gnpx20230930

gnpx20230930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2023

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

For the transition period from __________________ to ______________

Commission file number: 001-38244

GENPREX, INC.

(Exact name of registrant as specified in its charter)

Delaware	90-0772347
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

3300 Bee Cave Road, #650-227, Austin, TX	78746
(Address of principal executive offices)	(Zip Code)

(512) 537-7997

(Registrant’s telephone number, including area code)

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

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

GNPX

The Nasdaq Capital Market

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 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 ☒

As of November 6, 2023, the registrant had 59,434,822 shares of common stock, par value $0.001 per share, outstanding.

Table of Contents

GENPREX, INC.

FORM 10-Q TABLE OF CONTENTS

			Page No.

PART I	FINANCIAL INFORMATION		3

ITEM 1.	FINANCIAL STATEMENTS		3
	Condensed Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022		3
	Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2023, and 2022 (unaudited)		4
	Condensed Statements of Changes in Stockholders' Equity for the Three and Nine Months Ended September 30, 2023, and 2022 (unaudited)		5
	Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2023, and 2022 (unaudited)		6
	Notes to Unaudited Condensed Financial Statements		7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		20
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		27
ITEM 4.	CONTROLS AND PROCEDURES		27

PART II	OTHER INFORMATION		28

ITEM 1.	LEGAL PROCEEDINGS		28
ITEM 1A.	RISK FACTORS		28
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES		28
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES		28
ITEM 4.	MINE SAFETY DISCLOSURES		28
ITEM 5.	OTHER INFORMATION		28
ITEM 6.	EXHIBITS		28
SIGNATURES		30

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Genprex, Inc.

Condensed Balance Sheets

	*September 30,*			*December 31,*
	*2023*			*2022*
Assets		(unaudited)			(see Note 2)
Current assets:
Cash and cash equivalents	$	11,711,319		$	20,954,069
Accounts receivable		—			34,852
Prepaid expenses and other		1,145,760			484,224
Total current assets		12,857,079			21,473,145
Property and equipment, net		11,454			23,032
Other non-current assets:
Security deposits		17,154			21,818
Research and development supplies		2,994,460			2,864,937
Intellectual property, net		763,478			702,095
Total other assets		3,775,092			3,588,850
Total assets	$	16,643,625		$	25,085,027
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,179,192		$	442,925
Other current liabilities		3,158,941			2,367,362
Total current liabilities		4,338,133			2,810,287
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock $0.001 par value: 200,000,000 shares authorized; 59,429,822 and 48,105,962 shares issued and outstanding at September 30, 2023, and December 31, 2022, respectively		59,430			48,106
Additional paid-in capital		140,005,090			125,054,453
Accumulated deficit		(127,759,028	)		(102,827,819	)
Total stockholders’ equity		12,305,492			22,274,740
Total liabilities and stockholders’ equity	$	16,643,625		$	25,085,027

See accompanying notes to the unaudited condensed financial statements.

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Genprex, Inc.

Condensed Statements of Operations (unaudited)

	*Three Months Ended*						*Nine Months Ended*
	*September 30,*						*September 30,*
	*2023*			*2022*			*2023*			*2022*
Cost and expenses:
Depreciation	$	3,724		$	6,224		$	11,578		$	19,497
Research and development		4,616,546			3,157,731			13,903,611			8,124,884
General and administrative		3,166,057			3,006,484			11,173,643			9,107,141
Total costs and expenses		7,786,327			6,170,439			25,088,832			17,251,522
Operating loss		(7,786,327	)		(6,170,439	)		(25,088,832	)		(17,251,522	)
Interest income		51,391			27,877			175,413			34,500
Realized gain (loss)		13,307			—			17,790			—
Net loss	$	(7,748,243	)	$	(6,142,562	)	$	(24,931,209	)	$	(17,217,022	)
Net loss per share—basic and diluted	$	(0.13	)	$	(0.13	)	$	(0.47	)	$	(0.36	)
Weighted average number of common shares— basic and diluted		57,805,639			47,984,724			53,115,947			47,919,626

See accompanying notes to the unaudited condensed financial statements.

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Genprex, Inc.

Condensed Statements of Changes in Stockholders' Equity (unaudited)

		*Common Stock*				*Additional*		*Accumulated*			*Total*
	*Shares*		*Amount*		*Paid-In Capital*		*Deficit*			*Stockholders' Equity*
Balance at December 31, 2021		47,874,708	$	47,874	$	120,316,315	$	(79,087,198	)	$	41,276,991
Issuance of common stock for services		5,000		5		17,495		—			17,500
Share-based compensation		—		—		1,039,940		—			1,039,940
Net loss		—		—		—		(5,309,817	)		(5,309,817	)
Balance at March 31, 2022		47,879,708	$	47,879	$	121,373,750	$	(84,397,015	)	$	37,024,614
Issuance of common stock for services		18,643		19		17,953		—			17,972
Share-based compensation		—		—		1,133,342		—			1,133,342
Net loss		—		—		—		(5,764,643	)		(5,764,643	)
Balance at June 30, 2022		47,898,351	$	47,898	$	122,525,045	$	(90,161,658	)	$	32,411,285
Issuance of common stock for cash		116,973		117		1,637		—			1,754
Issuance of common stock for services		5,000		5		6,895		—			6,900
Share-based compensation		—		—		1,211,137		—			1,211,137
Net loss		—		—		—		(6,142,562	)		(6,142,562	)
Balance at September 30, 2022		48,020,324	$	48,020	$	123,744,714	$	(96,304,220	)	$	27,488,514

Balance at December 31, 2022		48,105,962	$	48,106	$	125,054,453	$	(102,827,819	)	$	22,274,740
Issuance of common stock and warrants for cash net of issuance costs		3,863,116		3,863		3,774,493		—			3,778,356
Issuance of common stock for services		5,000		5		7,945		—			7,950
Share-based compensation		—		—		1,324,165		—			1,324,165
Net loss		—		—		—		(9,202,774	)		(9,202,774	)
Balance at March 31, 2023		51,974,078	$	51,974	$	130,161,056	$	(112,030,593	)	$	18,182,437
Issuance of common stock for services		5,000		5		4,395		—			4,400
Share-based compensation		—		—		1,541,805		—			1,541,805
Net loss		—		—		—		(7,980,192	)		(7,980,192	)
Balance at June 30, 2023		51,979,078	$	51,979	$	131,707,256	$	(120,010,785	)	$	11,748,450
Issuance of common stock and warrants for cash net of issuance costs		7,445,744		7,446		6,807,565		—			6,815,011
Issuance of common stock for services		5,000		5		4,795		—			4,800
Share-based compensation		—		—		1,485,474		—			1,485,474
Net loss		—		—		—		(7,748,243	)		(7,748,243	)
Balance at September 30, 2023		59,429,822	$	59,430	$	140,005,090	$	(127,759,028	)	$	12,305,492

See accompanying notes to the unaudited condensed financial statements.

