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, 2022

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

For the transition period from __________ to __________

Commission file number: 001-36333

Bio-Path Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware		87-0652870
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)


4710 Bellaire Boulevard, Suite 210, Bellaire, Texas		77401
(Address of principal executive offices)		(Zip Code)

(832) 742-1357

(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, par value $0.001 per share	BPTH	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 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 ☒

At August 9, 2022, the Company had 7,160,164 outstanding shares of common stock, par value $0.001 per share.

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Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “our,” “us,” “the Company” and “Bio-Path” refer to Bio-Path Holdings, Inc. and its subsidiary. Bio-Path Holdings, Inc.’s wholly-owned subsidiary, Bio-Path, Inc., is sometimes referred to herein as “Bio-Path Subsidiary.”

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements can be identified by words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” “project,” “goal,” “strategy,” “future,” “likely,” “may,” “should,” “will” and variations of these words and similar references to future periods, although not all forward-looking statements contain these identifying words. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances, including those discussed in “Item 1A. Risk Factors” to Part I of our Annual Report on Form 10-K as of the fiscal year ended December 31, 2021, and in other reports or documents we file with the U.S. Securities and Exchange Commission (“SEC”). As a result, our actual results and financial condition may differ materially from those expressed or forecasted in the forward-looking statements, and you should not rely on such forward-looking statements. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations and financial condition. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

●the impact, risks and uncertainties related to COVID-19 and actions taken by governmental authorities or others in connection therewith;

●our lack of significant revenue to date, our history of recurring operating losses and our expectation of future operating losses;

●our need for substantial additional capital and our need to delay, reduce or eliminate our drug development and commercialization efforts if we are unable to raise additional capital;

●the highly-competitive nature of the pharmaceutical and biotechnology industry and our ability to compete effectively;

●the success of our plans to use collaboration arrangements to leverage our capabilities;

●our ability to retain and attract key personnel;

●the risk of misconduct of our employees, agents, consultants and commercial partners;

●disruptions to our operations due to expansions of our operations;

●the costs we would incur if we acquire or license technologies, resources or drug candidates;

●risks associated with product liability claims;

●our reliance on information technology systems and the liability or interruption associated with cyber-attacks or other breaches of our systems;

●our ability to use net operating loss carryforwards;

●provisions in our charter documents and state law that may prevent a change in control;

●work slowdown or stoppage at government agencies could negatively impact our business;

●our need to complete extensive clinical trials and the risk that we may not be able to demonstrate the safety and efficacy of our drug candidates;

●risks that our clinical trials may be delayed or terminated;

●our ability to obtain domestic and/or foreign regulatory approval for our drug candidates;

●changes in existing laws and regulations affecting the healthcare industry;

●our reliance on third parties to conduct clinical trials for our drug candidates;

●our ability to maintain orphan drug exclusivity for our drug candidates;

●our reliance on third parties for manufacturing our clinical drug supplies;

●risks associated with the manufacture of our drug candidates;

●our ability to establish sales and marketing capabilities relating to our drug candidates;

●market acceptance of our drug candidates;

●third-party payor reimbursement practices;

●our ability to adequately protect the intellectual property of our drug candidates;

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●infringement on the intellectual property rights of third parties;

●costs and time relating to litigation regarding intellectual property rights;

●our ability to adequately prevent disclosure by our employees or others of trade secrets and other proprietary information;

●our need to raise additional capital;

●the volatility of the trading price of our common stock;

●our common stock being thinly traded;

●our ability to issue shares of common or preferred stock without approval from our stockholders;

●our ability to pay cash dividends;

●costs and expenses associated with being a public company;

●our ability to maintain effective internal controls over financial reporting; and

●our ability to maintain compliance with the listing standards of the Nasdaq Capital Market.

Please also refer to “Item 1A. Risk Factors” to Part I of our Annual Report on Form 10-K as of the fiscal year ended December 31, 2021, “Item 1A. Risk Factors” to Part II of this Quarterly Report on Form 10-Q and other reports or documents we file with the SEC for a discussion of risks and factors that could cause our actual results and financial condition to differ materially from those expressed or forecasted in this Quarterly Report on Form 10-Q.

Any forward-looking statement made by us in this Quarterly Report on Form 10-Q is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise. However, you should carefully review the risk factors set forth in other reports or documents we file from time to time with the SEC.

