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PBLA Panbela Therapeutics

Filed: 11 Aug 21, 4:16pm
 

 

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 June 30, 2021

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________ to ________.

 

Commission File No.: 001-39468

 

Panbela Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

87-0543922

 
 

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer Identification No.)

 
     
 

712 Vista Blvd #305
Waconia, Minnesota

 

55387

 
 

(Address of principal executive offices)

 

(Zip Code)

 

 

(952) 479-1196

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, $0.001 par value

 

PBLA

 

The Nasdaq Stock Market LLC

 

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 Exchange Act). Yes ☐  No ☑

 

On August 9, 2021, there were 13,428,757 shares of the registrant’s common stock, par value $0.001, outstanding.

 

 

 

 

 

Panbela Therapeutics, Inc.
Index to Quarterly Report on Form 10-Q

 

 

  Page
    

PART I  FINANCIAL INFORMATION

  
   

Item 1.

Financial Statements (Unaudited).

3

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

13

 

Item 3.

Quantitative and Qualitative Disclosure About Market Risk.

19

 

Item 4.

Controls and Procedures.

19

 
   

PART II  OTHER INFORMATION

  
   

Item 1.

Legal Proceedings.

20

 

Item 1A.

Risk Factors.

20

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

20

 

Item 3.

Defaults Upon Senior Securities.

20

 

Item 4.

Mine Safety Disclosures.

20

 

Item 5.

Other Information.

21

 

Item 6.

Exhibits.

21

 

 

2

 

PART I FINANCIAL INFORMATION

 

Item 1.

Financial Statements.

 

 

Panbela Therapeutics, Inc.
Condensed Consolidated Balance Sheets

(In thousands, except share amounts)

 

  

June 30, 2021

  

December 31, 2020

 
  

(Unaudited)

     
ASSETS        

Current assets:

        

Cash and cash equivalents

 $6,405  $9,022 

Prepaid expenses and other current assets

  210   412 

Income tax receivable

  625   323 

Total current assets

  7,240   9,757 

Other noncurrent assets

  55   56 

Total assets

 $7,295  $9,813 
         

LIABILITIES AND STOCKHOLDERS' EQUITY

        

Current liabilities:

        

Accounts payable

 $781  $554 

Accrued expenses

  612   811 

Total current liabilities

  1,393   1,365 
         

Stockholders' equity:

        

Preferred stock, $0.001 par value; 10,000,000 authorized; no shares issued or outstanding as of June 30, 2021 and December 31, 2020

  0   0 

Common stock, $0.001 par value; 100,000,000 authorized; 10,095,423 and 9,664,427 shares issued and outstanding as of June 30, 2021 and December 31, 2020 respectively

  10   10 

Additional paid-in capital

  56,506   54,848 

Accumulated deficit

  (50,469)  (46,026)

Accumulated comprehensive loss

  (145)  (384)

Total stockholders' equity

  5,902   8,448 

Total liabilities and stockholders' equity

 $7,295  $9,813 

 

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

 

3

 

 

 

Panbela Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share amounts)

(Unaudited)

 

  Three Months Ended June 30,  Six Months Ended June 30, 
  

2021

  

2020

  

2021

  

2020

 

Operating expenses:

                

General and administrative

 $1,241  $670  $2,391  $1,125 

Research and development

  985   434   2,084   1,032 

Operating loss

  (2,226)  (1,104)  (4,475)  (2,157)
                 

Other (expense) income:

                

Interest expense

  (4)  (4)  (7)  (9)

Other (expense) income

  (148)  649   (269)  (184)

Total other (expense) income

  (152)  645   (276)  (193)
                 

Loss before income tax benefit

  (2,378)  (459)  (4,751)  (2,350)
                 

Income tax benefit

  192   40   308   133 
                 

Net loss

  (2,186)  (419)  (4,443)  (2,217)

Foreign currency translation adjustment

  140   (715)  239   82 

Comprehensive loss

 $(2,046) $(1,134) $(4,204) $(2,135)
                 

Basic and diluted net loss per share

 $(0.22) $(0.06) $(0.44) $(0.33)

Weighted average shares outstanding - basic and diluted

  10,092,995   6,732,470   9,989,705   6,681,889 

 

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

 

4

 

 

 

Panbela Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders Equity

(In thousands)

(Unaudited)

 

  For the Six Months Ended June 30, 2021 
  

Common Stock

  

Additional Paid-In

  

Accumulated

  

Accumulated Other Comprehensive

  

Total Stockholders'

 
  

Shares

  

Amount

  

Capital

  

Deficit

  

Gain (Loss)

  

Equity

 

Balances as of January 1, 2021

  9,664  $10  $54,848  $(46,026) $(384) $8,448 

Warrants exercised for cash

  229   0   1,042   0   0   1,042 

Warrants exercised net cashless

  189   0   0   0   0   0 

Vested restricted stock units

  7   0   0   0   0   0 

Stock-based compensation

  -   0   252   0   0   252 

Net loss

  -   0   0   (2,257)  0   (2,257)

Foreign currency translation adjustment

  -   0   0   0   99   99 

Balances at March 31, 2021

  10,089  $10  $56,142  $(48,283) $(285) $7,584 
                         

Warrants exercised net cashless

  2   0   0   0   0   0 

Vested restricted stock units

  4   0   0   0   0   0 

Stock-based compensation

  -   0   364   0   0   364 

Net loss

  -   0   0   (2,186)  0   (2,186)

Foreign currency translation adjustment

  -   0   0   0   140   140 

Balances at June 30, 2021

  10,095  $10  $56,506  $(50,469) $(145) $5,902 

 

  For the Six Months Ended June 30, 2020 
  

Common Stock

  

Additional Paid-In

  

Accumulated

  

Accumulated Other Comprehensive

  

Total Stockholders'

 
  

Shares

  

Amount

  

Capital

  

Deficit

  

Gain (Loss)

  

Equity

 

Balances as of January 1, 2020

  6,631  $7  $42,331  $(41,258) $305  $1,385 

Warrants issued for future services

  -   0   228   0   0   228 

Stock-based compensation

  -   0   112   0   0   112 

Net loss

  -   0   0   (1,798)  0   (1,798)

Foreign currency translation adjustment

  -   0   0   0   797   797 

Balances at March 31, 2020

  6,631  $7  $42,671  $(43,056) $1,102  $724 
                         

Sale of Common stock and warrants

  437   0   1,746   0   0   1,746 

Stock-based compensation

  -   0   264   0   0   264 

Net loss

  -   0   0   (419)  0   (419)