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Genprex, Inc.

Condensed Statements of Cash Flows (unaudited)

	*Nine Months Ended September 30,*
	*2023*			*2022*
Cash flows from operating activities:
Net loss	$	(24,931,209	)	$	(17,217,022	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		11,578			19,497
Share-based compensation		4,368,594			3,426,791
Changes in operating assets and liabilities:
Accounts receivable		34,852			(34,852	)
Prepaid expenses and other		(656,871	)		(259,057	)
Research and development supplies		(129,523	)		117,786
Accounts payable		736,266			(289,324	)
Other current liabilities		791,579			1,161,341
Net cash used in operating activities		(19,774,734	)		(13,074,840	)
Cash flows from investing activities:
Additions to intellectual property		(61,383	)		(39,737	)
Net cash used in investing activities		(61,383	)		(39,737	)
Cash flows from financing activities:
Net proceeds from issuances of common stock and warrants		10,593,367			1,754
Net cash provided by financing activities		10,593,367			1,754
Net decrease in cash and cash equivalents		(9,242,750	)		(13,112,823	)
Cash and cash equivalents, beginning of period		20,954,069			38,628,876
Cash and cash equivalents, end of period	$	11,711,319		$	25,516,053

See accompanying notes to the unaudited condensed financial statements.

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GENPREX, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Note 1 - Description of Business and Basis of Presentation

Unless the context requires otherwise, references to “Genprex,” the “Company,” “we,” “us” or “our” in this Quarterly Report on Form 10-Q refer to Genprex, Inc. We are a clinical stage gene therapy company pioneering the development of gene-based therapies for large patient populations with unmet medical needs. Our oncology platform utilizes our non-viral ONCOPREX® Nanoparticle Delivery System. Using this system, plasmids containing tumor suppressor genes, which are deleted early in the development of cancer, are encapsulated within lipid nanoparticles and administered intravenously to the patient to re-express the deleted tumor suppressor genes. Our diabetes technology is designed to work in Type 1 diabetes by transforming alpha cells in the pancreas into functional beta-like cells, which can produce insulin but may be distinct enough from beta cells to evade the body’s immune system. In Type 2 diabetes, our technology is believed to work by replenishing and rejuvenating the beta cells that make insulin.

Oncology Platform

Our lead oncology drug candidate, REQORSA® Immunogene Therapy (generic name: quaratusugene ozeplasmid), previously referred to as GPX-001, uses the ONCOPREX Nanoparticle Delivery System to deliver DNA plasmids that express the TUSC2 tumor suppressor gene and is initially being developed in combination with prominent approved cancer drugs to treat Non-Small Cell Lung Cancer (“NSCLC”) and Small Cell Lung Cancer (“SCLC”). REQORSA has a multimodal mechanism of action whereby it interrupts cell signaling pathways that cause replication and proliferation of cancer cells, re-establishes pathways for apoptosis (programmed cell death) in cancer cells, and modulates the immune response against cancer cells. In early studies, REQORSA has been shown to be complementary with targeted drugs and immunotherapies. Our strategy is to develop REQORSA in combination with current approved therapies and we believe REQORSA’s unique attributes position it to provide treatments that improve on these current therapies for patients with NSCLC, SCLC, and possibly other cancers.

Acclaim-1: The Acclaim-1 study is a Phase 1/2 clinical trial that has three portions - a Phase 1 dose escalation portion, a Phase 2 expansion portion, and a Phase 2 randomized portion. Acclaim-1 uses a combination of REQORSA and AstraZeneca's Tagrisso® in patients with late-stage NSCLC that has activating epidermal growth factor receptor (“EGFR”) mutations and progression after treatment with Tagrisso. In October 2023, one of our clinical collaborators presented in a poster presentation at the 2023 AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics the Phase 1 results of the Acclaim-1 study. The reported results showed no dose limiting toxicities (“DLTs”), established a Phase 2 recommended dose of 0.12 mg/kg (the highest dose level administered in the trial) and provided data showing early efficacy of REQORSA in combination with Tagrisso. Specifically, it showed of the 12 patients treated with escalating doses of REQORSA and standard doses of Tagrisso, all of whom had progressed on Tagrisso containing regimens, two patients experienced prolonged time to progression, including one with continuing partial response. Additionally, a third patient, at the highest dose, has stable disease, is continuing to receive treatment and thus is a candidate for prolonged time to progression. REQORSA administration was generally well tolerated, which we believe is why there were no DLTs. The administration was associated with a delayed infusion-related reaction of muscle aches, fever and chills in some patients, which we believe is similar to reactions seen with the administration of antibodies routinely used in oncology treatment. This was managed with prophylactic steroids, acetaminophen and diphenhydramine, and symptoms decreased with repeat cycles. We believe this new mechanism and novel approach targeting lung cancer, which comes with a strong safety profile and early signs of efficacy, is paving new ground in the fight against lung cancer. In May 2023, after completion of the Phase 1 portion of the Acclaim-1 trial, the Safety Review Committee (“SRC”) approved advancement from the Phase 1 dose escalation portion of the trial to the Phase 2 expansion portion of the trial.

The Phase 2 expansion portion of the trial is expected to enroll approximately 66 patients; half will be patients who received only prior Tagrisso treatment and the other half will be patients who received prior Tagrisso treatment and chemotherapy, in order to determine toxicity profiles of patients with different eligibility criteria, as well as efficacy and other endpoints. There will be an interim analysis following the treatment of 19 patients in each cohort. In preparation for the Phase 2 expansion portion of the trial, we are in the process of adding additional clinical sites. The Food and Drug Administration (“FDA”) has granted Fast Track Designation for the Acclaim-1 treatment combination of REQORSA and Tagrisso in NSCLC patients who have progressed after Tagrisso treatment. We are working towards opening the Phase 2 expansion portion of the trial for enrollment as soon as reasonably practicable and expect this will occur between December 2023 and the end of the first quarter of 2024, subject to the availability of a new batch of REQORSA.

Acclaim-2: The Acclaim-2 study is a Phase 1/2 clinical trial that has three portions - a Phase 1 dose escalation portion, a Phase 2 expansion portion, and a Phase 2 randomized portion. The Phase 1 dose escalation portion of Acclaim-2 is open for enrollment but currently not treating patients. The Acclaim-2 trial uses a combination of REQORSA and Merck & Co.’s Keytruda® in patients with late-stage NSCLC whose disease has progressed after treatment with Keytruda. Patients are treated at the 0.06 mg/kg dose level in the first cohort of patients and, subject to the Acclaim-2 Safety Review Committee approval, will be treated at successive dose levels of 0.09 mg/kg and 0.12 mg/kg. The FDA has granted Fast Track Designation for the Acclaim-2 treatment combination of REQORSA and Keytruda in NSCLC patients who have progressed after Keytruda treatment. We expect enrollment in the dose escalation portion of the study to be completed in the second half of 2024, depending on the timing of the availability of a new batch of REQORSA. The Acclaim-2 study has experienced slower than expected patient enrollment, which we primarily attribute to the large number of clinical trials being conducted that seek to combine an investigational drug with Keytruda in the relapsed setting.

