Monopar Therapeutics (MNPR) FY 2022 MD&A
This page reproduces the company's own Item 7 MD&A text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.
Overview
We are a clinical stage biopharmaceutical company 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 therapeutics in late preclinical or in clinical development stages. We leverage our scientific and clinical experience to help reduce the risk of and accelerate the clinical development of our drug product candidates.
Financial Status
Our cash, cash equivalents and investments as of December 31, 2022, was $13.1 million. As discussed further below and elsewhere in this Annual Report, we expect that our current funds will be sufficient for us to obtain topline results from our ongoing open-label Phase 1b camsirubicin clinical trial as planned by the end of 2023 (but as discussed below, this may not be the case if camsirubicin reaches even higher dose levels than we are anticipating and topline results are deferred as dosing continues beyond 2023) and, assuming a positive result of the go/no go interim analysis decision anticipated by the end of March 2023, the continued enrollment in the Phase 3 portion of our ongoing Validive Phase 2b/3 (VOICE) clinical program. We will require additional funding to advance our clinical and preclinical programs and we anticipate that we will seek to raise additional capital within the next 12 months to fund our future operations.
Our primary funding source over the past three years was sales of shares of our common stock under at-the-market sales programs through Capital on DemandTM Sales Agreements with JonesTrading Institutional Services LLC (“Jones Trading”). During 2020 and the first quarter of 2021, we sold 1,964,724 shares of our common stock at an average gross price of $10.02 per share for net proceeds of $19,100,603, after fees and commissions of $591,188. The maximum aggregate offering price under the prior agreement was reached during the first quarter of 2021 and there were no further sales under that agreement. In April 2022, we entered into a new at-the-market sales agreement. Pursuant to that agreement, during 2022, the Company sold 64,573 shares of its common stock at an average gross price per share of $2.71 for net proceeds of $170,552, after fees and commissions of $4,377. In addition, the Company incurred legal, accounting and other fees totaling $83,234 for net proceeds after fees, commissions and expenses of $87,318. From January 1, 2023 to March 10, 2023, the Company sold 241,475 shares of its common stock at an average gross price per share of $3.47 for net proceeds of $836,836, after fees and commissions of $20,940.
Validive Clinical Update
In February 2021, we dosed the first patient in our Phase 2b/3 VOICE trial of Validive® for the prevention of chemoradiation treatment (“CRT”)-induced severe oral mucositis (“SOM”) in patients with oropharyngeal cancer (“VOICE”). In August 2021, we successfully reached our original target of 20 activated clinical trial sites for the Phase 2b portion of the 2b/3 Validive® VOICE trial and in September 2021, we received authorization to proceed with the VOICE clinical trial in multiple countries in Europe. In 2022, we completed enrollment of the Phase 2b portion of the VOICE trial and commenced enrollment in the Phase 3 portion. As of March 10, 2023, we have 81 clinical sites activated and enrolling patients in the U.S. and Europe. To be prepared for a potential positive go/no-go decision based on the interim analysis, we continue to activate additional sites globally. This interim analysis, and the resulting go/no-go decision about whether to proceed to the Phase 3 portion of the trial, is expected by the end of March 2023. If the interim analysis results in a no-go decision, we would need to reconsider our efforts with respect to Validive and refocus our development efforts on our other product candidates. Validive has been our lead product candidate to date and is the most clinically advanced, and if we had to reconsider or abandon our efforts, it would likely materially adversely impact our financing prospects, as well as the price of our common stock. Because the interim analysis is being performed by an independent data monitoring committee, we do not know what the results will be as of the date of this Annual Report.
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To complete the VOICE clinical program, including, if required, completing a second Phase 3 confirmatory 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 within the next 12 months.
Camsirubicin Clinical Update
In August 2021, we announced clearance from the U.S. Food and Drug Administration (“FDA”) to proceed with an open-label Phase 1b dose-escalation clinical trial evaluating camsirubicin plus growth factor support (pegfilgrastim/G-CSF) in patients with advanced soft tissue sarcoma (“ASTS”). In September 2021, we initiated the Phase 1b clinical trial, and in October 2021 we dosed the first patients. In February 2022, we announced that the first dose level of camsirubicin had been completed in November 2021, with a positive recommendation from the trial safety review committee to proceed to next higher dose level and that three patients had already been dosed at the second dose level. That dose level was successfully cleared, as was the third and fourth dose levels, and we are presently enrolling patients at the fifth dose level. The fifth dose level is over twice the highest dose administered in any prior camsirubicin clinical trial (650 mg/m2 versus 265 mg/m2) and no drug-related cardiotoxicity has been observed to date up to the current dose-level. The open-label Phase 1b camsirubicin dose-escalation trial is planning to enroll additional cohorts until the maximum tolerable dose is reached.
