wint20220930

wint20220930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 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 000-26422

WINDTREE THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

94-3171943

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

2600 Kelly Road, Suite 100

Warrington, Pennsylvania

(Address of principal executive offices)

18976-3622

(Zip Code)

Registrant’s telephone number, including area code: (215) 488-9300

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, $0.001 par value	WINT	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, 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 ☒

As of November 14, 2022, there were 38,610,119 shares of the registrant’s common stock outstanding, par value $0.001 per share.

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PART I - FINANCIAL INFORMATION

		Page

Item 1.	Financial Statements	4

	CONDENSED CONSOLIDATED BALANCE SHEETS	4
	As of September 30, 2022 (unaudited) and December 31, 2021

	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)	5
	For the Three and Nine Months Ended September 30, 2022 and 2021

	CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited) For the Three and Nine Months Ended September 30, 2022 and 2021	6

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)	7
	For the Nine Months Ended September 30, 2022 and 2021

	Notes to Condensed Consolidated Financial Statements (unaudited)	8

Item 2.	Management ’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25

Item 4.	Controls and Procedures	25

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	27

Item 4.	Mine Safety Disclosures	27

Item 5.	Other Information	27

Item 6.	Exhibits	28

Signatures		29

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Unless the context otherwise requires, all references to “we,” “us,” “our,” and the “Company” include Windtree Therapeutics, Inc., and its consolidated subsidiaries.

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, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements provide our current expectations or forecasts of future events and financial performance and may be identified by the use of forward-looking terminology, including such terms as “believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “will,” “should,” “could,” “targets,” “projects,” “contemplates,” “predicts,” “potential” or “continues” or, in each case, their negative, or other variations or comparable terminology, though the absence of these words does not necessarily mean that a statement is not forward-looking.

We intend that all forward-looking statements be subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to many risks and uncertainties that could cause actual results to differ materially from any future results expressed or implied by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Examples of such risks and uncertainties, which potentially could have a material adverse effect on our development programs, business and/or operations, include, but are not limited to the following:

	●	our estimates regarding future results of operations, financial position, research and development costs, capital requirements, and our needs for additional financing;

	●	how long we can continue to fund our operations with our existing cash and cash equivalents;

	●	we received written notice from The Nasdaq Stock Market LLC, or Nasdaq, that we have failed to comply with Nasdaq’s continued listing standards; if we fail to regain compliance within the allowed grace periods or other processes provided under the Nasdaq listing requirements, our common stock may be delisted and the value of our common stock may decrease;

	●	the potential impairment of our intangible assets and goodwill on our condensed consolidated balance sheet, which could lead to material impairment charges in the future;

	●	potential delays and uncertainties in our anticipated timelines and milestones and additional costs associated with the impact of the residual effects of the novel coronavirus, or COVID-19, pandemic on our clinical trial operations;

	●	the costs, timing, and results, of our preclinical studies and clinical trials, as well as the number of required trials for regulatory approval and the criteria for success in such trials;

	●	legal and regulatory developments in the United States, or U.S., and foreign countries, including any actions or advice that may affect the design, initiation, timing, continuation, progress or outcome of clinical trials or result in the need for additional clinical trials;

	●	the difficulties and expenses associated with obtaining and maintaining regulatory approval of our product candidates, and the indication and labeling under any such approval;

	●	risks related to manufacturing active pharmaceutical ingredients, drug product, and other materials we need;

	●	delays, interruptions or failures in the manufacture and supply of our product candidates;

	●	the plans of our AEROSURF and KL4 licensee, Lee’s Pharmaceutical (HK) Ltd., or Lee’s (HK), and its ability to successfully execute necessary clinical and business development activities in a timely manner, if at all, to support development and commercialize the licensed product candidates;

	●	the performance of third parties, both foreign and domestic, upon which we depend, including contract research organizations, contract manufacturing organizations, contract laboratories, and independent contractors;

	●	the size and growth of the potential markets for our product candidates, the regulatory requirements in such markets, the rate and degree of market acceptance of our product candidates, and our ability to serve those markets;

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

	●	our ability to limit our exposure under product liability lawsuits;

	●	our ability to obtain and maintain intellectual property protection for our product candidates;

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	●	recently enacted and future legislation, including but not limited to, the Inflation Reduction Act of 2022, regarding the healthcare system in the U.S. or the healthcare systems in foreign jurisdictions;

