UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-36333
BIO-PATH HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation
or organization)
4710 Bellaire Boulevard, Suite 210, Bellaire, Texas
(Address of principal executive offices)
87-0652870
(I.R.S. Employer Identification No.)
77401
(Zip Code)
Registrant’s telephone number, including area code: (832) 742-1357
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.001 per share
Trading Symbol
BPTH
Name of each exchange on which registered
The Nasdaq Capital Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange
Act.
Large accelerated filer
Non-accelerated filer
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
As of March 6, 2024, there were 678,795 shares of the registrant’s common stock issued and outstanding. The aggregate market value of the voting stock held by non-
affiliates of the registrant was approximately $13,509,998.86 as of June 30, 2023, the last business day of the registrant’s most recently completed second fiscal quarter,
based on the last sales price of the registrant’s common stock as reported on The Nasdaq Capital Market on such date. For purposes of the preceding sentence only, all
directors, executive officers and beneficial owners of 10% or more of the shares of the registrant’s common stock are assumed to be affiliates.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
TABLE OF CONTENTS
PART I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C. Cybersecurity
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Party Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
PART IV
Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary
Signatures
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Unless the context requires otherwise, references in this Annual Report on Form 10-K to “we,” “our,” “us,” “the Company”
and “Bio-Path” refer to Bio-Path Holdings, Inc. and its subsidiary. Bio-Path Holdings, Inc.’s wholly-owned subsidiary, Bio-Path, Inc.,
is sometimes referred to herein as “Bio-Path Subsidiary.”
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). Forward-looking statements can be identified by words such as “anticipate,” “expect,” “intend,” “plan,” “believe,”
“seek,” “estimate,” “project,” “goal,” “strategy,” “future,” “likely,” “may,” “should,” “will” and variations of these words and similar
references to future periods, although not all forward-looking statements contain these identifying words. Forward-looking statements
are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and
assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy
and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties
and changes in circumstances, including those discussed in “Item 1A. Risk Factors” of this Annual Report on Form 10-K and in other
reports or documents we file with the U.S. Securities and Exchange Commission (“SEC”). As a result, our actual results and financial
condition may differ materially from those expressed or forecasted in the forward-looking statements, and you should not rely on such
forward-looking statements. We can give no assurances that any of the events anticipated by the forward-looking statements will
occur or, if any of them do, what impact they will have on our results of operations and financial condition. Important factors that
could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements
include, among others, the following:
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our lack of significant revenue to date, our history of recurring operating losses and our expectation of future operating
losses;
our need for substantial additional capital and our need to delay, reduce or eliminate our drug development and
commercialization efforts if we are unable to raise additional capital;
the highly-competitive nature of the pharmaceutical and biotechnology industry and our ability to compete effectively;
the success of our plans to use collaboration arrangements to leverage our capabilities;
our ability to retain and attract key personnel;
the risk of misconduct of our employees, agents, consultants and commercial partners;
disruptions to our operations due to expansions of our operations;
the costs we would incur if we acquire or license technologies, resources or drug candidates;
risks associated with product liability claims;
our reliance on information technology systems and the liability or interruption associated with cyber-attacks or other
breaches of our systems;
our ability to use net operating loss carryforwards;
provisions in our charter documents and state law that may prevent a change in control;
• work slowdown or stoppage at government agencies could negatively impact our business;
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the impact, risks and uncertainties related to global pandemics, including the COVID-19 pandemic, and actions taken by
governmental authorities or others in connection therewith;
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our need to complete extensive clinical trials and the risk that we may not be able to demonstrate the safety and efficacy
of our drug candidates;
risks that our clinical trials may be delayed or terminated;
our ability to obtain domestic and/or foreign regulatory approval for our drug candidates;
changes in existing laws and regulations affecting the healthcare industry;
our reliance on third parties to conduct clinical trials for our drug candidates;
our ability to maintain orphan drug exclusivity for our drug candidates;
our reliance on third parties for manufacturing our clinical drug supplies;
risks associated with the manufacture of our drug candidates;
our ability to establish sales and marketing capabilities relating to our drug candidates;
• market acceptance of our drug candidates;
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third-party payor reimbursement practices;
our ability to adequately protect the intellectual property of our drug candidates;
infringement on the intellectual property rights of third parties;
costs and time relating to litigation regarding intellectual property rights;
our ability to adequately prevent disclosure by our employees or others of trade secrets and other proprietary
information;
our need to raise additional capital;
the volatility of the trading price of our common stock;
our common stock being thinly traded;
our ability to issue shares of common or preferred stock without approval from our stockholders;
our ability to pay cash dividends;
costs and expenses associated with being a public company;
our ability to maintain effective internal controls over financial reporting; and
our ability to maintain compliance with the listing standards of the Nasdaq Capital Market.
Please also refer to “Item 1A. Risk Factors” of this Annual Report on Form 10-K and other reports or documents we file with
the SEC for a discussion of risks and factors that could cause our actual results and financial condition to differ materially from those
expressed or forecasted in this Annual Report on Form 10-K.
Any forward-looking statement made by us in this Annual Report on Form 10-K is based only on information currently
available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future developments or otherwise. However, you should carefully review the risk
factors set forth in other reports or documents we file from time to time with the SEC.
ITEM 1. BUSINESS
Overview
PART I
We are a clinical and preclinical stage oncology-focused RNAi nanoparticle drug development company utilizing a novel technology
that achieves systemic delivery for target-specific protein inhibition for any gene product that is over-expressed in disease. Our drug
delivery and antisense technology, called DNAbilize®, is a platform that uses P-ethoxy, which is a deoxyribonucleic acid (DNA)
backbone modification that is intended to protect the DNA from destruction by the body’s enzymes when circulating in vivo,
incorporated inside of a lipid bilayer having neutral charge. We believe this combination allows for high efficiency loading of
antisense DNA into non-toxic, cell-membrane-like structures for delivery of the antisense drug substance into cells. In vivo, the
DNAbilize® delivered antisense drug substances are systemically distributed throughout the body to allow for reduction or
elimination of target proteins in blood diseases and solid tumors. Through testing in numerous animal studies and dosing in clinical
trials, our DNAbilize® drug candidates have demonstrated an excellent safety profile. DNAbilize® is a registered trademark of the
Company.
Using DNAbilize® as a platform for drug development and manufacturing, we currently have four drug candidates in development to
treat at least five different cancer disease indications (Figure 1). Our lead drug candidate, prexigebersen (pronounced prex” i je ber’
sen), which targets growth factor receptor-bound protein 2 (“Grb2”), initially started the efficacy portion of a Phase 2 clinical trial for
untreated acute myeloid leukemia (“AML”) patients in combination with low-dose cytarabine (“LDAC”). The interim data presented
in the 2018 American Society of Hematology (“ASH”) Annual Meeting showed that 11 (65%) of the 17 evaluable patients had a
response, including five (29%) who achieved complete remission (“CR”), inclusive of one CR with incomplete hematologic recovery
(“CRi”) and one morphologic leukemia-free state, and six (35%) stable disease responses, including two patients who had greater than
a 50% reduction in bone marrow blasts. However, DNA hypomethylating agents are now the most frequently used agents in the
treatment of elderly AML patients in the U.S. and Europe. As a result, Stage 2 of the Phase 2 trial in AML was amended to remove the
combination treatment of prexigebersen and LDAC and replace it with the combination treatment of prexigebersen and decitabine, a
DNA hypomethylating agent, for treatment of a second cohort of untreated AML patients. Since decitabine is also used as a treatment
for relapsed/refractory AML patients, a cohort of relapsed/refractory AML patients was also added to the study.
The U.S. Food and Drug Administration (“FDA”) granted approval of venetoclax in combination with LDAC, decitabine or
azacytidine (the latter two drugs are DNA hypomethylating agents) as frontline therapy for newly diagnosed AML in adults who are
75 years or older, or who have comorbidities precluding intensive induction chemotherapy. We believe this approval of the frontline
venetoclax and decitabine combination therapy provides an opportunity for combining prexigebersen with the combination therapy for
the treatment of newly diagnosed AML patients. Preclinical efficacy studies for the triple combination treatment of prexigebersen,
decitabine and venetoclax in AML have been successfully completed. In the preclinical efficacy studies, four AML cancer cell lines
were treated with three different combinations of decitabine, venetoclax and prexigebersen. Decrease in AML cell viability was the
primary measure of efficacy. The triple combination of decitabine, venetoclax and prexigebersen showed significant improvement in
efficacy in three of the four AML cell lines. Based on these results, we believe that adding prexigebersen to the treatment combination
of decitabine and venetoclax could lead to improved efficacy in AML patients. Accordingly, we further amended Stage 2 of this Phase
2 clinical trial to add the triple combination treatment comprised of prexigebersen, decitabine and venetoclax.
Our approved amended Stage 2 for this Phase 2 clinical trial currently has three cohorts of patients. The first two cohorts will treat
patients with the triple combination of prexigebersen, decitabine and venetoclax. The first cohort will include untreated AML patients,
and the second cohort will include relapsed/refractory AML patients. Finally, the third cohort will treat relapsed/refractory AML
patients, who are venetoclax-resistant or -intolerant, with the two-drug combination of prexigebersen and decitabine. The full trial
design plans have approximately 98 evaluable patients for the first cohort having untreated AML patients with a preliminary review
performed after 19 evaluable patients and a formal interim analysis after 38 evaluable patients. The full trial design plans have
approximately 54 evaluable patients for each of the second cohort, having relapsed/refractory AML patients, and the third cohort,
having AML patients who are venetoclax-resistant or -intolerant, in each case with a review performed after 19 evaluable patients.
The study is anticipated to be conducted at up to ten clinical sites in the U.S., and Gail J. Roboz, MD, is the national coordinating
Principal Investigator for the Phase 2 trial. Dr. Roboz is a professor of medicine and director of the Clinical and Translational
Leukemia Program at the Weill Medical College of Cornell University (the “Weill Medical College”) and the New York-Presbyterian
Hospital in New York City. On August 13, 2020, we announced the enrollment and dosing of the first patient in this approved
amended Stage 2 of the Phase 2 clinical trial.
2
The safety run-in of Stage 2 of the Phase 2 clinical study was successfully completed, and the preliminary data was presented at the
2021 ASH Annual Meeting. In the safety run-in of the triple combination, six evaluable patients were treated with the combination of
prexigebersen, decitabine and venetoclax. These patients included four relapsed/refractory AML patients, and two newly diagnosed
AML patients. Five patients (83%) responded to treatment, including four (67%) achieving CR and one (17%) achieving CRi. Recent
publications provide that response (CR + CRi) rates to combination treatment with decitabine and venetoclax (but without
prexigebersen) are 42 to 52% for relapsed/refractory AML patients and 0 to 39% for relapsed/refractory secondary AML patients.
Response rates to frontline treatment with decitabine and venetoclax (but without prexigebersen) are 62 to 71% for newly diagnosed
AML patients. These preliminary data showed the treatment was well-tolerated and there were no dose limiting toxicities attributed to
prexigebersen. Three patients remained on treatment for more than one cycle.
On August 1, 2023, we announced interim data for the first two cohorts of the amended Stage 2 of the Phase 2 clinical trial. Fourteen
newly diagnosed patients were evaluable in the first cohort and treated with at least one cycle of the prexigebersen, decitabine and
venetoclax combination therapy. All patients in the first cohort (median age 75) were adverse risk by 2017 European LeukemiaNet
(“ELN”) guidelines (n=10) or secondary AML (n=4). Prexigebersen was well-tolerated, and adverse events (“AEs”) were generally
consistent with decitabine and venetoclax treatment and/or for AML. Twelve of the 14 evaluable patients (86%) achieved CR/CRi and
two (14%) achieved partial remission (“PR”). In total, 100% of the evaluable patients had a response to treatment. The CR/CRi rates
of 86% for the evaluable patients in the first cohort is significantly higher than the CR/CRi rates of 62% for newly diagnosed patients
treated with the frontline combination treatment of decitabine and venetoclax. Fourteen refractory/relapsed evaluable AML patients in
the second cohort were treated with at least one cycle of the prexigebersen, decitabine and venetoclax combination therapy.
Substantially all of the patients in the second cohort (median age 56.5) were adverse risk by 2017 ELN guidelines (n=11) or secondary
AML (n=2). Prexigebersen was well-tolerated, and AEs were generally consistent with decitabine and venetoclax treatment and/or for
AML. Eight of the 14 evaluable refractory/relapsed patients (57%) achieved CR/CRi, two (14%) achieved PR and two (22%) achieved
stable disease. In total, 93% of the evaluable patients in the second cohort had a response to treatment. The CR/CRi rates of 57% for
the evaluable refractory and relapsed patients in the second cohort is significantly higher than the CR/CRi rates of 21% for
refractory/relapsed patients treated with the combination treatment of decitabine and venetoclax. Based on this interim data, we
currently plan to pursue FDA expedited programs for Fast Track designation, and we are evaluating whether to seek to expand Stage 2
of the Phase 2 clinical trial in Europe.
Our second drug candidate, Liposomal Bcl-2 (“BP1002”), targets the protein Bcl-2, which is responsible for driving cell survival in up
to 60% of all cancers. A Phase 1 clinical trial to evaluate the ability of BP1002 to treat refractory/relapsed lymphoma and
refractory/relapsed chronic lymphocytic leukemia (“CLL”) patients has been initiated. The Phase 1 clinical trial is being conducted at
the Georgia Cancer Center while two additional clinical trial sites are currently being activated for inclusion in the study, The
University of Texas Southwestern and New York Medical College. On January 10, 2024, we announced the successful completion of
the first dose cohort in the Phase 1 clinical trial. A total of six evaluable patients are scheduled to be treated with BP1002 monotherapy
in a standard 3+3 design, unless there is a dose limiting toxicity which would require an additional three patients to be tested. There
were no dose limiting toxicities in the first dose cohort (20 mg/m2). Enrollment is now open for patients for the second BP1002 dose
cohort of 40 mg/m2.
Additionally, preclinical studies suggest that the combination of BP1002 with decitabine is efficacious in venetoclax-resistant
leukemia and lymphoma cells. An abstract of the preclinical study was presented at the 2021 American Association for Cancer
Research (“AACR”) Annual Meeting. A Phase 1/1b clinical trial to investigate the ability of BP1002 to treat refractory/relapsed AML
patients, including venetoclax-resistant patients, is being studied. A recent study1 found that AML patients who had relapsed from
frontline venetoclax-based treatment had a very poor prognosis, with a median survival of less than three months. Since venetoclax
and BP1002 utilize different mechanisms of action, we believe that BP1002 may be a potential treatment for venetoclax-relapsed
AML patients. The Phase 1/1b clinical trial is being conducted at several leading cancer centers in the United States, including the
Weill Medical College, The University of Texas MD Anderson Cancer Center (“MD Anderson”), Scripps Health and The University
of California at Los Angeles Cancer Center. On December 14, 2023, we announced the successful completion of the first dose cohort
of the dose escalation portion of the Phase 1/1b clinical trial of BP1002. A total of three evaluable patients per dosing cohort are
scheduled to be treated with BP1002 monotherapy in a standard 3+3 design. The first dose cohort consisted of a starting dose of 20
mg/m2, and there were no dose limiting toxicities. Enrollment is now open for patients for the second BP1002 dose cohort of 40
1 (Maiti A, Ruasch C, Cortes JE, et.al. Outcomes of relapsed or refractory acute myeloid leukemia after frontline hypomethylating
agent and venetoclax regimens. Haematologica 2021; 106: 894-898.)
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mg/m2. The Phase 1b portion of the study is expected to commence after completion of BP1002 monotherapy cohorts and is intended
to assess the safety and efficacy of BP1002 in combination with decitabine in refractory/relapsed AML patients.
Our third drug candidate, Liposomal STAT3 (“BP1003”), targets the STAT3 protein and is currently in IND enabling studies as a
potential treatment of pancreatic cancer, non-small cell lung cancer (“NSCLC”) and AML. Preclinical models have shown BP1003 to
inhibit cell viability and STAT3 protein expression in NSCLC and AML cell lines. Further, BP1003 successfully penetrated
pancreatic tumors ex vivo and significantly enhanced the efficacy of gemcitabine, a treatment for patients with advanced pancreatic
cancer, in a pancreatic cancer patient derived tumor model. An abstract of the preclinical study was presented at the 2019 AACR
Annual Meeting. Our lead indication for BP1003 is pancreatic cancer due to the severity of this disease and the lack of effective, life-
extending treatments. For example, pancreatic adenocarcinoma is projected to be the second most lethal cancer behind lung cancer by
2030. Typical survival for a metastatic pancreatic cancer patient is about three to six months from diagnosis. Additionally, an abstract
of the preclinical study demonstrating that BP1003 enhanced the sensitivity of breast and ovarian cancer cells to chemotherapy was
presented at the 2022 AACR Annual Meeting. We have successfully completed several IND enabling studies of BP1003 and have one
additional IND enabling study to complete. Once the additional study is successfully completed, our goal is to file an IND application
and initiate the first-in-humans Phase 1 study of BP1003 in patients with refractory, metastatic solid tumors, including pancreatic
cancer and NSCLC.
In addition, a modified product named BP1001-A, our fourth drug candidate, has shown to enhance chemotherapy efficacy in
preclinical solid tumor models. Results of the preclinical study were published in the scientific journal Oncotarget in July 2020.
BP1001-A incorporates the same drug substance as prexigebersen but has a slightly modified formulation designed to enhance
nanoparticle properties. A BP1001-A Phase 1/1b clinical trial in patients with advanced or recurrent solid tumors has been initiated.
The Phase 1/1b clinical trial is being conducted at several leading cancer centers in the United States, including MD Anderson,
Karmanos Cancer Institute, Mary Crowley Cancer Research and Holy Cross Hospital, Maryland. On July 17, 2023, we announced
completion of the first cohort of the dose escalation portion of the Phase 1/1b clinical trial. A total of nine evaluable patients are
scheduled to be treated with BP1001-A monotherapy in a standard 3+3 dose escalation design. The first dose cohort consisted of a
starting dose of 60 mg/m2, and there were no dose limiting toxicities. Enrollment is now open for patients for the second dose cohort
of 90 mg/m2. The Phase 1b portion of the study is expected to commence after successful completion of BP1001-A monotherapy
cohorts and is intended to assess the safety and efficacy of BP1001-A in combination with paclitaxel in patients with recurrent ovarian
or endometrial tumors.
Our DNAbilize® technology-based products are available for out-licensing or partnering. We intend to apply our drug technology
template to new disease-causing protein targets to develop new liposomal antisense drug candidates for inclusion in our pipeline that
meet scientific, preclinical and commercial criteria and file new patents on these targets. We expect that these efforts will include
collaboration with key scientific opinion leaders in the field of study and include developing drug candidates for diseases other than
cancer. As we expand our drug development programs, we will look at indications where a systemic delivery is needed and antisense
RNAi nanoparticles can be used to slow, reverse or cure a disease, either alone or in combination with another drug.
We have certain intellectual property as the basis for our current drug products in clinical development, prexigebersen, BP1002,
BP1003 and BP1001-A. We are developing RNAi antisense nanoparticle drug candidates based on our own patented technology to
treat cancer and autoimmune disorders where targeting a single protein may be advantageous and result in reduced patient adverse
effects as compared to small molecule inhibitors with off-target and non-specific effects. We have composition of matter and method
of use intellectual property for the design and manufacture of antisense RNAi nanoparticle drug products.
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Our pipeline for development of antisense therapeutics is set forth in Figure 1 below:
Figure 1. Bio-Path Pipeline for Development of Therapeutics
* Received orphan drug designation from the U.S. FDA and from the European Medicines Agency (“EMA”) for AML
Our basic drug development concept is to block expression of proteins associated with disease. Messenger RNA (“mRNA”)
is essential in the process of creating proteins. We have developed DNAbilize® nanoparticle drug delivery systems to deliver short
strands of antisense DNA drugs to cells and block the production of proteins associated with disease progression.
Antisense DNA therapeutics is the field of designing short DNA sequences that are complementary to a mRNA for a protein
of interest with the intention of inhibiting the production of the targeted protein. The DNA will find the matching RNA and form a
complex. The complexed RNA will not have access to the protein-making machinery, which prevents the cell from translating it into a
protein. Thus, protein production is turned off and levels of the targeted protein are reduced in the cell. This gene-specific process of
controlling protein expression has led to great interest in using antisense DNA to shut off the production of proteins involved in
disease. Antisense therapeutics have been in development for over 20 years. However, challenges to antisense therapeutics, such as
instability of antisense drugs inside of the body and inefficient delivery of antisense to disease cells, have thawed antisense therapeutic
potential.
We believe our DNAbilize® technology, which is the combination of the protected P-ethoxy antisense DNA backbone with
the neutral liposome nanoparticle, is the ideal approach for antisense DNA therapeutics because it overcomes the challenges
associated with both antisense stability and intracellular delivery. The P-ethoxy modification used in our DNAbilize® technology is
completely sulfur free. We avoid using sulfur-containing antisense because it has been associated with causing liver toxicity and life-
threatening bleeding and clotting complications. We prefer neutral lipids to cationic lipids for intracellular delivery because
encapsulating the antisense DNA inside a neutral charged lipid bilayer facilitates the delivery and transfer of DNA into the cell to be
fluid and gentle. While many companies have focused research on either the DNA stabilization problem or the lipid delivery problem,
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we are not aware of any company that has developed improvements in both areas. DNAbilize® is truly a stand-alone platform because,
as demonstrated by our published preclinical studies, it allows for high doses of drug products to be delivered throughout the entire
body while minimizing toxicity. This allows our research and development efforts to focus on drug targets rather than on indications
because the DNAbilize® system should not be limited in what types of indications it can treat. As such, we believe that DNAbilize®
represents the first ever antisense therapeutic approach that can successfully treat hematological and systemic diseases.
Strategy
Because of our unique ability to address unmet needs in hematological malignancies, our lead drug candidates focus on
cancers of the blood and lymph. Our strategy is to develop prexigebersen, BP1002, BP1003 and BP1001-A for multiple indications
where the pathways involving Grb2, Bcl-2 and STAT3, respectively, are utilized to promote cancer growth, survival, angiogenesis and
tumor surveillance evasion. Using DNAbilize® technology, we plan to develop therapeutics to a wide range of diseases and disorders
independently and in partnership with others. Our strategy includes:
• Developing prexigebersen for treatment of AML in combination therapies.
• Developing BP1002 for treatment of lymphoma and CLL.
• Developing BP1002 for refractory/relapsed AML patients, including venetoclax-resistant patients.
• Developing BP1003 for pancreatic cancer, NSCLC and AML.
• Developing BP1001-A for treatment of solid tumors.
• Expanding DNAbilize® to evaluate targets beyond cancer.
• Establishing DNAbilize® as the antisense drug delivery method of choice by forming partnerships with pharmaceutical
and academic clinical research labs.
Overview of Drug Candidates
The historical perspective of cancer treatments has been the use of drugs that affect the entire body. Advances in the past
decades have shifted to treating the tumor tissue itself. One of the main strategies in these developments has been targeted therapy,
involving drugs that are targeted to block the expression of specific disease-causing proteins while having little or no effect on other
healthy tissues. We believe that nucleic acid drug products, specifically antisense, are a promising field of targeted therapy.
Development of antisense as cancer drugs, however, has been limited by the lack of a suitable method to deliver antisense drugs to
cancer cells with high uptake into the cancer cells without causing toxicity to non-cancer cells. Our patented DNAbilize® neutral-lipid
based liposome technology is designed to overcome these limitations. We have published preclinical studies demonstrating that our
DNAbilize® technology could efficiently deliver antisense therapeutics to mouse models of hematological malignancies and solid
tumors, decrease target proteins production and suppress tumor progression. In addition, to date, no adverse effects attributed to the
study drugs have been observed in our leukemia and lymphoma clinical trials.
PREXIGEBERSEN
Prexigebersen is targeted at the protein Grb2, a bridging protein between activated and mutated cellular kinases and the
proteins involved in cell propagation, and in particular, a well-known cancer associated switch called Ras protein. When mutations
occur that activate these kinases, the cell propagates uncontrollably, via Grb2, and this results in disease progression. Antisense
inhibition of Grb2 interrupts the signals between mutated and activated receptors that connect to the Ras protein. This inhibition
suppresses cancer cell propagation and does not result in adverse events typically observed with receptor inhibitors or Ras pathway
inhibitors. We believe that prexigebersen has the potential to be an ideal combination for any number of cancer therapeutics where the
Ras pathway is aberrantly activated and patient fitness is a major concern, such as in AML.
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Indications for Acute Myeloid Leukemia (AML)
AML - Background and Common Treatments. AML is the rapid accumulation of immature myeloid cells in the blood,
resulting in a drop of the other cell types such as red blood cells and platelets. AML incidence increases with age, with more than 50%
of the cases in people aged 60 or older. AML is the most common acute leukemia in adults, and the National Cancer Institute
estimated that approximately 20,380 new cases occurred in 2023 (Table 1). The five-year survival rate is approximately 11% in older
adults (ages 65+). Prior to venetoclax approval, the frontline low-intensity therapies for elderly AML patients were LDAC, decitabine
or azacytidine. The Bcl-2 inhibitor venetoclax is approved for newly diagnosed AML patients aged 75 years and older or adults who
cannot be treated with intensive induction chemotherapy. Venetoclax is used in combination with LDAC, decitabine or azacytidine.
Mutation in the Bcl-2 binding domain, which reduces venetoclax’s ability to bind to Bcl-2, has been linked with venetoclax resistance
in CLL patients. Such venetoclax resistance may also occur in AML patients. AML remains an area of high unmet need for both the
relapsed and the newly diagnosed elderly population who are typically ineligible for induction therapy.
Table 1. Basic Statistics for AML
Prexigebersen Development and Treatment for Leukemia. The safety, pharmacokinetics and efficacy of our lead DNAbilize®
antisense drug candidate, prexigebersen, was assessed in patients having AML, CML, myelodysplastic syndrome (MDS) or acute
lymphoblastic leukemia (“ALL”) in a Phase 1 trial. The Phase 1 clinical trial was a dose-escalating study to determine the safety and
tolerability of escalating doses of prexigebersen. After completion of dose-escalation monotherapy, the safety and toxicity of
prexigebersen in combination with LDAC was assessed in patients with refractory/relapsed AML. Additionally, the pharmacokinetics
and anti-leukemic effects, including down-regulation of the target Grb2 protein in patient samples, of the drug candidate were
determined. Results of the clinical study were published in the scientific journal Lancet Haematology in 2018.
Phase 1 Clinical Trial
Among the 39 patients enrolled in the study, 12 patients were removed from study before the end of cycle 1 because of
disease progression or death, without dose-limiting toxicity, and were replaced per protocol guidelines. The approved prexigebersen
treatment cycle is two doses per week over four weeks, resulting in eight doses administered over 28 days. Among the 27 evaluable
patients, 21 patients were treated with escalating doses of prexigebersen monotherapy and six patients were treated with prexigebersen
plus LDAC (Figure 2). The dose-limiting toxicity was not reached in the prexigebersen monotherapy cohorts, up to the maximum
dose of 90 mg/m2. The prexigebersen plus LDAC combination was also well tolerated, with a toxicity profile similar to that of
prexigebersen monotherapy, including the absence of identifiable dose-limiting toxicity. Lack of toxicity is a major advantage for the
drug candidate prexigebersen since it allows higher levels of drug to be administered to the patient, increasing the potential therapeutic
benefit.
Patients could receive additional cycles of prexigebersen if they exhibited stable disease or had improvement of their disease.
In the prexigebersen monotherapy cohorts, four patients completed two cycles of treatment and three patients completed five cycles of
treatment. Among the six patients who received prexigebersen plus LDAC combination therapy, three received three cycles of
treatment and one received five cycles of treatment. Furthermore, five patients receiving prexigebersen plus LDAC combination
experienced at least a 50% reduction in bone marrow blasts; two patients achieved a CR, one achieved CRi, and two had stable
disease. These results demonstrate the potential anti-leukemic activity of prexigebersen and its potential to stabilize patients for
extended treatments.
One of the assays developed in the Phase 1 clinical trial was the flow cytometry scientific assay which was used to provide
critical proof that DNAbilize® neutral liposome delivery technology delivered the drug substance to the cell and was able to transport
it across the cell membrane into the interior to block cellular production of the Grb2 protein. The extent by which prexigebersen
inhibited the expression of the target Grb2 protein and the expression of phosphorylated extracellular signal related kinase (pERK), a
7
protein downstream of the Ras protein, in patient samples was investigated. By the end of the treatment, prexigebersen decreased Grb2
protein levels in 10 out of 12 samples (83%) tested (average reduction 50%) compared to the baseline Grb2 levels prior to treatment.
Similarly, by the end of the treatment, prexigebersen decreased pERK levels in seven out of 12 samples (58%) tested (average
reduction 52%) compared to the baseline pERK levels prior to treatment. These results are potentially a significant breakthrough for
antisense therapeutics, whose development, to date, as a class of therapeutics has been severely limited by a lack of a systemic
delivery mechanism that can safely distribute the drug throughout the body and deliver the antisense drug substance across the cell
membrane into the interior of the cell. Further, we expect that scientific proof of principle for DNAbilize® may lead to licensing and
business development opportunities, supporting our business model.
An important outcome of the Phase1b clinical trial was a novel method which was developed to assess the pharmacokinetics
of the drug, i.e., to detect the prexigebersen drug substance in patients’ peripheral blood samples. Pharmacokinetics of prexigebersen
demonstrated a half-life at 60 mg/m2 of 30 hours, significantly better than the 90 mg/m2 dose. The final analysis of these data, along
with the demonstrated reductions in bone marrow blasts, suggested that 60 mg/m2 is the appropriate dose for use in the Phase 2 trial.
A summary of the clinical trial results for the Phase 1 monotherapy for indications of AML, CML, MDS and ALL, and Phase
1b combination therapy for prexigebersen for indications of AML is shown in Figure 2 below. The first six cohorts, patients 001 to
034, were treated in the Phase 1 clinical trial using prexigebersen as a monotherapy. The seventh cohort, patients 035, 037 and 038,
were treated in our Phase 1b clinical trial evaluating the combination therapy of 60 mg/m2 prexigebersen. The eighth cohort, patients
039, 040 and 041, were treated with combination therapy of 90 mg/m2.
Figure 2. Summary Cohorts 1-8 Prexigebersen Clinical Trial Phase 1 and 1b
Peripheral or bone
marrow blast %
Patients
1
6
7
10
11
14
15
20
21
22
23
24
25
26
27
28
29
30
31
32
34
35
37
38
39
40
41
Diagnosis
CML
AML
MDS
AML
CML
AML
AML
AML
AML
AML
MDS
MDS
AML
AML
AML
AML
AML
AML
AML
AML
AML
AML
AML
AML
AML
AML
AML
Baseline
51
15
8
23
7
48
54
76
71
1
NE
—
10
11
93
96
35
51
17
24
66
17
25
23
36
31
18
Nadir
No
2
4
10
No
5
31
5
43
—
NE
—
3
No
No
93
7
17
No
22
ND
2
33
2
16
2
9
Off-
Tx
97
5
6
10
50
21
72
63
74
1
NE
—
19
80
97
98
24
82
17
22
ND
2
ND
3
58
2
14
Reason
Cycles
Discontinued Completed
DLT
PD
PD
PD
PD
PD
PD
PD
PD
PD
PD
PD
PD
PD
PD
PD
PD
PD
PD
PD
PD
CRi
PD
CR
SD
CR
SD
<1
5
5
1
1
1
1
1
2
2
1
5
2
1
1
1
1
1
1
2
1
1
1
5
3
3
3
Nadir: the lowest point, Off-TX: off treatment, No: no reduction in blasts, DLT: dose limiting toxicity, PD: progressive
disease, NE: not enough sample to evaluate, ND: not done, CRi: complete remission with incomplete hematologic recovery, CR:
complete remission, SD: stable disease
8
Phase 2 Clinical Trials
Results from the Phase 1b clinical trial demonstrated it is safe to add prexigebersen to LDAC, which appears to yield better
response rates in this AML patient population. A Phase 2 study was initiated to assess the efficacy of prexigebersen plus LDAC in
newly diagnosed AML patients. Thirty patients were enrolled and 17 patients were deemed evaluable (Table 2). The interim data
showed that 11 (65%) of the 17 evaluable patients had a response, including five (29%) who achieved CR, including one CRi and one
morphologic leukemia free state, and six (35%) stable disease responses, including two patients who had greater than a 50% reduction
in bone marrow blasts. The efficacy data from the 17 evaluable patients was very favorable compared to the reported CR, CRp and
CRi rates of 7 to 13% with LDAC treatment alone. Importantly, through investigation by the principal investigators, it was observed
that 68% of patients were secondary AML patients, a difficult class to treat.
Table 2. Outcome of evaluable patients who were treated with prexigebersen + LDAC
Results to date have shown prexigebersen, with its efficacy and excellent safety profile, to be an effective combination
candidate with frontline therapy. However, DNA hypomethylating agents are now the most frequently used agents in the treatment of
elderly AML patients in the U.S. and Europe. As a result, we amended Stage 2 of the Phase 2 trial in AML to remove the combination
treatment of prexigebersen and LDAC and replace it with the combination treatment of prexigebersen and decitabine. Since decitabine
is also used as a treatment for relapsed/refractory AML patients, a cohort of relapsed/refractory AML patients was also added to the
study.
We believe the approval of the frontline venetoclax and decitabine combination therapy provides an opportunity for
combining prexigebersen with the combination therapy for the treatment of newly diagnosed AML patients. Preclinical testing of
prexigebersen with venetoclax and decitabine demonstrated the potential to enhance efficacy of the frontline treatment combination.
The triple combination of prexigebersen, venetoclax and decitabine showed significant improvement in decreasing the viability of
three of the four AML cell lines tested. Bio-Path’s approved amended Stage 2 for this Phase 2 clinical trial has three cohorts of
patients. The first two cohorts will treat patients with the triple combination of prexigebersen, decitabine and venetoclax with the first
cohort including untreated AML patients and the second cohort including relapsed/refractory AML patients. Finally, the third cohort
will treat relapsed/refractory AML patients who are venetoclax-resistant or -intolerant with the two-drug combination of
prexigebersen and decitabine.
The first step in establishing the amended Stage 2 of the Phase 2 trial in AML was demonstrating the safety of treating
patients with the two-drug combination of prexigebersen and decitabine. Results of the six evaluable patients, who were treated with
the combination of prexigebersen and decitabine, in Stage 2 of the Phase 2 clinical trial were presented in the 2021 ASH Annual
Meeting (Table 3). Although the treatment combination of prexigebersen and decitabine was not the treatment planned for the efficacy
evaluation of Stage 2 of the Phase 2 clinical trial, the efficacy profile in this safety segment of the study was encouraging with 50% of
patients having a response, including two complete responses (33%) with incomplete hematologic recovery and one patient (17%)
9
showing partial response. For reference, in this class of AML patients, the complete response rate to treatment with decitabine alone is
approximately 20%.
Additionally, results of the six evaluable patients, who were treated with the triple combination of prexigebersen, decitabine
and venetoclax, in Stage 2 of the Phase 2 clinical trial were also presented in the 2021 ASH Annual Meeting (Table 3). These patients
included four relapsed/refractory AML patients, and two newly diagnosed AML patients. In the preliminary safety data review, five of
the patients (83%) responded to treatment, including four (67%) achieving CR and one (17%) achieving CRi. Recent publications
provide that CR rates to combination treatment with decitabine and venetoclax (but without prexigebersen) are 42 to 52% for
relapsed/refractory AML patients and 0 to 39% for relapsed/refractory secondary AML patients. Response rates to frontline treatment
with decitabine and venetoclax (but without prexigebersen) are 62 to 71% for newly diagnosed AML patients. These preliminary data
showed the treatment was well-tolerated and there were no dose limiting toxicities attributed to prexigebersen. Three patients
remained on treatment for more than one cycle.
Table 3. Outcome of evaluable patients who were treated with the two-drug prexigebersen + decitabine combination or the
triple prexigebersen + decitabine + venetoclax combination
On August 1, 2023, we announced interim data for the first two cohorts of the amended Stage 2 of the Phase 2 clinical trial
(Table 4). Fourteen newly diagnosed patients were evaluable in the first cohort and treated with at least one cycle of the
prexigebersen, decitabine and venetoclax combination therapy. All patients in the first cohort (median age 75) were adverse risk by
2017 ELN guidelines (n=10) or secondary AML (n=4). Prexigebersen was well-tolerated, and AEs were generally consistent with
decitabine and venetoclax treatment and/or for AML. Twelve of the 14 evaluable patients (86%) achieved CR/CRi and two (14%)
achieved PR. In total, 100% of the evaluable patients had a response to treatment. The CR/CRi rates of 86% for the evaluable patients
in the first cohort is significantly higher than the CR/CRi rates of 62% for newly diagnosed patients treated with the frontline
combination treatment of decitabine and venetoclax. Fourteen refractory/relapsed evaluable AML patients in the second cohort were
treated with at least one cycle of the prexigebersen, decitabine and venetoclax combination therapy. Substantially all of the patients in
the second cohort (median age 56.5) were adverse risk by 2017 ELN guidelines (n=11) or secondary AML (n=2). Prexigebersen was
well-tolerated, and AEs were generally consistent with decitabine and venetoclax treatment and/or for AML. Eight of the 14 evaluable
refractory/relapsed patients (57%) achieved CR/CRi, two (14%) achieved PR and two (22%) achieved stable disease. In total, 93% of
the evaluable patients in the second cohort had a response to treatment. The CR/CRi rates of 57% for the evaluable refractory and
relapsed patients in the second cohort is significantly higher than the CR/CRi rates of 21% for refractory/relapsed patients treated with
the combination treatment of decitabine and venetoclax. Based on this interim data, we currently plan to pursue FDA expedited
programs for Fast Track designation, and we are evaluating whether to seek to expand Stage 2 of the Phase 2 clinical trial in Europe.
