s
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 
 
(Mark One) 
 
 
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the Quarterly Period Ended September 30, 2020
 
 
 
 
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from                      to                      
 
 
 
Commission File Number: 001-39070
 
 
 
 

 
 
MONOPAR THERAPEUTICS INC.
(Exact name of registrant as specified in its charter)
 
 
DELAWARE
 
32-0463781
(State or other jurisdiction of
incorporation or organization)
 
 
(I.R.S. employer
identification number)
1000 Skokie Blvd., Suite 350, Wilmette, IL
 
60091
(Address of principal executive offices)
 
(zip code)
 
(847) 388-0349
 
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
 
 
 
  Title of each class
 
  Trading Symbol(s)
 
  Name of each exchange on which registered
  Common Stock, $0.001 par value
 
  MNPR
 
The Nasdaq Stock Market LLC
(Nasdaq Capital Market)
 
 
 

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
 
Accelerated filer
Non-accelerated filer
   
Smaller reporting company
 
 
 
Emerging growth company
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes      No  
 
 
 
The number of shares outstanding with respect to each of the classes of our common stock, as of October 31, 2020, is set forth below:
 
Class
 
Number of shares outstanding
 
Common Stock, par value $0.001 per share
 
 
11,452,177
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MONOPAR THERAPEUTICS INC.
TABLE OF CONTENTS
 
 
 
 
FINANCIAL INFORMATION
  Page
 
 
 
 
 
 
 
 
Item 1.
 
 2
 
 
 
 
 2
 
 
 
 
 3
 
 
 
 
 4
 
 
 
 
 6
 
 
 
 
 7
 
 
Item 2.
 
 20
 
 
Item 4.
 
 32
 
 
 
 
 
 
 
 
 
OTHER INFORMATION
 
 
 
Item 1A.
 
 33
 
 
Item 6.
 
 34
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 35
 
 
 
 
 
 
 
 
   
 
 
 
 
 
Forward-Looking Statements
 
 
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Act”) and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q are forward-looking statements. The words “hopes,” “believes,” “anticipates,” “plans,” “seeks,” “estimates,” “projects,” “expects,” “intends,” “may,” “could,” “should,” “would,” “will,” “continue,” and similar expressions are intended to identify forward-looking statements. The following uncertainties and factors, among others, could affect future performance and cause actual results to differ materially from those matters expressed in or implied by forward-looking statements:
 
our ability to raise sufficient funds by mid-2021 in order for us to start the Phase 3 portion of our Validive Phase 2b/3 clinical trial and thereafter in order to complete the trial, support further development of camsirubicin in and beyond the Phase 2 clinical trial, support further development of potential radio-immuno-therapeutics to treat severe COVID-19 (patients with SARS-CoV-2 infection) and generally to support our current and any future product candidates through completion of clinical trials, approval processes and, if applicable, commercialization;
 
our ability to find a suitable pharmaceutical partner to further our development efforts, if we are unable to raise sufficient additional financing;
 
risks and uncertainties associated with our research and development activities, including our clinical trials;
 
estimated timeframes for our clinical trials and regulatory reviews for approval to market products;
 
plans to research, develop and commercialize our current and future product candidates;
 
the rate and degree of market acceptance and the competitive clinical efficacy and safety of any products for which we receive marketing approval;
 
the difficulties of commercialization, marketing and manufacturing capabilities and strategy;
 
uncertainties of intellectual property position and strategy;
 
challenging future financial performance;
 
the risks inherent in our estimates regarding expenses, capital requirements and need for additional financing;
 
the uncertain impact of government laws and regulations;
 
our ability to attract and retain key personnel;
 
the impact of the COVID-19 pandemic on our ability to advance our clinical programs and raise additional financing; and
 
uncertainty of financial and operational projections.
 
Although we believe that the expectations reflected in such forward-looking statements are appropriate, we can give no assurance that such expectations will be realized. Cautionary statements are disclosed in this Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements. We undertake no obligation to update any statements made in this Quarterly Report on Form 10-Q or elsewhere, including without limitation any forward-looking statements, except as required by law.
 
Any forward-looking statements in this Quarterly Report reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information.
 
 
 
 
1
 
PART I
 
FINANCIAL INFORMATION
 
Item 1. Financial Statements
Monopar Therapeutics Inc.
 
Condensed Consolidated
Balance Sheets
(Unaudited)
 
 
 
September 30, 2020
 
December 31, 2019*
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
 $ 17,982,672
 
 $ 13,213,929
Other current assets
 
  104,550
 
  15,711
Total current assets
 
18,087,222
 
          13,229,640
 
 
 
 
 
Other non-current assets
 
  68,858
 
  122,381
Total assets
 
  $ 18,156,080
 
  $ 13,352,021
Liabilities and Stockholders’ Equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable, accrued expenses and other current liabilities
 
 $ 542,068
 
 $ 724,165
Current portion of bank loan
 
            67,772
 
Total current liabilities
 
609,840
 
             724,165
 
 
 
 
 
Long-term liabilities:
 
 
 
 
Non-current portion of bank loan
 
           54,628
 
Total long-term liabilities
 
           54,628
 
Total liabilities
 
664,468
 
             724,165
Commitments and contingencies (Note 6)
 
 
 
 
Stockholders’ equity:
 
 
 
 
Common stock, par value of $0.001 per share, 40,000,000 authorized, 11,452,177 and 10,587,632 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively
 
  11,452
 
  10,587
Additional paid-in capital
 
       47,546,915
 
38,508,825
Accumulated other comprehensive loss
 
(10,044)
 
             (10,970)
Accumulated deficit
 
(30,056,711)
 
         (25,880,586)
Total stockholders' equity
 
17,491,612
 
          12,627,856
Total liabilities and stockholders' equity
 
 $ 18,156,080
 
 $ 13,352,021
 
  
* Derived from the Company’s audited consolidated financial statements.
 
 

 
 
The accompanying notes are an integral
part of these condensed consolidated financial statements.
 
 
2
 
Monopar Therapeutics Inc.
 
Condensed Consolidated
Statements of Operations and Comprehensive Loss
(Unaudited)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2020
 
2019
 
2020
 
2019
Operating expenses:
 
 
 
 
 
 
 
Research and development
$ 1,255,916
 
$ 219,846
 
 $ 2,432,826
 
     $ 1,384,740
General and administrative
  392,063
 
  539,602
 
  1,815,299
 
  1,714,126
Total operating expenses
1,647,979
 
759,448
 
4,248,125
 
      3,098,866
Loss from operations
    (1,647,979)
 
(759,448)
 
(4,248,125)
 
(3,098,866)
Other income:
 
 
 
 
 
 
 
Interest income, net
8,541
 
23,368
 
72,000
 
          80,851
Net loss
(1,639,438)
 
(736,080)
 
(4,176,125)
 
   (3,018,015)
Other comprehensive income
 
 
 
 
 
 
 
Foreign currency translation gain (loss)
1,510
 
(8,739)
 
926
 
      (9,799)
Comprehensive loss
 $ (1,637,928)
 
 $ (744,819)
 
 $ (4,175,199)
 
 $(3,027,814)
Net loss per share:
 
 
 
 
 
 
 
Basic and diluted
 $ (0.15)
 
 $ (0.08)
 
 $ (0.39)
 
 $ (0.32)
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic and diluted
11,116,409
 
9,291,421
 
10,792,413
 
     9,291,421
 
 
 
 
 
The accompanying notes are an integral
part of these condensed consolidated financial statements.

3
 
Monopar Therapeutics Inc.
Condensed Consolidated Statements of Stockholders’ Equity
Nine Months Ended September 30, 2019
(Unaudited)
 
 
 
  Common Stock
 
 
 
 
 
 
 
 
 
 
 
Shares
 
Amount
 
Additional Paid-in Capital
 
Accumulated Other Comprehensive Loss
 
Accumulated Deficit
 
Total Stockholders' Equity
Balance at January 1, 2019
 
  9,291,421
 
 $ 9,291
 
 $ 28,567,221
 
 $ (2,396)
 
 $ (21,655,712)
 
 $ 6,918,404
Stock-based compensation (non-cash)
 
  —
 
  —
 
  233,776
 
  —
 
  —
 
  233,776
Net loss
 
  —
 
  —
 
 
  —
 
  (1,376,235)
 
  (1,376,235)
Accumulated other comprehensive loss
 
  —
 
  —
 
 
  (2,127)
 
 
  (2,127)
Balance at March 31, 2019
 
9,291,421
 
9,291
 
28,800,997
 
(4,523)
 
 (23,031,947)
 
        5,773,818
Stock-based compensation (non-cash)
 
  —
 
  —
 
257,633
 
  —
 
             —
 
257,633
Net loss
 
 
 
 
  —
 
(905,700)
 
        (905,700)
Accumulated other comprehensive gain
 
 —
 
 
 
1,067
 
 
           1,067
Balance at June 30, 2019
 
9,291,421
 
9,291
 
29,058,630
 
(3,456)
 
(23,937,647)
 
        5,126,818
Stock-based compensation (non-cash)
 
  —
 
  —
 
  242,956
 

 
  —
 
  242,956
Net loss
 
  —
 
  —
 
  —
 
  —
 
  (736,080)
 
  (736,080)
Accumulated other comprehensive loss
 
  —
 
  —
 
  —
 
  (8,739)
 
  —
 
  (8,739)
Balance at September 30, 2019
 
 9,291,421
 
 $ 9,291
 
 $ 29,301,586
 
 $ (12,195)
 
 $ (24,673,727)
 
 $ 4,624,955
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
 
 
 
 
4
 
 
 
Monopar Therapeutics Inc.
Condensed Consolidated Statements of Stockholders’ Equity
Nine Months Ended September 30, 2020
(Unaudited)
 
 
 
  Common Stock
 
 
 
 
 
 
 
 
 
 
 
Shares
 
Amount
 
Additional Paid-in Capital
 
Accumulated Other Comprehensive Income (Loss)
 
Accumulated Deficit
 
Total Stockholders' Equity
Balance at January 1, 2020
 
  10,587,632
 
 $ 10,587
 
 $ 38,508,825
 
 $ (10,970)
 
 $ (25,880,586)
 
 $ 12,627,856
Issuance of common stock under a Capital on DemandTM Sales Agreement with JonesTrading Institutional Services LLC, net of commissions and fees of $16,284
 
  33,903
 
  34
 
  526,109
 
  —
 
  —
 
  526,143
Issuance of common stock to non-employee directors pursuant to vested restricted stock units
 
  1,288
 
  1
 
  (1)
 
 
  —
 
  —
Stock-based compensation (non-cash)
 
  —
 
  —
 
  338,497
 
  —
 
  —
 
  338,497
Offering costs
 
 
 
  (2,161)
 
 
 
  (2,161)
Net loss
 
  —
 
  —
 
  —
 
  —
 
  (1,090,877)
 
  (1,090,877)
Accumulated other comprehensive loss
 
 
 

 
  (4,041)
 

 
  (4,041)
Balance at March 31, 2020
 
10,622,823
 
10,622
 
   39,371,269
 
 (15,011)
 
(26,971,463)
 
12,395,417
Issuance of common stock under a Capital on DemandTM Sales Agreement with Jones Trading Institutional Services LLC, net of commissions and fees of $29,425
 
  111,858
 
                    113
 
                     950,577
 
  —
 
  —
 
                         950,690
Issuance of common stock to non-employee directors pursuant to vested restricted stock units
 
  1,292
 
                        1
 
                             (1)
 
  —
 
                             
 
                                 —
Stock-based compensation (non-cash)
 
 —
 
      —
 
367,358
 
 
       —
 
          367,358
Offering costs
 
  —
 
  —
 
(116,605)
 
  —
 
  —
 
        (116,605)
Net loss
 
  —
 
  —
 
  —
 
  —
 
(1,445,810)
 
(1,445,810)
Accumulated other comprehensive income
 

 

 

 
3,457
 

 
           3,457
Balance at June 30, 2020
 
10,735,973
 
10,736
 
40,572,598
 
(11,554)
 
(28,417,273)
 
      12,154,507
Issuance of common stock under a Capital on DemandTM Sales Agreement with Jones Trading Institutional Services LLC, net of commissions and fees of $207,326
 
  714,916
 
  715
 
                  6,697,743
 
  —
 
  —
 
  6,698,458
Issuance of common stock to non-employee directors pursuant to vested restricted stock units
 
  1,288
 
  1
 
  (1)
 
 
  —
 
  —
Stock-based compensation (non-cash)
 
  —
 
  —
 
  283,713
 
  —
 
  —
 
  283,713
Offering costs
 
 
 
  (7,138)
 
 
 
  (7,138)
Net loss
 
  —
 
  —
 
  —
 
  —
 
  (1,639,438)
 
  (1,639,438)
Accumulated other comprehensive income
 
 
 
 
  1,510
 
 
  1,510
Balance at September 30, 2020
 
11,452,177
 
 $ 11,452
 
 $ 47,546,915
 
$ (10,044)
 
 $ (30,056,711)
 
 $ 17,491,612
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
5
 
 

 
Monopar Therapeutics Inc.
 