Acclaim-3: The Acclaim-3 study has two portions - a Phase 1 dose escalation portion and a Phase 2 expansion portion. In November 2022, we filed with the FDA our protocol for our Phase 1/2 Acclaim-3 clinical trial using a combination of REQORSA and Genentech, Inc.’s Tecentriq® as maintenance therapy in patients with extensive stage small cell lung cancer (“ES-SCLC”) who did not develop tumor progression after receiving Tecentriq and chemotherapy as initial standard treatment. We are working towards opening the Phase 1 dose escalation portion of the trial for enrollment as soon as reasonably practicable and expect this will occur between December 2023 and the end of the first quarter of 2024, subject to the availability of a new batch of REQORSA. Patients will be treated with REQORSA and Tecentriq until disease progression or unacceptable toxicity is experienced. In June 2023, the FDA granted Fast Track Designation for the Acclaim-3 treatment combination of REQORSA and Tecentriq as maintenance therapy in patients with ES-SCLC who did not develop tumor progression after receiving Tecentriq and chemotherapy as initial standard treatment. In August 2023, the FDA granted Orphan Drug Designation to REQORSA for the treatment of SCLC. 

We have experienced a delay in the successful production of a new batch of REQORSA in connection with our transition to a lipid nanoparticle (“LNP”) third party contract development and manufacturing organization (“LNP CDMO”) with advanced and automated processes that we believe ultimately will allow us to more efficiently scale our product as we increase production for our trials. We currently estimate that we have enough REQORSA to treat patients receiving REQORSA in our ongoing clinical trials through December 2023. In the event we have not produced another batch of REQORSA by the time we have used our inventory of REQORSA, treatment of patients in our ongoing Acclaim-1 and Acclaim-2 clinical trials and pending enrollment in our Acclaim-1, Acclaim-2 and Acclaim-3 clinical trials would be delayed until a new batch of REQORSA is successfully produced.  We expect to produce a new batch of REQORSA between December 2023 and the end of the first quarter of 2024.

In April 2023, at the 2023 Annual Meeting of the American Association of Cancer Researchers (AACR 2023), we presented data that we believe further validates our ONCOPREX Nanoparticle Delivery System platform. These positive pre-clinical data were reported from our University of Texas MD Anderson Cancer Center ("MD Anderson") collaborators and documented the successful delivery of a second tumor suppressor gene, the NPRL2 tumor suppressor gene. The studies used the ONCOPREX Nanoparticle Delivery System to express the NPRL2 gene in anti-PD1 resistant, metastatic human NSCLCs in humanized mouse models. We believe these studies of NPRL2 provide solid data that the ONCOPREX Nanoparticle Delivery System is a platform that can be used with multiple tumor suppressor genes.

The TUSC2 gene is one of a series of tumor suppressor genes on the short arm of Chromosome 3. The therapeutic use of TUSC2 is covered by our exclusive worldwide licenses from MD Anderson. NPRL2 is another tumor suppressor gene also located on the short arm of Chromosome 3 and we have filed for patent protection for its therapeutic use. We believe that our ONCOPREX Nanoparticle Delivery System may allow for delivery of a number of other cancer-fighting genes, alone or in combination with other cancer therapies, to combat multiple types of cancer. In August 2022, we entered into a three-year sponsored research agreement with MD Anderson to support further pre-clinical studies of TUSC2 and NPRL2.

Diabetes Gene Therapy

In diabetes, we have exclusively licensed from the University of Pittsburgh of the Commonwealth System of Higher Education (“University of Pittsburgh”) multiple technologies relating to the development of a gene therapy product for each of Type 1 and Type 2 diabetes. The same general novel approach is used in each of Type 1 and Type 2 whereby an adeno-associated virus (“AAV”) vector containing the Pdx1 and MafA genes is administered directly into the pancreatic duct. In humans, we believe this can be done with a routine endoscopy procedure. Our diabetes product candidates are currently being evaluated and optimized in preclinical animal studies at the University of Pittsburgh. GPX-002 is being developed for the treatment of Type 1 diabetes and GPX-003 is being developed for the treatment of Type 2 diabetes. GPX-002 is designed to work by transforming alpha cells in the pancreas into functional beta-like cells, which can produce insulin but may be distinct enough from beta cells to evade the body’s immune system. GPX-003 is believed to work by replenishing and rejuvenating the beta cells that make insulin. We expect to finalize our constructs and request to meet with the FDA before the end of 2023 to obtain their guidance on the toxicology studies that we plan to conduct. In October 2023, we entered into a one-year extension to our August 2022 sponsored research agreement with the University of Pittsburgh for the use of GPX-003 in a non-human primate (“NHP”) model of Type 2 diabetes. The extension includes a revised research plan to encompass our most recent technologies to which we acquired exclusive rights from the University of Pittsburgh in July 2023.  In February 2023, our research collaborators at the University of Pittsburgh presented preclinical data in a NHP model of Type 1 diabetes highlighting the therapeutic potential of GPX-002 at the 16th International Conference on Advanced Technologies & Treatments for Diabetes (ATTD 2023) in Berlin, Germany. The study results showed the treated animals had statistically significant decreased insulin requirements, increased c-peptide levels, and improved glucose tolerance compared to baseline.  In July 2023, we entered into an exclusive license agreement with the University of Pittsburgh related to a gene therapy for both Type 1 and Type 2 diabetes using a MafB promoter to drive expression of the Pdx1 and MafA transcription factors.

Capital Requirements, Liquidity and Going Concern Considerations

Our unaudited condensed financial statements are prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, as shown in the accompanying unaudited condensed financial statements, we have sustained substantial losses from operations since inception and have no current source of revenue. In addition, we have used, rather than provided, cash in our operations. We expect to continue to incur significant expenditures to further clinical trials for the commercial development of our product candidates.

Management recognizes that we must obtain additional capital resources to successfully commercialize our product candidates. To date, we have received funding in the form of equity and debt, and we plan to seek additional funding in the future. However, no assurances can be given that we will be successful in raising additional capital. If we are not able to timely and successfully raise additional capital, the timing of our clinical trials, financial condition and results of operations may be materially and adversely affected. These unaudited condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities.

