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, 2024

☐ 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: 001-41294

Onconetix, Inc.

(Exact name of registrant as specified in its charter)

Delaware		83-2262816
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

201 E. Fifth Street, Suite 1900

Cincinnati, OH

45202

(Address of principal executive offices)

(Zip Code)

(513) 620-4101

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class		Trading Symbol(s)		Name of exchange on which registered
Common stock, $0.00001 par value		ONCO		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of August 29, 2024, the registrant had 29,790,119 shares of common stock, $0.00001 par value per share, outstanding.

TABLE OF CONTENTS

		Page
Cautionary Note Regarding Forward-Looking Statements		ii

PART I.	FINANCIAL INFORMATION	1
Item 1.	Condensed Consolidated Financial Statements (unaudited).	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Convertible Redeemable Preferred Stock and Stockholders’ Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	46
Item 4.	Controls and Procedures.	46
PART II.	OTHER INFORMATION	49
Item 1.	Legal Proceedings.	49
Item 1A.	Risk Factors.	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	53
Item 3.	Defaults Upon Senior Securities.	53
Item 4.	Mine Safety Disclosures.	53
Item 5.	Other Information.	53
Item 6.	Exhibits.	54
	Signatures	55

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements that reflect our current expectations and views of future events. The forward-looking statements are contained principally in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Readers are cautioned that known and unknown risks, uncertainties and other factors, including those over which we may have no control and others listed in the “Risk Factors” section of this Report, may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by the words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future, although not all forward-looking statements contain these words. These statements relate to future events or our future financial performance or condition and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. These forward-looking statements include, but are not limited to, statements about:

●

our financial position and estimated cash burn rate;

●

our estimates regarding expenses, future revenues and capital requirements;

●

our ability to continue as a going concern;

●

our need to raise substantial additional capital to fund our operations and repay indebtedness;

●

our ability to commercialize or monetize Proclarix and integrate the assets and commercial operations acquired in the share exchange with Proteomedix AG (“Proteomedix”);

●

the successful development of our commercialization capabilities, including sales and marketing capabilities.

●

our ability to maintain the necessary regulatory approvals to market and commercialize our products;

●

the results of market research conducted by us or others;

●

our ability to obtain and maintain intellectual property protection for our current products;

●

our ability to protect our intellectual property rights and the potential for us to incur substantial costs from lawsuits to enforce or protect our intellectual property rights;

●

the possibility that a third party may claim we or our third-party licensors have infringed, misappropriated, or otherwise violated their intellectual property rights and that we may incur substantial costs and be required to devote substantial time defending against claims against us;

●

our reliance on third parties, including manufacturers and logistics companies;

●

our dependence on third parties to develop, market, distribute and sell our products;

●

the success of competing therapies or diagnostics and products that are or become available;

●

our ability to successfully compete against current and future competitors;

●

our ability to expand our organization to accommodate potential growth and our ability to retain and attract, motivate and retain key personnel;

●

the potential for us to incur substantial costs resulting from product liability lawsuits against us and the potential for these product liability lawsuits to cause us to limit our commercialization of our products;

●

market acceptance of our products, the size and growth of the potential markets for our current products, and our ability to serve those markets; and

●

disruptions in the business of Onconetix or Proteomedix, which could have an adverse effect on their respective businesses and financial results.

These forward-looking statements involve numerous risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results of operations or the results of other matters that we anticipate herein could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other sections in this Report. You should thoroughly read this Report and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

The forward-looking statements made in this Report relate only to events or information as of the date on which the statements are made in this Report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this Report and the documents that we refer to in this Report and have filed as exhibits to this Report, completely and with the understanding that our actual future results may be materially different from what we expect.

iii

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

ONCONETIX, INC.
Condensed Consolidated Balance Sheets (Unaudited)

	June 30, 2024			December 31, 2023

ASSETS
Current assets
Cash	$	930,541		$	4,554,335
Accounts receivable, net		171,313			149,731
Inventories		160,272			364,052
Prepaid expenses and other current assets		773,322			770,153
Total current assets		2,035,448			5,838,271

Prepaid expenses, long-term		-			17,423
Property and equipment, net		69,189			60,654
Deferred offering costs		366,113			366,113
Operating right of use asset		179,983			148,542
Intangible assets, net		20,310,890			25,410,887
Goodwill		36,502,332			55,676,142
Total assets	$	59,463,955		$	87,518,032

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	3,169,727		$	5,295,114
Accrued expenses		1,438,872			2,199,867
Notes payable, net of debt discounts of $89,667 and $381,627 at June 30, 2024 and December 31, 2023, respectively		10,093,425			9,618,373
Note payable – related party, net of debt discount of $106,180 and $0 at June 30, 2024 and December 31, 2023, respectively		4,893,820			—
Operating lease liability, current		119,474			74,252
Subscription agreement liability – related party		885,600			—
Contingent warrant liability		2,641			2,641
Total current liabilities		20,603,559			17,190,247

