that may be
filed in the future or any regulatory extensions that may be
obtained. The royalty termination provision pursuant to (3)
described above is shorter than 20 years and is the least likely
cause of termination of royalty payments.
The
Onxeo license agreement does not have a pre-determined term, but
expires on a product-by-product and country-by-country basis; that
is, the agreement expires with respect to a given product in a
given country whenever our royalty payment obligations with respect
to such product have expired. The agreement may also be terminated
early for cause if either we or Onxeo materially breach the
agreement, or if either we or Onxeo become insolvent. We may also
choose to terminate the agreement, either in its entirety or as to
a certain product and a certain country, by providing Onxeo with
advance notice.
Grupo Español de Investigación en Sarcomas
(“GEIS”)
In June
2019, we executed a clinical collaboration with GEIS for the
development of camsirubicin in patients with advanced soft tissue
sarcoma (“ASTS”). GEIS will be the study sponsor and
will lead a multi-country, randomized, open-label Phase 2 clinical
trial to evaluate camsirubicin head-to-head against doxorubicin in
patients with ASTS. Enrollment of the trial is anticipated to begin
at the end of 2020 or early 2021 and will include approximately 170
ASTS patients. We will provide study drug and supplemental
financial support for the clinical trial averaging approximately $2
million to $3 million per year. During
the three and nine months ended September 30, 2020, we incurred
$400,320 and $612,304 in GEIS and other clinical-related expenses
including clinical material manufacturing and database management
expenses in support of GEIS’s Phase 2 camsirubicin clinical
trial. During the three and nine months ended September 30, 2019,
we incurred nominal expense related to the GEIS
collaboration. We can terminate the agreement by providing
GEIS with advance notice, and without affecting the Company’s
rights and ownership to any intellectual property or clinical
data.
30
XOMA Ltd.
The
intellectual property rights contributed by Tactic Pharma, LLC to
us included the non-exclusive license agreement with XOMA Ltd. for
the humanization technology used in the development of MNPR-101.
Pursuant to such license agreement, we are obligated to pay XOMA
Ltd. clinical, regulatory and sales milestones which could reach up
to $14.925 million if we achieve all milestones for MNPR-101. The
agreement does not require the payment of sales royalties. There
can be no assurance that we will achieve any milestones. As of
October 31, 2020, we had not reached any milestones and had not
been required to pay XOMA Ltd. any funds under this license
agreement.
Service Providers
In the
normal course of business, we contract with service providers to
assist in the performance of research and development, financial
strategy, audit, tax and legal support. We can elect to discontinue
the work under these agreements at any time. We could also enter
into collaborative research and development, contract research,
manufacturing and supplier agreements in the future, which may
require upfront payments and/or long-term commitments of
cash.
Office Lease
Effective January
1, 2018, we leased office space in the Village of Wilmette,
Illinois for $2,520 per month for 24 months. This office space
houses our current headquarters. On December 31, 2019, the office
lease expired and we continued to lease on a month-to-month basis.
In February 2019, we leased additional office spaces on a month-to
month basis at our headquarters and we anticipate that we will
lease additional space in the future as we hire additional
personnel.
Legal Contingencies
We are
currently not, and to date have never been, a party to any material
legal proceedings.
Indemnification
In the
normal course of business, we enter into contracts and agreements
that contain a variety of representations and warranties and
provide for general indemnification. Our exposure under these
agreements is unknown because it involves claims that may be made
against us in the future, but that have not yet been made. To date,
we have not paid any claims or been required to defend any action
related to our indemnification obligations. However, we may record
charges in the future as a result of these indemnification
obligations.
In
accordance with our Second Amended and Restated Certificate of
Incorporation, Amended and Restated Bylaws and the indemnification agreements entered into with
each officer and non-employee director, we have
indemnification obligations to our officers and non-employee
directors for certain events or occurrences, subject to certain
limits, while they are serving at our request in such capacity.
There have been no claims to date.
Off-Balance Sheet Arrangements
To
date, we have not had any off-balance sheet arrangements, as
defined under the SEC rules.
31
Item 4. Controls and
Procedures
Our
Chief Executive Officer and Chief Financial Officer have provided
certifications filed as Exhibits 31.1 and 32.1, and 31.2,
respectively. Such certifications should be read in conjunction
with the information contained in this Item 4 for a more complete
understanding of the matters covered by those
certifications.
(a) Disclosure Controls and Procedures
We
carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of our
disclosure controls and procedures as of September 30, 2020,
pursuant to Rules 13a15(e) and 15d15(e) under the Exchange Act.
Based on that evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that our disclosure controls and
procedures, as of such date, were effective.
(b) Changes in Internal Control over Financial
Reporting
We have
concluded that the condensed consolidated financial statements and
other financial information included in this Quarterly Report on
Form 10-Q fairly present in all material respects our financial
condition, results of operations and comprehensive loss and cash
flows as of, and for, the periods presented.
There
have been no changes in our internal control over financial
reporting during the three and nine months ended September 30, 2020
that have materially affected, or are reasonably likely to
materially affect, our internal control over financial
reporting.
32
PART II. OTHER
INFORMATION
Item 1A. Risk Factors
Except
for the updated risk factor set forth below, there have been no
material changes in information regarding our risk factors as
described in Item 1A of our Annual Report on Form 10-K as filed
with the SEC on March 27, 2020.
Our operations and financial results could be adversely impacted by
the global outbreak of the 2019 Novel Coronavirus (COVID-19), which
has negatively impacted our stock price and our ability to raise
substantial funds in the near-term, and may negatively impact our
ability to manufacture our product candidates for our clinical
trials, our ability to accrue and conduct our planned clinical
trials, and may delay regulatory agency responses. Any such impact
will negatively impact our financial condition and could require us
to delay our clinical development programs.
