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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 June 30, 2021

Or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-36020

Onconova Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

Delaware

    

22-3627252

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

12 Penns Trail, Newtown, PA

18940

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (267) 759-3680

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.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).   Yes   No

The number of outstanding shares of the registrant’s Common Stock, par value $0.01 per share, as of August 4, 2021 was 15,781,040.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

Common Stock, par value $.01 per share

ONTX

The Nasdaq Stock Market LLC

Table of Contents

ONCONOVA THERAPEUTICS, INC.

 

TABLE OF CONTENTS FOR QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2021

 

Page

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

3

Condensed Consolidated Balance Sheets

3

Condensed Consolidated Statements of Operations

4

Condensed Consolidated Statements of Comprehensive Loss

5

Consolidated Statement of Stockholders’ Equity (Deficit)

6

Condensed Consolidated Statements of Cash Flows

7

Notes to Condensed Consolidated Financial Statements

8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3. Quantitative and Qualitative Disclosures About Market Risk

32

Item 4. Controls and Procedures

32

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

32

Item 1A. Risk Factors

32

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

33

Item 3. Defaults Upon Senior Securities

33

Item 4. Mine Safety Disclosures

34

Item 5. Other Information

34

Item 6. Exhibits

34

SIGNATURES

35

All common stock, equity, share and per share amounts have been retroactively adjusted to reflect a one-for-fifteen reverse stock split which was effective May 20, 2021.

2

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Onconova Therapeutics, Inc.

Condensed Consolidated Balance Sheets

June 30, 

December 31, 

2021

2020

Assets

(unaudited)

Current assets:

Cash and cash equivalents

$

43,709,000

$

19,025,000

Receivables

 

27,000

 

37,000

Prepaid expenses and other current assets

 

457,000

 

722,000

Total current assets

 

44,193,000

 

19,784,000

Property and equipment, net

 

45,000

 

52,000

Other non-current assets

 

140,000

 

150,000

Total assets

$

44,378,000

$

19,986,000

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

4,290,000

$

4,833,000

Accrued expenses and other current liabilities

 

2,983,000

 

4,962,000

Deferred revenue

 

226,000

 

226,000

Total current liabilities

 

7,499,000

 

10,021,000

Warrant liability

530,000

321,000

Deferred revenue, non-current

 

3,356,000

 

3,469,000

Total liabilities

 

11,385,000

 

13,811,000

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $0.01 par value, 5,000,000 authorized at June 30, 2021 and December 31, 2020, none issued and outstanding at June 30, 2021 and December 31, 2020

 

 

Common stock, $0.01 par value, 125,000,000 and 250,000,000 authorized at June 30, 2021 and December 31, 2020, 15,781,040 and 12,396,219 shares issued and outstanding at June 30, 2021 and December 31, 2020

 

158,000

 

124,000

Additional paid in capital

 

470,335,000

 

434,593,000

Accumulated deficit

 

(437,502,000)

 

(428,556,000)

Accumulated other comprehensive income

 

2,000

 

14,000

Total stockholders’ equity

 

32,993,000

 

6,175,000

Total liabilities and stockholders’ equity

$

44,378,000

$

19,986,000

See accompanying notes to condensed consolidated financial statements.

3

Table of Contents

Onconova Therapeutics, Inc.

Condensed Consolidated Statements of Operations (unaudited)

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2021

    

2020

    

2021

    

2020

    

Revenue

$

57,000

$

56,000

$

113,000

$

108,000

Operating expenses:

General and administrative

 

2,850,000

 

2,594,000

 

5,067,000

 

4,401,000

Research and development

 

1,852,000

 

4,801,000

 

3,789,000

 

8,171,000

Total operating expenses

 

4,702,000

 

7,395,000

 

8,856,000

 

12,572,000

Loss from operations

 

(4,645,000)

 

(7,339,000)

 

(8,743,000)

 

(12,464,000)

Change in fair value of warrant liability

 

427,000

 

(56,000)

 

(209,000)

 

(119,000)

Other (loss) income, net

 

(13,000)

 

 

6,000

 

96,000

Net loss

$

(4,231,000)

$

(7,395,000)

$

(8,946,000)

$

(12,487,000)

Net loss per share, basic and diluted

$

(0.27)

$

(0.65)

$

(0.59)

$

(1.14)

Basic and diluted weighted average shares outstanding

 

15,780,863

 

11,303,508

 

15,201,719

 

10,996,624

See accompanying notes to condensed consolidated financial statements.