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		Page
PART I - FINANCIAL INFORMATION		5
Item 1.	Financial Statements	5
	Condensed Consolidated Balance Sheets (Unaudited)	5
	Condensed Consolidated Statements of Operations (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows (Unaudited)	7
	Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)	8
	Notes to the Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21
PART II - OTHER INFORMATION		22
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	23
Signature		24

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIO-PATH HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)


	As of June 30,		As of December 31,
	2022		2021
		(unaudited)
Assets

Current assets
Cash	$	17,024	$	23,774
Prepaid drug product		2,147		523
Other current assets		1,392		1,843
Total current assets		20,563		26,140

Fixed assets
Furniture, fixtures & equipment		1,120		1,099
Less accumulated depreciation		(917)		(874)
		203		225

Right of use operating assets		243		203

Total Assets	$	21,009	$	26,568
Liabilities & Shareholders' Equity
Current liabilities
Accounts payable	$	611	$	106
Accrued expenses		608		770
Current portion of lease liabilities		102		82
Total current liabilities		1,321		958

Noncurrent lease liabilities		168		153

Total Liabilities		1,489		1,111
Shareholders' equity
Preferred stock, $.001 par value; 10,000 shares authorized; no shares issued and outstanding		—		—
Common stock, $.001 par value; 200,000 shares authorized; 7,160 and 7,160 shares issued and outstanding, respectively		7		7
Additional paid in capital		103,541		103,111
Accumulated deficit		(84,028)		(77,661)
Total shareholders' equity		19,520		25,457
Total Liabilities & Shareholders' Equity	$	21,009	$	26,568

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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BIO-PATH HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021

Operating expenses

Research and development	$	1,851	$	760	$	3,949	$	2,021
General and administrative		1,159		1,049		2,420		2,236

Total operating expenses		3,010		1,809		6,369		4,257

Net operating loss	$	(3,010)	$	(1,809)	$	(6,369)	$	(4,257)

Other income
Interest income		2		1		2		2

Total other income		2		1		2		2

Net loss	$	(3,008)	$	(1,808)	$	(6,367)	$	(4,255)

Net loss per share, basic and diluted	$	(0.42)	$	(0.26)	$	(0.89)	$	(0.67)

Basic and diluted weighted average number of common shares outstanding		7,160		6,960		7,160		6,344

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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BIO-PATH HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2022		2021

Cash flow from operating activities

Net loss	$	(6,367)	$	(4,255)

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

Stock-based compensation		430		329
Amortization of right of use assets		45		42
Depreciation		43		36
(Increase) decrease in operating assets
Prepaid drug product		(1,624)		(263)
Other current assets		451		(82)
Increase (decrease) in operating liabilities
Accounts payable and accrued expenses		343		14
Lease liabilities		(50)		(46)

Net cash used in operating activities		(6,729)		(4,225)

Cash flow from investing activities

Purchases of furniture, fixtures & equipment		(21)		(47)

Net cash used in investing activities		(21)		(47)

Cash flow from financing activities

Net proceeds from sale of common stock		—		14,453
Net proceeds from exercise of warrants		—		4,157

Net cash provided by financing activities		—		18,610

Net (decrease) increase in cash		(6,750)		14,338

Cash, beginning of period		23,774		13,755

Cash, end of period	$	17,024	$	28,093

Supplemental disclosure of non-cash activities

Non-cash operating activities
Right of use asset recognized in exchange for lease obligation	$	85	$	—

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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BIO-PATH HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(Unaudited)


				Additional
	Common Stock			Paid in		Accumulated
Description	Shares	Amount		Capital		Deficit		Total

Balance at March 31, 2021	6,960	$	7	$	101,034	$	(69,668)	$	31,373

Stock-based compensation	—		—		189		—		189
Net loss	—		—		—		(1,808)		(1,808)

Balance at June 30, 2021	6,960	$	7	$	101,223	$	(71,476)	$	29,754

Balance at March 31, 2022	7,160	$	7	$	103,328	$	(81,020)	$	22,315

Stock-based compensation	—		—		213		—		213
Net loss	—		—		—		(3,008)		(3,008)

Balance at June 30, 2022	7,160	$	7	$	103,541	$	(84,028)	$	19,520


				Additional
	Common Stock			Paid in		Accumulated
Description	Shares	Amount		Capital		Deficit		Total

Balance at December 31, 2020	4,542	$	5	$	82,286	$	(67,221)	$	15,070

Issuance of common stock, net of fees	1,989		2		14,451		—		14,453
Exercise of warrants, net of fees	429		—		4,157		—		4,157
Stock-based compensation	—		—		329		—		329
Net loss	—		—		—		(4,255)		(4,255)

Balance at June 30, 2021	6,960	$	7	$	101,223	$	(71,476)	$	29,754


Balance at December 31, 2021	7,160	$	7	$	103,111	$	(77,661)	$	25,457

Stock-based compensation	—		—		430		—		430
Net loss	—		—		—		(6,367)		(6,367)

Balance at June 30, 2022	7,160	$	7	$	103,541	$	(84,028)	$	19,520

SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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BIO-PATH HOLDINGS, INC.

Notes to the Unaudited Condensed Consolidated Financial Statements

Unless the context requires otherwise, references in these Notes to the Condensed Consolidated Financial Statements to “we,” “our,” “us,” “the Company” and “Bio-Path” refer to Bio-Path Holdings, Inc. and its subsidiary. Bio-Path Holdings, Inc.’s wholly-owned subsidiary, Bio-Path, Inc., is sometimes referred to herein as “Bio-Path Subsidiary.”

The accompanying unaudited condensed interim financial statements have been prepared in conformity with the authoritative U.S. generally accepted accounting principles (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. The unaudited quarterly financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Annual Report on Form 10-K of the Company as of and for the fiscal year ended December 31, 2021. The results of operations for the period ended June 30, 2022, are not necessarily indicative of the results for a full-year period.