10
Table 4. Interim data of evaluable patients who were treated with the triple prexigebersen + decitabine + venetoclax
combination
Development of new therapeutics for AML can meet currently unmet needs for patients who have very few treatment options
due to age, fitness or treatment-resistance of advanced genetically unstable cells. Elderly patients unfit to receive a stem cell transplant
or induction therapy face a likelihood of relapse to a more resistant leukemia. Prexigebersen and DNAbilize® technology offer new
hope for achieving remission for fragile populations. We believe that the combination of prexigebersen with frontline chemotherapy
can provide a way to treat cancer without added toxicity so that the patient can remain under treatment long enough to reach complete
remission.
BP1002
BP1002, also known by its scientific name as Liposomal Bcl-2, is our second liposome delivered antisense drug candidate.
BP1002 is intended to target lymphoma, CLL, AML and certain solid tumor markets. We believe that BP1002 has the potential to
treat 40 to 60% of solid tumors.
Bcl-2 is a protein that is involved in regulating apoptosis, or programmed cell death. Apoptosis is a physiologic mechanism
of cell turnover by which cells actively commit suicide in response to aberrant external signals. Over-expression of Bcl-2 prevents the
induction of apoptosis in response to cellular insults such as treatment with chemotherapeutic agents. Bcl-2, initially discovered in
transformed follicular lymphoma (“FL”) was found to contribute to the pathophysiology of various subtypes of non-Hodgkin’s
lymphoma (“NHL”).
Non-Hodgkin’s Lymphoma - Background and Common Treatments. Lymphoma can start anywhere in the body where lymph
tissue is found. The major sites of lymph tissue are lymph nodes, bone marrow, spleen, thymus, adenoids and tonsils and the digestive
tract. NHL is a term used for many different types of lymphoma that share some common characteristics. In the U.S., approximately
86,550 new cases of and 20,180 deaths from NHL were expected in 2023 (Table 5). Approximately 60% of NHLs are aggressive
lymphomas which usually need to be treated right away, as they grow and can spread quickly to other parts of the lymph system or to
other parts of the body, such as the liver, brain or bone marrow.
Table 5. Basic statistics of Non-Hodgkin’s Lymphoma
11
BP1002 - Development and Treatment for lymphoma
Therapies that directly and specifically block or inhibit protein synthesis of Bcl-2 could be transformative for NHL. The
Bcl-2 inhibitor venetoclax was approved by the FDA for the treatment of patients with CLL and small lymphocytic leukemia (“SLL”).
However, treatment with venetoclax can lead to the development of drug resistance, resulting in disease recurrence. One of the
proposed mechanisms of venetoclax resistance is acquired mutations in Bcl-2, which reduce venetoclax’s ability to bind and inhibit
Bcl-2. Because BP1002 activity is based on blocking the Bcl-2 messenger RNA and BP1002 targets Bcl-2 at a site different from
venetoclax, we expect BP1002 to overcome such venetoclax resistance mechanism and be an effective approach for patients who have
relapsed from venetoclax. Preclinical studies suggest that the combination of BP1002 with decitabine is efficacious in venetoclax-
resistant lymphoma cells. An abstract of the preclinical study was presented at the 2021 American Association for Cancer Research
Annual Meeting. We believe BP1002 provides a new tool for cancer treatment for not just lymphomas, but also many cancers for
which Bcl-2 expression is driving cell survival. The introduction of a new, non-toxic, and specific Bcl-2 inhibitor could be a major
advance in cancer therapeutics.
On January 10, 2024, we announced the successful completion of the first dose cohort in the Phase 1 clinical trial evaluating
the ability of BP1002 to treat refractory/relapsed lymphoma and refractory/relapsed CLL patients. The Phase 1 clinical trial is being
conducted at the Georgia Cancer Center while two additional clinical trial sites are currently being processed for inclusion in the
study, The University of Texas Southwestern and New York Medical College. Initially, a total of six evaluable patients are scheduled
to be treated with BP1002 monotherapy in a standard 3+3 design, with a starting dose of 20 mg/m2. The approved treatment cycle is
two doses per week over four weeks, resulting in eight doses administered over twenty-eight days. Enrollment is now open for patients
for the second dose cohort of 40 mg/m2.
BP1002 - Development and Treatment for AML
The Bcl-2 inhibitor venetoclax is used in frontline combination therapies to treat elderly AML patients; however, venetoclax
resistance has been observed. A recent study2 found that AML patients who had relapsed from frontline venetoclax-based treatment
had a very poor prognosis, with a median survival of less than three months. Since venetoclax and BP1002 utilize different
mechanisms of action, we believe that BP1002 may be a potential treatment for venetoclax-relapsed AML patients. Preclinical studies,
presented as an abstract at the 2021 American Association for Cancer Research Annual Meeting, suggest that the combination of
BP1002 with decitabine is efficacious in venetoclax-resistant AML cells. A Phase 1/1b clinical trial to investigate the ability of
BP1002 to treat refractory/relapsed AML patients, including venetoclax-resistant patients, is being studied. The Phase 1/1b clinical
trial is being conducted at several leading cancer centers in the United States, including the Weill Medical College, MD Anderson
Cancer Center, Scripps Cancer Center and The University of California at Los Angeles Cancer Center. Gail J. Roboz, M.D., is serving
as the national coordinating Principal Investigator for the Phase 1/1b trial. Gary Schiller, M.D., The University of California at Los
Angeles Cancer Center, Maro Ohanian, D.O., Department of Leukemia, University of Texas MD Anderson Cancer Center, and David
Hermel, M.D., Scripps Health, will each serve as Principal Investigators.
On December 14, 2023, we announced the successful completion of the first dose cohort of the dose escalation portion of the
Phase 1/1b clinical trial of BP1002 which evaluates the ability of BP1002 to treat refractory/relapsed AML patients, including
venetoclax-resistant patients. A total of three evaluable patients per dosing cohort are scheduled to be treated with BP1002
monotherapy in a standard 3+3 design, unless there is a dose limiting toxicity which would require an additional three patients tested.
The first dose cohort consisted of a starting dose of 20 mg/m2, and there were no dose limiting toxicities. The approved treatment
cycle is two doses per week over four weeks for a total of eight doses administered over 28 days. Enrollment is now open for patients
for the second dose cohort of 40 mg/m2. The Phase 1b portion of the study is expected to commence after completion of BP1002
monotherapy cohorts and will assess the safety and efficacy of BP1002 in combination with decitabine in refractory/relapsed AML
patients.
BP1003
BP1003 is our third liposome delivered antisense drug candidate. BP1003 is a DNAbilize® RNAi nanoparticle containing
antisense DNA targeting STAT3, whose elevated expression/activity is associated with a poorer survival outcome for patients with
2 (Maiti A, Ruasch C, Cortes JE, et.al. Outcomes of relapsed or refractory acute myeloid leukemia after frontline hypomethylating
agent and venetoclax regimens. Haematologica 2021; 106: 894-898.)
12
solid tumors, including those of gastric cancer, lung cancer, hepatic cancer, osteosarcoma, prostate cancer and pancreatic
adenocarcinoma (PDAC). We believe that a therapeutic that shuts down the STAT3 protein can have significant clinical impact for
solid tumors that have elevated expression/activity of STAT3.
Our lead indication for BP1003 is pancreatic cancer due to the severity of this disease and the lack of effective, life-extending
treatments. PDAC is a cancer of the exocrine cells of the pancreas. In the U.S. in 2022, approximately 62,210 people were diagnosed
with PDAC, and approximately 49,830 died from the disease. It is estimated that less than 11% of PDAC patients survive beyond
five years, and it is projected that by 2030, PDAC will become the second most lethal cancer behind lung cancer. Treatment of the
disease is hampered by the location of the pancreas, which is difficult to reach with conventional therapies and the fibrotic nature of
the tumors, which protects them from penetration by chemotherapeutics. We believe a novel and unconventional therapeutic is needed
to overcome these barriers to treatment.
While competition for therapeutics that target the STAT3 pathway exists, the competition for specific STAT3 inhibitors is
very small. Many peptides designed to bind to STAT3 suffered from poor intrinsic pharmacokinetic properties, including poor cellular
permeability and lack of stability in vivo, which curtailed their further development. Even second-generation peptidomimetics have
failed to overcome these limitations. Most compounds under development target the pathway upstream of STAT3, such as the JAK2
kinase. However, lack of efficacy of the JAK2 kinase inhibitors was observed in PDAC clinical studies. Ionis Pharmaceuticals, Inc.
has developed an antisense DNA-based STAT3 inhibitor called IONIS-STAT3-2.5Rx. It is being evaluated in clinical trials by
AstraZeneca under the name AZD9150 for solid tumors and NHL. However, due to the toxicity of the DNA chemistry,
thrombocytopenia continues to limit the systemic delivery and efficacy of such compounds for the treatment of cancer. We believe
BP1003 avoids these complications.
We hypothesized that the natural lipid delivery vesicle would have unique characteristics that would allow for penetration of
the fibrotic stroma to reach the PDAC cells. An abstract of the preclinical study was presented in the 2019 American Association for
Cancer Research Annual Meeting. Our preclinical work demonstrated that BP1003 was successful in crossing the scar tissue matrix
and delivering antisense drug into the tumor tissue. Subsequent studies evaluating the combination of BP1003 with gemcitabine, a
standard of care for PDAC patients with metastatic disease, suggest that the regimen has synergistic anti-tumor effects. Additionally,
an abstract of the preclinical study demonstrating that BP1003 enhanced the sensitivity of breast and ovarian cancer cells to
chemotherapy was presented at the 2022 AACR Annual Meeting. We have successfully completed several IND enabling studies of
BP1003, including safety. Body weight was used as an indicator of BP1003 safety in rodents. Mice received saline or twice weekly
injections of BP1003 for four weeks. There was no difference in body weight between control mice and BP1003-treated mice (Figure
3). We have one additional IND enabling study to complete. Once the additional study is successfully completed, our goal is to file an
IND and initiate the first-in-humans Phase 1 study of BP1003 in patients with refractory, metastatic solid tumors, including pancreatic
cancer and NSCLC.
Figure 3. No difference in mean body weight was observed between control groups and BP1003-treated groups
We believe that the excellent safety profile of the DNAbilize® chemistry, the novel lipid formula that allows for penetration
of the tumor stroma, and the ability to target a single protein with precision, makes BP1003 an ideal candidate for combination with
approved treatments to extend survival while maintaining quality of life for the patient.
13
BP1001-A
Data supports a prominent role of Grb2 in the progression of solid tumors, and overexpression of Grb2 has been associated
with chemosensitivity, poor prognosis and advanced disease in several malignancies including gynecologic malignancies.
Indications for Solid Tumors (e.g., Ovary, Endometrium)
Ovarian cancer is one of the most common types of gynecologic malignancy. In the U.S., 19,710 new cases of and 13,270
deaths from ovarian cancer were expected in 2023 (Table 6). According to the Ovarian Cancer Research Alliance, approximately 70%
of patients diagnosed with ovarian cancer will have a recurrence. Recurrent ovarian cancer is treatable but rarely curable. The
response rates to second-line chemotherapy are low and differ by platinum-sensitivity status: 20 to 25% for platinum-sensitive cases
and 10 to 20% for platinum-resistant cases3. Given the poor outcomes of treatment for ovarian cancer, novel drug treatments are
urgently needed.
Table 6. Basic Statistics for Ovarian Cancer
Endometrial cancer is the most common gynecologic malignancy in the U.S. In the U.S., 66,200 new cases of and 13,030
deaths from endometrial cancer were expected in 2023 (Table 7). The majority of cases are diagnosed at an early stage and are
amenable to treatment with surgery alone. However, approximately 38 to 67% of advanced stage endometrial cancers will recur 4.
Recurrent endometrial cancer is incurable with currently available standard therapies. The median survival for patients with recurrent
endometrial carcinoma is approximately 12 to 15 months 5. Novel drug treatments for recurrent endometrial carcinoma are urgently
needed.
Table 7. Basic Statistics for Endometrial Cancer
Development and Treatment for ovarian and endometrial cancer
Grb2 may be a novel potential therapeutic target for ovarian and endometrial cancer, and BP1001-A may provide clinical
benefit against these gynecologic malignancies. BP1001-A is a modified drug product with the same drug substance as prexigebersen
but includes formulation enhancements to produce smaller drug nanoparticles. The goal of this product enhancement is to produce
smaller drug nanoparticles that can pass through vasculature pore spaces, thereby enabling release of the drug product into the interior
of the tumor to enhance drug effectiveness. Preclinical experiments were conducted in collaboration with leaders in the field of
ovarian cancer at MD Anderson Cancer Center. Results of the preclinical study were published in the scientific journal Oncotarget in
3 (Soyama H, Takano M, Miyamoto M, et al. Factors favouring long-term survival following recurrence in ovarian cancer. Mol Clin
Oncol. 2017: 7: 42-46.)
4 (Huijgens ANJ, Merten HJMM. Factors predicting recurrent endometrial cancer. Facts Views Vis Obgyn. 2013; 5: 179-186.)
5 (Brooks RA, Fleming GF, Lastra RR, et al. Current recommendations and progress in endometrial cancer. CA Cancer J Clin 2019;
69: 258-279.)
14
July 2020. BP1001-A effectively penetrated ovarian tumors and decreased target Grb2 protein level in preclinical ovarian and
endometrial tumor models. BP1001-A was demonstrated to reduce tumor burden both as a monotherapy and in combination with
paclitaxel, a therapy commonly used to treat patients with advanced ovarian or endometrial cancer.
A Phase 1/1b clinical trial of BP1001-A in patients with advanced or recurrent solid tumors has been initiated. The dose
escalation portion of the Phase 1/1b clinical trial is ongoing at more than eight leading cancer centers in the United States, including
MD Anderson, The Mary Crowley Cancer Research Center, and Karmanos Cancer Center. Initially, a total of nine evaluable patients
are scheduled to be treated with BP1001-A monotherapy in a standard 3+3 design, with a starting dose of 60 mg/m2 and continuing
with 90 mg/m2 and 135 mg/m2. The approved treatment cycle is two doses per week over four weeks, resulting in eight doses
administered over 28 days. The Phase 1b portion of the study is expected to commence after successful completion of BP1001-A
monotherapy cohorts and is intended to assess the safety and efficacy of BP1001-A in combination with paclitaxel in patients with
recurrent ovarian or endometrial tumors.
On July 17, 2023, we announced successful completion of the first dose cohort of BP1001-A in the Phase 1/1b study. Three
patients were enrolled into the first dose cohort of BP1001-A at three different centers in the study, including one patient with hepatic
lesions (and lung metastases) and two with advanced gynecologic lesions. All three patients had undergone extensive previous
chemotherapies and/or surgeries for their disease prior to enrollment in this study. No patient experienced any treatment related
adverse events or any adverse events deemed related to the study drug. Enrollment is now open for patients for the second dose cohort.
Indications for Triple Negative Breast Cancer (TNBC) and Inflammatory Breast Cancer (IBC)
TNBC and IBC - Background and Common Treatments. Approximately 15 to 20% of breast cancers fall into the category of
triple-negative. TNBC tumors do not express estrogen receptors, progesterone receptors, and low human epidermal growth factor
receptor 2 (“HER2”). These negative indicators mean that the growth of the cancer is not supported by the hormones estrogen and
progesterone, or by the presence of HER2 receptors. Therefore, TNBC does not respond to hormonal therapy or therapies that target
HER2 receptors. In addition, TNBC tumors are very aggressive. IBC is a rare and very aggressive type of breast cancer that accounts
for 2 to 5% of all breast cancers. A lack of targeted treatments for these types of breast cancer has led to development of new
therapeutics currently in clinical trials. Overexpression of receptor tyrosine kinases has been reported for TNBC and IBC. Since Grb2
is vital in the cancer signaling of receptor tyrosine kinases, the Company and collaborators at MD Anderson Cancer Center are
interested in developing BP1001-A as a potential treatment for TNBC and IBC.
DNABILIZE®
DNAbilize® technology is available for out-licensing. We intend to apply our drug delivery technology template to new
disease-causing protein targets to develop new liposomal antisense drug candidates for inclusion in our pipeline that meet scientific,
preclinical and commercial criteria and file new patents on these targets. We expect that these efforts will include collaboration with
scientific key opinion leaders in the field of study and include developing drug candidates for diseases other than cancer. A significant
amount of capital is expected to be allocated to in-license promising protein targets that can be developed as new liposomal antisense
drug candidates. As we expand, we will look at indications where a systemic delivery is needed and antisense can be used to slow,
reverse or cure a disease, either alone or in combination with another drug. Our patent portfolio currently includes three issued patents
in the U.S. that protect the platform technology for DNAbilize®, the Company’s novel RNAi nanoparticle drugs. We plan to continue
our efforts to build protection around our technology as it safeguards our platform technology and target-specific technology, is a
deterrent to would-be competitors and creates value around our core competencies.
We are interested in pursuing a wide-ranging, proactive licensing program to include co-development of specific liposomal
antisense drug candidates, sub-licensing our delivery template for outside development of liposomal antisense drug candidates or out-
licensing a partially-developed drug candidate for final development and marketing.
Research and Development
Our research and development expense primarily consists of third-party clinical, preclinical and manufacturing development
activities, salaries and benefits expense and stock-based compensation. As we advance and expand our pipeline of drug candidates, we
anticipate our research and development expenses will continue to increase in conjunction with these activities. Research and
15
development expenses incurred during the years ended December 31, 2023 and 2022 were $11.6 million and $9.2 million,
respectively.
Manufacturing
We do not own or operate, and currently have no plans to establish, any manufacturing facilities. Accordingly, we have no
ability to internally manufacture the drug candidates that we need to conduct our clinical trials. For the foreseeable future, we expect
to continue to rely on third-party manufacturers and other third parties to produce, package and store sufficient quantities of our drug
candidates and any future drug candidates for use in our clinical trials. We have entered into agreements with third-party
manufacturers for the manufacture of our drug requirements, including agreements for the manufacture of prexigebersen for use in our
Phase 2 clinical trial in AML, as well as agreements for the manufacture of BP1002, BP1003 and BP1001-A for use in our Phase 1
clinical trials. However, we may face various risks and uncertainties in connection with our reliance on third-party manufacturers, as
discussed in “Item 1A. Risk Factors” of this Annual Report on Form 10-K under the heading “Risks Related to Manufacturing Our
Drug Candidates.” If the FDA or other regulatory agencies approve any of our drug candidates for commercial sale, we expect that we
would continue to rely, at least initially, on third-party manufacturers to produce commercial quantities of such approved drug
candidates. However, we may in the future elect to manufacture certain of our drug candidates in our own manufacturing facilities. If
we do so, we will require substantial additional funds and need to recruit qualified personnel in order to build or lease and operate any
manufacturing facilities.
Sales and Marketing
We currently do not have any commercial drug products or an organization for the sales and marketing of pharmaceutical
products. In order to successfully commercialize any drug candidates that may be approved in the future by the FDA or comparable
foreign regulatory authorities, we must build our sales and marketing capabilities or make arrangements with third parties to perform
these services. For certain drug candidates in selected indications where we believe that an approved product could be commercialized
by a specialty sales force that calls on a limited but focused group of physicians, we may commercialize these products ourselves.
However, in therapeutic indications that require a large sales force selling to a large and diverse prescribing population, we may enter
into arrangements with other companies for commercialization. If we are unable to establish adequate sales, marketing and
distribution capabilities, whether independently or with third parties, we may not be able to generate product revenue and may not
become profitable.
Intellectual Property
Patents, trademarks, trade secrets, technology, know-how and other proprietary rights are important to our business. Our
success depends in large part on our ability to obtain and maintain patent protection both in the U.S. and in other countries for our
drug candidates and on our ability to operate without infringing the proprietary rights of third parties. Our ability to protect our drug
candidates from unauthorized or infringing use by third parties depends in substantial part on our ability to obtain and maintain valid
and enforceable patents.
We rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or
obtainable. However, trade secrets are difficult to protect. In order to protect our proprietary technology and processes, we also rely in
part on confidentiality and intellectual property assignment agreements with our corporate partners, employees, consultants, outside
scientific collaborators, sponsored researchers and other advisors. These agreements may not effectively prevent disclosure of
confidential information nor result in the effective assignment to us of intellectual property, and may not provide an adequate remedy
in the event of unauthorized disclosure of confidential information or other breaches of the agreements. In addition, others may
independently discover our trade secrets and proprietary information, and in such case we could not assert any trade secret rights
against such party. To the extent that we enter into out-license and in-license agreements in the future, our success will depend in part
on the ability of our licensors to obtain, maintain and enforce patent protection for their intellectual property, in particular, any patents
to which we secure exclusive rights.
We have expanded our intellectual property portfolio by filing patent applications that are applicable to our technology and
business strategy. Our patent portfolio currently includes five issued patents in the U.S. and 17 issued patents in foreign jurisdictions:
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Claims Related to DNAbilize®
Patent No.
US 9,744,187
Title
P-ethoxy nucleic acids for liposomal formulation
Date Issued
August 29, 2017
US 10,335,428
P-ethoxy nucleic acids for liposomal formulation
July 2, 2019
US 10,898,506
P-ethoxy nucleic acids for liposomal formulation
January 26, 2021
SG 11201802718P
P-ethoxy nucleic acids for liposomal formulation
May 12, 2021
EA 038277
(in force in AM, AZ, BY,
KG, KZ, RU, TJ, TM)
P-ethoxy nucleic acids for liposomal formulation
August 4, 2021
AU 2016340123
P-ethoxy nucleic acids for liposomal formulation
January 5, 2023
MX 403603
IN 472686
P-ethoxy nucleic acids for liposomal formulation
June 20, 2023
P-ethoxy nucleic acids for liposomal formulation
November 24, 2023
Patent No.
US 10,927,379
US 11,041,153
EP 3 512 525
(in force in DE, ES, FR, GB,
and NL)
Compositions and Methods of Use for Specific Drug Targets
Title
Combination therapy with liposomal antisense oligonucleotides
Date Issued
February 23, 2021
P-ethoxy nucleic acids for STAT3 inhibition
June 22, 2021
Combination therapy with liposomal antisense oligonucleotides
July 27, 2022
JP 7132911
Combination therapy with liposomal antisense oligonucleotides
August 30, 2022
JP 7186721
P-ethoxy nucleic acids for IGF-1R inhibition
December 1, 2022
CN ZL 201880033244.6
P-ethoxy nucleic acids for STAT3 inhibition
December 16, 2022
EA 041953
(in force in AM, AZ, BY,
KG, KZ, RU, TJ, TM)
Combination therapy with liposomal antisense oligonucleotides
December 19, 2022
JP 7237009
P-ethoxy nucleic acids for STAT3 inhibition
March 2, 2023
EA 042663
(in force in AM, AZ, BY,
KG, KZ, RU, TJ, TM)
P-ethoxy nucleic acids for STAT3 inhibition
March 9, 2023
HK 400 11951
Combination therapy with liposomal antisense oligonucleotides
April 6, 2023
JP 7284709
P-ethoxy nucleic acids for BCL2 inhibition
May 23, 2023
17
EA 044637
MX 408790
MX 408785
P-ethoxy nucleic acids for BCL2 inhibition
September 19, 2023
P-ethoxy nucleic acids for STAT3 inhibition
December 7, 2023
P-ethoxy nucleic acids for BCL2 inhibition
December 7, 2023
We have six additional pending patent applications in the U.S. and seven additional allowed patent application in a foreign
jurisdiction. Further, we have pending patent applications in key foreign jurisdictions across our six families of applications. We
continue our efforts to build protection around our technology as it safeguards our platform technology and target-specific technology,
is a deterrent to would-be competitors and creates value around our core competencies.
There can be no assurances that patents related to our existing patent applications or applications we may file in the future
will be issued or that any issued patents will provide meaningful protection for our drug candidates, which could materially and
adversely affect our competitive business position, business prospects and financial condition.
In the U.S., individual patents extend for varying periods of time depending on the date of filing of the patent application or
the date of patent issuance. Generally, patents issued in the U.S. are effective for 20 years from the earliest non-provisional filing date.
In addition, a patent term can sometimes be extended to recapture a portion of the term effectively lost during the FDA’s regulatory
review period; however, the restoration period cannot be longer than five years, and the total patent term cannot exceed 14 years
following FDA approval.
Employees
We currently employ ten full-time employees. We also have contractual relationships with additional professionals who
perform certain medical officer, regulatory, drug development and administrative duties. We believe relations with such professionals
and employees are good.
Competition
We are engaged in segments of the pharmaceutical and biotechnology industry that are highly competitive and characterized
by rapid and significant technological change. Many large pharmaceutical and biotechnology companies, academic and research
institutions, governmental agencies and other public and private research organizations are pursuing the development of novel drugs
that target AML, MDS, lymphoma, ovarian and endometrial cancer, pancreatic cancer, and other cancers generally. We face, and
expect to continue to face, intense and increasing competition as new products enter the market and advanced technologies become
available. Our competitors may discover, develop or commercialize products or other novel technologies that are more effective, safer
or less costly than our drug candidates. Our competitors may also obtain FDA or other regulatory approval for their products more
rapidly than we may obtain approval for our drug candidates.
Many of our competitors have:
•
significantly greater capital, technical and human resources than we have and may be better equipped to discover,
develop, manufacture and commercialize drug candidates;
• more experience in drug discovery, development and commercialization, obtaining regulatory approvals and
manufacturing and marketing pharmaceutical products;
•
•
drug candidates that have been approved or are in late-stage clinical development; and/or
collaboration arrangements in our target markets with leading companies and research institutions.
Mergers and acquisitions in the pharmaceutical and biotechnology industry may result in even more resources being
concentrated among a smaller number of our competitors. Smaller or early stage companies may also prove to be significant
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competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete
with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patent
registration for clinical trials, and acquiring technologies complementary to, or necessary for, our drug candidates and programs.
Competitive products and technological developments may render our drug candidates noncompetitive or obsolete before we
can recover the expenses of developing and commercializing our drug candidates. Furthermore, the development of new treatment
methods and/or the widespread adoption or increased utilization of any vaccine for the diseases we are targeting could render our drug
candidates noncompetitive, obsolete or uneconomical. If we successfully develop and obtain approval for any of our drug candidates,
we will face competition based on the safety and effectiveness of our drug candidates, the timing of their entry into the market in
relation to competitive products in development, the availability and cost of supply, marketing and sales capabilities, reimbursement
coverage, price, patent position and other factors. If we successfully develop drug candidates but those drug candidates do not achieve
and maintain market acceptance, our business will not be successful.
Government Regulation
Overview
Government authorities in the U.S., at the federal, state and local level, and other countries extensively regulate, among other
things, the research, development, testing, manufacture, labeling, record keeping, packaging, promotion, storage, advertising,
distribution, marketing and export and import of products such as those we are developing. The nature and extent to which such
regulations will apply to us will vary depending on the nature of any drug candidates we develop. We anticipate that all of our drug
candidates will require regulatory approval by governmental agencies prior to commercialization. This process and subsequent
compliance with appropriate federal, state, local, and foreign statutes and regulations will require the expenditure of substantial time
and financial resources.
U.S. Drug Development Process
In the U.S., drugs are subject to rigorous regulation by the FDA under the Federal Food, Drug and Cosmetic Act (the
“FDCA”), and implementing regulations, as well as other federal and state statutes. Failure by us or our collaborators to comply with
the applicable U.S. requirements at any time during the drug candidate development process, approval process or after approval, may
subject us to administrative or judicial sanctions. These sanctions could include the FDA’s refusal to approve pending applications,
license suspension or revocation, withdrawal of an approval, a clinical hold, warning letters, product recalls, product seizures, total or
partial suspension of production or distribution, injunctions, fines, civil penalties or criminal prosecution. Any agency or judicial
enforcement action could have a material adverse effect on us.
The process required by the FDA before a new drug may be marketed in the U.S. generally involves the following:
•
•
•
•
•
completion of preclinical laboratory tests, animal studies and formulation studies according to FDA’s Good
Laboratory Practice regulations;
submission of an IND, which must become effective before human clinical trials may begin and which must include
approval by an institutional review board at each clinical site before the trials are initiated;
performance of adequate and well-controlled human clinical trials according to FDA’s Good Clinical Practice
(“GCP”) regulations to establish the safety and efficacy of the proposed drug for its intended use;
submission to, and acceptance by, the FDA of a new drug application (an “NDA”);
completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess
compliance with current Good Manufacturing Practice (“cGMP”) regulations to assure that the facilities, methods
and controls are adequate to preserve the drug’s identity, strength, quality and purity; and
• FDA review and approval of the NDA.
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Pre-Approval Studies
Clinical trials involve the administration of the IND to volunteers or patients under the supervision of one or more qualified
investigators in accordance with FDA’s GCP regulations. Clinical trials must be conducted under institutional review board approved
protocols detailing the objectives of the trial and the safety and effectiveness criteria to be evaluated. Progress reports detailing the
results of the clinical trials must be submitted at least annually to the FDA and more frequently if adverse events or other certain types
of other changes occur.
Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:
• Phase 1: The drug candidate is initially introduced into human subjects or patients with the disease and tested for
safety, dosage tolerance, absorption, metabolism, distribution and excretion. In the case of some drug candidates for
severe or life-threatening diseases, the initial human testing is often conducted in patients.
• Phase 2: Involves studies in a limited patient population to identify possible adverse effects and safety risks, to
preliminarily evaluate the efficacy of the drug candidate for specific targeted diseases and to determine dosage
tolerance and optimal dosage.
• Phase 3: Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient
population, typically at geographically dispersed clinical study sites. These studies are intended to establish the
overall risk-benefit ratio of the drug candidate and provide, if appropriate, an adequate basis for product labeling.
Phase 1, Phase 2 and Phase 3 testing may not be completed successfully within any specified period, if at all. The FDA or an
institutional review board or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the
research subjects or patients are being exposed to an unacceptable health risk.
Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional
information about the chemistry and physical characteristics of the drug candidate and finalize a process for manufacturing the product
in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the
drug candidate and, among other requirements, the manufacturer must develop methods for testing the identity, strength, quality and
purity of the final drug. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to
demonstrate that the drug candidate does not undergo unacceptable deterioration over its shelf life.
Our business model is primarily focused on the preclinical to Phase 2a interval. This greatly reduces the time frame for us
from in-license of a new, preclinical stage drug candidate to be developed to out-licensing to a pharmaceutical partner.
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Approval Process
After successful completion of the required clinical trials, an NDA is generally submitted, which is required before marketing
of the product may begin in the U.S. The NDA must include the results of drug development, preclinical studies and clinical studies,
together with other detailed information, including information on the chemistry, manufacture and composition of the drug. Once the
submission is accepted for filing, the FDA begins an in-depth substantive review.
The FDA reviews an NDA that has been accepted for filing to determine, among other things, whether a product is safe and
effective for its intended use. The approval process for an NDA is lengthy and the FDA may refuse to approve an NDA if the
applicable regulatory criteria are not satisfied or may require additional clinical or other data and information. Even if such data and
information is submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval. The FDA may also
refer applications for drug candidates which present difficult questions of safety or efficacy to an advisory committee, typically a
panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be
approved. The FDA is not bound by the recommendation of an advisory committee. Before approving an NDA, the FDA will also
inspect the facility or facilities where the product is manufactured to determine whether its manufacturing is cGMP-compliant to
assure and preserve the product’s identity, strength, quality, purity and stability.
There are various programs that are intended to expedite the development and review of drug candidates, and/or provide for
approval on the basis of surrogate endpoints, including Fast Track, breakthrough therapy, priority review and accelerated approval.
Even if a drug candidate qualifies for one or more of these programs, the FDA may later decide that the drug candidate no longer
meets the conditions for qualification or that the time period for FDA review or approval will not be shortened. Generally, drug
candidates that may be eligible for these programs are those for serious or life-threatening conditions, those with the potential to
address unmet medical needs or those that offer meaningful benefits over existing treatments.
Fast Track is a process designed to facilitate the development and expedite the review of drug candidates to treat serious
diseases and fill an unmet medical need. Breakthrough therapy requires preliminary clinical evidence that demonstrates the drug
candidate may have substantial improvement on at least one clinically significant endpoint over available therapy. A breakthrough
therapy designation conveys all of the Fast Track program features, as well as more intensive FDA guidance on an efficient drug
development program. Priority review is designed to give drug candidates that offer major advances in treatment or provide a
treatment where no adequate therapy exists an initial review within six months as compared to a standard review time of 10 months.
Although Fast Track, breakthrough therapy and priority review do not affect the standards for approval, the FDA will attempt to
facilitate early and frequent meetings with a sponsor of a Fast Track designated drug candidate and expedite review of the application
for a drug candidate designated for priority review. Accelerated approval provides an earlier approval of drugs to treat serious diseases
and that fill an unmet medical need based on a surrogate endpoint, which is a laboratory measurement or physical sign used as an
indirect or substitute measurement representing a clinically meaningful outcome. As a condition of approval, the FDA may require
that a sponsor of a product receiving accelerated approval perform post-marketing clinical trials.
If the FDA evaluations of the application and the manufacturing facilities are favorable, the FDA may issue an approval letter
or an “approvable” letter. An approvable letter will usually contain a number of conditions that must be met in order to secure final
approval of the NDA and authorization of commercial marketing of the drug for certain indications. An approval letter authorizes
commercial marketing of the drug with specific prescribing information for a specific indication. As a condition of NDA approval, the
FDA may require post-approval testing, including Phase 4 trials, and surveillance to monitor the drug’s safety or efficacy and may
impose other conditions, including labeling or distribution restrictions which can materially impact the potential market and
profitability of the drug. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained
or problems occur after the product reaches the market. The FDA may also refuse to approve the NDA or issue a “not approvable”
letter outlining the deficiencies in the submission and often requiring additional testing or information.
To date, we have not submitted a marketing application for any drug candidate to the FDA or any foreign regulatory agency,
and none of our drug candidates have been approved for commercialization in any country. We have limited experience in conducting
and managing the clinical trials necessary to obtain regulatory approvals, including approval by the FDA. The time required to
complete clinical trials and for the FDA’s review processes is uncertain and typically takes many years. Our analysis of data obtained
from preclinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could delay, limit
or prevent regulatory approval. We may also encounter unanticipated delays or increased costs due to government regulation from
future legislation or administrative action or changes in FDA policy during the period of product development, clinical trials, and FDA
21
regulatory review. We estimate that it generally takes 10 to 15 years or possibly longer to discover, develop and bring to market a new
pharmaceutical product in the U.S. as outlined below:
Post-Approval Studies
Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory standards is not maintained
or if problems occur after the product reaches the market. After approval, some types of changes to the approved product, such as
adding new indications, manufacturing changes and additional labeling claims, are subject to further FDA review and approval. In
addition, the FDA may require testing and surveillance programs to monitor the effect of approved products that have been
commercialized, and the FDA has the power to prevent or limit further marketing of a product based on the results of these post-
marketing programs.
Any drug products manufactured or distributed by us pursuant to FDA approvals are subject to continuing regulation by the
FDA, including, among other things:
•
•
•
•
•
•
•
record-keeping requirements;
reporting of adverse experiences with the drug;
providing the FDA with updated safety and efficacy information;
drug sampling and distribution requirements;
notifying the FDA and gaining its approval of specified manufacturing or labeling changes;
complying with certain electronic records and signature requirements; and
complying with FDA promotion and advertising requirements.
We rely, and expect to continue to rely, on third parties for the production of clinical quantities of our drug candidates. Future
FDA and state inspections may identify compliance issues at the facilities of our contract manufacturers that may disrupt production
or distribution, or require substantial resources to correct.
From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory
provisions governing the approval, manufacturing and marketing of products regulated by the FDA. In addition, FDA regulations and
guidance are often revised or reinterpreted by the agency in ways that may significantly affect our business and our drug candidates. It
is impossible to predict whether legislative changes will be enacted, or FDA regulations, guidance or interpretations changed or what
the impact of such changes, if any, may be.
Foreign Regulations
Whether or not we obtain FDA approval for a drug candidate, we must obtain the requisite approvals from regulatory
authorities in non-U.S. countries prior to the commencement of clinical trials or marketing of our products in those countries. Certain
countries outside of the U.S. have a process that requires the submission of a clinical trial application (“CTA”), much like an IND,
prior to the commencement of human clinical trials. In the E.U., for example, a CTA must be submitted to the competent national
health authority and to independent ethics committees in each country in which a company intends to conduct clinical trials. Once the
CTA is approved in accordance with a country’s requirements, clinical trial development may proceed in that country.