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
 
 
 
Nine Months Ended September 30,
 
 
2020
 
2019
Cash flows from operating activities:
 
 
 
 
Net loss
 
 $ (4,176,125)
 
 $ (3,018,015)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
Stock-based compensation expense (non-cash)
 
          989,568
 
  734,365
Changes in operating assets and liabilities, net
 
 
 
 
Other current assets
 
           (45,649)
 
            (4,630)
Accounts payable, accrued expenses and other current liabilities
 
          (189,372)
 
           (60,695)
Net cash used in operating activities
 
        (3,421,578)
 
        (2,348,975)
Cash flows from financing activities:
 
 
 
 
     Cash proceeds from the sales of common stock under a Capital on DemandTM Sales Agreement with Jones Trading Institutional Services LLC, net of cash commissions and fees of $253,035
 
                8,175,290
 
Offering costs
 
 (108,430)
 
         (39,458)
PPP forgivable bank loan
 
  122,400
 
Net cash provided by (used in) financing activities
 
8,189,260
 
          (39,458)
Effect of exchange rates
 
1,061
 
          (9,799)
Net increase (decrease) in cash and cash equivalents
 
4,768,743
 
      (2,398,232)
Cash and cash equivalents at beginning of period
 
13,213,929
 
       6,892,772
Cash and cash equivalents at end of period
 
 $ 17,982,672
 
 $ 4,494,540
 
 
 
 

 
 
 
The accompanying notes are an integral
part of these condensed consolidated financial statements.
 
 
6
 
 
 
MONOPAR THERAPEUTICS INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
September 30, 2020
 
Note 1 -  Nature of Business and Liquidity
 
Nature of Business
 
Monopar Therapeutics Inc. (“Monopar” or the “Company”) is a clinical-stage biopharmaceutical company primarily focused on developing proprietary therapeutics designed to extend life or improve quality of life for cancer patients. Monopar currently has three compounds in development: 1) Validive® (clonidine mucobuccal tablet; clonidine MBT), a Phase 2b/3 clinical stage, first-in-class mucoadhesive buccal tablet for the prevention and treatment of radiation induced severe oral mucositis (“SOM”) in oropharyngeal cancer patients; 2) camsirubicin (generic name for MNPR-201, GPX-150; 5-imino-13-deoxydoxorubicin), a proprietary Phase 2 clinical stage topoisomerase II-alpha selective analog of doxorubicin engineered specifically to retain anticancer activity while minimizing toxic effects on the heart; and 3) a preclinical stage uPAR targeted antibody, MNPR-101, for advanced cancers and severe COVID-19.
 
Liquidity
 
The Company has incurred an accumulated deficit of approximately $30.1 million as of September 30, 2020. To date, the Company has primarily funded its operations with the net proceeds from the Company’s initial public offering of its common stock on Nasdaq, private placements of convertible preferred stock and of common stock, from the cash provided in the camsirubicin asset purchase transaction, from sales of its common stock in the public market under a Capital on DemandTM Sales Agreement. Management believes that currently available resources will provide sufficient funds to enable the Company to meet its planned obligations through December 2021. The Company’s ability to fund its future operations, including the clinical development of Validive and camsirubicin, is dependent upon its ability to execute its business strategy, to obtain additional funding and/or to execute collaborative research agreements. There can be no certainty that future financing or collaborative research agreements will occur at a time needed to maintain operations, if at all.
 
In December 2019, a novel strain of coronavirus (“COVID-19”) surfaced in China and spread to essentially all of the remaining world. By March 2020 COVID-19 was designated a global pandemic, resulting in government-mandated travel restrictions and temporary shutdowns or limitations of non-essential businesses in many states in the United States. The Company is able to remain open but has allowed their employees to work from home, if required by local authorities. Due to the volatility of the stock markets resulting from travel restrictions and indeterminate but temporary business limitations, the Company faces challenges in raising substantial cash in the near-term. In response to the current COVID-19 pandemic and its effects on clinical trials, Monopar has modified the original adaptive design Phase 3 clinical trial for its lead product candidate, Validive, to be a Phase 2b/3 clinical trial to better fit the types of trials which can enroll patients in the current environment. This modification will allow the Company to initiate the clinical trial without requiring near-term financing. The decision to proceed to the Phase 3 portion of the clinical trial without a delay will largely be dependent on the Company’s cash position closer to that time, anticipated to be in the second half of 2021. To initiate and complete the Phase 3 portion of the clinical trial, Monopar will require additional funding in the millions or tens of millions of dollars (depending on if the Company has consummated a collaboration or partnership or neither for Validive), which it is planning to pursue in the next 12 months. Due to many uncertainties, the Company is unable to estimate the pandemic’s financial impact or duration at this time, or its potential impact on the Company’s planned clinical trials including the pandemic’s effect on drug candidate manufacturing, shipping, patient recruitment at clinical sites and regulatory agencies around the globe.
 
 
Note 2 - Significant Accounting Policies
 
Basis of Presentation
 
These condensed consolidated financial statements include the financial results of Monopar Therapeutics Inc., its wholly-owned French subsidiary, Monopar Therapeutics, SARL, and its wholly-owned Australian subsidiary, Monopar Therapeutics Australia Pty Ltd, and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include all disclosures required by GAAP for interim financial reporting. All intercompany accounts have been eliminated. The principal accounting policies applied in the preparation of these condensed consolidated financial statements are set out below and have been consistently applied in all periods presented. The Company has been primarily involved in performing research activities, developing product candidates, and raising capital to support and expand these activities.
 
 
7
 
 
 
 
MONOPAR THERAPEUTICS INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
September 30, 2020
 
 
The accompanying unaudited condensed consolidated financial statements contain all normal, recurring adjustments necessary to present fairly the Company’s condensed consolidated financial position as of September 30, 2020 and as of December 31, 2019, the Company’s condensed consolidated results of operations and comprehensive loss for the three and nine months ended September 30, 2020 and 2019, and the Company’s condensed consolidated cash flows for the nine months ended September 30, 2020 and 2019. The condensed consolidated results of operations and comprehensive loss and condensed consolidated cash flows for the periods presented are not necessarily indicative of the consolidated results of operations or cash flows which may be reported for the remainder of 2020 or for any future period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2019, included in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) on March 27, 2020.
 
Functional Currency
 
The Company's consolidated functional currency is the U.S. Dollar. The Company's Australian subsidiary and French subsidiary use the Australian Dollar and European Euro, respectively, as their functional currency. At each quarter-end, each foreign subsidiary's balance sheets are translated into U.S. Dollars based upon the quarter-end exchange rate, while their statements of operations and comprehensive loss and statements of cash flows are translated into U.S. Dollars based upon an average exchange rate during the period.
 
Comprehensive Loss
 
Comprehensive loss represents net loss plus any gains or losses not reported in the condensed consolidated statements of operations and comprehensive loss, such as foreign currency translations gains and losses that are typically reflected on the Company’s condensed consolidated statements of stockholders’ equity.
 
Use of Estimates
 
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
 
Going Concern Assessment
 
The Company applies Accounting Standards Codification 205-40 (“ASC 205-40”), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which the Financial Accounting Standards Board (“FASB”) issued to provide guidance on determining when and how reporting companies must disclose going concern uncertainties in their financial statements. ASC 205-40 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial statements (or within one year after the date on which the financial statements are available to be issued, when applicable). Further, a company must provide certain disclosures if there is “substantial doubt about the entity’s ability to continue as a going concern.” In October 2020, the Company analyzed its cash requirements through December 2021 and has determined that, based upon the Company’s current available cash, the Company has no substantial doubt about its ability to continue as a going concern.
 
 
8
 
 
 
MONOPAR THERAPEUTICS INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
September 30, 2020
 
 
Cash Equivalents
 
The Company considers all highly liquid investments purchased with a maturity of 90 days or less on the date of purchase to be cash equivalents. Cash equivalents as of September 30, 2020 and December 31, 2019 consisted of one money market account.
 
Deferred Offering Costs
 
Deferred offering costs represent legal, auditing, travel and filing fees related to fundraising efforts that have not yet been concluded.
 
Prepaid Expenses
 
Prepayments are expenditures for goods or services before the goods are used or the services are received and are charged to operations as the benefits are realized. Prepaid expenses include payments to development collaborators in excess of actual expenses incurred by the collaborator, measured at the end of each reporting period. Prepayments also include insurance premiums and software costs of $10,000 or more that are expensed monthly over the life of the contract. Prepaid expenses are reflected on the Company’s condensed consolidated balance sheets as other current assets.
 
Bank Loans
 
In May 2020, the Company applied for and received a bank loan pursuant to the Paycheck Protection Program (“PPP”) established pursuant to the Coronavirus Aid, Relief, and Economic Security Act, as administered by the U.S. Small Business Administration (“SBA”).
 
The SBA will forgive the bank loan pursuant to the PPP, if certain conditions are met, namely the bank loan must be used primarily for payroll during the 24-week period following receipt of the loan, without significant staffing reductions during that period. The Company believes it is eligible and intends to apply for loan forgiveness by December 2020 when the Company’s bank is able to process SBA loan forgiveness application. Should the bank loan not be forgiven, the Company would be required to pay 1% annual interest on the loan with principal and interest payments beginning approximately seven months after receipt of the loan with payments over 18 months. The Company has recorded the PPP loan on the condensed consolidated balance sheets as of September 30, 2020 as liabilities titled current (due within 12 months) and non-current portions of bank loan.
 
Concentration of Credit Risk
 
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents. The Company maintains cash and cash equivalents at two reputable financial institutions. As of September 30, 2020, the balance at one financial institution was in excess of the $250,000 Federal Deposit Insurance Corporation (“FDIC”) insurable limit. The Company has not experienced any losses on its deposits since inception and management believes the Company is not exposed to significant risks with respect to these financial institutions.
 
Fair Value of Financial Instruments
 
For financial instruments consisting of cash and cash equivalents, accounts payable, accrued expenses, other current liabilities and bank loans, the carrying amounts are reasonable estimates of fair value due to their relatively short maturities.
 