In December 2019, a novel strain of coronavirus
(“COVID-19”) was reported to have surfaced in Wuhan,
China, resulting in significant disruptions to Chinese
manufacturing and supply chain, as well as travel restrictions in
many countries. In March 2020, COVID-19 was designated a global
pandemic and many countries, including the United States, have
declared national emergencies and have implemented preventive
measures by limiting large public gatherings, setting separation
distances between individuals (social distancing), rules for
mandatory use of personal protective equipment (primarily masks)
and shelter-in-place mandates. Many employers are restricting
non-essential work travel and are requiring that employees work
from their homes to limit personal interaction. Many businesses are
closed or are operating in a substantially reduced fashion and many
employees have been laid off. While the extent of the impact of the
COVID-19 pandemic on our business and financial results is
uncertain, a continued and prolonged public health crisis such as
the COVID-19 pandemic would have a negative impact on our business,
financial condition and operating results. The COVID-19 pandemic
has resulted in significant volatility and substantial declines in
the stock markets, which have negatively impacted our stock price
and negatively impacted our ability to raise significant funds in
the near-term. It is unknown the potential impact in the long-term
in the event of a prolonged disruption or recession. In
addition, the COVID-19
pandemic could impact the conduct of clinical trials as a result
of quarantines, site closures, travel limitations,
delays in the manufacturing of our
product candidates for our clinical trials due to supply chain
disruptions, and delays in the initiation and enrollment of
patients in our planned clinical trials, or other
considerations if site personnel or trial subjects become infected
with COVID-19, which would negatively
impact our financial condition and could require us to delay our
clinical development programs. In addition, COVID-19 could delay
U.S. and foreign regulatory agencies from responding to our
submissions either due to shortages of personnel or shifting their
priorities to COVID-19 related therapeutics, resulting in potential
delays of our planned clinical trials. Given the dynamic nature of
these circumstances, the duration of any business disruption or
potential duration and impact of the COVID-19 pandemic to our
business is difficult to predict. In response to the current COVID-19 pandemic and
its effects on clinical trials, we have modified the original
adaptive design Phase 3 clinical trial for our lead product
candidate, Validive, to be a Phase 2b/3 clinical trial to better
fit the types of trials which can enroll patients in the current
environment. We are aiming to
enroll the first patient in a Phase 2b/3 clinical trial for
Validive in the fourth quarter of 2020. The Phase 3 portion of the
clinical trial is anticipated to start right after the Phase 2b
portion, pending our ability to raise sufficient funds. To commence
the Phase 3 portion of the trial, we will require additional
funding in the millions or tens of millions of dollars (depending
on if we have consummated a collaboration or partnership or neither
for Validive), or find a suitable pharmaceutical partner, both of
which we are planning to pursue in the next 12 months. There can be
no assurance that any such events will occur.
33
Item 6. Exhibits
The
following exhibits are filed as part of this Quarterly
Report.
|
Exhibit
|
Document
|
Incorporated by Reference From:
|
|
10.1
|
Filed
herewith
|
|
|
31.1
|
Filed
herewith
|
|
|
31.2
|
Filed
herewith
|
|
|
32.1
|
Filed
herewith
|
|
|
101.INS
|
XBRL
Instance Document
|
|
|
101.SCH
|
XBRL
Taxonomy Extension Schema
|
|
|
101.CAL
|
XBRL
Taxonomy Extension Calculation Linkbase
|
|
|
101.DEF
|
XBRL
Taxonomy Extension Definition Linkbase
|
|
|
101.LAB
|
XBRL
Taxonomy Extension Label Linkbase
|
|
|
101.PRE
|
XBRL
Taxonomy Extension Presentation Linkbase
|
|
.
34
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
|
MONOPAR
THERAPEUTICS INC.
|
|
|
|
|
|
|
|
|
Dated: November 12,
2020
|
By:
|
/s/
Chandler D.
Robinson
|
|
|
|
|
Chandler D.
Robinson
|
|
|
|
|
Chief
Executive Officer and Director
(Principal
Executive Officer)
|
|
|
|
|
||
|
|
|
|
|
|
Dated: November 12,
2020
|
By:
|
/s/
Kim R.
Tsuchimoto
|
|
|
|
|
Kim R.
Tsuchimoto
|
|
|
|
|
Chief
Financial Officer
(Principal
Financial Officer)
|
|
35
Exhibit 10.1
FORM OF
INDEMNIFICATION AGREEMENT
This
Indemnification Agreement (this “Agreement”), dated as of
__________, is by and between Monopar Therapeutics Inc., a Delaware
corporation (the “Company”), and
_______________________ (“Indemnitee”).
RECITALS
1.
The Company desires
to attract and retain the services of highly qualified individuals,
such as Indemnitee, to serve as officers and directors of the
Company and to indemnify its officers and directors so as to
provide them with the maximum protection permitted by
law.
2.
In order to address
such issues and induce Indemnitee to serve or continue to serve as
an officer or director of the Company, the Company has determined
to enter into this Agreement with Indemnitee.
3.
The indemnification
rights provided to Indemnitee pursuant to this Agreement are in
addition to any rights for indemnification provided to Indemnitee
pursuant to the Company’s certificate of incorporation (as it
may be amended from time to time, the “Certificate
of Incorporation”), the
Company’s bylaws (as they may be amended from time to time,
the “Bylaws”)
and any resolutions adopted pursuant thereto and to any
indemnification rights to which Indemnitee may be entitled under
the General Corporation Law of the State of Delaware (the
“DGCL”).
AGREEMENT
Therefore, the
Company and Indemnitee agree as follows:
1.
Definitions.
a.