The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary
from country to country, but typically takes several years and requires significant resources. In all cases, the clinical trials must be
conducted in accordance with GCP and other applicable regulatory requirements.
22
To obtain regulatory approval of an investigational drug under E.U. regulatory systems, we must submit a marketing
authorization application. This application is similar to the NDA in the U.S., with the exception of, among other things, country-
specific document requirements. Drugs can be authorized in the E.U. by using (i) the centralized authorization procedure, (ii) the
mutual recognition procedure, (iii) the decentralized procedure or (iv) national authorization procedures.
The EMA implemented the centralized procedure for the approval of human drugs to facilitate marketing authorizations that
are valid throughout the E.U. This procedure results in a single marketing authorization granted by the European Commission that is
valid across the E.U., as well as in Iceland, Liechtenstein and Norway. The centralized procedure is compulsory for certain human
drugs including those that are: (i) derived from biotechnology processes, such as genetic engineering, or (ii) contain a new active
substance indicated for the treatment of certain diseases.
Reimbursement
Sales of pharmaceutical products depend in significant part on the availability of third-party reimbursement, which is time
consuming and expensive. Reimbursement may not be available or sufficient to allow us to sell our future products, if any, on a
competitive and profitable basis.
The passage of the Medicare Prescription Drug and Modernization Act of 2003 (the “MMA”) imposed requirements for the
distribution and pricing of prescription drugs for Medicare beneficiaries, which may affect the marketing of our future products, if
any. The MMA also introduced a reimbursement methodology, part of which went into effect in 2004, and a prescription drug plan,
which went into effect on January 1, 2006. While the MMA applies only to drug benefits for Medicare beneficiaries, private payors
often follow Medicare coverage policy and payment limitations in setting their own payment rates. Any reduction in payment that
results from the MMA may result in a similar reduction in payments from non-governmental payors.
In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.
The requirements governing drug pricing vary widely from country to country. For example, the E.U. provides options for its member
states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to
control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product or it
may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the
market.
There have been and we expect that there will continue to be frequent federal and state proposals to impose governmental
pricing controls or cost containment measures for prescription drugs. While we cannot predict whether such legislative or regulatory
proposals will be adopted, the adoption of such proposals could have a material adverse effect on our business, financial condition and
profitability. For example, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education
Affordability Reconciliation Act of 2010, contains provisions that may reduce the profitability of drugs, including, for example,
increased rebates for drugs sold to Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory
discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales to federal
health care programs. Even if favorable coverage and reimbursement status is attained for one or more of our drug candidates for
which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.
Other Regulations
Pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984, known as the Hatch-Waxman Act, under
certain conditions a sponsor may be granted marketing exclusivity for a period of five years following FDA approval. During this
period, third parties would not be permitted to obtain FDA approval for a similar or identical drug through an Abbreviated NDA,
which is the application form typically used by manufacturers seeking approval of a generic drug. The Hatch-Waxman Act also
permits a patent extension term of up to five years as compensation for patent term lost during product development and the FDA
regulatory review process. However, patent extension cannot extend the remaining term of a patent beyond a total of 14 years. The
patent term restoration period is generally one-half the time between the effective date of an IND and the submission date of an NDA,
plus time of active FDA review between the submission date of an NDA and the approval of that application. Only one patent
applicable to an approved drug is eligible for the extension and it must be applied for prior to expiration of the patent and within
60 days of the approval of the NDA.
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In April 2015 and October 2016, prexigebersen received orphan drug designations for AML in the U.S. from the FDA and in
the E.U. from the EMA, respectively. Orphan designation is available in the U.S. to drugs intended to treat, diagnose or prevent a rare
disease or condition that affects fewer than 200,000 people in the U.S. at the time of application for orphan designation. Orphan drug
designation must be requested before submitting an application for marketing authorization. Orphan designation qualifies the sponsor
of the product for a tax credit and marketing incentives. The first sponsor to receive FDA marketing approval for a drug with an
orphan designation is entitled to a seven-year exclusive marketing period in the U.S. for that product for that indication and, typically,
a waiver of the prescription drug user fee for its marketing application. However, a drug that the FDA considers to be clinically
superior to, or different from, the approved orphan drug, even though for the same indication, may also obtain approval in the U.S.
during the seven-year exclusive marketing period. Orphan drug exclusive marketing rights may also be lost if the FDA later
determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the
drug. To receive orphan drug designation from the EMA, a therapy must be intended for the treatment of a life-threatening or
chronically debilitating rare condition with a prevalence of less than five in 10,000 in the E.U. Orphan drug designation provides
incentives designed to facilitate development, including fee reductions for protocol assistance, scientific advice and importantly, may
provide up to ten years of market exclusivity in the E.U. following product approval.
There is no guarantee that any of our other drug candidates will receive orphan drug designation or that, even if such drug
candidate is granted such status, the drug candidate’s clinical development and regulatory approval process will not be delayed or will
be successful.
Pharmaceutical companies are also subject to various federal and state laws pertaining to health care “fraud and abuse,”
including anti-kickback laws and false claims laws. Anti-kickback laws make it illegal for any entity or person to solicit, offer,
receive, or pay any remuneration in exchange for, or to induce, the referral of business, including the purchase or prescription of a
particular drug. False claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented, for payment
to third party payors, including Medicare and Medicaid, claims for reimbursed drugs or services that are false or fraudulent, claims for
items or services not provided as claimed, or claims for medically unnecessary items or services.
Company History and Available Information
The Company was incorporated in May 2000 as a Utah corporation. In February 2008, Bio-Path Subsidiary completed a
reverse merger with the Company, which at the time was traded over the counter and had no current operations. The prior name of the
Company was changed to Bio-Path Holdings, Inc. and the directors and officers of Bio-Path Subsidiary became the directors and
officers of Bio-Path Holdings, Inc. On March 10, 2014, our common stock ceased trading on the OTCQX and commenced trading on
the Nasdaq Capital Market under the ticker symbol “BPTH.” Effective December 31, 2014, we changed our state of incorporation
from Utah to Delaware through a statutory conversion pursuant to the Utah Revised Business Corporation Act and the Delaware
General Corporation Law.
On February 22, 2024, we effected a reverse stock split of our outstanding shares of common stock at a ratio of 1-for-20, and
our common stock began trading on the spilt-adjusted basis on the Nasdaq Capital Market at the commencement of trading on
February 23, 2024. All common stock share and per share amounts in this Annual Report on Form 10-K have been adjusted to give
effect to the 1-for-20 reverse stock split.
Our principal executive offices are located at 4710 Bellaire Boulevard, Suite 210, Bellaire, Texas 77401, and our telephone
number is (832) 742-1357. Our Internet address is www.biopathholdings.com. We are not including the information contained in our
website as part of, or incorporating it by reference into, this Annual Report on Form 10-K. We make available free of charge through
our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to
these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we
electronically file such materials with, or furnish it to, the SEC. We also make available on our website our Corporate Governance
Guidelines; the charters for our Audit Committee, Nominating/Corporate Governance Committee and Compensation Committee; our
Employee Code of Business Conduct and Ethics, which applies to all of our employees, including our executive officers; and our
Code of Business Conduct and Ethics for Members of the Board of Directors. All such information is also available in print and free
of charge to any of our stockholders who request it. In addition, we intend to disclose on our website any amendments to, or waivers
from, our codes of business conduct and ethics that are required to be publicly disclosed pursuant to rules of the SEC.
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ITEM 1A. RISK FACTORS
Risk Factor Summary
We are providing the following summary of the risk factors disclosed in this Annual Report on Form 10-K to enhance the
readability and accessibility of our risk factor disclosures. We encourage our stockholders to carefully review the risk factors disclosed
in this Form 10-K in their entirety for additional information regarding the material factors that make an investment in the Company
speculative or risky.
• We are a clinical stage biotechnology company with no significant revenue. We have incurred significant operating
losses since our inception, and we expect to incur losses for the foreseeable future and may never achieve profitability.
• We will continue to require substantial additional capital for the foreseeable future. If we are unable to raise additional
capital when needed, we may be forced to delay, reduce or eliminate our drug development programs and
commercialization efforts.
• The pharmaceutical and biotechnology industry is highly competitive. If we are unable to compete effectively, our drug
candidates may be rendered noncompetitive or obsolete.
• Future collaboration arrangements to leverage our capabilities may not be successful.
•
If we are unable to attract and retain key management, scientific personnel and advisors, we may not successfully
develop our drug candidates or achieve our other business objectives.
• Our employees, agents, consultants and commercial partners may engage in misconduct or other improper activities,
including non-compliance with applicable regulatory standards and requirements.
• We expect to expand our operations, including clinical trials, in the future and may face challenges in managing our
growth, which may result in disruptions to our operations.
•
If we acquire or license technologies, resources or drug candidates, we will incur a variety of costs and may never realize
benefits from the transaction.
• Our business has a substantial risk of product liability claims. If we are unable to obtain or maintain appropriate levels of
insurance, a product liability claim could adversely affect our business.
• We are increasingly dependent on information technology systems to operate our business and a cyber-attack or other
breach of our systems, or those of third parties on whom we may rely, could subject us to liability or interrupt the
operation of our business.
• Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
• Provisions of our charter documents or Delaware law could delay or prevent an acquisition of our company, even if the
acquisition would be beneficial to our stockholders, and could make it more difficult to change management.
• We face competition from entities that have developed or may develop therapeutic candidates for our target disease
indications, including companies developing novel treatments and technology platforms based on modalities and
technology that may be similar to ours. If these companies develop technologies, including delivery technologies, or
therapeutic candidates more rapidly than we do, or their technologies are more effective, our ability to develop and
successfully commercialize therapeutic candidates may be adversely affected.
• We may be subject, directly or indirectly, to certain U.S. federal and state healthcare laws and regulations, such as anti-
kickback, false claims laws, physician payment transparency laws or similar fraud and abuse laws, which could expose
25
us to potential criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and
future earnings.
•
Inadequate funding for the FDA, the SEC and other government agencies, or a work slowdown or stoppage at those
agencies as part of a broader federal government shutdown, could hinder their ability to hire and retain key leadership
and other personnel, prevent new products and services from being developed or commercialized in a timely manner, or
otherwise prevent those agencies from performing normal business functions on which the operation of our business may
rely, which could negatively impact our business.
• Our business and operations have been affected by and could be materially and adversely affected in the future by the
effects of health epidemics and pandemics, including the evolving and ongoing effects of the COVID-19 pandemic.
• Unstable market and economic conditions may have serious adverse effects on our ability to raise funds, which may
cause delays, restructuring or cessation of our operations.
• We must complete extensive clinical trials to demonstrate the safety and efficacy of our drug candidates. If we are unable
to demonstrate the safety and efficacy of our drug candidates, we will not be successful.
• Delays in the commencement of clinical trials of our drug candidates could result in increased costs to us and delay our
ability to generate revenues.
• Delays in the completion of, or the termination of, clinical trials of our drug candidates could result in increased costs to
us and could delay or prevent us from generating revenues.
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•
If we are unable to obtain U.S. and/or foreign regulatory approval, we will be unable to commercialize our drug
candidates.
In addition to regulations in the U.S., we may be subject to a variety of regulations in other jurisdictions governing,
among other things, clinical trials and any commercial sales and distribution of our products, if approved.
• Changes in existing laws and regulations affecting the healthcare industry could increase our costs and otherwise
adversely affect our business.
• We rely on third parties to conduct clinical trials for our drug candidates, and their failure to timely and properly perform
their obligations may result in costs and delays that prevent us from obtaining regulatory approval or successfully
commercializing our drug candidates.
• We may not be able to obtain or maintain orphan drug exclusivity for our product candidates.
• We rely on third parties for manufacturing of our clinical drug supplies; our dependence on these manufacturers may
impair the development of our drug candidates.
• There are underlying risks associated with the manufacture of our drug candidates, which have never been manufactured
in large scale. Furthermore, we anticipate continued reliance on third-party manufacturers if we are successful in
obtaining marketing approval from the FDA or other regulatory agencies for any of our drug candidates.
•
Identification of previously unknown problems with respect to a drug candidate, manufacturer or facility may result in
restrictions on the drug candidate, manufacturer or facility.
• We may experience delays in the development of our drug candidates if the third-party manufacturers of our drug
candidates cannot meet FDA requirements relating to current Good Manufacturing Practices.
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If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and
sell our drug candidates, we may not generate product revenue.
If our future drugs do not achieve market acceptance, we may be unable to generate significant revenue, if any.
If third-party payors do not adequately reimburse patients for any of our drug candidates that are approved for marketing,
they might not be purchased or used, and our revenues and profits will not develop or increase.
If our patent position does not adequately protect our drug candidates, others could compete against us more directly,
which would harm our business.
If any third-party owners of intellectual property we may license in the future do not properly maintain or enforce the
patents underlying such licenses, our competitive position and business prospects will be harmed.
•
If we infringe or are alleged to infringe intellectual property rights of third parties, our business could be harmed.
• Litigation regarding patents, intellectual property and other proprietary rights may be expensive and time consuming. If
we are involved in such litigation, it could cause delays in bringing drug candidates to market and harm our ability to
operate.
• Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other
proprietary information and may not adequately protect our intellectual property.
• Raising additional capital may cause dilution to existing stockholders, restrict our operations or require us to relinquish
rights. Additionally, sales of a substantial number of shares of our common stock or other securities in the public market
could cause our stock price to fall.
• We may issue additional shares of our common stock in accordance with our equity incentive plans or upon exercise or
conversion of outstanding securities that are exercisable for or convertible into shares of our common stock, which may
cause dilution to existing stockholders.
• The trading price of our common stock has been volatile and is likely to be volatile in the future.
• Our common stock is thinly traded and in the future may continue to be thinly traded, and our stockholders may be
unable to sell at or near asking prices or at all if they need to sell their shares to raise money or otherwise desire to
liquidate such shares.
• Our certificate of incorporation grants our Board of Directors the power to designate and issue additional shares of
common and/or preferred stock.
• We do not anticipate paying cash dividends, and accordingly stockholders must rely on stock appreciation for any return
on their investment in us.
• Our management is required to devote substantial time and incur additional expense to comply with public company
regulations.
• Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-
Oxley Act of 2002 could have a material adverse effect on the price of our common stock.
• Our common stock may be delisted from The Nasdaq Capital Market which could negatively impact the price of our
common stock and our ability to access the capital markets.
27
Risks Related to Our Business
We are a clinical stage biotechnology company with no significant revenue. We have incurred significant operating losses since
our inception, and we expect to incur losses for the foreseeable future and may never achieve profitability.
We have incurred significant operating losses since our inception. As of December 31, 2023, we had an accumulated deficit
of $107.6 million. To date, we have not generated any revenue from the sale of our drug candidates and we do not expect to generate
any revenue from sales of our drug candidates for the foreseeable future. We expect to continue to incur significant operating losses
and we anticipate that our losses may increase substantially as we expand our drug development programs and commercialization
efforts.
To achieve profitability, we must successfully develop and obtain regulatory approval for one or more of our drug candidates
and effectively commercialize any drug candidates we develop. Even if we succeed in developing and commercializing one or more of
our drug candidates, we may not be able to generate sufficient revenue and we may never be able to achieve or sustain profitability.
We will continue to require substantial additional capital for the foreseeable future. If we are unable to raise additional capital
when needed, we may be forced to delay, reduce or eliminate our drug development programs and commercialization efforts.
We expect to continue to incur significant operating expenses in connection with our ongoing activities, including conducting
clinical trials, manufacturing and seeking regulatory approval of our drug candidates, prexigebersen, BP1002, BP1003 and BP1001-A.
In addition, if we obtain regulatory approval of one or more of our drug candidates, we expect to incur significant commercialization
expenses related to product sales, marketing, manufacturing and distribution.
As of December 31, 2023, we had $1.1 million in cash on hand, compared to $10.4 million as of December 31, 2022. We
have determined that the Company’s available cash at December 31, 2023 will not be sufficient to fund current liabilities and capital
expenditure requirements. Our ongoing future capital requirements will depend on numerous factors, including:
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the rate of progress, results and costs of completion of ongoing clinical trials of our drug candidates;
the rate of progress, results and costs of completion of ongoing preclinical testing of our drug candidates;
the size, scope, rate of progress, results and costs of completion of any potential future clinical trials and preclinical
tests of our drug candidates that we may initiate;
the costs to obtain adequate supply of the compounds necessary for our drug candidates;
the costs of obtaining regulatory approval of our drug candidates;
the scope, prioritization and number of drug development programs we pursue;
the costs for preparing, filing, prosecuting, maintaining and enforcing our intellectual property rights and defending
intellectual property-related claims;
the extent to which we acquire or in-license other products and technologies and the costs to develop those products
and technologies;
the costs of future commercializing activities, including product sales, marketing, manufacturing and distribution, of
any of our drug candidates or other products for which marketing approval has been obtained;
our ability to establish strategic collaborations and licensing or other arrangements on terms favorable to us; and
competing technological and market developments.
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Any additional fundraising efforts may divert our management from their day to day activities, which may adversely affect
our ability to develop and commercialize our drug candidates. Our ability to raise additional funds will depend, in part, on the success
of our product development activities and other factors related to financial, economic and market conditions, many of which are
beyond our control. There can be no assurance that we will be able to raise additional capital when needed or on terms that are
favorable to us, if at all. If adequate funds are not available on a timely basis, we may be forced to:
•
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delay, reduce the scope of or eliminate one or more of our drug development programs;
relinquish, license or otherwise dispose of rights to technologies, drug candidates or products that we would
otherwise seek to develop or commercialize ourselves at an earlier stage or on terms that are less favorable than
might otherwise be available; or
•
liquidate and dissolve the Company.
If our operating plans change, we may require additional capital sooner than planned. Such additional financing may not be
available when needed or on terms favorable to us. In addition, we may seek additional capital due to favorable market conditions or
strategic considerations, even if we believe we have sufficient funds for our current and future operating plan.
The report of our independent registered public accounting firm contains an emphasis of a matter regarding substantial doubt
about our ability to continue as a going concern.
The report of our independent registered public accounting firm relating to our December 31, 2023 consolidated financial
statements contains an emphasis of a matter regarding substantial doubt about our ability to continue as a going concern. As discussed
in Note 2 to the consolidated financial statements included herein, we have suffered recurring losses from operations and have a
projected cash deficiency that raise substantial doubt about our ability to continue as a going concern. The consolidated financial
statements have been prepared assuming we will continue as a going concern and do not include any adjustments that might result
from the outcome of this uncertainty.
We have determined that the Company’s available cash at December 31, 2023 will not be sufficient to fund current liabilities
and capital expenditure requirements. We may finance our foreseeable cash requirements through cash on hand, debt financings and
public or private equity offerings. Additionally, we may seek collaborations and license arrangements for our drug candidates. We
may seek to access the public or private equity markets whenever conditions are favorable. We currently have no lines of credit or
other arranged access to debt financing. If we are unable to obtain funding due to unfavorable terms or market conditions,
management has determined that it can reduce spending on its day-to-day operations, sell laboratory assets and temporarily delay
planned activities if needed. However, our ability to continue as a going concern is dependent upon obtaining funding through one or
more sources described above to meet our planned obligations and pay our liabilities.
The pharmaceutical and biotechnology industry is highly competitive. If we are unable to compete effectively, our drug candidates
may be rendered noncompetitive or obsolete.
We are engaged in segments of the pharmaceutical and biotechnology industry that are highly competitive and characterized
by rapid and significant technological change. Many large pharmaceutical and biotechnology companies, academic and research
institutions, governmental agencies and other public and private research organizations are pursuing the development of novel drugs
that target AML, CML, ALL, MDS, lymphoma, ovarian, breast cancer, solid tumors and other cancers generally. We face, and expect
to continue to face, intense and increasing competition as new products enter the market and advanced technologies become available.
Our competitors may discover, develop or commercialize products or other novel technologies that are more effective, safer or less
costly than our drug candidates. Our competitors may also obtain FDA or other regulatory approval for their products more rapidly
than we may obtain approval for our drug candidates.
Many of our competitors have:
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significantly greater capital, technical and human resources than we have and may be better equipped to discover,
develop, manufacture and commercialize drug candidates;
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• more experience in drug discovery, development and commercialization, obtaining regulatory approvals and
manufacturing and marketing pharmaceutical products;
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drug candidates that have been approved or are in late-stage clinical development; and/or
collaboration arrangements in our target markets with leading companies and research institutions.
Mergers and acquisitions in the pharmaceutical and biotechnology industry may result in even more resources being
concentrated among a smaller number of our competitors. Smaller or early stage companies may also prove to be significant
competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete
with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patent
registration for clinical trials, and acquiring technologies complementary to, or necessary for, our drug candidates and programs.
Competitive products and technological developments may render our drug candidates noncompetitive or obsolete before we
can recover the expenses of developing and commercializing our drug candidates. Furthermore, the development of new treatment
methods and/or the widespread adoption or increased utilization of any vaccine for the diseases we are targeting could render our drug
candidates noncompetitive, obsolete or uneconomical. If we successfully develop and obtain approval for any of our drug candidates,
we will face competition based on the safety and effectiveness of our drug candidates, the timing of their entry into the market in
relation to competitive products in development, the availability and cost of supply, marketing and sales capabilities, reimbursement
coverage, price, patent position and other factors. If we successfully develop drug candidates but those drug candidates do not achieve
and maintain market acceptance, our business will not be successful.
Future collaboration arrangements to leverage our capabilities may not be successful.
As part of our business strategy, we may enter into collaborative arrangements for the development and commercialization of
our drug candidates. For our collaboration efforts to be successful, we must identify partners whose competencies complement ours.
We must also successfully enter into collaboration agreements with them on terms attractive to us and integrate and coordinate their
resources and capabilities with our own. We may be unsuccessful in entering into collaboration agreements with acceptable partners
or negotiating favorable terms in these agreements. In addition, we may face a disadvantage in seeking to enter into or negotiating
collaborations with potential partners because other potential collaborators may have greater management and financial resources than
we do.
If we do enter into collaborative arrangements, the success of these collaboration arrangements will depend heavily on the
efforts and activities of our collaborators. Furthermore, we may face risks and uncertainties in connection with collaborative
arrangements, including:
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inability to integrate the resources or capabilities of collaborators;
collaborators may prove difficult to work with or less skilled than we originally expected;
disputes may arise with respect to the ownership of rights to technology developed with collaborators;
disagreements with collaborators could delay or terminate the research, development or commercialization of
products or result in litigation or arbitration;
difficulty enforcing our arrangements if one of our collaborators fails to perform;
termination of our collaboration arrangements by collaborators, which could make it difficult for us to attract new
collaborators or adversely affect the perception of us in the business or financial communities;
collaborators may have considerable discretion in electing whether to pursue the development of any additional drug
candidates and may pursue technologies or products either on their own or in collaboration with our competitors that
are similar to or competitive with our technologies; and
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•
collaborators may change the focus of their development and commercialization efforts.
If we are unsuccessful in our collaborative efforts, our ability to develop and market drug candidates could be severely
limited.
If we are unable to attract and retain key management, scientific personnel and advisors, we may not successfully develop our drug
candidates or achieve our other business objectives.
Our success depends on the availability and contributions of members of our senior management team, scientific team and
other key personnel. The loss of services of any of these individuals could delay, reduce or prevent our drug development and other
business objectives. Furthermore, recruiting and retaining qualified scientific personnel to perform drug development work will be
critical to our success. We face intense competition for qualified individuals from numerous pharmaceutical and biotechnology
companies, universities, governmental entities and other public and private research institutions. We may be unable to attract and
retain these individuals, and our failure to do so could materially adversely affect our business and financial condition.
Our employees, agents, consultants and commercial partners may engage in misconduct or other improper activities, including
non-compliance with applicable regulatory standards and requirements.
We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants, advisors and
commercial partners. Misconduct by these persons could include intentional failures to comply with the regulations of the FDA and
non-U.S. regulators, comply with healthcare fraud and abuse laws and regulations in the U.S. and abroad, report financial information
or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare
industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices.
These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission,
customer incentive programs and other business arrangements. Such misconduct could involve the improper use of information
obtained in the course of clinical studies, which could result in regulatory sanctions and cause serious harm to our business, financial
condition and reputation. We currently have codes of business conduct and ethics applicable to all of our employees, but it is not
always possible to identify and deter employee misconduct, and our codes of business conduct and ethics and the other precautions we
take to detect and prevent improper activities may not be effective in controlling unknown or unmanaged risks or losses, or in
protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or
regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those
actions could result in the imposition of significant fines or other sanctions, which could materially adversely affect our business and
financial condition. Whether or not we are successful in defending against such actions or investigations, we could incur substantial
costs, including legal fees, and divert the attention of management in defending ourselves against any of these claims or investigations.
We expect to expand our operations, including clinical trials, in the future and may face challenges in managing our growth,
which may result in disruptions to our operations.
We expect to expand our operations, including clinical trials for our drug candidates, over time. To successfully manage
future growth, we may need to implement and improve our managerial, operational and financial resources, and may need to expand
our facilities and recruit and train additional qualified personnel. Our expected growth may also require significant financial resources,
which may not be available when needed or on terms favorable to us. Our senior management may be required to devote substantial
attention to managing growth activities and may be unable to effectively manage the expansion of our operations due to our limited
resources, which may result in disruptions to our business operations and could harm our business and financial condition.
If we acquire or license technologies, resources or drug candidates, we will incur a variety of costs and may never realize benefits
from the transaction.
If appropriate opportunities become available, we may license or acquire technologies, resources, drugs or drug candidates.
We may never realize the anticipated benefits of such a transaction. In particular, due to the risks inherent in drug development, we
may not successfully develop or obtain marketing approval for the drug candidates we acquire. Future licenses or acquisitions could
result in potentially dilutive issuances of our equity securities, the incurrence of debt, the creation of contingent liabilities, material
impairment expenses related to goodwill and impairment or amortization expenses related to other intangible assets, which could harm
our business and financial condition.
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Our business has a substantial risk of product liability claims. If we are unable to obtain or maintain appropriate levels of
insurance, a product liability claim could adversely affect our business.
Our business exposes us to significant potential product liability risks that are inherent in the development, manufacturing
and sales and marketing of human therapeutic products. Although we do not currently commercialize any products, claims could be
made against us based on the use of our drug candidates in clinical trials. Product liability claims could delay or prevent completion of
our clinical development programs. We currently have product liability insurance, but we may not be able to maintain such insurance
on acceptable terms. However, even if we maintain or obtain other product liability insurance, our insurance may not provide adequate
coverage against potential liabilities. As a result, we may be unable to obtain or maintain insurance coverage at a reasonable cost to
protect against losses that could harm our business and financial condition. If any claims are brought against us, and we are not
successful in defending ourselves, those claims could result in damage awards against us, which could materially adversely affect our
business and financial condition. Whether or not we are successful in defending against such claims, we could incur substantial costs,
including legal fees, and divert the attention of management in defending ourselves against any of these claims.
We are increasingly dependent on information technology systems to operate our business and a cyber-attack or other breach of
our systems, or those of third parties on whom we may rely, could subject us to liability or interrupt the operation of our business.
We are increasingly dependent on information technology systems to operate our business. A breakdown, invasion,
corruption, destruction or interruption of critical information technology systems by employees, others with authorized access to our
systems or unauthorized persons could negatively impact operations. In the ordinary course of business, we collect, store and transmit
confidential information and it is critical that we do so in a secure manner to maintain the confidentiality and integrity of such
information. Additionally, we outsource certain elements of our information technology systems to third parties. As a result of this
outsourcing, our third party vendors may or could have access to our confidential information making such systems vulnerable. Data
breaches of our information technology systems, or those of our third party vendors, may pose a risk that sensitive data may be
exposed to unauthorized persons or to the public. For example, the loss of clinical trial data from completed or ongoing clinical trials
or preclinical studies could result in delays in our regulatory approval efforts and significantly increase our costs to recover or
reproduce the data. While we believe that we have taken appropriate security measures to protect our data and information technology
systems, and have been informed by our third party vendors that they have as well, there can be no assurance that our efforts will
prevent breakdowns or breaches in our systems, or those of our third party vendors, that could materially adversely affect our business
and financial condition.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
Under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation experiences an
“ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the
corporation’s ability to utilize its pre-change net operating loss carryforwards and other pre-change tax attributes (such as research tax
credits) to offset its post-change taxable income or taxes may be limited. Our prior and potential future equity offerings and other
changes in our stock ownership, some of which are outside of our control, may have resulted or could in the future result in an
ownership change under Section 382 of the Code. If a limitation were to apply, utilization of a portion of our domestic net operating
loss and tax credit carryforwards could be limited in future periods and a portion of the carryforwards could expire before being
available to reduce future income tax liabilities.
On December 22, 2017, the U.S. government enacted legislation referred to as the Tax Cuts and Jobs Act (the “Tax Act”).
Under the Tax Act, net operating losses generated prior to 2018 will continue to be governed by the net operating loss tax rules as they
existed prior to the adoption of the new Tax Act, which means that generally they will expire 20 years after they were generated if not
used prior thereto. Accordingly, our net operating losses could expire unused and be unavailable to offset future income tax liabilities,
if any. Under the Tax Act, net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the
deductibility of such net operating losses is limited to 80% of current year taxable income. We continue to examine the impact that
this provision of the Tax Act, among other provisions, may have on our business.
32
Provisions of our charter documents or Delaware law could delay or prevent an acquisition of our company, even if the acquisition
would be beneficial to our stockholders, and could make it more difficult to change management.
Provisions of our certificate of incorporation and bylaws may discourage, delay or prevent a merger, acquisition or other
change in control that stockholders might otherwise consider favorable, including transactions in which stockholders might otherwise
receive a premium for their shares. In addition, these provisions may frustrate or prevent any attempt by our stockholders to replace or
remove our current management by making it more difficult to replace or remove our board of directors. These provisions include:
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limitations on our stockholders’ ability to call special meetings of stockholders;
an advance notice requirement for stockholder proposals and nominations for members of our Board;
the authority of our Board to determine the number of director seats on our Board;
the authority of our Board to fill vacancies occurring on the Board;
the authority of our Board to issue preferred stock with such terms as our Board may determine.
In addition, because we are governed by Delaware law, we are subject to the provisions of Section 203 of the Delaware
General Corporation Law, which prohibits a publicly held Delaware corporation from engaging in a business combination with an
interested stockholder, generally a person who, together with its affiliates, owns or within the last three years has owned 15% of our
voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless
the business combination is approved in a prescribed manner.
We face competition from entities that have developed or may develop therapeutic candidates for our target disease indications,
including companies developing novel treatments and technology platforms based on modalities and technology that may be
similar to ours. If these companies develop technologies, including delivery technologies, or therapeutic candidates more rapidly
than we do, or their technologies are more effective, our ability to develop and successfully commercialize therapeutic candidates
may be adversely affected.
While we believe that our DNAbilize® technology is the only delivery method of its type, the area of cancer treatment
research is rapidly progressing, with many stakeholders, including for-profit and nonprofit institutions, conducting preclinical and
clinical studies of various types of therapeutic products for the same or similar indications for use as our drug candidates. We expect
that such work by others will continue, which may make it difficult for us to effectively recruit and enroll a satisfactory number of
participants in clinical trials.
Our success will partially depend on our ability to develop therapeutics that are safer and more effective than competing
therapeutics. Our commercial opportunity and success will be reduced or eliminated if competing therapeutics are safer, more
effective, or less expensive than the therapeutics we develop, or if any are granted exclusive marketing approval by the FDA that
precludes the marketing of our drug candidates for a period of time. If our lead drug candidates are approved for the indications we are
currently pursuing, they will compete with a range of therapeutic treatments that are either in development or currently marketed. For
example, the FDA has recently approved a number of drugs indicated for treatment of AML, some of which may have target patient
populations similar to that of our drug candidates.
Many of our competitors may have significantly greater financial, technical, manufacturing, marketing, sales and supply
resources or experience than we do. If we successfully obtain FDA approval for any drug candidate, we will face competition based
on many different factors, including the safety and effectiveness of our products, the ease with which our products can be
administered, the timing and scope of regulatory approvals (if we are able to obtain any) for these drug candidates, the availability and
cost of manufacturing, marketing and sales capabilities, price, reimbursement coverage and patent position. Competing therapeutics
could present superior treatment alternatives, including by being more effective, safer, less expensive or marketed and sold more
effectively than any therapeutics we may develop. Competitive alternatives may make any drugs that we develop obsolete or
noncompetitive before we recover the expense of developing and commercializing our drug candidates, if we are able to obtain
regulatory approval to commercialize such drug candidates.
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We may be subject, directly or indirectly, to certain U.S. federal and state healthcare laws and regulations, such as anti-kickback,
false claims laws, physician payment transparency laws or similar fraud and abuse laws, which could expose us to potential
criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.
Healthcare providers, physicians and others will play a primary role in the recommendation, ordering and utilization of any
products for which we obtain regulatory approval. If we obtain FDA approval for any of our products and begin commercializing
those products in the U.S., our operations may be subject to various federal and state fraud and abuse laws, including, without
limitation, the federal Anti-Kickback Statute, the federal False Claims Act, and physician payment transparency laws and regulations.
These laws may impact, among other things, our potential sales, marketing and education programs and our relationships with
physicians, patients, and other persons or entities in a position to refer, use, or recommend our future products. The laws that may
affect our ability to operate could include, but are not limited to:
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the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting,
receiving, offering or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly,
overtly or covertly, in cash or in kind, to induce, or in return for, either the referral of an individual, or the purchase,
lease, order or recommendation of any good, facility, item or service for which payment may be made, in whole or
in part, under a federal healthcare program, such as the Medicare and Medicaid programs;
federal civil and criminal false claims laws and civil monetary penalty laws, including the False Claims Act, which
may be pursued through civil whistleblower or qui tam actions, impose criminal and civil penalties against
individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for
payment or approval from Medicare, Medicaid or other third-party payors that are false or fraudulent or making a
false statement to avoid, decrease or conceal an obligation to pay money to the federal government;
federal criminal statutes under the Health Insurance Portability and Accountability Act of 1996, which prohibit
knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or
obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned
by, or under the custody or control of, any healthcare benefit program, and knowingly and willfully falsifying,
concealing or covering up by any trick or device a material fact or making any materially false statements in
connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters;
the federal transparency requirements under The Patient Protection and Affordable Care Act and the Health Care
and Education Reconciliation Act (known collectively as the “Affordable Care Act”), including the provision
commonly referred to as the Physician Payments Sunshine Act, which requires manufacturers of drugs, biologics,
devices and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health
Insurance Program to report annually to the Centers for Medicare and Medicaid Services information related to
payments or other transfers of value made to physicians and teaching hospitals, as well as ownership and investment
interests held by physicians and their immediate family members; and
• State law equivalents of each of the healthcare laws described above, some of which may be broader in scope and
apply regardless of the type of payor, such as state anti-kickback statutes and false claims acts, and state pricing,
marketing, and transparency statutes that require us to adopt compliance programs, report pricing information, or
disclose payments or other transfers of value to physicians or other covered recipients.
Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible
that some of our business activities could be subject to challenge under one or more of such laws once our products are
commercialized. In addition, healthcare reform legislation has strengthened these laws and additional laws or requirements may be
implemented in the future. For example, the Affordable Care Act, among other things, amended the intent requirement of the federal
Anti-Kickback and criminal healthcare fraud statutes. As a result of such amendment, a person or entity no longer needs to have actual
knowledge of these statutes or specific intent to violate them in order to have committed a violation. Moreover, the Affordable Care
34
Act provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-
Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.
Efforts to ensure that our business arrangements comply with applicable healthcare laws and regulations will involve
substantial costs. It is possible that governmental authorities will conclude that our existing or future business practices do not comply
with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations.
Any such actions instituted against us could have a significant adverse impact on our business, including the imposition of civil,
criminal and administrative penalties, damages, disgorgement, monetary fines, possible exclusion from participation in Medicare,
Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, and
curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
Even if we are successful in defending against such actions, we may nonetheless be subject to substantial costs, reputational harm and
adverse effects on our ability to operate our business.
If any of our employees, agents, or the physicians or other providers or entities with whom we expect to do business are
found to have violated applicable laws, we may be subject to criminal, civil or administrative sanctions, including exclusions from
government funded healthcare programs, or, if we are not subject to such actions, we may suffer reputational harm for conducting
business with persons or entities found, or accused of being, in violation of such laws. Any such events could adversely affect our
ability to operate our business and our results of operations.
Inadequate funding for the FDA, the SEC and other government agencies, or a work slowdown or stoppage at those agencies as
part of a broader federal government shutdown, could hinder their ability to hire and retain key leadership and other personnel,
prevent new products and services from being developed or commercialized in a timely manner, or otherwise prevent those
agencies from performing normal business functions on which the operation of our business may rely, which could negatively
impact our business.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government
budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and
policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the
SEC and other government agencies on which our operations may rely, including those that fund research and development activities,
is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved
by necessary government agencies, which could adversely affect our business. For example, over the last several years, including
December 22, 2018 to January 25, 2019, the U.S. government has shut down several times and certain regulatory agencies, such as the
FDA and the SEC, have had to furlough employees and stop critical activities. If a prolonged government shutdown or a series of
shutdowns occurs, it could significantly affect the ability of the FDA to timely review and process our regulatory submissions, which
could have a material adverse effect on our business. Further, future government shutdowns could impact our ability to gain access to
the public markets and obtain necessary capital in order to properly capitalize and continue our operations, which could have a
material adverse effect on our business and financial condition.