4

Table of Contents

Onconova Therapeutics, Inc.

Condensed Consolidated Statements of Comprehensive Loss (unaudited)

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2021

    

2020

    

2021

    

2020

    

Net loss

$

(4,231,000)

$

(7,395,000)

$

(8,946,000)

$

(12,487,000)

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments, net

 

4,000

 

7,000

 

(12,000)

 

1,000

Other comprehensive income (loss), net of tax

4,000

7,000

(12,000)

1,000

Comprehensive loss

$

(4,227,000)

$

(7,388,000)

$

(8,958,000)

$

(12,486,000)

See accompanying notes to condensed consolidated financial statements.

5

Table of Contents

Onconova Therapeutics, Inc.

Consolidated Statement of Stockholders’ Equity (Deficit) (unaudited)

Three Month Periods Ended June 30, 2021 and 2020

Accumulated

Additional

other

Common Stock

Paid in

Accumulated

comprehensive

    

Shares

    

Amount

    

Capital

    

deficit

    

(loss) income

    

Total

Balance at March 31, 2021

15,779,160

$

158,000

$

470,268,000

$

(433,271,000)

$

(2,000)

$

37,153,000

Net loss

 

 

 

 

(4,231,000)

 

 

(4,231,000)

Other comprehensive loss

 

 

 

 

 

4,000

 

4,000

Exercise of stock options

1,776

7,000

7,000

Stock-based compensation

 

 

 

60,000

 

 

 

60,000

Shares issued in connection with reverse stock split

104

Balance at June 30, 2021

15,781,040

$

158,000

$

470,335,000

$

(437,502,000)

$

2,000

$

32,993,000

Balance at March 31, 2020

11,161,072

$

111,000

$

429,752,000

$

(408,491,000)

$

(24,000)

$

21,348,000

Net loss

 

 

 

 

(7,395,000)

 

 

(7,395,000)

Other comprehensive loss

 

 

 

 

 

7,000

 

7,000

Stock-based compensation

 

 

 

92,000

 

 

 

92,000

Issuance of common stock upon exercise of warrants

367,425

4,000

1,576,000

1,580,000

Issuance of common stock upon exercise of pre-funded warrants

83,333

1,000

1,000

Balance at June 30, 2020

11,611,830

$

116,000

$

431,420,000

$

(415,886,000)

$

(17,000)

$

15,633,000

Six Month Periods Ended June 30, 2021 and 2020

Accumulated

Additional

other

Common Stock

Paid in

Accumulated

comprehensive

    

Shares

    

Amount

    

Capital

    

deficit

    

income (loss)

    

Total

Balance at December 31, 2020

12,396,219

$

124,000

$

434,593,000

$

(428,556,000)

$

14,000

$

6,175,000

Net loss

 

 

 

 

(8,946,000)

 

 

(8,946,000)

Other comprehensive income

 

 

 

 

 

(12,000)

 

(12,000)

Exercise of stock options

4,642

24,000

24,000

Stock-based compensation

 

 

 

125,000

 

 

 

125,000

Shares issued in connection with reverse stock split

104

Issuance of common stock, net

3,220,075

32,000

35,115,000

35,147,000

Issuance of common stock upon exercise of warrants

160,000

2,000

478,000

480,000

Balance at June 30, 2021

15,781,040

$

158,000

$

470,335,000

$

(437,502,000)

$

2,000

$

32,993,000

Balance at December 31, 2019

7,411,157

$

74,000

$

414,917,000

$

(403,399,000)

$

(18,000)

$

11,574,000

Net loss

 

 

 

 

(12,487,000)

 

 

(12,487,000)

Other comprehensive loss

 

 

 

 

 

1,000

 

1,000

Stock-based compensation

 

 

 

185,000

 

 

 

185,000

Issuance of common stock, net

1,844,168

18,000

9,044,000

9,062,000

Issuance of common stock upon exercise of warrants

2,273,172

23,000

7,274,000

7,297,000

Issuance of common stock upon exercise of pre-funded warrants

83,333

1,000

1,000

Balance at June 30, 2020

11,611,830

$

116,000

$

431,420,000

$

(415,886,000)

$

(17,000)

$

15,633,000

See accompanying notes to condensed consolidated financial statements.