The Company believes that its current cash and cash equivalents will be sufficient to fund expenditure requirements for our necessary operations and expected clinical trial activities into the second quarter of 2024. The Company has based these estimates, however, on assumptions that may prove to be wrong, and could spend available financial resources much faster than we currently expect. The Company will need to raise additional funds to continue funding our development and operations. Management plans to secure such additional funding, although there are no guarantees or commitments for additional funding.

As a result of the Company’s recurring losses from operations and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern. The unaudited condensed financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

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Note 2 - Summary of Significant Accounting Policies

Our unaudited condensed financial statements have been prepared in accordance with U.S. GAAP, and the requirements of the United States (“U.S.”) Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. Accordingly, they do not include all of the information and footnotes normally included in financial statements prepared in conformity with U.S. GAAP. The December 31, 2022 condensed balance sheet was derived from the December 31, 2022 audited financial statements. Our unaudited condensed financial statements should be read in conjunction with the financial statements and notes thereto included in our 2022 Annual Report on Form 10-K, filed with the SEC on March 31, 2023 (the “Form 10-K”).

The accompanying unaudited condensed financial statements are unaudited and include all adjustments (consisting of normal recurring adjustments) that management considers necessary for a fair presentation of our condensed financial position and results of operations for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year.

A summary of our significant accounting policies consistently applied in the preparation of the accompanying unaudited condensed financial statements follows.

Use of Estimates

The preparation of our unaudited condensed financial statements in conformity with U.S. GAAP requires us 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 unaudited condensed financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

We consider all highly liquid short-term investments with an initial maturity of three months or less to be cash equivalents. Any amounts of cash in financial institutions which exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits expose us to cash concentration risk. We have cash in a money market account and had $11,465,328 and $20,679,538 in excess of FDIC insured limits of $250,000 at September 30, 2023 and December 31, 2022, respectively. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive shares of common stock, which includes common stock equivalents consisting of (i) 25,557,227 unexercised options granted by our board of directors and warrants to purchase shares of common stock, and (ii) 2,284,580 unvested restricted stock units to purchase shares of common stock granted by our board of directors.

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheet for cash, money-market savings account, accounts receivable, and accounts payables approximate fair value because of the immediate or short-term maturity of these financial instruments.

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Property and Equipment

Furniture and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Routine maintenance and repairs are charged to expense as incurred and major renovations or improvements are capitalized.

Research and Development Costs

Research and development expenditures consist of costs incurred to conduct research, develop engineering materials for further study, and develop clinical strategies for current and future programs. These costs include payments to collaborative research partners, manufacturing partners and consultants, and clinical strategy partners, wages and associated employee benefits, facilities, and overhead costs. These expenditures relate to our preclinical and Phase 1/2 clinical trials and are expensed as incurred. Materials produced to be used in clinical research are capitalized and included in research and development supplies and are expensed as they are used for testing or clinical activities, or have spoiled.

Research and development supplies purchased, valued at cost, and capitalized for future use were $2,994,460 and $2,864,937 at September 30, 2023 and December 31, 2022, respectively.

Intellectual Property

Intellectual property consists of legal and related costs associated with patents and other proprietary technology and rights developed, acquired, licensed by, or maintained by us that we believe contribute to a probable economic benefit toward such patents and activities. These costs incurred in connection with obtaining and maintaining intellectual property protection, such as patent applications and patent maintenance, are capitalized. Intellectual property is stated at cost, to be amortized on a straight-line basis over the estimated useful lives of the assets.

Accounting for Stock-Based Compensation

We use the fair value-based method of accounting for stock-based compensation for options granted to employees, independent consultants and contractors. We measure options granted at fair value determined as of the grant date and recognize the expense over the periods in which the options vest or are expected to vest and related services are rendered based on the terms and conditions of the award. Generally, where the award only has a service condition, the requisite service period is the same as the vesting period.

Long-Lived Assets

We review long-lived assets and certain identifiable intangibles held and used for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating the fair value and future benefits of our intangible assets, management performs an analysis of the anticipated undiscounted future net cash flow of the individual assets over the remaining amortization period. We recognize an impairment loss if the carrying value of the asset exceeds the discounted expected future cash flows. During the nine months ended September 30, 2023, and the year ended December 31, 2022, there were no deemed impairments of our long-lived assets.

Recent Accounting Developments

Accounting pronouncements issued but not effective until after September 30, 2023, are not expected to have a significant effect on our financial condition, results of operations, or cash flows.

Immaterial Correction of Prior Period Errors and Disclosures

During the period ended September 30, 2023, an immaterial error was identified that reduced net loss during for the three-month period ended March 31, 2023 by approximately $302,000 associated with expenses associated with fundraising expenses during the period. The Company recorded an out-of-period adjustment of approximately $302,000 to finance fee expense and additional paid-in capital during the three-month period ended September 30, 2023. The impact of these errors on prior periods would be to decrease the finance fee expense and additional paid-in capital by approximately $302,000 for the three-month period ended March 31, 2023.

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Note 3 - Intellectual Property

We own or have exclusive license agreements on 20 granted patents and 22 pending patent applications worldwide for technologies developed in-house or by researchers at the National Cancer Institute, MD Anderson, the University of Texas Southwestern Medical Center, and the University of Pittsburgh. These patents comprise various therapeutic, diagnostic, technical and processing claims. These license rights will be amortized on a straight-line basis over the estimated period of useful lives of the underlying patents or the license agreements.

University of Pittsburgh

On February 11, 2020, we entered into an exclusive license agreement with the University of Pittsburgh for patented gene therapy technologies relating to the potential treatment of Type 1 and Type 2 diabetes. This license was first amended on August 17, 2022, to extend the milestone related to the filing of a new investigational drug ("IND") application. This license was amended again on November 3, 2022, to include a new licensed glucagon promoter technology related to Type 1 diabetes and set FDA and clinical milestones related to the glucagon technology (See Note 7 – Commitments and Contingences – Commitments – University of Pittsburgh).

On November 22, 2022, we entered into an exclusive license agreement with the University of Pittsburgh relating to the transformation of macrophages enabling them to reduce autoimmunity activity in Type 1 diabetes.

On December 29, 2022, we entered into an exclusive license agreement with the University of Pittsburgh relating to the use of an insulin promoter in combination with our existing gene therapy, including the Pdx1 and MafA transcription factors, as a potential treatment for Type 2 diabetes.

On July 14, 2023, we entered into an exclusive license agreement with the University of Pittsburgh related to a gene therapy for both Type 1 and Type 2 diabetes using a MafB promoter to drive expression of the Pdx1 and MafA transcription factors.

The University of Texas MD Anderson Cancer Center

On May 4, 2020, we entered into an exclusive worldwide license agreement with The Board of Regents of the University of Texas System on behalf of MD Anderson relating to a portfolio of patent applications and related technology for the treatment of cancer using our lead drug candidate and immunotherapies.