Foreign currency translation adjustment

  -   0   0   0   (715)  (715)

Balances at June 30, 2020

  7,068  $7  $44,681  $(43,475) $387  $1,600 

 

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

 

5

 

 

 

Panbela Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows
(In thousands)

(Unaudited)

 

  Six Months Ended June 30 
  

2021

  

2020

 

Cash flows from operating activities:

        

Net loss

 $(4,443) $(2,217)

Adjustments to reconcile net loss to net cash used in operating activities:

        

Stock-based compensation

  616   376 

Changes in operating assets and liabilities:

        

Income tax receivable

  (251)  (151)

Prepaid expenses and other current assets

  130   7 

Accounts payable

  484   (14)

Accrued liabilities

  (194)  23 

Net cash used in operating activities

  (3,658)  (1,976)
         

Cash flows from financing activities:

        

Proceeds from sale of common stock and warrants net of offering costs of $2

  0   1,746 

Proceeds from exercise of stock purchase warrants

  1,042   0 

Proceeds from payroll protection loan

  0   103 

Repayments of term debt

  0   (53)

Net cash provided by financing activities

  1,042   1,796 
         

Effect of exchange rate changes on cash and cash equivalents

  (1)  (4)
         

Net change in cash and cash equivalents

  (2,617)  (184)

Cash and cash equivalents at beginning of period

  9,022   2,449 

Cash and cash equivalents at end of period

 $6,405  $2,265 
         

Supplemental disclosure of cash flow information:

        

Cash paid during period for interest

 $7  $4 
         

Supplemental disclosure of non-cash transactions:

        

Warrants issued for future services

 $0  $228 

 

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

 

6

 

 

Panbela Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements

 

 

 

1.

Business

 

Panbela Therapeutics, Inc. and its wholly-owned subsidiary Panbela Therapeutics Pty Ltd (collectively “we,” “us,” “our,” and the “Company”) exist for the primary purpose of advancing the commercial development of a proprietary polyamine analogue for the treatment of patients with pancreatic cancer. We have exclusively licensed the worldwide rights to this compound, which has been designated as SBP-101, from the University of Florida Research Foundation, Inc. (“UFRF”).

 

 

2.

Risks and Uncertainties

 

The Company operates in a highly regulated and competitive environment. The development, manufacturing and marketing of pharmaceutical products require approval from, and are subject to ongoing oversight by, the Food and Drug Administration (“FDA”) in the United States, the Therapeutic Goods Administration in Australia, the European Medicines Agency in the European Union, and comparable agencies in other countries. Obtaining approval for a new pharmaceutical product is never certain, may take many years, and is normally expected to involve substantial expenditures.

 

We have incurred losses of $50.5 million since our inception in 2011. For the six months ended June 30, 2021, we incurred a net loss of $4.4 million. We also incurred negative cash flows from operating activities of approximately $3.7 million for this period. As we continue to pursue development activities and seek commercialization of our initial product candidate, SBP-101, we expect to incur substantial losses, which are likely to generate negative net cash flows from operating activities. As of June 30, 2021, we had cash and cash equivalents of $6.4 million, working capital of $5.8 million, (current assets less current liabilities) and stockholders’ equity of $5.9 million. On July 2, 2021, the company, in an underwritten transaction, sold 3,333,334 shares of common stock, the net proceeds of the transaction were approximately $9.0 million. The Company’s principal sources of cash have historically included the issuance of convertible debt and equity securities.

 

The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts of liabilities that might result from the outcome of these uncertainties. Our current independent registered public accounting firm included a paragraph emphasizing this going concern uncertainty in their audit report regarding our 2020 financial statements dated March 25, 2021. Our ability to continue as a going concern, realize the carrying value of our assets and discharge our liabilities in the ordinary course of business is dependent upon a number of factors, including our ability to obtain additional financing, the success of our development efforts, our ability to obtain marketing approval for our SBP-101 product candidate in the United States, Australia, the European Union or other markets and ultimately our ability to market and sell our SBP-101 product candidate. These factors, among others, raise substantial doubt about our ability to continue operations as a going concern. See Note 4 titled “Liquidity and Business Plan.”

 

In March 2020, the World Health Organization declared the spread of a novel strain of coronavirus (“COVID-19”) a global pandemic. Actions were taken by federal, state and local governmental authorities to combat the spread of COVID-19, including through issuances of “stay-at-home” directives and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations. These measures, while intended to protect human life, led to significantly reduced economic activity. Vaccines became available at the end of 2020 and distribution in the U.S. first accelerated during the first quarter of 2021 and then leveled off in the second quarter. Most state and local authorities have reopened businesses and infections rates dropped through much of the second quarter. More recently infections in the United States have started to increase again as variants such as the delta variant have become more prevalent. The rapid development and uncertainty of the situation continues to preclude any prediction as to the ultimate impact COVID-19 will have on the Company's business, financial condition, results of operation and cash flows, which will depend largely on future developments directly or indirectly relating to the duration and scope of the COVID-19 outbreak in the United States, Australia and the rest of the world. During the spring of 2020 enrollment in our clinical trial was temporarily paused to allow our clinical sites time to prepare for COVID -19. We continued to treat patients already enrolled throughout the temporary pause in enrollment, and the study enrollment was completed in December of 2020. During the spring of 2021, the Company also experienced a delay in the manufacturing of the active product ingredient, which is manufactured in India. There was no disruption in supply for our clinical or preclinical testing. The active ingredient for our next clinical trial has now been received in the United States. The Company’s administrative operations have been decentralized since inception so the Company experienced no administrative disruptions or additional costs due to the pandemic or related restrictions.

 

7

 
 

3.

Basis of Presentation

 

We have prepared the accompanying interim condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These interim condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals, which, in the opinion of management, are necessary to present fairly our consolidated financial position, consolidated results of operations and consolidated cash flows for the periods and as of the dates presented. Our fiscal year ends on December 31. The condensed consolidated balance sheet as of December 31, 2020, was derived from audited consolidated financial statements but does not include all disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements and the notes thereto included in our most recent filed Annual Report on Form 10-K and our subsequent filings with the SEC. The nature of our business is such that the results of any interim period may not be indicative of the results to be expected for the entire year.

 

 

4.