Our business and operations have been affected by and could be materially and adversely affected in the future by the effects of
health epidemics and pandemics, including the evolving and ongoing effects of the COVID-19 pandemic.
Our business and operations could be adversely affected by health epidemics and pandemics, including the ongoing COVID-
19 pandemic, which has presented a substantial public health and economic challenge around the world and has affected, and
continues to affect, our employees, clinical trial participants, communities, and business operations, as well as the U.S. and global
economy and financial markets. To date, COVID 19’s impact on our operations has been limited to the inability to travel to clinical
trial sites, clinical trial sites not allowing nonessential personnel on site for the purpose of monitoring activity, delays in the
manufacture of our drug requirements by contracted third-party manufacturers and limitations on patient recruiting and enrollment.
There can be no guarantee we will not experience other impacts, such as being forced to further delay or pause enrollment,
experiencing potential interruptions to our supply chain, facing difficulties or additional costs in enrolling patients in future clinical
trials or being able to achieve full enrollment of our studies within the timeframes we anticipate, or at all.
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The negative impacts caused by the COVID-19 pandemic have been and may continue to be extensive in many aspects of
society and could continue to result in significant disruptions to the global economy, as well as businesses and capital markets around
the world. The full extent to which the COVID-19 pandemic could ultimately impact our business, preclinical studies, clinical trials
and financial results will depend on future developments, which are highly uncertain and cannot be accurately predicted, including the
emergence of new variants and subvariants of the virus that causes COVID-19.
Other public health crises, including any future outbreaks of contagious diseases, could have additional material adverse
effects on our business. The extent to which any future public health crises may impact our business, results of operations, and
financial condition depends on many factors which are highly uncertain and are difficult to predict. These factors include, but are not
limited to, the duration and spread of any outbreak, its severity, the actions to contain or address the impact of the outbreak, the
timing, distribution, and efficacy of vaccines and other treatments, United States and foreign government actions to respond to
possible reductions in global economic activity, and how quickly and to what extent normal economic and operating conditions can
resume.
Unstable market and economic conditions may have serious adverse effects on our ability to raise funds, which may cause delays,
restructuring or cessation of our operations.
From time to time, global and domestic credit and financial markets have experienced extreme disruptions, including
severely diminished liquidity and credit availability, declines in economic growth, increases in unemployment rates, and uncertainty
about economic stability. If the equity and credit markets deteriorate, it may make a debt or equity financing more difficult to
complete, costlier, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms will have a
material adverse effect on our business strategy and financial condition, and could require us to liquidate and dissolve the Company.
Risks Related to the Development of Our Drug Candidates
We must complete extensive clinical trials to demonstrate the safety and efficacy of our drug candidates. If we are unable to
demonstrate the safety and efficacy of our drug candidates, we will not be successful.
To date, none of our drug candidates have been approved for sale in the U.S. or any foreign country. While antisense
therapeutics have been in development for over 20 years, only a limited number of antisense drugs have been successfully developed
to date. Further, the development of liposomal antisense therapeutics, which comprise our drug therapeutics technology, has faced
many challenges and generally remains unproven in the treatment of cancers. The success of our business depends primarily on our
ability to develop and commercialize our drug candidates successfully. Our drug candidates must satisfy rigorous standards of safety
and efficacy before they can be approved for sale. To satisfy these standards, we must engage in expensive and lengthy testing of our
drug candidates.
We may not be able to obtain authority from the FDA or other equivalent foreign regulatory agencies to move on to further
efficacy segments of our ongoing clinical trials or commence and complete any other clinical trials for any of our drug candidates.
Positive results in preclinical studies of a drug candidate may not be predictive of similar results in human clinical trials, and
promising results from early clinical trials of a drug candidate may not be replicated in later clinical trials. A number of companies in
the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving
promising results in early-stage development. Accordingly, the results from the preclinical tests or clinical trials for our drug
candidates may not be predictive of the results we may obtain in later stage trials. The failure of clinical trials to demonstrate safety
and efficacy of one or more of our drug candidates will have a material adverse effect on our business and financial condition.
Delays in the commencement of clinical trials of our drug candidates could result in increased costs to us and delay our ability to
generate revenues.
Our drug candidates will require continued extensive clinical trials prior to the submission of a regulatory application for
commercial sales. Because of the nature of clinical trials, we do not know whether future planned clinical trials will begin on time, if
at all. Delays in the commencement of clinical trials could significantly increase our drug development costs and delay any
commercialization of our drug candidates. In addition, many of the factors that may cause, or lead to, a delay in the commencement of
clinical trials may also ultimately lead to denial of regulatory approval of a drug candidate.
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The commencement of clinical trials can be delayed for a variety of reasons, including delays in:
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demonstrating sufficient safety and efficacy in past clinical trials to obtain regulatory approval to commence a
further clinical trial;
convincing the FDA that we have selected valid endpoints for use in proposed clinical trials;
reaching agreements on acceptable terms with prospective contract manufacturers for manufacturing sufficient
quantities of our drug candidates; and
•
obtaining institutional review board approval to conduct a clinical trial at a prospective site.
In addition, the commencement of clinical trials may be delayed due to insufficient patient enrollment, which is a function of
many factors, including the size of the patient population, the nature of the protocol, the proximity of patients to clinical sites, the
availability of effective treatments for the relevant disease and the eligibility criteria for the clinical trial.
Delays in the completion of, or the termination of, clinical trials of our drug candidates could result in increased costs to us and
could delay or prevent us from generating revenues.
Once a clinical trial has begun, it may be delayed, suspended or terminated by us or the FDA or other regulatory authorities
due to a number of factors, including:
•
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regulators or institutional review boards may not authorize us to commence or conduct a clinical trial at a
prospective trial site;
our preclinical tests or clinical trials may produce negative or inconclusive results, and we may decide, or regulators
may require us, to conduct additional preclinical testing or clinical trials or we may abandon projects that we expect
may not be promising;
• we might have to suspend or terminate our clinical trials if the participating patients are being exposed to
unacceptable health risks;
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regulators or institutional review boards may require that we hold, suspend or terminate clinical research for various
reasons, including noncompliance with regulatory requirements;
the cost of our clinical trials may be greater than we currently anticipate and we may lack adequate funding to
continue the clinical trial;
the timing of our clinical trials may be longer than we currently anticipate;
our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to
us in a timely manner (including delays or inability to manufacture or obtain sufficient quantities of materials for use
in clinical trials);
inadequacy of or changes in our manufacturing process or compound formulation;
slower than expected rates of patient recruitment and enrollment or lower than expected patient retention rates;
the effects of our drug candidates may not be the desired effects or may include undesirable side effects or our drug
candidates may have other unexpected characteristics;
•
changes in applicable regulatory policies and regulations;
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delays in identifying and reaching agreement on acceptable terms with prospective clinical trial sites;
uncertainty regarding proper dosing;
failure of our clinical research organizations to comply with all regulatory and contractual requirements or otherwise
fail to perform their services in a timely or acceptable manner;
scheduling conflicts with participating clinicians and clinical institutions;
failure to construct appropriate clinical trial protocols;
insufficient data to support regulatory approval;
inability or unwillingness of medical investigators to follow our clinical protocols; and
the timing of discussions and meetings with the FDA or other regulatory authorities regarding the scope or design of
our clinical trials.
Many of these factors that may lead to a delay, suspension or termination of clinical trials of our drug candidates may also
ultimately lead to denial of regulatory approval of our drug candidates.
From time to time, we may publicly announce our expected timing of completing certain milestones relating to various
scientific, clinical, regulatory, development and other objectives related to our business. For example, these milestones may include
the commencement or completion of scientific studies or clinical trials or the submission or approval of regulatory filings. Our
estimates for completion of these milestones are based on a variety of assumptions, some of which may be out of our control.
If we experience delays in the completion of, or termination of, clinical trials of any drug candidates in the future, or if we do
not meet our milestones within the estimated timeframes that we have publicly announced, our business, financial condition and the
commercial prospects for our drug candidates could be materially adversely affected, and our ability to generate product revenues
could be delayed or eliminated. In addition, our stock price could decline.
If we are unable to obtain U.S. and/or foreign regulatory approval, we will be unable to commercialize our drug candidates.
Our drug candidates are subject to extensive governmental regulations relating to, among other things, research, testing,
development, manufacturing, safety, efficacy, record keeping, labeling, marketing and distribution of drugs. Rigorous preclinical
testing and clinical trials and an extensive regulatory approval process are required in the U.S. and in many foreign jurisdictions prior
to the commercial sale of our drug candidates. Satisfaction of these and other regulatory requirements is costly, time consuming,
uncertain and subject to unanticipated delays. It is possible that none of the drug candidates we are developing will obtain marketing
approval. In connection with the clinical trials for our drug candidates, we face risks that:
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the drug candidate may not prove to be sufficiently efficacious;
the drug candidate may not prove to be safe;
the drug candidate may not be readily co-administered or combined with other drugs or drug candidates;
the results may not confirm the positive results from earlier preclinical studies or clinical trials;
the results may not meet the level of statistical significance required by the FDA or other regulatory agencies; and
the FDA or other regulatory agencies may require us to carry out additional studies.
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We have limited experience in conducting and managing later stage clinical trials necessary to obtain regulatory approvals,
including approval by the FDA. However, this risk would be mitigated in the event the Company is successful entering into a co-
development agreement with a pharma partner for late stage clinical development. The time required to complete clinical trials and for
the FDA and other countries’ regulatory review processes is uncertain and typically takes many years. Our analysis of data obtained
from preclinical and clinical trials is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or
prevent regulatory approval. We may also encounter unanticipated delays or increased costs due to government regulation from future
legislation or administrative action or changes in FDA policy during the period of product development, clinical trials, and FDA
regulatory review.
Any regulatory approval to market a product may be subject to limitations on the indicated uses for which we may market the
product and affect reimbursement by third-party payors. These limitations may limit the size of the market for the product. We may
also become subject to numerous foreign regulatory requirements governing the conduct of clinical trials, manufacturing and
marketing authorization, pricing and third-party reimbursement. The foreign regulatory approval process includes all of the risks
associated with FDA approval described above as well as risks attributable to the satisfaction of foreign regulations. Approval by the
FDA does not ensure approval by regulatory authorities outside the U.S. Foreign jurisdictions may have different approval procedures
than those required by the FDA and may impose additional testing requirements for our drug candidates.
In addition to regulations in the U.S., we may be subject to a variety of regulations in other jurisdictions governing, among other
things, clinical trials and any commercial sales and distribution of our products, if approved.
Whether or not we obtain FDA approval for a drug candidate, we must obtain the requisite approvals from regulatory
authorities in non-U.S. countries prior to the commencement of clinical trials or marketing of our products in those countries. Certain
countries outside of the U.S. have a process that requires the submission of a clinical trial application, much like an IND, prior to the
commencement of human clinical trials. In the E.U., for example, a CTA must be submitted to the competent national health authority
and to independent ethics committees in each country in which a company intends to conduct clinical trials. Once the CTA is
approved in accordance with a country’s requirements, clinical trial development may proceed in that country.
The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary
from country to country. In all cases, the clinical trials must be conducted in accordance with GCP and other applicable regulatory
requirements.
To obtain regulatory approval of an investigational drug under E.U. regulatory systems, we must submit a marketing
authorization application. This application is similar to the NDA in the U.S., with the exception of, among other things, country-
specific document requirements. Drugs can be authorized in the E.U. by using (i) the centralized authorization procedure, (ii) the
mutual recognition procedure, (iii) the decentralized procedure or (iv) national authorization procedures.
The EMA implemented the centralized procedure for the approval of human drugs to facilitate marketing authorizations that
are valid throughout the E.U. This procedure results in a single marketing authorization granted by the European Commission that is
valid across the E.U., as well as in Iceland, Liechtenstein and Norway. The centralized procedure is compulsory for certain human
drugs including those that are: (i) derived from biotechnology processes, such as genetic engineering, or (ii) contain a new active
substance indicated for the treatment of certain diseases.
Changes in existing laws and regulations affecting the healthcare industry could increase our costs and otherwise adversely affect
our business.
Our research and development activities, preclinical studies and clinical trials, and the manufacturing, marketing and labeling
of any products we may develop, are subject to extensive regulation by the FDA and other regulatory authorities in the U.S. and other
countries. Changes in existing federal, state and foreign laws and agency regulations may be established that could prevent or delay
regulatory approval of our drug candidates or materially increase our costs, including:
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changes in the FDA and foreign regulatory processes for new therapeutics that may delay or prevent the approval of
any of our drug candidates;
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new laws, regulations, or judicial decisions related to healthcare availability or the payment for healthcare products
and services, including prescription drugs, that would make it more difficult for us to market and sell products once
they are approved by the FDA or foreign regulatory agencies;
changes in FDA and foreign regulations that may require additional safety monitoring prior to or after the
introduction of new products to market, which could materially increase our costs of doing business; and
changes in FDA and foreign current cGMP that would make it more difficult for us to manufacture our drug
candidates in accordance with cGMP.
Delays in obtaining or preventing our obtaining regulatory approval of our drug candidates could materially adversely affect
our ability to commercialize any of our drug candidates and our ability to receive product revenues or to receive milestone payments
or royalties from any product rights we might license to others.
We rely on third parties to conduct clinical trials for our drug candidates, and their failure to timely and properly perform their
obligations may result in costs and delays that prevent us from obtaining regulatory approval or successfully commercializing our
drug candidates.
We rely on independent contractors, including clinical research organizations, in certain areas that are particularly relevant to
our research and drug development plans, such as for data management for the conduct of clinical trials. The competition for these
relationships is intense, and we may not be able to maintain our relationships with them on acceptable terms. Independent contractors
generally may terminate their engagements at any time, subject to notice. As a result, we can control their activities only within certain
limits, and they will devote only a certain amount of their time conducting research on and trials of our drug candidates and assisting
in developing them. If they do not successfully carry out their duties under their agreements with us, fail to inform us if these trials fail
to comply with clinical trial protocols or fail to meet expected deadlines, our clinical trials may need to be extended, delayed or
terminated. We may not be able to enter into replacement arrangements without undue delays or excessive expenditures. If there are
delays in testing or regulatory approvals as a result of the failure to perform by our independent contractors or other outside parties,
our drug candidate development costs will increase and we may not be able to attain regulatory approval for or successfully
commercialize our drug candidates.
In addition, we have no control over the financial health of our independent contractors. Several of our independent
contractors are in possession of valuable and sensitive information relating to the safety and efficacy of our drug candidates, and
several others provide services to a significant percentage of the patients enrolled in our clinical trials in which such independent
contractors participate. Should one or more of these independent contractors become insolvent, or otherwise are not able to continue to
provide services to us, the clinical trial in which such contractor participates could become significantly delayed and we may be
materially adversely affected as a result of the delays and additional expenses associated with such event.
We may not be able to obtain or maintain orphan drug exclusivity for our product candidates.
Prexigebersen has received orphan drug designations for the treatment of AML in the U.S. Orphan designation is available to
drugs intended to treat, diagnose or prevent a rare disease or condition that affects fewer than 200,000 people in the U.S. at the time of
application for orphan designation. Orphan drug designation must be requested before submitting an application for marketing
authorization. Orphan designation qualifies the sponsor of the product for a tax credit and marketing incentives. The first sponsor to
receive FDA marketing approval for a drug with an orphan designation is entitled to a seven-year exclusive marketing period in the
U.S. for that product for that indication and, typically, a waiver of the prescription drug user fee for its marketing application.
However, a drug that the FDA considers to be clinically superior to, or different from, the approved orphan drug, even though for the
same indication, may also obtain approval in the U.S. during the seven-year exclusive marketing period. Orphan drug exclusive
marketing rights may also be lost if the FDA later determines that the request for designation was materially defective or if the
manufacturer is unable to assure sufficient quantity of the drug.
In October 2016, prexigebersen also received orphan drug designation for AML in the E.U. from the EMA. To receive
orphan drug designation from the EMA, a therapy must be intended for the treatment of a life-threatening or chronically debilitating
rare condition with a prevalence of less than five in 10,000 in the E.U. Orphan drug designation provides incentives designed to
40
facilitate development, including fee reductions for protocol assistance, scientific advice and importantly, may provide up to ten years
of market exclusivity in the E.U. following product approval.
There is no guarantee that any of our other drug candidates will receive orphan drug designation or that, even if such drug
candidate is granted such status, the drug candidate’s clinical development and regulatory approval process will not be delayed or will
be successful.
Risks Related to Manufacturing Our Drug Candidates
We rely on third parties for manufacturing of our clinical drug supplies; our dependence on these manufacturers may impair the
development of our drug candidates.
We have no ability to internally manufacture the drug candidates that we need to conduct our clinical trials. For the
foreseeable future, we expect to continue to rely on third-party manufacturers and other third parties to produce, package and store
sufficient quantities of our drug candidates and any future drug candidates for use in our clinical trials. We have entered into
agreements with third-party manufacturers for the manufacture of our drug requirements, including agreements for the manufacture of
prexigebersen for use in our Phase 2 clinical trial in AML, as well as agreements for the manufacture of BP1002, BP1003 and
BP1001-A for use in our Phase 1 clinical trials. To date, we have made steady progress with our current third-party manufacturers,
overcoming challenges associated with scaling up manufacturing to develop their capabilities to supply us with our necessary
quantities of drug supplies for our clinical trials. However, we may face various risks and uncertainties in connection with our reliance
on third-party manufacturers, including:
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reliance on third-party manufacturers for regulatory compliance and quality assurance;
the possibility of breach of the manufacturing agreement by the third-party manufacturer because of factors beyond
our control;
the possibility of termination or nonrenewal of our manufacturing agreement by the third-party manufacturer at a
time that is costly or inconvenient for us;
the potential that third-party manufacturers will develop know-how owned by such third-party manufacturer in
connection with the production of our drug candidates that is necessary for the manufacture of our drug candidates;
and
reliance on third-party manufacturers to assist us in preventing inadvertent disclosure or theft of our proprietary
knowledge.
Our drug candidates are complicated and expensive to manufacture. If our third-party manufacturers fail to deliver our drug
candidates for clinical use on a timely basis, with sufficient quality, and at commercially reasonable prices, we may be required to
delay or suspend clinical trials or otherwise discontinue development of our drug candidates. While we may be able to identify
replacement third-party manufacturers or develop our own manufacturing capabilities for these drug candidates, this process would
likely cause a delay in the availability of our drug candidates and an increase in costs. In addition, third-party manufacturers may have
a limited number of facilities in which our drug candidates can be manufactured, and any interruption of the operation of those
41
facilities due to events such as equipment malfunction or failure or damage to the facility by natural disasters could result in the
cancellation of shipments, loss of product in the manufacturing process or a shortfall in available drug candidates.
We may in the future elect to manufacture certain of our drug candidates in our own manufacturing facilities. If we do so, we
will require substantial additional funds and need to recruit qualified personnel in order to build or lease and operate any
manufacturing facilities.
There are underlying risks associated with the manufacture of our drug candidates, which have never been manufactured in large
scale. Furthermore, we anticipate continued reliance on third-party manufacturers if we are successful in obtaining marketing
approval from the FDA or other regulatory agencies for any of our drug candidates.
To date, our drug candidates have been manufactured in relatively small quantities for preclinical testing and clinical trials by
third-party manufacturers, and have never been manufactured in large scale. Additionally, as in the development of any new
compound, there are underlying risks associated with their manufacture. These risks include, but are not limited to, cost, process scale-
up, process reproducibility, construction of a suitable process plant, timely availability of raw materials, as well as regulatory issues
associated with the manufacture of an active pharmaceutical agent. Any of these risks may prevent us from successfully developing
our drug candidates. Our failure, or the failure of our third-party manufacturers to achieve and maintain these high manufacturing
standards, including the incidence of manufacturing errors and reliable product packaging for diverse environmental conditions, could
result in patient injury or death, product recalls or withdrawals, delays or failures in product testing or delivery, cost overruns or other
problems that could materially adversely affect our business and financial condition.
If the FDA or other regulatory agencies approve any of our drug candidates for commercial sale, we expect that we would
continue to rely, at least initially, on third-party manufacturers to produce commercial quantities of such approved drug candidates.
These manufacturers may not be able to successfully increase the manufacturing capacity for any of our approved drug candidates in a
timely or economic manner, or at all. Significant scale-up of manufacturing may require additional validation studies, which the FDA
or other regulatory authorities must review and approve. If our third-party manufacturers are unable to successfully increase the
manufacturing capacity for a drug candidate, or we are unable to establish our own manufacturing capabilities, the commercial launch
of any approved products may be delayed or there may be a shortage in supply.
Identification of previously unknown problems with respect to a drug candidate, manufacturer or facility may result in restrictions
on the drug candidate, manufacturer or facility.
The FDA stringently applies regulatory standards for the manufacturing of our drug candidates. Identification of previously
unknown problems with respect to a drug candidate, manufacturer or facility may result in restrictions on the drug candidate,
manufacturer or facility, including warning letters, suspensions of regulatory approvals, operating restrictions, delays in obtaining new
product approvals, withdrawal of the product from the market, product recalls, fines, injunctions and criminal prosecution. Any of the
foregoing could have a material adverse effect on our business and financial condition.
We may experience delays in the development of our drug candidates if the third-party manufacturers of our drug candidates
cannot meet FDA requirements relating to current Good Manufacturing Practices.
Our third-party manufacturers are required to produce our drug candidates under FDA cGMP in order to meet acceptable
standards for our preclinical testing and clinical trials. If such standards change, the ability of third-party manufacturers to produce our
drug candidates on the schedule we require for our preclinical tests and clinical trials may be affected. In addition, third-party
manufacturers may not perform their obligations under their agreements with us or may discontinue their business before the time
required by us to gain approval for or commercialize our drug candidates. Any difficulties or delays in the manufacturing and supply
of our drug candidates could increase our costs or cause us to lose revenue or postpone or cancel clinical trials.
The FDA also requires that we demonstrate structural and functional comparability of a drug candidate produced by different
third-party manufacturers. Because we may use multiple sources to manufacture our drug candidates, we may need to conduct
comparability studies to assess whether manufacturing changes have affected the safety, identity, purity or potency of any drug
candidate compared to the drug candidate produced by another manufacturer. If we are unable to demonstrate comparability, the FDA
could require us to conduct additional clinical trials, which would be expensive and significantly delay commercialization of our drug
candidates.
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Risks Related to Commercialization
If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our
drug candidates, we may not generate product revenue.
We have no commercial products, and we do not currently have an organization for the sales and marketing of
pharmaceutical products. In order to successfully commercialize any drug candidates that may be approved in the future by the FDA
or comparable foreign regulatory authorities, we must build our sales and marketing capabilities or make arrangements with third
parties to perform these services. For certain drug candidates in selected indications where we believe that an approved product could
be commercialized by a specialty sales force that calls on a limited but focused group of physicians, we may commercialize these
products ourselves. However, in therapeutic indications that require a large sales force selling to a large and diverse prescribing
population, we may enter into arrangements with other companies for commercialization. If we are unable to establish adequate sales,
marketing and distribution capabilities, whether independently or with third parties, we may not be able to generate product revenue
and may not become profitable.
If our future drugs do not achieve market acceptance, we may be unable to generate significant revenue, if any.
Even if our drug candidates obtain regulatory approval, they may not gain market acceptance among physicians, health care
payors, patients and the medical community. Factors that we believe could materially affect market acceptance of our drug candidates
include:
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the timing of market introduction of competitive drugs;
the demonstrated clinical safety and efficacy of our drug candidates compared to other drugs and other drug
candidates;
the suitability of our drug candidates to be co-administered or combined with other drugs or drug candidates;
the durability of our drug candidates in their ability to prevent the emergence of drug-resistant viral mutants;
the convenience and ease of administration of our drug candidates;
the existence, prevalence and severity of adverse side effects;
other potential advantages of alternative treatment methods;
the effectiveness of marketing and distribution support;
the cost-effectiveness of our drug candidates; and
the availability of reimbursement from managed care plans, the government and other third-party payors.
If our approved drug candidates fail to achieve market acceptance, we would not be able to generate significant revenue. In
addition, even if our approved drug candidates achieve market acceptance, we may not be able to maintain that market acceptance
over time if:
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new products or technologies are introduced that are more favorably received than our products, are more cost
effective or render our products obsolete;
unforeseen complications arise with respect to the use of our products; or
sufficient third-party insurance coverage or reimbursement does not remain available.
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If third-party payors do not adequately reimburse patients for any of our drug candidates that are approved for marketing, they
might not be purchased or used, and our revenues and profits will not develop or increase.
Our revenues and profits will depend significantly upon the availability of adequate reimbursement for the use of any
approved drug candidates from governmental and other third-party payors, both in the U.S. and in foreign markets. Reimbursement by
a third party may depend upon a number of factors, including the third-party payor’s determination that use of an approved drug
candidate is:
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a covered benefit under its health plan;
safe, effective and medically necessary;
appropriate for the specific patient;
cost effective; and
neither experimental nor investigational.
The regulations that govern marketing approvals, pricing and reimbursement for new therapeutic and diagnostic products
vary widely from country to country. Some countries require approval of the sale price of a drug candidate before it can be marketed.
In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets,
prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a
result, we might obtain regulatory approval for a drug candidate in a particular country, but then be subject to price regulations that
delay our commercial launch of the approved drug and negatively impact the revenues we are able to generate from the sale of the
approved drug in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more drug
candidates, even if our drug candidates obtain regulatory approval.
Obtaining reimbursement approval for an approved drug from each third-party and government payor is a time-consuming
and costly process that could require us to provide supporting scientific, clinical and cost-effectiveness data for the use of any
approved drug candidates to each payor. We may not be able to provide data sufficient to gain acceptance with respect to
reimbursement. There also exists substantial uncertainty concerning third-party reimbursement for the use of any approved drug
incorporating new technology, and even if determined eligible, coverage may be more limited than the purposes for which the drug is
approved by the FDA. Moreover, eligibility for coverage does not imply that any approved drug will be reimbursed in all cases or at a
rate that allows us to make a profit or even cover our costs. Interim payments for new products, if applicable, may also be insufficient
to cover our costs and may not be made permanent. Reimbursement rates may vary according to the use of the approved drugs and the
clinical setting in which it is used, may be based on payments allowed for lower-cost products or combinations of products that are
already reimbursed, may be incorporated into existing payments for other products or services, and may reflect budgetary constraints
and/or imperfections in Medicare or Medicaid data used to calculate these rates. Net prices for products may be reduced by mandatory
discounts or rebates required by government health care programs or by any future relaxation of laws that restrict imports of certain
medical products from countries where they may be sold at lower prices than in the U.S.
In the U.S., at both the federal and state levels, the government regularly proposes legislation to reform health care and its
cost, and such proposals have received increasing political attention. While health care reform may increase the number of patients
who have insurance coverage for the use of any approved drug, it may also include changes that adversely affect reimbursement for
approved drugs. In addition, there has been, and we expect that there will continue to be, federal and state proposals to constrain
expenditures for medical products and services, which may affect payments for any of our drug candidates that obtain approval. The
Centers for Medicare and Medicaid Services frequently change product descriptors, coverage policies, product and service codes,
payment methodologies and reimbursement values. Third-party payors often follow Medicare coverage policy and payment
limitations in setting their own reimbursement rates and may have sufficient market power to demand significant price reductions. As
a result of actions by these third-party payors, the health care industry is experiencing a trend toward containing or reducing costs
through various means, including lowering reimbursement rates, limiting therapeutic class coverage and negotiating reduced payment
schedules with service providers for drug products.
44
Our inability to promptly obtain coverage and profitable reimbursement rates from government-funded and private payors for
any of our drug candidates that obtain approval could have a material adverse effect on our business and financial condition.
Risks Related to Intellectual Property
If our patent position does not adequately protect our drug candidates, others could compete against us more directly, which would
harm our business.
Our patent portfolio currently includes five issued patents in the U.S. and 17 issued patents in foreign jurisdictions:
Claims Related to DNAbilize®
Patent No.
US 9,744,187
Title
P-ethoxy nucleic acids for liposomal formulation
Date Issued
August 29, 2017
US 10,335,428
P-ethoxy nucleic acids for liposomal formulation
July 2, 2019
US 10,898,506
P-ethoxy nucleic acids for liposomal formulation
January 26, 2021
SG 11201802718P
P-ethoxy nucleic acids for liposomal formulation
May 12, 2021
EA 038277
(in force in AM, AZ, BY,
KG, KZ, RU, TJ, TM)
P-ethoxy nucleic acids for liposomal formulation
August 4, 2021
AU 2016340123
P-ethoxy nucleic acids for liposomal formulation
January 5, 2023
MX 403603
IN 472686
P-ethoxy nucleic acids for liposomal formulation
June 20, 2023
P-ethoxy nucleic acids for liposomal formulation
November 24, 2023
Patent No.
US 10,927,379
US 11,041,153
EP 3 512 525
(in force in DE, ES, FR, GB,
and NL)
Compositions and Methods of Use for Specific Drug Targets
Title
Combination therapy with liposomal antisense oligonucleotides
Date Issued
February 23, 2021
P-ethoxy nucleic acids for STAT3 inhibition
June 22, 2021
Combination therapy with liposomal antisense oligonucleotides
July 27, 2022
JP 7132911
Combination therapy with liposomal antisense oligonucleotides
August 30, 2022
JP 7186721
P-ethoxy nucleic acids for IGF-1R inhibition
December 1, 2022
CN ZL 201880033244.6
P-ethoxy nucleic acids for STAT3 inhibition
December 16, 2022
EA 041953
(in force in AM, AZ, BY,
KG, KZ, RU, TJ, TM)
Combination therapy with liposomal antisense oligonucleotides
December 19, 2022
45
JP 7237009
P-ethoxy nucleic acids for STAT3 inhibition
March 2, 2023
EA 042663
(in force in AM, AZ, BY,
KG, KZ, RU, TJ, TM)
P-ethoxy nucleic acids for STAT3 inhibition
March 9, 2023
HK 400 11951
Combination therapy with liposomal antisense oligonucleotides
April 6, 2023
JP 7284709
EA 044637
MX 408790
MX 408785
P-ethoxy nucleic acids for BCL2 inhibition
May 23, 2023
P-ethoxy nucleic acids for BCL2 inhibition
September 19, 2023
P-ethoxy nucleic acids for STAT3 inhibition
December 7, 2023
P-ethoxy nucleic acids for BCL2 inhibition
December 7, 2023
We have six additional pending patent applications in the U.S. and seven additional allowed patent application in a foreign
jurisdiction. Further, we have pending patent applications in key foreign jurisdictions across our six families of applications. Our
success depends in large part on our ability to obtain and maintain patent protection both in the U.S. and in other countries for our
drug candidates. Our ability to protect our drug candidates from unauthorized or infringing use by third parties depends in substantial
part on our ability to obtain and maintain valid and enforceable patents. Due to evolving legal standards relating to the patentability,
validity and enforceability of patents covering pharmaceutical inventions and the scope of claims made under these patents, our ability
to maintain, obtain and enforce patents is uncertain and involves complex legal and factual questions. Accordingly, rights under any
issued patents may not provide us with sufficient protection for our drug candidates or provide sufficient protection to afford us a
commercial advantage against competitive products or processes. We cannot guarantee that any patents will issue from any pending or
future patent applications owned by or licensed to us.
Even if patents have issued or will issue, we cannot guarantee that the claims of these patents are or will be valid or
enforceable or will provide us with any significant protection against competitive products or otherwise be commercially valuable to
us. Patent applications in the U.S. are maintained in confidence for up to 18 months after their filing. In some cases, however, patent
applications remain confidential in the USPTO for the entire time prior to issuance as a U.S. patent. Similarly, publication of
discoveries in the scientific or patent literature often lags behind actual discoveries. Consequently, we cannot be certain that we or our
licensors were the first to invent, or the first to file patent applications on, our drug candidates. The costs of these proceedings could be
substantial and it is possible that our efforts would be unsuccessful, resulting in a loss of our U.S. patent position. Furthermore, we
may not have identified all U.S. and foreign patents or published applications that affect our business either by blocking our ability to
commercialize our drugs or by covering similar technologies that affect our drug market.
The claims of the issued patents that are licensed to us, and the claims of any patents which may issue in the future and be
owned by or licensed to us, may not confer on us significant commercial protection against competing products. Additionally, our
patents may be challenged by third parties, resulting in the patent being deemed invalid, unenforceable or narrowed in scope, or the
third party may circumvent any such issued patents. Our patents might not contain claims that are sufficiently broad to prevent others
from utilizing our technologies. Consequently, our competitors may independently develop competing products that do not infringe
our patents or other intellectual property. To the extent a competitor can develop similar products using a different molecule, our
patents may not prevent others from directly competing with us.
The laws of some foreign jurisdictions do not protect intellectual property rights to the same extent as in the U.S. and many
companies have encountered significant difficulties in protecting and defending such rights in foreign jurisdictions. If we encounter
such difficulties in protecting or are otherwise precluded from effectively protecting our intellectual property rights in foreign
jurisdictions, our business prospects could be substantially harmed.
Because of the extensive time required for development, testing and regulatory review of a drug candidate, it is possible that,
before any of our drug candidates can be commercialized, any related patent may expire or remain in force for only a short period
46
following commercialization of our drug candidates, thereby reducing any advantages of the patent. To the extent our drug candidates
based on that technology are not commercialized significantly ahead of the date of any applicable patent, or to the extent we have no
other patent protection on such drug candidates, those drug candidates would not be protected by patents, and we would then rely
solely on other forms of exclusivity, such as regulatory exclusivity provided by the FDCA or trade secret protection.
The Leahy-Smith America Invents Act (the “America Invents Act”) was signed into law in September 2011, and many of the
substantive changes became effective in March 2013. The America Invents Act reforms U.S. patent law in part by changing the
standard for patent approval from a “first to invent” standard to a “first to file” standard and developing a post-grant review system.
This legislation changes U.S. patent law in a way that may weaken our ability to obtain patent protection in the U.S. for those
applications filed after March 2013.
If any third-party owners of intellectual property we may license in the future do not properly maintain or enforce the patents
underlying such licenses, our competitive position and business prospects will be harmed.
We may enter into licenses for third-party intellectual property in the future. Our success will depend in part on the ability of
our licensors to obtain, maintain and enforce patent protection for their intellectual property, in particular, those patents to which we
have secured exclusive rights. If applicable, our licensors may not successfully prosecute the patent applications to which we are
licensed. Even if patents issue in respect of any such patent applications, our licensors may fail to maintain these patents, may
determine not to pursue litigation against other companies that are infringing these patents, or may pursue such litigation less
aggressively than we would. In addition, our licensors may terminate their agreements with us in the event we breach the applicable
license agreement and fail to cure the breach within a specified period of time. Without protection for the intellectual property we
license, other companies might be able to offer substantially identical products for sale, which could materially adversely affect our
competitive business position, business prospects and financial condition.
Because our research and development of drug candidates incorporates compounds and other information that is the
intellectual property of third parties, we depend on continued access to such intellectual property to conduct and complete our
preclinical and clinical research and commercialize the drug candidates that result from this research. We expect that future licenses
would impose, numerous obligations on us. For example, under our existing and future license agreements, we may be required to pay
(i) annual maintenance fees until a drug candidate is sold for the first time, (ii) running royalties on net sales of drug candidates,
(iii) minimum annual royalties after a drug candidate is sold for the first time, and (iv) one-time payments upon the achievement of
specified milestones. We may also be required to reimburse patent costs incurred by the licensor, or we may be obligated to pay
additional royalties, at specified rates, based on net sales of our drug candidates that incorporate the licensed intellectual property
rights. We may also be obligated under some of these agreements to pay a percentage of any future sublicensing revenues that we may
receive. Future license agreements may also include payment obligations such as milestone payments or minimum expenditures for
research and development. We expect that any future licenses would contain reporting, insurance and indemnification requirements.
If we infringe or are alleged to infringe intellectual property rights of third parties, our business could be harmed.
Our research, development and commercialization activities, including any drug candidates resulting from these activities,
may infringe or be claimed to infringe patents or other proprietary rights owned by third parties and to which we do not hold licenses
or other rights. There may be applications that have been filed but not published that, if issued, could be asserted against us. If a patent
infringement suit were brought against us, we could be forced to stop or delay research, development or manufacturing of drug
candidate that is the subject of the suit. Further, if we are found to have infringed a third- party patent, we could be obligated to pay
royalties and/or other payments to the third party related to our drug candidates, which may be substantial, or we could be enjoined
from selling our drug candidates that obtain approval.
There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the
pharmaceutical and biotechnology industries. In addition to infringement claims against us, we may become a party to other patent
litigation and other proceedings, including interference proceedings declared by the USPTO and opposition proceedings in the
European Patent Office, regarding intellectual property rights with respect to our drug candidates and technology. Uncertainties
resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our
business and financial condition.