In November 2022, we presented an abstract and poster of the Phase 1b clinical trial data at the Connective Tissue Oncology Society Annual Meeting in Vancouver, BC. Following completion of the Phase 1b clinical trial, we continue to expect that Grupo Español de Investigación en Sarcomas (“GEIS”) will sponsor and lead a multi-country, randomized, open-label Phase 2 clinical trial to evaluate camsirubicin head-to-head against doxorubicin, the current first-line treatment for ASTS. We currently anticipate topline results in the camsirubicin Phase 1b clinical trial by the end of 2023 and believe we have sufficient funds to advance the trial through that date. However, if camsirubicin reaches higher dose levels than we are anticipating, the Phase 1b clinical trial may still be dosing patients beyond the end of 2023 and topline results may be deferred. Although we would likely consider this a positive development, it is possible that we would require additional funding to complete an extended Phase 1b clinical trial in this situation. Regardless, additional funding is expected to be required to support further development through and beyond our ongoing Phase 1b clinical trial.
MNPR-101 for Radiopharmaceutical Use Development Update
Pursuant to our 50/50 collaboration development agreement with NorthStar Medical Radioisotopes, LLC (“NorthStar”) to develop potential radioimmunotherapeutics based on MNPR-101 (“MNPR-101 RITs”), we have coupled MNPR-101 to imaging and therapeutic radioisotopes. The resulting conjugates, MNPR-101-Zr and MNPR-101-PCTA-Ac225, are designed to be highly selective agents that have the potential to image and kill certain cancer cells. By eradicating these cancer cells with a uPAR-targeted RIT (“uPRIT”), the therapeutic goal is to spare healthy cells while quickly killing the cancer cells.
Based on promising recently generated preclinical imaging results with MNPR-101-Zr showing high uptake across multiple tumor types, the companies committed to additional funding with the aim of initiating a first-in-human imaging study with MNPR-101-Zr as early as the end of this year. MNPR-101-Zr is a zirconium-89 labeled version of MNPR-101, a highly selective antibody against the urokinase plasminogen activator receptor (“uPAR”). Positron emission tomography (“PET”) imaging of preclinical mouse models for triple-negative breast, colorectal, and pancreatic tumors displayed high and selective uptake of MNPR-101-Zr in these uPAR-expressing tumors. These proof-of-concept studies provide support for a first-in-human PET imaging study with MNPR-101-Zr and a future therapeutic study using the previously announced actinium-225 labeled MNPR-101 RIT. Overall, the imaging results demonstrate the potential utility of MNPR-101 as a precision targeting agent for both imaging and therapy in multiple cancer indications.
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MNPR-202 and Related Analogs Updates
In June 2021, we entered into a collaboration agreement with the Cancer Science Institute of Singapore (“CSI Singapore”), one of Asia’s premier cancer research centers, at the National University of Singapore (“NUS”) (consistently ranked as one of the world’s top universities) to evaluate the activity of MNPR-202 and related analogs in multiple types of cancer. MNPR-202 was designed to retain the same potentially non-cardiotoxic backbone as camsirubicin but is modified at other positions which may enable it to work in certain cancers that are resistant to camsirubicin and doxorubicin. In December 2020, we announced the issuance of our composition of matter U.S. patent (US10,450,340) covering MNPR-202 and related analogs. CSI Singapore has tested MNPR-202 in preclinical cancer models with promising results. In December 2022, in collaboration with Dr. Anand Jeyasekharan of CSI Singapore, we presented an abstract and poster of the preclinical data of MNPR-202 at the American Society of Hematology 64th Annual Meeting in New Orleans, LA.