Liquidity and Business Plan

 

On July 2, subsequent to the end of the period, the Company completed an underwritten public offering of 3,333,334 shares of common stock at $3.00 per share which resulted in net proceeds of approximately $9.0 million.

 

Between February 5 and March 23, 2021, the company issued 228,938 shares of common stock as the result of the exercise of outstanding warrants. Total cash received was approximately $1.0 million.

 

On September 1, 2020, the Company completed an underwritten public offering of 2,545,454 shares of common stock and warrants to purchase the same number of shares of common stock which resulted in net proceeds of approximately $9.3 million. In the quarter ended June 30, 2020, the Company sold common stock and warrants to purchase common stock in private placements to certain accredited investors resulting in net proceeds of approximately $1.7 million.

 

We will need to raise additional capital to fully fund the randomized clinical trial set to begin enrollment at the end of 2021.Our future success is dependent upon our ability to obtain additional financing, the success of our development efforts, our ability to obtain marketing approval for our SBP-101 product candidate in the United States or other markets and ultimately our ability to market and sell our SBP-101 product candidate. If we are unable to obtain additional financing when needed, if our clinical trials are not successful or if we are unable to obtain marketing approval, we would not be able to continue as a going concern and would be forced to cease operations and liquidate our company.

 

There can be no assurances that we will be able to obtain additional financing on commercially reasonable terms, or at all. The sale of additional convertible debt or equity securities would likely result in dilution to our current stockholders.

 

 

5.

Summary of Significant Accounting Policies

 

Principles of consolidation

 

The accompanying condensed consolidated financial statements include the assets, liabilities, and expenses of the Company. All significant intercompany transactions and balances have been eliminated in consolidation.

 

8

 

Use of estimates

 

The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amount of expenses during the reporting period. Actual results could differ from those estimates, particularly given the significant social and economic disruptions and uncertainties with the ongoing pandemic and control responses.

 

Research and development costs

 

Research and development costs include expenses incurred in the conduct of our second Phase 1 human clinical trial, for third-party service providers performing various testing and accumulating data related to our preclinical studies; sponsored research agreements; developing and scaling the manufacturing process necessary to produce sufficient amounts of the SBP-101 compound for use in our pre-clinical studies and human clinical trials; consulting resources with specialized expertise related to execution of our development plan for our SBP-101 product candidate; personnel costs, including salaries, benefits and share-based compensation; and costs to license and maintain our licensed intellectual property.

 

We charge research and development costs, including clinical trial costs, to expense when incurred. Our human clinical trials are, and will be, performed at clinical trial sites and are administered jointly by us with assistance from contract research organizations (“CROs”). Costs of setting up clinical trial sites are accrued upon execution of the study agreement. Expenses related to the performance of clinical trials generally are accrued based on contracted amounts and the achievement of agreed upon milestones, such as patient enrollment, patient follow-up, etc. We monitor levels of performance under each significant contract, including the extent of patient enrollment and other activities through communications with the clinical trial sites and CROs, and adjust the estimates, if required, on a quarterly basis so that clinical expenses reflect the actual effort expended at each clinical trial site and by each CRO.

 

All material CRO contracts are terminable by us upon written notice and we are generally only liable for actual effort expended by the CROs and certain non-cancelable expenses incurred at any point of termination.

 

We expense costs associated with obtaining licenses for patented technologies when it is determined there is no alternative future use of the intellectual property subject to the license.

 

Stock-based compensation

 

In accounting for stock-based incentive awards, we measure and recognize the cost of employee and non-employee services received in exchange for awards of equity instruments based on the fair value of those awards on the grant date. Calculating stock-based compensation expense requires the input of highly subjective assumptions, which represent our best estimates and involve inherent uncertainties and the application of management’s judgment. Compensation cost is recognized ratably using the straight-line attribution method over the vesting period, which is considered to be the requisite service period. Compensation expense for performance-based stock option awards is recognized when “performance” has occurred or is probable of occurring.

 

The fair value of stock-based awards is estimated at the date of grant using the Black-Scholes option pricing model. The determination of the fair value of stock-based awards is affected by our stock price, as well as assumptions regarding a number of complex and subjective variables. Risk free interest rates are based upon U.S. Treasury rates appropriate for the expected term of each award. Expected volatility rates are based primarily on the volatility rates of a set of guideline companies, which consist of public and recently public biotechnology companies. The assumed dividend yield is zero, as we do not expect to declare any dividends in the foreseeable future. The expected term of options granted is determined using the “simplified” method. Under this approach, the expected term is presumed to be the mid-point between the average vesting date and the end of the contractual term.

 

Foreign currency translation adjustments

 

The functional currency of Panbela Therapeutics Pty Ltd is the Australian Dollar. Accordingly, assets and liabilities, and equity transactions of Panbela Therapeutics Australia Pty Ltd are translated into U.S. dollars at period-end exchange rates. Revenues and expenses are translated at the average exchange rate in effect for the period. The resulting translation gains and losses are recorded as a component of accumulated comprehensive loss presented within the stockholders’ equity. During the three and six-month periods ended June 30, 2021, and 2020, any reclassification adjustments from accumulated other comprehensive loss to operations were inconsequential.

 

9

 

Comprehensive loss

 

Comprehensive loss consists of our net loss and the effects of foreign currency translation.

 

Net loss per share

 

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is based on the weighted average of common shares outstanding during the period plus dilutive potential common shares calculated using the treasury stock method. Such potentially dilutive shares are excluded when the effect would be anti-dilutive or reduce a net loss per share. The Company’s potential dilutive shares, which include outstanding common stock options, and warrants, have not been included in the computation of diluted net loss per share for all periods as the result would be anti-dilutive.

 

The following table sets forth the potential shares of common stock that were not included in the calculation of diluted net loss per share as their effects would have been anti-dilutive as of the dates indicated:

 

  June 30, 
  

2021

  

2020

 

Employee and non-employee stock options

  2,431,911   1,958,411 

Resticted stock units

  21,580   0 

Common stock issuable under common stock purchase warrants

  5,109,501   3,934,099 
   7,562,992   5,892,510 

 

 

6.

Stockholders Equity

 

Warrants exercised and expired

 

During the six months ended June 30, 2021, the Company issued a total of 228,939 shares of common stock for a total of approximately $1.0 million, resulting from exercises of outstanding warrants. During the same period, the Company issued an additional 190,588 shares of common stock resulting from the net, cashless, exercise of outstanding warrants to purchase 536,140 shares. Warrants to purchase a total of 573,339 shares of common stock, all having an exercise price of $5.00 per share, expired during the six months ended June 30, 2021. Additionally, warrants to purchase 108,550 shares of common stock, with an exercise price of $15.00 expired during the six months ended June 30, 2021.