 
 
9
 
 
 
MONOPAR THERAPEUTICS INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
September 30, 2020
 
 
ASC 820, Fair Value Measurements and Disclosures, as amended, addresses the measurement of the fair value of financial assets and financial liabilities. Under this standard, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.
 
The standard establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources. Unobservable inputs reflect a reporting entity’s pricing an asset or liability developed based on the best information available under the circumstances. The fair value hierarchy consists of the following three levels:
 
Level 1 - instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets.
 
Level 2 - instrument valuations are obtained from readily available pricing sources for comparable instruments.
 
Level 3 - instrument valuations are obtained without observable market values and require a high-level of judgment to determine the fair value.
 
Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each reporting period. There were no transfers between Level 1, 2 or 3 of the fair value hierarchy during the three and nine months ended September 30, 2020 and the year ended December 31, 2019. The following table presents the assets and liabilities that are reported at fair value on our condensed consolidated balance sheets on a recurring basis. No values were recorded in Level 2 or Level 3 at September 30, 2020 and December 31, 2019.
 
          Assets and Liabilities Measured at Fair Value on a Recurring Basis
 
September 30, 2020
 
Level 1
 
 
Total
 
Assets
 
 
 
 
 
 
Cash equivalents(1)
 $17,736,266 
 $17,736,266 
Total
 $17,736,266 
 $17,736,266 
 
 
December 31, 2019
 
Level 1
 
 
Total
 
Assets
 
 
 
 
 
 
Cash equivalents(1)
 $13,083,536 
 $13,083,536 
Total
 $13,083,536 
 $13,083,536 
 
(1)
Cash equivalents represent the fair value of the Company’s investment in a money market account.
 
 
Net Loss per Share
 
Net loss per share for the three and nine months ended September 30, 2020 and 2019 is calculated by dividing net loss by the weighted-average shares of common stock outstanding during the period. Diluted net loss per share for the three and nine months ended September 30, 2020 and 2019 is calculated by dividing net loss by the weighted-average shares of the sum of a) weighted average common stock outstanding (11,116,409 and 10,792,413 shares for the three and nine months ended September 30, 2020, respectively; 9,291,421 shares for the three and nine months ended September 30, 2019) and b) potentially dilutive shares of common stock (such as stock options and restricted stock units) outstanding during the period. As of September 30, 2020 and 2019, potentially dilutive securities included stock-based awards to purchase up to 1,303,674 and 1,105,896 shares of the Company’s common stock, respectively. For the three and nine months ended September 30, 2020 and 2019, potentially dilutive securities are excluded from the computation of fully-diluted net loss per share as their effect is anti-dilutive.
 
 
10
 
MONOPAR THERAPEUTICS INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
September 30, 2020
  
Research and Development Expenses
 
Research and development (“R&D”) costs are expensed as incurred. Major components of R&D expenses include salaries and benefits paid to the Company’s R&D staff, fees paid to consultants and to the entities that conduct certain R&D activities on the Company’s behalf and materials and supplies which are used in R&D activities during the reporting period.
 
The Company accrues and expenses the costs for clinical trial activities performed by third parties based upon estimates of the percentage of work completed over the life of the individual study in accordance with agreements established with contract research organizations, service providers, and clinical trial sites. The Company determines the estimates through discussions with internal clinical personnel and external service providers as to progress or stage of completion of trials or services and the agreed upon fee to be paid for such services. Costs of setting up clinical trial sites for participation in the trials are expensed immediately as R&D expenses. Clinical trial site costs related to patient screening and enrollment are accrued as patients are screened/entered into the trial. During the three and nine months ended September 30, 2020 and 2019, the Company had no clinical trials in progress.
 
Collaborative Agreements
 
The Company and its collaborative partners are active participants in collaborative arrangements and all parties would be exposed to significant risks and rewards depending on the technical and commercial success of the activities. Contractual payments to the other parties in collaboration agreements and costs incurred by the Company when the Company is deemed to be the principal participant for a given transaction are recognized on a gross basis in R&D expenses. Royalties and license payments are recorded as earned.
 
During the three and nine months ended September 30, 2020 and 2019, no milestones were met and no royalties were earned, therefore, the Company did not pay or accrue/expense any license or royalty payments.
 
Licensing Agreements
 
The Company has various agreements licensing technology utilized in the development of its product or technology programs. The licenses contain success milestone obligations and royalties on future sales. During the three and nine months ended September 30, 2020 and 2019, no milestones were met and no royalties were earned, therefore, the Company did not pay or accrue/expense any license or royalty payments under any of its license agreements.
  
Patent Costs
  
The Company expenses costs relating to issued patents and patent applications, including costs relating to legal, renewal and application fees, as a component of general and administrative expenses in its condensed consolidated statements of operations and comprehensive loss.
 
Income Taxes
 
On December 16, 2015, the Company began using an asset and liability approach for accounting for deferred income taxes, which requires recognition of deferred income tax assets and liabilities for the expected future tax consequences of events that have been recognized in its financial statements but have not been reflected in its taxable income. Estimates and judgments are required in the calculation of certain tax liabilities and in the determination of the recoverability of certain deferred income tax assets, which arise from temporary differences and carryforwards. Deferred income tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled.
 
 
11
 
 
 
MONOPAR THERAPEUTICS INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
September 30, 2020
 
  
The Company regularly assesses the likelihood that its deferred income tax assets will be realized from recoverable income taxes or recovered from future taxable income. To the extent that the Company believes any amounts are more likely than not to be realized, the Company records a valuation allowance to reduce the deferred income tax assets. In the event the Company determines that all or part of the net deferred tax assets are not realizable in the future, an adjustment to the valuation allowance would be charged to earnings in the period such determination is made. Similarly, if the Company subsequently determines deferred income tax assets that were previously determined to be unrealizable are now realizable, the respective valuation allowance would be reversed, resulting in an adjustment to earnings in the period such determination is made.
 
Internal Revenue Code Section 382 (“Section 382”) provides that, after an ownership change, the amount of a loss corporation’s net operating loss (“NOL”) for any post-change year that may be offset by pre-change losses shall not exceed the Section 382 limitation for that year. To date, the Company has not conducted a Section 382 study, however, because the Company will continue to raise significant amounts of equity in the coming years, the Company expects that Section 382 will limit the Company’s usage of NOLs in the future.
 
ASC 740, Income Taxes, requires that the tax benefit of net operating losses, temporary differences, and credit carryforwards be recorded as an asset to the extent that management assesses that realization is "more likely than not." Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. The Company has reviewed the positive and negative evidence relating to the realizability of the deferred tax assets and has concluded that the deferred tax assets are not more likely than not to be realized with the exception of its U.S. Federal R&D tax credits which will be utilized to reduce payroll taxes in future periods. As a result, the Company recorded a full valuation allowance as of September 30, 2020 and December 31, 2019. The Company intends to maintain the valuation allowance until sufficient evidence exists to support its reversal. The Company regularly reviews its tax positions. For a tax benefit to be recognized, the related tax position must be more likely than not to be sustained upon examination. Any amount recognized is generally the largest benefit that is more likely than not to be realized upon settlement. The Company’s policy is to recognize interest and penalties related to income tax matters as an income tax expense. For the three and nine months ended September 30, 2020 and 2019, the Company did not have any interest or penalties associated with unrecognized tax benefits.
 
The Company is subject to U.S. Federal, Illinois and California income taxes. In addition, the Company is subject to local tax laws of France and Australia. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company was incorporated on December 16, 2015 and is subject to U.S. Federal, state and local tax examinations by tax authorities for the years ended December 31, 2019, 2018, 2017 and 2016, and for the short tax period December 16, 2015 to December 31, 2015. The Company does not anticipate significant changes to its current uncertain tax positions through September 30, 2020. The Company has filed its U.S. Federal and state tax returns for the year ended December 31, 2019 prior to the extended filing deadlines in all jurisdictions.
 
Stock-Based Compensation
 
The Company accounts for stock-based compensation arrangements with employees, non-employee directors and consultants using a fair value method, which requires the recognition of compensation expense for costs related to all stock-based awards, including stock option and restricted stock unit (“RSU”) grants. The fair value method requires the Company to estimate the fair value of stock-based payment awards on the date of grant using an option pricing model or the closing stock price on the date of grant in the case of RSUs.
 
 
 
12
 
 
 
MONOPAR THERAPEUTICS INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
September 30, 2020
 
Stock-based compensation costs for awards granted to employees and non-employee directors are based on the fair value of the underlying instrument calculated using the Black-Scholes option-pricing model on the date of grant for stock options and using the closing stock price on the date of grant for RSUs and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. Determining the appropriate fair value model and related assumptions requires judgment, including estimating the future stock price volatility, forfeiture rates and expected terms. The expected volatility rates are estimated based on the actual volatility of comparable public companies over recent historical periods of the same length as the expected term. The Company selected these companies based on reasonably comparable characteristics, including market capitalization, stage of corporate development and with historical share price information sufficient to meet the expected term (life) of the stock-based awards. The expected term for options granted to date is estimated using the simplified method. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company has not paid dividends and does not anticipate paying a cash dividend in the future vesting period and, accordingly, uses an expected dividend yield of zero. The risk-free interest rate is based on the rate of U.S. Treasury securities with maturities consistent with the estimated expected term of the awards. Prior to January 1, 2019, the measurement of consultant stock-based compensation was subject to periodic adjustments as the underlying equity instruments vested and was recognized as an expense over the period in which services were rendered. Since January 1, 2019, consultant stock-based compensation is valued on the grant date and is recognized as an expense over the period in which services are rendered.
 
Recent Accounting Pronouncements
 
In August 2018, the FASB issued Accounting Standards Updates (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The ASU modifies, and in certain cases eliminates, the disclosure requirements on fair value measurements in Topic 820. The amendments in ASU No. 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this ASU and has determined that it had no material effect on its condensed consolidated financial statements and footnote disclosures for the three and nine months ended September 30, 2020.
 
Note 3 - Capital Stock
 
Holders of the common stock are entitled to receive such dividends as may be declared by the Board of Directors out of funds legally available therefor. Upon dissolution and liquidation of the Company, holders of the common stock are entitled to a ratable share of the net assets of the Company remaining after payments to creditors of the Company. The holders of shares of common stock are entitled to one vote per share for the election of each director nominated to the board and one vote per share on all other matters submitted to a vote of stockholders.
 
The Company’s amended and restated certificate of incorporation authorizes the Company to issue 40,000,000 shares of common stock with a par value of $0.001 per share.
  
Sales of Common Stock
  
On December 23, 2019, the Company closed the initial public offering of its common stock. The Company sold 1,277,778 shares of its common stock at a public offering price of $8.00 per share pursuant to an underwriting agreement with JonesTrading Institutional Services, LLC (“JonesTrading”). The Company paid JonesTrading a customary commission and reimbursement of a portion of their legal fees incurred in connection with the offering, which in aggregate totaled approximately $0.7 million. Net proceeds on a cash basis were approximately $9.4 million, after deducting underwriting discounts and accrued, unpaid offering expenses. The Company had incurred and paid prior to the initial public offering approximately $0.6 million of fundraising expenses which were capitalized on the Company’s balance sheet as deferred offering costs and were reclassified as offering expenses (a contra-equity balance sheet account) upon the closing of the Company’s initial public offering. After deducting previously paid offering expenses of approximately $0.6 million, the accrual basis net proceeds were $8.8 million as reported on the Company’s consolidated statement of stockholders’ equity as of December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2020. The Company’s common stock began trading on the Nasdaq Capital Market on December 19, 2019.
 