Our Strategy
Our management team has extensive experience in developing therapeutics and medical technologies through global regulatory approval and commercialization. In aggregate, companies they co-founded have achieved four drug approvals and three diagnostic medical imaging device approvals in the U.S. and the EU, successfully sold an asset developed by management which is currently in Phase 3 clinical trials, sold two oncology-focused diagnostic imaging businesses to Fortune Global 1000 firms, and completed the clinical and commercial development and ultimately the sale of a commercial biopharmaceutical company for over $800 million in cash. In addition, the team has supported multiple regulatory submissions with the FDA and EMA and launched multiple drugs in the U.S and the EU. Understanding the preclinical, clinical, regulatory and commercial development processes and hurdles are key factors in successful drug development and the expertise demonstrated by our management team across all of these areas increases the probability of success in advancing the product candidates in our product pipeline. Our strategic goal is to acquire, develop and commercialize promising oncology product candidates that address important unmet medical needs of cancer patients. Seven key elements of our strategy to achieve this goal are to:
| · | Leverage data generated from the Phase 2 Validive clinical trial to complete the execution of a hopefully successful VOICE clinical program for Validive for SOM in oropharyngeal cancer (“OPC”). In the prior Phase 2 clinical trial the absolute incidence of SOM in OPC patients was reduced by 26.3%, the time to SOM onset was delayed, and the duration of disease in patients that developed SOM was decreased by 15.5 days in the Validive 100 µg cohort versus placebo. In addition to the data from the Phase 2 clinical trial, we believe the guidance from our key opinion leaders (“KOLs”) as well as from the FDA and EMA, and our own internal clinical trial design expertise, help position us well for an effective VOICE clinical trial program. | |
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| · | Obtain FDA and EMA approval of Validive to maximize the commercial potential of Validive in both the U.S. and the EU, and seek marketing partnerships outside these markets. If the VOICE clinical program of Validive is successful and FDA and EMA approvals are obtained, we currently intend to commercialize Validive in the U.S. and the EU ourselves, which may include establishing our own specialty sales force and seeking partnerships outside of these territories for regulatory approval and drug sales and distribution. | |
| · | Advance the clinical development of camsirubicin, by pursuing indications where doxorubicin has demonstrated efficacy. ASTS will be the first indication, which is anticipated to allow camsirubicin to go head-to-head against doxorubicin, the current first-line treatment. In this indication, camsirubicin previously demonstrated clinical benefit (stable disease or partial response) in 52.6% of patients evaluable for tumor progression in a single-arm Phase 2 study. Clinical benefit was proportional to dose and was consistently observed at higher cumulative doses of camsirubicin (1000 mg/m2). Camsirubicin was very well tolerated in this Phase 2 study and underscored the ability to potentially administer camsirubicin without restriction as to cumulative dose (doxorubicin is limited due to heart toxicity to 450 mg/m2 cumulative dose). Our current ongoing Phase 1b clinical trial continues towards establishing a new, higher recommended dose for the next Phase 2 ASTS clinical trial. | |
| · | Continue the development of MNPR-101-Zr, MNPR-101 RIT and related molecules as therapeutic, diagnostic and imaging agents. We plan to continue the development of MNPR-101-Zr, MNPR-101 RIT and related molecules for diagnostic, imaging, and therapeutic use in cancer. | |
| · | Continue the development of MNPR-202 and related analogs in multiple types of cancers. The 2-pyrrilino camsirubicin analog (MNPR-202) and related analogs represent proprietary compositions of matter designed to retain the non-cardiotoxic backbone of camsirubicin yet exhibit novel features in terms of antitumor activity and mechanism that distinguish these analogs from camsirubicin as well as from doxorubicin, potentially addressing camsirubicin- and doxorubicin-resistant cancers. | |
| · | Expand our drug development pipeline through advancing current assets, in-licensing, and acquisition of oncology product candidates. We plan to continue the expansion of our drug development pipeline through acquiring or in-licensing additional oncology product candidates, particularly those that leverage existing scientific and clinical data that helps reduce the risks of the next steps in clinical development. | |
| · | Utilize the expertise and prior experience of our team in the areas of asset acquisition, drug development and commercialization to establish ourselves as a leading biopharmaceutical company. Our senior executive team has relevant experience in biopharmaceutical in-licensing and acquisitions as well as developing product candidates through approval and commercialization. In aggregate, our team has co-founded BioMarin Pharmaceutical (Nasdaq: BMRN), Sensant Corp (acquired by Siemens), American BioOptics (assets acquired by Olympus), Raptor Pharmaceuticals ($800 million sale to Horizon Therapeutics), and Tactic Pharma, LLC (“Tactic Pharma”) (sale of lead asset, choline tetrathiomolybdate, was ultimately acquired by Alexion in June 2018 for $764 million; Alexion was subsequently acquired by AstraZeneca). |
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Implications of Being an Emerging Growth Company
We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). An emerging growth company may take advantage of specified reduced reporting burdens that are otherwise applicable generally to public companies. These provisions include, but are not limited to:
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| ● | inclusion of only two years, as compared to three years, of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s discussion and analysis of financial condition and results of operations” disclosures; |
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| ● | an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”); |
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| ● | an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board (“PCAOB”) requiring mandatory audit firm rotation; |
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| ● | reduced disclosure about executive compensation arrangements; and |
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| ● | an exemption from the requirement to seek non-binding advisory votes on executive compensation or golden parachute arrangements. |
We expect to take advantage of these provisions until we are no longer an emerging growth company. We will remain an emerging growth company until the earliest of (1) the last day of the year (a) following the fifth anniversary of the completion of our initial public offering which is December 2024, (b) in which we have total annual gross revenue of at least
$1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
We have elected to take advantage of certain of the reduced disclosure obligations in this Annual Report on Form 10-K, and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be reduced and/or less detailed than what you might find from other public reporting companies.