A
“Change in
Control” shall mean the occurrence of any one or more
of the following events:
i.
any Person (other
than any Permitted Holder as defined in the Company’s
Certificate of Incorporation) becomes the Beneficial Owner (except
that a Person shall be deemed to be the Beneficial Owner of all
shares that any such Person has the right to acquire pursuant to
any agreement or arrangement or upon exercise of conversion rights,
warrants or options or otherwise, without regard to the sixty (60)
day period referred to in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company, representing
thirty percent (30%) or more of the combined voting power of such
entity’s then outstanding securities;
ii.
during any twelve
(12) month period, a majority of the members of the board of
directors of the Company is replaced by individuals who were not
members of the board of directors of the Company at the beginning
of such twelve (12) month period and whose election by the board of
directors of the Company or nomination for election by the
Company’s shareholders was not approved by a vote of at least
a majority of the directors then still in office who either were
directors at the beginning of such twelve (12) month period or
whose election or nomination for election was previously so
approved;
iii.
the consummation of
a merger or consolidation of the Company with any other entity,
other than a merger or consolidation that would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving or
resulting entity) fifty percent (50%) or more of the combined
voting power of the surviving or resulting entity outstanding
immediately after such merger or consolidation; or
iv.
the consummation of
a sale or disposition of all or substantially all of the assets of
the Company, other than such a sale or disposition that would
result in the voting securities of the Company outstanding
immediately prior thereto representing fifty percent (50%) or more
of the combined voting power of the acquiring entity outstanding
immediately after such a sale or disposition.
For
purposes of this Section 1(a), the following terms shall have the
following meanings:
(2)
“Beneficial
Owner” shall have the meaning ascribed to such term in
Rule13d-3 and Rule 13d-5 of the Exchange Act.
b.
“Bylaws” shall have the
meanings set forth in the Recitals.
c.
“Certificate of
Incorporation” shall have the meaning set forth in the
Recitals.
d.
“Corporate Status”
describes the status of a person who is or was a director, trustee,
general partner, managing member, officer, employee, agent or
fiduciary of the Company or any other Enterprise.
e.
“DGCL” shall have the
meaning set forth in the Recitals.
f.
“Disinterested Director”
means a director of the Company who is not and was not a party to
the Proceeding in respect of which indemnification is sought by
Indemnitee.
g.
“Enterprise” means the
Company and any other corporation, partnership, limited liability
company, joint venture, trust, employee benefit plan or other
enterprise of which Indemnitee is or was serving at the request of
the Company as a director, trustee, general partner, managing
member, officer, employee, agent or fiduciary.
h.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time, and
the rules, regulations and guidance thereunder, or any successor
act thereto.
i.
“Expenses” include all
reasonable and actually incurred attorneys’ fees, retainers,
court costs, transcript costs, fees and costs of experts, witness
fees, travel expenses, duplicating costs, printing and binding
costs, telephone charges, postage, delivery service fees, and all
other disbursements or expenses of the types customarily
incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, being or preparing to be a
witness in, or otherwise participating in, a Proceeding. Expenses
also include (i) Expenses incurred in connection with any
appeal resulting from any Proceeding, including without limitation
the premium, security for, and other costs relating to any cost
bond, supersede as bond or other appeal bond or their equivalent,
and (ii) for purposes of Section 12(d), Expenses incurred
by Indemnitee in connection with the interpretation, enforcement or
defense of Indemnitee’s rights under this Agreement or under
any directors’ and officers’ liability insurance
policies maintained by the Company. Expenses, however, shall not
include amounts paid in settlement by Indemnitee or the amount of
judgments or fines against Indemnitee.
j.
“Independent Counsel”
means a law firm, or a partner or member of a law firm, that is
experienced in matters of corporation law and neither presently is,
nor in the past five years has been, retained to represent (i) the
Company or Indemnitee in any matter material to either such party
(other than as Independent Counsel with respect to matters
concerning Indemnitee under this Agreement, or other indemnitees
under similar indemnification agreements), or (ii) any other party
to the Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term
“Independent
Counsel” shall not include any person who, under the
applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or
Indemnitee in an action to determine Indemnitee’s rights
under this Agreement.
k.
“Proceeding” means any
threatened, pending or completed action, suit, arbitration,
mediation, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or proceeding, whether brought in
the right of the Company or otherwise and whether of a civil,
criminal, administrative or investigative nature, including any
appeal therefrom and including without limitation any such
Proceeding pending as of the date of this Agreement, in which
Indemnitee was, is or will be involved as a party, a potential
party, a non-party witness or otherwise by reason of (i) the fact
that Indemnitee is or was a director or officer of the Company,
(ii) any action taken by Indemnitee or any action or inaction on
Indemnitee’s part while acting in the capacity of a director
or officer of the Company, or (iii) the fact that he or she is
or was serving at the request of the Company as a director,
trustee, general partner, managing member, officer, employee, agent
or fiduciary of the Company or any other Enterprise, in each case
whether or not serving in such capacity at the time any liability
or Expense is incurred for which indemnification or advancement of
expenses can be provided under this Agreement.
l.
Construction of Certain
Phrases. Reference to “other enterprises” shall include
employee benefit plans; references to “fines” shall include any excise
taxes assessed on a person with respect to any employee benefit
plan; references to “serving
at the request of the Company” shall include any
service as a director, officer, employee or agent of the Company
which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in
good faith and in a manner he or she reasonably believed to be in
the best interests of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner
“not opposed to the best
interests of the Company” as referred to in this
Agreement.
2.
Indemnification in Third-Party
Proceedings. The Company shall indemnify Indemnitee in
accordance with the provisions of this Section 2 if Indemnitee is,
or is threatened to be made, a party to or a participant in any
Proceeding, other than a Proceeding by or in the right of the
Company to procure a judgment in its favor. Pursuant to this
Section 2, Indemnitee shall be indemnified to the fullest extent
permitted by applicable law against all Expenses, judgments, fines
and amounts paid in settlement actually and reasonably incurred by
Indemnitee or on his or her behalf in connection with such
Proceeding or any claim, issue or matter therein, if Indemnitee
acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the Company and,
with respect to any criminal action or proceeding, had no
reasonable cause to believe that his or her conduct was
unlawful.