 
13
 
 
 
MONOPAR THERAPEUTICS INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
September 30, 2020
 
 
On January 13, 2020, the Company entered into a Capital on Demand™ Sales Agreement with JonesTrading, as sales agent, pursuant to which Monopar may offer and sell (at its discretion), from time to time, through or to JonesTrading shares of Monopar’s common stock, having an aggregate offering price of up to $19.7 million. Pursuant to this agreement, as of September 30, 2020, the Company sold 860,677 shares of its common stock at an average gross price per share of $9.79 for net proceeds of $8,175,290, after commissions and fees of $253,035.
 
As of September 30, 2020, the Company had 11,452,177 shares of common stock issued and outstanding. 
 
Note 4 - Stock Incentive Plan
 
In April 2016, the Company’s Board of Directors and stockholders representing a majority of the Company’s outstanding stock at that time, approved the Monopar Therapeutics Inc. 2016 Stock Incentive Plan, as amended (the “Plan”), allowing the Company to grant up to an aggregate 700,000 shares of stock-based awards in the form of stock options, restricted stock units, stock appreciation rights and other stock-based awards to employees, non-employee directors and consultants. In October 2017, the Company’s Board of Directors voted to increase the stock award pool to 1,600,000 shares of common stock, which subsequently was approved by the Company’s stockholders. In April 2020, the Company’s Board of Directors voted to increase the stock award pool to 3,100,000 (and increase of 1,500,000 shares of common stock), which was approved by the Company’s stockholders in June 2020.
 
In January 2020, the Company's Plan Administrator Committee granted two new hire stock option grants and a consultant stock option grant to the Company’s acting chief medical office, in aggregate, for the purchase of 15,125 shares of the Company’s common stock with exercise prices ranging from $16.80 to $17.75. The stock options have a 10-year term and vest over 1 to 4 years.
 
In February 2020, the Company's Plan Administrator Committee (with regards to non-officer employees) and the Company's Compensation Committee, as ratified by the Board of Directors (in the case of officers and non-employee directors) granted an aggregate of 189,985 stock options with exercise prices ranging from $12.93 to $14.35 as annual equity grants to executive officers, non-employee directors and staff. All stock options have a 10-year term and vest over 1 to 4 years. The annual equity grants also included an aggregate 45,722 restricted stock units to executive officers, non-employee directors and staff which vest over 1 to 4 years.
 
In May 2020, the Company's Plan Administrator Committee granted stock option grants to a new hire and an employee, in aggregate, for the purchase of 4,000 shares of the Company’s common stock with exercise prices ranging from $7.61 to $7.66. All stock options have a 10-year term and vest over 4 years.
 
In August and September 2020, the Company's Plan Administrator Committee granted two new hire stock option grants for the purchase of 7,000 shares of the Company’s common stock with exercise prices of $4.93 to $5.65. All stock options have a 10-year term and vest over 4 years.
 
Under the Plan, the per share exercise price for the shares to be issued upon exercise of an option shall be determined by the Plan Administrator, except that the per share exercise price shall be no less than 100% of the fair market value per share on the grant date. Fair market value is established by the Company’s Board of Directors, using third party valuation reports, recent private financings or the Company’s closing prices on Nasdaq since the Company’s listing on December 19, 2019. Stock options generally expire after 10 years.
 
 
14
 
 
 
MONOPAR THERAPEUTICS INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
September 30, 2020
 
 
 
Stock option activity under the Plan was as follows:
 
 
 
Options Outstanding
 
 
Number of Shares Subject to Options
 
Weighted-Average Exercise Price
Balances at January 1, 2019
 
  1,105,896
 
 $ 2.99
Granted
 
 
Forfeited
 
 
Exercised
 
  (18,433)
 
  5.97
Balances at December 31, 2019
 
  1,087,463
 
             2.94
Granted(1)
 
  174,357
 
  14.08
Forfeited
 
— 
 
Exercised
 
 
 
Balances at September 30, 2020
 
  1,261,820
 
             4.48
 
 
 
(1)
174,357 options vest as follows: options to purchase 145,648 shares of the Company’s common stock vest 6/48ths on the six-month anniversary of grant date and 1/48th per month thereafter; options to purchase 22,584 shares of the Company’s common stock vest quarterly over one year; and options to purchase 6,125 shares of the Company’s common stock vest monthly over one year. Exercise prices are noted in the paragraphs above this table.
 
A summary of options outstanding as of September 30, 2020 is shown below:
 
Exercise Prices
 
Number of Shares Subject to Options Outstanding
 
Weighted-Average Remaining
Contractual Term in Years
 
Number of Shares Subject to Options Fully Vested and Exercisable
 
Weighted-Average Remaining Contractual Term in Years
$0.001-$5.00
 
  557,420
 
 5.97 years
 
  526,720
 
 5.93 years
$5.01-$10.00
 
  541,043
 
 7.79 years
 
  350,471
 
 7.72 years
$10.01-$15.00
 
  148,232
 
 9.34 years
 
  48,327
 
 9.34 years
$15.01-$20.00
 
  15,125
 
 9.30 years
 
  6,094
 
 9.32 years
 
 
  1,261,820
 
 
 
  931,612
 
 
 
 
 

      
 
 
15
 
 
 
MONOPAR THERAPEUTICS INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
September 30, 2020
 
 
Restricted stock unit activity under the Plan was as follows:
 
 
 
Restricted Stock Units
 
Weighted-Average Grant Date Fair Value per Unit
Unvested balance at January 1, 2020
 
 
$  —
Granted
 
  45,722
 
12.93
Vested
 
  (3,868)
 
12.93
Forfeited
 
  —
 
Unvested Balance at September 30, 2020
 
  41,854
 
12.93
 
 
 
 
During the three months ended September 30, 2020 and 2019, the Company recognized $163,807 and $154,906, respectively, of employee and non-employee director stock-based compensation expense as general and administrative expenses and $102,346 and $67,347, respectively, as research and development expenses. During the nine months ended September 30, 2020 and 2019, the Company recognized $633,462 and $470,232, respectively, of employee and non-employee director stock-based compensation expense as general and administrative expenses and $303,415 and $202,012, respectively, as research and development expenses. The stock-based compensation expense is allocated on a departmental basis, based on the classification of the holder. No income tax benefits have been recognized in the condensed consolidated statements of operations and comprehensive loss for stock-based compensation arrangements.
 
The Company recognizes as an expense the fair value of options granted to persons (currently consultants) who are neither employees nor non-employee directors. Stock-based compensation expense for consultants which was recorded as research and development expense for the three months ended September 30, 2020 and 2019 was $17,560 and $20,704, and for the nine months ended September 30, 2020 and 2019 $52,691 and $62,121, respectively.
 
The fair value of options granted from inception to September 30, 2020 was based on the Black-Scholes option-pricing model assuming the following factors: 5.3 to 6.1 years expected term, 55% to 85% volatility, 0.4% to 2.9% risk free interest rate and zero dividends. The expected term for options granted to date was estimated using the simplified method. There were 7,000 and 216,110 stock option grants during the three and nine months ended September 30, 2020, respectively. For the three and nine months ended September 30, 2020 the weighted average grant date fair value was $3.87 per share and $9.05 per share, respectively. There were no stock option grants during the three and nine months ended September 30, 2019. For the three months ended September 30, 2020 and 2019, the fair value of shares vested was $0.3 million and $0.2 million, respectively. For the nine months ended September 30, 2020 and 2019, the fair value of shares vested was $0.9 million and $0.6 million, respectively. At September 30, 2020, the aggregate intrinsic value of outstanding stock options was approximately $3.0 million of which approximately $2.8 million was vested and approximately $0.2 million is expected to vest (representing options to purchase up to 330,208 shares of the Company's common stock), and the weighted-average exercise price in aggregate was $4.48 which includes $3.11 for fully vested stock options and $8.32 for stock options expected to vest. At September 30, 2020, the unamortized unvested balance of stock-based compensation was approximately $2.1 million to be amortized over 2.67 years.
 
 
 
 
16
 
 
 
MONOPAR THERAPEUTICS INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
September 30, 2020
 
 
Note 5 - Related Party Transactions
 
 
In December 2019, Tactic Pharma, LLC (“Tactic Pharma”), purchased 125,000 shares of Monopar’s common stock in Monopar’s initial public offering at $8 per share for an aggregate $1 million, at which time its beneficial ownership in Monopar was 41.6%. As of September 30, 2020, Tactic Pharma beneficially owned 38.4% of Monopar’s common stock.
 
During the three and nine months ended September 30, 2020 and 2019, the Company was governed by six members of its Board of Directors (“Related Parties”). The Related Parties are also current common stockholders (owning approximately an aggregate 3% of the common stock outstanding as of September 30, 2020). None of the Related Parties received compensation other than market-rate salary, market-rate stock-based compensation and benefits and performance-based bonus or in the case of non-employee directors, market-rate Board fees and market-rate stock-based compensation. Three of the Board members are also Managing Members of Tactic Pharma as of September 30, 2020. Chandler D. Robinson is the Company’s Co-Founder, Chief Executive Officer, common stockholder, Managing Member of Tactic Pharma, former Manager of the predecessor LLC, Manager of CDR Pharma, LLC and Board member of Monopar as a C Corporation. Andrew P. Mazar is the Company’s Co-Founder, Executive Vice President of Research and Development, Chief Scientific Officer, common stockholder, Managing Member of Tactic Pharma, former Manager of the predecessor LLC and Board member of Monopar as a C Corporation. Michael Brown is a Managing Member of Tactic Pharma (as of February 1, 2019 with no voting power as it relates to the Company), a previous managing member of Monopar as an LLC, common stockholder and Board member of Monopar as a C Corporation. Christopher M. Starr is the Company’s Co-Founder, Executive Chairman of the Board of Directors, common stockholder, former Manager of the predecessor LLC and Board member of Monopar as a C Corporation.
 
During the quarter ended March 31, 2019, the Company paid or accrued approximately $33,725 in legal fees to a large national law firm, in which a family member of the Company’s Chief Executive Officer was a law partner through January 31, 2019. The family member personally billed a de minimis amount of time on the Company’s legal engagement with the law firm in this period.
 
 
Note 6 – Commitments and Contingencies
 
License, Development and Collaboration Agreements
 
Onxeo S.A.
 
In June 2016, the Company executed an option and license agreement with Onxeo S.A. (“Onxeo”), a public French company, which gave Monopar the exclusive option to license (on a world-wide exclusive basis) Validive to pursue treating severe oral mucositis in patients undergoing chemoradiation treatment for head and neck cancers. The pre-negotiated Onxeo license agreement for Validive as part of the option agreement includes clinical, regulatory, developmental and sales milestones that could reach up to $108 million if the Company achieves all milestones, and escalating royalties on net sales from 5% to 10%. On September 8, 2017, the Company exercised the license option, and therefore paid Onxeo the $1 million fee under the option and license agreement.
 
 
 
17
 
 
 
MONOPAR THERAPEUTICS INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
September 30, 2020
 
 
 
Under the agreement, the Company is required to pay royalties to Onxeo on a product-by-product and country-by-country basis until the later of (1) the date when a given product is no longer within the scope of a patent claim in the country of sale or manufacture, (2) the expiry of any extended exclusivity period in the relevant country (such as orphan drug exclusivity, pediatric exclusivity, new chemical entity exclusivity, or other exclusivity granted beyond the expiry of the relevant patent), or (3) a specific time period after the first commercial sale of the product in such country. In most countries, including the U.S., the patent term is generally 20 years from the earliest claimed filing date of a non-provisional patent application in the applicable country, not taking into consideration any potential patent term adjustment that may be filed in the future or any regulatory extensions that may be obtained. The royalty termination provision pursuant to (3) described above is shorter than 20 years and is the least likely cause of termination of royalty payments.
 
