MONOPAR THERAPEUTICS INC. You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing at the end of this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. You should read the "Risk Factors" section of this Annual Report on Form 10-K, Item 1A, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are a clinical stage biopharmaceutical company focused on developing proprietary therapeutics designed to extend life or improve quality of life for cancer patients. We are building a drug development pipeline through the licensing and acquisition of 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. OnDecember 23, 2019 , we completed 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 onDecember 19, 2019 . OnJanuary 13, 2020 , we entered into a Capital on DemandTM Sales Agreement withJonesTrading 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 ofMarch 13, 2020 , we sold 33,903 shares of our common stock at an average gross price of$15.9994 for net proceeds of$526,143 , after fees and commissions of$16,284 . We are devoting a significant portion of the net proceeds from our initial public offering to fund our camsirubicin Phase 2 clinical trial for which we recently signed a collaboration agreement with Grupo Español de Investigación en Sarcomas ("GEIS"), discussed in further detail below.We believe the net proceeds from our initial public offering will be sufficient to enable us to obtain topline results for that camsirubicin Phase 2 clinical trial. We are aiming to enroll the first patient in a Phase 3 clinical development program for our lead product candidate, Validive (clonidine mucobuccal tablet; clonidine MBT) within a few months of raising sufficient funds. To do so, 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
coming months.
Our Product Candidates
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 parenteral
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 3
clinical program.
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 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.
The OPC target population for Validive is the most rapidly growing segment of
head and neck cancer ("HNC") patients, with an estimated 40,000 new cases of OPC
in the alone in 2019. 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.
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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, we are aiming to enroll the first
patient in our Phase 3 randomized trial for our lead product candidate,
Validive, within a few months of raising sufficient funds. The Validive program
will consist of an adaptive design trial with an interim analysis planned for
approximately twelve months after the first patient is dosed, and a confirmatory
second trial planned to commence shortly after completion of this interim
analysis.
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 for 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 1st-line treatment is doxorubicin. The aim is to administer
camsirubicin without restricting cumulative dose, thereby potentially improving
efficacy by keeping patients on treatment who are responding. In June 2019 , we
entered into a clinical collaboration with Grupo Español de Investigación en
Sarcomas ("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 in the second half of 2020 and to include approximately 170 ASTS patients,
an interim analysis, and take around two years to enroll. The primary endpoint
of the trial will be progression-free survival, with secondary endpoints
including overall survival 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.
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. The IND-enabling work is nearly completed.
Our management team has extensive experience in developing therapeutics through regulatory approval and commercialization. In aggregate, companies they co-founded have achieved four drug approvals in theU.S. and the EU, successfully sold an asset developed by management which is currently in Phase 3 clinical trials, and completed the sale of a biopharmaceutical company for over$800 million in cash. Understanding the preclinical, clinical, regulatory and commercial development processes and hurdles are key factors in successful drug development and the expertise demonstrated by our management team across all of these areas increases the probability of success in advancing the product candidates in our product pipeline. Our Product Pipeline [[Image Removed]] 45
Validive (clonidine mucobuccal tablet; clonidine MBT)
Validive is an MBT of clonidine. The MBT formulation was developed to enhance the oral mucosal drug delivery and significantly increase the salivary concentrations of the active ingredient while minimizing systemic absorption. The Validive tablet is tasteless and administered once daily by affixing it to the outside of the patient's upper gum where it dissolves slowly over the period of several hours, resulting in the extended release of clonidine into the oral cavity and oropharynx, the site of SOM following chemoradiation treatment for OPC. Validive therapy is designed to begin on the first day of chemoradiation treatment and continue daily through the last day of treatment. SOM is a painful and debilitating inflammation and ulceration of the mucous membranes lining the oral cavity and oropharynx in response to chemoradiation therapy. Patients receiving CRT to treat their OPC often develop SOM, which remains one of the most common and devastating side effects of treatment in this indication. We believe Validive has the potential to address several critical elements that affect SOM patients, including: Reduction in the incidence of SOM. SOM can increase the risk of acute and chronic comorbidities, including dysphagia, trismus and lung complications, which are often