 

Public offering of common stock and warrants

 

On September 1, 2020, the Company closed an underwritten public offering of 2,545,454 shares of its common stock and warrants to purchase an aggregate of up to the same number of additional shares of common stock. The warrants are exercisable for a period of five years from the date of issuance at an initial exercise price of $4.54. The gross proceeds from the offering was approximately $10.5 million. The net proceeds was approximately $9.3 million. After exercises, registered warrants to purchase common stock totaling 2,306,516 remained on June 30, 2021.

 

10

 

Shares reserved

 

The following shares of common stock were reserved for future issuance as of date indicated:

 

  

June 30, 2021

 

Stock options outstanding

  2,431,911 

Restricted stock units

  21,580 

Shares available for grant under equity incentive plan

  1,385,588 

Common shares issuable under outstanding common stock purchase warrants

  5,109,501 
   8,948,580 

 

 

7.

Stock-based Compensation

 

2016 Omnibus Incentive Plan

 

The Panbela Therapeutics, Inc. 2016 Omnibus Incentive Plan (the “2016 Plan”) was adopted by our Board of Directors in March 2016 and approved by our stockholders in May 2016. The 2016 Plan permits the granting of incentive and non-statutory stock options, restricted stock, stock appreciation rights, performance units, performance shares and other stock awards to eligible employees, directors and consultants. We grant options to purchase shares of common stock under the 2016 Plan at no less than the fair market value of the underlying common stock as of the date of grant. Options granted under the 2016 Plan have a maximum term of ten years. As of June 30, 2021, options to purchase 2,199,911 shares of common stock and 21,580 restricted stock units, each representing the right to acquire one share of common stock, were outstanding under the 2016 Plan and 1,385,588 shares remained available for future awards.

 

2011 Stock Option Plan

 

Our Board of Directors ceased making awards under the Panbela Therapeutics, Inc. 2011 Stock Option Plan (the “2011 Plan”) upon the original receipt of stockholder approval for the 2016 Plan in May 2016. Awards outstanding under the 2011 Plan remain outstanding in accordance with and pursuant to the terms thereof. As of June 30, 2021, options to purchase 232,000 shares of common stock remained outstanding under the 2011 Plan. The average remaining life is approximately 3.4 years.

 

Stock-based Compensation Expense

 

General and administrative (“G&A”) and research and development (“R&D”) expenses include non-cash stock-based compensation expense as a result of our issuance of stock options. The terms and vesting schedules for stock-based awards vary by type of grant and the employment status of the grantee. The awards granted through June 30, 2021, vest based upon time-based and performance conditions. There was approximately $2.4 million unamortized stock-based compensation expense related to options granted to employees as of June 30, 2021.

 

Stock-based compensation expense for each of the periods presented is as follows (in thousands):

 

  Six Months Ended June 30, 
  

2021

  

2020

 

General and Administrative

 $514  $294 

Research and Development

  102   82 
  $616  $376 

 

11

 

Details of options available to grant, granted, exercised, cancelled or forfeited during the six months ended June 30, 2021, follows:

 

  

Shares

Available for

Grant

  

Shares Underlying

Options

  

Weighted

Average

Exercise Price

Per Share

  

Aggregate

Intrinsic Value

 

Balance at January 1, 2021

  894,501   2,137,499  $6.77  $388,461 

Additional shares available to grant

  818,579   -   -     

Granted

  (496,840)  496,840   4.05     

Exercised

  -   -   -     

Cancelled

  -   -   -     

Forfeitures / Expired

  202,428   (202,428)  9.85     
                 

Balance at June 30, 2021

  1,418,668   2,431,911  $5.96  $48,470 

 

Information about stock options outstanding, vested and expected to vest as of June 30, 2021, is as follows:

 

      

Outstanding, Vested and Expected to Vest

   Options Vested and Exercisable      

Per Share Exercise Price

  

Shares

  

Weighted Average

Remaining

Contractual Life

(Years)

  

Weighted

Average

Exercise Price

  

Options

Exercisable

  

Weighted

Average

Remaining

Contractual Life

(Years)

 
                        

$0.875

-$1.10   22,000   1.42  $1.02   22,000   1.42 

$2.275

-$2.50   22,000   2.70  $2.44   22,000   2.70 
$2.95-$4.17   1,207,940   7.95  $3.41   692,075   6.80 

$4.50

-$8.10   687,100   7.19  $6.13   607,100   6.96 

$9.99

-$10.10   266,048   8.43  $9.99   107,012   7.53 
$15.10     226,823   4.72  $15.10   226,823   4.72 
                        

Totals

   2,431,911   7.70  $5.96   1,677,010   6.50 

 

Key assumptions

 

The estimated grant-date fair values of the stock options were calculated using the Black-Scholes valuation model, based on the following assumptions for the six months ended June 30, 2021:

 

  

2021

 

Common stock fair value

 

 

$3.58to$4.17 

Risk-free interest rate

  0.79%to1.08% 

Expected dividend yield

   0  

Expected Option life (yrs)

 

 

5.30to5.75 

Expected stock price volatility

   90%  

 

 

8.

Subsequent Event

 

On July 2, 2021, subsequent to the end of the period, the Company completed a registered underwritten transaction. The company issued 3,333,334 shares of common stock at a price of $3.00 per share. The gross proceeds of the transaction totaled $10.0 million and after underwriter discounts and other costs the net proceeds was approximately $9.0 million.

 

12

 
 

Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations.

 

This Quarterly Report and other publicly available documents, including any documents incorporated herein and therein by reference contain, and our officers and representatives may from time to time make, forward-looking statements, including within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. When used in the following discussion, the words anticipates, intends, believes, expects, plans, seeks, estimates, likely, may, would, will, and similar expressions, as they relate to us or our management, are intended to identify such forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding (i) our plans to initiate a randomized clinical trial; and (ii) our estimates of additional funds that may be required to complete our development plan and obtain necessary approvals.