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Note 4 - Equity

Registered Direct Offerings

On March 1, 2023, we completed a registered direct offering, in which we sold to an accredited healthcare-focused institutional investor an aggregate of 3,809,524 shares of our common stock and warrants to purchase up to 3,809,524 shares of our common stock, at a combined offering price of $1.05 per share of common stock and accompanying warrant. The warrants are exercisable immediately upon issuance, expire 5 years from the date of issuance and have an exercise price of $1.10 per share. We received net proceeds of approximately $3.6 million after $400,000 of commissions and expenses, excluding any proceeds that may be received in the future from any exercise of the warrants.

On July 21, 2023, we completed a registered direct offering priced at the market under Nasdaq rules, in which we sold to accredited healthcare-focused institutional investors an aggregate of (i) 7,425,744 shares of our common stock, and (ii) warrants to purchase up to 7,425,744 shares of our common stock, at a combined offering price of $1.01 per share of common stock and accompanying warrant. The warrants are exercisable immediately upon issuance, expire 5 years from the date of issuance and have an exercise price of $0.885 per share. Also, we agreed to issue to H.C. Wainwright & Co., LLC or its designees (the “Placement Agent”) warrants to purchase up to an aggregate of 445,545 shares of our common stock. The warrants issued to the Placement Agent have substantially the same terms as the warrants issued to the investors except that the Placement Agent warrants have an exercise price of $1.2625 per share and expire on July 18, 2028. We received net proceeds of approximately $6.7 million after approximately $800,000 of commissions and expenses, excluding any proceeds that may be received in the future from any exercise of the warrants.

At-The-Market Offering

On November 18, 2022, we entered into an Equity Distribution Agreement (the "Sales Agreement") with JMP Securities LLC ("JMP Securities") pursuant to which we may sell from time to time, at our option, shares of our common stock through JMP Securities, as sales agent (the "ATM Facility"), up to an aggregate offering price of $50 million. Sales of the shares pursuant to the ATM Facility were previously made under our prior "shelf" Registration Statement on Form S-3 (Reg. No. 333-239134), and future ATM Facility sales may be made under our currently effective "shelf" Registration Statement on Form S-3 (Reg. No. 333-271386) and a related prospectus supplement for the ATM Facility to be filed as appropriate. Additionally, under the terms of the Sales Agreement, the shares may be sold at market prices, at negotiated prices or at prices related to the prevailing market price. We will pay JMP Securities a commission of 3.0% of the gross proceeds from the sale of the shares. During the year ended December 31, 2022, we sold 3,886 shares of common stock for aggregate net proceeds of $4,532 under the ATM Facility. We did not use the ATM Facility during the three months ended September 30, 2023, and during the nine months ended September 30, 2023, we sold 53,592 shares of common stock for aggregate net proceeds of $78,355 under the ATM Facility.

Stock Issuances

During the three months ended September 30, 2023, we issued (i) 5,000 shares of common stock for services provided to us valued at $4,800 to the Chairman of our Scientific Advisory Board and (ii) 20,000 shares of common stock upon the exercise of options by a former board member. During the nine months ended September 30, 2023, we issued (i) 15,000 shares of common stock for services provided to us valued at $17,150 to the Chairman of our Scientific Advisory Board and (ii) 20,000 shares of common stock upon the exercise of options by an former board member (inclusive of the shares issued during the three months ended September 30, 2023, as described in the immediately preceding sentence).

During the three months ended September 30, 2022, we issued 5,000 shares of common stock for services provided to us valued at $6,900 to the Chairman of our Scientific Advisory Board. During the nine months ended September 30, 2022, we issued (i) 15,000 shares of common stock for services provided to us valued at $35,550 to the Chairman of our Scientific Advisory Board, (ii) 13,643 shares of common stock upon the exercise of warrants on a cashless basis, and (iii) 116,973 shares of common stock upon the exercise of options by an executive (inclusive of the shares issued during the three months ended September 30, 2022, as described in the immediately preceding sentence).

Preferred Stock

We are authorized to issue 10,000,000 shares of preferred stock with a par value of $0.001 per share, none of which are outstanding as of September 30, 2023 and December 31, 2022.

Common Stock

We are authorized to issue 200,000,000 shares of common stock with a par value of $0.001 per share, all of which are voting common stock. There were 59,429,822 and 48,105,962 shares of our common stock outstanding as of September 30, 2023 and December 31, 2022, respectively.

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Common Stock Purchase Warrants

Common stock purchase warrant activity for the three and nine months ended September 30, 2023, and September 30, 2022, respectively, is as follows:

	*2023*				*2022*
	*Number of*		*Weighted Average*		*Number of*		*Weighted Average*
	*Warrants*		*Exercise Price*		*Warrants*		*Exercise Price*
Outstanding at January 1,		2,147,778	$	4.32		2,204,747	$	4.39
Warrants issued		3,839,524		1.10		—		—
Warrants cancelled or expired		38,400		6.25		—		—
Outstanding at March 31,		5,948,902	$	2.23		2,204,747	$	4.39
Warrants exercised		—		—		13,643		0.50
Warrants cancelled or expired		—		—		112,993		4.47
Outstanding at June 30,		5,948,902	$	2.23		2,078,111	$	4.41
Warrants issued		8,011,289		0.90		100,000		1.44
Outstanding at September 30,		13,960,191	$	1.47		2,178,111	$	4.28
Vested at September 30,		7,977,957	$	0.91		25,002	$	3.02
Exercisable at September 30,		13,706,025	$	1.46		1,869,778	$	4.63

During the three-month period ended September 30, 2023, we issued (i) warrants to purchase up to an aggregate of 140,000 shares of common stock to service providers at exercise prices ranging from $0.65 to $0.95 per share, the fair market value of a share of common stock on the date of issuance, (ii) warrants to purchase up to 7,425,744 shares of common stock to accredited healthcare-focused institutional investors in connection with the registered direct offering completed on July 21, 2023, at an exercise price of $0.885 per share, and (iii) warrants to purchase up to 445,545 shares of common stock to H.C. Wainwright & Co., LLC or its designees (“Placement Agent”) in connection with the registered direct offering completed on July 21, 2023, at an exercise price of $1.2625 per share. During the nine-month period ended September 30, 2023, we (i) issued warrants to purchase up to an aggregate of 11,745,813 shares of common stock at exercise prices ranging from $0.73 to $1.65 per share to service providers, institutional investors, and the Placement Agent and (ii) were deemed to cancel warrants to purchase 38,400 shares of common stock upon termination of warrants previously issued to placement agents associated with our Initial Public Offering in March 2018 (inclusive of the warrants issued during the three-month period ended September 30, 2023, as described in the immediately preceding sentence). During the three- and nine-month periods ended September 30, 2023, we recorded share-based compensation of $50,853 and $128,164, respectively, associated with the vesting and issuance of warrants. We expect to record an additional $16,797 of share-based compensation for time-based vesting through the end of the fiscal year 2023 and $300,000 of share-based compensation based on performance-based vesting in the future with respect to our warrants outstanding as of September 30, 2023.