The Onxeo license agreement does not have a pre-determined term, but expires on a product-by-product and country-by-country basis; that is, the agreement expires with respect to a given product in a given country whenever the Company’s royalty payment obligations with respect to such product have expired. The agreement may also be terminated early for cause if either the Company or Onxeo materially breach the agreement, or if either the Company or Onxeo become insolvent. The Company may also choose to terminate the agreement, either in its entirety or as to a certain product and a certain country, by providing Onxeo with advance notice.
 
The Company plans to internally develop Validive with the near-term goal of commencing a Phase 2b/3 clinical trial, which, if successful, may allow the Company to apply for marketing approval within the next several years. The Company will need to raise significant funds or enter into a collaboration partnership to support the further development of Validive. As of September 30, 2020, the Company had not reached any of the pre-specified milestones and has not been required to pay Onxeo any funds under this license agreement other than the $1 million one-time license fee.
  
Grupo Español de Investigación en Sarcomas (“GEIS”)
 
In June 2019, the Company executed a clinical collaboration agreement with GEIS for the development of camsirubicin in patients with advanced soft tissue sarcoma (“ASTS”). GEIS will be the study sponsor and will lead a multi-country, randomized, open-label Phase 2 clinical trial to evaluate camsirubicin head-to-head against the current 1st-line treatment for ASTS, doxorubicin. Enrollment of the trial is anticipated to begin at the end of 2020 or early 2021, and will include approximately 170 ASTS patients. The Company will provide study drug and supplemental financial support for the clinical trial averaging approximately $2 million to $3 million per year. During the three and nine months ended September 30, 2020, the Company incurred $400,320 and $612,304, respectively, in expenses under the GEIS agreement and other clinical-related expenses including clinical material manufacturing and database management expenses in support of GEIS’s Phase 2 camsirubicin clinical trial. During the three and nine months ended September 30, 2019, the Company incurred nominal expense related to the GEIS collaboration. The Company can terminate the agreement by providing GEIS with advance notice, and without affecting the Company’s rights and ownership to any intellectual property or clinical data.
 
 XOMA Ltd.
 
The intellectual property rights contributed by Tactic Pharma, LLC (“Tactic Pharma”) to the Company included the non-exclusive license agreement with XOMA Ltd. for the humanization technology used in the development of MNPR-101. Pursuant to such license agreement, the Company is obligated to pay XOMA Ltd. clinical, regulatory and sales milestones for MNPR-101 that could reach up to $14.925 million if the Company achieves all milestones. The agreement does not require the payment of sales royalties. There can be no assurance that the Company will reach any milestones under the XOMA agreement. As of September 30, 2020, the Company had not reached any milestones and has not been required to pay XOMA Ltd. any funds under this license agreement.
 
 
18
 
 
 
MONOPAR THERAPEUTICS INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
September 30, 2020
 
 
Operating Leases
 
Commencing January 1, 2018, the Company entered into a lease for its executive headquarters at 1000 Skokie Blvd., Suite 350, Wilmette, Illinois. The lease term was January 1, 2018 through December 31, 2019, at which time the lease was on a month-to-month basis. In addition, effective February 2019, the Company leased additional office space in the same building on a month-to-month basis.
 
During the three months ended September 30, 2020 and 2019, the Company recognized operating lease expenses of $13,462 and $13,462, respectively. During the nine months ended September 30, 2020 and 2019, the Company recognized operating lease expenses of $41,565 and $38,427, respectively.
 
Effective January 1, 2019, the Company adopted ASU 2016-02, as amended by ASU 2018-10, which requires the Company to record leases on its condensed consolidated balance sheet as (a) a lease liability and (b) a right-of-use asset. Because the Company had no lease obligation (other than on a month-to-month basis) past December 31, 2019, the Company had no lease liability and right-of-use asset on its condensed consolidated balance sheet as of September 30, 2020 or December 31, 2019.
 
Legal Contingencies
 
The Company may be subject to claims and assessments from time to time in the ordinary course of business. No claims have been asserted to date.
 
Indemnification
 
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but that have not yet been made. To date, the Company has not paid any claims nor been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of future claims against these indemnification obligations.
 
In accordance with its second amended and restated certificate of incorporation, amended and restated bylaws and the indemnification agreements entered into with each officer and non-employee director, the Company has indemnification obligations to its officers and non-employee directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacities. There have been no claims to date.
 
Paycheck Protection Program (“PPP”) Bank Loan
 
In May 2020, the Company applied for and received a $122,400 PPP bank loan established pursuant to the Coronavirus Aid, Relief, and Economic Security Act, as administered by the U.S. Small Business Administration (“SBA”).
 
The SBA will forgive the bank loan pursuant to the PPP, if certain conditions are met, namely the bank loan must be used primarily for payroll during the 24-week period following receipt of the loan, without significant staffing reductions during that period. The Company believes it is eligible and intends to apply for loan forgiveness in December 2020 when the bank is able to process SBA loan forgiveness application. Should the bank loan not be forgiven, the Company would be required to pay 1% annual interest on the loan with principal and interest payments beginning approximately seven months after receipt of the loan with payments over 18 months. The Company has recorded the PPP loan on the balance sheet as of September 30, 2020 as a liability as current (due within 12 months) and non-current portions of bank loan, although the Company anticipates to reclassify the liability to a contra-expense account on the Company’s statements of operations and comprehensive loss at year-end, if the Company’s PPP bank loan is fully forgiven by the SBA.
 
 
19
 
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
 
 
You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes contained in this Quarterly Report.
 
 
Overview
 
We are a clinical stage biopharmaceutical company primarily focused on developing proprietary therapeutics designed to extend life or improve quality of life for cancer patients. We are building a drug development pipeline through the licensing and acquisition of oncology therapeutics in late preclinical and clinical development stages. We leverage our scientific and clinical experience to help reduce the risk and accelerate the clinical development of our drug product candidates.
 
In December 2019, we closed our initial public offering. We sold 1,277,778 shares of our common stock at a public offering price of $8.00 per share. Net proceeds were approximately $9.4 million, after deducting underwriting discounts and accrued, unpaid offering expenses. Our common stock began trading on the Nasdaq Capital Market on December 19, 2019.
 
In January 2020, we entered into a Capital on DemandTM Sales Agreement with JonesTrading Institutional Services, LLC (“JonesTrading”), as sales agent, pursuant to which we may offer and sell (at our discretion), from time to time, through or to JonesTrading shares of our common stock, having an aggregate offering price of up to $19.7 million. Pursuant to this agreement, as of September 30, 2020, we have sold 860,677 shares of our common stock at an average gross price per share of $9.79 for net proceeds of $8,175,290, after commissions of $253,035.
 
In June 2020, we entered into a 50/50 collaboration development agreement with NorthStar Medical Radioisotopes, LLC (“NorthStar”) to develop potential Radio-Immuno-Therapeutics (“RITs”) to treat severe COVID-19 (patients with SARS-CoV-2 infection). NorthStar is a commercial producer and supplier of medical radioisotopes. This collaboration combines NorthStar’s expertise in the innovative production, supply, and distribution of important medical radioisotopes with our expertise in therapeutic drug development and our pre-IND stage humanized urokinase plasminogen activator receptor (“uPAR”) targeted monoclonal antibody known as MNPR-101, along with a proprietary portfolio of related monoclonal antibodies that target uPAR or its ligand uPA. uPAR seems to be selectively expressed on aberrantly activated immune cells. In response to coronavirus infection, these rogue immune cells produce pro-inflammatory cytokines that can cause runaway inflammation throughout the body, commonly referred to as a cytokine storm. It is this systemic hyper-inflammatory state that is thought to be largely responsible for the severe lung injury and multiple organ damage that contributes to poor outcomes and death in patients with severe COVID-19.
 
In this collaboration, we plan to couple MNPR-101 to a therapeutic radioisotope supplied by NorthStar in order to create a highly selective agent that has the potential to kill aberrantly activated cytokine-producing immune cells. By eradicating these cells with a uPAR-targeted RIT, the goal is to spare healthy cells while quickly reducing the cytokine storm and its harmful systemic effects. Through September 30, 2020, we have incurred immaterial amounts of expenses related to the NorthStar collaboration.
 
In November 2020, we announced a series of recently issued patents for our Phase 2b/3 clinical-stage lead product candidate, Validive (clonidine HCl mucobuccal tablet). These patents, including U.S. Patent No. 10,675,271, provide claims covering “Clonidine and/or clonidine derivatives for use in the prevention and/or treatment of adverse side effects of chemotherapy”. These patents expand the potential use of Validive in cancer patients, beyond the earlier allowed claims for the prevention of oral mucositis in patients receiving chemoradiotherapy. Specifically, they provide protection for the potential ability of Validive to prevent or treat common chemotherapy-associated side effects such as gastrointestinal disorders, respiratory disorders, fatigue and headache, and would provide protection should we determine in the future to conduct additional Validive development activities related to adverse side effects of chemotherapy beyond oropharyngeal cancer.
 
        Given the COVID-19 pandemic and its effects on clinical trials and fundraising, we have adjusted our clinical development plans accordingly to fit what is feasible in the current environment. We have simplified the design of the previously planned Phase 3 clinical trial for our lead product candidate, Validive (clonidine mucobuccal tablet; clonidine MBT), to a seamless design Phase 2b/3 that will allow us to minimize touch points with patients and sites. This seamless design will allow us to advance to the Phase 3 portion of the trial if supported by the interim data at the end of the Phase 2b portion of the trial. We are aiming to enroll the first patient in the Phase 2b portion of the trial in the fourth quarter of 2020. This modification in design allows us to initiate the clinical trial without requiring near-term financing. The decision to open the Phase 3 portion of the clinical trial will largely be dependent on our cash position closer to that time, anticipated to be in late 2021. To open and complete the Phase 3 portion of the clinical trial, we will require additional funding in the millions or tens of millions of dollars (depending on if we have consummated a collaboration or partnership or neither for Validive), which we are planning to pursue in the next 12 months.
 
We are continuing to devote a portion of the net proceeds from our initial public offering to support the camsirubicin Phase 2 clinical trial for which we signed a collaboration agreement in June 2019 with Grupo Español de Investigación en Sarcomas (“GEIS”), discussed in further detail below. We believe we have funds sufficient to enable GEIS to commence its open label Phase 2 clinical trial at the end of 2020 or early 2021 and to obtain results from the run-in portion of the trial.
 
 
20
 
 
 
Our Product Candidates
 
Validive
 
Validive is designed to be used prophylactically to reduce the incidence, delay the time to onset, and decrease the duration of severe oral mucositis (“SOM”) in patients undergoing chemoradiotherapy (“CRT”) for oropharyngeal cancer (“OPC”). SOM is a painful and debilitating inflammation and ulceration of the mucous membranes lining the oral cavity and oropharynx in response to chemoradiation. The majority of patients receiving CRT to treat their OPC develop SOM, which remains one of the most common and devastating side effects of treatment in this indication. The potential clinical benefits to patients of reducing or delaying the incidence of SOM, or reducing the duration of SOM, include: reduced treatment discontinuations leading to potentially improved overall survival outcomes; reduced mouth and throat pain avoiding the need to receive enteral (feeding tube) or parenteral (intravenous) nutrition; and decreased long-term and often permanent debilitation arising from swallowing difficulties, neck and throat spasms, and lung complications due to food aspiration. Our mucobuccal tablet (“MBT”) formulation is a novel delivery system for clonidine that allows for prolonged and enhanced local delivery of drug in the regions of mucosal radiation damage in patients with OPC. Validive has been granted fast track designation in the U.S., orphan drug designation in the EU, and has global intellectual property patent protection through mid-2029 not accounting for possible extensions.
 