3.
Indemnity in Proceedings by or in the
Right of the Company. The Company shall indemnify Indemnitee
in accordance with the provisions of this Section 3 if Indemnitee
is, or is threatened to be made, a party to or a participant in any
Proceeding by or in the right of the Company to procure a judgment
in its favor. Pursuant to this Section 3, Indemnitee shall be
indemnified to the fullest extent permitted by applicable law
against all Expenses actually and reasonably incurred by Indemnitee
or on Indemnitee’s behalf in connection with such Proceeding
or any claim, issue or matter therein, if Indemnitee acted in good
faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the Company. No indemnification
for Expenses shall be made under this Section 3 in respect of any
claim, issue or matter as to which Indemnitee shall have been
adjudged by a court of competent jurisdiction to be liable to the
Company, unless and only to the extent that the Delaware Court of
Chancery or any court in which the Proceeding was brought shall
determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnification for
such expenses as the Delaware Court of Chancery or such other court
shall deem proper.
4.
Indemnification for Expenses of a
Party Who is Wholly or Partly Successful. To the extent that
Indemnitee is a party to or a participant in and is successful (on
the merits or otherwise) in defense of any Proceeding or any claim,
issue or matter therein, the Company shall indemnify Indemnitee
against all Expenses actually and reasonably incurred by Indemnitee
or on Indemnitee’s behalf in connection therewith. For
purposes of this section, the termination of any claim, issue or
matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
5.
Indemnification for Expenses of a
Witness. To the extent that Indemnitee is, by reason of his
or her Corporate Status, a witness in any Proceeding to which
Indemnitee is not a party, Indemnitee shall be indemnified to the
extent permitted by applicable law against all Expenses actually
and reasonably incurred by Indemnitee or on Indemnitee’s
behalf in connection therewith.
6.
Additional Indemnification.
Notwithstanding any limitation in Sections 2, 3 or 4, the Company
shall indemnify Indemnitee to the fullest extent permitted by
applicable law, as such may be amended from time to time, if
Indemnitee is, or is threatened to be made, a party to or a
participant in any Proceeding (including a Proceeding by or in the
right of the Company to procure a judgment in its favor) against
all Expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by Indemnitee or on his or her
behalf in connection with the Proceeding or any claim, issue or
matter therein.
7.
Exclusions. Notwithstanding any
provision in this Agreement, the Company shall not be obligated
under this Agreement to make any indemnity in connection with any
Proceeding (or any part of any Proceeding):
a.
for which payment
has actually been made to or on behalf of Indemnitee under any
statute, insurance policy, indemnity provision, vote or otherwise,
except with respect to any excess beyond the amount
paid;
b.
for an accounting
or disgorgement of profits pursuant to Section 16(b) of the
Exchange Act or similar provisions of federal, state or local
statutory law or common law, if Indemnitee is held liable therefor
(including pursuant to any settlement arrangements in connection
therewith);
c.
for any
reimbursement of the Company by Indemnitee of any bonus or other
incentive-based or equity-based compensation or of any profits
realized by Indemnitee from the sale of securities of the Company,
as required in each case under the Exchange Act (including any such
reimbursements that arise from an accounting restatement of the
Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002,
or the payment to the Company of profits arising from the purchase
and sale by Indemnitee of securities in violation of Section 306 of
the Sarbanes-Oxley Act of 2002), if Indemnitee is held liable
therefor (including pursuant to any settlement arrangements in
connection therewith);
d.
initiated by
Indemnitee, including any Proceeding (or any part of any
Proceeding) initiated by Indemnitee against the Company or its
directors, officers, employees, agents or other indemnitees, unless
(i) the Company’s board of directors authorized the
Proceeding (or the relevant part of the Proceeding) prior to its
initiation, (ii) the Company provides the indemnification, in its
sole discretion, pursuant to the powers vested in the Company under
applicable law, (iii) otherwise authorized in Section 12, or (iv)
otherwise required by applicable law; or
e.
if prohibited by
law.
8.
Advances of Expenses. The
Company shall advance the Expenses incurred by Indemnitee in
connection with any Proceeding prior to its final disposition, and
such advancement shall be made as soon as reasonably practicable,
but in any event no later than 90 days, after the receipt by the
Company of a written statement or statements requesting such
advances from time to time (which shall include invoices received
by Indemnitee in connection with such Expenses but, in the case of
invoices in connection with legal services, any references to legal
work performed or to expenditure made that would cause Indemnitee
to waive any privilege accorded by applicable law shall not be
included with the invoice). Indemnitee hereby undertakes to repay
any advance to the extent that it is ultimately determined that
Indemnitee is not entitled to be indemnified by the Company, and no
other form of undertaking shall be required other than the
execution of this Agreement. Such repayment obligation will be
unsecured and will not bear interest. This Section 8 shall not
apply to the extent advancement is prohibited by law and shall not
apply to any Proceeding (or any part of any Proceeding) for which
indemnity is not permitted under this Agreement, but shall apply to
any Proceeding (or any part of any Proceeding) referenced in
Section 7(b) or 7(c) prior to a determination that Indemnitee is
not entitled to be indemnified by the Company.
9.
Procedures for Notification and
Defense of Claim.
a.
Indemnitee shall
notify the Company in writing of any matter with respect to which
Indemnitee intends to seek indemnification or advancement of
Expenses as soon as reasonably practicable following the receipt by
Indemnitee of notice thereof. The written notification to the
Company shall include, in reasonable detail, a description of the
nature of the Proceeding and the facts underlying the Proceeding.
The failure by Indemnitee to notify the Company will not relieve
the Company from any liability which it may have to Indemnitee
hereunder or otherwise than under this Agreement, and any delay in
so notifying the Company shall not constitute a waiver by
Indemnitee of any rights, except to the extent that such failure or
delay materially prejudices the Company.
b.
