SEC Filing | Onconova Therapeutics

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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 September 30, 2021

☐

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 November 1, 2021 was 20,890,563.

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

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ONCONOVA THERAPEUTICS, INC.

TABLE OF CONTENTS FOR QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 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	22
Item 3. Quantitative and Qualitative Disclosures About Market Risk	33
Item 4. Controls and Procedures	33

PART II — OTHER INFORMATION

Item 1. Legal Proceedings	34
Item 1A. Risk Factors	34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3. Defaults Upon Senior Securities	34
Item 4. Mine Safety Disclosures	34
Item 5. Other Information	34
Item 6. Exhibits	35
SIGNATURES	36

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.

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Onconova Therapeutics, Inc.

Condensed Consolidated Balance Sheets


	September 30,		December 31,
	2021		2020
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	59,378,000	$	19,025,000
Receivables		29,000		37,000
Prepaid expenses and other current assets		529,000		722,000
Total current assets		59,936,000		19,784,000
Property and equipment, net		42,000		52,000
Other non-current assets		12,000		150,000
Total assets	$	59,990,000	$	19,986,000
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,050,000	$	4,833,000
Accrued expenses and other current liabilities		2,749,000		4,962,000
Deferred revenue		226,000		226,000
Total current liabilities		7,025,000		10,021,000
Warrant liability		—		321,000
Deferred revenue, non-current		3,299,000		3,469,000
Total liabilities		10,324,000		13,811,000

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.01 par value, 5,000,000 authorized at September 30, 2021 and December 31, 2020, none issued and outstanding at September 30, 2021 and December 31, 2020		—		—
Common stock, $0.01 par value, 125,000,000 and 250,000,000 authorized at September 30, 2021 and December 31, 2020, 20,890,563 and 12,396,219 shares issued and outstanding at September 30, 2021 and December 31, 2020		209,000		124,000
Additional paid in capital		490,418,000		434,593,000
Accumulated deficit		(440,955,000)		(428,556,000)
Accumulated other comprehensive income		(6,000)		14,000
Total stockholders’ equity		49,666,000		6,175,000

Total liabilities and stockholders’ equity	$	59,990,000	$	19,986,000

See accompanying notes to condensed consolidated financial statements.

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Onconova Therapeutics, Inc.

Condensed Consolidated Statements of Operations (unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue	$	57,000	$	66,000	$	170,000	$	174,000
Operating expenses:
General and administrative		2,284,000		2,147,000		7,351,000		6,548,000
Research and development		1,763,000		4,193,000		5,552,000		12,364,000
Total operating expenses		4,047,000		6,340,000		12,903,000		18,912,000
Loss from operations		(3,990,000)		(6,274,000)		(12,733,000)		(18,738,000)
Change in fair value of warrant liability		530,000		56,000		321,000		(63,000)
Other income (loss), net		7,000		(23,000)		13,000		73,000
Net loss	$	(3,453,000)	$	(6,241,000)	$	(12,399,000)	$	(18,728,000)
Net loss per share, basic and diluted	$	(0.22)	$	(0.52)	$	(0.80)	$	(1.65)
Basic and diluted weighted average shares outstanding		15,979,180		12,058,508		15,463,720		11,353,169

See accompanying notes to condensed consolidated financial statements.

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Onconova Therapeutics, Inc.

Condensed Consolidated Statements of Comprehensive Loss (unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net loss	$	(3,453,000)	$	(6,241,000)	$	(12,399,000)	$	(18,728,000)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments, net		(8,000)		15,000		(20,000)		16,000
Other comprehensive (loss) income, net of tax		(8,000)		15,000		(20,000)		16,000
Comprehensive loss	$	(3,461,000)	$	(6,226,000)	$	(12,419,000)	$	(18,712,000)

See accompanying notes to condensed consolidated financial statements.

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Onconova Therapeutics, Inc.