In September 2017, we exercised an option to license Validive from Onxeo S.A., the company that developed Validive through its Phase 2 clinical trial. In the completed Phase 2 clinical trial, Validive demonstrated clinically meaningful efficacy signals within the 64-patient OPC population randomized to placebo, Validive 50 µg dose and Validive 100 µg dose. The absolute incidence of SOM in OPC patients who received a dose of Validive 100 µg once per day was reduced by 26.3% (incidence rate of 65.2% in placebo, 45.0% in Validive 50 µg group, and 38.9% in Validive 100 µg group). The median time to onset of SOM was 37 days in the placebo cohort; 45 days in the Validive 50 µg cohort and no median time of onset was reached in the Validive 100 µg group since fewer than half of this cohort of patients developed SOM. There was also a 37.8% reduction in the median duration of the SOM for the Validive 100 µg group versus placebo (41.0 days placebo group, 34.0 days Validive 50 µg group, and 25.5 days Validive 100 µg group) in patients that developed SOM. Median duration of SOM across all patients, inclusive of both those that did and did not develop SOM, was 17 days in the placebo group and 0 days in each of the Validive 50 and 100 µg groups. A positive dose response was seen in each of these three clinical endpoints. Additionally, patients in the Validive cohorts in the Phase 2 clinical trial demonstrated a safety profile similar to that of placebo. While not designed by us, Onxeo’s promising preclinical studies and Phase 2 clinical trial have informed the design and conduct of what we believe will be an effective Phase 2b/3 clinical trial.
 
SOM typically arises in the immune tissue at the back of the tongue and throat, which comprise the oropharynx, and consists of acute severe tissue damage and pain that prevents patients from swallowing, eating and drinking. Validive stimulates the alpha-2 adrenergic receptor (alpha-2AR) on macrophages (white blood cells present in the immune tissues of the oropharynx) suppressing pro-inflammatory cytokine expression. Validive exerts its effects locally in the oral cavity and oropharynx over a prolonged period of time through its unique MBT formulation. Patients who develop SOM are also at increased risk of developing late onset toxicities, including trismus (jaw, neck, and throat spasms), dysphagia, and lung complications, which are often irreversible and lead to increased hospitalization and the need for further interventions sometimes years after completion of chemoradiotherapy. We believe that a reduction in the incidence and duration of SOM by Validive will have the potential to reduce treatment discontinuation and/or treatment delays potentially leading to improved survival outcomes, and reducing or eliminating these long-term morbidities resulting from CRT.
 
The OPC target population for Validive is the most rapidly growing segment of head and neck cancer (“HNC”) patients, estimated to exceed 40,000 new cases of OPC in the U.S alone in 2020. The growth in OPC is driven by the increasing prevalence of oral human papilloma virus (“HPV”) infections in the U.S. and around the world. Despite the availability of a pediatric/adolescent HPV vaccine, the rate of OPC incidence in adults is not anticipated to be materially reduced for many decades due to low adoption of the vaccine to date. As a result, the incidence of HPV-driven OPC is projected to increase for many years to come and will continue to support a clinical need for Validive for the prevention of CRT-induced SOM in patients with OPC since CRT is the standard of care treatment, and we do not anticipate this changing for years to come.
 
A pre-Phase 3 meeting with the FDA was held and based on the meeting discussion, a Phase 3 clinical protocol and accompanying statistical analysis plan (“SAP”) was submitted to the FDA for review and comments. We have also received protocol assistance and advice on our Phase 3 protocol and SAP from the European Medicines Agency Committee on Human Medicinal Products (EMA/CHMP/SAWP). Based on comments and guidance provided by FDA and EMA, and our analysis of the current COVID-19 pandemic and its effects on clinical trials, we have modified our original adaptive design Phase 3 clinical trial to be a seamless Phase 2b/3 clinical trial to better fit the current clinical research environment. The primary endpoint, absolute incidence of SOM, remains the same, but the overall design of the trial has been simplified and the touch points with the healthcare system have been minimized. Our aim is to commence the Phase 2b/3 clinical trial in the fourth quarter of 2020, with the interim (completion of Phase 2b) reached approximately 12 months from first patient dosed, and the Phase 3 enrollment completed in the fourth quarter of 2022. Opening the Phase 3 portion of the trial will be subject to the interim (Phase 2b) results and our ability to raise additional funding or find a suitable pharmaceutical partner.
 
 
21
 
 
Camsirubicin
 
Our second product candidate, camsirubicin, is a novel analog of doxorubicin which has been designed to reduce the cardiotoxic side effects generated by doxorubicin while retaining anti-cancer activity. Camsirubicin is not metabolized to the derivatives that are believed to be responsible for doxorubicin’s cardiotoxic effects. A Phase 2 clinical trial for camsirubicin has been completed in patients with advanced (e.g. unresectable or metastatic) soft tissue sarcoma (“ASTS”). Average life expectancy for these patients is 12-15 months. In this study, 52.6% of patients evaluable for tumor progression demonstrated clinical benefit (partial response or stable disease), which was proportional to dose and consistently observed at higher cumulative doses of camsirubicin (>1000 mg/m2). Camsirubicin was very well tolerated in this study and underscored the ability to potentially administer camsirubicin without restriction of cumulative dose in patients with ASTS. Doxorubicin is limited to a lifetime cumulative dose maximum of 450 mg/m2. Even if a patient is responding, they are pulled off of doxorubicin treatment once this cumulative dose has been reached.
 
Based on encouraging clinical results to date, we plan to continue the development of camsirubicin as 1st-line treatment in patients with ASTS, where the current first line treatment is doxorubicin. The aim is to administer camsirubicin without restricting cumulative dose, thereby potentially improving efficacy beyond that of doxorubicin by keeping patients who are responding on treatment. In June 2019, we entered into a clinical collaboration with GEIS. GEIS will lead a multi-country, randomized, open-label Phase 2 clinical trial evaluating camsirubicin head-to-head against doxorubicin in patients with ASTS. GEIS is an internationally renowned non-profit organization focused on the research, development and management of clinical trials for sarcoma, that has worked with many of the leading biotech and global pharmaceutical companies. Enrollment of the trial is currently anticipated to begin at the end of 2020 or early 2021, and to include approximately 170 ASTS patients, an interim analysis, and take around two years to enroll. The trial will begin with a dose escalation (“run-in”) prior to the randomization portion of the trial. The primary endpoint of the trial will be progression-free survival, with secondary endpoints including overall survival, response rate and incidence of treatment-emergent adverse events. In November 2019, the European Commission granted orphan drug designation for camsirubicin for the treatment of soft tissue sarcoma in the EU.
 
MNPR-101
 
Our third program, MNPR-101, is a novel first-in-class humanized monoclonal antibody to the urokinase plasminogen activator receptor (“uPAR”) for the treatment of advanced cancers and severe COVID-19. We have entered into a collaboration development agreement with NorthStar to develop potential RITs to treat severe COVID-19. This collaboration combines NorthStar’s expertise in the innovative production, supply, and distribution of important medical radioisotopes with our expertise in therapeutic drug development. NorthStar and we plan to couple MNPR-101 along with a proprietary portfolio of related monoclonal antibodies that target uPAR or its ligand uPA with a therapeutic radioisotope. uPAR seems to be selectively expressed on aberrantly activated immune cells. In response to coronavirus infection, these rogue immune cells produce pro-inflammatory cytokines that can cause runaway inflammation throughout the body, commonly referred to as a cytokine storm. It is this systemic hyper-inflammatory state that is thought to be largely responsible for the severe lung injury and further multiple organ damage that contributes to poor outcomes and death in patients with severe COVID-19.
 
In collaboration with NorthStar, we have filed a provisional patent application entitled “Precision Radioimmunotherapeutic Targeting of the Urokinase Plasminogen Activator Receptor (uPAR) for Treatment of Severe COVID-19 Disease” with the U.S. Patent and Trademark Office (“USPTO”). This application covers novel compositions and uses of cytotoxic radioisotopes attached to antibodies that bind to uPAR, thereby creating precision targeted radiotherapeutics, also known as uPRITs, for the treatment of severe COVID-19 and other respiratory diseases. Advanced COVID-19 patients frequently develop severe, life-threatening, pulmonary inflammation as a result of a viral induced cytokine storm. The development of this cytokine storm is associated with a high rate of mortality in severe COVID-19 patients, even with oxygen support and mechanical ventilation. uPRITs have been designed with the goal of selectively eliminating the aberrantly activated immune cells responsible for causing the cytokine storm. By eradicating these cells with a targeted RIT, the goal is to spare healthy cells while quickly reducing the cytokine storm and its harmful systemic effects. The co-inventors of the provisional patent application are James Harvey, Chief Scientific Officer of NorthStar, and Andrew P. Mazar, our Chief Scientific Officer. We have also entered into collaborations with IsoTherapeutics, LLC and Aragen Bioscience, Inc. to generate and evaluate candidate uPRIT conjugates for activity against uPAR with the goal of identifying one to two development candidates by the end of 2020.
 
 
22
 
 
Revenues
 
We are an emerging growth company, have no approved drugs and have not generated any revenues. To date, we have engaged in acquiring pharmaceutical drug product candidates, licensing rights to drug product candidates, entering into collaboration agreements for testing and clinical development of our drug product candidates and providing the infrastructure to support the clinical development of our drug product candidates. We do not anticipate commercial revenues from operations until we complete testing and development of one of our drug product candidates and obtain marketing approval or we sell, enter into a collaborative marketing arrangement, or out- license one of our drug product candidates to another party. See “Liquidity and Capital Resources”.
 
Recently Issued and Adopted Accounting Pronouncements
 
A description of recently issued accounting pronouncements that may potentially impact our financial position and condensed consolidated results of operations is disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
 
Critical Accounting Policies and Use of Estimates
 
While our significant accounting policies are described in more detail in Note 2 of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our condensed consolidated financial statements.
 
Stock-Based Compensation
 
We account for stock-based compensation arrangements with employees, non-employee directors and consultants using a fair value method, which requires the recognition of compensation expense for costs related to all stock-based awards, including stock option grants and RSUs. The fair value method requires us to estimate the fair value of stock-based payment awards on the date of grant using an option pricing model or the closing stock price on date of grant in the case of RSUs.
 
Stock-based compensation costs for stock awards granted to our employees and non-employee directors are based on the fair value of the underlying instruments calculated using the Black-Scholes option-pricing model on the date of grant for stock options and using the closing stock price on the date of grant for RSUs and recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. Determining the appropriate fair value model and related assumptions requires judgment, including selecting methods for estimating the Company’s future stock price volatility, forfeiture rates and expected term. The expected volatility rates are estimated based on the actual volatility of comparable public companies over recent historical periods of the same length as the expected term. We generally selected these companies based on reasonably comparable characteristics, including market capitalization, risk profiles, stage of corporate development and with historical share price information sufficient to meet the expected term of the stock-based awards. The expected term for stock options granted during the three and nine months ended September 30, 2020 and 2019 was estimated using the simplified method. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We have not paid dividends and do not anticipate paying a cash dividend in future vesting periods and, accordingly, use an expected dividend yield of zero. The risk-free interest rate is based on the rate of U.S. Treasury securities with maturities consistent with the estimated expected term of the awards. Prior to January 1, 2019, the measurement of consultant stock-based compensation was subject to periodic adjustments as the underlying equity instruments vested and was recognized as an expense over the period in which services were rendered. Since January 1, 2019, consultant stock-based compensation is valued on the grant date and is recognized as an expense over the period in which services are rendered.
 