If, at the time of
the receipt of a notice of a Proceeding pursuant to the terms
hereof, the Company has directors’ and officers’
liability insurance in effect that may be applicable to the
Proceeding, the Company shall give prompt notice of the
commencement of the Proceeding to the insurers in accordance with
the procedures set forth in the applicable policies. The Company
shall thereafter take all commercially-reasonable action to cause
such insurers to pay, on behalf of Indemnitee, all amounts payable
as a result of such Proceeding in accordance with the terms of such
policies.
c.
If the Company is
obligated to make any indemnity in connection with a Proceeding,
the Company may assume the defense of such Proceeding with counsel
approved by Indemnitee, which approval shall not be unreasonably
withheld, conditioned or delayed, upon the delivery to Indemnitee
of written notice of the Company’s election to do so. After
delivery of such notice, approval of such counsel by Indemnitee and
the retention of such counsel by the Company, the Company will not
be liable to Indemnitee for any fees or expenses of counsel
subsequently incurred by Indemnitee with respect to the same
Proceeding. Notwithstanding the Company’s assumption of the
defense of any such Proceeding, the Company shall be obligated to
pay the fees and expenses of Indemnitee’s separate counsel to
the extent (i) the employment of separate counsel by Indemnitee is
authorized by the Company, (ii) counsel for the Company or
Indemnitee shall have reasonably concluded that there is a conflict
of interest between the Company and Indemnitee in the conduct of
any such defense such that Indemnitee needs to be separately
represented, (iii) the Company is not financially or legally able
to perform its indemnification obligations, or (iv) the Company
shall not have retained, or shall not continue to retain, counsel
to defend such Proceeding. Regardless of any provision in this
Agreement, Indemnitee shall have the right to employ counsel in any
Proceeding at Indemnitee’s personal expense. The Company
shall not be entitled, without the consent of Indemnitee, to assume
the defense of any claim brought by or in the right of the
Company.
d.
Indemnitee shall
give the Company such information and cooperation in connection
with the Proceeding as may be reasonably appropriate.
e.
The Company shall
not be liable to indemnify Indemnitee for any settlement of any
Proceeding (or any part thereof) without the Company’s prior
written consent, which shall not be unreasonably withheld,
conditioned or delayed.
f.
The Company shall
not settle any Proceeding (or any part thereof) in a manner that
imposes any penalty or liability on Indemnitee without
Indemnitee’s prior written consent, which shall not be
unreasonably withheld, conditioned or delayed.
10.
Procedures upon Application for
Indemnification.
a.
To obtain
indemnification, Indemnitee shall submit to the Company a written
request, including therein or therewith such documentation and
information as is reasonably available to Indemnitee and as is
reasonably necessary to determine whether and to what extent
Indemnitee is entitled to indemnification following the final
disposition of the Proceeding. The Company shall, as soon as
reasonably practicable after receipt of such a request for
indemnification, advise the board of directors that Indemnitee has
requested indemnification. Any delay in providing the request will
not relieve the Company from its obligations under this Agreement,
except to the extent such failure is prejudicial.
b.
Upon written
request by Indemnitee for indemnification pursuant to Section
10(a), a determination with respect to Indemnitee’s
entitlement thereto shall be made in the specific case (i) if a
Change in Control shall have occurred, by Independent Counsel in a
written opinion to the Company’s board of directors, a copy
of which shall be delivered to Indemnitee or (ii) if a Change in
Control shall not have occurred, (A) by a majority vote of the
Disinterested Directors, even though less than a quorum of the
Company’s board of directors, (B) by a committee of
Disinterested Directors designated by a majority vote of the
Disinterested Directors, even though less than a quorum of the
Company’s board of directors, (C) if there are no such
Disinterested Directors or, if such Disinterested Directors so
direct, by Independent Counsel in a written opinion to the
Company’s board of directors, a copy of which shall be
delivered to Indemnitee or (D) if so directed by the
Company’s board of directors, by the stockholders of the
Company. If it is determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within thirty
days after such determination. Indemnitee shall cooperate with the
person, persons or entity making the determination with respect to
Indemnitee’s entitlement to indemnification, including
providing to such person, persons or entity upon reasonable advance
request any documentation or information that is not privileged or
otherwise protected from disclosure and that is reasonably
available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys’
fees and disbursements) actually and reasonably incurred by
Indemnitee in so cooperating with the person, persons or entity
making such determination shall be borne by the Company, to the
extent permitted by applicable law.
c.
In the event the
determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 10(b), the Independent
Counsel shall be selected as provided in this Section 10(c). If a
Change in Control shall not have occurred, the Independent Counsel
shall be selected by the Company’s board of directors, and
the Company shall give written notice to Indemnitee advising him or
her of the identity of the Independent Counsel so selected. If a
Change in Control shall have occurred, the Independent Counsel
shall be selected by Indemnitee (unless Indemnitee shall request
that such selection be made by the Company’s board of
directors, in which event the preceding sentence shall apply), and
Indemnitee shall give written notice to the Company advising it of
the identity of the Independent Counsel so selected. In either
event, Indemnitee or the Company, as the case may be, may, within
ten days after such written notice of selection shall have been
given, deliver to the Company or to Indemnitee, as the case may be,
a written objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent
Counsel so selected does not meet the requirements of
“Independent Counsel” as defined in Section 1 of this
Agreement, and the objection shall set forth with particularity the
factual basis of such assertion. Absent a proper and timely
objection, the person so selected shall act as Independent Counsel.