The JOBS Act also permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have irrevocably elected to opt out of this provision and, as a result, we will comply with new or revised accounting standards when they are required to be adopted by public companies that are not emerging growth companies. In addition, we are also a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act and have elected to take advantage of certain of the scaled back disclosure requirements available to smaller reporting companies such as avoiding the extensive narrative disclosure required of other reporting companies, particularly in the description of executive compensation.
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Revenues
We are an emerging growth company. We have no approved drugs and have not generated any revenues. To date, we have engaged in acquiring or in-licensing 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
During the year ended December 31, 2022, there were no relevant recently issued accounting pronouncements that would impact our financial position and our consolidated results of operations and comprehensive loss or cashflows.
Critical Accounting Policies and Use of Estimates
While our significant accounting policies are described in more detail in Note 2 of our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Clinical Trials Accruals
We accrue and expense 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. We estimate the amounts to accrue based upon 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.
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 compensation grants, including stock option and restricted stock unit (“RSU”) grants. 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 the date of grant in the case of RSUs.
Stock-based compensation costs for stock awards granted to our employees, non-employee directors and consultants 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 our future stock price volatility and expected holding term. The expected volatility rates are estimated based on our actual historical volatility over the two-year period from our initial public offering on December 18, 2019, through December 31, 2021. The expected term for stock options granted during the years ended December 31, 2022, and 2021, was estimated using the simplified method. Forfeitures only include actual forfeitures to-date as the Company accounts for forfeitures as they occur due to a limited history of forfeitures. 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.
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Results of Operations
Comparison of the Years Ended December 31, 2022, and December 31, 2021
The following table summarizes the results of our operations for the years ended December 31, 2022, and 2021:
| Years Ended December 31, | ||||||||||||
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| (in thousands) | 2022 | 2021 | Variance | |||||||||
| Research and development expenses | $ | 7,592 | $ | 6,493 | $ | 1,099 | ||||||
| General and administrative expenses | 2,945 | 2,634 | 311 | |||||||||
| Total operating expenses | 10,537 | 9,127 | 1,410 | |||||||||
| Operating loss | (10,537 | ) | (9,127 | ) | (1,410 | ) | ||||||
| Interest income | 21 | 24 | (3 | ) | ||||||||
| Net loss | $ | (10,516 | ) | $ | (9,103 | ) | $ | (1,413 | ) |
Research and Development (“R&D”) Expenses
R&D expenses for the year ended December 31, 2022 were $7,592,000, compared to $6,493,000 for the year ended December 31, 2021. This represents an increase of $1,099,000 primarily attributed to (1) a $1,044,000 increase for Validive clinical trial planning and execution including manufacturing costs, (2) a $460,000 increase due to camsirubicin clinical trial planning and execution including manufacturing costs, (3) a $193,000 increase in R&D consulting, partially offset by (1) a $534,000 decrease for R&D personnel salaries, bonuses, benefits and annual (non-cash) equity grants and (2) a $64,000 net decrease in other R&D expenses.
General and Administrative (“G&A") Expenses
G&A expenses for the year ended December 31, 2022, were $2,945,000, compared to $2,634,000 for the year ended December 31, 2021. This represents an increase of $311,000 primarily attributed to (1) a $349,000 increase in G&A personnel salaries, bonuses, benefits and stock-based compensation for annual (non-cash) equity grants, and (2) a $27,000 net increase in other G&A expenses partially offset by a $65,000 decrease in patent costs.