6

Table of Contents

Onconova Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

Six Months Ended June 30, 

    

2021

    

2020

    

Operating activities:

Net loss

$

(8,946,000)

$

(12,487,000)

Adjustment to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

 

7,000

 

5,000

Change in fair value of warrant liabilities

209,000

119,000

Stock compensation expense

 

125,000

 

185,000

Changes in assets and liabilities:

Receivables

 

10,000

 

57,000

Prepaid expenses and other current assets

 

265,000

 

(70,000)

Other assets

10,000

Accounts payable

 

(543,000)

 

877,000

Accrued expenses and other current liabilities

 

(1,979,000)

 

(418,000)

Deferred revenue

 

(113,000)

 

(112,000)

Net cash used in operating activities

 

(10,955,000)

 

(11,844,000)

Investing activities:

Payments for purchase of property and equipment

(15,000)

Net cash used in investing activities

 

 

(15,000)

Financing activities:

Proceeds from the sale of common stock and warrants, net of costs

35,147,000

9,062,000

Proceeds from the exercise of warrants

480,000

7,298,000

Proceeds from the exercise of stock options

 

24,000

 

Net cash provided by financing activities

 

35,651,000

 

16,360,000

Effect of foreign currency translation on cash

 

(12,000)

 

1,000

Net increase in cash and cash equivalents

 

24,684,000

 

4,502,000

Cash and cash equivalents at beginning of period

 

19,025,000

 

22,726,000

Cash and cash equivalents at end of period

$

43,709,000

$

27,228,000

See accompanying notes to condensed consolidated financial statements.

7

Table of Contents

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of Business

The Company

Onconova Therapeutics, Inc. (the “Company”) was incorporated in the State of Delaware on December 22, 1998 and commenced operations on January 1, 1999. The Company’s headquarters are located in Newtown, Pennsylvania. The Company is a clinical-stage biopharmaceutical company focused on discovering and developing novel products for patients with cancer. The Company has proprietary targeted anti-cancer agents designed to disrupt specific cellular pathways that are important for cancer cell proliferation. The Company believes that the product candidates in its pipeline have the potential to be efficacious in a variety of cancers with unmet medical need. The Company currently has the following two clinical-stage programs: 1. ON 123300 in solid tumors; and 2. oral rigosertib alone or in combination with PD-1 inhibitors for treatment of KRAS-mutated solid tumors. During 2012, Onconova Europe GmbH was established as a wholly owned subsidiary of the Company for the purpose of further developing business in Europe.

The Company has entered into several license and collaboration agreements. In 2011, the Company entered into a license agreement, as subsequently amended, with SymBio Pharmaceuticals Limited (“SymBio”), which grants SymBio certain rights to commercialize rigosertib in Japan and Korea. In December 2017, the Company entered into a license and collaboration agreement with HanX Biopharmaceuticals, Inc. (“HanX”) for the further development, registration and commercialization of ON 123300 in greater China. ON 123300 is a preclinical compound which the Company believes has the potential to overcome the limitations of current generation CDK 4/6 inhibitors. Under the terms of the agreement, the Company received an upfront payment, and will receive regulatory and commercial milestone payments, as well as royalties on Chinese sales. The key feature of the collaboration is that HanX provides all funding required for Chinese IND enabling studies performed for Chinese Food and Drug Administration IND approval, which was received in January 2020. The Company and HanX also intended for these studies to comply with the FDA standards for IND approval. Accordingly, such studies were used by the Company for an IND filing with the US FDA in November 2020. The FDA Study May Proceed letter was issued in December 2020. The Company maintains global rights outside of China. On March 2, 2018, the Company entered into a License, Development and Commercialization Agreement (the “Pint License Agreement”) with Pint International SA (which, together with its affiliate Pint Pharma GmbH, are collectively referred to as “Pint”). Under the terms of the agreement, the Company granted Pint an exclusive, royalty-bearing license, with the right to sublicense, under certain Company patent rights and know-how, to develop and commercialize any pharmaceutical product containing rigosertib in all uses of rigosertib in certain Latin American countries. In May 2019, the Company entered into a License and Collaboration Agreement (the “HanX License Agreement”) with HanX. Under the terms of the HanX License Agreement, the Company granted HanX an exclusive, royalty-bearing license, with the right to sublicense, under certain Company patent rights and know-how, to develop and commercialize any pharmaceutical product (the “HanX Product”) containing rigosertib in all uses of rigosertib or the HanX Product in human therapeutic uses in the People’s Republic of China, Hong Kong, Macau and Taiwan (the “HanX Territory”). In connection with the HanX License Agreement, the Company also entered into a Securities Purchase Agreement with each of HanX and Abundant New Investments Ltd. (“Abundant”), an affiliate of HanX (each, a “Securities Purchase Agreement” and together, the “Securities Purchase Agreements”). HanX did not fulfill its obligations under the HanX License Agreement and in January 2020, in accordance with the terms of the HanX License Agreement, the HanX License Agreement was deemed to be void ab initio. Upon this termination, the rights to HanX Product in the HanX Territory reverted to the Company in accordance with the terms of the HanX License Agreement. In addition, the Securities Purchase Agreements terminated automatically effective upon the termination of the HanX License Agreement in accordance with the Securities Purchase Agreements. In November 2019, the Company entered into a Distribution, License and Supply Agreement (the “Knight License Agreement”) with Knight Therapeutics Inc. (“Knight”). Under the terms of the Knight License Agreement, the Company granted Knight (i) a non-exclusive, royalty-bearing license, with the right to sublicense, under certain Company patent rights and know-how, to develop and manufacture any product (the “Knight Licensed Product”) containing rigosertib for Canada (and Israel, should Knight exercise its option as set forth in the Knight License Agreement) (the “Knight Territory”) and in human uses (the