If such written objection is so made and substantiated, the
Independent Counsel so selected may not serve as Independent
Counsel unless and until such objection is withdrawn or a court has
determined that such objection is without merit. If, within 20 days
after the later of (i) submission by Indemnitee of a written
request for indemnification pursuant to Section 10(a) hereof and
(ii) the final disposition of the Proceeding, the parties have not
agreed upon an Independent Counsel, either the Company or
Indemnitee may petition the Delaware Court of Chancery for
resolution of any objection which shall have been made by the
Company or Indemnitee to the other’s selection of Independent
Counsel and for the appointment as Independent Counsel of a person
selected by the court or by such other person as the court shall
designate, and the person with respect to whom all objections are
so resolved or the person so appointed shall act as Independent
Counsel under Section 10(b) hereof. Upon the due commencement of
any judicial proceeding pursuant to Section 12(a) of this
Agreement, the Independent Counsel shall be discharged and relieved
of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then
prevailing).
d.
The Company agrees
to pay the reasonable fees and expenses of any Independent
Counsel.
11.
Presumptions and Effects of Certain
Proceedings.
a.
In making a
determination with respect to entitlement to indemnification
hereunder, the person, persons or entity making such determination
shall, to the fullest extent not prohibited by law, presume that
Indemnitee is entitled to indemnification under this Agreement, and
the Company shall, to the fullest extent not prohibited by law,
have the burden of proof to overcome that presumption by clear and
convincing evidence.
b.
The termination of
any Proceeding or of any claim, issue or matter therein, by
judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise
expressly provided in this Agreement) of itself adversely affect
the right of Indemnitee to indemnification or create a presumption
that Indemnitee did not act in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best
interests of the Company or, with respect to any criminal
Proceeding, that Indemnitee had reasonable cause to believe that
his or her conduct was unlawful.
c.
For purposes of any
determination of good faith, Indemnitee shall be deemed to have
acted in good faith to the extent Indemnitee relied in good faith
on (i) the records or books of account of the Enterprise, including
financial statements, (ii) information supplied to Indemnitee by
the officers or employees of the Enterprise in the course of their
duties, (iii) the advice of legal counsel for the Enterprise
or its board of directors or counsel selected by any committee of
the board of directors or (iv) information or records given or
reports made to the Enterprise by an independent certified public
accountant, an appraiser, investment banker or other expert
selected with reasonable care by the Enterprise or its board of
directors or any committee of the board of directors. The
provisions of this Section 11(c) shall not be deemed to be
exclusive or to limit in any way the other circumstances in which
Indemnitee may be deemed to have met any applicable standard of
conduct.
d.
Neither the
knowledge, actions nor failure to act of any other director,
officer, agent or employee of the Enterprise shall be imputed to
Indemnitee for purposes of determining the right to indemnification
under this Agreement.
12.
Remedies of
Indemnitee.
a.
Subject to Section
12(e), in the event that (i) a determination is made pursuant to
Section 10 of this Agreement that Indemnitee is not entitled to
indemnification under this Agreement, (ii) advancement of Expenses
is not timely made pursuant to Section 8 or 12(d) of this
Agreement, (iii) no determination of entitlement to indemnification
shall have been made pursuant to Section 10 of this Agreement
within 90 days after the later of the receipt by the Company of the
request for indemnification or the final disposition of the
Proceeding, (iv) payment of indemnification pursuant to this
Agreement is not made (A) within thirty days after a determination
has been made that Indemnitee is entitled to indemnification or (B)
with respect to indemnification pursuant to Sections 4, 5 and 12(d)
of this Agreement, within thirty days after receipt by the Company
of a written request therefor, or (v) the Company or any other
person or entity takes or threatens to take any action to declare
this Agreement void or unenforceable, or institutes any litigation
or other action or proceeding designed to deny, or to recover from,
Indemnitee the benefits provided or intended to be provided to
Indemnitee hereunder, Indemnitee may seek an adjudication by the
Delaware Court of Chancery of his or her entitlement to such
indemnification or advancement of Expenses. Indemnitee shall
commence such proceeding seeking an adjudication within 180 days
after the date on which Indemnitee first has the right to commence
such proceeding pursuant to this Section 12(a).
b.
Neither (i) the
failure of the Company, its board of directors, any committee or
subgroup of the board of directors, Independent Counsel or
stockholders to have made a determination that indemnification of
Indemnitee is proper in the circumstances because Indemnitee has
met the applicable standard of conduct, nor (ii) an actual
determination by the Company, its board of directors, any committee
or subgroup of the board of directors, Independent Counsel or
stockholders that Indemnitee has not met the applicable standard of
conduct, shall create a presumption that Indemnitee has or has not
met the applicable standard of conduct. In the event that a
determination shall have been made pursuant to Section 10 of this
Agreement that Indemnitee is not entitled to indemnification, any
judicial proceeding commenced pursuant to this Section 12 shall be
conducted in all respects as a de novo trial on the merits, and
Indemnitee shall not be prejudiced by reason of that adverse
determination. In any judicial proceeding commenced pursuant to
this Section 12, the Company shall, to the fullest extent not
prohibited by law, have the burden of proving Indemnitee is not
entitled to indemnification or advancement of Expenses, as the case
may be, by clear and convincing evidence.
c.
To the fullest
extent not prohibited by law, the Company shall be precluded from
asserting in any judicial proceeding commenced pursuant to this
Section 12 that the procedures and presumptions of this Agreement
are not valid, binding and enforceable and shall stipulate in any
such court that the Company is bound by all the provisions of this
Agreement. If a determination shall have been made pursuant to
Section 10 of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination
in any judicial proceeding commenced pursuant to this Section 12,
absent (i) a misstatement by Indemnitee of a material fact, or an
omission of a material fact necessary to make Indemnitee’s
statements not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such
indemnification under applicable law.
d.
To the extent not
prohibited by law, the Company shall indemnify Indemnitee against
all Expenses that are incurred by Indemnitee in connection with any
action for indemnification or advancement of Expenses from the
Company under this Agreement or under any directors’ and
officers’ liability insurance policies maintained by the
Company to the extent Indemnitee is successful in such action, and,
if requested by Indemnitee, shall (as soon as reasonably
practicable, but in any event no later than 90 days, after receipt
by the Company of a written request therefor) advance such Expenses
to Indemnitee, subject to the provisions of Section 8.
e.