1. Organization and Business

The Company is a clinical and preclinical stage oncology-focused RNAi nanoparticle drug development company utilizing a novel technology that achieves systemic delivery for target-specific protein inhibition for any gene product that is over-expressed in disease. The Company’s drug delivery and antisense technology, called DNAbilize®, is a platform that uses P-ethoxy, which is a deoxyribonucleic acid (DNA) backbone modification that is intended to protect the DNA from destruction by the body’s enzymes when circulating in vivo, incorporated inside of a lipid bilayer having neutral charge. The Company believes this combination allows for high efficiency loading of antisense DNA into non-toxic, cell-membrane-like structures for delivery of the antisense drug substance into cells. In vivo, the DNAbilize® delivered antisense drug substances are systemically distributed throughout the body to allow for reduction or elimination of target proteins in blood diseases and solid tumors. Through testing in numerous animal studies and treatment in over 120 patients, the Company’s DNAbilize® drug candidates have demonstrated an excellent safety profile. DNAbilize® is a registered trademark of the Company. Using DNAbilize® as a platform for drug development and manufacturing, the Company currently has four antisense drug candidates in development to treat at least five different cancer disease indications.

The Company’s operations to date have been limited to organizing and staffing the Company, acquiring, developing and securing its technology and undertaking product development for a limited number of product candidates. As the Company has not begun its planned principal operations of commercializing a product candidate, the Company’s activities are subject to significant risks and uncertainties, including the potential requirement to secure additional funding, the outcome of the Company’s clinical trials and failing to operationalize the Company’s current drug candidates before another company develops similar products.

2. Significant Accounting Policies

Net Loss Per Share – Basic net loss per common share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period. Although there were warrants and stock options outstanding as of June 30, 2022 and 2021, no potential common shares are included in the computation of any diluted per share amount, as they would be antidilutive. Consequently, diluted net loss per share as presented in the condensed consolidated financial statements is equal to basic net loss per share for the three and six months ended June 30, 2022 and 2021. The calculation of diluted earnings per share for 2022 did not include 657,408 shares and 400,531 shares issuable pursuant to the exercise of outstanding common stock options and warrants, respectively, as of June 30, 2022 as the effect would be antidilutive. The calculation of diluted earnings per share for 2021

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did not include 485,908 shares and 429,791 shares issuable pursuant to the exercise of outstanding common stock options and warrants, respectively, as of June 30, 2021 as the effect would be antidilutive.

Fair Value - The fair values of cash and cash equivalents, accounts payable and accrued liabilities approximate their carrying values because of the short-term maturities of these instruments.

3. Prepaid Drug Product

Advance payments, including nonrefundable amounts, for goods or services that will be used or rendered for future clinical development activities are deferred and capitalized. Such amounts will be recognized as an expense as the related goods are delivered or the related services are performed. The Company recognized certain expenses and incurred installment costs for its contract drug manufacturing and raw material suppliers with prepayments totaling $0.5 million as of December 31, 2021 pursuant to drug supply contracts for the manufacture and delivery of prexigebersen for testing in a Phase 2 clinical trial and BP1002 for testing in a Phase 1 clinical trial. The Company recognized certain expenses and incurred additional installment costs during the first six months of 2022, with advanced payments remaining to be expensed totaling $2.1 million as of June 30, 2022.

4. Other Current Assets

As of June 30, 2022, other current assets included prepaid expenses of $1.4 million, comprised primarily of prepayments of $1.2 million made for the Company’s clinical trials for prexigebersen in AML, BP1001-A in solid tumors as well as BP1002 in separate clinical trials for lymphoma and AML. Additionally, the Company had prepaid preclinical expenses of $0.1 million and prepaid manufacturing development expenses of $0.1 million. As of December 31, 2021, other current assets included prepaid expenses of $1.8 million, comprised primarily of prepayments of $1.4 million made for the Company’s clinical trials for BP1002 in AML and lymphoma, prexigebersen in AML and BP1001-A in solid tumors as well as prepaid insurance of $0.3 million and other prepaid expenses of $0.1 million.

5. Accounts Payable

As of June 30, 2022, current liabilities included accounts payable of $0.6 million, comprised primarily of amounts owed for drug supply manufacturing of $0.3 million, clinical trial expenses of $0.2 million and legal and patent fees of $0.1 million. As of December 31, 2021, current liabilities included accounts payable of $0.1 million, comprised primarily of legal and patent fees and expenses related to manufacturing totaling $0.1 million.

6. Accrued Expense

As of June 30, 2022, current liabilities included accrued expenses of $0.6 million, comprised primarily of accrued employee vacation and bonus expenses of $0.3 million, manufacturing and testing services of $0.1 million, professional and consulting fees of $0.1 million and legal and patent fees of $0.1 million. As of December 31, 2021, current liabilities included accrued expenses of $0.8 million, comprised primarily of accrued employee vacation and bonus expenses of $0.4 million, franchise tax expense of $0.1 million, legal and patent fees of $0.1 million, manufacturing expenses of $0.1 million and other accrued expenses of $0.1 million.