47
Litigation regarding patents, intellectual property and other proprietary rights may be expensive and time consuming. If we are
involved in such litigation, it could cause delays in bringing drug candidates to market and harm our ability to operate.
Our success will depend in part on our ability to operate without infringing the proprietary rights of third parties. Although
we are not currently aware of any litigation or other proceedings or third-party claims of intellectual property infringement related to
our drug candidates, the pharmaceutical industry is characterized by extensive litigation regarding patents and other intellectual
property rights. Other parties may obtain patents in the future and allege that the use of our technologies infringes these patent claims
or that we are employing their proprietary technology without authorization. Likewise, third parties may challenge or infringe upon
our existing or future patents. Proceedings involving our patents or patent applications or those of others could result in adverse
decisions regarding:
•
•
the patentability of our inventions relating to our drug candidates; and/or
the enforceability, validity or scope of protection offered by our patents relating to our drug candidates.
Even if we are successful in these proceedings, we may incur substantial costs and divert management time and attention in
pursuing these proceedings, which could have a material adverse effect on us. If we are unable to avoid infringing the patent rights of
others, we may be required to seek a license, defend an infringement action or challenge the validity of the patents in court. Patent
litigation is costly and time consuming. We may not have sufficient resources to bring these actions to a successful conclusion. In
addition, if we do not obtain a license, develop or obtain non-infringing technology, fail to defend an infringement action successfully
or have infringed patents declared invalid, we may:
•
•
•
incur substantial monetary damages;
encounter significant delays in bringing our drug candidates to market; and/or
be precluded from participating in the manufacture, use or sale of our drug candidates or methods of treatment
requiring licenses.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there
is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition,
during the course of this kind of litigation, there could be public announcements of the results of hearings, motions or other interim
proceedings or developments. If investors perceive these results to be negative, the market price for our common stock could be
significantly harmed.
Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary
information and may not adequately protect our intellectual property.
We rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or
obtainable. However, trade secrets are difficult to protect. In order to protect our proprietary technology and processes, we also rely in
part on confidentiality and intellectual property assignment agreements with our corporate partners, employees, consultants, outside
scientific collaborators and sponsored researchers and other advisors. These agreements may not effectively prevent disclosure of
confidential information nor result in the effective assignment to us of intellectual property, and may not provide an adequate remedy
in the event of unauthorized disclosure of confidential information or other breaches of the agreements. In addition, others may
independently discover our trade secrets and proprietary information, and in such case we could not assert any trade secret rights
against such party. Enforcing a claim that a party illegally obtained and is using our trade secrets is difficult, expensive and time-
consuming, and the outcome is unpredictable. In addition, courts outside the U.S. may be less willing to protect trade secrets. Costly
48
and time-consuming litigation could be necessary to seek to enforce and determine the scope of our proprietary rights, and failure to
obtain or maintain trade secret protection could materially adversely affect our business and financial condition.
Risks Related to Our Securities
Raising additional capital may cause dilution to existing stockholders, restrict our operations or require us to relinquish rights.
Additionally, sales of a substantial number of shares of our common stock or other securities in the public market could cause our
stock price to fall.
We expect to seek the additional capital necessary to fund our operations through public or private equity offerings,
collaboration agreements, debt financings or licensing arrangements. To the extent that we raise additional capital through the sale of
equity or convertible debt securities, existing stockholders’ ownership interests will be diluted and the terms may include liquidation
or other preferences that adversely affect their rights as a stockholder. 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 collaboration or licensing arrangements with third parties, we
may have to relinquish valuable rights to our technologies or drug candidates, or grant licenses on terms that are not favorable to us. In
addition, sales of a substantial number of shares of our common stock or other securities in the public market could occur at any time.
These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market
price of our common stock.
We may issue additional shares of our common stock in accordance with our equity incentive plans or upon exercise or conversion
of outstanding securities that are exercisable for or convertible into shares of our common stock, which may cause dilution to
existing stockholders.
As of December 31, 2023, there were 43,383 shares of common stock reserved for issuance upon the exercise of outstanding
options granted under our equity incentive plans. As of December 31, 2023, there were (i) 937 additional shares of common stock
reserved for future issuance of awards under the Bio-Path Holdings, Inc. 2017 Stock Incentive Plan, as amended (the “2017 Stock
Incentive Plan”), and (ii) 53,950 additional shares of common stock reserved for future issuance of awards under the Bio-Path
Holdings, Inc. 2022 Stock Incentive Plan (the “2022 Stock Incentive Plan”). In addition, as of December 31, 2023, there were 190,063
shares of common stock reserved for issuance upon the exercise of outstanding warrants that we have issued in connection with prior
securities offerings. To the extent that outstanding stock options and warrants are exercised, existing stockholders’ ownership interests
may be diluted, which may reduce the market price of our common stock.
The trading price of our common stock has been volatile and is likely to be volatile in the future.
The trading price of our common stock has been highly volatile. From January 1, 2020 through December 31, 2023, our stock
price has fluctuated from a low of $6.40 to a high of $486.80, after adjustment for reverse stock splits. The market price for our
common stock will be affected by a number of factors, including:
•
•
•
•
•
•
•
the denial or delay of regulatory approvals of our drug candidates or receipt of regulatory approval of competing
products;
our ability to accomplish clinical, regulatory and other drug development milestones;
the ability of our drug candidates, if they receive regulatory approval, to achieve market success;
the performance of third-party manufacturers and suppliers;
developments with respect to patents and other intellectual property rights;
sales of common stock or other securities by us or our stockholders in the future;
additions or departures of key scientific or management personnel;
49
•
•
•
•
•
•
•
•
disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to
obtain patent protection for our drug candidates;
trading volume of our common stock;
investor perceptions about us and our industry;
public reaction to our press releases, other public announcements and SEC and other filings;
the failure of analysts to cover us, or changes in analysts’ estimates or recommendations;
the failure by us to meet analysts’ projections or guidance;
general market conditions and other factors unrelated to our operating performance or the operating performance of
our competitors; and
the other factors described elsewhere in this “Item 1A. Risk Factors” or the section titled “Risk Factors” contained in
our other public filings.
The stock prices of many companies in the biotechnology industry have experienced wide fluctuations that have often been
unrelated to the operating performance of these companies. Following periods of volatility in the market price of a company’s
securities, securities class action litigation often has been initiated against a company. If any class action litigation is initiated against
us, we may incur substantial costs and our management’s attention may be diverted from our operations, which could materially
adversely affect our business and financial condition.
Our common stock is thinly traded and in the future may continue to be thinly traded, and our stockholders may be unable to sell
at or near asking prices or at all if they need to sell their shares to raise money or otherwise desire to liquidate such shares.
To date, we have a low volume of daily trades in our common stock on The Nasdaq Capital Market. Our stockholders may be
unable to sell their common stock at or near their asking prices or at all, which may result in substantial losses to our stockholders.
The market for our common stock may be characterized by significant price volatility when compared to seasoned issuers,
and we expect that our share price will be more volatile than a seasoned issuer for the foreseeable future. As noted above, our common
stock may be sporadically and/or thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of
shares by our stockholders may disproportionately influence the price of those shares in either direction.
Our certificate of incorporation grants our Board of Directors the power to designate and issue additional shares of common
and/or preferred stock.
Our authorized capital consists of 200,000,000 shares of common stock and 10,000,000 shares of preferred stock. Our
preferred stock may be designated into series pursuant to authority granted by our certificate of incorporation, and on approval from
our Board of Directors (the “Board”). The Board, without any action by our stockholders, may designate and issue shares in such
classes or series as the Board deems appropriate and establish the rights, preferences and privileges of such shares, including
dividends, liquidation and voting rights. The rights of holders of other classes or series of stock that may be issued could be superior to
the rights of holders of our common shares. The designation and issuance of shares of capital stock having preferential rights could
adversely affect other rights appurtenant to shares of our common stock.
We do not anticipate paying cash dividends, and accordingly stockholders must rely on stock appreciation for any return on their
investment in us.
We anticipate that we will retain our earnings, if any, for future growth and therefore do not anticipate paying cash dividends
in the future. As a result, only appreciation of the price of our common stock will provide a return to stockholders.
50
Our management is required to devote substantial time and incur additional expense to comply with public company regulations.
As a public reporting company, we are subject to the Sarbanes-Oxley Act of 2002, as well as to the information and reporting
requirements of the SEC and other federal securities laws. We are also subject to the rules of The Nasdaq Stock Market. As a result,
we incur significant legal, accounting, and other expenses that we would not incur as a private company, including costs associated
with our public company reporting requirements and corporate governance requirements. Compliance with these public company
obligations places significant additional demands on our limited number of finance and accounting staff and on our financial,
accounting and information systems.
Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of
2002 could have a material adverse effect on the price of our common stock.
Section 404 of the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC require an annual
management assessment of the effectiveness of our internal control over financial reporting. As a smaller reporting company as
defined in Rule 12b-2 under the Exchange Act, we are currently exempt from the auditor attestation requirement of Section 404(b). If
we lose this eligibility, we will incur increased personnel and audit fees in connection with the additional audit requirements. If we fail
to maintain the adequacy of our internal control over financial reporting, we may not be able to ensure that we can conclude on an
ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley
Act of 2002 and the related rules and regulations of the SEC. If we cannot in the future favorably assess the effectiveness of our
internal control over financial reporting, investor confidence in the reliability of our financial reports may be adversely affected, which
could have a material adverse effect on the price of our common stock.
Our common stock may be delisted from The Nasdaq Capital Market which could negatively impact the price of our common stock
and our ability to access the capital markets.
The listing standards of The Nasdaq Capital Market provide that a company, in order to qualify for continued listing, must
maintain (1) a board of directors comprised of a majority of Independent Directors (as defined in Nasdaq Listing Rule 5605(a)(2)) and
an audit committee of the board of directors comprised of at least three members, each of whom must be an Independent Director, and
(2) a minimum stock price of $1.00 and satisfy standards relative to minimum stockholders’ equity, minimum market value of
publicly held shares and various additional requirements.
If we fail to comply with all listing standards applicable to issuers listed on The Nasdaq Capital Market, our common stock
may be delisted. If our common stock is delisted, it could reduce the price of our common stock and the levels of liquidity available to
our stockholders. In addition, the delisting of our common stock could materially adversely affect our access to the capital markets and
any limitation on liquidity or reduction in the price of our common stock could materially adversely affect our ability to raise capital.
Delisting from The Nasdaq Capital Market could also result in other negative consequences, including the potential loss of confidence
by suppliers, customers and employees, the loss of institutional investor interest and fewer business development opportunities.
In the past, we have received a notice of non-compliance from the Listing Qualifications Department of The Nasdaq Stock
Market LLC with respect to the $1.00 minimum closing bid price requirement. Although we have effected a reverse stock split in an
effort to regained compliance with the minimum closing bid price requirement, there can be no assurance that we will be able to meet
the minimum closing bid price requirement or other listing requirements in the future.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Risk Management and Strategy
We maintain standard procedures to help assess, identify and manage material risk posed by cybersecurity threats and
regularly evaluate how we can integrate these procedures into our overall risk management processes. For example, we require that all
of our employees who have access to our internal network complete formal cybersecurity training upon hire and on a periodic basis,
including training on phishing, malware, and other cybersecurity risks. We also continuously evaluate our information technology
51
systems and our practices that relate to our information technology systems. To date, we have not engaged any assessors, consultants,
auditors or other third parties in connection with these efforts but may elect to do so in the future.
To the extent we identify areas in our information systems that need improvement, we seek to timely implement and monitor
such improvements. While we believe that we have taken appropriate security measures to protect our data and information
technology systems, and have been informed by our third-party vendors that they have as well, there can be no assurance that our
efforts will prevent breakdowns or breaches in our systems, or those of our third-party vendors, that could materially adversely affect
our business and financial condition. For additional information regarding whether risks from cybersecurity threats are reasonably
likely to materially affect the Company, including our business strategy, results of operations, or financial condition, see Item 1A,
“Risk Factors,” in this Annual Report on Form 10-K.
Governance
One of the functions of our Board is to identify principal risks of the Company and ensure implementation of appropriate
systems to manage these risks, including risks from cybersecurity threats. Our Board works with members of management to identify
and manage these risks, including cybersecurity risks. We currently employ a qualified Director of Information Technology and Data
Management Systems who reports to our Chief Executive Officer. This employee has over 20 years of experience with cybersecurity,
information technology development and deployment and information technology risk assessment and management, including
information security management.
Our information technology employee regularly monitors our information technology systems and monitors the prevention, detection,
mitigation and remediation of cybersecurity incidents in consultation with our Chief Executive Officer. To the extent necessary, our
Chief Executive Officer reports such risks to our Board.
ITEM 2. PROPERTIES
In April 2014, we entered into a lease agreement for approximately 3,000 square feet of office space for general and
administrative purposes in Bellaire, Texas, which is part of the Houston metropolitan area. The term of the lease began on August 1,
2014 and was scheduled to terminate on July 31, 2019. In May 2019, we entered into an amendment to the lease agreement to extend
the term of the lease to October 31, 2024.
In April 2016, we entered into a lease agreement for approximately 2,100 square feet of lab space located in Bellaire, Texas
for research and development purposes. The term of the lease began on May 1, 2016 and was scheduled to terminate on April 30,
2019. In December 2018, we entered into an amendment to the lease agreement to extend the term of the lease to April 30, 2022. In
January 2022, we exercised an option in the lease agreement amendment to extend the term of the lease to April 30, 2025.
We do not own or lease any other real property that is materially important to our business. We believe that our current
facilities are adequate for our current needs and that additional space will be available when and as needed.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
52
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Our common stock is listed on The Nasdaq Capital Market under the symbol “BPTH.”
PART II
Holders
As of March 6, 2024, there were 678,795 shares of our common stock outstanding and approximately 187 stockholders of
record.
Dividends
We have not paid any cash dividends since our inception and do not anticipate or contemplate paying dividends in the
foreseeable future.
Unregistered Sales of Equity Securities and Use of Proceeds
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
ITEM 6. [RESERVED]
53
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
In addition to historical information, this Annual Report on Form 10-K contains forward-looking statements that involve
significant risks and uncertainties, which may cause our actual results to differ materially from plans and results discussed in forward-
looking statements. We encourage you to review the risks and uncertainties, discussed in “Item 1A. Risk Factors” and “Cautionary
Note Regarding Forward-Looking Statements,” included elsewhere in this Annual Report on Form 10-K. The risks and uncertainties
can cause actual results to differ significantly from those forecasted in forward-looking statements or implied in historical results and
trends.
The following discussion of our financial condition and results of operations should be read in conjunction with our financial
statements and related notes included elsewhere in this Annual Report on Form 10-K.
Overview
We are a clinical and preclinical stage oncology-focused RNAi nanoparticle drug development company utilizing a novel
technology that achieves systemic delivery for target-specific protein inhibition for any gene product that is over-expressed in disease.
Our drug delivery and antisense technology, called DNAbilize®, is a platform that uses P-ethoxy, which is a DNA backbone
modification that is intended to protect the DNA from destruction by the body’s enzymes when circulating in vivo, incorporated inside
of a lipid bilayer having neutral charge. We believe this combination allows for high efficiency loading of antisense DNA into non-
toxic, cell-membrane-like structures for delivery of the antisense drug substance into cells. In vivo, the DNAbilize® delivered
antisense drug substances are systemically distributed throughout the body to allow for reduction or elimination of target proteins in
blood diseases and solid tumors. Through testing in numerous animal studies and dosing in clinical trials, our DNAbilize® drug
candidates have demonstrated an excellent safety profile. DNAbilize® is a registered trademark of the Company.
Using DNAbilize® as a platform for drug development and manufacturing, we currently have four drug candidates in
development to treat at least five different cancer disease indications. Our lead drug candidate, prexigebersen (pronounced prex” i je
ber’ sen), which targets Grb2, initially started the efficacy portion of a Phase 2 clinical trial for untreated AML patients in combination
with LDAC. The interim data presented in the 2018 ASH Annual Meeting showed that 11 (65%) of the 17 evaluable patients had a
response, including five (29%) who achieved CR, inclusive of one CR with CRi and one morphologic leukemia-free state, and six
(35%) stable disease responses, including two patients who had greater than a 50% reduction in bone marrow blasts. However, DNA
hypomethylating agents are now the most frequently used agents in the treatment of elderly AML patients in the U.S. and Europe. As
a result, Stage 2 of the Phase 2 trial in AML was amended to remove the combination treatment of prexigebersen and LDAC and
replace it with the combination treatment of prexigebersen and decitabine, a DNA hypomethylating agent, for treatment of a second
cohort of untreated AML patients. Since decitabine is also used as a treatment for relapsed/refractory AML patients, a cohort of
relapsed/refractory AML patients was also added to the study.
The FDA granted approval of venetoclax in combination with LDAC, decitabine or azacytidine (the latter two drugs are
DNA hypomethylating agents) as frontline therapy for newly diagnosed AML in adults who are 75 years or older, or who have
comorbidities precluding intensive induction chemotherapy. We believe this approval of the frontline venetoclax and decitabine
combination therapy provides an opportunity for combining prexigebersen with the combination therapy for the treatment of newly
diagnosed AML patients. Preclinical efficacy studies for the triple combination treatment of prexigebersen, decitabine and venetoclax
in AML have been successfully completed. In the preclinical efficacy studies, four AML cancer cell lines were treated with three
different combinations of decitabine, venetoclax and prexigebersen. Decrease in AML cell viability was the primary measure of
efficacy. The triple combination of decitabine, venetoclax and prexigebersen showed significant improvement in efficacy in three of
the four AML cell lines. Based on these results, we believe that adding prexigebersen to the treatment combination of decitabine and
venetoclax could lead to improved efficacy in AML patients. Accordingly, we further amended Stage 2 of this Phase 2 clinical trial to
add the triple combination treatment comprised of prexigebersen, decitabine and venetoclax.
Our approved amended Stage 2 for this Phase 2 clinical trial currently has three cohorts of patients. The first two cohorts will
treat patients with the triple combination of prexigebersen, decitabine and venetoclax. The first cohort will include untreated AML
patients, and the second cohort will include relapsed/refractory AML patients. Finally, the third cohort will treat relapsed/refractory
AML patients, who are venetoclax-resistant or -intolerant, with the two-drug combination of prexigebersen and decitabine. The full
trial design plans have approximately 98 evaluable patients for the first cohort having untreated AML patients with a preliminary
54
review performed after 19 evaluable patients and a formal interim analysis after 38 evaluable patients. The full trial design plans have
approximately 54 evaluable patients for each of the second cohort, having relapsed/refractory AML patients, and the third cohort,
having AML patients who are venetoclax-resistant or -intolerant, in each case with a review performed after 19 evaluable patients.
The study is anticipated to be conducted at up to ten clinical sites in the U.S., and Gail J. Roboz, MD, is the national coordinating
Principal Investigator for the Phase 2 trial. Dr. Roboz is a professor of medicine and director of the Clinical and Translational
Leukemia Program at the Weill Medical College and the New York-Presbyterian Hospital in New York City. On August 13, 2020, we
announced the enrollment and dosing of the first patient in this approved amended Stage 2 of the Phase 2 clinical trial.
The safety run-in of Stage 2 of the Phase 2 clinical study was successfully completed, and the preliminary data was presented
at the 2021 ASH Annual Meeting. In the safety run-in of the triple combination, six evaluable patients were treated with the
combination of prexigebersen, decitabine and venetoclax. These patients included four relapsed/refractory AML patients, and two
newly diagnosed AML patients. Five patients (83%) responded to treatment, including four (67%) achieving CR and one (17%)
achieving CRi. Recent publications provide that response (CR + CRi) rates to combination treatment with decitabine and venetoclax
(but without prexigebersen) are 42 to 52% for relapsed/refractory AML patients and 0 to 39% for relapsed/refractory secondary AML
patients. Response rates to frontline treatment with decitabine and venetoclax (but without prexigebersen) are 62 to 71% for newly
diagnosed AML patients. These preliminary data showed the treatment was well-tolerated and there were no dose limiting toxicities
attributed to prexigebersen. Three patients remained on treatment for more than one cycle.
On August 1, 2023, we announced interim data for the first two cohorts of the amended Stage 2 of the Phase 2 clinical trial.
Fourteen newly diagnosed patients were evaluable in the first cohort and treated with at least one cycle of the prexigebersen,
decitabine and venetoclax combination therapy. All patients in the first cohort (median age 75) were adverse risk by 2017 ELN
guidelines (n=10) or secondary AML (n=4). Prexigebersen was well-tolerated, and AEs were generally consistent with decitabine and
venetoclax treatment and/or for AML. Twelve of the 14 evaluable patients (86%) achieved CR/CRi and two (14%) achieved PR. In
total, 100% of the evaluable patients had a response to treatment. The CR/CRi rates of 86% for the evaluable patients in the first
cohort is significantly higher than the CR/CRi rates of 62% for newly diagnosed patients treated with the frontline combination
treatment of decitabine and venetoclax. Fourteen refractory/relapsed evaluable AML patients in the second cohort were treated with at
least one cycle of the prexigebersen, decitabine and venetoclax combination therapy. Substantially all of the patients in the second
cohort (median age 56.5) were adverse risk by 2017 ELN guidelines (n=11) or secondary AML (n=2). Prexigebersen was well-
tolerated, and AEs were generally consistent with decitabine and venetoclax treatment and/or for AML. Eight of the 14 evaluable
refractory/relapsed patients (57%) achieved CR/CRi, two (14%) achieved PR and two (22%) achieved stable disease. In total, 93% of
the evaluable patients in the second cohort had a response to treatment. The CR/CRi rates of 57% for the evaluable refractory and
relapsed patients in the second cohort is significantly higher than the CR/CRi) rates of 21% for refractory/relapsed patients treated
with the combination treatment of decitabine and venetoclax. Based on this interim data, we currently plan to pursue FDA expedited
programs for Fast Track designation, and we are evaluating whether to seek to expand Stage 2 of the Phase 2 clinical trial in Europe.
Our second drug candidate, BP1002, targets the protein Bcl-2, which is responsible for driving cell survival in up to 60% of
all cancers. A Phase 1 clinical trial to evaluate the ability of BP1002 to treat refractory/relapsed lymphoma and CLL patients has been
initiated. The Phase 1 clinical trial is being conducted at the Georgia Cancer Center while two additional clinical trial sites are
currently being activated for inclusion in the study, The University of Texas Southwestern and New York Medical College. On
January 10, 2024, we announced the successful completion of the first dose cohort in the Phase 1 clinical trial. A total of six evaluable
patients are scheduled to be treated with BP1002 monotherapy in standard 3+3 design, unless there is a dose limiting toxicity which
would require an additional three patients to be tested. There were no dose limiting toxicities in the first dose cohort (20 mg/m2).
Enrollment is now open for patients for the second BP1002 dose cohort of 40 mg/m2.
Additionally, preclinical studies suggest that the combination of BP1002 with decitabine is efficacious in venetoclax-resistant
leukemia and lymphoma cells. An abstract of the preclinical study was presented at the 2021 AACR Annual Meeting. A Phase 1/1b
clinical trial to investigate the ability of BP1002 to treat refractory/relapsed AML patients, including venetoclax-resistant patients, is
being studied. A recent study6 found that AML patients who had relapsed from frontline venetoclax-based treatment had a very poor
prognosis, with a median survival of less than 3 months. Since venetoclax and BP1002 utilize different mechanisms of action, we
believe that BP1002 may be a potential treatment for venetoclax-relapsed AML patients. The Phase 1/1b clinical trial is being
6 (Maiti A, Ruasch C, Cortes JE, et.al. Outcomes of relapsed or refractory acute myeloid leukemia after frontline hypomethylating
agent and venetoclax regimens. Haematologica 2021; 106: 894-898.)
55
conducted at several leading cancer centers in the United States, including the Weill Medical College, MD Anderson, Scripps Cancer
Center and The University of California at Los Angeles Cancer Center.
On December 14, 2023, we announced the successful completion of the first dose cohort of the dose escalation portion of the
Phase 1/1b clinical trial of BP1002. A total of three evaluable patients per dosing cohort are scheduled to be treated with BP1002
monotherapy in a standard 3+3 design. The first dose cohort consisted of a starting dose of 20 mg/m2, and there were no dose limiting
toxicities. Enrollment is now open for patients for the second BP1002 dose cohort of 40 mg/m2. The Phase 1b portion of the study is
expected to commence after completion of BP1002 monotherapy cohorts and is intended to assess the safety and efficacy of BP1002
in combination with decitabine in refractory/relapsed AML patients.
Our third drug candidate, BP1003, targets the STAT3 protein and is currently in IND enabling studies as a potential treatment
of pancreatic cancer, NSCLC and AML. Preclinical models have shown BP1003 to inhibit cell viability and STAT3 protein
expression in NSCLC and AML cell lines. Further, BP1003 successfully penetrated pancreatic tumors ex vivo and significantly
enhanced the efficacy of gemcitabine, a treatment for patients with advanced pancreatic cancer, in a pancreatic cancer patient derived
tumor model. An abstract of the preclinical study was presented at the 2019 AACR Annual Meeting. Our lead indication for BP1003
is pancreatic cancer due to the severity of this disease and the lack of effective, life-extending treatments. For example, pancreatic
adenocarcinoma is projected to be the second most lethal cancer behind lung cancer by 2030. Typical survival for a metastatic
pancreatic cancer patient is about three to six months from diagnosis. Additionally, an abstract of the preclinical study demonstrating
that BP1003 enhanced the sensitivity of breast and ovarian cancer cells to chemotherapy was presented at the 2022 AACR Annual
Meeting. We have successfully completed several IND enabling studies of BP1003 and have one additional IND enabling study to
complete. Once the additional study is successfully completed, our goal is to file an IND application and initiate the first-in-humans
Phase 1 study of BP1003 in patients with refractory, metastatic solid tumors, including pancreatic cancer and NSCLC.
In addition, a modified product named BP1001-A, our fourth drug candidate, has shown to enhance chemotherapy efficacy in
preclinical solid tumor models. Results of the preclinical study were published in the scientific journal Oncotarget in July 2020.
BP1001-A incorporates the same drug substance as prexigebersen but has a slightly modified formulation designed to enhance
nanoparticle properties. A BP1001-A Phase 1/1b clinical trial in patients with advanced or recurrent solid tumors has been initiated.
The Phase 1/1b clinical trial is being conducted at several leading cancer centers in the United States, including MD Anderson,
Karmanos Cancer Institute, Mary Crowley Cancer Research and Holy Cross Hospital, Maryland. On July 17, 2023, we announced
completion of the first cohort of the dose escalation portion of the Phase 1/1b clinical trial. A total of nine evaluable patients are
scheduled to be treated with BP1001-A monotherapy in a standard 3+3 dose escalation design. The first dose cohort consisted of a
starting dose of 60 mg/m2, and there were no dose limiting toxicities. Enrollment is now open for patients for the second dose cohort
of 90 mg/m2. The Phase 1B portion of the study is expected to commence after successful completion of BP1001-A monotherapy
cohorts and is intended to assess the safety and efficacy of BP1001-A in combination with paclitaxel patients with recurrent ovarian or
endometrial tumors.
Our DNAbilize® technology-based products are available for out-licensing or partnering. We intend to apply our drug
technology template to new disease-causing protein targets to develop new liposomal antisense drug candidates for inclusion in our
pipeline that meet scientific, preclinical and commercial criteria and file new patents on these targets. We expect that these efforts will
include collaboration with key scientific opinion leaders in the field of study and include developing drug candidates for diseases other
than cancer. As we expand our drug development programs, we will look at indications where a systemic delivery is needed and
antisense RNAi nanoparticles can be used to slow, reverse or cure a disease, either alone or in combination with another drug.
We have certain intellectual property as the basis for our current drug products in clinical development, prexigebersen,
BP1002, BP1003 and BP1001-A. We are developing RNAi antisense nanoparticle drug candidates based on our own patented
technology to treat cancer and autoimmune disorders where targeting a single protein may be advantageous and result in reduced
patient adverse effects as compared to small molecule inhibitors with off-target and non-specific effects. We have composition of
matter and method of use intellectual property for the design and manufacture of antisense RNAi nanoparticle drug products.
As of December 31, 2023, we had an accumulated deficit of $107.6 million. Our net loss was $16.1 million and $13.9 million
for the years ended December 31, 2023 and 2022, respectively. We expect to continue to incur significant operating losses, and we
anticipate that our losses may increase substantially as we expand our drug development programs and commercialization efforts. To
achieve profitability, we must enter into license or development agreements with third parties or successfully develop and obtain
regulatory approval for one or more of our drug candidates and effectively commercialize any drug candidates we develop. In
56
addition, if we obtain regulatory approval of one or more of our drug candidates, we expect to incur significant commercialization
expenses related to product sales, marketing, manufacturing and distribution. Even if we succeed in developing and commercializing
one or more of our drug candidates, we may not be able to generate sufficient revenue and we may never be able to achieve or sustain
profitability. We expect to finance our foreseeable cash requirements through cash on hand, cash from operations, debt financings and
public or private equity offerings. We may seek to access the public or private equity markets whenever conditions are favorable;
however, there can be no assurance that we will be able to raise additional capital when needed or on terms that are favorable to us, if
at all. Additionally, we may seek collaborations and license arrangements for our drug candidates. We currently have no lines of credit
or other arranged access to debt financing.
Financial Operations Overview
Revenue
We have not generated significant revenues to date. Our ability to generate revenues from our drug candidates will depend
heavily on the successful development and eventual commercialization of our drug candidates.
In the future, we may generate revenue from a combination of product sales, third-party grants, service agreements, strategic
alliances and licensing arrangements. We expect that any revenue we generate will fluctuate due to the timing and amount of services
performed, milestones achieved, license fees earned and payments received upon the eventual sales of our drug candidates, in the
event any are successfully commercialized. If we fail to complete the development of any of our drug candidates or obtain regulatory
approval for them, our ability to generate future revenue will be adversely affected.
Research and development expenses
Research and development expenses consist of costs associated with our research activities, including the development of our
drug candidates. Our research and development expenses consist of:
•
•
expenses related to research and development personnel, including salaries and benefits, travel and stock-based
compensation;
external research and development expenses incurred under arrangements with third parties, such as contract
research organizations, clinical investigative sites, laboratories, manufacturing organizations and consultants; and
•
costs of materials used during research and development activities.
Costs and expenses that can be clearly identified as research and development are charged to expense as incurred. Advance
payments, including nonrefundable amounts, for goods or services that will be used or rendered for future research and development
activities are deferred and capitalized. Such amounts will be recognized as an expense as the related goods are delivered or the related
services are performed. If the goods will not be delivered, or services will not be rendered, then the capitalized advance payment is
charged to expense.
We expect research and development expenses associated with the completion of the associated clinical trials to be
substantial and to increase over time. The successful development of our drug candidates is highly uncertain. At this time, we cannot
reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete development of
our drug candidates or the period, if any, in which material net cash inflows from our drug candidates may commence. This is due to
the numerous risks and uncertainties associated with developing drugs, including the uncertainty of:
•
•
the rate of progress, results and costs of completion of ongoing clinical trials of our drug candidates;
the size, scope, rate of progress, results and costs of completion of any potential future clinical trials and preclinical
tests of our drug candidates that we may initiate;
•
competing technological and market developments;
57
•
•
•
•
the performance of third-party manufacturers and suppliers;
the ability of our drug candidates, if they receive regulatory approval, to achieve market success;
disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to
obtain patent protection for our drug candidates; and
the impact, risks and uncertainties related to global pandemics and actions taken by governmental authorities or
others in connection therewith.
A change in the outcome of any of these variables with respect to the development of a drug candidate could mean a
significant change in the costs and timing associated with the development of that drug candidate. For example, if the FDA or other
regulatory authority were to require us to conduct clinical trials beyond those which we currently anticipate will be required for the
completion of clinical development of a drug candidate or if we experience significant delays in enrollment in any clinical trials, we
could be required to expend significant additional financial resources and time on the completion of clinical development.
General and administrative expenses
Our general and administrative expenses consist primarily of salaries and benefits for management and administrative
personnel, professional fees for legal, accounting and other services, travel costs and facility-related costs such as rent, utilities and
other general office expenses.
Results of Operations
Comparisons of the Year Ended December 31, 2023 to the Year Ended December 31, 2022
Revenue. We had no revenue for each of the years ended December 31, 2023 and 2022.
Research and Development Expenses. Our research and development expense was $11.6 million for the year ended
December 31, 2023, an increase of $2.4 million compared to the year ended December 31, 2022. The increase in research and
development expense was primarily due to manufacturing expenses related to drug product releases in 2023 as well as an increase in
expense related to our clinical trial for prexigebersen in AML due to increased patient enrollment in 2023. The following table sets
forth our research and development expenses (in thousands):
Research and development expense
Non-cash stock-based compensation expense
Total research and development expense
Year ended
December 31,
2023
11,425
183
11,608
$
$
2022
8,969
196
9,165
$
$
General and Administrative Expenses. Our general and administrative expense was $4.2 million for the year ended
December 31, 2023, a decrease of $0.5 million compared to the year ended December 31, 2022. The decrease in general and
administrative expense was primarily due to decreased salaries and benefits expense as well as Delaware franchise tax expense. The
following table sets forth our general and administrative expenses (in thousands):
General and administrative expense
Non-cash stock-based compensation expense
Total general and administrative expense
Year ended
December 31,
2023
2022
3,684
551
4,235
$
$
4,081
655
4,736
$
$
58
Net Operating Loss. Our net loss from operations was $15.8 million for the year ended December 31, 2023, an increase of
$1.9 million compared to the year ended December 31, 2022.
Change in Fair Value of Warrant Liability. The change in fair value of the warrant liability for the year ended December 31,
2023 resulted in non-cash expense of $0.3 million.
Net Loss. Our net loss was $16.1 million for the year ended December 31, 2023, an increase of $2.2 million compared to
the year ended December 31, 2022.
Net Loss per Share. Net loss per share, both basic and diluted, was $33.63 per share for the year ended December 31, 2023,
compared to $38.12 per share for the year ended December 31, 2022. Net loss per share is calculated using the weighted average
number of shares of common stock outstanding during the applicable periods and excludes stock options and warrants because they
are antidilutive.
Liquidity and Capital Resources
Overview
We have not generated significant revenues to date. Since our inception, we have funded our operations primarily through
public and private offerings of our capital stock and other securities. We expect to finance our foreseeable cash requirements through
cash on hand, cash from operations, debt financings and public or private equity offerings. We may seek to access the public or private
equity markets whenever conditions are favorable; however, there can be no assurance that we will be able to raise additional capital
when needed or on terms that are favorable to us, if at all. Additionally, we may seek collaborations and license arrangements for our
drug candidates. We currently have no lines of credit or other arranged access to debt financing.
We had a cash balance of $1.1 million at December 31, 2023, a decrease of $9.3 million compared to December 31, 2022.
We do not believe that our available cash at December 31, 2023 will be sufficient to fund current liabilities and capital expenditure
requirements. The Company’s ability to continue as a going concern is dependent upon obtaining funding through one or more sources
as described above to meet its planned obligations and pay its liabilities.
Cash Flows
For the Year Ended December 31, 2023
Operating Activities. Net cash used in operating activities for the year ended December 31, 2023 was $11.5 million.
Excluding non-cash stock-based compensation expense of $0.7 million, change in fair value of the warrant liability of $0.3 million and
depreciation and amortization expenses of $0.2 million, net cash used in operating activities consisted primarily of the net loss for the
period of $16.1 million. These are partially offset by a decrease in prepaid drug product of $3.0 million, a decrease in other current
assets of $0.3 million and an increase in operating liabilities of $0.1 million.
Investing Activities. There were no investing activities for the year ended December 31, 2023.
Financing Activities. Net cash provided by financing activities for the year ended December 31, 2023 consisted of net
proceeds of $1.7 million from the 2023 Public Offering as described below, as well as net proceeds of $0.5 million from the exercise
of warrants to purchase shares of our common stock.
For the Year Ended December 31, 2022
Operating Activities. Net cash used in operating activities for the year ended December 31, 2022 was $15.1 million.
Excluding non-cash stock-based compensation expense of $0.9 million and depreciation and amortization expenses of $0.2 million,
net cash used in operating activities consisted primarily of the net loss for the period of $13.9 million and an increase in current assets
of $2.9 million which was partially offset by an increase in accounts payable and accrued expenses of $0.7 million.
59
Investing Activities. Net cash used in investing activities for the year ended December 31, 2022 consisted of a capital
expenditure totaling $21,000 which was related to a research and development equipment purchase.
Financing Activities. Net cash provided by financing activities for the year ended December 31, 2022 consisted of net
proceeds of $1.7 million from the 2022 Registered Direct Offering and the 2022 Private Placement, each as described below.