irreversible and lead to increased hospitalization and the need for additional interventions. In a Phase 2 clinical trial, the OPC patient cohort treated with Validive 100 µg demonstrated a reduction in the absolute incidence of SOM compared to placebo of 26.3% (incidence rate of 65.2% in placebo, 45.0% in Validive 50 µg group, 38.9% in Validive 100 µg group). A reduced incidence of SOM in OPC patients may lower the risk of acute and chronic comorbidities and improve quality of life. Delay in the time to onset of SOM. SOM can cause cancer treatment delay and/or discontinuation, which may impact overall survival outcomes. In a Phase 2 clinical trial, the OPC patients had a time to onset of SOM of 37 days in the placebo cohort; 45-day time to onset of SOM in the Validive 50 µg cohort; and median was not reached as fewer than half of the patients developed SOM in the Validive 100 µg group. Prolonging time to onset of SOM may lead to fewer missed chemoradiotherapy treatments, resulting in improved overall survival outcomes. Decrease in the duration of SOM. Longer duration of SOM leads to a higher risk of the need for parenteral nutrition and lower quality of life. SOM patients experience inability to drink and/or eat, and difficulty swallowing often resulting in malnourishment and feeding tube intervention. The Phase 2 clinical trial data demonstrated a 15.5-day reduction (by 37.8%) in the duration of SOM for patients treated with Validive 100 µg (41 day median duration with placebo, 34 days with the Validive 50 µg group, and 25.5 days for the Validive 100 µg group) in patients that developed SOM. Median duration 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. Reduced duration of SOM may result in lower risk of malnourishment and feeding tube intervention, and fewer treatment terminations/delays
Camsirubicin (5-imino-13-deoxydoxorubicin; formerly MNPR-201, GPX-150)
Camsirubicin is a proprietary doxorubicin analog that is selective for
topoisomerase II-alpha. Doxorubicin is used to treat adult and pediatric solid
and blood (hematologic) cancers, including soft tissue sarcomas, breast,
gastric, ovarian and bladder cancers, leukemias and lymphomas. The clinical
efficacy of doxorubicin has historically been limited by the risk of patients
developing irreversible, potentially life-threatening cardiotoxicity, despite
clinical studies demonstrating the anti-cancer benefit of higher doses of
doxorubicin administered for longer periods of time. For example, several
clinical studies completed in the 1990's demonstrated that concurrent
doxorubicin (60 mg/m2, 8 cycles) and paclitaxel gave a 94% overall response rate
in patients with metastatic breast cancer but led to 18% of these patients
developing congestive heart failure. Reduction of doxorubicin to 4-6 cycles of
treatment decreased the incidence of congestive heart failure, but also reduced
response rates to 45-55%.
Camsirubicin has been engineered specifically to retain the anticancer activity
of doxorubicin while minimizing the toxic effects on the heart. Similar to
doxorubicin, the antitumor effects of camsirubicin are mediated through the
stabilization of the topoisomerase II complex after a DNA strand break and DNA
intercalation leading to tumor cell apoptosis (cell death). Inhibiting the
topoisomerase II-alpha isoform is desired for the anti-cancer effect, while
inhibiting the topoisomerase II-beta isoform has been demonstrated to mediate,
at least in part, the cardiotoxicity associated with doxorubicin. Camsirubicin
is more selective than doxorubicin for inhibiting topoisomerase II-alpha versus
topoisomerase II-beta. This selectivity may at least partly explain the minimal
cardiotoxicity that has been observed for camsirubicin in preclinical and
clinical studies to date. We believe these attributes provide a strong rationale
to develop camsirubicin without restriction on cumulative dose, in a broad
spectrum of cancer types.
Development of camsirubicin is being pursued initially in patients with advanced
soft tissue sarcoma (ASTS). Currently, these patients receive doxorubicin in the
1st-line and camsirubicin will be evaluated in a randomized Phase 2 trial head
to head against doxorubicin. Although doxorubicin has been the standard of care
treatment for over 40 years for patients with ASTS, patients are pulled off
treatment to limit irreversible heart failure once the cumulative dose reaches
450 mg/m2, even if they are experiencing clinical benefit. As a result, median
progression free survival for ASTS patients is approximately 6 months, with
median overall survival of 12-15 months. Thus, there is a significant unmet
opportunity to develop a replacement for doxorubicin that retains anti-cancer
activity while reducing or eliminating the risk for irreversible heart damage.
MNPR-101 (formerly huATN-658)
MNPR-101 is a novel, preclinical stage drug candidate. It is a first-in-class
humanized monoclonal antibody to the urokinase plasminogen activator receptor
("uPAR"), a well-credentialed cancer therapeutic target. uPAR is a protein
receptor that sits on the cell surface of, and is overexpressed in, many deadly
cancers, but has little to no expression in healthy tissue; several Phase 1
imaging studies in human advanced cancer patients show that uPAR is detected
selectively in the tumor.
In normal cells, uPAR is transiently expressed as part of a highly regulated
process required for the breakdown of the extracellular matrix during normal
tissue remodeling. In cancer, however, uPAR is constitutively overexpressed by
the tumor cell, and the uPAR extracellular matrix degrading function is hijacked
by the tumor to support tissue invasion, metastasis, and angiogenesis. It is
important to tumor cell survival, and uPAR expression increases in high grade
and metastatic disease.