During the three-month period ended September 30, 2022, we issued warrants to purchase up to an aggregate of 100,000 shares of common stock to service providers at exercise prices ranging from $0.74 to $0.84 per share, the fair market value of a share of common stock on the date of issuance. During the nine-month period ended September 30, 2022, we (i) issued warrants to purchase up to an aggregate of 100,000 shares of common stock to service providers at exercise prices ranging from $0.74 to $0.84 per share, the fair market value of a share of common stock on the date of issuance, (ii) issued 13,643 shares of common stock to a placement agent associated with a registered direct offering in November 2019 upon the exercise of warrants on a cashless basis, and (iii) were deemed to cancel warrants to purchase 112,993 shares of common stock upon termination of a warrant and warrant shares forfeited associated with a cashless exercise (inclusive of the warrants issued during the three-month period ended September 30, 2022, as described in the immediately preceding sentence). We recorded share-based compensation of $47,882 associated with warrants during the three and nine-month periods ended September 30, 2022.

As of September 30, 2023, we had outstanding warrants to purchase 13,960,191 shares of common stock at a weighted average exercise price of $1.47 that have been issued to various consultants, investors, and placement agents. These warrants vest immediately or over periods ranging up to 12 months, are exercisable for a period of up to five years, enable the holders to purchase shares of our common stock at exercise prices ranging from $0.73 to $7.22 per share and have per-share fair values ranging from $0.35 to $4.63, based on Black-Scholes-Merton pricing models. The following assumptions were used in calculation of fair market value of options via Black-Scholes-Merton pricing models for the three and nine months ended September 30, 2023:

	*Three Months Ended September 30, 2023*	*Nine Months Ended September 30, 2023*
Expected term (in years):	2.5 - 3.0	2.5 - 3.0
Risk-free rate:	5.33% - 5.52%	4.99% - 5.52%
Volatility:	83.14%	83.14%
Dividend yield:	0%	0%

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2018 Equity Incentive Plan

Our board of directors and stockholders have approved and adopted our 2018 Equity Incentive Plan (“2018 Plan”), which became effective on the completion of our IPO on April 3, 2018. The 2018 Plan provides for the grant of incentive stock options that are intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (“ISOs”), nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit ("RSU") awards, performance-based stock awards and performance-based cash awards. ISOs may be granted only to employees. All other awards may be granted to employees, including officers, and to our non-employee directors and consultants.

A total of 4,160,000 shares of common stock were initially available under the 2018 Plan, plus a number of shares of common stock (not to exceed 2,628,749 shares) subject to outstanding awards under our 2009 Equity Incentive Plan (the “2009 Plan”) as of the IPO that expire, are forfeited or otherwise terminate or that are used to cover the exercise price or applicable tax withholdings. No further grants will be made under the 2009 Plan.

In addition, the number of shares of common stock reserved for issuance under the 2018 Plan automatically increases on January 1 of each year, since January 1, 2019, by 5% of the total number of shares of our common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by our board of directors or a committee of our board of directors appointed to administer the 2018 Plan.

On January 1, 2022 and 2023, the number of shares of common stock reserved for issuance under the 2018 Plan was increased by an aggregate of 2,393,735 and 2,405,298 shares, respectively. As of September 30, 2023, a total of 437,281 shares of common stock remain available for issuance under the 2018 Plan.

2018 Employee Stock Purchase Plan

Our board of directors and stockholders approved and adopted our 2018 Employee Stock Purchase Plan (“ESPP”), which became effective on April 3, 2018. The ESPP has not yet been utilized as a benefit available to our employees. The ESPP authorizes the issuance of 208,050 shares of our common stock pursuant to purchase rights that may be granted to our eligible employees. The number of shares of common stock reserved for issuance under the ESPP is automatically increased on January 1 of each calendar year, beginning on January 1, 2019, by 2% of the total number of shares of our common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the administrator of the ESPP. The administrator of the ESPP determined not to increase the number of shares reserved for issuance under the ESPP on January 1, 2023.

Stock Options

As of September 30, 2023, we had outstanding stock options to purchase 11,672,036 shares of common stock that have been granted to various executives, other employees, directors, and independent contractors. These options vest immediately or over periods ranging from 12 to 48 months, are exercisable for a period of up to ten years, enable the holders to purchase shares of our common stock at exercise prices ranging from $0.45 to $9.80 per share and have per-share fair values ranging from $0.32 to $7.93, based on Black-Scholes-Merton pricing models. The following assumptions were used in calculation of fair market value of options via Black-Scholes-Merton pricing models for the three- and nine-months ended September 30, 2023:

	*Three Months Ended September 30, 2023*	*Nine Months Ended September 30, 2023*
Expected term (in years):	6.0	6.0
Risk-free rate:	5.37%	4.60% – 5.73%
Volatility:	83.42%	83.14% - 83.42%
Dividend yield:	0%	0%

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During the three-month period ended September 30, 2023, we (i) granted stock options to purchase an aggregate of 200,000 shares of our common stock with an exercise price of $0.45 per share to an employee, (ii) cancelled options to purchase 12,291 shares of common stock at an exercise prices ranging from $2.20 to $3.55 per share in connection with the termination of certain employees, and (iii) issued 20,000 shares of the Company's common stock upon the exercise of options held by a former board member with an exercise price of $0.30 per share. During the nine-month period ended September 30, 2023, we (i) granted stock options to purchase an aggregate of 330,000 shares of our common stock with exercise prices ranging from $0.45 to $1.51 per share to employees, (ii) cancelled options to purchase 12,291 shares of common stock at an exercise prices ranging from $2.20 to $3.55 per share in connection with the termination of certain employees, and (iii) issued 20,000 shares of the Company's common stock upon the exercise of options held by a former board member with an exercise price of $0.30 per share (inclusive of the options granted or cancelled, and shares issued, during the three-month period ended September 30, 2023, as described in the immediately preceding sentence).

During the three-month period ended September 30, 2022, we (i) granted stock options to purchase an aggregate of 9,000 shares of our common stock with an exercise price of $1.49 per share to employees, (ii) issued 116,973 shares of the Company's common stock upon the exercise of options held by an executive with an exercise price of $0.02 per share, and (iii) cancelled options to purchase 49,167 shares of common stock at an exercise prices ranging from $2.20 to $3.66 per share in connection with the termination of certain employees. During the nine-month period ended September 30, 2022, we (i) granted stock options to purchase an aggregate of 2,901,166 shares of our common stock with exercise prices ranging from $1.36 to $3.50 per share to board members, executives, other employees and consultants, and (ii) issued 116,973 shares of the Company's common stock upon the exercise of options held by an executive with an exercise price of $0.02 per share, and (iii) cancelled options to purchase 66,667 shares of common stock at an exercise prices ranging from $2.00 to $3.66 per share in connection with the termination of certain employees (inclusive of the options granted or cancelled, and shares issued, during the three-month period ended September 30, 2022, as described in the immediately preceding sentence).