2022 Shelf Registration Statement
On May 27, 2022, we filed a shelf registration statement on Form S-3 with the SEC, which was declared effective by the
SEC on June 14, 2022 (File No. 333-265282) (the “2022 Shelf Registration Statement”), at which time the offering of unsold
securities under a previous shelf registration statement on Form S-3 filed with the SEC, which was declared effective by the SEC on
June 5, 2019 (File No. 333-231537) (the “2019 Shelf Registration Statement”), was deemed terminated pursuant to
Rule 415(a)(6) under the Securities Act. The 2022 Shelf Registration Statement was filed to register the offering, issuance and sale of
(i) up to $110.0 million of our common stock, preferred stock, warrants to purchase common stock or preferred stock or any
combination thereof, either individually or in units, (ii) up to $9.0 million of our common stock under the Offering Agreement (as
defined below), which $9.0 million was subsequently reduced to $3.0 million pursuant to a prospectus supplement filed with the SEC
on July 29, 2022, and (iii) up to 11,895 shares of our common stock pursuant to the exercise of warrants outstanding on May 27, 2022.
The $3.0 million of our common stock that could previously be offered, issued and sold under the Offering Agreement was included
in the $110.0 million of our securities that may be offered, issued and sold. On December 7, 2022, we received written notice from
Wainwright (as defined below) that Wainwright had elected, pursuant to Section 8(b) of the Offering Agreement, to terminate the
Offering Agreement effective as of December 7, 2022. As of immediately prior to the termination of the Offering Agreement, all $3.0
million of shares of our common stock remained available for sale pursuant to the ATM Prospectus (as defined below) and the
Offering Agreement. As a result of the termination of the Offering Agreement, we will not offer or sell any additional shares of our
common stock under the ATM Prospectus or the Offering Agreement, and the entire $3.0 million of shares of our common stock
included in the ATM Prospectus will be available for sale in other offerings pursuant to the 2022 Shelf Registration Statement.
Because our public float is less than $75.0 million, our ability to offer and sell any securities under the 2022 Shelf Registration
Statement is currently limited pursuant to Instruction I.B.6 to Form S-3. For so long as our public float is less than $75.0 million, the
aggregate market value of securities we sell pursuant to Instruction I.B.6 to Form S-3 during any 12 consecutive months may not
exceed one-third of our public float. The foregoing does not constitute an offer to sell or the solicitation of an offer to buy securities,
and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of that jurisdiction.
2022 Registered Direct Offering and 2022 Private Placement
On November 6, 2022, we entered into a placement agency agreement with Roth Capital Partners, LLC relating to the 2022
Registered Direct Offering and the 2022 Private Placement. In addition, on November 6, 2022, we entered into securities purchase
agreements with several institutional and accredited investors pursuant to which we agreed to sell, in a registered direct offering, an
aggregate of 40,000 shares of our common stock for gross proceeds of approximately $2.0 million under the base prospectus
contained in the 2022 Shelf Registration Statement and a related prospectus supplement filed with the SEC on November 9, 2022 (the
“2022 Registered Direct Offering”). In a concurrent private placement, we also agreed pursuant to the securities purchase agreements
to issue to such investors warrants to purchase up to 40,000 shares of our common stock (the “2022 Private Placement”). The 2022
Registered Direct Offering and the 2022 Private Placement closed on November 9, 2022. The net proceeds from the offerings, after
deducting the placement agent’s fees and expenses and our offering expenses, and excluding the proceeds, if any, from the exercise of
the warrants issued in the offerings, were approximately $1.7 million.
2023 Public Offering
On August 3, 2023, we entered into a placement agency agreement with Roth Capital Partners, LLC relating to a best efforts
public offering of an aggregate of 175,000 shares of its common stock, together with warrants to purchase up to 175,000 shares of its
common stock (the “2023 Warrants”), for gross proceeds of approximately $2.1 million (the “2023 Public Offering”). The 2023
Public Offering was made pursuant to a registration statement on Form S-1, as amended (File No. 333-272879), which was declared
effective by the SEC on August 2, 2023. The 2023 Public Offering closed on August 7, 2023. The net proceeds from the 2023 Public
Offering, after deducting the placement agent’s fees and expenses and our offering expenses, and excluding the proceeds, if any, from
the exercise of the warrants issued in such offering, were approximately $1.7 million.
60
Future Capital Requirements
We expect to continue to incur significant operating expenses in connection with our ongoing activities, including conducting
clinical trials, manufacturing and seeking regulatory approval of our drug candidates, prexigebersen, BP1002, BP1003 and BP1001-A.
Accordingly, we will continue to require substantial additional capital to fund our projected operating requirements. Such additional
capital may not be available when needed or on terms favorable to us. In addition, we may seek additional capital due to favorable
market conditions or strategic considerations, even if we believe we have sufficient funds for our current and future operating plan.
There can be no assurance that we will be able to continue to raise additional capital through the sale of our securities in the future.
Our future capital requirements may change and will depend on numerous factors, which are discussed in detail in “Item 1A. Risk
Factors” of this Annual Report on Form 10-K.
Off-Balance Sheet Arrangements
As of December 31, 2023, we did not have any material off-balance sheet arrangements.
Critical Accounting Policies
Our management’s discussion and analysis of our financial condition and results of operations are based on our financial
statements, which have been prepared in conformity with GAAP in the U.S. The preparation of such financial statements has required
our management to make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including
the notes thereto, and related disclosures of commitments and contingencies, if any. We consider our critical accounting policies to be
those that require the more significant judgments and estimates in the preparation of financial statements, including the following:
Research and Development Costs – Costs and expenses that can be clearly identified as research and development are
charged to expense as incurred. Advance payments, including nonrefundable amounts, for goods or services that will be used or
rendered for future research and development activities are deferred and capitalized. Such amounts will be recognized as an expense
as the related goods are delivered or the related services are performed. If the goods will not be delivered, or services will not be
rendered, then the capitalized advance payment is charged to expense.
The Company estimates its clinical trial expense accrual each period based on a cost per patient calculation which is derived
from estimated start-up costs, clinical trial costs based on the number of patients and length of treatment and clinical study report
costs. These services are performed by the Company’s third-party clinical research organizations, laboratories and clinical
investigative sites. The expense accrual is recorded in research and development expense each period. Amounts that have been prepaid
in advance of work performed are recorded in other current assets.
For the years ended December 31, 2023 and 2022, we had $11.6 million and $9.2 million, respectively, of costs classified as
research and development expense.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our consolidated financial statements, together with the report of our independent registered public accounting firm, are set
forth beginning on page F-1 of this Annual Report on Form 10-K.
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
61
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
It is management’s responsibility to establish and maintain adequate disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures of a
company that are designed to ensure that information required to be disclosed by the company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and
forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated
to management, including the company’s principal executive and principal financial officers, as appropriate, to allow timely decisions
regarding required disclosure.
Our management, including our Chief Executive Officer (who is also our Chief Financial Officer), has reviewed and
evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
Act, as of the end of the period covered by this Annual Report on Form 10-K. Following this review and evaluation, our management
determined that as of the end of the period covered by this Annual Report on Form 10-K, our disclosure controls and procedures were
effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated
to management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal
control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act, is a process designed by, or under the
supervision of, our principal executive officer and our principal financial officer, and effected by our Board, management, and other
personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP and includes those policies and procedures that:
• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
disposition of our assets;
• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance
with authorizations of our management and directors; and
• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and presentation. The scope of management’s assessment of the
effectiveness of internal control over financial reporting includes our consolidated subsidiary.
Management’s assessment of the effectiveness of our internal controls is based principally on our financial reporting as of
December 31, 2023. In making our assessment of internal control over financial reporting, management used the criteria set forth in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Our management, with the participation of our Chief Executive Officer (who is also our Chief Financial Officer), has evaluated the
effectiveness of our internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as of
December 31, 2023. Based on this evaluation, management believes that, as of December 31, 2023, our internal control over financial
reporting was effective.
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Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the fourth fiscal quarter of 2023
that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
PART III
Identification of Directors and Executive Officers
Our current directors and officers are set forth below:
Name
Peter H. Nielsen
Heath W. Cleaver, CPA
Paul D. Aubert
Aline B. Sherwood
Douglas P. Morris
Age
75
50
54
54
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Position - Committee
Chief Executive Officer; President; Chief Financial Officer;
Treasurer; Chairman of the Board; Director – Business
Development Committee
Director – Audit Committee (Chair); Compensation Committee;
Nominating/Corporate Governance Committee (Chair)
Director – Audit Committee; Compensation Committee (Chair);
Nominating/Corporate Governance Committee
Director – Audit Committee; Compensation Committee;
Nominating/Corporate Governance Committee; Business
Development Committee (Chair)
Director – Business Development Committee; Director of
Investor Relations; Secretary
Our current directors will serve until the next annual meeting of stockholders or until their successors are elected or
appointed and qualified.
Background Information
Peter H. Nielsen. Mr. Nielsen co-founded Bio-Path and has served as Bio-Path’s President, Chief Executive Officer, Chief
Financial Officer/Treasurer and Chairman of the Board since 2008. At the time of Bio-Path’s establishment in 2007, Mr. Nielsen
licensed technology and targets from The University of Texas, MD Anderson Cancer Center and coordinated preclinical development,
optimization and manufacturing of Bio-Path’s lead drug candidate, prexigebersen. Since that time, Mr. Nielsen has led the clinical
advancement of prexigebersen into Phase 2 studies, the introduction of additional pipeline candidates and the Company’s public
market debut. Prior to co-founding Bio-Path, Mr. Nielsen worked with several other companies, leading turnarounds and developing
and executing on strategies for growth. Mr. Nielsen previously served as a director of Synthecon, Inc., a company developing 3D cell
culture technology. Before entering the biotechnology sector, Mr. Nielsen was a lieutenant in the U.S. Naval Nuclear Power program
where he was director of the physics department and was employed at Ford Motor Company in product development. Mr. Nielsen has
a broad background in senior management and has significant negotiating experience. He holds engineering, mathematics and M.B.A.
finance degrees from the University of California at Berkeley.
Heath W. Cleaver, CPA. Mr. Cleaver has served as a director of Bio-Path since 2014. Since February 2020, Mr. Cleaver has
served as the President and Chief Financial Officer of Compressor Engineering Corporation (“CECO”), a privately-held independent
manufacturer of engine and compressor replacement parts. Prior to his current roles, Mr. Cleaver served as Chief Financial Officer of
CECO from July 2017 to February 2020. Mr. Cleaver was previously a consultant providing turn-around management and capital
raising services to companies in the oil and gas service sector from 2016 to 2017. From 2015 to 2016, Mr. Cleaver served as the Chief
Financial Officer of Global Fabrication Services, Inc. In 2014, Mr. Cleaver served as Chief Financial Officer at Tarka Resources, Inc.
From 2011 until 2014, Mr. Cleaver served as Chief Financial Officer of Porto Energy Corp. From 2010 until 2011, Mr. Cleaver served
as Chief Accounting Officer of Porto Energy Corp. Mr. Cleaver served as Corporate Controller and then as Vice President and Chief
Accounting Officer for BPZ Energy from 2006 to 2010. Beginning in 1997 through 2004, Mr. Cleaver served in various accounting
roles, including Financial Controller, at Horizon Offshore Contractors, Inc. Mr. Cleaver is a Certified Public Accountant in the state of
Texas and holds a Bachelor’s Degree in Business Administration - Accounting from Texas A&M University.
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Paul D. Aubert. Mr. Aubert was appointed to the Board on February 1, 2018. Mr. Aubert is currently Senior Vice President
& General Counsel of Anthem Holdings Company and its subsidiaries, positions he has held since March 2018. From June 2014 to
March 2018, he practiced law in a solo law practice and also served as part-time General Counsel to his current employers. From
February 2012 through May 2014, Mr. Aubert served as General Counsel of Pernix Therapeutics Holdings, Inc., a Nasdaq-listed
specialty pharmaceutical company. Before that, he was a Shareholder in the Corporate and Securities practice group at Winstead PC, a
national law firm headquartered in Dallas, Texas, from 2007 to 2012. Mr. Aubert also served as an attorney in the Corporate and
Securities practice groups of several national and international law firms prior to joining Winstead in 2004, including at Andrews
Kurth LLP from 1999 to 2004, Weil, Gotshal & Manges LLP from 1998 to 1999 and Jones Walker LLP from 1996 to 1998. Mr.
Aubert holds a Juris Doctor and an M.B.A. from Tulane University in New Orleans, Louisiana and a B.A. in History from Louisiana
State University - Baton Rouge.
Aline B. Sherwood. Ms. Sherwood was appointed to the Board on March 31, 2022. Ms. Sherwood is currently the senior
director of strategic communications at Cognition Therapeutics, Inc. Prior to joining Cognition in October 2023, she provided tactical
support and strategic counsel to pre-commercial, public and private life sciences companies through Scienta Communications, LLC,
an independent communications consultancy established in 2010. Previously, Ms. Sherwood worked at a series of global and boutique
public and investor relations agencies where she provided support for companies developing therapeutics in a variety of indications.
Earlier in her career, she managed corporate communications for The Liposome Company, which had developed and commercialized
a liposomal formulation of amphotericin B. Before transitioning to industry, Ms. Sherwood worked in research laboratories at
Princeton University and Thomas Jefferson University. She earned a Bachelor of Science in biochemistry and classical civilizations
from Beloit College.
Douglas P. Morris. Mr. Morris is a co-founder of Bio-Path and has served as a director of Bio-Path since 2007 and served as
an officer from 2007 to June 2014. Mr. Morris also currently serves as the Director of Investor Relations and the Secretary of Bio-
Path. Mr. Morris previously served as a co-founder, Managing Member, and Secretary of nCAP Holdings, LLC (nCAP), a privately
held technology based company from September 2013 to January 2016. Between 1993 and 2010, Mr. Morris was an officer and
director of Celtic Investment, Inc., a financial services company. Mr. Morris owned and operated Hyacinth Resources, LLC
(“Hyacinth”), a business-consulting firm, from 1990 until September 2018, and is also a Managing Member of Sycamore Ventures,
LLC, a privately held consulting firm. Mr. Morris has a B.A. from Brigham Young University, and attended the University of
Southern California Master’s program in public administration.
Board of Directors
Our operations are managed under the broad supervision of the Board, which has ultimate responsibility for the establishment
and implementation of our general operating philosophy, objectives, goals and policies. Our Board is currently comprised of three
independent directors and two non-independent directors. The Board has determined that current directors Heath W. Cleaver, Paul D.
Aubert and Aline B. Sherwood are “independent” as independence is defined under the listing standards for The Nasdaq Stock
Market. The Board based these determinations primarily on a review of the responses our directors provided to questions regarding
employment and compensation history, affiliations and family and other relationships.
Codes of Ethics
We have adopted the Employee Code of Business Conduct and Ethics, which applies to all of our employees, including our
executive officers, and the Code of Business Conduct and Ethics for Members of the Board, which applies to members of the Board.
Board Committees
The Board has a standing audit committee (the “Audit Committee”), compensation committee (the “Compensation
Committee”) and nominating/corporate governance committee (the “Nominating/Corporate Governance Committee”), each of which
is governed by a charter. The Board may also establish other committees from time to time as necessary to facilitate the management
of the business and affairs of the Company. In 2020, the Board formed a business development committee (the “Business
Development Committee”) that assists the Board by advising management on its plans for business development, licensing
opportunities and business partnership opportunities. In addition to these committees, we also have a Scientific Advisory Board that
serves an advisory role to management and the Board. The information below summarizes the functions of each of the committees and
the Scientific Advisory Board.
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Audit Committee
The Audit Committee has been structured to comply with the requirements of Section 3(a)(58)(A) of the Exchange Act. The
Board has determined that the Audit Committee members have the appropriate level of financial understanding and industry specific
knowledge to be able to perform the duties of the position and are financially literate and have the requisite financial sophistication as
required by the applicable listing standards of The Nasdaq Stock Market.
The Audit Committee, as permitted by, and in accordance with, its charter, is responsible to periodically assess the adequacy
of procedures for the public disclosure of financial information and review on behalf of the Board, and report to the Board, the results
of its review and its recommendation regarding all material matters of a financial reporting and audit nature, including, but not limited
to, the following main subject areas:
•
•
•
•
•
•
financial statements, including management’s discussion and analysis thereof;
financial information in any annual information form, proxy statement, prospectus or other offering document,
material change report, or business acquisition report;
press releases regarding annual and interim financial results or containing earnings guidance;
internal controls;
audits and reviews our financial statements; and
filings with securities regulators containing financial information, including our Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q.
The Audit Committee appoints and sets the compensation for the independent registered public accounting firm annually and
reviews and evaluates such external auditor. This external auditor reports directly to the Audit Committee. The Audit Committee
establishes our hiring policies regarding current and former partners and employees of the external auditor. In addition, the Audit
Committee pre-approves all audit and non-audit services undertaken by the external auditor.
The Audit Committee has direct responsibility for overseeing the work of the external auditor engaged for the purpose of
preparing or issuing an auditor’s report or performing other audit, review or attest services, including the resolution of disagreements
between the external auditor and management.
The Audit Committee is currently comprised of Messrs. Cleaver and Aubert and Ms. Sherwood. Mr. Cleaver currently serves
as the chair of the Audit Committee. The Board has determined that Mr. Cleaver qualifies as an “audit committee financial expert”
under the Exchange Act and that each member of the Audit Committee is an independent director. The Audit Committee meets at least
once per fiscal quarter to fulfill its responsibilities under its charter and in connection with the review of the Company’s quarterly and
annual financial statements.
Compensation Committee
The Compensation Committee’s role is to assist the Board in fulfilling its responsibilities relating to all forms of
compensation of the Company’s executive officers, administering the Company’s incentive compensation plan and other benefits
plans, including a deferred compensation plan, if applicable, and producing any required report on executive compensation for use in
the Company’s proxy statement or other public disclosure. The Compensation Committee operates under a written charter adopted by
the Board. The Compensation Committee periodically assesses compensation of our executive officers in relation to companies of
comparable size, industry and complexity, taking the performance of the Company and such other companies into consideration. All
decisions with respect to the compensation of our Chief Executive Officer are determined and approved either solely by the
Compensation Committee or together with other independent directors, as directed by the Board. All decisions with respect to non-
CEO executive compensation, and incentive-compensation and equity-based plans are first approved by the Compensation Committee
and then submitted, together with the Compensation Committee’s recommendation, to the members of the Board for final approval. In
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addition, the Compensation Committee will, as appropriate, review and approve public or regulatory disclosure respecting
compensation, including required disclosures regarding executive compensation under Item 402 of Regulation S-K, and the basis on
which performance is measured. The Compensation Committee has the authority to retain and compensate any outside adviser as it
determines necessary to permit it to carry out its duties. The Compensation Committee has not to date engaged the services of any
executive compensation consultant. The Compensation Committee may not form or delegate authority to subcommittees without the
prior approval of the Board.
The Compensation Committee is currently comprised of Messrs. Aubert and Cleaver and Ms. Sherwood, each of whom are
independent under the rules of The Nasdaq Stock Market. The Compensation Committee meets as necessary. Mr. Aubert currently
serves as the chair of the Compensation Committee.
Nominating/Corporate Governance Committee
The Nominating/Corporate Governance Committee’s charter provides that the responsibilities of such committee include:
•
•
•
•
•
evaluating, identifying and recommending nominees to the Board;
considering written recommendations from our stockholders for nominees to the Board;
recommending directors to serve as committee members and chairs;
reviewing and developing corporate governance guidelines, policies and procedures for the Board;
reviewing disclosure by the Company of matters within the Nominating/Corporate Governance Committee’s
mandate; and
•
reviewing and evaluating the Nominating/Corporate Governance Committee’s charter and efficacy.
The Nominating/Corporate Governance Committee is responsible for, among other things, identifying and recommending
potential candidates for nomination to the Board. The Nominating/Corporate Governance Committee receives advice from the Board
and will consider written recommendations from the stockholders of the Company respecting individuals best suited to serve as
directors, and, when necessary, develops its own list of appropriate candidates for directorships. For a description of the procedures to
be followed by stockholders of the Company in submitting recommendations to be considered by the Nominating/Corporate
Governance Committee, see the discussion set forth below under the heading titled, “Stockholder Nominations for Directors.”
The Nominating/Corporate Governance Committee is currently comprised of Messrs. Cleaver and Aubert and Ms. Sherwood,
each of whom are independent under the rules of The Nasdaq Stock Market. Mr. Cleaver currently serves as the chair of the
Nominating/Corporate Governance Committee. The Nominating/Corporate Governance Committee meets at least annually, and
otherwise as necessary.
Business Development Committee
The Business Development Committee assists the Board by advising management on its plans for business development,
licensing opportunities and business partnership opportunities. The Business Development Committee also performs other duties as
directed by the Board from time to time and operates under a written charter adopted by the Board. The Business Development
Committee is currently comprised of Ms. Sherwood and Messrs. Nielsen and Morris. Ms. Sherwood currently serves as the chair of
the Business Development Committee.
Scientific Advisory Board
The Scientific Advisory Board assists management and the Board on an advisory basis with respect to the research,
development, clinical, regulatory and commercial plans and activities relating to research, manufacture, use and/or sale of our drug
candidates and products. The Scientific Advisory Board meets on an ad hoc basis and may attend meetings of the Board at the Board’s
67
request. The current members of the Scientific Advisory Board are Jorge Cortes, M.D, who serves as chairman, D. Craig Hooper,
Ph.D., and Jason Fleming, M.D.
Availability of Committee Charters and Other Information
The charters for our Audit Committee, Compensation Committee, and Nominating/Corporate Governance Committee, as
well as our Corporate Governance Guidelines, Employee Code of Business Conduct and Ethics and Code of Business Conduct and
Ethics for Members of the Board, are available under the section titled “Corporate Governance” on the Investors page of the
Company’s website, www.biopathholdings.com. We intend to disclose any changes to or waivers from the Employee Code of
Business Conduct and Ethics that would otherwise be required to be disclosed under Item 5.05 of Form 8-K on our website. The
information on our website is not, and shall not be deemed to be, a part of this Annual Report on Form 10-K or incorporated into any
other filings we make with the SEC.
We also make available on our website, free of charge, access to our Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K and any amendments to those reports, as well as other documents that we file with or
furnish to the SEC pursuant to Sections 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after such documents
are filed with, or furnished to, the SEC.
Nomination Process
It is our Board’s responsibility to nominate members for election to the Board and to fill vacancies on the Board that may
occur between annual meetings of stockholders. The Nominating/Corporate Governance Committee assists the Board by identifying
and reviewing potential candidates for Board membership consistent with criteria approved by the Board. The Nominating/Corporate
Governance Committee also annually recommends qualified candidates (which may include existing directors) for approval by the
Board of a slate of nominees to be proposed for election to the Board at the annual meeting of stockholders.
In the event of a vacancy on the Board between annual meetings of our stockholders, the Board may request that the
Nominating/Corporate Governance Committee identify, review and recommend qualified candidates for Board membership for Board
consideration to fill such vacancies, if the Board determines that such vacancies will be filled. Our First Amended and Restated
Bylaws (the “Bylaws”) allow for up to fifteen directors. The Board is permitted by the Bylaws to change the number of directors by a
resolution adopted by the Board.
When formulating its recommendations for potential Board nominees, the Nominating/Corporate Governance Committee
seeks and considers advice and recommendations from management, other members of the Board and may seek or consider advice
and recommendations from consultants, outside counsel, accountants or other advisors as the Nominating/Corporate Governance
committee or the Board may deem appropriate.
Board membership criteria are determined by the Board, with input from the Nominating/Corporate Governance Committee.
The Board is responsible for periodically determining the appropriate skills, perspectives, experiences and characteristics required of
Board candidates, taking into account our needs and current make-up of the Board. This assessment should include appropriate
knowledge, experience, and skills in areas deemed critical to understanding the Company and our business; personal characteristics,
such as integrity and judgment; and the candidate’s commitments to the boards of other companies. Each Board member is expected
to ensure that other existing and planned future commitments do not materially interfere with the member’s service as a director and
that he or she devotes the time necessary to discharge his or her duties as a director.
Stockholder Nominations for Directors
The Nominating/Corporate Governance Committee will consider candidates for director nominees that are recommended by
our stockholders in the same manner as Board recommended nominees, in accordance with the procedures set forth in our Bylaws.
Any such nominations should be submitted to the Nominating/Corporate Governance Committee c/o Secretary, Bio-Path
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Holdings, Inc., 4710 Bellaire Boulevard, Suite 210, Bellaire, Texas 77401 before the deadline set forth in the Bylaws and should be
accompanied by the following information:
•
appropriate biographical information, a statement as to the qualifications of the nominee and any other information
relating to such nominee that is required to be disclosed pursuant to Regulation 14A under the Exchange Act
(including such person’s written consent to being named in the proxy statement as a nominee and to serving as a
director if elected); and
•
the Proposing Stockholder Information (as defined in the Bylaws).
Involvement in Certain Legal Proceedings
There have been no events under any bankruptcy act, no criminal proceedings and any judgments or injunctions material to
the evaluation of the ability and integrity of any director or executive officer during the last ten years.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and officers, and persons who own more than 10% of our common
stock, to file initial reports of ownership and reports of changes in ownership (Forms 3, 4, and 5) of common stock with the SEC.
Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish us with copies of all such forms that
they file.
To our knowledge, based solely on our review of the copies of such reports received by us and on written representations by
certain reporting persons that no reports on Form 5 were required, we believe that during the fiscal year ended December 31, 2023, all
Section 16(a) filing requirements applicable to our officers, directors and 10% stockholders were complied with in a timely manner.
ITEM 11. EXECUTIVE COMPENSATION
The Compensation Committee oversees our compensation programs for executives and all employees. The Compensation
Committee understands that for the Company and its stockholders to achieve long-term success, the compensation programs need to
attract, retain, develop and motivate a strong leadership team. As a result, our executive compensation programs are designed to pay
for performance, enable talent attraction, retain top talent and closely align the interests of our executives with those of our
stockholders. All decisions with respect to the compensation of our Chief Executive Officer are determined and approved either solely
by the Compensation Committee or together with other independent directors, as directed by the Board. All decisions with respect to
non-CEO executive compensation, incentive-compensation and equity-based plans are first approved by the Compensation Committee
and then submitted, together with the Compensation Committee’s recommendation, to the members of the Board for final approval.
This section provides important information on our executive compensation programs and explains the compensation
decisions made during 2023 by the Compensation Committee for our named executive officers (“NEOs”). In the fiscal year ended
December 31, 2023, our only NEO was Peter H. Nielsen, Chairman of the Board, Chief Executive Officer, Chief Financial Officer and
President.
Compensation Philosophy
Our primary objective with respect to executive compensation is to design a reward system that will align executive
compensation with our overall business strategies and attract and retain highly qualified executives. We intend to stay competitive in
the marketplace with companies of comparable size, industry and complexity. Our compensation philosophy for executives is guided
by the following principles:
• Pay for Performance. In making compensation decisions, we consider annual and long-term Company performance
and consider the compensation of our executive officers in relation to companies of comparable size, industry and
complexity, taking the performance of the Company into consideration.
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• Reviewed Annually. The Compensation Committee annually reviews compensation levels to ensure we remain
competitive and continue to attract, retain and motivate top-tier talent.
• Alignment with Stockholder Interests. Our compensation is intended to closely align the interests of our NEOs with
those of our stockholders in an effort to create long-term stockholder value. In developing our compensation
philosophy, the Compensation Committee has considered the most recent stockholder advisory vote on executive
compensation in which an overwhelmingly positive percentage of the votes cast were in favor of our executive
compensation. The Compensation Committee is continuously mindful of stockholders’ views on executive
compensation and remains focused on ensuring proper alignment with stockholder interests.
Our compensation philosophy rewards demonstrated performance and encourages behavior that is in the long-term best
interests of the Company and its stockholders.
Elements and Mix of our 2023 Compensation Program
The following elements made up the fiscal year 2023 compensation program for our NEOs:
Element
Base Salary
Form of Compensation
Purpose, Basis and Performance Criteria
Cash
•
•
•
•
•
•
•
•
•
Base salary is intended to provide a market competitive
level of fixed compensation in recognition of
responsibilities, skills, capabilities, experience and
leadership.
Base salary is not generally performance based, but
reflective of competencies and experience.
Annual cash performance incentive awards are intended to
motivate and reward performance achievement.
Payments are discretionary and approved annually by the
Compensation Committee.
Long-term incentive awards are intended to recognize and
reward the achievement of long-term corporate goals and
objectives, recognize promotions, motivate retention of our
leadership talent and align executives’ interests with our
stockholders.
The Compensation Committee determines the amount of
long-term incentive awards to be granted to each NEO. The
Compensation Committee also may make isolated awards to
recognize promotions, new hires or individual performance
achievements.
In 2023, the long-term incentive awards included time-
vested equity awards that vest over a four-year period.
The Compensation Committee provides time-vested long-
term incentives (i) to build a consistent ownership stake and
retention incentive, (ii) to create a meaningful tie to the
Company’s relative long-term stockholder returns and (iii)
to motivate consistent improvement over a longer-term
horizon.
Employment agreements are intended to provide financial
security and an industry-competitive compensation package
for NEOs. This additional security helps ensure that NEOs
remain focused on our performance and the continued
creation of stockholder value throughout any change of
control transaction rather than on the potential uncertainties
associated with their own employment.
Annual Performance Incentive Awards (considered
Cash
“at-risk” compensation)
Long-Term Incentive Awards (considered “at-risk”
Stock Options
compensation)
Change of Control Severance
Eligible to receive severance
payments and post-termination
health benefits in connection with
involuntary termination within three
months before or twelve months after
a change of control
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Evaluation Process, Compensation Consultant, Peer Comparisons and Officers
Evaluation Process. The Compensation Committee oversees the administration of the compensation programs applicable to
our employees, including our NEOs. The Compensation Committee generally makes its decisions regarding the annual compensation
of our NEOs at its regularly-scheduled meeting in the first quarter of each year. These decisions include adjustments to base salary,
grants of annual incentive awards and grants of long-term incentive awards. The Compensation Committee also makes compensation
adjustments as necessary at other times during the year, such as in the case of promotions, changes in employment status and for
competitive purposes.
Each year for the Compensation Committee meeting, our CEO prepares an evaluation of each of the other executive officers,
if any, and makes compensation recommendations to the Compensation Committee based upon our performance against our corporate
performance metrics and the individual’s performance. In addition to considering the CEO’s recommendations, the Compensation
Committee assesses the applicable executive officer’s impact during the year and his or her overall value to the Company, specifically
by considering the individual leadership skills, impact on strategic initiatives, performance in his or her primary area of responsibility,
his or her role in succession planning and development, and other intangible qualities that contribute to corporate and individual
success. During 2023, our CEO was our only executive officer.
Compensation Consultant and Peer Comparisons. For the 2023 performance period, the Compensation Committee did not
engage an external compensation consultant to review the compensation of our executive officers. For comparison purposes, the
Compensation Committee relied upon peer executive compensation data from proxies and compensation surveys of the Industry Peer
Group (as defined below) prepared by our executive compensation counsel based on parameters set by the Compensation Committee.
The Compensation Committee reviewed executive compensation data from the Industry Peer Group to consider competitive pay levels
and compensation practices. Such data included components such as total direct compensation, considered as the sum of base salary
and annual cash performance incentive award, as well as total compensation, including long-term incentive awards.
While executive compensation data from the Industry Peer Group provides a point of reference for measurement, it is not the
determinative factor for compensation decisions. The Compensation Committee does not target the compensation of our executive
officers to a specific percentile of compensation provided to officers in comparable positions in our Industry Peer Group. The purpose
of the comparison is not to supplant the analyses of our corporate performance and the individual performance of our executive
officers that the Compensation Committee considers when making compensation decisions. Because the compensation data is just one
of the several analytic tools that are used in setting executive compensation, the Compensation Committee has discretion in
determining the nature and extent of its use.
The Compensation Committee established our current Industry Peer Group in 2023. With the assistance of our executive
compensation counsel, the Compensation Committee reviews the composition of the peer group annually to ensure that companies are
relevant for comparative purposes. In identifying companies to include in the Industry Peer Group, the Compensation Committee
considered, among other things, the following:
•
•
•
•
•
the industry of the companies;
the annual revenue, market capitalization and total assets of the companies;
the number of full-time employees of the companies;
the market data sources that are available with respect to the companies; and
the number of peers included in the Industry Peer Group.
For 2023, our Industry Peer Group consisted of the following companies (the “Industry Peer Group”):
• Actinium Pharmaceuticals, Inc. (ATNM)
• Cellectar Biosciences, Inc. (CLRB)
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• Cyclacel Pharmaceuticals Inc. (CYCC)
• Dare Bioscience, Inc. (DARE)
• Diffusion Pharmaceuticals, Inc. (DFFN)
• Neurobo Therapeutics Inc. (NRBO)
• Ocuphire Pharma, Inc. (OCUP)
• PDS Biotechnology Corp. (PDSB)
• Soligenix, Inc. (SNGX)
• Sonnet Biotherapeutics Holdings, Inc. (SONN)
• Xenetic Biosciences Inc. (XBIO)
Role of the Chief Executive Officer. Annually, our CEO provides the Compensation Committee with an evaluation of his
performance that is based, in large part, upon performance of the Company and as our lead representative to the investment
community. The Compensation Committee evaluates our CEO on these and other criteria. The total compensation package for our
CEO is based on the Compensation Committee’s evaluation, and reflects his performance, the performance of the Company and
competitive industry practices.
Role of Other Executive Officers. Our CEO makes recommendations to the Compensation Committee on all compensation
actions (other than his own compensation) affecting our other executive officers, if any. In developing his recommendation for an
executive officer, our CEO considers the self-evaluation prepared by the executive officer, the recommendations of his executive
team, as well as his own evaluation. Our CEO’s evaluation includes an assessment of the impact that the executive officer has had on
the Company during the award year and their overall value to the Company as a senior leader. The Compensation Committee is
provided with our CEO’s evaluation of each executive officer’s performance and contributions to the Company. The Compensation
Committee considers the information and recommendations provided by our CEO and provides a recommendation to the Board for
non-CEO executive officer base salary, annual cash incentive awards and grants of long-term incentive awards, which are subject to
approval by the Board. During 2023, our CEO was our only executive officer.
2023 Performance Analysis and Compensation Decisions
In its meeting in the first quarter of each year, the Compensation Committee determines base salaries for the current year, the
annual performance incentive awards for prior-year performance and the long-term incentive awards for the current year. Each
element is reviewed annually, as well as at the time of a promotion, other change in responsibilities, other significant corporate events
or a material change in market conditions. Variances in the amount of compensation awarded to each executive officer generally
reflect differences in individual responsibility and experience.
Base Salary. In recent years, the Compensation Committee has adjusted executive base salaries with the goal of providing a
stable base of competitive cash compensation while rewarding corporate and individual performance through annual performance
incentive awards. During 2023, the Compensation Committee approved an annual base salary for Mr. Nielsen of $575,000, compared
to $555,000 during 2022. Mr. Nielsen voluntarily reduced his base salary for 2023 to $400,000.
Annual Performance Incentive Awards. During 2023, the Compensation Committee approved a discretionary annual cash
performance incentive award for Mr. Nielsen in the amount of $110,000. Mr. Nielsen voluntarily elected to forego this award.
Long-term Incentive Awards. The Compensation Committee believes that long-term incentive awards should provide for a
retention incentive with a strong tie to relative long-term stockholder return. Accordingly, the Compensation Committee grants stock
option awards that typically vest over a four-year period. During 2023, the Board approved a long-term incentive award in the form of
72
stock options to Mr. Nielsen based on recommendations from the Compensation Committee. Specifically, in May 2023, Mr. Nielsen
was awarded a time-vested stock option award to purchase 5,250 shares of our common stock. The terms of the stock option grant
require, among other things, that Mr. Nielsen continue to provide services over the vesting period of the options. The stock options
vest over a four-year period from the date of the grant, with one-fourth (1/4) of the stock options vesting on the first anniversary of
such grant, and the remaining stock options vesting thereafter in equal monthly increments equal to one-forty-eighth (1/48) of the
stock options over the next three years, based on continuing service to the Company.
Summary Compensation Table
The following table sets forth information with respect to the compensation of our sole NEO for the fiscal years ended
December 31, 2023 and 2022.
Name and Principal Position
Peter H. Nielsen, CEO,
CFO, President, Chairman, Director
Year Salary ($) Bonus ($)
2023 $ 575,000 (2) $ 110,000 (3) $ 130,880 $
$ 288,669 $
2022 $ 555,000
$ 150,000
Option
Awards
($)(1)
All Other
Compensation
($)
11,237 (4) $ 827,117
17,678 (5) $ 1,011,347
Total ($)
(1) The amounts reported in this column reflect the aggregate grant date fair value of equity awards granted during the year
computed in accordance with FASB ASC Topic 718. See Note 11 to our consolidated financial statements included in this
Annual Report on Form 10-K for assumptions made by us in such valuation.
(2) Mr. Nielsen voluntarily reduced his base salary for 2023 to $400,000.
(3) Mr. Nielsen voluntarily elected to forego the entire $110,000 bonus.
(4) The amounts reported include Medicare premiums of $7,855, insurance copayments of $1,990 and certain other benefits
including life insurance premiums paid by the Company for Mr. Nielsen.
(5) The amounts reported include Medicare premiums of $12,822, insurance copayments of $3,471 and certain other benefits
including life insurance premiums paid by the Company for Mr. Nielsen.