 
23
 
 
Results of Operations
 
Comparison of the Three Months and Nine Months Ended September 30, 2020 and September 30, 2019
 
The following tables summarize the results of our operations for the three and nine months ended September 30, 2020 and 2019:
 
 
 
Three Months Ended September 30,
 
 
Nine Months Ended September 30,
 
 
 
(Unaudited)
 
 
(Unaudited)
 
(in thousands)
 
2020
 
 
2019
 
 
Variance
 
 
2020
 
 
2019
 
 
Variance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and development expenses
 $1,256 
 $220 
 $1,036 
 $2,433 
 $1,385 
 $1,048 
General and administrative expenses
  392 
  539 
  (147)
  1,815 
  1,714 
  101 
   Total operating expenses
  1,648 
  759 
  889 
  4,248 
  3,099 
  1,149 
Operating loss
  (1,648)
  (759)
  (889)
  (4,248)
  (3,099)
  (1,149)
Interest income, net
  9 
  23 
  (14)
  72 
  81 
  (9)
   Net loss
 $(1,639)
 $(736)
 $(903)
 $(4,176)
 $(3,018)
 $(1,158)
 
    
    
    
    
    
    
 
 
Research and Development Expenses
 
Research and Development (“R&D”) expenses for the three months ended September 30, 2020 were approximately $1,256,000, compared to approximately $220,000, for the three months ended September 30, 2019. This represents an increase of approximately $1,036,000 primarily attributed to increases in expenses for the planning of the camsirubicin Phase 2 clinical trial including manufacturing of $380,000, increases in Validive clinical trial planning and manufacturing costs of approximately $325,000, an increase in the allocation of the CEO's salary and benefits for the three months to R&D expenses of $224,000, annual R&D personnel salary increases, annual (non-cash) equity grants and salaries and benefits of three new R&D personnel of approximately $134,000, partially offset by a decrease in other R&D expenses of $27,000.
 
R&D expenses for the nine months ended September 30, 2020 were approximately $2,433,000, compared to approximately $1,385,000, for the nine months ended September 30, 2019. This represents an increase of approximately $1,048,000 primarily attributed to increases in expenses for the planning of the camsirubicin Phase 2 clinical trial including manufacturing of $590,000, annual R&D personnel salary increases, annual (non-cash) equity grants and salaries and benefits of three new R&D personnel of approximately $324,000, an increase to the allocation of the CEO's salary and benefits to R&D expenses of $306,000, partially offset by a decreases in Validive clinical trial planning and manufacturing costs of approximately $138,000 and other R&D expenses of $34,000.
 
 
24
 
 
General and Administrative Expenses
 
General and Administrative (“G&A”) expenses for the three months ended September 30, 2020 were approximately $392,000, compared to approximately $539,000, for the three months ended September 30, 2019. This represents a decrease of approximately $147,000 primarily attributed to the CEO's salary and benefits allocated from G&A expenses to R&D expenses of $224,000, decreases in stock-based compensation for non-employee directors (non-cash) of $22,000, and patent fees of $13,000, partially offset by increases in stock-based compensation for annual (non-cash) equity grants and annual G&A personnel salary increases of $76,000, external fees related to public company compliance of $14,000, and net increases in other G&A expenses of $22,000.
 
G&A expenses for the nine months ended September 30, 2020 were approximately $1,815,000, compared to approximately $1,714,000, for the nine months ended September 30, 2019. This represents an increase of approximately $101,000 primarily attributed to net increases in stock-based compensation for annual (non-cash) equity grants and annual G&A personnel salary increases of $318,000, increases in legal and audit fees related to public company compliance of $116,000, and net increases in general costs of operations of $45,000, partially offset by the CEO's salary and benefits allocated from G&A expenses to R&D expenses of $306,000, and decreases in stock-based compensation for non-employee directors (non-cash) of $72,000.
 
 
Interest Income
 
Interest income for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 decreased by approximately $14,000, due to a significant decrease in bank interest rates partially offset by an increase in bank balances resulting from our initial public offering in December 2019 and funds raised in our Capital on DemandTM Sales Agreement with JonesTrading.
 
Interest income for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 decreased by approximately $9,000, due to a significant decrease in bank interest rates partially offset by an increase in bank balances resulting from our initial public offering in December 2019 and funds raised in our Capital on DemandTM Sales Agreement with JonesTrading.
 
 
Liquidity and Capital Resources
 
Sources of Liquidity
 
We have incurred losses and cumulative negative cash flows from operations since our inception in December 2014 resulting in an accumulated deficit of approximately $30.1 million as of September 30, 2020. We anticipate that we will continue to incur losses for the foreseeable future. We expect that our research and development and general and administrative expenses will increase to enable the execution of our strategic plan. As a result, we anticipate that we will need to raise additional capital to fund our future operations. We will seek to obtain needed capital through a combination of equity offerings, debt financings, strategic collaborations and grant funding. To date, we have funded our operations through private placements of our preferred and common stock, the net receipt of funds related to the acquisition of camsirubicin, net proceeds from the initial public offering of our common stock and net proceeds from sales under our Capital on Demand™ Sales Agreement. We anticipate that the currently available funds as of October 31, 2020, will fund our operations through December 2021.
 
 
We invest our cash equivalents in a money market account.
 
 
25
 
 
 
Cash Flows
 
The following table provides information regarding our cash flows for the nine months ended September 30, 2020 and 2019.
 
 
 
Nine Months Ended
 
 
Nine Months ended September 30, 2020 versus
 
 
 
September 30,
 
 
Nine Months ended September 30, 2019
 
(in thousands)
 
2020
 
 
2019
 
 
Variance
 
 
 
 
 
 
 
 
 
 
 
Net cash used in operating activities
 $(3,421)
 $(2,349)
 $(1,072)
Net cash provided by (used in) financing activities
  8,189 
  (39)
  8,228 
Effect of exchange rates
  1 
  (10)
  11 
Net increase (decrease) in cash and cash equivalents
 $4,769 
 $(2,398)
 $7,167 
 
 
 
 
 
Cash Flow Used in Operating Activities
 
The increase of approximately $1,072,000 in cash flow used in operating activities during the nine months ended September 30, 2020, compared to the nine months ended September 30, 2019, was primarily a result of increased R&D and G&A cash operating expenses.
 
Cash Flow Used in Investing Activities
 
There was no cash flow used in investing activities for the nine months ended September 30, 2020 and 2019.
 
Cash Flow Provided by (Used in) Financing Activities
 
The increase of approximately $8,228,000 in cash flow provided by financing activities for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019, was a result of sales of our common stock under our Capital on DemandTM Sales Agreement with JonesTrading and the receipt of the PPP forgivable bank loan.
 
 
26
 
 
 
Future Funding Requirements
 
 
To date, we have not generated any revenue from product sales. We do not know when, or if, we will generate any revenue from product sales. We do not expect to generate any revenue from product sales unless and until we obtain regulatory approval of and commercialize any of our current or future drug product candidates or we out-license or sell a drug product candidate to another party. At the same time, we expect our expenses to increase in connection with our ongoing development activities, particularly as we continue the research, development, future preclinical studies and clinical trials of, and seek regulatory approval for, our current and future drug product candidates. If we obtain regulatory approval of any of our current or future drug product candidates, we will need substantial additional funding for commercialization requirements and our continuing drug product development operations.
 
 
As a company, we have not completed development through marketing approvals of any therapeutic products. We expect to continue to incur significant increases in expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially as we:
 
●            
advance the clinical development and execute the regulatory strategy for Validive;
 
●            
continue the clinical development and execute the regulatory strategy for camsirubicin;
 
●            
continue the preclinical activities and potentially enter clinical development of MNPR-101 for severe COVID-19;
 
●            
acquire and/or license additional pipeline drug product candidates and pursue the future preclinical and/or clinical development of such drug product candidates;
 
●            
seek regulatory approvals for any of our current and future drug product candidates that successfully complete registration clinical trials;
 
●            
establish or purchase the services of a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval;
 
●            
develop our manufacturing/quality capabilities or establish a reliable, high quality supply chain sufficient to support our clinical requirements and to provide sufficient capacity to launch and grow the sales of any product for which we obtain marketing approval; and
 
●            
add or contract for required operational, financial and management information systems and capabilities and other specialized expert personnel to support our drug product candidate development and planned commercialization efforts.
 
 
 
27
 
 
We anticipate that the funds available as of October 31, 2020, will fund our planned operations through December 2021. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of our drug product candidates, and the extent to which we enter into collaborations with third parties to participate in the development and commercialization of our drug product candidates, we are unable to accurately estimate with high reliability the amounts and timing required for increased capital outlays and operating expenditures associated with our current and anticipated drug product candidate development programs. Our future capital requirements will depend on many factors, including:
 
●            
the progress of regulatory interactions and clinical development of Validive;
 
●            
the progress of clinical development and regulatory outcomes of camsirubicin;
 
●            
the progress of preclinical and clinical development of MNPR-101 including through our collaboration with NorthStar;
 
●            
the number and characteristics of other drug product candidates that we may license, acquire or otherwise pursue;
 
●            
the scope, progress, timing, cost and results of research, preclinical development and clinical trials of current and future drug product candidates;
 
●            
the costs, timing and outcomes of seeking and obtaining FDA and international regulatory approvals;
 
●            
the costs associated with manufacturing/quality requirements and establishing sales, marketing and distribution capabilities;
 
●            
our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make in connection with the licensing, filing, defense and enforcement of any patents or other intellectual property rights;
 
●            
our need and ability to hire or contract for additional management, administrative, scientific, medical, sales and marketing, and manufacturing/quality and other specialized personnel or external expertise;
 
●            
the effect of competing products or new therapies that may limit market penetration or prevent the introduction of our drug product candidates or reduce the commercial potential of our product portfolio;
 
●            
our need to implement additional internal systems and infrastructure; and
 
●            
the economic and other terms, timing and success of our existing collaboration and licensing arrangements and any collaboration, licensing or other arrangements into which we may enter in the future, including the timing of receipt of or payment to or from others of any milestone or royalty payments under these arrangements.
 
 
 
28
 
 
Funding Requirements in the Fourth Quarter of 2020 and Onward
 
        Expenditures are expected to increase in the fourth quarter of 2020 and onward for:
 
●            
contract research services and clinical site fees for the Validive Phase 2b/3 clinical trial;
 
●            
process development, manufacturing costs and clinical database management of camsirubicin in connection with the GEIS Phase 2 clinical trial;
 
●            
supporting the NorthStar collaboration;
 
●            
GEIS collaboration milestone fees; and
 
●            
employee compensation and consulting fees to support the planning and initiation of our Validive Phase 2b/3 clinical trial.
 
We are aiming to enroll the first patient in our Phase 2b/3 clinical trial for Validive in the fourth quarter of 2020. We will proceed to the Phase 3 portion of the clinical trial based on an interim analysis of the Phase 2b portion, pending our ability to raise sufficient funds. To commence the Phase 3 portion of the trial, we will require additional funding in the millions or tens of millions of dollars (depending on if we have consummated a collaboration or partnership or neither for Validive), or find a suitable pharmaceutical partner, both of which we are planning to pursue in the next 12 months. There can be no assurance that any such events will occur. We intend to continue evaluating drug product candidates for the purpose of growing our pipeline. Identifying and securing high quality compounds usually takes time and related expenses; however, our spending could be significantly accelerated in the fourth quarter of 2020 and onward if additional drug product candidates are acquired and enter clinical development. In this event, we may be required to expand our management team, and pay higher contract manufacturing costs, contract research organization fees, other clinical development costs and insurance costs that are not currently projected. The anticipated operating cost increases in the fourth quarter of 2020 and onward are expected to be primarily driven by the funding of our planned Validive Phase 2b/3 clinical trial and in support of the GEIS Phase 2 clinical trial of camsirubicin. Beyond our need to raise additional funding in the next 12 months to start the Validive Phase 3 portion of the trial, we will also need significant additional funding thereafter in order to complete the clinical trial, support further development of camsirubicin in and beyond the Phase 2 trial, to support our collaboration with NorthStar, if successful, and generally to support our current and any future product candidates through completion of trials, approval processes and, if applicable, commercialization.
 