MNPR-101 has demonstrated significant antitumor activity in numerous preclinical
models of tumor growth, both as a monotherapy and in combination with other
therapeutics and is being advanced toward an IND. Based on the selective
expression of uPAR in numerous tumor types, we anticipate MNPR-101 will be
well-tolerated and amenable to a variety of combination treatment approaches in
the clinic.
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Our Strategy
Leveraging the experience and the demonstrated competencies of our management team, our strategic goal is to acquire, develop and commercialize promising oncology product candidates that address the unmet medical needs of cancer patients. The five key elements of our strategy to achieve this goal are to:
?
Advance the clinical development of camsirubicin, by pursuing clinical
indications where doxorubicin has demonstrated efficacy. ASTS will be the first
indication, which will allow camsirubicin to go head-to-head against
doxorubicin, the current 1st-line treatment. In this indication, camsirubicin
previously demonstrated clinical benefit (stable disease or partial response) in
52.6% of patients evaluable for tumor progression in a single arm Phase 2 study.
Clinical benefit was proportional to dose and consistently observed at higher
cumulative doses of camsirubicin (>1000 mg/m2). Camsirubicin was very well
tolerated in this Phase 2 study and underscored the ability to potentially
administer camsirubicin without restriction for cumulative dose (doxorubicin is
limited to 450 mg/m2 cumulative dose due to heart toxicity).
?
Leverage data generated from the Phase 2 Validive clinical trial to position us
well for a successful Phase 3 clinical program for Validive for SOM in OPC. In a
Phase 2 clinical trial the absolute incidence of SOM in OPC patients was reduced
by 26.3%, the time to onset was delayed, and the duration in patients that
developed SOM was decreased by 15.5 days in the Validive 100 µg cohort versus
placebo. In addition to the data from the Phase 2 clinical trial, we believe the
guidance from our key opinion leaders ("KOLs") as well as from the FDA and EMA,
and our own internal clinical trial design expertise, position us well for a
successful Phase 3 clinical trial program.
?
Obtain FDA approval of Validive and maximize the commercial potential of Validive in theU.S. and the EU, seeking partnerships outside these markets. Following a potentially successful Phase 3 clinical program of Validive and potential FDA approval, we currently intend to commercialize Validive in theU.S. and the EU which may include establishing our own specialty sales force and seeking partnerships outside of these territories for regulatory approval and drug sales and distribution. ? Continue the development of MNPR-101 and expand our drug development pipeline through in-license and acquisition of oncology product candidates. We plan to continue the development of MNPR-101 and the expansion of our drug development pipeline through acquiring or in-licensing additional oncology product candidates, particularly those that leverage existing scientific and clinical data that helps de-risk the next steps in clinical development.
?
Utilize the expertise and prior experience of our team in the areas of asset acquisition, drug development and commercialization to establish ourselves as a leading biopharmaceutical company. Our senior executive team has relevant experience in biopharmaceutical in-licensing and acquisitions as well as developing product candidates through approval and commercialization. In aggregate, our team has co-founded BioMarin Pharmaceutical (Nasdaq: BMRN),Raptor Pharmaceuticals ($800 million sale to Horizon Pharma), andTactic Pharma, LLC ("Tactic Pharma") (sale of lead asset, choline tetrathiomolybdate, which was ultimately acquired by Alexion inJune 2018 for$764 million ).
Risks Associated with our Business
Our business is subject to numerous risks and uncertainties, including those highlighted in "Item 1A - Risk Factors". These risks include, among others,
the
following:
?
We are a clinical stage biopharmaceutical company with a history of losses. We
expect to continue to incur significant losses for the foreseeable future and
may never achieve or maintain profitability, which could result in a decline in
the market value of our common stock.
?
Funds raised in our recent initial public offering of our common stock are not
sufficient to start our Phase 3 clinical development of Validive, and require
that we raise significant additional funds in the coming months and thereafter
in order to complete Validive's Phase 3 clinical trial, support further
development of camsirubicin beyond Phase 2 and generally to support our current
and any future product candidates through completion of trials, approval
processes and, if applicable, commercialization. If we are unable to raise
enough funds in the coming months from the sale of our common stock or other
financing efforts, we may have to consider strategic options such as
out-licensing Validive or other product candidates, entering into a clinical
partnership, or terminating one or more programs. There can be no assurance that
we can find a suitable partner on satisfactory terms.
?
We have a limited operating history, no revenues from operations, and are dependent upon raising capital to continue our drug development programs.
?
We do not have and may never have any approved products on the market. Our
business is highly dependent upon receiving approvals from various
?
Our clinical trials may not yield sufficiently conclusive results for regulatory agencies to approve the use of our products.
?
If we experience delays or difficulties in the enrollment of subjects in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented, which would materially affect our financial condition.
?
