UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 March 31, 2023

☐

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

Commission file number: 001-36020

Onconova Therapeutics, Inc.

(Exact name of registrant as specified in its charter)


Delaware		22-3627252
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

12 Penns Trail, Newtown, PA		18940
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (267) 759-3680

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

The number of outstanding shares of the registrant’s Common Stock, par value $0.01 per share, as of May 1, 2023 was 20,969,559.

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 $.01 per share	ONTX	The Nasdaq Stock Market LLC

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ONCONOVA THERAPEUTICS, INC.

TABLE OF CONTENTS FOR QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2023


	Page
PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)	3
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Operations	4
Condensed Consolidated Statements of Comprehensive Loss	5
Consolidated Statement of Stockholders’ Equity (Deficit)	6
Condensed Consolidated Statements of Cash Flows	7
Notes to Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3. Quantitative and Qualitative Disclosures About Market Risk	27
Item 4. Controls and Procedures	27

PART II — OTHER INFORMATION

Item 1. Legal Proceedings	28
Item 1A. Risk Factors	28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3. Defaults Upon Senior Securities	29
Item 4. Mine Safety Disclosures	29
Item 5. Other Information	29
Item 6. Exhibits	29
SIGNATURES	30

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Onconova Therapeutics, Inc.

Condensed Consolidated Balance Sheets


	March 31,		December 31,
	2023		2022
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	34,220,000	$	38,757,000
Receivables		17,000		29,000
Prepaid expenses and other current assets		802,000		561,000
Total current assets		35,039,000		39,347,000
Property and equipment, net		21,000		24,000
Other non-current assets		1,000		1,000
Total assets	$	35,061,000	$	39,372,000
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,896,000	$	3,860,000
Accrued expenses and other current liabilities		4,102,000		3,960,000
Deferred revenue		226,000		226,000
Total current liabilities		9,224,000		8,046,000
Deferred revenue, non-current		2,961,000		3,017,000
Total liabilities		12,185,000		11,063,000

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized, none issued and outstanding at March 31, 2023 and December 31, 2022		—		—
Common stock, $0.01 par value, 125,000,000 shares authorized, 20,969,559 and 20,925,992 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively		210,000		209,000
Additional paid in capital		492,151,000		491,816,000
Accumulated deficit		(469,458,000)		(463,683,000)
Accumulated other comprehensive loss		(27,000)		(33,000)
Total stockholders’ equity		22,876,000		28,309,000
Total liabilities and stockholders’ equity	$	35,061,000	$	39,372,000

See accompanying notes to condensed consolidated financial statements.

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Onconova Therapeutics, Inc.

Condensed Consolidated Statements of Operations (unaudited)


	Three Months Ended March 31,
	2023		2022
Revenue	$	56,000	$	56,000
Operating expenses:
General and administrative		2,113,000		2,186,000
Research and development		4,080,000		2,002,000
Total operating expenses		6,193,000		4,188,000
Loss from operations		(6,137,000)		(4,132,000)
Other income, net		362,000		10,000
Net loss	$	(5,775,000)	$	(4,122,000)
Net loss per share, basic and diluted	$	(0.28)	$	(0.20)
Basic and diluted weighted average shares outstanding		20,960,171		20,904,085

See accompanying notes to condensed consolidated financial statements.

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Onconova Therapeutics, Inc.

Condensed Consolidated Statements of Comprehensive Loss (unaudited)


	Three Months Ended March 31,
	2023		2022
Net loss	$	(5,775,000)	$	(4,122,000)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net		6,000		(7,000)
Other comprehensive income (loss), net of tax		6,000		(7,000)
Comprehensive loss	$	(5,769,000)	$	(4,129,000)

See accompanying notes to condensed consolidated financial statements.

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Onconova Therapeutics, Inc.

Consolidated Statement of Stockholders’ Equity (Deficit) (unaudited)


	Three Month Periods Ended March 31, 2023 and 2022
								Accumulated
				Additional				other
	Common Stock			Paid in		Accumulated		comprehensive
	Shares	Amount		Capital		deficit		income (loss)		Total
Balance at December 31, 2022	20,925,992	$	209,000	$	491,816,000	$	(463,683,000)	$	(33,000)	$	28,309,000
Net loss	—		—		—		(5,775,000)		—		(5,775,000)
Other comprehensive loss	—		—		—		—		6,000		6,000
Stock-based compensation	—		—		336,000		—		—		336,000
Shares issued for vested restricted stock units	43,567		1,000		(1,000)		—		—		—
Balance at March 31, 2023	20,969,559	$	210,000	$	492,151,000	$	(469,458,000)	$	(27,000)	$	22,876,000