The weighted average remaining contractual term for the outstanding options at September 30, 2023 and December 31, 2022 is 6.43 and 7.08 years, respectively.

Stock option activity for the nine months ended September 30, 2023 and December 31, 2022, respectively, is as follows:

	*2023*				*2022*
	*Number of*		*Weighted Average*		*Number of*		*Weighted Average*
	*Options*		*Exercise Price*		*Options*		*Exercise Price*
Outstanding at January 1,		11,374,327	$	3.08		8,574,301	$	3.35
Options granted		82,500		1.43		2,404,562		2.30
Options expired or cancelled		—		—		17,500		2.00
Outstanding at March 31,		11,456,827	$	3.07		10,961,363	$	3.13
Options granted		47,500		0.85		487,604		1.62
Outstanding at June 30,		11,504,327	$	3.06		11,448,967	$	3.06
Options granted		200,000		0.45		9,000		1.49
Options exercised		20,000		0.30		116,973		0.02
Options expired or cancelled		12,291		3.12		49,167		2.74
Outstanding at September 30,		11,672,036	$	3.02		11,291,827	$	3.09
Vested at September 30,		620,911	$	2.79		578,807	$	2.94
Exercisable at September 30,		9,315,404	$	3.14		6,579,287	$	3.23

Restricted Stock Units

A summary of the RSU activity under the 2018 Plan during the nine months ended September 30, 2023 is presented below. These amounts include RSUs granted to executives, other employees, and board members. There was no RSU activity for the year ended December 31, 2022.

	*Number of*		*Weighted Average*
	*Units*		*Grant Date Fair Value*
Outstanding at January 1,		—		—
Restricted stock units granted		1,913,195		1.65
Outstanding at March 31,		1,913,195	$	1.65
Restricted stock units granted		371,385		0.74
Outstanding at June 30,		2,284,580	$	1.50
Outstanding at September 30,		2,284,580	$	1.50
Vested at September 30,		—		—
Expected to vest at September 30,		2,284,580	$	1.50

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Share-Based Compensation

For the three- and nine months ended September 30, 2023, our total share-based compensation was approximately $1.5 million, including $0.3 million of R&D expense and $1.2 million of G&A expense, and $4.4 million, including $1.0 million of R&D expense and $3.4 million of G&A expense, respectively, nearly all of which represents the expected vesting of options issued to executives, other employees, and service providers and RSUs issued to executives, other employees, and board members, respectively. As of September 30, 2023, our total compensation cost related to non-vested time-based stock option awards and warrants granted to executives, other employees, board members, and service providers and not yet recognized was approximately $5.9 million. We expect to record this stock-based compensation expense over the next three years using a graded vesting method. As of September 30, 2023, the weighted average term over which these expenses are expected to be recognized is 1.37 years.

For the three- and nine-month periods ended September 30, 2022, our total share-based compensation was approximately $1.2 million, including $0.2 million of R&D expense and $1.0 million of G&A expense, and $3.4 million, including $0.6 million of R&D expense and $2.8 million of G&A expense, respectively, nearly all of which represents the expected vesting of options issued to executives, other employees, and service providers, respectively.

As of September 30, 2023, there are no performance-based stock option awards outstanding and one performance-based warrant outstanding issued to a service provider. Our total compensation cost related to the non-vested performance-based warrant not yet recognized was approximately $300,000. The entirety of this warrant may be recognized and recorded upon the achievement of certain clinical milestones.

Note 5 - 401(k) Savings Plan

In 2022, we established a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code ("401(k) Plan") and established an employer matching program for participants in the 401(k) Plan. The 401(k) Plan covers all employees who meet defined minimum age and service requirements, and allows participants to defer a portion of their annual compensation on a pre-tax basis. We incurred $29,817 and $120,623 of expense for matching contributions to the 401(k) Plan during the three- and nine months ended September 30, 2023, respectively. We incurred $25,631 and $51,382 of expense for matching contributions to the 401(k) Plan during the three- and nine-month periods ended September 30, 2022, respectively.

Note 6 - Related Party Transactions

Introgen Research Institute

Introgen Research Institute (“IRI”) is a Texas-based technology company formed by Rodney Varner, our President, Chief Executive Officer and Chairman of the Board and IRI's sole officer. IRI is owned by trusts of which Mr. Varner's descendants are the sole beneficiaries. In April 2009, prior to Mr. Varner becoming an officer and director of our Company in August 2012, we entered into an Assignment and Collaboration Agreement with IRI, providing us with the exclusive right to commercialize a portfolio of intellectual property. This agreement was amended in 2011 to include additional sublicensing of additional intellectual property made available to IRI from MD Anderson (See Note 7 – Commitments and Contingences – Commitments – MD Anderson Cancer Center). There were no amounts incurred or due under this agreement at September 30, 2023 and December 31, 2022.

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Note 7 - Commitments and Contingencies

Commitments

MD Anderson Cancer Center

In July 2018, we entered into a two-year sponsored research agreement with MD Anderson to sponsor preclinical studies focused on the combination of REQORSA with an immunotherapy with a projected total cost of approximately $2 million. This agreement was extended beyond the original expiration date, expiring in May 2022 after giving effect to such extension. In August 2022, we entered into a three-year sponsored research agreement with MD Anderson to sponsor preclinical studies focused on REQORSA and NPRL2 in oncology to resensitize NSCLC and SCLC to targeted therapies and immunotherapies with a projected total cost of approximately $2.9 million. We incurred approximately $240,000 and $720,000 of expense from this agreement during the three- and nine-month periods ended September 30, 2023, respectively. We incurred approximately $240,000 of expense from this agreement during the three- and nine-month periods ended September 30, 2022. As of September 30, 2023, we have paid approximately $720,000 toward this $2.9 million commitment.

In 2011, we agreed to assume certain contractual and other obligations of IRI in consideration for the sublicense rights, expertise, and assistance associated with certain technologies and intellectual property originally licensed to another party under the 1994 License Agreement with MD Anderson (“Original MD Anderson License Agreement”). These technologies and intellectual property were later sublicensed to IRI (the “IRI Sublicense”). We also agreed to pay royalties of 1% on sales of certain licensed products for a period of 21 years following the termination of the later of the Original MD Anderson License Agreement and the IRI Sublicense. We assumed patent prosecution costs and an annual minimum royalty of $20,000 payable to the National Institutes of Health.