Interest Income
Interest income for the year ended December 31, 2022, decreased by $3,000 versus the year ended December 31, 2021. The decrease was caused by lower bank balances offset by an increase in interest rates in 2022.
Liquidity and Capital Resources
Sources of Liquidity
We have incurred losses and cumulative negative cash flows from operations since we commenced operations resulting in an accumulated deficit of approximately $51.8 million as of December 31, 2022. We anticipate that we will continue to incur losses for the foreseeable future. We expect that our R&D and G&A expenses will increase to enable the execution of our strategic plan. As a result, we anticipate that we will seek to raise additional capital within the next 12 months to fund our future operations. We will seek to obtain needed capital through a combination of equity offerings, including the usage of our Capital on DemandTM Sales Agreement with JonesTrading, debt financings, strategic collaborations and grant funding. To date, we have funded our operations through net proceeds from the initial public offering of our common stock, net proceeds from sales of our common stock through at-the-market sales programs, private placements of our preferred and common stock, and the net receipt of funds related to the acquisition of camsirubicin. We anticipate that the currently available funds as of March 10, 2023, will fund our planned operations at least through March 31, 2024.
We invest our cash equivalents in two money market accounts and U.S. Treasury Bills.
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Cash Flows
The following table provides information regarding our cash flows for the years ended December 31, 2022, and 2021.
| Years Ended December 31, | ||||||||||||
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| (in thousands) | 2022 | 2021 | Variance | |||||||||
| Net cash used in operating activities | $ | (7,228 | ) | $ | (7,317 | ) | $ | 89 | ||||
| Net cash used in investing activities | (4,919 | ) | - | (4,919 | ) | |||||||
| Net cash provided by financing activities | 33 | 10,879 | (10,846 | ) | ||||||||
| Effect of exchange rates | (4 | ) | 5 | (9 | ) | |||||||
| Net increase (decrease) in cash and cash equivalents | $ | (12,118 | ) | $ | 3,567 | $ | (15,685 | ) |
During 2022, the Company began investing its idle cash due to the rising interest rates and at December 31, 2022, the Company holds short term liquid investments of $4,934,000 which can be readily converted to cash. During the years ended December 31, 2022 and 2021, we had net cash outflows of $12,118,000 and net cash inflows of $3,567,000, respectively, a decrease of $15,685,000. During 2022, we had higher net cash used investing activities and less funds raised from sales of our common stock under an at-the-market sales program compared to 2021.
Cash Flow Used in Operating Activities
The cash flow used in operating activities during the year ended December 31, 2022, compared to the year ended December 31, 2021 was essentially flat.
Cash Flow Used in Investing Activities
The increase to cash flow used in investing activities during the year ended December 31, 2022, compared to the year ended December 31, 2021 of approximately $4,919,000 was a result of our investment in U.S. Treasury Bills at the end of 2022. Prior to 2022, idle cash was invested in money market accounts and recorded as cash equivalents.
Cash Flow Provided by Financing Activities
The decrease in cash flow provided by financing activities during the year ended December 31, 2022, compared to the year ended December 31, 2021, of approximately $10,846,000 was primarily due to higher net proceeds from sales of our common stock through an at-the-market sales program in 2021.