7. Stockholders’ Equity

Issuances of Common Stock - On February 16, 2021, the Company entered into a placement agency agreement with Roth Capital Partners, LLC relating to a public offering of 1,710,600 shares of its common stock for gross proceeds of approximately $13.0 million under the Company’s shelf registration statement on Form S-3 (File No. 333-231537) (the “2019 Shelf Registration Statement”), which was declared effective by the SEC on June 5, 2019 (the “2021 Public Offering”). In addition, on February 16, 2021, the Company entered into a securities purchase agreement with certain institutional investors pursuant to which the Company agreed to sell an aggregate of 1,650,000 shares of its common stock in the 2021 Public Offering to such investors. The 2021 Public Offering closed on February 18, 2021. The net proceeds from the offerings, after deducting the placement agent’s fees and expenses and the Company’s offering expenses, were approximately $12.2 million.

At-The-Market Offering Agreement - On July 13, 2020, the Company entered into an At-The-Market Offering Agreement (the “Offering Agreement”) with H. C. Wainwright & Co., LLC (“Wainwright”), as sales agent and/or principal, pursuant to which the

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Company may offer and sell, from time to time, through or to Wainwright, shares of the Company’s common stock. From July 14, 2020 to August 18, 2021, offers and any applicable sales of shares of common stock under the Offering Agreement were made pursuant to the base prospectus contained in the 2019 Shelf Registration Statement and a related prospectus supplement filed with the SEC on July 14, 2020, for an aggregate offering price of up to $7.0 million. From August 19, 2021 to June 14, 2022, offers and any applicable sales of shares of common stock under the Offering Agreement were made pursuant to the base prospectus contained in the 2019 Shelf Registration Statement and a related prospectus supplement filed with the SEC on August 19, 2021, as amended pursuant to an amendment to prospectus supplement filed with the SEC on March 15, 2022, for an aggregate offering price of up to $10.0 million. From and after June 15, 2022, offers and sales of shares of common stock under the Offering Agreement may be made pursuant to the Company’s shelf registration statement on Form S-3, which was declared effective by the SEC on June 14, 2022 (File No. 333-265282) (the “2022 Shelf Registration Statement”), and a related prospectus supplement filed with the SEC on June 14, 2022, as supplemented and amended pursuant to a prospectus supplement filed with the SEC on July 29, 2022, for an aggregate offering price of up to $3.0 million, provided that the Company may be limited in the amount of securities that it can currently sell under the Offering Agreement pursuant to Instruction I.B.6 to Form S-3 for so long as its public float remains less than $75.0 million. Under the Offering Agreement, Wainwright may sell shares by any method deemed to be an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended. The Company will pay Wainwright a commission on the aggregate gross proceeds from each sale of shares under the Offering Agreement and has agreed to provide Wainwright with customary indemnification and contribution rights. The Company has also agreed to reimburse Wainwright for certain specified expenses.

During the six months ended June 30, 2022, the Company did not offer or sell any shares of its common stock under the Offering Agreement.

Stockholders’ Equity totaled $19.5 million as of June 30, 2022 compared to $25.5 million as of December 31, 2021. There were 7,160,164 shares of common stock issued and outstanding as of June 30, 2022. There were no shares of preferred stock issued and outstanding as of June 30, 2022.

8. Stock-Based Compensation Plan

The 2017 Plan – On December 21, 2017, the Company’s stockholders approved the Bio-Path Holdings, Inc. 2017 Stock Incentive Plan (as amended, the “2017 Plan”), which replaced the First Amended 2007 Stock Incentive Plan, as amended (the “2007 Plan”). The 2007 Plan expired by its terms in January 2018, and no awards were made under the 2007 Plan from the approval of the 2017 Plan on December 21, 2017 until the expiration of the 2007 Plan. The 2017 Plan provides for the grant of Incentive Stock Options, Non-Qualified Stock Options, Restricted Shares, Restricted Share Units, Stock Appreciation Rights, Performance-Based Awards and other stock-based awards, or any combination of the foregoing to the Company’s employees, non-employee directors and consultants. On December 19, 2019, the Company’s stockholders approved an amendment to the 2017 Plan to increase the number of shares reserved for grant and issuance pursuant to the 2017 Plan by 600,000 shares to 660,000 shares. Under the 2017 Plan, the exercise price of awards is determined by the Board of Directors or the compensation committee of the Board of Directors, and for options intended to qualify as qualified Incentive Stock Options, may not be less than the fair market value as determined by the closing stock price at the date of the grant. Each option and award under the 2017 Plan shall vest and expire as determined by the Board of Directors or the compensation committee. Options expire no later than ten years from the date of grant. All grants provide for accelerated vesting if there is a change of control, as defined in the 2017 Plan.

Stock-based compensation expense for both the three months ended June 30, 2022 and 2021 was $0.2 million. Of these amounts, stock-based compensation expense for personnel involved in the Company’s general and administrative activities for the three months ended June 30, 2022 and 2021 was $0.2 million and $0.1 million, respectively. Stock-based compensation expense for personnel involved in the Company’s research and development activities for the three months ended June 30, 2022 and 2021 was $50,000 and $45,000, respectively.