On March 3, 2021, we entered into an amendment (the “MD License Amendment”) to the Patent and Technology License Agreement dated May 4, 2020, with MD Anderson. The MD License Amendment grants us a worldwide, exclusive, sublicensable license to an additional portfolio of six patents and one patent application and related technology for methods for treating cancer by administration of a TUSC2 therapy in conjunction with EGFR inhibitors or other anti-cancer therapies in patients predicted to be responsive to TUSC2 therapy. Pursuant to the MD License Amendment, we agreed to (i) pay annual maintenance fees ranging from the mid five figures to the low six figures, (ii) total milestone payments of $6,150,000, (iii) a one-time fee in the mid five figures and (iv) certain patent related expenses. We incurred $0 and $45,000 of expense from this agreement during each of the three- and nine-month periods ended September 30, 2023, respectively. We incurred $0 and $90,000 of expense from this agreement during the three- and nine-month periods ended September 30, 2022, respectively. As of September 30, 2023, we have paid approximately $320,000 toward this commitment.

National Institutes of Health

We have a royalty obligation to the National Institutes of Health ("NIH") to be paid upon our receipt of FDA approval using NIH technology. The $240,000 contingent obligation which increases annually by $20,000 and is $340,000 and $360,000 as of December 31, 2022, and September 30, 2023, respectively, and will be recognized if and when we obtain regulatory approval (the event that triggers the payment obligation).

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University of Pittsburgh

Pursuant to an exclusive license agreement dated February 11, 2020, by and between us and the University of Pittsburgh, amended on August 17, 2022, and amended again on November 3, 2022, we agreed to pay (i) an initial licensing fee of $25,000, (ii) annual maintenance fees of $25,000 for the first three years and $40,000 for each subsequent year following the first anniversary of the agreement, (iii) royalties ranging from 1.5% to 3% of net sales of licensed technologies, (iv) an annual minimum royalty payment of $250,000 per year beginning in the year of the first commercial sale of licensed technology, (v) a share of non-royalty sublicense income of 20%, and (vi) an aggregate of $3,975,000 in milestone payments related to the usage of a glucagon promoter and gene therapy technologies to potentially treat Type 1 diabetes. Unless earlier terminated pursuant to its terms, the agreement expires upon the later of (i) 20 years after the first commercial sale of the licensed technology thereunder and (ii) expiration of the last valid claim under the patent rights. We incurred $0 and $25,000 of expense from this agreement during each of the three- and nine-month periods ended September 30, 2023, respectively. We incurred $0 and $25,000 of expense from this agreement during each of the three- and nine-month periods ended September 30, 2022, respectively. As of September 30, 2023, we have incurred and paid approximately $110,000 toward this commitment.

Pursuant to an exclusive license agreement dated November 22, 2022, by and between us and the University of Pittsburgh, we agreed to pay (i) an initial licensing fee of $25,000, (ii) annual maintenance fees of $25,000 for the first three years and $40,000 for each subsequent year following the first anniversary of the agreement, (iii) royalties ranging from 1.5% to 3% of net sales of licensed technologies, (iv) an annual minimum royalty payment of $250,000 per year beginning in the year of the first commercial sale of licensed technology, (v) a share of non-royalty sublicense income of 20%, and (vi) an aggregate of $3,975,000 in milestone payments related to the usage of a macrophage technology and gene therapy technologies to potentially treat Type 1 diabetes. Unless earlier terminated pursuant to its terms, the agreement expires upon the later of (i) 20 years after the first commercial sale of the licensed technology thereunder and (ii) expiration of the last valid claim under the patent rights. We incurred $0 and $25,000 of expense from this agreement during each of the three- and nine-month periods ended September 30, 2023, respectively. We did not incur expenses from this agreement during the three- or nine-month periods ended September 30, 2022. As of September 30, 2023, we have incurred and paid approximately $25,000 toward this commitment.

Pursuant to an exclusive license agreement dated December 29, 2022, by and between us and the University of Pittsburgh, we agreed to pay (i) an initial licensing fee of $25,000, (ii) annual maintenance fees of $25,000 for the first three years and $40,000 for each subsequent year following the first anniversary of the agreement, (iii) royalties ranging from 1.5% to 3% of net sales of licensed technologies, (iv) an annual minimum royalty payment of $250,000 per year beginning in the year of the first commercial sale of licensed technology, (v) a share of non-royalty sublicense income of 20%, and (vi) an aggregate of $3,975,000 in milestone payments related to the usage of an insulin promoter and gene therapy technologies to potentially treat Type 2 diabetes. Unless earlier terminated pursuant to its terms, the agreement expires upon the later of (i) 20 years after the first commercial sale of the licensed technology thereunder and (ii) expiration of the last valid claim under the patent rights. We incurred $0 and $25,000 of expense from this agreement during each of the three- and nine-month periods ended September 30, 2023, respectively. We did not incur expenses from this agreement during the three- or nine-month periods ended September 30, 2022. As of September 30, 2023, we have paid approximately $25,000 toward this commitment.

Pursuant to an exclusive license agreement dated July 14, 2023, by and between us and the University of Pittsburgh, we agreed to pay (i) an initial licensing fee of $25,000, (ii) annual maintenance fees of $25,000 for the first year, $50,000 for the second and third years, and $100,000 for the fourth year and each subsequent year following the fourth anniversary of the agreement thereafter until the anniversary prior to the year of the first commercial sale, (iii) royalties ranging from 1.5% to 3% of net sales of licensed technologies, (iv) an annual minimum royalty payment of $250,000 per year beginning in the year of the first commercial sale of licensed technology, (v) a share of non-royalty sublicense income of 20%, and (vi) an aggregate of $4,225,000 in milestone payments related to the usage of an MafB promoter and gene therapy technologies to potentially treat Type 1 and Type 2 diabetes. Unless earlier terminated pursuant to its terms, the agreement expires upon the later of (i) 20 years after the first commercial sale of the licensed technology thereunder and (ii) expiration of the last valid claim under the patent rights. We incurred $25,000 of expense from this agreement during each of the three- and nine-month periods ended September 30, 2023. We did not incur expenses from this agreement during the three- or nine-month periods ended September 30, 2022. As of September 30, 2023, we have paid approximately $25,000 toward this commitment.

Contract Development and Manufacturing Organization

We entered into a three-year development services agreement in July 2022, amended in each of January 2023 and March 2023, with a contract development and manufacturing organization to manufacture good manufacturing practices ("GMP") grade materials for use in our clinical trials with a projected total cost of approximately $4.5 million. We incurred approximately $33,500 and $2.5 million of expense from this agreement during the three- and nine-months ended

SEC Form 10-Q filed by Genprex Inc.