We rely on third parties to conduct our manufacturing, non-clinical studies, and
our clinical trials. If these third parties do not successfully carry out their
contractual duties or meet expected deadlines, the initiation or conduct of our
clinical trials may be delayed and we may be unable to obtain regulatory
approval for, or commercialize our, current product candidates or any future
products, and our financial condition will be adversely affected.
?
We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively. Competition and technological change may make our product candidates obsolete or non-competitive.
?
The termination of third-party licenses could adversely affect our rights to important compounds or technologies.
?
If we and our third-party licensors do not obtain and preserve protection for
our respective intellectual property rights, our competitors may be able to take
advantage of our development efforts to develop competing drugs.
?
If we lose key management leadership, and/or scientific personnel, and if we
cannot recruit qualified employees or other significant personnel, we may
experience program delays and increased compensation costs, and our business may
be materially disrupted.
?
The COVID-19 pandemic could have a substantial negative impact on our business,
financial condition, operating results, stock price and ability raise additional
funds.
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Implications of Being an
We qualify as an "emerging growth company" as defined in the Jumpstart our
Business Startups Act of 2012 ("JOBS Act"). An emerging growth company may take
advantage of specified reduced reporting and other burdens that are otherwise
applicable generally to public companies. These provisions include, but are
not
limited to:
?
inclusion of only two years, as compared to three years, of audited financial
statements in addition to any required unaudited interim financial statements
with correspondingly reduced "Management's discussion and analysis of financial
condition and results of operations" disclosures;
?
an exemption from the auditor attestation requirement in the assessment of our
internal control over financial reporting pursuant to the Sarbanes-Oxley Act of
2002 ("Sarbanes-Oxley Act");
?
an exemption from compliance with any new requirements adopted by the
?
reduced disclosure about executive compensation arrangements; and
?
an exemption from the requirement to seek non-binding advisory votes on executive compensation or golden parachute arrangements.
We may take advantage of these provisions until we are no longer an emerging growth company. We will remain an emerging growth company until the earliest of (1) the last day of the year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least$1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds$700 million as of the priorJune 30th , and (2) the date on which we have issued more than$1.0 billion in non-convertible debt during the prior three-year period. We have elected to take advantage of certain of the reduced disclosure obligations in this Annual Report on Form 10-K, and may elect to take advantage of other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different than what you might find from other public reporting companies. The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have irrevocably elected to opt out of this provision and, as a result, we will comply with new or revised accounting standards when they are required to be adopted by public companies that are not emerging growth companies. In addition, we are also a "smaller reporting company" as defined in Rule 12b-2 of the Exchange Act and have elected to take advantage of certain of the scaled disclosure requirements available to smaller reporting companies such as avoiding the extensive narrative disclosure required of other reporting companies, particularly in the description of executive compensation.
Corporate Information
We were formed as aDelaware limited liability company inDecember 2014 , with the nameMonopar Therapeutics, LLC . InDecember 2015 , we converted to aDelaware C corporation. Our principal executive offices are located at1000 Skokie Blvd , Suite 350,Wilmette, IL 60091. Our telephone number is (847) 388-0349. Our corporate website is located at www.monopartx.com. Any information contained in, or that can be accessed through our website, is not incorporated by reference in this Annual Report on Form 10-K.
Trademark notice
We have registered trademarks with the
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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".
Critical Accounting Policies and Use of Estimates
While our significant accounting policies are described in more detail in Note 2 of our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Recently Issued and Adopted Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and consolidated results of operations is disclosed in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
Research and Development Expenses
Research and development ("R&D") costs are expensed as incurred. Major
components of R&D expenses include salaries and benefits of R&D staff,
stock-based compensation expense related to stock options granted to our R&D
team, fees paid to consultants and to the entities that conduct certain
development activities on our behalf, and materials and supplies used in R&D
activities.
We accrue and expense the costs for clinical trial activities performed by third
parties based upon estimates of the percentage of work completed over the life
of the individual study in accordance with agreements established with contract
research organizations and clinical trial sites. We determine 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 enrollment are accrued and expensed
as patients are entered into the trial. During the years ended December 31, 2019
and 2018, we had no clinical trials in progress.The successful development of
our product pipeline is uncertain. We cannot precisely or accurately estimate
the nature, timing or costs of the efforts that will be necessary to complete
the remainder of the development of any of our drug product candidates or the
period, if any, in which material net cash inflows from our drug product
candidates may commence. This is due to the numerous risks and uncertainties
associated with developing drug product candidates, including:
?
receiving less funding than the product programs require;
?
slower than expected progress in developing Validive, camsirubicin, MNPR-101 or other drug product candidates;
?
higher than expected costs to produce, test, package, warehouse, and distribute our current and future drug product candidates;
?
higher than expected costs for preclinical testing of our current or future acquired and/or in-licensed programs;
? increased future clinical trial costs, including requirements for increases in the number of patients, clinical sites, size, duration, testing requirements, or complexity of future clinical trials; ?