Grants of Plan-Based Awards Table
The following table contains information about grants of plan-based stock options to our sole NEO during fiscal year 2023:
Estimated Future Payouts Under Non-Equity
Incentive Plan Awards
Name
Mr. Nielsen (1)
Grant
Date
5/2/2023
Threshold
($)
Target
($)
All Other
Stock
Awards:
All Other
Option
Awards:
Number of Number of
Securities
Underlying
Shares of
Stock or
Exercise or Grant Date
Fair Value
of
Stock
Awards
($)(2)
Base
Price of
Option
Awards
($/Sh)
5,250 $ 27.80 $ 25.00
($)
Units (#) Options (#)
Maximum
(1) Reflects time-vested stock options awarded under the 2022 Stock Incentive Plan. The options vest over a four-year period
from the date of grant, with one-fourth (1/4) of the options vesting on the first anniversary of such grant, and the remaining
options vesting thereafter in equal monthly increments equal to one-forty-eighth (1/48) of the options over the next
three years.
(2) The amounts in this column reflect the aggregate grant date fair value of equity awards granted during the year computed in
accordance with FASB ASC Topic 718. See Note 11 to our consolidated financial statements included in this Annual Report
on Form 10-K for assumptions made by us in such valuation.
73
Narrative Disclosures to Summary Compensation Table and Grants of Plan-Based Awards Table
Please see the discussion under the heading “2023 Performance Analysis and Compensation Decisions” in this Annual
Report on Form 10-K, above.
Outstanding Equity Awards at December 31, 2023
The following table sets forth certain information with respect to outstanding stock option awards of our sole NEO for the
fiscal year ended December 31, 2023.
Name
Mr. Nielsen (1)
Mr. Nielsen (1)
Mr. Nielsen (1)
Mr. Nielsen (2)
Mr. Nielsen (3)
Mr. Nielsen (4)
Mr. Nielsen (5)
Mr. Nielsen (6)
Number of Securities Number of Securities
Underlying Unexercised Underlying Unexercised Number of Securities
Options Unexercisable Underlying Unexercised
Option
Exercise
Unearned Options (#) Price ($)
Options Exercisable
(#)
(#)
Equity Incentive
Plan Awards:
Option
Expiration
Date
138
325
750
703
3,719
3,438
1,969
—
—
—
—
47
531
1,562
2,531
5,250
— $ 11,000.00 April 2026
736.00 April 2028
— $
368.00 March 2029
— $
65.00 March 2030
— $
104.20
— $
June 2030
140.40 March 2031
— $
72.20 March 2032
— $
27.80 May 2033
— $
(1) All of these options granted are fully vested.
(2) This option vests over a four-year period from the date of grant, March 28, 2020, with one-fourth (1/4) of the shares vesting
on the first anniversary of such grant, and the remaining shares vesting thereafter in equal monthly increments equal to one-
forty-eighth (1/48) of the shares over the next three years, based on continuing service to the Company.
(3) This option vests over a four-year period from the date of grant, June 16, 2020, with one-fourth (1/4) of the shares vesting on
the first anniversary of such grant, and the remaining shares vesting thereafter in equal monthly increments equal to one-
forty-eighth (1/48) of the shares over the next three years, based on continuing service to the Company.
(4) This option vests over a four-year period from the date of grant, March 31, 2021, with one-fourth (1/4) of the shares vesting
on the first anniversary of such grant, and the remaining shares vesting thereafter in equal monthly increments equal to one-
forty-eighth (1/48) of the shares over the next three years, based on continuing service to the Company.
(5) This option vests over a four-year period from the date of grant, March 23, 2022, with one-fourth (1/4) of the shares vesting
on the first anniversary of such grant, and the remaining shares vesting thereafter in equal monthly increments equal to one-
forty-eighth (1/48) of the shares over the next three years, based on continuing service to the Company.
(6) This option vests over a four-year period from the date of grant, May 2, 2023, with one-fourth (1/4) of the shares vesting on
the first anniversary of such grant, and the remaining shares vesting thereafter in equal monthly increments equal to one-
forty-eighth (1/48) of the shares over the next three years, based on continuing service to the Company.
Employment Agreement and Potential Payments Upon Termination or Change of Control
Bio-Path Subsidiary has entered into an employment agreement with its Chief Executive Officer, Peter H. Nielsen, dated
May 1, 2007 (the “Nielsen Employment Agreement”).
74
The Nielsen Employment Agreement provides for a base salary, as approved by the Compensation Committee, of $400,000.
The Nielsen Employment Agreement provides that Mr. Nielsen is entitled to certain severance payments and benefits in the event he
is terminated without Cause (as defined in the Nielsen Employment Agreement) or resigns for Good Reason (as defined in the Nielsen
Employment Agreement), subject to Mr. Nielsen’s continued compliance with the Confidentiality Agreement (as defined in the
Nielsen Employment Agreement) and execution of a general release of all claims against us. In addition, the Nielsen Employment
Agreement also provides that Mr. Nielsen is entitled to certain severance payments and benefits in the event he is terminated without
Cause or resigns for Good Reason within three months before or 12 months following a Change in Control (as defined in the Nielsen
Employment Agreement), subject to Mr. Nielsen’s continued compliance with the Confidentiality Agreement and execution of a
general release of all claims against us.
The severance payments and benefits include the following in the event Mr. Nielsen is terminated without Cause or resigns
for Good Reason: (i) any accrued but untaken vacation days of Mr. Nielsen will be paid to the extent not yet paid; (ii) the equivalent of
Mr. Nielsen’s base salary will be paid for a period of three months; and (iii) subject to certain restrictions, for three months after
Mr. Nielsen’s date of termination, the Company will continue its contributions toward Mr. Nielsen’s health care, dental, disability and
life insurance benefits on the same basis as immediately prior to the date of termination.
The severance payments and benefits include the following in the event Mr. Nielsen is terminated without Cause or resigns
for Good Reason within three months before or 12 months following a Change in Control: (i) any unvested stock or stock options
awarded to Mr. Nielsen shall immediately vest upon the occurrence of Mr. Nielsen’s termination of employment; (ii) Mr. Nielsen’s
base salary will be paid through the termination date, and any accrued but untaken vacation days of Mr. Nielsen will be paid to the
extent not yet paid; (iii) Mr. Nielsen’s normal post-termination benefits will be paid in accordance with our retirement, insurance and
other benefit plan arrangements (including non-qualified deferred compensation plans); (iv) the equivalent of Mr. Nielsen’s base
salary will be paid for a period of three months; (v) subject to certain restrictions, for six months after Mr. Nielsen’s date of
termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice of policy, Mr. Nielsen’s
health care, dental, disability and life insurance benefits will be provided on the same basis as immediately prior to the date of
termination; and (vi) subject to certain restrictions and to the extent not otherwise paid or provided, we will pay or provide any other
amounts or benefits required to be paid or provided or which Mr. Nielsen is eligible to receive following his termination of
employment under any of our plans, programs, policies, practices, contracts or agreements.
Potential severance payments and benefits to be paid pursuant to the Nielsen Employment Agreement assuming a termination
or Change in Control occurred on December 31, 2023 are set forth in the table below.
Triggering Event
Name
Peter H. Nielsen
Benefit
Market Value of Stock Vesting $
Accrued Vacation Days
Three Months’ Base Salary
Continuation of Benefits
Total
$
Termination without Cause or
Resignation for Good Reason ($) Following a Change in Control ($)
Termination without Cause or
Resignation for Good Reason within
3 Months Before or 12 Months
— $
36,923
100,000
1,667
138,590 $
— (1)
36,923
100,000
3,334
140,257
(1) Mr. Nielsen’s stock option awards would immediately become vested, and the value of the acceleration would be equal to the
vesting shares multiplied by the excess of the then current stock price over the exercise price of the options. For purposes of
this table, we have calculated the value of the acceleration using the closing price of our common stock on December 29,
2023, or $9.20 per share.
75
The following table presents summary information for the year ended December 31, 2023 regarding the compensation of the
members of our Board (other than Mr. Nielsen).
DIRECTOR COMPENSATION
Name
Heath W. Cleaver
Paul D. Aubert
Aline B. Sherwood
Douglas P. Morris (3)
Fees
Earned
or Paid
in Cash
Option
Awards
All Other
Compensation
$
$
$
$
73,000 (1) $
61,500 (1) $
64,500 (1) $
— $
12,306 (2) $
12,306 (2) $
12,306 (2) $
16,235 (4) $
— $
— $
— $
73,744 (5) $
Total
85,306
73,806
76,806
89,979
(1) These amounts reflect cash fees paid to or earned by our non-employee directors for attending Board or committee meetings
during the year ended December 31, 2023.
(2) In May 2023, our non-employee directors who were eligible at such time earned or received an annual grant of an option to
purchase 500 shares of our common stock, which was the only grant received by such directors during 2023. The amounts in
this column reflect the aggregate grant date fair value of equity awards granted during the year computed in accordance with
FASB ASC Topic 718. See Note 11 to our consolidated financial statements included elsewhere in this Annual Report on
Form 10-K for assumptions made by us in such valuation.
(3) Mr. Morris was hired by the Company in 2016 as the Company’s Director of Investor Relations. Accordingly, Mr. Morris is
not considered a non-employee director and does not receive compensation for his services as a member of the Board.
(4) Option awards granted to Mr. Morris reflect compensation received by Mr. Morris in his capacity as the Company’s Director
of Investor Relations.
(5) This amount reflects compensation received by Mr. Morris in his capacity as the Company’s Director of Investor Relations,
which includes base salary and certain other benefits.
The following table reflects the aggregate number of outstanding options (including unexercisable options) held by our
directors (other than Mr. Nielsen) as of December 31, 2023:
Heath W. Cleaver
Paul D. Aubert
Aline B. Sherwood
Douglas P. Morris (1)
Director
Number of
shares underlying
outstanding options
2,125
2,100
1,000
2,619
(1) Mr. Morris was hired by the Company in 2016 as the Company’s Director of Investor Relations. Accordingly, Mr. Morris is
not considered a non-employee director.
Narrative to Director Compensation Table
In 2023, our non-employee directors received cash and equity compensation in accordance with our non-employee director
compensation structure. Directors who were also employed by the Company did not receive compensation for services as directors.
During 2023, our compensation structure for all non-employee directors was as follows:
Cash Compensation Program
Non-employee directors received as compensation an annual cash retainer in the amount of $40,000.
76
The chairs of the respective Board committees also received as compensation the following amounts: (i) an annual cash
retainer in the amount of $20,000 to the chair of the Audit Committee; (ii) an annual cash retainer in the amount of $10,000 to the
chair of the Compensation Committee; (iii) an annual cash retainer in the amount of $8,000 to the chair of the Nominating/Corporate
Governance Committee; and (iv) an annual cash retainer in the amount of $8,000 to the chair of the Business Development
Committee.
Non-chair members of the respective Board committees also received as compensation the following amounts: (i) an annual
cash retainer in the amount of $7,500 to each member of the Audit Committee; (ii) an annual cash retainer in the amount of $5,000 to
each member of the Compensation Committee; and (iii) an annual cash retainer in the amount of $4,000 to each member of the
Nominating/Corporate Governance Committee.
In addition to the foregoing cash compensation for Board and committee members, non-employee directors of the Board who
spent significant time performing Board or committee service beyond the normal scope of their Board or committee responsibilities
could receive up to $2,500 per diem at the discretion of the Chief Executive Officer of the Company.
Equity Compensation Program
Each non-employee director of the Board also received as compensation an annual stock option grant (a “Grant”) of 500
shares of our common stock (the “Option Shares”). The exercise price of the Option Shares was determined by the Board, and the
Option Shares vest over a one-year period from the date of the Grant, with the Option Shares vesting in equal monthly increments
equal to one-twelfth (1/12) of the Option Shares, based on continuing service to the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The following table sets forth information regarding shares of our common stock beneficially owned at March 5, 2024 by:
(i) our sole NEO and each director; (ii) all executive officers and directors as a group; and (iii) each person known by us to
beneficially own 5% or more of the outstanding shares of our common stock. The information in this table is based solely on
statements in filings with the SEC or other reliable information.
Name of Beneficial Owner
Peter H. Nielsen (1) (2)
Douglas P. Morris (1) (3)
Heath W. Cleaver (1) (4)
Aline B. Sherwood (1) (5)
Paul D. Aubert (1) (6)
All officers and directors as a group (7)
*Less than 1%
(1) These are our NEOs and directors.
Amount and
Nature of
Beneficial
Ownership
14,838
2,123
2,119
1,000
2,100
22,180
Percent of
Class
2.35 %
*
*
*
*
3.48 %
(2) Includes 1,292 shares owned of record and 13,546 shares issuable upon the exercise of options that are exercisable within
60 days.
(3) Includes 403 shares held by Hyacinth Resources, LLC and 7 shares held by Sycamore Ventures, LLC. Mr. Morris disclaims
beneficial ownership of the shares held by Sycamore Ventures, LLC except to the extent of his pecuniary interest therein.
Also includes 1,713 shares issuable upon the exercise of options that are exercisable within 60 days.
(4) All 2,119 shares are issuable upon the exercise of options that are exercisable within 60 days.
77
(5) All 1,000 shares are issuable upon the exercise of options that are exercisable within 60 days.
(6) All 2,100 shares are issuable upon the exercise of options that are exercisable within 60 days.
(7) Includes 1,702 shares owned of record and 20,478 shares issuable upon the exercise of options currently exercisable or will
be exercisable within 60 days.
Equity Compensation Plan Information
There are no equity compensation plans that have not been approved by our stockholders. The following table contains
information about our equity compensation plans in effect as of December 31, 2023 (in thousands, except per share amount).
Plan Category
Equity compensation plans approved by stockholders
Equity compensation plans not approved by stockholders
Number of
shares of
common stock to
be issued
upon exercise of
outstanding
options, warrants
and rights (1)
Weighted-average
exercise price
of outstanding
options, warrants
and rights
Number of
shares of
common stock
remaining
available for
future issuance
under equity
compensation
plans (2)
44 $
—
8.06
55
—
(1) The shares shown in this column are securities to be issued upon exercise of outstanding options, warrants and rights were
subject to outstanding stock option awards as of December 31, 2023 that were granted under each of the 2017 Stock
Incentive Plan and the 2022 Stock Incentive Plan and total 32 and 12, respectively.
(2) The shares shown in this column as remaining available for future issuance as of December 31, 2023 are under each of the
2017 Stock Incentive Plan and the 2022 Stock Incentive Plan and total 1 and 54, respectively.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transactions
It is our policy that we will not enter into any transactions required to be disclosed under Item 404 of Regulation S-K
promulgated by the SEC unless the Audit Committee first reviews and approves the transactions. The Audit Committee is required to
review on an ongoing basis, and pre-approve all related party transactions before they are entered into, including those transactions
that are required to be disclosed under Item 404 of Regulation S-K. Related party transactions involving a director must also be
approved by the disinterested members of the Audit Committee. It is the responsibility of our employees and directors to disclose any
significant financial interest in a transaction between the Company and a third party, including an indirect interest. All related party
transactions shall be disclosed in our filings with the SEC as required under SEC rules.
In addition, pursuant to our codes of ethics, all employees, officers and directors of ours and our subsidiaries are prohibited
from engaging in any relationship or financial interest that is an actual or potential conflict of interest with us without approval.
Employees and officers are required to provide written disclosure to their supervisors as soon as they have any knowledge of a
transaction or proposed transaction with an outside individual, business or other organization that would create a conflict of interest or
the appearance of one. Directors are required to disclose such information to the Board or as otherwise required by law.
For our last two fiscal years, there has not been nor is there currently proposed any transaction or series of similar
transactions to which we were or are to be a party in which the amount involved exceeds the lesser of $120,000 or 1% of the average
of our total assets at the end of our last two fiscal years, and in which any of our directors, executive officers, persons who we know
hold more than 5% of our common stock, or any member of the immediate family of any of the foregoing persons had or will have a
direct or indirect material interest other than: (i) compensation agreements and other arrangements, which are described elsewhere in
this Annual Report on Form 10-K and (ii) the transactions described in the following paragraph.
78
We have entered into indemnity agreements with certain of our officers and directors which provide, among other things, that
we will indemnify such officer or director, under the circumstances and to the extent provided for therein, for expenses, damages,
judgments, fines and settlements he or she may be required to pay in actions or proceedings which he or she is or may be made a party
by reason of his or her position as a director, officer or other agent of the Company, and otherwise to the fullest extent permitted under
applicable law, our Certificate of Incorporation and our Bylaws.
Director Independence
The following members of the Board have been identified as independent under the standards of The Nasdaq Stock Market:
Heath W. Cleaver, Paul D. Aubert and Aline B. Sherwood. Presently, there are no directors on our Audit Committee,
Nominating/Corporate Governance Committee or Compensation Committee who are not independent under the standards of The
Nasdaq Stock Market.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
For the fiscal years ended December 31, 2023 and December 31, 2022, Ernst & Young LLP (“EY”), as our independent
registered public accounting firm during such time, billed the approximate fees set forth in the table below. The Board has considered
the services provided by EY and has concluded that such services are compatible with the independence of EY as our principal
accountants during such periods.
The table below sets forth the aggregate fees billed to the Company by EY for services rendered in the fiscal years ended
December 31, 2023 and December 31, 2022 (in thousands).
Audit fees (1)
Audit-related fees (2)
Tax fees (3)
All other fees (4)
Total
December 31,
December 31,
2023
2022
$
$
445
—
—
—
445
$
$
336
—
—
—
336
(1) Audit fees consist of fees billed for professional services rendered for the audit of our consolidated financial statements,
reviews of the interim condensed consolidated financial statements included in quarterly filings, services associated with
equity offerings, including with respect to registration statements filed by the Company, and services that are normally
provided by EY in connection with statutory and regulatory filings or engagements, including consents, except those not
required by statute or regulation.
(2) Audit-related fees consist of fees billed by EY for assurance and related services. These fees include services provided in
conjunction with due diligence services and employee benefit plan audits.
(3) Tax fees consist of fees billed for professional services rendered by EY for state and federal tax compliance and advice, and
tax planning.
(4) All other fees consist of fees billed by EY for professional services other than those relating to audit fees, audit-related fees
and tax fees.
Pre-Approval Policies and Procedures
The Audit Committee has not adopted any blanket pre-approval policies and procedures. Instead, the Audit Committee will
pre-approve the provision of all audit or non-audit services.
79
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV
1. Financial Statements. The financial statements and information required by “Item 8. Financial Statements and
Supplementary Data” of this Annual Report on Form 10-K appear on pages F-1 through F-17 of this report. The Index to
Consolidated Financial Statements appears on page F-1.
2. Financial Statement Schedules. All schedules are omitted because they are not applicable or the required information is
shown in the financial statements or the notes thereto.
3. Exhibits.
Exhibit
Number
2.1
3.1
3.2
3.3
3.4
3.5
3.6
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
Exhibit
Agreement and Plan of Merger and Reorganization dated September 27, 2007, by and among the Company, Biopath
Acquisition Corp., a Utah corporation and wholly owned subsidiary of the registrant, and Bio-Path, Inc., a Utah
corporation (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on
September 27, 2007).
Certificate of Incorporation (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K
filed on January 6, 2015).
Certificate of Amendment to the Certificate of Incorporation of Bio-Path Holdings, Inc. (incorporated by reference to
Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 9, 2018).
Certificate of Amendment to the Certificate of Incorporation of Bio-Path Holdings, Inc. (incorporated by reference to
Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on January 16, 2019).
Certificate of Amendment to the Certificate of Incorporation of Bio-Path Holdings, Inc. (incorporated by reference to
Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 23, 2024).
First Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on
Form 8-K filed on June 7, 2017).
Amendment No. 1 to the First Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the
Company’s Current Report on Form 8-K filed on December 8, 2023).
Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on
Form 10-K filed on March 16, 2015).
Form of Warrant issued to Maxim Group LLC, Sabby Healthcare Volatility Master Fund, Ltd. and Sabby Volatility
Warrant Master Fund, Ltd. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K
on January 21, 2014).
Form of Warrant issued to certain investors (incorporated by reference to Exhibit 4.1 to the Company’s Current
Report on Form 8-K filed on June 29, 2016).
Form of Warrant issued to H.C. Wainwright & Co., LLC and certain of its designees (incorporated by reference to
Exhibit 4.5 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2016).
Form of New Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed
on May 22, 2017).
Form of Warrant Amendment (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-
K filed on June 19, 2017).
Form of Warrant issued to certain investors (incorporated by reference to Exhibit 4.1 to the Company’s Current
Report on Form 8-K filed on November 6, 2017).
Form of Warrant issued to Roth Capital Partners, LLC (incorporated by reference to Exhibit 4.9 to the Company’s
Annual Report on Form 10-K filed on April 2, 2018).
Form of Series A Warrant issued to certain investors (incorporated by reference to Exhibit 4.2 to the Company’s
Current Report on Form 8-K filed on September 21, 2018).
Form of Warrant issued to H.C. Wainwright & Co., LLC and certain of its designees (incorporated by reference to
Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q filed on November 14, 2018).
Form of Underwriter Warrant issued to H.C. Wainwright & Co., LLC and certain of its designees (incorporated by
reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 16, 2019).
80
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19
4.20
10.1+
Form of Series A Warrant issued to certain investors (incorporated by reference to Exhibit 4.1 to the Company’s
Current Report on Form 8-K filed on January 22, 2019).
Form of Warrant issued to H.C. Wainwright & Co., LLC and certain of its designees (incorporated by reference to
Exhibit 4.15 to the Company’s Annual Report on Form 10-K filed on March 19, 2019).
Form of Warrant issued to H.C. Wainwright & Co., LLC and certain of its designees (incorporated by reference to
Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 13, 2019).
Form of Warrant issued to certain investors (incorporated by reference to Exhibit 4.1 to the Company’s Current
Report on Form 8-K filed on November 22, 2019).
Form of Warrant issued to H.C. Wainwright & Co., LLC and certain of its designees (incorporated by reference to
Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on November 22, 2019).
Description of Bio-Path Holdings, Inc.’s Securities Registered under Section 12 of the Securities Exchange Act of
1934 (incorporated by reference to Exhibit 4.17 to the Company's Annual Report on Form 10-K filed on March 5,
2020).
Form of Common Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K
filed on November 9, 2022).
Form of Common Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K
filed on August 7, 2023).
Warrant Agency Agreement, dated as of August 7, 2023, by and between the Company and Equiniti Trust Company,
LLC (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on August 7,
2023).
Employment Agreement – Peter H. Nielsen (incorporated by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed on February 19, 2008).
10.2+
Amended 2007 Stock Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Registration
10.3+
10.4
10.5
10.6+
10.7
10.8
10.9
10.10
10.11
10.12
10.13
Statement on Form S-8 filed on December 10, 2008).
First Amendment to First Amended 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q filed on August 14, 2013).
Form of Securities Purchase Agreement by and between the Company, Sabby Healthcare Volatility Master Fund,
Ltd. and Sabby Volatility Warrant Master Fund, Ltd. (incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed on January 21, 2014).
Form of Waiver, Consent and Amendment to that certain Securities Purchase Agreement by and between Sabby
Healthcare Volatility Master Fund, Ltd. and Sabby Volatility Warrant Master Fund, Ltd. (incorporated by reference
to Exhibit 10.2 to the Company’s Current Report on Form 8-K on January 21, 2014).
First Amendment to Employment Agreement, dated March 26, 2014 – Peter H. Nielsen (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 26, 2014).
Lease Agreement dated April 16, 2014 by and between the Company and Pin Oak North Parcel TT, LLC
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 18, 2014).
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed on April 16, 2015).
Controlled Equity OfferingSM Sales Agreement, dated June 24, 2015, by and between the Company and Cantor
Fitzgerald & Co. (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on
June 25, 2015).
Form of Securities Purchase Agreement by and between the Company and certain investors (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 29, 2016).
Form of Warrant Exercise Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed on May 22, 2017).
Form of Securities Purchase Agreement by and between the Company and certain investors (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 6, 2017).
Form of Leak-Out Agreement by and between the Company and certain investors (incorporated by reference to
Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 6, 2017).
10.14+
Bio-Path Holdings, Inc. 2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s
10.15
Current Report on Form 8-K filed on December 27, 2017).
Form of Incentive Stock Option Award Agreement under 2017 Stock Incentive Plan (incorporated by reference to
Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 27, 2017).
81
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26+
10.27+
10.28
Form of Non-Qualified Stock Option Award Agreement under 2017 Stock Incentive Plan (incorporated by reference
to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on December 27, 2017).
Form of Restricted Share Unit Award Agreement (Time-Vested) under 2017 Stock Incentive Plan (incorporated by
reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on December 27, 2017).
Form of Restricted Share Unit Award Agreement (Performance-Based) under 2017 Stock Incentive Plan
(incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on December 27,
2017).
Form of Restricted Share Award Agreement under 2017 Stock Incentive Plan (incorporated by reference to Exhibit
10.6 to the Company’s Current Report on Form 8-K filed on December 27, 2017).
Form of Stock Appreciation Right Award Agreement under 2017 Stock Incentive Plan (incorporated by reference to
Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on December 27, 2017).
Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed on September 21, 2018).
Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed on January 22, 2019).
Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed on March 13, 2019).
First Amendment to Lease Agreement dated April 16, 2014 by and between the Company and Pin Oak North Parcel
TT, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 4,
2019).
Form of Securities Purchase Agreement by and between the Company and certain investors (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 22, 2019).
First Amendment to Bio-Path Holdings, Inc. 2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to
the Company’s Current Report on Form 8-K filed on December 23, 2019).
Second Amendment to Bio-Path Holdings, Inc. 2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.1
to the Company’s Quarterly Report on Form 10-Q filed on May 16, 2022).
Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed on November 9, 2022).
10.29+
Bio-Path Holdings, Inc. 2022 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
10.38
Current Report on Form 8-K filed on December 20, 2022).
Form of Incentive Stock Option Award Agreement under 2022 Stock Incentive Plan (incorporated by reference to
Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 20, 2022).
Form of Non-Qualified Stock Option Award Agreement under 2022 Stock Incentive Plan (incorporated by reference
to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on December 20, 2022).
Form of Restricted Share Unit Award Agreement (Time-Vested) under 2022 Stock Incentive Plan (incorporated by
reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on December 20, 2022).
Form of Restricted Share Unit Award Agreement (Performance-Based) under 2022 Stock Incentive Plan
(incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on December 20,
2022).
Form of Restricted Share Award Agreement under 2022 Stock Incentive Plan (incorporated by reference to Exhibit
10.6 to the Company’s Current Report on Form 8-K filed on December 20, 2022).
Form of Stock Appreciation Right Award Agreement under 2022 Stock Incentive Plan (incorporated by reference to
Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on December 20, 2022).
Placement Agency Agreement, dated as of August 3, 2023, by and between the Company and Roth Capital Partners,
LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 7,
2023).
Form of Securities Purchase Agreement, dated as of August 3, 2023, by and between the Company and certain
purchasers (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August
7, 2023).
Form of Warrant Amendment Agreement, dated as of August 3, 2023, by and between the Company and certain
warrant holders (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on
August 7, 2023).
82
21.1
23.1*
31*
Subsidiaries of Bio-Path Holdings, Inc. (incorporated by reference to Exhibit 21.1 to the Company's Annual Report
on Form 10-K filed on March 5, 2020).
Consent of Ernst & Young LLP.
Certification of Principal Executive Officer/Principal Financial Officer pursuant to Exchange Act Rules 13a-14 and
15d-14, as adopted pursuant to Section 302 Sarbanes Oxley Act of 2002.
32**
Certification of Principal Executive Officer/Principal Financial Officer pursuant to Section 18 U.S.C. Section 1350,
97*
101*
104*
as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
Executive Compensation Recoupment Policy.
The following financial statements from the Company’s Annual Report on Form 10-K for the year ended December
31, 2023, formatted in Inline XBRL: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations;
(iii) Consolidated Statements of Cash Flows; (iv) Consolidated Statements of Shareholders’ Equity; and (v) Notes to
the Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, formatted
in Inline XBRL (included as Exhibit 101).
* Filed herewith.
** Furnished herewith.
+ Management contract or compensatory plan.
ITEM 16. FORM 10-K SUMMARY
None.
83
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Dated: March 7, 2024
BIO-PATH HOLDINGS, INC.
By: /s/ Peter H. Nielsen
Peter H. Nielsen
President
Chief Executive Officer
Chief Financial Officer
Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Date
March 7, 2024
Title
Signature
President/Chief Executive Officer/ Chief Financial Officer/
Principal Accounting Officer/Director
/s/ Peter H. Nielsen
Peter H. Nielsen
March 7, 2024
Director
March 7, 2024
Director
March 7, 2024
Director
March 7, 2024
Director
/s/ Heath W. Cleaver
Heath W. Cleaver
/s/ Paul D. Aubert
Paul D. Aubert
/s/ Aline B. Sherwood
Aline B. Sherwood
/s/ Douglas P. Morris
Douglas P. Morris
84
Index to Consolidated Financial Statements
Bio-Path Holdings, Inc. Financial Statements
Reports of Independent Registered Public Accounting Firms (PCAOB ID: 42)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Consolidated Statements of Shareholders’ Equity
Notes to Consolidated Financial Statements
Page
F-2
F-4
F-5
F-6
F-7
F-8
F-1
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Bio-Path Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Bio-Path Holdings, Inc. (the Company) as of December 31, 2023
and 2022, the related consolidated statements of operations, shareholders’ equity and cash flows for each of the two years in the period
ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion,
the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31,
2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in
conformity with U.S. generally accepted accounting principles.
The Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going
concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has stated
that substantial doubt exists about the Company’s ability to continue as a going concern. Management’s evaluation of the events and
conditions and management's plans regarding these matters are also described in Note 2. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no
such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the
critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not,
by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosure to which it relates.
F-2
Prepaid or Accrued Research and Development Expenses
Description of the
Matter
During 2023, the Company incurred $11.6 million for research and development expenses and as of December
31, 2023 recorded prepaid clinical trial expenses of $0.9 million and accrued clinical trial expense of $0.8
million. As disclosed in Note 2 to the consolidated financial statements, research and development costs are
charged to expense when the related goods are delivered, or services are performed. The Company estimated its
clinical trial expense based on a cost per patient calculation, which is derived from estimated start-up costs,
clinical trial costs based on the number of patients and length of treatment and clinical study report costs. The
Company recorded an accrual or prepaid for clinical trial expenses based on its estimated clinical trial expense as
compared to payments made to the Company’s third-party clinical research organization, laboratories and
clinical investigation sites.
Auditing the Company’s accrued and prepaid research and development expenses is complex due to significant
judgment and estimates made by management in determining the clinical trial expenses incurred, which include
inputs such as number of patients, length of treatment and clinical study report costs, compared to payments the
Company has made.
How We
Addressed the
Matter in Our
Audit
To test the prepaid research and development expenses for significant clinical trials, our audit procedures
included, among others, testing the accuracy and completeness of the underlying data used in the estimates and
evaluating the significant assumptions that are used by management to estimate the recorded prepayments. To
test the significant assumptions, we corroborated the patient enrollment, length of treatment, trial timeline and
progress of research and development activities through discussion with the Company’s research and
development personnel that oversee the research and development projects, inspected the Company’s contracts
with third parties and any pending change orders to assess the impact on amounts recorded, and obtained
information directly from vendors of their costs incurred to date. We tested a sample of transactions and
compared the costs against related invoices and contracts. We also performed analytics over fluctuations in
accruals or prepaid balances by trial throughout the year and tested subsequent payments to evaluate the
completeness of the research and development expenses recognized.
/s/ Ernst & Young
We have served as the Company’s auditor since 2020.
Houston, Texas
March 7, 2024
F-3
BIO-PATH HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
As of December 31, As of December 31,
2023
2022
$
$
$
1,052 $
632
1,358
3,042
1,120
(1,044)
76
102
10,384
3,587
1,644
15,615
1,120
(962)
158
198
3,220 $
15,971
457 $
1,346
103
1,906
863
10
2,779
667
909
108
1,684
—
113
1,797
Assets
Current assets
Cash
Prepaid drug product
Other current assets
Total current assets
Fixed assets
Furniture, fixtures & equipment
Less accumulated depreciation
Right of use operating assets
Total Assets
Liabilities & Shareholders' Equity
Current liabilities
Accounts payable
Accrued expenses
Current portion of lease liabilities
Total current liabilities
Warrant liability
Noncurrent lease liabilities
Total Liabilities
Shareholders' equity
Preferred stock, $.001 par value; 10,000 shares authorized; no shares issued and
outstanding
Common stock, $.001 par value; 200,000 shares authorized; 618 and 398 shares
issued and outstanding, respectively
Additional paid in capital
Accumulated deficit
Total shareholders' equity
Total Liabilities & Shareholders' Equity
$
—
—
1
108,047
(107,607)
441
3,220 $
1
105,702
(91,529)
14,174
15,971
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-4
BIO-PATH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Operating expenses
Research and development
General and administrative
Total operating expenses
Net operating loss
Other income (loss)
Change in fair value of warrant liability
Interest income
Total other income (loss)
Net loss
Net loss per share, basic and diluted
Year Ended December 31,
2023
2022
$
11,608
4,235
$
9,165
4,736
15,843
13,901
$
(15,843)
$
(13,901)
(271)
36
(235)
—
33
33
$
$
(16,078)
$
(13,868)
(33.63)
$
(38.12)
Basic and diluted weighted average number of common shares outstanding
478
364
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-5
BIO-PATH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Cash flow from operating activities
Net loss
Adjustments to reconcile net loss to net cash used in operating activities
Stock-based compensation
Amortization of right of use assets
Depreciation
Change in fair value of warrant liability
(Increase) decrease in operating assets
Prepaid drug product
Other current assets
Increase (decrease) in operating liabilities
Accounts payable and accrued expenses
Lease liabilities
Net cash used in operating activities
Cash flow from investing activities
Purchases of furniture, fixtures & equipment
Net cash used in investing activities
Cash flow from financing activities
Net proceeds from sale of common stock
Net proceeds from exercise of warrants
Net cash provided by financing activities
Net decrease in cash
Cash, beginning of period
Cash, end of period
Supplemental disclosure of non-cash activities
Non-cash operating activities
Right of use asset recognized in exchange for lease obligation
Year Ended December 31,
2023
2022
$
(16,078) $
(13,868)
734
96
82
271
2,955
286
227
(108)
851
90
88
—
(3,064)
199
700
(99)
(11,535)
(15,103)
—
—
1,677
526
2,203
(21)
(21)
1,734
—
1,734
(9,332)
(13,390)
10,384
23,774
$
1,052 $
10,384
$
— $
85
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-6
BIO-PATH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands)
Description
Common Stock
Paid in
Shares Amount Capital
Accumulated
Deficit
Total
Additional
Balance at December 31, 2021
358 $
1 $ 103,117 $
(77,661) $
25,457
Issuance of common stock, net of fees
Stock-based compensation
Net loss
40
—
—
—
—
—
1,734
851
—
—
—
(13,868)
1,734
851
(13,868)
Balance at December 31, 2022
398 $
1 $ 105,702 $
(91,529) $
14,174
Balance at December 31, 2022
398 $
1 $ 105,702 $
(91,529) $
14,174
Issuance of common stock, net of fees
Exercise of warrants, net of fees
Stock-based compensation
Net loss
175
45
—
—
—
—
—
—
491
1,120
734
—
—
—
—
(16,078)
491
1,120
734
(16,078)
Balance at December 31, 2023
618 $
1 $ 108,047 $
(107,607) $
441
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-7
Bio-Path Holdings, Inc.
Notes to Consolidated Financial Statements
December 31, 2023
Unless the context requires otherwise, references in these Notes to the Consolidated Financial Statements to “we,” “our,” “us,” “the
Company” and “Bio-Path” refer to Bio-Path Holdings, Inc. and its subsidiary. Bio-Path Holdings, Inc.’s wholly-owned subsidiary,
Bio-Path, Inc., is sometimes referred to herein as “Bio-Path Subsidiary.”
1. Organization and Business
The Company is a clinical and preclinical stage oncology focused RNAi nanoparticle drug development company utilizing a novel
technology that achieves systemic delivery for target specific protein inhibition for any gene product that is over-expressed in disease.
The Company’s drug delivery and antisense technology, called DNAbilize®, is a platform that uses P-ethoxy, which is a
deoxyribonucleic acid (DNA) backbone modification that is intended to protect the DNA from destruction by the body’s enzymes
when circulating in vivo, incorporated inside of a lipid bilayer having neutral charge. The Company believes this combination allows
for high efficiency loading of antisense DNA into non-toxic, cell-membrane-like structures for delivery of the antisense drug
substance into cells. In vivo, the DNAbilize® delivered antisense drug substances are systemically distributed throughout the body to
allow for reduction or elimination of target proteins in blood diseases and solid tumors. Through testing in numerous animal studies
and dosing in clinical trials, the Company's DNAbilize® drug candidates have demonstrated an excellent safety profile. DNAbilize®
is a registered trademark of the Company. Using DNAbilize® as a platform for drug development and manufacturing, the Company
currently has four antisense drug candidates in development to treat at least five different cancer disease indications.
