wint20230930

wint20230930_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, 2023

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

For the transition period from _____ to _____

Commission File Number: 001-39290

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 9, 2023, there were 5,148,219 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, 2023 (unaudited) and December 31, 2022

	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)	5
	For the Three and Nine Months Ended September 30, 2023 and 2022

	CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited) For the Three and Nine Months Ended September 30, 2023 and 2022	6

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)	7
	For the Nine Months Ended September 30, 2023 and 2022

	Notes to Condensed Consolidated Financial Statements (unaudited)	8

Item 2.	Management ’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27

Item 4.	Controls and Procedures	27

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

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

Item 3.	Defaults Upon Senior Securities	28

Item 4.	Mine Safety Disclosures	28

Item 5.	Other Information	28

Item 6.	Exhibits	28

Signatures		30

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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;

	●	changes in market conditions, general economic conditions, and the banking sector, and potential constraints in accessing capital or credit if and when needed with favorable terms, if at all;

	●	the potential impairment of our intangible assets 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 coronavirus pandemic and the evolving events in Israel and Gaza 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., and its affiliate, Zhaoke Pharmaceutical (Hefei) Co. Ltd., and their ability to successfully source materials, execute necessary clinical and business development activities in a timely manner, if at all, to support development and commercialization of 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, security incidents, data privacy violations, or other significant disruption;

	●	economic uncertainty resulting from inflation and the rapid increase in interest rates, including concerns involving liquidity, defaults or other non-performance by financial institutions; and

	●	economic uncertainty resulting from geopolitical instability, including the ongoing military conflict between Russia and Ukraine, the People’s Republic of China and the Republic of China (Taiwan), and the evolving events in Israel and Gaza.

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, 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, 2022, as supplemented by our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023, to better understand the 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, 2023			December 31, 2022
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	7,365		$	6,172
Prepaid expenses and other current assets		1,543			1,205
Total current assets		8,908			7,377

Property and equipment, net		205			262
Restricted cash		150			154
Operating lease right-of-use assets		1,544			1,853
Intangible assets		25,250			25,250
Goodwill		-			3,058
Total assets	$	36,057		$	37,954

LIABILITIES, MEZZANINE EQUITY & STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	944		$	249
Accrued expenses		1,859			1,552
Operating lease liabilities - current portion		439			404
Loans payable		467			252
Total current liabilities		3,709			2,457

Operating lease liabilities - non-current portion		1,251			1,624
Restructured debt liability - contingent milestone payments		15,000			15,000
Other liabilities		3,800			3,800
Deferred tax liabilities		4,813			5,061
Total liabilities		28,573			27,942

Mezzanine Equity:
Series A redeemable preferred stock, $0.001 par value; 0 and 40,000 shares authorized; 0 and 38,610.119 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		-			-

Stockholders’ Equity:
Preferred stock, $0.001 par value; 5,000,000 and 4,960,000 shares authorized; 0 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		-			-
Common stock, $0.001 par value; 120,000,000 shares authorized at September 30, 2023 and December 31, 2022; 5,148,220 and 772,203 shares issued at September 30, 2023 and December 31, 2022, respectively; 5,148,219 and 772,202 shares outstanding at September 30, 2023 and December 31, 2022, respectively		5			-
Additional paid-in capital		850,202			837,598
Accumulated deficit		(839,669	)		(824,532	)
Treasury stock (at cost); 1 share		(3,054	)		(3,054	)
Total stockholders’ equity		7,484			10,012
Total liabilities, mezzanine equity & stockholders’ equity	$	36,057		$	37,954

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,
	2023			2022			2023			2022

Expenses:
Research and development	$	2,110		$	1,543		$	5,288		$	9,883
General and administrative		2,580			2,653			7,292			8,548
Loss on impairment of goodwill		-			454			3,058			12,090
Total operating expenses		4,690			4,650			15,638			30,521
Operating loss		(4,690	)		(4,650	)		(15,638	)		(30,521	)

Other income (expense):
Interest income		112			39			264			57
Interest expense		(13	)		(14	)		(38	)		(40	)
Other income, net		166			569			275			988
Total other income, net		265			594			501			1,005

Net loss	$	(4,425	)	$	(4,056	)	$	(15,137	)	$	(29,516	)

Net loss per common share
Basic and diluted	$	(0.86	)	$	(6.51	)	$	(4.50	)	$	(49.94	)

Weighted average number of common shares outstanding
Basic and diluted		5,148			623			3,363			591

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)

	Mezzanine Equity				Stockholders’ Equity
	Series A Preferred Stock				Common Stock									Treasury Stock
	Shares		Amount		Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Shares		Amount			Total

Balance - December 31, 2021		-	$	-		565	$	-	$	830,259	$	(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 of $6		-		-		4		-		205		-			-		-			205
Balance - March 31, 2022		-	$	-		569	$	-	$	831,234	$	(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 of $32		-		-		19		-		1,020		-			-		-			1,020
Balance - June 30, 2022		-	$	-		588	$	-	$	833,035	$	(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 of $47		-		-		65		-		1,535		-			-		-			1,535
Balance - September 30, 2022		-	$	-		653	$	-	$	835,314	$	(814,840	)		-	$	(3,054	)	$	17,420

	Mezzanine Equity				Stockholders’ Equity
	Series A Preferred Stock				Common Stock									Treasury Stock
	Shares		Amount		Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Shares		Amount			Total

Balance - December 31, 2022		39	$	-		772	$	-	$	837,598	$	(824,532	)		-	$	(3,054	)	$	10,012
Net loss		-		-