8

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

“Field”), and (ii) an exclusive, royalty-bearing license, with the right to sublicense, under certain Company patent rights and know-how, to commercialize the Knight Licensed Product in the Knight Territory and in the Field. Knight has also agreed to obtain from the Company all of its requirements of the Knight Licensed Products for the Knight Territory, and the Company has agreed to supply Knight with all of its requirements of the Knight Licensed Products. In December 2019, the Company entered into a Distribution, License and Supply Agreement (the “STA License Agreement”) with Specialised Therapeutics Asia Pte. Ltd. (“STA”). Under the terms of the STA License Agreement, the Company granted STA (i) a non-exclusive, royalty -bearing license, with the right to sublicense, under certain Company patent rights and know-how, to develop and manufacture any product (the “STA Licensed Product”) containing rigosertib for Australia and New Zealand (the “STA Territory”) and in human uses (the “Field”), and (ii) an exclusive, royalty-bearing license, with the right to sublicense, under certain Company patent rights and know- how, to commercialize the STA Licensed Product in the STA Territory and in the Field. STA has also agreed to obtain from the Company all of its requirements of the STA Licensed Products for the STA Territory, and the Company has agreed to supply STA with all of its requirements of the STA Licensed Products.

On May 20, 2021, the Company amended its certificate of incorporation to effect a one-for-fifteen reverse stock split of its common stock. All common stock, equity, share and per share amounts in the financial statements and notes have been retroactively adjusted to reflect this one-for-fifteen reverse stock split.

On May 20, 2021, the Company amended its certificate of incorporation to decrease the number of authorized shares of common stock par value $0.01 per share from 250,000,000 to 125,000,000.

Liquidity

The Company has incurred recurring operating losses since inception. For the six months ended June 30, 2021, the Company incurred a net loss of $8,946,000 and as of June 30, 2021 the Company had generated an accumulated deficit of $437,502,000. The Company anticipates operating losses to continue for the foreseeable future due to, among other things, costs related to research, development of its product candidates and its preclinical programs, strategic alliances and its administrative organization. At June 30, 2021, the Company had cash and cash equivalents of $43,709,000. The Company will require substantial additional financing to fund its ongoing clinical trials and operations, and to continue to execute its strategy.

On January 11, 2021, the Company closed on an offering of common stock. The Company issued 1,303,408 shares of common stock and net proceeds were approximately $8.5 million. On February 16, 2021, the Company closed on an offering of common stock. The Company issued 1,916,667 shares of common stock and net proceeds were approximately $26.7 million.

Following the unsuccessful conclusion of the INSPIRE trial, the Company has taken steps to reduce its cash expenditures. From September 2020 to December 2020, the Company implemented a workforce reduction of employees in research and development who were primarily focused on preparing the NDA for the use of rigosertib in higher risk MDS. In total, 10 employees were terminated, representing approximately 43% of the Company’s workforce. A severance related charge of approximately $1,207,000, which includes a non-cash charge of approximately $29,000 related to the accelerated vesting of outstanding stock options, was recorded in the year ended December 31, 2020. The accrued severance balance remaining at June 30, 2021 was $177,000 and is included in accrued expenses and other liabilities on the balance sheet. It will be paid in periodic amounts through September 2021. On October 30, 2020, the Company notified its landlord of its intention to not renew its office space lease. The lease expired in February 2021 and was modified to a month-to-month lease for a portion of the space. The lease terminated in June 2021 and the Company has relocated to temporary office space with all employees working remotely.