Until we can generate a sufficient amount of product revenue to finance our cash requirements, we expect to finance our future cash needs primarily through a combination of equity offerings, debt financings, strategic collaborations and grant funding. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our current stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our current stockholders’ rights. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with other parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug product candidates or grant licenses on terms that may not be favorable to us, which will reduce our future returns and affect our future operating flexibility. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our pipeline product development or commercialization efforts or grant rights to others to develop and market drug product candidates that we would otherwise prefer to develop and market ourselves.
 
 
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Contractual Obligations and Commitments
 
License, Development and Collaboration Agreements
 
Onxeo S.A.
 
In June 2016, we executed an agreement with Onxeo S.A., a French public company, which gave us the exclusive option to license (on a world-wide exclusive basis) Validive (clonidine mucobuccal tablet; clonidine MBT a mucoadhesive tablet of clonidine based on the Lauriad mucoadhesive technology) to pursue treating severe oral mucositis in patients undergoing chemoradiation treatment for head and neck cancers. The agreement includes clinical, regulatory, developmental and sales milestones that could reach up to $108 million if we achieve all milestones, and escalating royalties from 5% to 10% on net sales. In September 2017, we exercised the option to license Validive from Onxeo for $1 million, but as of October 31, 2020, we have not been required to pay Onxeo any other funds under the agreement. We anticipate the need to raise significant funds to support the completion of clinical development and marketing approval of Validive.
 
Under the agreement, we are required to pay royalties to Onxeo on a product-by-product and country-by-country basis until the later of (1) the date when a given product is no longer within the scope of a patent claim in the country of sale or manufacture, (2) the expiry of any extended exclusivity period in the relevant country (such as orphan drug exclusivity, pediatric exclusivity, new chemical entity exclusivity, or other exclusivity granted beyond the expiry of the relevant patent), or (3) a specific time period after the first commercial sale of the product in such country. In most countries, including the U.S., the patent term is generally 20 years from the earliest claimed filing date of a non-provisional patent application in the applicable country, not taking into consideration any potential patent term adjustment that may be filed in the future or any regulatory extensions that may be obtained. The royalty termination provision pursuant to (3) described above is shorter than 20 years and is the least likely cause of termination of royalty payments.
 
The Onxeo license agreement does not have a pre-determined term, but expires on a product-by-product and country-by-country basis; that is, the agreement expires with respect to a given product in a given country whenever our royalty payment obligations with respect to such product have expired. The agreement may also be terminated early for cause if either we or Onxeo materially breach the agreement, or if either we or Onxeo become insolvent. We may also choose to terminate the agreement, either in its entirety or as to a certain product and a certain country, by providing Onxeo with advance notice.
 
Grupo Español de Investigación en Sarcomas (“GEIS”)
 
In June 2019, we executed a clinical collaboration with GEIS for the development of camsirubicin in patients with advanced soft tissue sarcoma (“ASTS”). GEIS will be the study sponsor and will lead a multi-country, randomized, open-label Phase 2 clinical trial to evaluate camsirubicin head-to-head against doxorubicin in patients with ASTS. Enrollment of the trial is anticipated to begin at the end of 2020 or early 2021 and will include approximately 170 ASTS patients. We will provide study drug and supplemental financial support for the clinical trial averaging approximately $2 million to $3 million per year. During the three and nine months ended September 30, 2020, we incurred $400,320 and $612,304 in GEIS and other clinical-related expenses including clinical material manufacturing and database management expenses in support of GEIS’s Phase 2 camsirubicin clinical trial. During the three and nine months ended September 30, 2019, we incurred nominal expense related to the GEIS collaboration. We can terminate the agreement by providing GEIS with advance notice, and without affecting the Company’s rights and ownership to any intellectual property or clinical data.
 
 
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XOMA Ltd.
 
The intellectual property rights contributed by Tactic Pharma, LLC to us included the non-exclusive license agreement with XOMA Ltd. for the humanization technology used in the development of MNPR-101. Pursuant to such license agreement, we are obligated to pay XOMA Ltd. clinical, regulatory and sales milestones which could reach up to $14.925 million if we achieve all milestones for MNPR-101. The agreement does not require the payment of sales royalties. There can be no assurance that we will achieve any milestones. As of October 31, 2020, we had not reached any milestones and had not been required to pay XOMA Ltd. any funds under this license agreement.
 
Service Providers
 
In the normal course of business, we contract with service providers to assist in the performance of research and development, financial strategy, audit, tax and legal support. We can elect to discontinue the work under these agreements at any time. We could also enter into collaborative research and development, contract research, manufacturing and supplier agreements in the future, which may require upfront payments and/or long-term commitments of cash.
 
Office Lease
 
Effective January 1, 2018, we leased office space in the Village of Wilmette, Illinois for $2,520 per month for 24 months. This office space houses our current headquarters. On December 31, 2019, the office lease expired and we continued to lease on a month-to-month basis. In February 2019, we leased additional office spaces on a month-to month basis at our headquarters and we anticipate that we will lease additional space in the future as we hire additional personnel.
 
Legal Contingencies
 
We are currently not, and to date have never been, a party to any material legal proceedings.
 
Indemnification
 
In the normal course of business, we enter into contracts and agreements that contain a variety of representations and warranties and provide for general indemnification. Our exposure under these agreements is unknown because it involves claims that may be made against us in the future, but that have not yet been made. To date, we have not paid any claims or been required to defend any action related to our indemnification obligations. However, we may record charges in the future as a result of these indemnification obligations.
 
In accordance with our Second Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and the indemnification agreements entered into with each officer and non-employee director, we have indemnification obligations to our officers and non-employee directors for certain events or occurrences, subject to certain limits, while they are serving at our request in such capacity. There have been no claims to date.
 
Off-Balance Sheet Arrangements
 
To date, we have not had any off-balance sheet arrangements, as defined under the SEC rules.
 
 
 
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Item 4. Controls and Procedures
 
Our Chief Executive Officer and Chief Financial Officer have provided certifications filed as Exhibits 31.1 and 32.1, and 31.2, respectively. Such certifications should be read in conjunction with the information contained in this Item 4 for a more complete understanding of the matters covered by those certifications.
 
(a) Disclosure Controls and Procedures
 
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of September 30, 2020, pursuant to Rules 13a15(e) and 15d15(e) under the Exchange Act. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures, as of such date, were effective.
 
(b) Changes in Internal Control over Financial Reporting
 
We have concluded that the condensed consolidated financial statements and other financial information included in this Quarterly Report on Form 10-Q fairly present in all material respects our financial condition, results of operations and comprehensive loss and cash flows as of, and for, the periods presented.
 
There have been no changes in our internal control over financial reporting during the three and nine months ended September 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 
 
 
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PART II. OTHER INFORMATION
 
Item 1A. Risk Factors
 
Except for the updated risk factor set forth below, there have been no material changes in information regarding our risk factors as described in Item 1A of our Annual Report on Form 10-K as filed with the SEC on March 27, 2020.
 
Our operations and financial results could be adversely impacted by the global outbreak of the 2019 Novel Coronavirus (COVID-19), which has negatively impacted our stock price and our ability to raise substantial funds in the near-term, and may negatively impact our ability to manufacture our product candidates for our clinical trials, our ability to accrue and conduct our planned clinical trials, and may delay regulatory agency responses. Any such impact will negatively impact our financial condition and could require us to delay our clinical development programs.
 
               In December 2019, a novel strain of coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China, resulting in significant disruptions to Chinese manufacturing and supply chain, as well as travel restrictions in many countries. In March 2020, COVID-19 was designated a global pandemic and many countries, including the United States, have declared national emergencies and have implemented preventive measures by limiting large public gatherings, setting separation distances between individuals (social distancing), rules for mandatory use of personal protective equipment (primarily masks) and shelter-in-place mandates. Many employers are restricting non-essential work travel and are requiring that employees work from their homes to limit personal interaction. Many businesses are closed or are operating in a substantially reduced fashion and many employees have been laid off. While the extent of the impact of the COVID-19 pandemic on our business and financial results is uncertain, a continued and prolonged public health crisis such as the COVID-19 pandemic would have a negative impact on our business, financial condition and operating results. The COVID-19 pandemic has resulted in significant volatility and substantial declines in the stock markets, which have negatively impacted our stock price and negatively impacted our ability to raise significant funds in the near-term. It is unknown the potential impact in the long-term in the event of a prolonged disruption or recession. In addition, the COVID-19 pandemic could impact the conduct of clinical trials as a result of quarantines, site closures, travel limitations, delays in the manufacturing of our product candidates for our clinical trials due to supply chain disruptions, and delays in the initiation and enrollment of patients in our planned clinical trials, or other considerations if site personnel or trial subjects become infected with COVID-19, which would negatively impact our financial condition and could require us to delay our clinical development programs. In addition, COVID-19 could delay U.S. and foreign regulatory agencies from responding to our submissions either due to shortages of personnel or shifting their priorities to COVID-19 related therapeutics, resulting in potential delays of our planned clinical trials. Given the dynamic nature of these circumstances, the duration of any business disruption or potential duration and impact of the COVID-19 pandemic to our business is difficult to predict. In response to the current COVID-19 pandemic and its effects on clinical trials, we have modified the original adaptive design Phase 3 clinical trial for our lead product candidate, Validive, to be a Phase 2b/3 clinical trial to better fit the types of trials which can enroll patients in the current environment. We are aiming to enroll the first patient in a Phase 2b/3 clinical trial for Validive in the fourth quarter of 2020. The Phase 3 portion of the clinical trial is anticipated to start right after the Phase 2b portion, pending our ability to raise sufficient funds. To commence the Phase 3 portion of the trial, we will require additional funding in the millions or tens of millions of dollars (depending on if we have consummated a collaboration or partnership or neither for Validive), or find a suitable pharmaceutical partner, both of which we are planning to pursue in the next 12 months. There can be no assurance that any such events will occur.
 
 
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Item 6. Exhibits
 
The following exhibits are filed as part of this Quarterly Report.
 
 
 
 
Exhibit
 
Document
Incorporated by Reference From:
   10.1 
  Filed herewith  
  31.1 
Filed herewith
  31.2 
Filed herewith
  32.1 
Filed herewith
 
101.INS
 
XBRL Instance Document
 
 
101.SCH
 
XBRL Taxonomy Extension Schema
 
 
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase
 
 
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase
 
 
101.LAB
 
XBRL Taxonomy Extension Label Linkbase
 
 
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase
 
 
 
 
.
 
 
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 

 
 
 
MONOPAR THERAPEUTICS INC.
 
 
 
 
 
Dated: November 12, 2020
By:  
/s/  Chandler D. Robinson
 
 
 
Chandler D. Robinson  
 
 
 
Chief Executive Officer and Director
(Principal Executive Officer)
 
 
 
 
 

 
 
 
 
 
Dated: November 12, 2020
By:  
/s/   Kim R. Tsuchimoto
 
 
 
Kim R. Tsuchimoto   
 
 
 
Chief Financial Officer
(Principal Financial Officer)
 
 
 

 
 
 
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