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


	Three Month Periods Ended September 30, 2021 and 2020
								Accumulated
				Additional				other
	Common Stock			Paid in		Accumulated		comprehensive
	Shares	Amount		Capital		deficit		(loss) income		Total
Balance at June 30, 2021	15,781,040	$	158,000	$	470,335,000	$	(437,502,000)	$	2,000	$	32,993,000
Net loss	—		—		—		(3,453,000)		—		(3,453,000)
Other comprehensive loss	—		—		—		—		(8,000)		(8,000)
Stock-based compensation	—		—		190,000		—		—		190,000
Issuance of common stock, net	5,109,523		51,000		19,893,000		—		—		19,944,000
Balance at September 30, 2021	20,890,563	$	209,000	$	490,418,000	$	(440,955,000)	$	(6,000)	$	49,666,000

Balance at June 30, 2020	11,611,830	$	116,000	$	431,420,000	$	(415,886,000)	$	(17,000)	$	15,633,000
Net loss	—		—		—		(6,241,000)		—		(6,241,000)
Other comprehensive loss	—		—		—		—		15,000		15,000
Stock-based compensation	—		—		90,000		—		—		90,000
Issuance of common stock upon exercise of warrants	691,389		7,000		2,711,000		—		—		2,718,000
Balance at September 30, 2020	12,303,219	$	123,000	$	434,221,000	$	(422,127,000)	$	(2,000)	$	12,215,000


	Nine Month Periods Ended September 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	—		—		—		(12,399,000)		—		(12,399,000)
Other comprehensive income	—		—		—		—		(20,000)		(20,000)
Exercise of stock options	4,642		—		24,000		—		—		24,000
Stock-based compensation	—		—		315,000		—		—		315,000
Shares issued in connection with reverse stock split	104		—		—		—		—		—
Issuance of common stock, net	8,329,598		83,000		55,008,000		—		—		55,091,000
Issuance of common stock upon exercise of warrants	160,000		2,000		478,000		—		—		480,000
Balance at September 30, 2021	20,890,563	$	209,000	$	490,418,000	$	(440,955,000)	$	(6,000)	$	49,666,000

Balance at December 31, 2019	7,411,157	$	74,000	$	414,917,000	$	(403,399,000)	$	(18,000)	$	11,574,000
Net loss	—		—		—		(18,728,000)		—		(18,728,000)
Other comprehensive loss	—		—		—		—		16,000		16,000
Stock-based compensation	—		—		275,000		—		—		275,000
Issuance of common stock, net	1,844,168		18,000		9,044,000		—		—		9,062,000
Issuance of common stock upon exercise of warrants	2,964,560		30,000		9,985,000		—		—		10,015,000
Issuance of common stock upon exercise of pre-funded warrants	83,334		1,000		—		—		—		1,000
Balance at September 30, 2020	12,303,219	$	123,000	$	434,221,000	$	(422,127,000)	$	(2,000)	$	12,215,000

See accompanying notes to condensed consolidated financial statements.

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Onconova Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)


	Nine Months Ended September 30,
	2021		2020
Operating activities:
Net loss	$	(12,399,000)	$	(18,728,000)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		10,000		9,000
Change in fair value of warrant liabilities		(321,000)		63,000
Stock compensation expense		315,000		275,000
Changes in assets and liabilities:
Receivables		8,000		52,000
Prepaid expenses and other current assets		193,000		(107,000)
Other assets		138,000		—
Accounts payable		(783,000)		1,454,000
Accrued expenses and other current liabilities		(2,213,000)		(456,000)
Deferred revenue		(170,000)		(169,000)
Net cash used in operating activities		(15,222,000)		(17,607,000)

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		55,091,000		9,062,000
Proceeds from the exercise of warrants		480,000		10,016,000
Proceeds from the exercise of stock options		24,000		—
Net cash provided by financing activities		55,595,000		19,078,000
Effect of foreign currency translation on cash		(20,000)		16,000
Net increase in cash and cash equivalents		40,353,000		1,472,000
Cash and cash equivalents at beginning of period		19,025,000		22,726,000
Cash and cash equivalents at end of period	$	59,378,000	$	24,198,000

See accompanying notes to condensed consolidated financial statements.

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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 has the following two clinical-stage programs: 1. narazaciclib (ON 123300), a multi-kinase inhibitor 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 narazaciclib in greater China. Narazaciclib 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

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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 nine months ended September 30, 2021, the Company incurred a net loss of $12,399,000 and as of September 30, 2021 the Company had generated an accumulated deficit of $440,955,000. 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 September 30, 2021, the Company had cash and cash equivalents of $59,378,000. 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. On September 28, 2021, the Company closed on an offering of common stock. The Company issued 5,000,000 shares of common stock and net proceeds were approximately $19.5 million.

On August 20, 2021, the Company entered into an at-the-market equity distribution agreement for the sale of up to $25.0 million of common stock. Through September 30, 2021, the Company sold 109,523 shares under the agreement at a weighted average price of $5.32 per share. Net proceeds after commissions and offering expenses were approximately $0.5 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 was included in accrued expenses and other liabilities on the balance sheet. It was paid in

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

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.