Stock-based compensation expense for the six months ended June 30, 2022 and 2021 was $0.4 million and $0.3 million, respectively. Of these amounts, stock-based compensation expense for personnel involved in the Company’s general and administrative activities for both the six months ended June 30, 2022 and 2021 was $0.3 million. Stock-based compensation expense for personnel involved in the Company’s research and development activities for both the six months ended June 30, 2022 and 2021 was $0.1 million.

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The Company utilized the Black-Scholes valuation model for estimating the fair value of the stock options granted, with the following weighted-average assumptions for options granted in the six months ended June 30, 2022 and 2021, respectively:


	2022		2021
Risk-free interest rate	2.43	%	1.18	%
Expected volatility	127	%	127	%
Expected term in years	6.0		6.1
Dividend yield	—	%	—	%

The following summary represents option activity under the Company’s stock-based compensation plans for the six months ended June 30, 2022:



		Weighted-
		Average
		Exercise
	Options	Price
	(in thousands)

Outstanding at December 31, 2021	486	$	14.58
Granted	192		3.71
Forfeited	(2)		7.02
Expired	(18)		5.96
Outstanding at June 30, 2022	658	$	11.67
Vested and expected to vest June 30, 2022	622	$	12.02
Exercisable at June 30, 2022	257	$	21.70

As of June 30, 2022, the aggregate intrinsic value of outstanding stock options was $40,000. The aggregate intrinsic value represents the total pretax intrinsic value (the difference between the Company’s closing stock price on June 30, 2022 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June 30, 2022. This amount changes based on the fair value of the Company’s stock.

As of June 30, 2022, unamortized stock-based compensation expense for all outstanding options was $1.6 million, which is expected to be recognized over a weighted average vesting period of 2.6 years.

9. Commitments and Contingencies

Drug Supplier Project Plan – Total commitments for the Company’s drug supplier project plan were $5.9 million as of June 30, 2022, comprised of $2.6 million for the manufacture of prexigebersen drug product, $2.5 million for manufacture of the Company’s Grb2 drug substance, $0.6 million for manufacturing supply chain expansion and $0.2 million for testing services. The Company expects to incur $5.8 million of these commitments over the next 12 months.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

When you read this Item of this Quarterly Report on Form 10-Q, it is important that you also read the unaudited financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and notes thereto included in our Annual Report on Form 10-K as of the fiscal year ended December 31, 2021. This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements due to the impact, risks and uncertainties related to COVID-19 and actions taken by governmental authorities or others in connection therewith. To date, COVID-19’s impact on our operations has been limited to the inability to travel to clinical trial sites, clinical trial sites not allowing nonessential personnel on site for the purpose of monitoring activity and delays in the manufacture of our drug requirements by contracted third-party manufacturers. We anticipate COVID-19 may have an effect on patient recruiting in the near term as social distancing mandates are in effect. We believe these operational issues can be managed through remote monitoring capabilities currently being developed and deployed. Our actual results could also differ materially from those anticipated in these forward-looking statements for many other reasons, including the matters discussed in “Item 1A. Risk Factors” to Part I of our Annual Report on Form 10-K as of the fiscal year ended December 31, 2021, the matters discussed in “Item 1A. Risk Factors” to Part II of this Quarterly Report on Form 10-Q, and other risks and uncertainties discussed in filings made with the SEC. See “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q for additional discussion regarding risks associated with forward-looking statements.

Overview.

We are a clinical and preclinical stage oncology-focused RNAi nanoparticle drug development company utilizing a novel technology that achieves systemic delivery for target-specific protein inhibition for any gene product that is over-expressed in disease. Our drug delivery and antisense technology, called DNAbilize®, is a platform that uses P-ethoxy, which is a deoxyribonucleic acid (DNA) backbone modification that is intended to protect the DNA from destruction by the body’s enzymes when circulating in vivo, incorporated inside of a lipid bilayer having neutral charge. We believe this combination allows for high efficiency loading of antisense DNA into non-toxic, cell-membrane-like structures for delivery of the antisense drug substance into cells. In vivo, the DNAbilize® delivered antisense drug substances are systemically distributed throughout the body to allow for reduction or elimination of target proteins in blood diseases and solid tumors. Through testing in numerous animal studies and treatment in over 120 patients, our DNAbilize® drug candidates have demonstrated an excellent safety profile. DNAbilize® is a registered trademark of the Company.