Notwithstanding
anything in this Agreement to the contrary, no determination as to
entitlement to indemnification shall be required to be made prior
to the final disposition of the Proceeding.
13.
Contribution. To the fullest
extent permissible under applicable law, if the indemnification
provided for in this Agreement is unavailable to Indemnitee, the
Company, in lieu of indemnifying Indemnitee, shall contribute to
the amounts incurred by Indemnitee, whether for Expenses,
judgments, fines or amounts paid or to be paid in settlement, in
connection with any claim relating to an indemnifiable event under
this Agreement, in such proportion as is deemed fair and reasonable
in light of all of the circumstances of such Proceeding in order to
reflect (i) the relative benefits received by the Company and
Indemnitee as a result of the events and transactions giving rise
to such Proceeding; and (ii) the relative fault of Indemnitee and
the Company (and its other directors, officers, employees and
agents) in connection with such events and
transactions.
14.
Non-exclusivity. The rights of
indemnification and to receive advancement of Expenses as provided
by this Agreement shall not be deemed exclusive of any other rights
to which Indemnitee may at any time be entitled under applicable
law, the Certificate of Incorporation or Bylaws, any agreement, a
vote of stockholders or a resolution of directors, or otherwise. To
the extent that a change in Delaware law, whether by statute or
judicial decision, permits greater indemnification or advancement
of Expenses than would be afforded currently under the Certificate
of Incorporation and Bylaws and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement
the greater benefits so afforded by such change, subject to the
restrictions expressly set forth herein or therein. Except as
expressly set forth herein, no right or remedy herein conferred is
intended to be exclusive of any other right or remedy, and every
other right and remedy shall be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. Except as expressly set forth
herein, the assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion
or employment of any other right or remedy.
15.
Primary Responsibility. The
Company acknowledges that Indemnitee may have certain rights to
indemnification and/or advancement of expenses provided by other
sources (collectively, the “Secondary Indemnitors”).
The Company agrees that Indemnitee is not obligated to enforce its
rights against such Secondary Indemnitors prior to obtaining
indemnification or advancement of expenses under this
Agreement.
16.
No Duplication of Payments. The
Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder (or for which
advancement is provided hereunder) if and to the extent that
Indemnitee has otherwise actually received payment for such amounts
under any insurance policy, contract, agreement or
otherwise.
17.
Subrogation. In the event of
any payment under this Agreement, the Company shall be subrogated
to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such
documents as are necessary to enable the Company to bring suit to
enforce such rights.
18.
Duration. This Agreement shall
continue in effect until the later of (a) ten years after the date
that Indemnitee shall have ceased to serve as a director or an
officer of the Company or as a director, trustee, general partner,
managing member, officer, employee, agent or fiduciary of any other
Enterprise, as applicable, (b) for as long as Indemnitee may be
subject to any Proceeding, even after Indemnitee has ceased to
serve as a director or officer of the Company or as a director,
trustee, general partner, managing member, officer, employee, agent
or fiduciary of any other Enterprise, as applicable.
19.
Successors. This Agreement shall be
binding upon and inure to the benefit of the Company and its
successors and assigns, and Indemnitee and Indemnitee’s
estate, heirs, legal representatives and
assigns.
20.
Severability. Nothing in this
Agreement is intended to require or shall be construed as requiring
the Company to do or fail to do any act in violation of applicable
law. The Company’s inability, pursuant to court order or
other applicable law, to perform its obligations under this
Agreement shall not constitute a breach of this Agreement. If any
provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (i)
the validity, legality and enforceability of the remaining
provisions of this Agreement (including without limitation, each
portion of any section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not
itself invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby and shall remain enforceable to the
fullest extent permitted by law; (ii) such provision or provisions
shall be deemed reformed to the extent necessary to conform to
applicable law and to give the maximum effect to the intent of the
parties hereto; and (iii) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, each
portion of any section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not
itself invalid, illegal or unenforceable) shall be construed so as
to give effect to the intent manifested thereby.
21.
Enforcement. The Company
expressly confirms and agrees that it has entered into this
Agreement and assumed the obligations imposed on it hereby in order
to induce Indemnitee to serve or continue to serve as a director or
officer of the Company, and the Company acknowledges that
Indemnitee is relying upon this Agreement in serving as a director
or officer of the Company.
22.
Entire Agreement. This
Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral, written and implied,
between the parties hereto with respect to the subject matter
hereof; provided, however, that this Agreement is a supplement to
and in furtherance of the Certificate of Incorporation, Bylaws and
applicable law.
23.
Modification and Waiver. No
supplement, modification or amendment to this Agreement shall be
binding unless executed in writing by the parties hereto. No
amendment, alteration or repeal of this Agreement shall adversely
affect any right of Indemnitee under this Agreement in respect of
any action taken or omitted by such Indemnitee in his or her
Corporate Status prior to such amendment, alteration or repeal. No
waiver of any of the provisions of this Agreement shall constitute
or be deemed a waiver of any other provision of this Agreement nor
shall any waiver constitute a continuing waiver.
24.
Notices. All notices and other
communications required or permitted hereunder shall be in writing
and shall be mailed by registered or certified mail, postage
prepaid, sent by electronic mail or otherwise delivered by hand,
messenger or courier service addressed:
a.
if to Indemnitee, to Indemnitee’s address, or electronic mail
address as shown on the signature page of this Agreement or in the
Company’s records, as may be updated in accordance with the
provisions hereof; or
b.
if to the Company, to the attention of Chandler D. Robinson, Chief
Executive Officer at Monopar Therapeutics Inc., 1000 Skokie Blvd.,
Suite 350, Wilmette, IL 60091.