 

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially and adversely from the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (i) our ability to obtain additional funding to complete a randomized clinical trial; (ii) progress and success of our Phase 1 clinical trial; (iii) the impact of the current COVID-19 pandemic on our ability to complete enrollment in future clinical trials and procure the active ingredient; (iv) our ability to demonstrate the safety and effectiveness of our SBP-101 product candidate (v) our ability to obtain regulatory approvals for our SBP-101 product candidate in the United States, the European Union or other international markets; (vi) the market acceptance and level of future sales of our SBP-101 product candidate; (vii) the cost and delays in product development that may result from changes in regulatory oversight applicable to our SBP-101 product candidate; (viii) the rate of progress in establishing reimbursement arrangements with third-party payors; (ix) the effect of competing technological and market developments; (x) the costs involved in filing and prosecuting patent applications and enforcing or defending patent claims; and (xi) such other factors as discussed in Part I, Item 1A under the caption Risk Factors in our most recent Annual Report on Form 10-K, any additional risks presented in our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K.

 

Any forward-looking statement made by us in this Quarterly Report is based on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement or reasons why actual results would differ from those anticipated in any such forward-looking statement, whether written or oral, whether as a result of new information, future developments or otherwise.

 

 

Overview

 

We exist for the primary purpose of advancing the commercial development of our proprietary polyamine analogue in solid tumors with an initial focus on pancreatic cancer.

 

We have exclusively licensed the worldwide rights to this compound, which has been designated as SBP-101, from the UFRF.

 

In August 2015, the FDA accepted our Investigational New Drug (“IND”) application for our SBP-101 product candidate.

 

In 2017 we completed an initial clinical trial of SBP-101 in patients with previously treated locally advanced or metastatic pancreatic cancer. This was a Phase 1, first-in-human, dose-escalation, monotherapy safety study. From January 2016 through September 2017, we enrolled twenty-nine patients into six cohorts (cohorts 5a and 5b while the same dose, were separated as the result of different manufacturing lots) in the dose-escalation phase of the Phase 1 trial. No drug-related bone marrow toxicity or peripheral neuropathy was observed at any dose level. In addition to being evaluated for safety, 23 of the 29 patients were evaluable for preliminary signals of efficacy prior to or at the eight-week conclusion of their first cycle of treatment using the Response Evaluation Criteria in Solid Tumors (“RECIST”), the currently accepted standard for evaluating change in the size of tumors. Eight of the 23 patients (35%) had stable disease (“SD”) and 15 of 24 (65%) had progressive disease (“PD”). It should be noted that of the 15 patients with PD, six came from cohorts one and two and are considered to have received less than potentially therapeutic doses of SBP-101. We also noted that 28 of the 29 patients had follow-up blood tests measuring the Tumor Marker CA 19-9 associated with pancreatic ductal adenocarcinoma. Eleven of these patients (39%) had reductions in the CA 19-9 levels, as measured at least once after the baseline assessment. Seven of the remaining 17 patients who showed no reduction in CA 19-9 came from cohorts one and two.

 

13

 

In December of 2020 we completed enrollment of patients in our second clinical trial, a Phase 1a/1b study of the safety, efficacy and pharmacokinetics of SBP-101 administered in combination with two standard-of-care chemotherapy agents, gemcitabine and nab-paclitaxel. A total of 25 subjects were enrolled in 4 cohorts in the Phase 1a portion of the trial to evaluate the dosage level and schedule. An additional 25 subjects were enrolled in the expansion or Phase 1b portion of the trial. On June 4, 2021, we announced the presentation of interim clinical data from our Phase 1 combination therapy study, “SBP-101, a polyamine metabolic inhibitor, administered in combination with gemcitabine and nab-paclitaxel (“G+A”), shows signals of efficacy as first-line treatment for subjects with metastatic pancreatic ductal adenocarcinoma (“PDA”),” at the American Society of Clinical Oncology (“ASCO”) Annual Meeting held June 4-8, 2021. 

 

SBP-101 was well-tolerated when administered at doses and schedules tested in combination with G+A in subjects with previously untreated metastatic PDA. The most common Grade ≥3 adverse events (“AEs”) related to any study medication were neutropenia in 20 subjects (19 attributed to G+A and 1 attributed to all 3) and elevated liver function tests (“LFTs”) in 15 subjects (5 attributed to SBP-101 and 10 attributed to all 3). SBP-101-related increases in LFTs were asymptomatic in all but 2 subjects and reversed in all but 1 subject when SBP-101 administration was interrupted and dose-reduced or discontinued. Six subjects experienced vision AEs (3 possibly related to SBP-101, 1 related to gemcitabine and 2 related to all 3 based on principal investigator assessment. All were considered by the sponsor to be possibly related to SBP-101; 5 subjects had findings consistent with retinopathy. Future studies will exclude patients with a history of retinopathy or at risk of retinal detachment and scheduled ophthalmologic monitoring for all patients. Additionally, in future dose-finding studies screening for retinal toxicity will be included.

 

Interim efficacy was reported for 29 response-evaluable subjects in Cohort 4 + Phase 1b as well as for 7 subjects in Cohort 2.  Eleven subjects in Cohort 4 + Phase 1b had treatment with SBP-101 interrupted to evaluate retinal toxicity. The dose level in Cohort 4 + Phase 1b was the same as Cohort 2; however, the dose schedule was altered. The dose interruption may confound final efficacy results for Cohort 4 + Phase 1b. In Cohort 2 (N=7), the objective response rate (“ORR”) was 71%, and the disease control rate (“DCR”) was 100% by RECIST criteria (SD or better for ≥ 16 weeks). Median progression free survival (“PFS”) in Cohort 2 was 5.6 months and median overall survival (“OS”) was 10.3 months. In Cohort 4 + Phase 1b (N=29), the ORR was 48%, DCR was 70%, and PFS was 5.2 months; median OS has not been reached in Cohort 4 + Phase 1b to date. Subsequent to the release of this data in our poster at ASCO, one subject with a partial response converted to a complete response (“CR”) and one subject while non-CR by RECIST criteria had no evidence of disease.

 

The Company believes that the interim results of the front-line clinical trial of our SBP-101 product candidate justify continued development. Additional clinical trials will be required for FDA or other country approvals. We expect to begin a randomized clinical trial of SBP-101 administered in combination with two standard-of-care chemotherapy agents, gemcitabine and nab-paclitaxel for first line treatment of metastatic PDA in the second half of 2021. The cost and expected duration of this randomized clinical trial is highly dependent on the nature and size of the trial which is still in planning at this time.