Using DNAbilize® as a platform for drug development and manufacturing, we currently have four drug candidates in development to treat at least five different cancer disease indications. Our lead drug candidate, prexigebersen (pronounced prex” i je ber’ sen), which targets growth factor receptor-bound protein 2 (Grb2), initially started the efficacy portion of a Phase 2 clinical trial for untreated acute myeloid leukemia (“AML”) patients in combination with low-dose cytarabine (“LDAC”). The interim data released on March 6, 2019 showed that 11 (65%) of the 17 evaluable patients had a response, including five (29%) who achieved complete remission (“CR”), inclusive of one CR with incomplete hematologic recovery (“CRi”) and one morphologic leukemia-free state, and six (35%) stable disease responses, including two patients who had greater than a 50% reduction in bone marrow blasts. However, DNA hypomethylating agents are now the most frequently used agents in the treatment of elderly AML patients in the U.S. and Europe. As a result, Stage 2 of the Phase 2 trial in AML was amended to remove the combination treatment of prexigebersen and LDAC and replace it with the combination treatment of prexigebersen and decitabine, a DNA hypomethylating agent, for treatment of a second cohort of untreated AML patients. Since decitabine is also used as a treatment for relapsed/refractory AML patients, a cohort of relapsed/refractory AML patients was also added to the study.

The U.S. Food and Drug Administration (“FDA”) granted approval of venetoclax in combination with LDAC, decitabine or azacytidine (the latter two drugs are DNA hypomethylating agents) as frontline therapy for newly diagnosed AML in adults who are 75 years or older, or who have comorbidities precluding intensive induction chemotherapy. We believe this approval of the frontline venetoclax and decitabine combination therapy provides an opportunity for combining prexigebersen with the combination therapy for the treatment of de novo AML patients. Preclinical efficacy studies for the triple combination treatment of prexigebersen, decitabine and venetoclax in AML have been successfully completed. In the preclinical efficacy studies, four AML cancer cell lines were treated with three different combinations of decitabine, venetoclax and prexigebersen. Decrease in AML cell viability was the primary

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measure of efficacy. The triple combination of decitabine, venetoclax and prexigebersen showed significant improvement in efficacy in three of the four AML cell lines. Based on these results, we believe that adding prexigebersen to the treatment combination of decitabine and venetoclax could lead to improved efficacy in AML patients. Accordingly, we further amended Stage 2 of this Phase 2 clinical trial to add the triple combination treatment comprised of prexigebersen, decitabine and venetoclax.

Bio-Path’s approved amended Stage 2 for this Phase 2 clinical trial currently has three cohorts of patients. The first two cohorts will treat patients with the triple combination of prexigebersen, decitabine and venetoclax. The first cohort will include untreated AML patients, and the second cohort will include relapsed/refractory AML patients. Finally, the third cohort will treat relapsed/refractory AML patients, who are venetoclax-resistant or -intolerant, with the two-drug combination of prexigebersen and decitabine. The full trial design plans have approximately 98 evaluable patients for the first cohort having untreated AML patients with a preliminary review performed after 19 evaluable patients and a formal interim analysis after 38 evaluable patients. The full trial design plans have approximately 54 evaluable patients for each of the second cohort, having relapsed/refractory AML patients, and the third cohort, having AML patients who are venetoclax-resistant or -intolerant, in each case with a review performed after 19 evaluable patients. The study is anticipated to be conducted at up to ten clinical sites in the U.S., and Gail J. Roboz, MD is the national coordinating Principal Investigator for the Phase 2 trial. Dr. Roboz is a professor of medicine and director of the Clinical and Translational Leukemia Program at the Weill Medical College and the New York-Presbyterian Hospital in New York City. On August 13, 2020, we announced the enrollment and dosing of the first patient in this approved amended Stage 2 of the Phase 2 clinical trial.

On April 5, 2021, we announced the successful completion of the safety run-in of Stage 2 of the Phase 2 clinical study. In the safety run-in of the triple combination, six evaluable patients were treated with the combination of prexigebersen, decitabine and venetoclax. These patients included four relapsed/refractory AML patients, and two newly diagnosed AML patients. In the preliminary safety data review, five of the patients (83%) responded to treatment, including four (67%) achieving CR and one (17%) achieving CRi. Recent publications provide that CR rates to combination treatment with decitabine and venetoclax (but without prexigebersen) are 42 to 52% for relapsed/refractory AML patients and 0 to 39% for relapsed/refractory secondary AML patients. Response rates to frontline treatment with decitabine and venetoclax (but without prexigebersen) are 62 to 71% for newly diagnosed AML patients. These preliminary data, presented at the 2021 American Society of Hematology Annual Meeting, showed the treatment was well-tolerated and there were no dose limiting toxicities attributed to prexigebersen. Three patients remained on treatment for more than one cycle.

Our second drug candidate, Liposomal Bcl-2 (“BP1002”), targets the protein Bcl-2, which is responsible for driving cell survival in up to 60% of all cancers. On November 21, 2019, we announced that the FDA cleared an Investigational New Drug (“IND”) application for BP1002 for an initial Phase 1 clinical trial that will evaluate the ability of BP1002 to treat refractory/relapsed lymphoma and CLL patients. The Phase 1 clinical trial is being conducted at several leading cancer centers, including MD Anderson Cancer Center and the Georgia Cancer Center. On November 19, 2020, we announced the enrollment and dosing of the first patient in the Phase 1 clinical trial.