Each such notice or other communication
shall for all purposes of this Agreement be treated as effective or
having been given (i) if delivered by hand, messenger or
courier service, when delivered (or if
sent via a
nationally-recognized overnight courier service, freight prepaid,
specifying next-business-day delivery, one business day
after deposit with the courier), or (ii) if
sent via mail,
at the earlier of its receipt or five days after the same has been
deposited in a regularly-maintained receptacle for the deposit of
the United States mail, addressed and mailed as aforesaid, or
(iii) if sent via electronic
mail, upon confirmation of delivery when directed to the relevant
electronic mail address, if sent during normal business hours of
the recipient, or if not sent during normal business hours of the
recipient, then on the recipient’s next business
day.
25.
Governing Law and Consent to
Jurisdiction. This Agreement shall be
governed by and construed in accordance with the domestic
substantive laws of the State of Delaware without giving effect to
any choice or conflict of laws provision or rule that would cause
the application of the domestic substantive laws of any other
jurisdiction. Each party hereto (a) hereby irrevocably
submits to the exclusive jurisdiction of the state and federal
courts sitting in the State of Delaware for the purpose of any
action, claim, cause of action or suit (in contract, tort or
otherwise), inquiry, proceeding or investigation arising out of or
based upon this Agreement or relating to the subject matter hereof,
(b) hereby waives to the extent not prohibited by applicable law,
and agrees not to assert, and agrees not to allow any of its
subsidiaries or agents to assert, by way of motion, as a defense or
otherwise, in any such action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that any
such proceeding brought in one of the above-named courts is
improper or that this Agreement or the subject matter hereof or
thereof may not be enforced in or by such court and (c) hereby
agrees neither to commence or maintain any action, claim, cause of
action or suit (in contract, tort or otherwise), inquiry,
proceeding or investigation arising out of or based upon this
Agreement, or relating to the subject matter hereof or thereof,
other than before one of the above-named courts, nor to make any
motion or take any other action seeking or intending to cause the
transfer or removal of any such action, claim, cause of action or
suit (in contract, tort or otherwise), inquiry, proceeding or
investigation to any court other than one of the above-named
courts, whether on the grounds of inconvenient forum or otherwise.
Each party hereto consents to service of process in any such
proceeding in any manner permitted by Delaware law, and agrees that
service of process by registered or certified mail, return receipt
requested, at its address specified pursuant to Section 13(c)
hereof is reasonably calculated to give actual notice.
26.
WAIVER OF JURY TRIAL. TO THE
EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED,
EACH PARTY HERETO HEREBY WAIVES AND COVENANTS THAT IT WILL NOT
ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO
TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION,
CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE),
INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON
OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THIS
AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT
IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THIS SECTION
26 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING
AND WILL RELY IN ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 26 WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE
WAIVER OF ITS RIGHT TO TRIAL BY JURY.
27.
Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall
for all purposes be deemed to be an original but all of which
together shall constitute one and the same Agreement. This
Agreement may also be executed and delivered by facsimile or
portable document format (.pdf) and in counterparts, each of which
shall for all purposes be deemed to be an original but all of which
together shall constitute one and the same Agreement.
28.
Descriptive Headings.
The
descriptive headings of this Agreement are for convenience of
reference only, are not to be considered a part hereof and shall
not be construed to define or limit any of the terms or provisions
hereof.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the Parties have executed this Agreement on the
date first written above.
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Monopar
Therapeutics Inc.
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By:
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Name:
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Title:
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Indemnitee |
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By:
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[Insert Indemnitee
Name]
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[Signature
Page to Indemnification Agreement]
Exhibit 31.1
CERTIFICATION
I,
Chandler D. Robinson, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Monopar
Therapeutics Inc.;
2. Based on my
knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period
covered by this report;
3. Based on my
knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
4. The registrant's
other certifying officer(s) and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such
disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such
internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the
effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
(d) Disclosed in this
report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's
other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the
equivalent functions):
(a) All significant
deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
(b) Any fraud, whether
or not material, that involves management or other employees who
have a significant role in the registrant's internal control over
financial reporting.
Date:
November 12, 2020
Chandler D.
Robinson
Chief
Executive Officer
Exhibit 31.2
CERTIFICATION
I, Kim
R. Tsuchimoto, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Monopar
Therapeutics Inc.;
2. Based on my
knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period
covered by this report;
3. Based on my
knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
4. The registrant's
other certifying officer(s) and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such
disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such
internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the
effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
(d) Disclosed in this
report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's
other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the
equivalent functions):
(a) All significant
deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
(b) Any fraud, whether
or not material, that involves management or other employees who
have a significant role in the registrant's internal control over
financial reporting.
Date:
November 12, 2020
/s/ Kim R.
Tsuchimoto
Kim R.
Tsuchimoto
Chief
Financial Officer
Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report on Form 10-Q of Monopar
Therapeutics Inc. (the Company) for the three and nine months ended
September 30, 2020, as filed with the Securities and Exchange
Commission on the date hereof (the Report), we, Chandler D.
Robinson, and Kim R. Tsuchimoto, hereby certify, pursuant to 18
U.S.C. §1350, as adopted pursuant to §906 of the
Sarbanes-Oxley Act of 2002, that:
(1) the
Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) the
information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
/s/ Chandler D. Robinson
Chandler D. Robinson
Chief
Executive Officer
November 12,
2020
/s/ Kim R. Tsuchimoto
Kim R.
Tsuchimoto
Chief
Financial Officer
November 12,
2020
This certification accompanies the Form 10-Q to which it relates,
is not deemed filed with the Securities and Exchange Commission and
is not to be incorporated by reference into any filing of Monopar
Therapeutics Inc. under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended (whether made
before or after the date of the Form 10-Q), irrespective of any
general incorporation language contained in such
filing.