9

Table of Contents

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

The Company has and may continue to delay, scale-back, or eliminate certain of its research and development activities and other aspects of its operations until such time as the Company is successful in securing additional funding. The Company is exploring various dilutive and non-dilutive sources of funding, including equity financings, strategic alliances, business development and other sources. The future success of the Company is dependent upon its ability to obtain additional funding. There can be no assurance, however, that the Company will be successful in obtaining such funding in sufficient amounts, on terms acceptable to the Company, or at all. The Company believes that its cash and cash equivalents will be sufficient to fund its ongoing trials and business operations for more than eighteen months from the date of this filing.

COVID-19

While the Company is not aware of a material impact from the novel coronavirus disease (“COVID-19”) pandemic through June 30, 2021, the full extent to which COVID-19 will directly or indirectly impact the Company’s business, results of operations and financial condition, including manufacturing, clinical trials and research and development costs, depends on future developments that are highly uncertain at this time.

2. Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Certain information and footnotes normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The financial statements include the consolidated accounts of the Company and its wholly-owned subsidiary, Onconova Europe GmbH. All significant intercompany transactions have been eliminated.

Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheet as of June 30, 2021, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2021 and 2020, the consolidated statements of stockholders’ equity (deficit) for the three and six months ended June 30, 2021 and 2020 and the condensed consolidated statements of cash flows for the six months ended June 30, 2021 and 2020 are unaudited. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2021, the results of its operations for the three and six months ended June 30, 2021 and 2020, and its cash flows for the six months ended June 30, 2021 and 2020. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2021 and 2020 are unaudited. The results for the three and six months ended June 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2020 included in the Company’s annual report on Form 10-K filed with the SEC on March 18, 2021.

All common stock, equity, share and per share amounts in the financial statements and notes have been retroactively adjusted to reflect a one-for-fifteen reverse stock split which was effective May 20, 2021.

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment, which is the identification and development of oncology therapeutics.

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2020 included in the Company’s annual report on Form 10-K filed with the SEC on March 18, 2021. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies.

Fair Value Measurements

The carrying amounts reported in the accompanying consolidated financial statements for cash and cash equivalents, accounts payable, and accrued liabilities approximate their respective fair values because of the short-term nature of these accounts. The fair value of the warrant liability is discussed in Note 7, “Fair Value Measurements.”

Recent Accounting Pronouncements

In June 2016, the FASB issued new guidance on the accounting for credit losses on financial instruments. The guidance was amended in November 2019. The new guidance introduces an expected loss model for estimating credit losses, replacing the incurred loss model. The new guidance also changes the impairment model for available-for-sale debt securities, requiring the use of an allowance to record estimated credit losses (and subsequent recoveries). The guidance is effective for the Company in fiscal years beginning after December 15, 2022, and interim periods within those years, with early adoption permitted. The Company is evaluating the impact of the adoption of the standard on its consolidated financial statements.

3. Revenue

The Company’s revenue during the three and six months ended June 30, 2021 and 2020 was from its license and collaboration agreement with SymBio.

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2021

    

2020

    

2021

    

2020

    

Symbio

Upfront license fee recognition over time

$

57,000

$

56,000

$

113,000

$

112,000

Supplies

(4,000)

$

57,000

$

56,000

$

113,000

$

108,000

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Deferred revenue is as follows:

Symbio

    

Upfront Payment

Deferred balance at December 31, 2020

$

3,695,000

Recognition to revenue

113,000

Deferred balance at June 30, 2021

$

3,582,000

4. Net Loss Per Share of Common Stock

The following potentially dilutive securities outstanding at June 30, 2021 and 2020 have been excluded from the computation of diluted weighted average shares outstanding, as they would be antidilutive (reflects the number of common shares as if the dilutive securities had been converted to common stock):

June 30, 

    

2021

    

2020

Warrants

 

511,202

 

1,457,479

Stock options

 

60,431

 

69,640

 

571,633

 

1,527,119

5. Warrants

Common Stock warrants are accounted for in accordance with applicable accounting guidance provided in ASC Topic 815, Derivatives and Hedging - Contracts in Entity’s Own Equity (ASC Topic 815), as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement. Some of the Company’s warrants are classified as liabilities because in certain circumstances they could require cash settlement.