future clinical trial results;
?
higher than expected costs associated with attempting to obtain regulatory approvals, including without limitation additional costs caused by delays and additional clinical testing mandated by regulatory authorities;
?
higher than expected personnel or other costs, such as adding personnel and engaging consultants;
?
higher than expected costs in pursuing the acquisition or licensing of additional assets;
?
higher than expected costs to protect our intellectual property portfolio or otherwise pursue our intellectual property strategy;
?
lower benefits of our drug product candidates compared to other competitive therapies;
? our ability to market, commercialize and achieve market acceptance sufficient to provide financial returns acceptable for future requirements and financial returns for our investors for any of our drug product candidates that we are developing or may develop in the future; and ?
the effects of the COVID-19 pandemic.
There are other risks described in "Item 1-A - Risk Factors". A change in the
outcome of any of these and other additional variables with respect to the
development of a drug product candidate could mean a significant change in the
costs and timing associated with the development of that drug product candidate.
We expect that R&D expenses will increase in future periods as a result of
current product candidates entering more expensive stages of development and
additional current and future product candidate programs under development which
will require increased personnel, increased consulting, future preclinical
studies and clinical trial costs, including clinical drug product manufacturing
and related costs.
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General and Administrative Expenses
General and administrative expenses consist primarily of compensation and expenses for our executive personnel who perform corporate and administrative functions, stock-based compensation expense related to stock options granted to our executive team, legal and audit expenses, general and administrative consulting, board fees and expenses, patent legal and application fees, and facilities and related expenses. Future general and administrative expenses may also include: compensation and expenses related to the employment of personnel or the engagement of consultants in the areas of finance, human resources, information technology, business development, legal, compliance, investor relations and others, depreciation and amortization of general and administrative fixed assets, investor relations and annual meeting expense, and stock-based compensation granted to personnel who perform corporate and administrative functions. We expect that our general and administrative expenses will increase in future periods as a result of increased personnel, expanded infrastructure, increased consulting, legal, accounting/auditing, investor relations and other expenses associated with being a public reporting company, costs incurred to seek and establish collaborations with respect to any of our drug product candidates, and costs required to find and acquire or license additional product candidates to expand our product pipeline.
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. 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. Stock-based compensation costs for stock options granted to our employees and non-employee directors are based on the fair value of the underlying option calculated using the Black-Scholes option-pricing model on the date of grant for stock options 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 years endedDecember 31, 2019 and 2018 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 ofU.S. Treasury securities with maturities consistent with the estimated expected term of the awards. Prior toJanuary 1, 2019 , the measurement of consultant stock-based compensation was subject to periodic adjustments as the underlying equity instruments vest. SinceJanuary 1, 2019 , consultant stock-based compensation is valued on the grant date and is recognized as an expense over the period during which services are rendered. Stock Incentive Plan InApril 2016 , our Board and the preferred stockholders representing a majority in interest of our outstanding stock approved theAmended and Restated Monopar Therapeutics Inc. 2016 Stock Incentive Plan, as subsequently amended (the "Plan"), allowing us to grant up to an aggregate 700,000 shares of stock awards, stock options, stock appreciation rights and other stock-based awards to our employees, non-employee directors and consultants. InOctober 2017 , our Board voted to increase the stock option pool to 1,600,000 shares, which subsequently was approved by our stockholders. ThroughFebruary 2017 , our Board granted to Board Members, our then acting chief financial officer, and our acting chief medical officer stock options to purchase up to an aggregate 555,520 shares of our common stock at an exercise price of$0.001 par value based upon third party valuations of our common stock. InSeptember 2017 , we granted stock options to purchase up to 21,024 shares of our common stock to each of the three new Board Members and inNovember 2017 , we granted options to purchase up to 40,000 shares of our common stock to an employee. These Board and employee stock options have an exercise price of$6 per share based on the price per share at which our common stock was sold in our most recent private offering prior to such grant. InJanuary 2018 , we granted stock options to purchase up to 32,004 shares of our common stock to our acting chief medical officer at an exercise price of$6 per share based on the price per share at which our common stock was sold in our most recent private offering prior to such