Additionally, preclinical studies suggest that the combination of BP1002 with decitabine is efficacious in venetoclax-resistant leukemia and lymphoma cells. An abstract of the preclinical study was presented at the 2021 American Association for Cancer Research (“AACR”) Annual Meeting. On August 24, 2021, we announced that the FDA cleared an IND application for BP1002 for an initial Phase 1/1b clinical trial that will evaluate the ability of BP1002 to treat refractory/relapsed AML patients. The Phase 1/1b clinical trial is anticipated to be conducted at several leading cancer centers in the United States, including the Weill Medical College, MD Anderson Cancer Center, The University of California at Los Angeles Cancer Center, and the Georgia Cancer Center. Gail J. Roboz, M.D., will serve as Principal Investigator for the Phase 1/1b trial.

Our third drug candidate, Liposomal STAT3 (“BP1003”), targets the STAT3 protein and is currently in IND enabling studies as a potential treatment of pancreatic cancer, non-small cell lung cancer (“NSCLC”) and AML. Preclinical models have shown BP1003 to inhibit cell viability and STAT3 protein expression in NSCLC and AML cell lines. Further, BP1003 successfully penetrated pancreatic tumors and significantly enhanced the efficacy of gemcitabine, a treatment for patients with advanced pancreatic cancer, in a pancreatic cancer patient derived tumor model. An abstract of the preclinical study was presented at the 2019 AACR Annual Meeting. Our lead indication for BP1003 is pancreatic cancer due to the severity of this disease and the lack of effective, life-extending treatments. For example, pancreatic adenocarcinoma is projected to be the second most lethal cancer behind lung cancer by 2030. Typical survival for a metastatic pancreatic cancer patient is about three to six months from diagnosis. Additionally, an abstract of the preclinical study demonstrating that BP1003 enhanced the sensitivity of breast and ovarian cancer cells to chemotherapy was presented at the 2022 AACR Annual Meeting. We successfully completed several IND enabling studies of BP1003 in 2021 and expect

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to complete one additional IND enabling study in 2022. If that additional study is successfully completed, our goal is to file an IND in 2022 or the first quarter of 2023. Based on the filing of the IND, we expect to initiate the first-in-humans Phase 1 study of BP1003 in patients with refractory, metastatic solid tumors, including pancreatic cancer and NSCLC.

In addition, a modified product named BP1001-A, Bio-Path's fourth drug candidate, has shown to enhance chemotherapy efficacy in preclinical solid tumor models. Results of the preclinical study were published in the scientific journal Oncotarget in July 2020. BP1001-A incorporates the same drug substance as prexigebersen but has a slightly modified formulation designed to enhance nanoparticle properties. In late 2019, we filed an IND application to initiate a Phase 1/1b clinical trial of BP1001-A in patients with solid tumors, including ovarian, endometrial, pancreatic and breast cancer. Ovarian cancer is one of the most common types of gynecologic malignancies, with approximately 50% of all cases occurring in women older than 63 years. On October 27, 2021, we announced that the FDA cleared the IND application for BP1001-A for the initial Phase 1/1b clinical trial, which allows us to proceed with next steps to open the clinical trial.

Our DNAbilize® technology-based products are available for out-licensing or partnering. We intend to apply our drug technology template to new disease-causing protein targets to develop new nanoparticle antisense RNAi drug candidates. We have a new product identification template in place to define a process of scientific, preclinical, commercial and intellectual property evaluation of potential new drug candidates for inclusion into our drug product development pipeline. As we expand our drug development programs, we will look at indications where a systemic delivery is needed and antisense RNAi nanoparticles can be used to slow, reverse or cure a disease, either alone or in combination with another drug.

We have certain intellectual property as the basis for our current drug products in clinical development, prexigebersen, BP1002, BP1003 and BP1001-A. We are developing RNAi antisense nanoparticle drug candidates based on our own patented technology to treat cancer and autoimmune disorders where targeting a single protein may be advantageous and result in reduced patient adverse effects as compared to small molecule inhibitors with off-target and non-specific effects. We have composition of matter and method of use intellectual property for the design and manufacture of antisense RNAi nanoparticle drug products.

As of June 30, 2022, we had an accumulated deficit of $84.0 million. Our net loss was $3.0 million and $1.8 million for the three months ended June 30, 2022 and 2021, respectively. Our net loss was $6.4 million and $4.3 million for the six months ended June 30, 2022 and 2021, respectively. We expect to continue to incur significant operating losses, and we anticipate that our losses may increase substantially as we expand our drug development programs and commercialization efforts. To achieve profitability, we must enter into license or development agreements with third parties, or successfully develop and obtain regulatory approval for one or more of our drug candidates and effectively commercialize any drug candidates we develop. In addition, if we obtain regulatory approval of one or more of our drug candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Even if we succeed in developing and commercializing one or more of our drug candidates, we may not be able to generate sufficient revenue and we may never be able to achieve or sustain profitability. We expect to finance our foreseeable cash requirements through cash on hand, cash from operations, debt financings and public or private equity offerings. We may seek to access the public or private equity markets whenever conditions are favorable; however, there can be no assurance that we will be able to raise additional capital when needed or on terms that are favorable to us, if at all. Additionally, we may seek collaborations and license arrangements for our drug candidates. We currently have no lines of credit or other arranged access to debt financing.