Balance at December 31, 2021	20,895,563	$	209,000	$	490,644,000	$	(444,719,000)	$	(14,000)	$	46,120,000
Net loss	—		—		—		(4,122,000)		—		(4,122,000)
Other comprehensive loss	—		—		—		—		(7,000)		(7,000)
Stock-based compensation	—		—		296,000		—		—		296,000
Balance at March 31, 2022	20,895,563	$	209,000	$	490,940,000	$	(448,841,000)	$	(21,000)	$	42,287,000

See accompanying notes to condensed consolidated financial statements.

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Onconova Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)


	Three Months Ended March 31,
	2023		2022
Operating activities:
Net loss	$	(5,775,000)	$	(4,122,000)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		3,000		3,000
Stock compensation expense		336,000		296,000
Changes in assets and liabilities:
Receivables		12,000		1,000
Prepaid expenses and other current assets		(241,000)		(251,000)
Accounts payable		1,036,000		365,000
Accrued expenses and other current liabilities		142,000		(532,000)
Deferred revenue		(56,000)		(56,000)
Net cash used in operating activities		(4,543,000)		(4,296,000)

Effect of foreign currency translation on cash		6,000		(7,000)
Net decrease in cash and cash equivalents		(4,537,000)		(4,303,000)
Cash and cash equivalents at beginning of period		38,757,000		55,070,000
Cash and cash equivalents at end of period	$	34,220,000	$	50,767,000

See accompanying notes to condensed consolidated financial statements.

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of Business

The Company

Onconova Therapeutics, Inc. (the Company) was incorporated in the State of Delaware on December 22, 1998 and commenced operations on January 1, 1999. The Company's headquarters are located in Newtown, Pennsylvania. The Company is a clinical-stage biopharmaceutical company focused on discovering and developing novel products for patients with cancer. The Company has proprietary molecularly targeted anti-cancer agents designed to disrupt specific cellular pathways that are important for cancer cell proliferation. The Company believes that the product candidates in its pipeline have the potential to be efficacious in a variety of cancers with unmet medical need. The Company has the following two clinical-stage programs: 1. narazaciclib (ON 123300), a multi-kinase inhibitor in solid tumors and hematological malignancies as a single agent or in combination with other anti-cancer therapies; and 2. oral rigosertib administered alone or in combination for the treatment of various cancers. The Company is currently evaluating potential compounds for in-licensing opportunities. During 2012, Onconova Europe GmbH was established as a wholly owned subsidiary of the Company for the purpose of further developing business in Europe.

Liquidity

The Company has incurred recurring operating losses since inception. For the three months ended March 31, 2023, the Company incurred a net loss of $5,775,000 and as of March 31, 2023 the Company had generated an accumulated deficit of $469,458,000. The Company anticipates operating losses to continue for the foreseeable future due to, among other things, costs related to research, development of its product candidates and its preclinical programs, strategic alliances and its administrative organization. At March 31, 2023, the Company had cash and cash equivalents of $34,220,000. The Company believes that its cash and cash equivalents will be sufficient to fund its ongoing trials and business operations into the first quarter of 2024; therefore, based on current projections, the Company does not have sufficient cash and cash equivalents to support its operations for at least the 12 months following the date that these financial statements are issued. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through the one year period after the date that the financial statements are issued. Due to the inherent uncertainty involved in making estimates and the risks associated with the research, development, and commercialization of biotechnology products, the Company may have based this estimate on assumptions that may prove to be wrong, and the Company's operating plan may change as a result of many factors currently unknown to the Company.

The Company will require substantial additional financing to fund its ongoing clinical trials and operations, and to continue to execute its strategy. To alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern, management plans to explore various dilutive and non-dilutive sources of funding, including equity financings, strategic alliances, business development and other sources. The future success of the Company is dependent upon its ability to obtain additional funding. There can be no assurance, however, that the Company will be successful in obtaining such funding in sufficient amounts, on terms acceptable to the Company, or at all. The failure to obtain sufficient capital on acceptable terms when needed would have a material adverse effect on the Company’s business, results of operations, and financial condition. Accordingly, management has concluded that substantial doubt exists with respect to the Company's ability to continue as a going concern within one year after the date that these financial statements are issued.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business, and do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

2. Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Certain information and footnotes normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The financial statements include the consolidated accounts of the Company and its wholly-owned subsidiary, Onconova Europe GmbH. All significant intercompany transactions have been eliminated.

Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheet as of March 31, 2023, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2023 and 2022, the consolidated statements of stockholders’ equity (deficit) for the three months ended March 31, 2023 and 2022 and the condensed consolidated statements of cash flows for the three months ended March 31, 2023 and 2022 are unaudited. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2023, the results of its operations for the three months ended March 31, 2023 and 2022, and its cash flows for the three months ended March 31, 2023 and 2022. The financial data and other information disclosed in these notes related to the three months ended March 31, 2023 and 2022 are unaudited. The results for the three months ended March 31, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2022, any other interim periods, or any future year or period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2022 included in the Company’s annual report on Form 10-K filed with the SEC on March 30, 2023.

Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment, which is the identification and development of oncology therapeutics.

Concentrations of Credit Risk and Off-Balance Sheet Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents. The Company maintains a portion of its cash and cash equivalent balances in the form of money market accounts with financial institutions that management believes are creditworthy. The Company has no financial instruments with off-balance sheet risk of loss.

At March 31, 2023 the Company had $30,001,000 of its cash and cash equivalents in a Morgan Stanley Institutional Liquidity Fund. The fund is a AAA rated money market fund that invests in a portfolio of liquid, high-quality debt securities issued by the U.S. government. The fund resides in a custodial account held by U.S. Bank for which SVB Asset Management is the advisor.

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2022 included in the Company’s annual report on Form 10-K filed with the SEC on March 30, 2023. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies.

Fair Value Measurements

At both March 31, 2023 and December 31, 2002, the Company had no financial assets and liabilities measured at fair value on a recurring basis. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company utilizes a valuation hierarchy for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The carrying amounts reported in the accompanying consolidated financial statements for cash and cash equivalents, accounts payable, and accrued liabilities approximate their respective fair values because of the short-term nature of these accounts.

Recent Accounting Pronouncements

In June 2016, the FASB issued new guidance on the accounting for credit losses on financial instruments. The guidance was amended in November 2019. The new guidance introduces an expected loss model for estimating credit losses, replacing the incurred loss model. The new guidance also changes the impairment model for available-for-sale debt securities, requiring the use of an allowance to record estimated credit losses (and subsequent recoveries). The guidance was effective for fiscal years beginning after December 15, 2022, and interim periods within those years, for companies deemed to be smaller reporting companies as of November 15, 2019, with early adoption permitted. The Company adopted the guidance effective January 1, 2023. The guidance did not have a material effect on the Company’s consolidated financial statements.

3. Revenue

The Company’s revenue during the three months ended March 31, 2023 and 2022 was from its license and collaboration agreement with SymBio.


	Three Months Ended March 31,
	2023		2022
Symbio
Upfront license fee recognition over time	$	56,000	$	56,000

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Onconova Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Deferred revenue is as follows:


	Symbio
	Upfront Payment
Deferred balance at December 31, 2022	$	3,243,000
Recognition to revenue		(56,000)

Deferred balance at March 31, 2023	$	3,187,000

4. Net Loss Per Share of Common Stock

The following potentially dilutive securities outstanding at March 31, 2023 and 2022 have been excluded from the computation of diluted weighted average shares outstanding, as they would be antidilutive (reflects the number of common shares as if the dilutive securities had been converted to common stock):


	March 31,
	2023	2022
Warrants	344,990	491,586
Stock options	1,856,722	871,842
	2,201,712	1,363,428

5. Warrants

Common Stock warrants are accounted for in accordance with applicable accounting guidance provided in ASC Topic 815, Derivatives and Hedging - Contracts in Entity’s Own Equity (ASC Topic 815), as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement.

Warrants outstanding and warrant activity (reflects the number of common shares as if the warrants were converted to common stock) for the three months ended March 31, 2023 is as follows:


					Balance				Balance
		Exercise		Expiration	December 31,	Warrants	Warrants	Warrants	March 31,
Description	Classification	Price		Date	2022	Issued	Exercised	Expired	2023
Non-tradable pre-funded warrants	Equity	$	2.25	July 2023	26	—	—	—	26
Non-tradable pre-funded warrants	Equity	$	2.25	none	3,522	—	—	—	3,522
Non-tradable pre-funded warrants	Equity	$	2.25	none	4,974	—	—	—	4,974
Non-tradable warrants	Equity	$	30.00	September 2023	7,306	—	—	—	7,306
Non-tradable warrants	Equity	$	3.00	November 2024

SEC Form 10-Q filed by Onconova Therapeutics Inc.