 

We are also exploring SBP-101 for neo-adjuvant treatment in appropriate patients. There is also preclinical data to suggest that SBP-101 may have potential therapeutic uses for cancers other than pancreatic. In February 2021, we entered into a research agreement with the Johns Hopkins University School of Medicine. The collaboration is intended to focus on the further development of Panbela’s investigative agent SBP-101, including activity in cell lines outside of pancreatic cancer, biomarkers informing diagnostics and potential combination with checkpoint inhibitors. We expect these efforts will yield preclinical data to inform future development in the second half of this year.

 

Financial Overview

 

We have incurred losses of $50.5 million since 2011. For the six months ended June 30, 2021, we incurred a net loss of $4.4 million. We also incurred negative cash flows from operating activities of approximately $3.7 million for this period. We expect to continue to incur substantial losses, which will generate negative net cash flows from operating activities, as we continue to pursue research and development activities and commercialize our SBP-101 product candidate.

 

Our cash was approximately $6.4 million and $9.0 million as of June 30, 2021 and December 31, 2020, respectively.

 

A decrease of $2.6 million in cash for the six months ended June 30, 2021 was due to negative cash flow from operations of approximately $3.7 million offset in part from funds generated from the exercise of warrants.

 

Other than the temporary pause in enrollment during April and May of 2020 in our current clinical trial, the Company has not experienced any significant disruptions to our operations as a result of the COVID-19 pandemic. Recruitment and enrollment were resumed in May of 2020 and completed in December of 2020. The Company was not required to change management practices as it was decentralized prior to the COVID-19 pandemic.

 

14

 

Based on anticipated use of cash we expect the proceeds of the sale of equity securities that occurred in September of 2020 and July of 2021 will be sufficient to fund our expected operations into the first quarter of 2023, however there can be no assurance to this estimate. We will need to obtain additional funds to continue our operations and execute our current business plans, including completing required future trials and pursuing regulatory approvals in the United States, the European Union and other international markets, and laboratory studies to explore potential indications in other cancer types. We historically have financed our operations principally from the sale of equity securities and debt. While we have been successful in the past in obtaining the necessary capital to support our operations, and have similar future plans to obtain additional financing, there is no assurance that we will be able to obtain additional financing under commercially reasonable terms and conditions, or at all. This risk would increase if our clinical data were inconclusive or not positive or economic conditions worsen in the market as a whole or in the pharmaceutical or biotechnology markets individually.

 

Results of Operations

 

Comparison of the results of operations (in thousands):

 

  Three months Ended June 30,      Six Months Ended June 30,     
  

2021

  

2020

  

Percent

Change

  

2021

  

2020

  

Percent

Change

 

Operating Expenses

                        

General and administrative

 $1,241  $670   85.2% $2,391  $1,125   112.5%

Research and development

  985   434   127.0%  2,084   1,032   101.9%

Total operating expenses

  2,226   1,104   101.6%  4,475   2,157   107.5%
                         

Other income (expense) net

  (152)  645   -123.6%  (276)  (193)  43.0%

Income tax benefit

  192   40   380.0%  308   133   131.6%
                         

Net Loss

 $(2,186) $(419)  421.7% $(4,443) $(2,217)  100.4%

 

General and administrative (“G&A”) expenses consist primarily of salaries, incentive compensation and other employee benefits, including stock-based compensation. Other G&A expenses include professional fees for accounting and tax, legal services, insurance, and costs associated with being a publicly traded company including directors and officer’s liability insurance premiums.

 

Research and development (“R&D”) expenses consist primarily of clinical and regulatory costs, costs incurred under agreements with contract research organizations, pre commercial manufacturing and stability testing and employee compensation related expenses.

 

R&D and G&A expenses include non-cash stock-based compensation expense because of our issuances of stock options. We expense the fair value of equity awards over their vesting periods. The terms and vesting schedules for share-based awards vary by type of grant and the employment status of the grantee. The awards granted through September 30, 2020 vest upon performance and time-based conditions. We expect to record additional non-cash share-based compensation expense in the future, which may be significant.

 

The following table summarizes the stock-based compensation expense in our statements of comprehensive loss for:

 

  Six Months Ended June 30 
  

2021

  

2020

 

General and administrative

 $514  $294 

Research and Development

  102   82 

Total Stock based compensation

 $616  $376 

 

15

 

Three months ended June 30, 2021 and June 30, 2020

 

General and administrative expense

 

For the three months ended June 30, 2021 and 2020 G&A expenses were $1.2 million and $0.7 million, respectively. The increase is due to higher employee compensation expense and incremental costs associated with our Nasdaq listing such as investor relations and insurance.

 

Research and development expense

 

For the three months ended June 30, 2021 and 2020 R&D expenses were $1.0 million and $0.4 million, respectively. The increase was primarily due to higher spending on preclinical research and pre commercial manufacturing.

 

Other income (expense), net

 

Other expense, net, was $152,000 for the three months ended June 30, 2021 and is primarily the result of a foreign currency exchange loss. The net other income of approximately $0.6 million in the three months ended June 30, 2020 is primarily a foreign exchange gain.

 

Income tax benefit

 

Income tax benefit increased to $192,000 for the three months ended June 30, 2021 up from $40,000 during the three months ended June 30, 2020. Our income tax benefit is derived primarily from refundable tax credits associated with our R&D activities conducted in Australia which were increased in the quarter.

 

Six months ended June 30, 2021 and June 30, 2020

 

General and administrative expense

 

For the six months ended June 30, 2021 and 2020 G&A expenses were $2.4 million and $1.1 million, respectively. The increase is due to higher employee compensation expense and incremental costs associated with our Nasdaq listing such as investor relations and insurance.

 

Research and development expense

 

For the six months ended June 30, 2021 and 2020 R&D expenses were $2.0 million and $1.0 million, respectively. The increase was due primarily to increased spending on the current clinical trial.

 

Other income (expense), net

 

Other expense, net, was $276,000 and $193,000 for the six months ended June 30, 2021 and June 30, 2020 respectively and is primarily the result of a foreign currency exchange loss.

 

Income tax benefit

 

Income tax benefit increased to $308,000 for the six months ended June 30, 2021 up from $133,000 during the six months ended June 30, 2020. Our income tax benefit is derived primarily from refundable tax credits associated with our R&D activities conducted in Australia.