Company History and Available Information

The Company was incorporated in May 2000 as a Utah corporation. In February 2008, Bio-Path Subsidiary completed a reverse merger with the Company, which at the time was traded over the counter and had no current operations. The prior name of the Company was changed to Bio-Path Holdings, Inc. and the directors and officers of Bio-Path Subsidiary became the directors and officers of Bio-Path Holdings, Inc. On March 10, 2014, our common stock ceased trading on the OTCQX and commenced trading on the Nasdaq Capital Market under the ticker symbol “BPTH.” Effective December 31, 2014, we changed our state of incorporation from Utah to Delaware through a statutory conversion pursuant to the Utah Revised Business Corporation Act and the Delaware General Corporation Law. Our principal executive offices are located at 4710 Bellaire Boulevard, Suite 210, Bellaire, Texas 77401, and our telephone number is (832) 742-1357.

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Recent Accounting Pronouncements

There are no recent accounting pronouncements that have a material impact on our condensed consolidated financial statements.

Financial Operations Overview

Revenue

We have not generated significant revenues to date. Our ability to generate revenues from our drug candidates, which we do not expect will occur for many years, if ever, will depend heavily on the successful development and eventual commercialization of our drug candidates.

In the future, we may generate revenue from a combination of product sales, third-party grants, service agreements, strategic alliances and licensing arrangements. We expect that any revenue we generate will fluctuate due to the timing and amount of services performed, milestones achieved, license fees earned and payments received upon the eventual sales of our drug candidates, in the event any are successfully commercialized. If we fail to complete the development of any of our drug candidates or obtain regulatory approval for them, our ability to generate future revenue will be adversely affected.

Research and development expenses

Research and development expenses consist of costs associated with our research activities, including the development of our drug candidates. Our research and development expenses consist of:

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expenses related to research and development personnel, including salaries and benefits, travel and stock-based compensation;

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external research and development expenses incurred under arrangements with third parties, such as contract research organizations, clinical investigative sites, laboratories, manufacturing organizations and consultants; and

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costs of materials used during research and development activities.

Costs and expenses that can be clearly identified as research and development are charged to expense as incurred. Advance payments, including nonrefundable amounts, for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts will be recognized as an expense as the related goods are delivered or the related services are performed. If the goods will not be delivered, or services will not be rendered, then the capitalized advance payment is charged to expense.

We expect research and development expenses associated with the completion of the associated clinical trials to be substantial and to increase over time. The successful development of our drug candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete development of our drug candidates or the period, if any, in which material net cash inflows from our drug candidates may commence. This is due to the numerous risks and uncertainties associated with developing drugs, including the uncertainty of:

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the rate of progress, results and costs of completion of ongoing clinical trials of our drug candidates;

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the size, scope, rate of progress, results and costs of completion of any potential future clinical trials and preclinical tests of our drug candidates that we may initiate;

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competing technological and market developments;

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the performance of third-party manufacturers and suppliers;

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the ability of our drug candidates, if they receive regulatory approval, to achieve market success;

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disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our drug candidates; and

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the impact, risks and uncertainties related to COVID-19 and actions taken by governmental authorities or others in connection therewith.

A change in the outcome of any of these variables with respect to the development of a drug candidate could mean a significant change in the costs and timing associated with the development of that drug candidate. For example, if the FDA or other regulatory authority were to require us to conduct clinical trials beyond those which we currently anticipate will be required for the completion of clinical development of a drug candidate or if we experience significant delays in enrollment in any clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development.

General and administrative expenses

Our general and administrative expenses consist primarily of salaries and benefits for management and administrative personnel, professional fees for legal, accounting and other services, travel costs and facility-related costs such as rent, utilities and other general office expenses.

Results of Operations

Comparisons of the Three Months Ended June 30, 2022 to the Three Months Ended June 30, 2021

Revenue. We had no revenue for each of the three months ended June 30, 2022 and 2021.

Research and Development Expense. Our research and development expense for the three months ended June 30, 2022 was $1.9 million, an increase of $1.1 million compared to the three months ended June 30, 2021. The increase in research and development expense was primarily due to manufacturing expenses related to drug product releases in the second quarter of 2022 and increased patient enrollment related to our Phase 2 clinical trial for prexigebersen in AML. The following table sets forth our research and development expenses (in thousands):


	Three Months Ended
	June 30,
	2022		2021
Research and development expense	$	1,801	$	715
Non-cash stock-based compensation expense		50		45
Total research and development expense	$	1,851	$	760

General and Administrative Expense. Our general and administrative expense for the three months ended June 30, 2022 was $1.2 million, an increase of $0.1 million compared to the three months ended June 30, 2021. The increase in general and administrative expense was primarily due to increased legal fees. The following table sets forth our general and administrative expenses (in thousands):

Three Months Ended

June 30,

General and administrative expense

Non-cash stock-based compensation expense

SEC Form 10-Q filed by Bio-Path Holdings Inc.