grant. InMay 2018 andAugust 2018 , we granted stock options to purchase up to 5,000 shares of our common stock each to two employees at an exercise price of$6 per share based on the price per share at which common stock was sold in the Company's most recent private offering prior to such grant. InAugust 2018 , we granted stock options to all four of our non-employee Board members, our chief executive officer, our chief scientific officer, and our chief financial officer to purchase up to an aggregate 425,300 shares of our common stock at an exercise price of$6 per share based on the price per share at which our common stock was sold in our most recent private offering prior to such grant. Vesting of such stock options commenced onOctober 1, 2018 . InDecember 2018 , we granted stock options to purchase up to 20,000 shares of our common stock to our acting chief medical officer, at an exercise price of$6 per share based on the price per share at which our common stock was sold in our most recent private offering prior to such grant. Vesting of such stock options commenced onJanuary 1, 2019 . OnJanuary 4 ,January 31 andFebruary 11, 2020 , our Plan Administrator Committee (with regards to non-officer employees) and our Compensation Committee, as ratified by the full Board (in the case of officers and non-employee directors) granted an aggregate of 205,110 stock options with exercise prices ranging from$12.93 to$17.75 for an aggregate grant date fair value of approximately$2.1 million which will be expensed over the vesting period. All stock options have a 10-year term and vest from 1 to 4 years. We also granted an aggregate 45,722 restricted stock units onJanuary 31, 2020 andFebruary 11, 2020 , with an aggregate value of approximately$0.7 million which vest from 1 to 4 years. Under the Plan, the per share exercise price for the shares to be issued upon exercise of an option is determined by a committee of our Board, except that the per share exercise price cannot be less than 100% of the fair market value per share on the grant date. In connection with our stock options issued inApril 2016 ,December 2016 , andFebruary 2017 , fair market value was established by our Plan Administrator using recently obtained third party valuation reports. In connection with our stock options issued inSeptember 2017 ,November 2017 ,January 2018 ,May 2018 ,August 2018 andDecember 2018 , fair market value was established by our Plan Administrator Committee based on the price per share at which common stock was sold in our most recent private offering prior to such grants. Options generally expire after ten years. During the years endedDecember 31, 2019 and 2018, we recognized$653,997 and$232,625 of employee and non-employee director stock-based compensation expense as general and administrative expenses, respectively, and$274,345 and$171,238 as research and development expenses, respectively. The stock-based compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the consolidated statements of operations and comprehensive loss for stock-based compensation arrangements. 50 We recognize 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 were recorded as research and development expense for the years endedDecember 31, 2019 and 2018 was$82,829 and$125,469 , respectively. The fair value of options granted from inception toDecember 31, 2019 was based on the Black-Scholes option-pricing model assuming the following factors: 4.7 to 6.2 years expected term, 55% to 85% volatility, 1.2% to 2.9% risk free interest rate and zero dividends. The expected term for options granted to date is estimated using the simplified method. There were no stock option grants during the year endedDecember 31, 2019 . For the year endedDecember 31, 2018 , the weighted-average grant date fair value was$2.05 per share. For the years endedDecember 31, 2019 and 2018 the fair value of shares vested was$0.8 million and$0.4 million , respectively. AtDecember 31, 2019 , the aggregate intrinsic value was approximately$14.9 million , of which approximately$10.7 million was vested and approximately$4.2 million is expected to vest (representing options to purchase up to 350,200 shares of our common stock), and the weighted-average exercise price in aggregate was$2.94 which includes$2.13 for fully vested stock options and$4.62 for stock options expected to vest. AtDecember 31, 2019 , unamortized unvested balance of stock based compensation was approximately$1.3 million , to be amortized over 2.4 years. Stock option activity under the Plan for the year endedDecember 31, 2019 was as follows: Options Outstanding Options Weighted-Average Available Number of Options Exercise Price Balances at January 1, 2018 941,408 658,592$ 0.94 Granted(1) (487,304) 487,304 6.00 Forfeited(2) 40,000 (40,000) 6.00 Balances at December 31, 2018 494,104 1,105,896 2.99 Exercised - (18,433) 5.97 Balances at December 31, 2019 494,104 1,087,463 2.94 (1)
32,004 options vest as follows: options to purchase up to 12,000 shares of common stock vest on the grant date, options to purchase up to 1,667 shares of common stock vest on the 1st of each month thereafter. 5,000 options vest 6/48ths on the grant date and 1/48th per month thereafter. 5,000 options vest 6/48ths on the six- month anniversary of grant date and 1/48th per month thereafter. 320,900 options vest 6/51 at the six-month anniversary of vesting commencement date and 1/51 per month thereafter, with vesting commencing onOctober 1, 2018 . 104,400 options vest quarterly over 5 quarters, with the first quarter commencedOctober 1, 2018 . 20,000 options vest as follows: options to purchase up to 1,667 shares of common stock vest onJanuary 31, 2019 and the last day of each month thereafter.
(2)
Forfeited options resulted from an employee termination.