Warrants outstanding and warrant activity (reflects the number of common shares as if the warrants were converted to common stock) for the six months ended June 30, 2021 is as follows:

Balance

Balance

Exercise

Expiration

December 31, 

Warrants

Warrants

Warrants

June 30, 

Description

    

Classification

    

Price

    

Date

    

2020

    

Issued

    

Exercised

    

Expired

    

2021

Non-tradable warrants

 

Liability

$

2,587.50

 

July 2021

 

430

 

 

 

 

430

Tradable warrants

 

Liability

$

1,107.00

 

July 2021

 

14,187

 

 

 

 

14,187

Non-tradable pre-funded warrants

 

Equity

$

2.25

 

July 2023

 

26

 

 

 

 

26

Non-tradable warrants

Equity

$

24.00

December 2022

26,189

26,189

Non-tradable warrants

Equity

$

211.50

March 2021

333

(333)

Non-tradable warrants

Equity

$

317.25

March 2021

556

(556)

Non-tradable warrants

Equity

$

116.8425

June 2021

1,000

(1,000)

Non-tradable pre-funded warrants

Equity

$

2.25

none

3,522

3,522

Non-tradable warrants

Equity

$

24.00

December 2022

120,407

120,407

Non-tradable pre-funded warrants

Equity

$

2.25

none

4,974

4,974

Non-tradable warrants

Equity

$

30.00

September 2023

7,306

7,306

Non-tradable warrants

Equity

$

3.00

November 2024

409,500

(160,000)

249,500

Non-tradable warrants

Equity

$

6.54375

December 2024

16,953

16,953

Non-tradable warrants

Equity

$

6.75450

December 2024

46,263

46,263

Non-tradable warrants

Equity

$

6.77850

December 2023

29,968

29,968

681,614

(160,000)

(1,889)

519,725

The tradable warrants which expired in July 2021 were issued in connection with a financing transaction completed in August 2016. Subsequent to the closing of that financing transaction, the Company executed a one-for-fifteen reverse stock split in September 2018. Subsequently, the Company executed a one-for-fifteen reverse stock split in May 2021. As a result, each of the 3,192,140 warrants is exercisable for 1/225 of one share of common stock at an exercise price of $4.92 per warrant. The table above shows the number of shares of common stock which could be

12

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

obtained by the exercise of all of the outstanding warrants, 14,187; and shows the exercise price for 225 of the warrants, $1,107.00.

6. Balance Sheet Detail

Prepaid expenses and other current assets:

June 30, 

December 31, 

    

2021

    

2020

Research and development

$

42,000

$

189,000

Manufacturing

 

144,000

 

90,000

Insurance

 

80,000

 

263,000

Other

 

191,000

 

180,000

$

457,000

$

722,000

Property and equipment:

June 30, 

December 31, 

    

2021

    

2020

Property and equipment

$

70,000

$

70,000

Accumulated depreciation

 

(25,000)

 

(18,000)

$

45,000

$

52,000

Accrued expenses and other current liabilities:

June 30, 

December 31, 

    

2021

    

2020

Research and development

$

1,849,000

$

2,541,000

Employee compensation

 

990,000

 

2,239,000

Professional fees

144,000

182,000

$

2,983,000

$

4,962,000

7. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company utilizes a valuation hierarchy for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

On January 5, 2016, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with an institutional investor providing for the issuance and sale by the Company of 861 shares of Common Stock, at a purchase price of $2,137.50 per share and warrants to purchase up to 430 shares of Common Stock

13

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(the “Warrants”) for aggregate gross proceeds of $1,840,000. The Company has classified the warrants as a liability (see Note 5). The estimated fair value using the Black-Scholes pricing model was approximately $0 at June 30, 2021 and December 31, 2020. These warrants expired in July 2021.