 

16

 

Liquidity and Capital Resources

 

The following table summarizes our liquidity and capital resources as of June 30, 2021 and December 31, 2020 and our cash flow data for the six months ended June 30, 2021 and 2020. It is intended to supplement the more detailed discussion that follows (in thousands):

 

Liquidity and Capital Resources

        
  

June 30, 2021

  

December 31, 2020

 

Cash and cash equivalents

 $6,405  $9,022 

Working capital

 $5,847  $8,392 

 

 

Cash Flow Data

 Six Months Ended June 30, 
  

2021

  

2020

 

Cash Provided by (Used in):

        

Operating Activities

 $(3,658) $(1,976)

Investment Activities

  -   - 

Financing Activities

  1,042   1,796 

Effect of exchange rate changes on cash

  (1)  (4)

Net (decrease) in cash and cash equivalents

 $(2,617) $(184)

 

Working Capital

 

Our total cash was $6.4 million and $9.0 million as of June 30, 2021 and December 31, 2020, respectively. We had $1.4 million in current liabilities and working capital of $5.8 million as of June 30, 2021, compared to $1.4 million in current liabilities and working capital of $8.4 million as of December 31, 2020.

 

Cash Flows

 

Net Cash Used in Operating Activities

 

Net cash used in operating activities was approximately $3.7 million in the six months ended June 30, 2021 compared to $2.0 million in the six months ended June 30, 2020. The net cash used in each of these periods primarily reflects the net loss for these periods and is partially offset by the effects of changes in operating assets and liabilities and non-cash stock compensation expense.

 

Net Cash Provided by Financing Activities

 

Net cash provided by financing activities was $1.0 million for the six months ended June 30, 2021 and net cash provided in financing activities was $1.8 million for the six months ended June 30, 2020. The cash provided for the six months ended June 30, 2021 represents the proceeds from the exercise of warrants during the first half of 2021. Cash provided for the six months ended June 30, 2020 was the result of a private sale of common stock and warrants.

 

On July 2, 2021 the company sold 3,333,334 shares of common stock, which provided incremental cash of approximately $9.0 million.

 

Capital Requirements

 

As we continue to pursue our operations and execute our business plan, including the wrapping up our current Phase 1 clinical trial and initiating a randomized trial for our initial product candidate, SBP-101, in pancreatic cancer, and pursuing regulatory approvals in the United States, the European Union and other international markets, we expect to continue to incur substantial and increasing losses, which will continue to generate negative net cash flows from operating activities.

 

17

 

Our future capital uses, and requirements depend on numerous current and future factors. These factors include, but are not limited to, the following:

 

 

the progress of clinical trials required to support our applications for regulatory approvals, including wrapping up our Phase 1a /1b clinical trial, a human clinical trial in Australia and the United States and initiating a planned randomized trial to be started in the second half of 2021;

 

 

the impact of the current COVID-19 pandemic on our ability to monitor our current clinical trial, initiate enrollment in a future clinical trial and procure the active ingredient;

 

 

our ability to demonstrate the safety and effectiveness of our SBP-101 product candidate;

 

 

our ability to obtain regulatory approval of our SBP-101 product candidate in the United States, the European Union or other international markets;

 

 

the cost and delays in product development that may result from changes in regulatory oversight applicable to our SBP-101 product candidate;

 

 

the market acceptance and level of future sales of our SBP-101 product candidate;

 

 

the rate of progress in establishing reimbursement arrangements with third-party payors;

 

 

the effect of competing technological and market developments; and

 

 

the costs involved in filing and prosecuting patent applications and enforcing or defending patent claims.

 

To date, we have used primarily equity financings and convertible debt to fund our ongoing business operations and short-term liquidity needs, and we expect to continue this practice for the foreseeable future. As of June 30, 2021, we did not have any existing credit facilities under which we could borrow funds.

 

We expect that we will have increases in expenditures in order to continue our efforts to grow our business, complete our Phase 1a clinical trial and begin the next clinical trial for our SBP-101 product candidate. We also have begun to invest in additional R&D efforts on mechanism of action, biomarkers, additional indications in other cancer types and the possibility of SBP-101 to act as a sensitizing agent for certain immunotherapies. The exact amounts and timing of any expenditure may vary significantly from our current intentions. We will need to obtain additional funds to continue our operations and execute our business plans including completion of required future trials and pursuing regulatory approvals in the United States, the European Union and other international markets. While we have been successful in the past in obtaining the necessary capital to support our operations, and have similar future plans to obtain additional financing, there is no assurance that we will be able to obtain additional financing under commercially reasonable terms and conditions, or at all. This risk would increase if our clinical data were inconclusive or not positive or economic conditions worsened in the market as a whole or in the pharmaceutical or biotechnology markets individually.

 

If we are unable to obtain additional financing when needed, we will likely need to reduce our operations by taking actions which may include, among other things, reducing use of outside professional service providers, reducing staff size or reduce staff compensation, significantly modifying or delaying the development of our SBP-101 product candidate, licensing rights to third parties, including the right to commercialize our SBP-101 product candidate for patients with pancreatic cancer, or other applications that we would otherwise seek to pursue, or discontinuing operations entirely.

 

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the interests of our current stockholders could be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our current stockholders. If we issue preferred stock, it could affect the rights of our stockholders or reduce the value of our common stock. Specific rights granted to future holders of preferred stock may include voting rights, preferences as to dividends and liquidation, conversion and redemption rights, sinking fund provisions, and restrictions on our ability to merge with or sell our assets to a third party. 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. Any of these events could adversely affect our ability to achieve our regulatory approvals and commercialization goals and harm our business.

 

Our future success is dependent upon our ability to obtain additional financing, the success of our current Phase 1 clinical trial and required future trials, our ability to obtain marketing approval for our SBP-101 product candidate in the United States, the European Union and other international markets. If we are unable to obtain additional financing when needed, if our Phase 1 clinical trial is not successful, if we do not receive regulatory approval required for future trials or if once these studies are concluded, we do not receive marketing approval for our SBP-101 product candidate, we would not be able to continue as a going concern and would be forced to cease operations. The interim financial statements included in this report have been prepared assuming that we will continue as a going concern and do not include any adjustments relating to the recoverability or classification of assets or the amounts of liabilities that might result from the outcome of these uncertainties.

 

18

 

Indebtedness

 

As of June 30, 2021 and December 31, 2020 we had no debt obligations.

 

Critical Accounting Policies and Estimates

 

Our significant accounting policies are set forth in the notes accompanying the condensed consolidated financial statements included in this document. The accounting policies used in preparing our interim fiscal 2021 condensed consolidated financial statements are the same as those described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

 

Item 3.

Quantitative and Qualitative Disclosure About Market Risk.