A summary of options outstanding as of
Number of
Number of Shares
Shares Subject to
Subject to Weighted-Average Options Fully Weighted-Average
Options Contractual Term Vested and Remaining
Exercise Prices Outstanding in Years Exercisable Contractual Term
$0.001 555,420 6.7 years 475,060 6.6 years
$6.00 532,043 8.6 years 283,521 8.5 years
1,087,463 758,581
51
Results of Operations
Comparison of the Years Ended
The following table summarizes the results of our operations for the years endedDecember 31, 2019 and 2018: Year Ended December 31, (in thousands) 2019 2018 Variance Revenue $ - $ - $ - Research and development expenses 1,969 1,774 195 General and administrative expenses 2,355 1,557 798 Total operating expenses 4,324 3,331 993 Operating loss (4,324) (3,331) (993) Interest and other income 99 103 (4) Net loss$ (4,225) $ (3,228) $ (997) R&D Expenses R&D expenses for the year ended December 31, 2019 were
approximately
$1,969,000 , compared to approximately$1,774,000 for the year endedDecember 31, 2018 , an increase of approximately$195,000 . This increase was primarily attributed to: Year endedDecember 31, 2019 versus Year endedDecember 31, 2018 R&D Expenses (in thousands) Increase in CRO and related fees in 2019 in preparation for Validive Phase 3 clinical trial$ 206
Increase in collaboration fees, database management fees and clinical material development in Q4 2019 in preparation for
the camsirubicin Phase 2 clinical trial sponsored by GEIS 126
Increase in employee stock-based compensation (non-cash) due
to
103
Increase in R&D employee bonuses in 2019 60
Decrease in stock-based compensation (non-cash) to the Acting Chief Medical Officer
(43)
Decrease in R&D base salaries and benefits primarily due to
the departure of our VP of Clinical Development in
(124)
Decrease in consulting fees for regulatory consultants utilized in 2018 in preparation for our meeting with the FDA
regarding Validive planning not repeated in 2019 (140) Other, net 7 Net increase in R&D expenses
$ 195 52
General and Administrative Expenses
General and administrative ("G&A") expenses for the year ended
Year ended December 31,
2019 versus year ended
December 31, 2018
G&A Expenses (in thousands)
Increase in Board stock-based compensation (non-cash) due
to August 2018 stock option grants to Board Members accrued bonuses
184
Increase in employee stock-based compensation (non-cash)
due to
158
Increase in audit fees due to increased scope and accounting complexity
113
Increase in Board fees for 2019 committee services
66
Other 14
Net increase in G&A expenses $ 798
Interest Income
Interest income for the year ended December 31, 2019 decreased by approximately
$4,000 versus the year ended December 31, 2018 due to the decrease in bank
balances resulting from the use of cash in operating activities, partly offset
by higher bank interest rates on our money market account. Note that the funds
received from the initial public offering of our common stock were received on
December 23, 2019 , therefore it did not have a significant impact on interest
income for the year ended December 31, 2019 .
Liquidity and Capital Resources
Sources of Liquidity
We have incurred losses and cumulative negative cash flows from operations since our inception inDecember 2014 resulting in an accumulated deficit of approximately$25.9 million as ofDecember 31, 2019 . 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 in 2020 to fund our 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 Gem Transaction (described below), net proceeds from the initial public offering of our common stock and net proceeds from sales under our Capital on DemandTMSales Agreement. We anticipate that the currently available funds as ofMarch 13, 2020 , will fund our minimal required operations throughMarch 2021 .
We invest our cash equivalents in a money market account.
Contribution to Capital
InAugust 2017 , our largest stockholder at that time, Tactic Pharma, surrendered 2,888,727 shares of common stock back to us as a contribution to the capital of the Company. This resulted in reducing Tactic Pharma's ownership in us at that time from 80% to 70%. As ofMarch 13, 2020 , Tactic Pharma owns 42% of us.
The Gem Transaction
OnAugust 25, 2017 , Tactic Pharma and Gem formed a limited liability company,TacticGem, LLC ("TacticGem") with Tactic Pharma contributing 4,111,273 shares of our common stock and Gem contributing assets and$5 million in cash before transaction costs. TacticGem then contributed the Gem assets, including the intellectual property rights to camsirubicin, (the "Gem Assets") and cash to us in exchange for 3,055,394 shares of our common stock (the "Gem Transaction"). This has resulted in TacticGem owning 68% of our outstanding common stock as ofMarch 13, 2020 . The contribution by TacticGem, made in conjunction with contributions from outside investors in a private offering, was intended to qualify for tax-free treatment.
It is anticipated that future cash burn will increase by approximately
53
Cash Flows
The following table provides information regarding our cash flows for the
years ended
Year ended December
Year ended December 31, 31, 2019 versus
Year ended December
(in thousands) 2019 2018 31, 2018
Net cash used in operating
activities $ (3,018) $ (2,681) $ ( 337)
Net cash provided by (used in)
financing activities 9,347 (206) 9,553
Effect of exchange rates on
cash and cash equivalents (8) (2) (6)
Net increase (decrease) in cash
and cash equivalents $ 6,321 $ (2,889) $ 9,210
During the years ended December 31, 2019 and 2018, we had net cashinflows of approximately$6,321,000 and net cash outflows of approximately$(2,889,000) , respectively, a change of approximately$9,210,000 due primarily to cash raised in our initial public offering inDecember 2019 offset by higher net cash used in operating activities in 2019.