Note payable, net of current portion		111,260			118,857
Subscription agreement liability – related party		—			864,000
Pension benefit obligation		375,360			556,296
Operating lease liability, net of current portion		60,509			74,290
Deferred tax liability, net		2,805,816			3,073,781
Total liabilities		23,956,504			21,877,471

Commitments and Contingencies (see Note 10)

Series B Convertible Redeemable Preferred stock, $0.00001 par value, 2,700,000 shares authorized at June 30, 2024 and December 31, 2023; 2,696,729 shares issued and outstanding at June 30, 2024 and December 31, 2023		64,236,085			64,236,085

Stockholders’ equity (deficit)
Series A Convertible Preferred stock, $0.00001 par value, 10,000 shares authorized at June 30, 2024 and December 31, 2023; 3,000 shares issued and outstanding at June 30, 2024 and December 31, 2023; Liquidation preference of $3,000,000 at June 30, 2024 and December 31, 2023		—			—
Common stock, $0.00001 par value, 250,000,000 shares authorized at June 30, 2024 and December 31, 2023; 22,848,876 and 22,841,975 shares issued at June 30, 2024 and December 31, 2023, respectively; 22,331,477 and 22,324,576 shares outstanding at June 30, 2024 and December 31, 2023, respectively		228			228
Additional paid-in-capital		49,405,359			49,428,809
Treasury stock, at cost; 517,399 shares of common stock at June 30, 2024 and December 31, 2023		(625,791	)		(625,791	)
Accumulated deficit		(82,211,470	)		(56,786,194	)
Accumulated other comprehensive income (loss)		(2,378,952	)		2,380,920
Total Onconetix stockholders’ deficit		(35,810,626	)		(5,602,028	)
Non-controlling interest		7,081,992			7,006,504
Total stockholders’ equity (deficit)		(28,728,634	)		1,404,476
Total liabilities, convertible redeemable preferred stock, and stockholders’ equity (deficit)	$	59,463,955		$	87,518,032

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

ONCONETIX, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	June 30, 2024			June 30, 2023			June 30, 2024			June 30, 2023

Revenue	$	704,848		$	-		$	1,405,281		$	-
Cost of revenue		604,132			-			1,115,565			-
Gross profit		100,716			-			289,716			-

Operating expenses
Selling, general and administrative		2,221,275			2,302,747			5,957,725			4,068,770
Research and development		(3,680	)		846,853			45,284			1,929,089
Impairment of ENTADFI assets		1,237,140			-			3,530,716			-
Impairment of goodwill		10,261,000			-			15,453,000			-
Impairment of deposit on asset purchase agreement		-			3,500,000			-			3,500,000
Total operating expenses		13,715,735			6,649,600			24,986,725			9,497,859
Loss from operations		(13,615,019	)		(6,649,600	)		(24,697,009	)		(9,497,859	)

Other (expense) income
Interest expense - related party		(156,169	)		-			(380,943	)		-
Interest expense		(205,146	)		(213,996	)		(393,429	)		(213,996	)
Change in fair value of subscription agreement liability – related party		(248,000	)		-			(21,600	)		-
Change in fair value of contingent warrant liability		-			(1,674	)		-			(59	)
Other - net		(31,602	)		-			(3,094	)		-
Total other expense		(640,917	)		(215,670	)		(799,066	)		(214,055	)
Loss before income taxes		(14,255,936	)		(6,865,270	)		(25,496,075	)		(9,711,914	)
Income tax (expense) benefit		(50,768	)		-			70,799			-
Net loss	$	(14,306,704	)	$	(6,865,270	)	$	(25,425,276	)	$	(9,711,914	)

Net loss per share, basic and diluted	$	(0.64	)	$	(0.43	)	$	(1.15	)	$	(0.61	)

Weighted average number of common shares outstanding, basic and diluted		22,196,265			15,906,725			22,171,931			15,908,560

Other comprehensive income (loss)
Net loss	$	(14,306,704	)	$	(6,865,270	)	$	(25,425,276	)	$	(9,711,914	)
Foreign currency translation		110,000			-			(4,881,144	)		-
Change in pension benefit obligation		(33,406	)		-			121,272			-
Total comprehensive loss	$	(14,230,110	)	$	(6,865,270	)	$	(30,185,148	)	$	(9,711,914	)

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

ONCONETIX, INC.

Condensed Consolidated Statements of Convertible Redeemable Preferred Stock and

Stockholders’ Equity (Deficit)
(Unaudited)

Series B
Preferred

Series A
Preferred

Common

Additional

Other

Total Onconetix

Non-

Total
Stockholders’

SEC Form 10-Q filed by Onconetix Inc.