The Company was incorporated in May 2000 as a Utah corporation. In February 2008, Bio-Path Subsidiary completed a reverse
merger with the Company, which at the time was traded over the counter and had no current operations. The prior name of the
Company was changed to Bio-Path Holdings, Inc. and the directors and officers of Bio-Path Subsidiary became the directors and
officers of Bio-Path Holdings, Inc. Effective December 31, 2014, the Company changed its state of incorporation from Utah to
Delaware through a statutory conversion pursuant to the Utah Revised Business Corporation Act and the Delaware General
Corporation Law.
On February 22, 2024, the Company effected a reverse stock split of its outstanding shares of common stock at a ratio of 1-for-20, and
its common stock began trading on the spilt-adjusted basis on the Nasdaq Capital Market at the commencement of trading on February
23, 2024. All common stock share and per share amounts in this Annual Report on Form 10-K have been adjusted to give effect to the
1-for-20 reverse stock split.
The Company’s operations to date have been limited to organizing and staffing the Company, acquiring, developing and securing its
technology and undertaking product development for a limited number of product candidates. As the Company has not begun its
planned principal operations of commercializing a product candidate, the Company’s activities are subject to significant risks and
uncertainties, including the potential requirement to secure additional funding, the outcome of the Company’s clinical trials and failing
to operationalize the Company’s current drug candidates before another company develops similar products.
2. Summary of Significant Accounting Policies
Principles of Consolidation — The consolidated financial statements include the accounts of Bio-Path Holdings, Inc. and its wholly
owned subsidiary Bio-Path, Inc. All intercompany accounts and transactions have been eliminated in consolidation.
Cash and Cash Equivalents — The Company considers all highly liquid investments with a maturity of three months or less when
purchased to be cash equivalents.
Concentration of Credit Risk — Financial instruments that potentially subject the Company to a significant concentration of credit
risk consist of cash. The Company maintains its cash balances with one major commercial bank, JPMorgan Chase Bank. The balances
are insured by the Federal Deposit Insurance Corporation (the “FDIC”) up to $250,000. As a result, as of December 31, 2023,
approximately $0.8 million of its cash balance was not covered by the FDIC. As of December 31, 2022, the Company had
F-8
approximately $10.4 million in cash on-hand, of which approximately $10.1 million was not covered by the FDIC. To date, the
Company has not incurred any losses on its cash balances.
Furniture, fixtures and equipment — Furniture, fixtures and equipment are stated at cost and depreciated using the straight-line
method over the estimated useful lives of the assets. Depreciation expense was $0.1 million for each of the years ended December 31,
2023 and 2022, respectively.
The estimated useful lives are as follows:
Computers and equipment – 3 years
Furniture and fixtures – 7 years
Scientific equipment –7 years
Leasehold improvements – Lesser of useful life or lease term
Major additions and improvements are capitalized, while costs for minor replacements, maintenance and repairs that do not increase
the useful life of an asset are expensed as incurred.
Long-Lived Assets — The Company’s long-lived assets consist of furniture, fixtures and equipment, leasehold improvements and
right-of-use operating assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of the asset is measured by a comparison of the asset’s
carrying amount to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an
asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying
amount of the asset exceeds the fair value of the asset.
Research and Development Costs — Costs and expenses that can be clearly identified as research and development are charged to
expense. Advance payments, including nonrefundable amounts, for goods or services that will be used or rendered for future research
and development activities are deferred and capitalized. Such amounts will be recognized as an expense as the related goods are
delivered or the related services are performed. If the goods will not be delivered, or services will not be rendered, then the capitalized
advance payment is charged to expense.
The Company estimates its clinical trial expense each period based on a cost per patient calculation which is derived from estimated
start-up costs, clinical trial costs based on the number of patients and length of treatment and clinical study report costs. These services
are performed by the Company’s third-party clinical research organizations, laboratories and clinical investigative sites. The expense
is recorded in research and development expense each period. Amounts that have been prepaid in advance of work performed are
recorded in other current assets.
Stock-Based Compensation — The Company records stock-based compensation expense measured using the fair value method. The
Company uses the Black-Scholes option valuation model to calculate stock-based compensation at the date of grant. Option pricing
models require the input of highly subjective assumptions, including the expected price volatility. The Company's policy is to estimate
forfeitures at the grant date and revise, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Changes in
these assumptions can materially affect the fair value estimate.
Warrants — The Company determines whether warrants should be classified as a liability or equity. For warrants classified as
liabilities, the Company estimates the fair value of the warrants at each reporting period using Level 3 inputs with changes in fair
value recorded in the Consolidated Statement of Operations as change in fair value of warrant liability. The estimates in
valuation models are based, in part, on subjective assumptions, including but not limited to stock price volatility, the expected life of
the warrants, the risk-free interest rate and the fair value of the common stock underlying the warrants, and could differ materially in
the future. The Company will continue to adjust the fair value of the warrant liability at the end of each reporting period for changes in
fair value from the prior period until the earlier of the exercise or expiration of the applicable warrant.
Net Loss Per Share — Basic net loss per common share is computed by dividing net loss attributable to common stockholders for the
period by the weighted average number of common shares outstanding during the period. Although there were warrants and stock
options outstanding during 2023 and 2022, they were not included in the computation of any diluted per-share amount when a loss
exists, as it would be anti-dilutive. Consequently, diluted net loss per share as presented in the financial statements is equal to basic net
F-9
loss per share for the years 2023 and 2022. The calculation of diluted earnings per share for 2023 did not include 43,383 shares and
190,063 shares issuable pursuant to the exercise of outstanding common stock options and warrants, respectively, as of December 31,
2023, as the effect would be anti-dilutive. The calculation of diluted earnings per share for 2022 did not include 32,871 shares and
60,027 shares issuable pursuant to the exercise of outstanding common stock options and warrants, respectively, as of December 31,
2022, as the effect would be anti-dilutive.
Use of Estimates — The preparation of consolidated financial statements in conformity with generally accepted accounting principles
in the United States (“U.S.”) requires management to make estimates and assumptions that affect the amounts reported in the
Company’s consolidated financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates and
judgments, which are based on historical and anticipated results and trends as well as on various other assumptions that the Company
believes to be reasonable under the circumstances. By their nature, estimates are subject to an inherent degree of uncertainty and, as
such, actual results may differ from the Company’s estimates. These estimates include prepaid and accrued clinical trial costs, stock-
based compensation expense, valuation of warrants and valuation of deferred tax assets.
Income Taxes — Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and
tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are
expected to reverse.
Liquidity — Since its inception, the Company has devoted substantially all of its efforts to product development, raising capital and
building infrastructure, and has not generated significant revenues from its planned principal operations. The Company does not
anticipate generating significant revenues for the foreseeable future. The Company’s activities are subject to significant risks and
uncertainties.
The Company has experienced significant losses since its inception, including net losses of $16.1 million and $13.9 million for
the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, the Company had an accumulated deficit of
$107.6 million and $1.1 million in cash and cash equivalents. The Company has no debt commitments. Substantially all of the
Company’s net losses have resulted from costs incurred in connection with its research and development activities and its general and
administrative expenses to support operations. The Company’s net losses may fluctuate significantly from quarter to quarter and year
to year.
The Company’s available cash at December 31, 2023 will not be sufficient to fund current liabilities and capital expenditure
requirements. Therefore, substantial doubt exists about the Company’s ability to continue as a going concern. The Company expects
to continue to incur significant operating expenses for the foreseeable future in connection with its ongoing activities, including
conducting clinical trials, manufacturing development and seeking regulatory approval of its drug candidates, prexigebersen, BP1002,
BP1003 and BP1001-A. Accordingly, the Company will continue to require substantial additional capital to fund its projected
operating requirements. Such additional capital may not be available when needed or on terms favorable to the Company. In addition,
the Company may seek additional capital due to favorable market conditions or strategic considerations, even if it believes it has
sufficient funds for its current and future operating plan. There can be no assurance that the Company will be able to continue to raise
additional capital through the sale of securities in the future. If the Company is not able to secure adequate additional funding, the
Company may be forced to make reductions in spending, extend payment terms with suppliers and/or suspend or curtail planned
programs. Any of these actions could materially harm the Company’s business, results of operations, financial condition and future
prospects.
Recent Accounting Pronouncements — From time to time, new accounting pronouncements are issued by the Financial Accounting
Standards Board (FASB) that are adopted by the Company as of the specified effective date. There are no recent accounting
pronouncements that have a material impact on the Company’s consolidated financial statements.
3. Prepaid Drug Product
Advance payments, including nonrefundable amounts, for goods or services that will be used or rendered for future clinical
development activities are deferred and capitalized. Such amounts will be recognized as an expense as the related goods are delivered
or the related services are performed. The Company recognized certain expenses and incurred installment costs for its contract drug
manufacturing and raw material suppliers with prepayments totaling $3.6 million as of December 31, 2022 pursuant to drug supply
contracts for the manufacture and delivery of prexigebersen for testing in a Phase 2 clinical trial, BP1001-A for testing in a Phase 1
F-10
clinical trial and BP1002 for testing in a Phase 1 clinical trial. The Company recognized certain expenses and incurred additional
installment costs during 2023, with advanced payments remaining to be expensed totaling $0.6 million as of December 31, 2023.
4. Other Current Assets
As of December 31, 2023, other current assets included prepaid expenses of $1.4 million, comprised primarily of prepayments of $0.9
million made for the Company’s clinical trials for BP1002 in AML and lymphoma and BP1001-A in solid tumors as well as prepaid
insurance of $0.3 million, prepaid Delaware franchise tax of $0.1 million and other prepaid expenses of $0.1 million. As of
December 31, 2022, other current assets included prepaid expenses of $1.6 million, comprised primarily of prepayments of $1.3
million made for the Company’s clinical trials for BP1002 in AML and lymphoma, BP1001-A in solid tumors and prexigebersen in
AML as well as prepaid insurance of $0.3 million.
5. Property and Equipment
The following table summarizes property and equipment as of December 31, 2023 and 2022:
December 31,
Leasehold improvements
Computers and office equipment
Furniture and fixtures
Scientific equipment
Total
Less: Accumulated depreciation
Net property and equipment
6. Accounts Payable
Estimated Useful
Lives
(in years)
2 to 5
3
7
7
$
2023
2022
(in thousands)
463 $
83
93
481
1,120
(1,044)
$
76 $
463
83
93
481
1,120
(962)
158
As of December 31, 2023, current liabilities included accounts payable of $0.5 million, comprised primarily of expenses related to our
clinical trials of $0.3 million, legal and patent fees of $0.1 million and other accounts payables of $0.1 million. As of December 31,
2022, current liabilities included accounts payable of $0.7 million, comprised primarily of expenses related to drug manufacturing,
development and testing services of $0.6 million and legal and patent fees of $0.1 million.
7. Accrued Expense
As of December 31, 2023, current liabilities included accrued expenses of $1.3 million, comprised primarily of expenses related to the
Company’s clinical trial for prexigebersen in AML of $0.8 million, accrued employee vacation and bonus expenses of $0.2 million,
professional and consulting fees of $0.1 million, legal and patent fees of $0.1 million and other accrued expenses of $0.1 million. As
of December 31, 2022, current liabilities included accrued expenses of $0.9 million, comprised primarily of accrued employee
vacation and bonus expenses of $0.4 million, drug manufacturing, development and testing services of $0.2 million, professional and
consulting fees of $0.1 million, legal and patent fees of $0.1 million and other accrued expenses of $0.1 million.
8. Warrant Liability
In connection with the 2023 Public Offering (as defined in Note 10), the Company issued the 2023 Warrants (as defined in Note 10).
The 2023 Warrants contain a provision applicable in the event of a fundamental transaction whereby the volatility used to calculate the
warrant exercise terms is fixed and meets the definition of a derivative.
Due to this provision and in accordance with ASC 815 Derivatives and Hedging, the 2023 Warrants were classified as a liability and
recorded at fair value using the Black-Scholes valuation model. The estimated fair value of the warrant liability for the 2023 Warrants
on the closing date of the 2023 Public Offering, August 7, 2023, was $1.2 million. As of December 31, 2023, the fair value of the
warrant liability was $0.9 million. The net change in fair value during the year of $0.3 million, comprised of a decrease in fair value of
F-11
$0.6 million related to warrant exercises partially offset by an increase in fair value of the warrant liability for the 2023 Warrants of
$0.3 million, is shown as other loss on the Company’s Consolidated Statements of Operations. The Company will continue to measure
the fair value of the 2023 Warrants each quarter until they are exercised or expire, and any change will be adjusted accordingly on the
Company’s financial statements.
9. Fair Value Measurements
In accordance with ASC 820, the Company uses various inputs to measure the 2023 Warrants on a recurring basis to determine the
fair value of the liability. ASC 820 also establishes a hierarchy categorizing inputs into three levels used to measure and disclose fair
value. The hierarchy gives the highest priority to quoted prices available in active markets and the lowest priority to unobservable
inputs. An explanation of each level in the hierarchy is described below:
Level 1 – Unadjusted quoted prices in active markets for identical instruments that are accessible by the Company on the measurement
date
Level 2 – Quoted prices in markets that are not active or inputs which are either directly or indirectly observable
Level 3 – Unobservable inputs for the instrument requiring the development of assumptions by the Company
The following table summarizes the Company’s 2023 Warrants measured at fair value within the hierarchy on a recurring basis as of
December 31, 2023:
Liabilities:
Warrant liability
Fair Value Measurements at
December 31, 2023
(in thousands)
Level 1
Level 2
Level 3
Total
$
—
$
—
$
863
$
863
The Company did not have the 2023 Warrants at December 31, 2022.
The following table summarizes changes to the fair value of the Level 3 2023 Warrants for the year ended December 31, 2023:
Balance at December 31, 2022
Issuance
Exercises
Change in fair value
Balance at December 31, 2023
Fair Value of
Warrant
Liability
(in
thousands)
$
$
—
1,186
(594)
271
863
F-12
The Company utilized the Black-Scholes valuation model for estimating the fair value of the 2023 Warrants using the following
assumptions as of December 31, 2023:
Risk-free interest rate
Expected volatility
Expected term in years
Dividend yield
As of
December 31,
2023
3.84 %
102 %
4.6
— %
10. Stockholders’ Equity
Issuances of Common Stock – On November 6, 2022, the Company entered into a placement agency agreement with Roth Capital
Partners, LLC relating to the 2022 Registered Direct Offering and the 2022 Private Placement. In addition, on November 6, 2022, the
Company entered into securities purchase agreements with several institutional and accredited investors pursuant to which the
Company agreed to sell, in a registered direct offering, an aggregate of 40,000 shares of our common stock for gross proceeds of
approximately $2.0 million under the base prospectus contained in the Company’s shelf registration statement on Form S-3 filed with
the SEC, which was declared effective by the SEC on June 14, 2022 (File No. 333-265282) (the “2022 Shelf Registration Statement”),
and a related prospectus supplement filed with the SEC on November 9, 2022 (the “2022 Registered Direct Offering”). In a concurrent
private placement, the Company also agreed pursuant to the securities purchase agreements to issue to such investors warrants to
purchase up to 40,000 shares of its common stock (the “2022 Private Placement”). The 2022 Registered Direct Offering and the 2022
Private Placement closed on November 9, 2022. The net proceeds from the offerings, after deducting the placement agent’s fees and
expenses and the Company’s offering expenses, and excluding the proceeds, if any, from the exercise of the warrants issued in the
offerings, were approximately $1.7 million.
On August 3, 2023, the Company entered into a placement agency agreement with Roth Capital Partners, LLC relating to a best
efforts public offering of an aggregate of 175,000 shares of our common stock, together with warrants to purchase up to 175,000
shares of the Company’s common stock (“the 2023 Warrants”), for gross proceeds of approximately $2.1 million (the “2023 Public
Offering”). The 2023 Public Offering was made pursuant to a registration statement on Form S-1, as amended (File No. 333-272879),
which was declared effective by the SEC on August 2, 2023. The 2023 Public Offering closed on August 7, 2023. The net proceeds
from the offering, after deducting the placement agent’s fees and expenses and the Company’s offering expenses, and excluding the
proceeds, if any, from the exercise of the warrants issued in the offering, were approximately $1.7 million.
During the year ended December 31, 2023, the Company issued an aggregate of 44,625 shares of its common stock pursuant to the
exercise of warrants at a weighted average exercise price of approximately $12.00 per share. The net proceeds to the Company from
the exercise of the warrants were approximately $0.5 million. The Company did not issue any common stock pursuant to the exercise
of warrants during the year ended December 31, 2022.
Stockholders’ Equity totaled $0.4 million as of December 31, 2023 compared to $14.2 million as of December 31, 2022. There were
617,633 shares of common stock issued and outstanding as of December 31, 2023. There were no shares of preferred stock issued and
outstanding as of December 31, 2023.
11. Stock-Based Compensation Plan
The 2022 Plan – On December 15, 2022, the Company’s stockholders approved the Bio-Path Holdings, Inc. 2022 Stock Incentive
Plan (the “2022 Plan”), which replaced the 2017 Stock Incentive Plan, as amended (the “2017 Plan,” and together with the 2022 Plan,
the “Plans”). As of stockholder approval of the 2022 Plan on December 15, 2022, no further awards will be made under the 2017 Plan.
The 2022 Plan provides for the grant of Incentive Stock Options, Non-Qualified Stock Options, Restricted Shares, Restricted Share
Units, Stock Appreciation Rights and other stock-based awards, or any combination of the foregoing, to the Company’s employees,
non-employee directors and consultants. As of December 31, 2023, there were 65,000 shares of common stock reserved for future
F-13
issuance of awards under the 2022 Plan. Under the 2022 Plan, the exercise price of awards is determined by the Board of Directors or
the compensation committee of the Board of Directors, and for options, may not be less than the fair market value as determined by
the closing stock price at the date of the grant. Each option and award under the 2022 Plan shall vest and expire as determined by the
Board of Directors or the compensation committee. Options expire no later than ten years from the date of grant. All grants provide for
accelerated vesting if there is a change in control, as defined in the 2022 Plan.
Stock option awards granted for the years 2023 and 2022 were estimated to have a weighted average fair value per share of $27.80 and
$74.20, respectively. The fair value calculation is based on stock options granted during the year using the Black-Scholes option-
pricing model on the date of grant. In addition, for all stock options granted, exercise price was determined based on the fair value as
determined by the closing stock price at the date of the grant. For stock options granted during 2023 and 2022 the following weighted
average assumptions were used in determining fair value:
Risk-free interest rate
Expected volatility
Expected term in years
Dividend yield
2023
3.42 %
129 %
6.0
— %
2022
2.43 %
127 %
6.0
— %
The Company determines the expected term of its stock option awards using the simplified method based on the weighted average of
the length of the vesting period and the term of the exercise period. Expected volatility is determined by the volatility of the
Company’s historical stock price over the expected term of the grant. The risk-free interest rate for the expected term of each option
granted is based on the U.S. Treasury yield curve in effect at the time of grant.
Option activity under the Plans for the year ended December 31, 2023 was as follows:
Outstanding at December 31, 2022
Granted
Expired
Outstanding at December 31, 2023
Vested and expected to vest December 31, 2023
Exercisable at December 31, 2023
Weighted-
Average
Exercise
Price
Options
(in thousands)
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
233.40
33 $
11 $
27.80
(1) $ 1,840.00
161.20
43 $
162.80
43 $
236.20
25 $
7.9 $
9.3
7.6 $
7.6 $
6.9 $
—
—
—
—
The aggregate intrinsic value represents the total pretax intrinsic value (the difference between the Company’s closing stock price on
December 31, 2023 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the
option holders had all option holders exercised their options on December 31, 2023. This amount changes based on the fair value of
the Company’s stock.
F-14
Option activity under the Plans for the year ended December 31, 2022 was as follows (in thousands, except as noted):
Outstanding at December 31, 2021
Granted
Expired
Outstanding at December 31, 2022
Vested and expected to vest December 31, 2022
Exercisable at December 31, 2022
Weighted-
Average
Exercise
Options
(in thousands)
Price
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
24 $ 291.60
10
74.20
119.20
(1)
33 $ 233.40
32 $ 238.00
16 $ 372.40
8.4 $
9.3
7.9 $
7.9 $
7.3 $
7,800
—
—
—
The aggregate intrinsic value represents the total pretax intrinsic value (the difference between the Company’s closing stock price on
December 31, 2022 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the
option holders had all option holders exercised their options on December 31, 2022. This amount changes based on the fair value of
the Company’s stock.
Stock-Based Compensation Expense – Total stock-based compensation expense for the year ended 2023 was $0.7 million, which
consisted of research and development expense of $0.2 million and general and administrative expense of $0.6 million. As of
December 31, 2023, future stock-based compensation expense for all outstanding unvested options was $0.9 million, which is
expected to be recognized over a weighted-average vesting period of 1.8 years. Total stock-based compensation expense for the year
ended 2022 was $0.9 million, which consisted of research and development expense of $0.2 million and general and administrative
expense of $0.7 million.
12. Warrants
A summary of warrants outstanding and exercisable as of December 31, 2023 is as follows (in thousands, except as noted):
Warrants Outstanding
Warrants Exercisable
Weighted
Weighted
Average
Remaining
Average
Contractual Exercise
Weighted
Average
Exercise
Number
Number
Year Issued
2018
2019
2022
2023
Outstanding
Life
(in years)
Exercisable
Price
(per share)
384.00
275.20
15.20
12.00
43.20
0.2
0.8
4.4
4.6
4.1 $
Price
(per share)
384.00
275.20
15.20
12.00
43.20
6
14
40
130
190 $
6
14
40
130
190
13. Commitments and Contingencies
Drug Supplier Project Plan – Total commitments for the Company’s drug supplier project plan were $1.0 million as of December 31,
2023, comprised of $0.8 million for the manufacture of the Company’s Grb2 drug substance and $0.2 million for testing services. The
Company expects to incur $0.9 million of these commitments over the next 12 months.
14. Leases
In April 2014, the Company entered into a five-year lease agreement for administrative office space located in Bellaire, Texas. The
term of the lease began on August 1, 2014 and was set to expire on July 31, 2019; however, in May 2019, the Company entered into
F-15
an amendment to the lease agreement to extend the term of the lease for a period of five years, beginning on August 1, 2019 and
ending on October 31, 2024.
In April 2016, the Company entered into a three-year lease agreement for lab space located in Bellaire, Texas. The term of lease began
on May 1, 2016 and was set to expire on April 30, 2019; however, in December 2018, the Company entered into an amendment to the
lease agreement to extend the term for a period of three years, beginning on May 1, 2019 and ending on April 30, 2022. In January
2022, the Company exercised an option in the lease agreement amendment to extend the term of the lease to April 30, 2025.
At the inception of an agreement, the Company determines if the agreement is a lease based on the unique facts and circumstances in
each agreement. Lease classification, recognition, and measurement are then determined at the lease commencement date. For
agreements that contain a lease, the Company identifies lease and non-lease components, determines the consideration in the contract,
determines whether the lease is an operating or financing lease and recognizes right of use (“ROU”) assets and lease liabilities. Lease
liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term.
The interest rate implicit in lease contracts is typically not readily determinable so the Company uses an incremental borrowing rate
based on the information available at the lease commencement date, which represents an estimated rate that would be incurred to
borrow over a similar term in a similar economic environment. The weighted average incremental borrowing rate utilized on its lease
liabilities as of December 31, 2023 was 8.0%.
The Company’s current leases include options to renew which can impact the lease term. The exercise of these options is at its
discretion and the Company does not include any of these options within the expected lease term as there is no reasonable certainty
these options will be exercised. Fixed lease payments on operating leases are recognized over the expected term of the lease on a
straight-line basis within its consolidated financial statements. The Company’s leases are included in ROU assets, current portion of
lease liabilities and noncurrent lease liabilities in its consolidated balance sheet for the year ended December 31, 2023.
The following table summarizes the Company’s operating lease assets and liabilities:
Assets:
Operating lease assets
Liabilities:
Current portion of lease liabilities
Noncurrent lease liabilities
Total operating lease liabilities
The following table summarizes the Company's lease related costs:
Operating lease costs
Variable lease costs
Total lease costs
December 31,
2023
2022
(in thousands)
$
102 $
198
103
10
$
113 $
108
113
221
December 31,
2023
2022
(in thousands)
113 $
10
123 $
115
5
120
$
$
The Company made cash payments for its operating leases of $0.1 million for the year ended December 31, 2023.
F-16
The following table summarizes the Company's expected minimum lease payments:
2024
2025
Future minimum lease payments
Less: Interest
Present value of operating lease liabilities
As of December 31, 2023
(in thousands)
$
$
108
11
119
(6)
113
As of December 31, 2023, the weighted average remaining lease term was 1.0 years.
15. Benefit Plan
The Company initiated a contribution savings plan under Section 401(k) of the Internal Revenue Code in 2016. Under the plan, all
eligible employees may contribute up to the statutory allowable amount governed by the Internal Revenue Service for any
calendar year. The Company makes matching contributions equal to 100% of the first 3% and 50% of the next 2% of each employee’s
base salary up to the allowable amount, which is fully vested on the date the matching contributions are made. For the years ended
December 31, 2023 and 2022, matching contributions totaled $52,000 and $37,000, respectively.
16. Income Taxes
At December 31, 2023, the Company had a net operating loss carryforward for federal income tax purposes of $97.3 million, $35.8
million of which begins to expire in varying amounts in tax years 2026 through 2037. Approximately $61.5 million of net operating
losses, incurred after December 31, 2017, carryforward indefinitely. Additionally, the Company has a research and development tax
credit carryforward of $6.5 million for federal income tax purposes that begins to expire in varying amounts in tax year 2028. In
connection with the Company’s equity transactions in 2007 and 2019, the Company determined that the utilization of net operating
losses in future years may be subject to limitations by reason of an “ownership change” as defined under Section 382 of the Internal
Revenue Code (IRC) (“Section 382 Limitation”). As a result of the Section 382 Limitation, the Company may not be able to fully
utilize its net operating loss carry forwards and other tax credit carry forwards to offset future taxable income. Based on the
Company’s estimated impact of the ownership change and Section 382 Limitation as of December 31, 2023, the net operating loss was
reduced to $88.3 million, and the tax credits were reduced to $4.8 million for credits earned after the 2019 ownership change. During
the year ended December 31, 2023, the Company raised additional equity capital and has yet to determine whether an ownership
change occurred. If an ownership change is determined to have occurred in 2023, additional limitations on the Company’s net
operating losses incurred prior to the ownership change may apply. Based on operations through December 31, 2023, the Company
has estimated that the net operating loss and tax credits should be further reduced by providing a full valuation allowance against both.
In assessing the ability to realize its deferred tax assets, management considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences become deductible. Management considers evidence
such as the reversal of deferred tax liabilities, projected future results of operations, and tax planning strategies in making this
assessment. Based upon the level of historical taxable income, significant book losses during the current and prior periods, and
projections for future results of operations over the periods in which the deferred tax assets are deductible, among other factors,
management continues to conclude that the Company does not meet the “more likely than not” requirement of ASC 740 in order to
recognize deferred tax assets. As such, a valuation allowance has been recorded to offset the Company’s net deferred tax assets at
December 31, 2023. The Company recorded an increase in the valuation allowance of $5.0 million for the year ended December 31,
2023.
Due to the uncertainty surrounding the realization of the benefits of its deferred assets, including NOL carryforwards, the Company
has provided a 100% valuation allowance on its net deferred tax assets at December 31, 2023 and 2022. The valuation allowance was
$24.2 million and $19.1 million as of December 31, 2023 and 2022, respectively.
F-17
The components of the Company’s deferred tax asset are as follows:
Deferred tax assets – non-current
Accrued bonuses
Accrued vacation
Net operating loss (NOL) carryover
Research & development tax credits
Share based expense
Other
Right of use lease liability
Fixed asset depreciation
Total deferred tax asset
Less: valuation allowance
Net deferred tax asset
Right of use asset
Net deferred tax asset
December 31,
2023
2022
(in thousands)
$
$
22 $
24
18,550
4,769
750
3
24
50
24,192
(24,171)
21
(21)
— $
63
28
15,818
2,509
671
3
46
44
19,182
(19,140)
42
(42)
—
Reconciliation between income taxes at the statutory tax rate (21%) and the actual income tax provision for continuing operations
follows:
Loss before income taxes
Tax (benefit) at statutory tax rate
Effects of:
Exclusion of incentive stock option expense
R&D tax credits
Increase in valuation allowance
FMV of warrants
Section 382 limit - NOL
Other
Provision for income taxes
December 31,
2023
2022
(in thousands)
$
(16,078)
(3,376)
$
(13,868)
(2,912)
74
(2,261)
5,031
57
—
475
—
$
80
844
98
—
1,890
—
—
$
As of December 31, 2023, the Company had no unrecognized income tax benefits. The Company’s policy for classifying interest and
penalties associated with unrecognized income tax benefits is to include such items as tax expense. No interest or penalties have been
recorded as of the year ended December 31, 2023, and no interest or penalties have been accrued as of December 31, 2023 and 2022,
respectively.
The Company’s open years for Internal Revenue Service (IRS) examination purposes due to normal statute of limitation are 2020,
2021 and 2022. However, since the Company has operating loss carryforwards, the IRS has the ability to make adjustments to items
that originate in a year otherwise barred by the statute of limitations under Section 6501 of the IRC of 1986, as amended, in order to
redetermine tax for an open year to which those items are carried. Therefore, in a year in which a net operating loss deduction was
claimed, the IRS may examine the year in which the net operating loss was generated and adjust it accordingly for purposes of
assessing additional tax in the year the net operating loss was claimed. The Company is not currently under examination by the IRS or
any other taxing authorities.
F-18
17. Subsequent Events
On February 22, 2024, the Company effected a reverse stock split of its outstanding shares of common stock at a ratio of 1-for-20, and
its common stock began trading on the spilt-adjusted basis on the Nasdaq Capital Market at the commencement of trading on February
23, 2024 (See Note 1).
F-19
Consent of Independent Registered Public Accounting Firm
Exhibit 23.1
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement (Form S-3 No. 333-265282) of Bio-Path Holdings, Inc.,
(2) Registration Statements (Form S-1 No. 333-229049, 333-269045 and 333-272879) of Bio-Path Holdings,
Inc.,
(3) Registration Statement (Form S-8 No. 333-156054) pertaining to the Bio-Path Holdings, Inc. 2007 Stock
Incentive Plan, as amended,
(4) Registration Statements (Form S-8 No. 333-223111 and 333-236390) pertaining to the Bio-Path Holdings,
Inc. 2017 Stock Incentive Plan, as amended; and
(5) Registration Statement (Form S-8 No. 333-270561) pertaining to the Bio-Path Holdings, Inc. 2022 Stock
Incentive Plan;
of our report dated March 7, 2024, with respect to the consolidated financial statements of Bio-Path Holdings,
Inc. included in this Annual Report (Form 10-K) of Bio-Path Holdings, Inc. for the year ended December 31,
2023.
/s/ Ernst & Young LLP
Houston, Texas
March 7, 2024
Exhibit 31
CERTIFICATION OF
PRINCIPAL EXECUTIVE OFFICER AND
PRINCIPAL FINANCIAL OFFICER
I, Peter H. Nielsen, certify that:
1. I have reviewed this Annual Report on Form 10-K of Bio-Path Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under my supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being
prepared; and
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors:
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting.
Date: March 7, 2024
By: /s/ Peter H. Nielsen
Peter H. Nielsen
Chief Executive Officer
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer)
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32
In connection with the Annual Report on Form 10-K of Bio-Path Holdings, Inc. (the “Company”) for the year ended
December 31, 2023 as filed with the Securities and Exchange Commission (the “Report”), I Peter H. Nielsen, Chief Executive Officer
and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-
Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
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Date: March 7, 2024
By: /s/ Peter H. Nielsen
Peter H. Nielsen
Chief Executive Officer
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer)
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by
the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 97
BIO-PATH HOLDINGS, INC.
EXECUTIVE COMPENSATION RECOUPMENT POLICY
Introduction
The Board of Directors (the “Board”) of Bio-Path Holdings, Inc. (the “Company”) believes that it is in
the best interests of the Company and its shareholders to create and maintain a culture that emphasizes integrity
and accountability and that reinforces the Company’s pay-for-performance compensation philosophy. The Board
has therefore adopted this Executive Compensation Recoupment Policy (this “Policy”), which provides for the
recoupment of certain executive compensation in the event of an accounting restatement resulting from material
noncompliance with financial reporting requirements under the federal securities laws. This Policy is designed
to comply with Section 10D of the Securities Exchange Act of 1934 (the “Exchange Act”).
Administration
This Policy shall be administered by the Board or, if so designated by the Board, the Compensation
Committee, in which case references herein to the Board shall be deemed references to the Compensation
Committee. Any determinations made by the Board shall be final and binding on all affected individuals.
Covered Executives
This Policy applies to the Company’s current and former executive officers, as determined by the Board
in accordance with Section 10D of the Exchange Act and the listing standards of the national securities exchange
on which the Company’s securities are listed (“Covered Executives”).
Recoupment; Accounting Restatement
In the event the Company is required to prepare an accounting restatement of its financial statements due
to the Company’s material noncompliance with any financial reporting requirement under the securities laws,
including any required accounting restatement to correct an error in previously issued financial statements that is
material to the previously issued financials statements or that would result in a material misstatement if the error
were corrected in the current period or left uncorrected in the current period, the Board will require reimbursement
or forfeiture of any excess Incentive Compensation received by any Covered Executive during the three
completed fiscal years immediately preceding the date on which the Company is required to prepare an accounting
restatement.
Incentive Compensation
For purposes of this Policy, Incentive Compensation means any of the following; provided that such
compensation is granted, earned, or vested based wholly or in part on the attainment of a financial reporting
measure:
• Annual bonuses and other short- and long-term cash incentives.
• Stock options.
• Stock appreciation rights.
• Restricted stock.
• Restricted stock units.
• Performance shares.
• Performance units.
Financial reporting measures include:
• Company stock price.
• Total shareholder return.
• Revenues.
• Net income.
• Earnings before interest, taxes, depreciation, and amortization (EBITDA).
• Funds from operations.
• Liquidity measures such as working capital or operating cash flow.
• Return measures such as return on invested capital or return on assets.
• Earnings measures such as earnings per share.
Excess Incentive Compensation: Amount Subject to Recovery
The amount to be recovered will be the excess of the Incentive Compensation paid to the Covered
Executive based on the erroneous data over the Incentive Compensation that would have been paid to the Covered
Executive had it been based on the restated results, as determined by the Board, without regard to any taxes paid
by the Covered Executive in respect of the Incentive Compensation paid based on the erroneous data.
If the Board cannot determine the amount of excess Incentive Compensation received by the Covered
Executive directly from the information in the accounting restatement, then it will make its determination based
on a reasonable estimate of the effect of the accounting restatement.
Method of Recoupment
The Board will determine, in its sole discretion, the method for recouping Incentive Compensation
hereunder which may include, without limitation:
requiring reimbursement of cash Incentive Compensation previously paid;
(a)
(b) seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer or other
disposition of any equity-based awards;
(c) offsetting the recouped amount from any compensation otherwise owed by the Company to the
Covered Executive;
(d) cancelling outstanding vested or unvested equity awards; and/or
(e)
taking any other remedial and recovery action permitted by law, as determined by the Board.
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No Indemnification
The Company shall not indemnify any Covered Executives against the loss of any incorrectly awarded
Incentive Compensation.
Interpretation
The Board is authorized to interpret and construe this Policy and to make all determinations necessary,
appropriate or advisable for the administration of this Policy. It is intended that this Policy be interpreted in a
manner that is consistent with the requirements of Section 10D of the Exchange Act and any applicable rules or
standards adopted by the Securities and Exchange Commission or any national securities exchange on which the
Company’s securities are listed.
Effective Date
This Policy shall be effective as of October 2, 2023 (the “Effective Date”) and shall apply to Incentive
Compensation that is received by Covered Executives on or after October 2, 2023, even if such Incentive
Compensation was approved, awarded or granted to Covered Executives prior to October 2, 2023.
Amendment; Termination
The Board may amend this Policy from time to time in its discretion and shall amend this Policy as it
deems necessary to reflect final regulations adopted by the Securities and Exchange Commission under Section
10D of the Exchange Act and to comply with any rules or standards adopted by a national securities exchange on
which the Company’s securities are listed. The Board may terminate this Policy at any time.
Other Recoupment Rights
The Board intends that this Policy will be applied to the fullest extent of the law. The Board may require
that any employment agreement, equity award agreement or similar agreement entered into on or after the
Effective Date shall, as a condition to the grant of any benefit thereunder, require a Covered Executive to agree
to abide by the terms of this Policy. Any right of recoupment under this Policy is in addition to, and not in lieu
of, any other remedies or rights of recoupment that may be available to the Company pursuant to the terms of any
similar policy in any employment agreement, equity award agreement or similar agreement and any other legal
remedies available to the Company.
Impracticability
The Board shall recover any excess Incentive Compensation in accordance with this Policy unless such
recovery would be impracticable, as determined by the Board in accordance with Rule 10D-1 of the Exchange
Act and the listing standards of the national securities exchange on which the Company’s securities are listed.
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Successors
This Policy shall be binding and enforceable against all Covered Executives and their beneficiaries, heirs,
executors, administrators or other legal representatives.
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