Cash Flow Used in Operating Activities
The increase to cash used in operating activities during the year ended
December 31, 2019 compared to the year ended December 31, 2018 of approximately
$337,000 was primarily due the increase in clinical development expenses related
to planning our Phase 3 clinical trial for Validive, collaboration fees to GEIS
related to planning the Phase 2 clinical trial for camsirubicin, board and audit
fees and employee compensation. Cash used in operating activities of
approximately $(3,018,000) for the year ended December 31, 2019 was primarily a
result of our approximately $(4,225,000) net loss offset by approximately
$1,011,000 of non-cash stock-based compensation and changes in operating assets
and liabilities of approximately $196,000 . Cash used in operating activities of
approximately $(2,681,000) for the year ended December 31, 2018 was primarily a
result of our approximately $(3,228,000) net loss offset by approximately
$529,000 of non-cash stock-based compensation plus changes in operating assets
and liabilities of approximately $18,000 .
Cash Flow Used in Investing Activities
There was no cash provided by or used in investing activities for
the years ended
Cash Flow Provided by (Used In) Financing Activities
The increase of cash provided by financing activities during the
year endedDecember 31, 2019 compared to the year endedDecember 31, 2018 of approximately$9,553,000 was due to net proceeds from the initial public offering of our common stock and the exercise of stock options offset by deferred offering costs during the year endedDecember 31, 2019 offset by the deferred offering costs incurred during the year endedDecember 31, 2018 .
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. We
expect to incur additional costs associated with operating as a listed stock
trading public company. In addition, 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.
54
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 of camsirubicin;
?
continue the preclinical activities and potentially enter clinical development of MNPR-101;
?
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. We anticipate that the funds available as ofMarch 13, 2020 , will fund our minimal operations throughMarch 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;
?
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.
55
See Item 1A - "Risk Factors". Expenditures are expected to increase in the second quarter of 2020 onward for: CRO and clinical site fees for the Validive Phase 3 clinical trial (if we raise sufficient financing to start the Phase 3 trial); process development and manufacturing costs of camsirubicin in connection with the GEIS Phase 2 clinical trial; collaboration milestone fees; employee compensation and consulting fees as a result of hiring additional employees and consultants to support the planning and initiation of our Validive Phase 3 clinical development program; and in adjusting employee compensation to align with comparable public companies. We are aiming to enroll the first patient in a Phase 3 clinical development program for Validive within a few months of raising sufficient funds. To do so, 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 coming 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 second 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 much higher contract manufacturing costs, contract research organization fees, other clinical development costs or insurance costs that are not currently projected. The anticipated operating cost increases in the second quarter of 2020 onward are expected to be primarily driven by the funding of our planned Validive Phase 3 clinical development program and in support of the GEIS Phase 2 clinical trial of camsirubicin. Beyond our need to raise additional funding in the coming months to start the Validive Phase 3 clinical trial, we will also need significant additional funding thereafter in order to complete Validive's Phase 3 clinical trial, support further development of camsirubicin beyond Phase 2 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. See Item 1A - "Risk Factors - Existing and new investors will experience dilution as a result of our option plan and potential future stock sales." 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.
Contractual Obligations and Commitments
InJune 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. InSeptember 2017 , we exercised the option to license Validive from Onxeo for$1 million , but as ofMarch 13, 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 theU.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")
InJune 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 in the second half of 2020 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. As ofMarch 13, 2020 , we have paid a nominal amount of financial support and incurred a nominal amount of drug manufacturing costs. 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. 56XOMA Ltd. The intellectual property rights contributed byTactic Pharma, LLC to us included the non-exclusive license agreement withXOMA Ltd. for the humanization technology used in the development of MNPR-101. Pursuant to such license agreement, we are obligated to payXOMA 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 ofMarch 13, 2020 , we had not reached any milestones and had not been required to payXOMA 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, contract research, manufacturing and supplier agreements in the future, which may require upfront payments and/or long-term commitments of cash.
Office Lease
EffectiveJanuary 1, 2018 , we leased office space in theVillage of Wilmette, Illinois for$2,519.50 per month for 24 months. This office space houses our current headquarters. OnDecember 31, 2019 , the office lease expired and we continued to lease on a month-to-month basis. InFebruary 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 and Amended and Restated Bylaws we have indemnification obligations to our officers and Board Members for certain events or occurrences, subject to certain limits, while they are serving at our request in such capacity. There have been no claims to date. See Item 1A - "Risk Factors - We have limited the liability of and indemnified our directors and officers."
Off-Balance Sheet Arrangements
To date, we have not had any off-balance sheet arrangements, as defined under
the
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