	●	our ability to recruit or retain key scientific, commercial or management personnel or to retain our executive officers;

	●	our ability to secure electronically stored work product, including clinical data, analyses, research, communications, and other materials necessary to gain regulatory approval of our product candidates, including those acquired from third parties, and assure the integrity, proper functionality, and security of our internal computer and information systems and prevent or avoid cyber-attacks, malicious intrusion, breakdown, destruction, loss of data privacy, or other significant disruption; and

	●	economic uncertainty resulting from inflation or geopolitical instability, including the ongoing military conflict between Russia and Ukraine, the People’s Republic of China and the Republic of China (Taiwan).

Pharmaceutical, biotechnology, and medical technology companies have suffered significant setbacks conducting clinical trials, even after obtaining promising earlier preclinical and clinical data. In addition, data obtained from clinical trials are susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. After gaining approval of a drug product, medical device or combination drug/device product, pharmaceutical and biotechnology companies face considerable challenges in marketing and distributing their products and may never become profitable.

The forward-looking statements contained in this Quarterly Report on Form 10-Q or the documents incorporated by reference herein speak only as of their respective dates. Factors or events that could cause our actual results to differ may emerge from time to time and it is not possible for us to predict them all. Except to the extent required by applicable laws, rules or regulations, we do not undertake any obligation to publicly update any forward-looking statements or to publicly announce revisions to any of the forward-looking statements, whether as a result of new information, future events or otherwise.

You should also read carefully the factors described in the “Risk Factors” included in Part II, Item 1A of this Quarterly Report on Form 10-Q in conjunction with Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as supplemented by our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022, to better understand significant risks and uncertainties inherent in our business and underlying any forward-looking statements.

Trademark Notice

AEROSURF®, AFECTAIR®, SURFAXIN®, SURFAXIN LS™, WINDTREE THERAPEUTICS® (logo),

WINDTREE THERAPEUTICS™, and WINDTREE™ are registered and common law trademarks of Windtree Therapeutics, Inc. (Warrington, PA).

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ITEM 1. Financial Statements

WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

	September 30, 2022			December 31, 2021
	Unaudited
ASSETS
Current Assets:
Cash and cash equivalents	$	8,436		$	22,348
Prepaid expenses and other current assets		1,596			1,143
Total current assets		10,032			23,491

Property and equipment, net		286			1,011
Restricted cash		154			154
Operating lease right-of-use assets		1,964			2,381
Intangible assets		32,070			32,070
Goodwill		3,592			15,682
Total assets	$	48,098		$	74,789

LIABILITIES & STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	410		$	693
Accrued expenses		2,496			3,408
Operating lease liabilities - current portion		416			528
Loans payable - current portion		629			294
Total current liabilities		3,951			4,923

Operating lease liabilities - non-current portion		1,732			2,071
Restructured debt liability - contingent milestone payments		15,000			15,000
Other liabilities		3,800			3,800
Deferred tax liabilities		6,195			7,114
Total liabilities		30,678			32,908

Stockholders’ Equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding		-			-
Common stock, $0.001 par value; 120,000,000 shares authorized at September 30, 2022 and December 31, 2021; 32,646,735 and 28,268,950 shares issued at September 30, 2022 and December 31, 2021, respectively; 32,646,711 and 28,268,926 shares outstanding at September 30, 2022 and December 31, 2021, respectively		33			28
Additional paid-in capital		835,281			830,231
Accumulated deficit		(814,840	)		(785,324	)
Treasury stock (at cost); 24 shares		(3,054	)		(3,054	)
Total stockholders’ equity		17,420			41,881
Total liabilities & stockholders’ equity	$	48,098		$	74,789

See notes to condensed consolidated financial statements

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WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021

Expenses:
Research and development	$	1,543		$	4,680		$	9,883		$	13,311
General and administrative		2,653			3,467			8,548			11,507
Loss on impairment of goodwill		454			-			12,090			-
Loss on impairment of intangible assets		-			-			-			37,770
Total operating expenses		4,650			8,147			30,521			62,588
Operating loss		(4,650	)		(8,147	)		(30,521	)		(62,588	)

Other income (expense):
Interest income		39			1			57			90
Interest expense		(14	)		(14	)		(40	)		(101	)
Other income (expense), net		569			(53	)		988			(296	)
Total other income (expense), net		594			(66	)		1,005			(307	)