On July 29, 2016 the Company closed on a Rights Offering, issuing 16,000 shares of Common Stock, 14,187 Tradable Warrants and 2,918 Pre-Funded Warrants. The Tradable Warrants are exercisable for a period of five years for one share of Common Stock at an exercise price of $1,107 per share. After the one-year anniversary of issuance, the Company may redeem the Tradable Warrants for $0.015 per Tradable Warrant if the volume weighted average price of its Common Stock is above $2,767.50 for each of 10 consecutive trading days. The Company has classified the Tradable Warrants as a liability (see Note 5). The Tradable Warrants have been listed on the Nasdaq Capital Market since issuance and the Company regularly monitors the trading activity. The Company has determined that an active and orderly market for the Tradable Warrants has developed and that the Nasdaq Capital Market price is the best indicator of fair value of the warrant liability. The quoted market price was used to determine the fair value at December 31, 2020 and June 30, 2021. These warrants expired in July 2021.

The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020:

Fair Value Measurement as of:

June 30, 2021

December 31, 2020

    

Level 1

    

Level 2

    

Level 3

    

Balance

    

Level 1

    

Level 2

    

Level 3

    

Balance

Tradable warrants liability

$

530,000

$

$

$

530,000

$

321,000

$

$

$

321,000

Non-tradable warrants liability

Total

$

530,000

$

$

$

530,000

$

321,000

$

$

$

321,000

There were no transfers between levels in any of the periods reported.

8. Stock-Based Compensation

The 2018 Omnibus Incentive Compensation Plan (the “2018 Plan”) was unanimously approved by the Company’s Board of Directors on May 24, 2018 and was approved by the Company’s stockholders on June 27, 2018.

Under the 2018 Plan, the Company may grant incentive stock options, non-qualified stock options, stock awards, stock units, stock appreciation rights and other stock-based awards to employees, non-employee directors and consultants, and advisors. The maximum aggregate number of shares of the Company’s common stock that may be issued under the 2018 Plan is 26,823.

The 2018 Plan was amended and restated following unanimous approval of the Company’s Board of Directors on April 24, 2019 and was approved by the Company’s shareholders on June 17, 2019. The amended 2018 Plan (the “Amended Plan”) allowed for an additional 39,300 shares of the Company’s common stock that may be issued under the Amended Plan with respect to awards made on and after June 17, 2019. At June 30, 2021, there were 5,205 shares available for future issuance.

Stock-based compensation expense includes stock options granted to employees and non-employees and has been reported in the Company’s statements of operations and comprehensive loss in either research and development expenses or general and administrative expenses depending on the function performed by the optionee. No net tax benefits related to the stock-based compensation costs have been recognized since the Company’s inception. The

14

Table of Contents

Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Company recognized stock-based compensation expense as follows for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2021

    

2020

    

2021

    

2020

    

General and administrative

$

43,000

$

46,000

$

99,000

$

91,000

Research and development

17,000

46,000

26,000

94,000

$

60,000

$

92,000

$

125,000

$

185,000

A summary of stock option activity for the six months ended June 30, 2021 is as follows:

    

Options Outstanding

Weighted

Weighted-

Average

Shares

Average

Remaining

Aggregate

Available

Number

Exercise

Contractual

Intrinsic

    

for Grant

    

of Shares

    

Price

    

Term (in years)

    

Value

Balance, December 31, 2020

 

12,339

57,939

$

368.10

 

8.38

$

Authorized

Granted

 

(21,000)

21,000

$

7.80

9.94

 

21,636

Exercised

 

(4,642)

$

4.65

8.47

 

Forfeitures

 

13,866

(13,866)

$

940.63

7.11

 

Balance, June 30, 2021

 

5,205

60,431

$

124.00

 

8.73

$

Vested or expected to vest, June 30, 2021

 

58,925

$

124.00

 

8.73

$

Exercisable at June 30, 2021

 

24,261

$

297.34

 

7.87

$

The Company accounts for all stock-based payments made to employees, non-employees and directors using an option pricing model for estimating fair value. Accordingly, stock-based compensation expense is measured based on the estimated fair value of the awards on the date of grant, net of forfeitures. Compensation expense is recognized for the portion that is ultimately expected to vest over the period during which the recipient renders the required services to the Company using the straight-line single option method.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options at the grant date. The Black-Scholes model requires the Company to make certain estimates and assumptions, including estimating the fair value of the Company’s Common Stock, assumptions related to the expected price volatility of the Common Stock, the period during which the options will be outstanding, the rate of return on risk-free investments and the expected dividend yield for the Company’s stock.

As of June 30, 2021, there was $102,000 of unrecognized compensation expense related to the unvested stock options which is expected to be recognized over a weighted-average period of approximately 2.29 years.

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)