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 twelve 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 September 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 September 30, 2021, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2021 and 2020, the consolidated statements of stockholders’ equity (deficit) for the three and nine months ended September 30, 2021 and 2020 and the condensed consolidated statements of cash flows for the nine months ended September 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 September 30, 2021, the results of its operations for the three and nine months ended September 30, 2021 and 2020, and its cash flows for the nine months ended September 30, 2021 and 2020. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2021 and 2020 are unaudited. The results for the three and nine months ended September 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.

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

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.

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 nine months ended September 30, 2021 and 2020 was from its license and collaboration agreement with SymBio.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Symbio
Upfront license fee recognition over time	$	57,000	$	56,000	$	170,000	$	169,000
Supplies		—		10,000		—		5,000

	$	57,000	$	66,000	$	170,000	$	174,000

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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		170,000

Deferred balance at September 30, 2021	$	3,525,000

4. Net Loss Per Share of Common Stock

The following potentially dilutive securities outstanding at September 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):


	September 30,
	2021	2020
Warrants	496,586	766,091
Stock options	438,006	66,933
	934,592	833,024

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 nine months ended September 30, 2021 is as follows:


					Balance				Balance
		Exercise		Expiration	December 31,	Warrants	Warrants	Warrants	September 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)	(16,506)	505,108

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

6. Balance Sheet Detail

Prepaid expenses and other current assets:


	September 30,		December 31,
	2021		2020
Research and development	$	22,000	$	189,000
Manufacturing		158,000		90,000
Insurance		252,000		263,000
Other		97,000		180,000
	$	529,000	$	722,000

Property and equipment:


	September 30,		December 31,
	2021		2020
Property and equipment	$	70,000	$	70,000
Accumulated depreciation		(28,000)		(18,000)
	$	42,000	$	52,000

Accrued expenses and other current liabilities:


	September 30,		December 31,
	2021		2020
Research and development	$	1,750,000	$	2,541,000
Employee compensation		888,000		2,239,000
Professional fees		111,000		182,000
	$	2,749,000	$	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 (the “Warrants”) for aggregate gross proceeds of $1,840,000. The Company classified the warrants as a liability (see Note 5). The estimated fair value using the Black-Scholes pricing model was approximately $0 at September 30, 2021 and December 31, 2020. These warrants expired in July 2021.

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

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 were exercisable for a period of five years for one share of Common Stock at an exercise price of $1,107 per share. The Company classified the Tradable Warrants as a liability (see Note 5). The Tradable Warrants were listed on the Nasdaq Capital Market. The Company determined that an active and orderly market for the Tradable Warrants developed and that the Nasdaq Capital Market price was 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. 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 September 30, 2021 and December 31, 2020:


	Fair Value Measurement as of:
	September 30, 2021								December 31, 2020
	Level 1		Level 2		Level 3		Balance		Level 1		Level 2		Level 3		Balance
Tradable warrants liability	$	—	$	—	$	—	$	—	$	321,000	$	—	$	—	$	321,000
Non-tradable warrants liability		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	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.

The 2021 Incentive Compensation Plan (the “2021 Plan”) was unanimously approved by the Company’s shareholders on July 30, 2021. Upon stockholders’ approval of the 2021 Plan, no further awards will be made under the amended 2018 Plan. Under the 2021 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 2021 Plan is 1,300,000. At September 30, 2021, there were 917,094 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

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Company recognized stock-based compensation expense related to stock options and restricted stock units as follows for the three and nine months ended September 30, 2021 and 2020:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
General and administrative	$	153,000	$	51,000	$	270,000	$	142,000
Research and development		29,000		39,000		45,000		133,000
	$	182,000	$	90,000	$	315,000	$	275,000

A summary of stock option activity for the nine months ended September 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	1,300,000	—
Granted	(398,575)	398,575	$	5.29	9.83		—
Exercised	—	(4,642)	$	4.65	8.47	$	21,636
Forfeitures	3,330	(13,866)	$	940.63	7.11
Balance, September 30, 2021	917,094	438,006	$	21.55	9.65	$	—
Vested or expected to vest, September 30, 2021		420,868	$	21.55	9.65	$	—
Exercisable at September 30, 2021		24,261	$	297.34	7.62	$	—

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, 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 September 30, 2021, there was $1,897,000 of unrecognized compensation expense related to the unvested stock options which is expected to be recognized over a weighted-average period of approximately 2.24 years.

The weighted-average assumptions underlying the Black-Scholes calculation of grant date fair value include the following:


	Nine months ended September 30,
	2021	2020
Risk-free interest rate