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 or royalties 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, assuming a positive result of the go/no go interim analysis decision anticipated by the end of March 2023; | |
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| · | advance the clinical development and execute the regulatory strategy for camsirubicin; | |
| · | continue the preclinical activities and potentially enter clinical development of an MNPR-101-derived radioimmunotherapeutics (MNPR-101 RIT) and companion diagnostics (MNPR-101-Zr), to treat cancer; | |
| · | continue the preclinical activities, and potentially later-on enter clinical development, of MNPR-202 (and related analogs) for various cancer indications; | |
| · | acquire and/or license additional pipeline drug product candidates and pursue the future preclinical and/or clinical development of such drug product candidates; |
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| · | seek regulatory approvals for any of our current and future drug product candidates that successfully complete registration clinical trials; | |
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| · | establish or purchase the services of a sales, marketing and distribution infrastructure to commercialize any products for which we obtain marketing approval; | |
| · | develop or contract for 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 supply the market for 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. |
We anticipate that the funds available as of March 10, 2023, will fund our obligations at least through March 31, 2024. 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 clinical development and regulatory interactions and approvals of Validive; | |
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| · | the progress of clinical development and regulatory interactions and approvals of camsirubicin; | |
| · | the costs, timing and outcomes of seeking, obtaining, and maintaining FDA and international regulatory approvals; | |
| · | the progress of preclinical and clinical development of MNPR-101-derived radioimmunotherapeutics and companion diagnostics, to treat cancer, including activities through our collaboration with NorthStar; | |
| · | the progress of preclinical and potentially clinical development of MNPR-202 (and related analogs); | |
| · | the number and characteristics of other drug product candidates that we may license, acquire, invent or otherwise pursue; | |
| · | the scope, progress, timing, cost and results of research, preclinical development and clinical trials and regulatory requirements for future drug product candidates; |
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| · | the costs associated with manufacturing/quality requirements and establishing or contracting for sales, marketing and distribution capabilities; | |
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| · | 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 and timing of entry 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; | |
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| · | our need to implement additional required internal management, operational, record keeping and other 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 license, milestone or royalty payments under these arrangements. |
Expenditures are expected to increase in 2023 and onward for:
| · | assuming a positive result of the go/no go interim analysis decision anticipated by the end of March 2023, clinical research services and clinical site fees for our Phase 3 VOICE clinical program, including, if required, completing a second Phase 3 confirmatory clinical trial; | |
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| · | process development, manufacturing costs, clinical trial expenses and clinical database management of camsirubicin in connection with the Phase 1b dose escalation clinical trial and other future clinical development; | |
| · | support of the development of MNPR-101-derived radioimmunotherapeutics (MNPR-101 RIT) and companion diagnostics (MNPR-101-Zr) to treat cancer, including activities through our collaboration with NorthStar; | |
| · | preclinical studies (and if successful, clinical studies) of MNPR-202 (and related analogs); and | |
| · | employee compensation and consulting fees to support the increased scope of activities required for the progress of our product candidate programs including Validive, camsirubicin, MNPR-101 RIT (uPRIT and related compounds) and companion diagnostics (MNPR-101-Zr) and MNPR-202 (and related analogs). |
We have activated clinical trial sites and are dosing patients in our VOICE clinical trial. In order to complete the VOICE clinical program, including, if required, completing a second Phase 3 confirmatory 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), or find a suitable pharmaceutical partner, both of which we are planning to pursue within the next 12 months. There can be no assurance that any such events will occur. We have also initiated and commenced dosing in our Phase 1b camsirubicin clinical trial. 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 2023 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. Beyond our need to raise additional funding within the next 12 months to complete the VOICE clinical program, additional long-term funding is needed to commercialize Validive, if approved, and otherwise generally to support our current and future product candidates through clinical trials, approval processes and, if applicable, commercialization.
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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, including the usage of our Capital on Demand™ Sales Agreement with JonesTrading, 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 likely will have to share or 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.
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 hydrochloride mucobuccal tablet; clonidine HCI MBT a mucoadhesive tablet of clonidine based on the Lauriad mucoadhesive technology. 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 March 10, 2023, we have not been required to pay Onxeo any other funds under the agreement. We will need to raise significant funds or enter into a collaboration partnership 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”). Following completion of the Phase 1b clinical trial in the U.S. that we initiated in the third quarter of 2021 with the first patient dosed in October 2021, we continue to expect that GEIS will sponsor and lead a multi-country, randomized, open-label Phase 2 clinical trial to evaluate camsirubicin head-to-head against doxorubicin, the current first-line treatment for ASTS. We will provide study drug and supplemental financial support for the clinical trial. For quarter ended March 31, 2021, we incurred $0.3 million in expenses under the GEIS agreement and other clinical-related expenses including clinical material manufacturing and database management expenses in support of the then-planned GEIS Phase 2 camsirubicin clinical trial. We can terminate the agreement by providing GEIS with advance notice, and without affecting our rights and ownership to any related intellectual property or clinical data. In the second quarter of 2021, due to regulatory delays in Spain, we decided to conduct an open-label Phase 1b clinical trial of camsirubicin in the U.S., therefore no expenses were incurred related to the GEIS collaboration beyond March 31, 2021.
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XOMA Ltd.
Pursuant to a non-exclusive license agreement with XOMA Ltd. for the humanization technology used in the development of MNPR-101, 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 March 10, 2023, 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 R&D, including drug product manufacturing, process development, clinical and preclinical development, and G&A including 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
We are currently leasing office space for our executive headquarters at 1000 Skokie Blvd., in the Village of Wilmette, Illinois for $4,238 per month through February 2024, 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 adverse 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. See Item 1A - “Risk Factors - We have limited the liability of and indemnified our directors and officers.”