Loss before income taxes		(4,056	)		(8,213	)		(29,516	)		(62,895	)
Deferred income tax benefit		-			-			-			8,332
Net loss	$	(4,056	)	$	(8,213	)	$	(29,516	)	$	(54,563	)

Net loss per common share
Basic and diluted	$	(0.13	)	$	(0.31	)	$	(1.00	)	$	(2.31	)

Weighted average number of common shares outstanding
Basic and diluted		31,135			26,704			29,554			23,616

See notes to condensed consolidated financial statements

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WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(in thousands)

	Common Stock									Treasury Stock
	Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Shares		Amount			Total

Balance - December 31, 2020		16,922	$	17	$	790,277	$	(717,688	)		-	$	(3,054	)	$	69,552
Net loss		-		-		-		(8,961	)		-		-			(8,961	)
Issuance of common stock and common stock warrants, net of issuance costs		9,230		9		27,381		-			-		-			27,390
Stock-based compensation expense		-		-		2,443		-			-		-			2,443
Issuance of common stock, ATM Program, net of issuance costs		105		-		570		-			-		-			570
Issuance of common stock warrants, equity consideration for service agreement		-		-		494		-			-		-			494
Balance - March 31, 2021		26,257	$	26	$	821,165	$	(726,649	)		-	$	(3,054	)	$	91,488
Net loss		-		-		-		(37,389	)		-		-			(37,389	)
Stock-based compensation expense		-		-		1,544		-			-		-			1,544
Issuance of common stock, ATM Program, net of issuance costs		447		1		1,119		-			-		-			1,120
Balance - June 30, 2021		26,704	$	27	$	823,828	$	(764,038	)		-	$	(3,054	)	$	56,763
Net loss		-		-		-		(8,213	)		-		-			(8,213	)
Stock-based compensation expense		-		-		1,629		-			-		-			1,629
Balance - September 30, 2021		26,704	$	27	$	825,457	$	(772,251	)		-	$	(3,054	)	$	50,179

	Common Stock									Treasury Stock
	Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Shares		Amount			Total

Balance - December 31, 2021		28,269	$	28	$	830,231	$	(785,324	)		-	$	(3,054	)	$	41,881
Net loss		-		-		-		(8,127	)		-		-			(8,127	)
Stock-based compensation expense		-		-		770		-			-		-			770
Issuance of common stock, ATM Program, net of issuance costs		200		-		205		-			-		-			205
Balance - March 31, 2022		28,469	$	28	$	831,206	$	(793,451	)		-	$	(3,054	)	$	34,729
Net loss		-		-		-		(17,333	)		-		-			(17,333	)
Stock-based compensation expense		-		-		781		-			-		-			781
Issuance of common stock, ATM Program, net of issuance costs		937		1		1,019		-			-		-			1,020
Balance - June 30, 2022		29,406	$	29	$	833,006	$	(810,784	)		-	$	(3,054	)	$	19,197
Net loss		-		-		-		(4,056	)		-		-			(4,056	)
Stock-based compensation expense		-		-		744		-			-		-			744
Issuance of common stock, ATM Program, net of issuance costs		3,241		4		1,531		-			-		-			1,535
Balance - September 30, 2022		32,647	$	33	$	835,281	$	(814,840	)		-	$	(3,054	)	$	17,420

See notes to condensed consolidated financial statements

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WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	Nine Months Ended
	September 30,
	2022			2021
Cash flows from operating activities:
Net loss	$	(29,516	)	$	(54,563	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		509			140
Stock-based compensation		2,295			5,616
Non-cash lease expense		417			505
Non-cash expense related to equity consideration for a service agreement		-			494
Loss on impairment of goodwill		12,090			-
Loss on impairment of intangible assets		-			37,770
Loss on sale and disposal of property and equipment		19			-
Deferred income tax benefit		-			(8,332	)
Unrealized (gain) loss on foreign exchange rate changes		(941	)		331
Changes in assets and liabilities:
Prepaid expenses and other current assets		687			682
Accounts payable		(283	)		(579	)
Accrued expenses		(898	)		(264	)
Operating lease liabilities		(451	)		(532	)
Net cash used in operating activities		(16,072	)		(18,732	)

Cash flows from investing activities:
Proceeds from sale of property and equipment

SEC Form 10-Q filed by Windtree Therapeutics Inc.