 

As a smaller reporting company, we are not required to provide disclosure pursuant to this item.

 

Item 4.

Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. As of the date of this filing, management has not identified any material weaknesses, but believes that it does have a significant deficiency in that it has insufficient personnel resources within the accounting function to fully segregate the duties over financial transaction processing and reporting. Management has mitigated this deficiency primarily through greater involvement in the review and monitoring of financial transaction processing and reporting by executive and senior management.

 

We believe that our internal control system provides reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements. All internal controls over financial reporting, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention or overriding of controls. Therefore, even effective internal controls over financial reporting can provide only reasonable assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness of internal controls over financial reporting may vary over time.

 

As of the end of the period covered by this quarterly report, the Company’s management conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, pursuant to Rules 13a-15 and 15d-15 of the Exchange Act. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2021, our disclosure controls and procedures were effective in ensuring that information relating to the Company required to be disclosed in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

Changes to Internal Control Over Financial Reporting

 

We have not identified any change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

19

 

PART II OTHER INFORMATION

 

Item 1.

Legal Proceedings.

 

None.

 

Item 1A.

Risk Factors.

 

Other than as noted below, there have been no material changes to the risk factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

 

Our business is subject to risks arising from epidemic diseases, such as the 2020 outbreak of the COVID-19 illness.

 

The outbreak of COVID-19, which was declared in March 2020 by the World Health Organization to be a pandemic, has spread across the globe and is impacting worldwide economic activity. A pandemic, including COVID-19, or other public health epidemic poses the risk that we or our employees, contractors, suppliers, and other partners may be prevented from conducting business activities for an indefinite period of time, including due to the spread of the disease within these groups or due to shutdowns that may be requested or mandated by governmental authorities. During the second quarter of 2020 we paused enrollment in our clinical trial for 6 weeks to allow the health care systems involved in the trial time to focus resources on responding to the pandemic. We continued to treat patients previously enrolled. Once enrollment was restarted in May 2020, we experienced no further delays. This delay did not have a material effect on the completion of enrollment or costs of the clinical trial. During the course of the pandemic, health care facilities have limited our ability to conduct on site patient data monitoring for our clinical trial, these visits are now successfully conducted remotely as necessary. We also experienced a delay, approximately 30 to 60 days, early in the pandemic, in the manufacturing of our active ingredient. We believe our supply of drug is adequate and we do not expect this delay to disrupt the current trial or anticipated new trial to be initiated in 2021.

 

While we have not, to date experienced any significant disruptions as a result of the pandemic, we are unable to estimate the future impact that COVID-19 could have on our operations. The continued spread of COVID-19, limited availability of approved vaccines and measures taken by governmental authorities in light of the same may slow potential enrollment of clinical trials and reduce the number of eligible patients for our clinical trials. The pandemic could also disrupt the supply chain and the manufacture or shipment of both drug substance and finished drug product for our product candidates for preclinical testing and clinical trials and adversely impact our business, financial condition or results of operations. We often attend and present clinical updates at various medical and investor conferences throughout the year. The COVID-19 outbreak has caused, and is likely to continue to cause, cancellations or reduced attendance of these conferences and we may need to seek alternate methods to present clinical updates and to engage with the medical and investment communities. The COVID-19 outbreak and mitigation measures may also have an adverse impact on global economic conditions which could have an adverse effect on our business and financial condition and our potential to conduct financings on terms acceptable to us, if at all. The extent to which the COVID-19 outbreak impacts our results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact.

 

The Company did experience a modest delay in shipment of the active ingredient from India to the United States as a result of increased COVID-19 cases in India in the first half of 2021. The product was received early July 2021 for filling and labeling. To the extent possible the spread of the Delta variant is being considered in our assumptions as the Company plans for a new clinical trial to be initiated, likely to be conducted in many different locations, in the second half of 2021. At this time no disruption to the initiation of the new trial is anticipated.

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

 

None,

 

Item 3.

Defaults Upon Senior Securities.

 

None.

 

Item 4.

Mine Safety Disclosures.

 

Not applicable.

 

20

 

Item 5.

Other Information.

 

None.

 

Item 6.

Exhibits.

 

 

Exhibit No.

 

Description

 

Manner of Filing

3.1

 

Restated Certificate of Incorporation, as amended through December 2, 2020 (incorporated by reference to Exhibit 3.1 to the annual report on Form 10-K for the year ended December 31, 2020).

 

Incorporated by Reference

     

3.2

 

Bylaws (incorporated by reference to Exhibit 3.2 to current report on Form 8-K filed December 2, 2020).

 

Incorporated by Reference

     

4.1

 

Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.2 to current report on Form 8-K filed September 1, 2020)

 

Incorporated by Reference

     

4.2

 

Form of Underwriter Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.2 Form S-1 effective August 27, 2020).

 

Incorporated by Reference

     

4.3

 

Warrant Agency Agreement with VStock Transfer, LLC dated September 1, 2020 (incorporated by reference to Exhibit 4.1 to current report on Form 8-K filed September 1, 2020).

 

Incorporated by Reference

     

10.1

 

2016 Omnibus Incentive Plan (incorporated by reference to Exhibit 99.1 to registration statement on Form S-8 filed April 20, 2021).

 

Incorporated by Reference

     

31.1

 

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) Under the Securities Exchange Act of 1934, as Amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

Filed Electronically

     

31.2

 

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) Under the Securities Exchange Act of 1934, as Amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

Filed Electronically

     

32.1

 

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

Filed Electronically

     

32.2

 

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

Filed Electronically

     

101

 

Financial statements from the quarterly report on Form 10-Q of Panbela Therapeutics, Inc. for the quarter ended June 30, 2021, formatted in Inline XBRL: (i) the Balance Sheets, (ii) the Statements of Operations and Comprehensive Loss, (iii) the Statements of Stockholders’ Equity (Deficit), (iv) the Statements of Cash Flows, and (v) the Notes to Financial Statements.

 

Filed Electronically

     

104

 

Cover Page Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

Filed Electronically

 

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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.

 

 

PANBELA THERAPEUTICS, INC.

  

Date: August 11, 2021

/s/ Jennifer K. Simpson

 

Jennifer K. Simpson

President and Chief Executive Officer

 

(Duly Authorized Officer)

  

Date: August 11, 2021

/s/ Susan Horvath

 

Susan Horvath

Chief Financial Officer

 

(Principal Financial Officer and Principal Accounting Officer)

 

 

22