MBRX 10-K & 10-Q changes, risk factors and insider trading

We are required to order the API used in our drug candidates from our manufacturers significantly in advance of our delivery needs, and problems with our forecasts related to the manufacturer of the API used in our drug candidates may delay our clinical trials.

We are responsible for matching our manufacturing forecasts with our expected trial recruitment and ensuring that the API's used in our product candidates are manufactured in accordance with applicable regulations. We are generally required to provide our manufacturers with these forecasts significantly in advance of our delivery dates. If we underestimate our product needs and are required to order additional API, we may experience substantial delays in receiving such product, which could delay or suspend our clinical trials and adversely affect our development timelines. Conversely, if we overestimate our product needs, we may expend unnecessary working capital and experience reduced liquidity. Because we have limited experience in conducting clinical trials, our ability to accurately forecast our product needs may be less developed than that of our larger, more experienced competitors, increasing our exposure to these risks.

We rely on patents and other intellectual property rights to protect our product candidates, the attainment, enforcement, defense and maintenance of which may be challenging and costly. Failure to enforce or protect these rights adequately could harm our ability to compete and impair our business.

Our commercial success depends in part on obtaining and maintaining patents and other forms of intellectual property protection, for example, for compositions-of-matter of our product candidates, formulations of our product candidates, polymorphs, salts and analogs of our product candidates, methods used to manufacture our product candidates, methods for manufacturing of the final drug product candidates, and methods of using our product candidates for the treatment of the indications we are developing or plan to develop, or on in-licensing such rights. Our patent portfolio comprises patents and patent applications which aspects of our product candidates Annamycin, WP1122 and WP1066. There is no assurance that our pending patent applications will result in issued patents, or if issued as patents, will include claims with sufficient scope of coverage to protect our product candidates, or that any pending patent applications will be issued as patents in a timely manner. Failure to obtain, maintain or extend adequate patent and other intellectual property rights could adversely affect our ability to develop and market our product candidates, resulting in harm to our business.

The patent prosecution process is expensive and time-consuming. We or our licensors may not be able to prepare, file and prosecute all necessary or desirable patent applications for a commercially reasonable cost or in a timely manner or in all jurisdictions. It is also possible that we or our licensors may fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection for them. Moreover, depending on the terms of any future in-licenses to which we may become a party, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology in-licensed from third parties. Therefore, these patents and patent applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.

Further, the issuance, scope, validity, enforceability, and commercial value of our and our current or future licensors’ patent rights are highly uncertain. Our and our licensors’ pending and future patent applications may not result in issued patents that protect our technology or product candidates, in whole or in part, or that effectively prevent others from commercializing competitive technologies and product candidates. The patent examination process may require us or our licensors to narrow the scope of the claims of our or our licensors’ pending and future patent applications, which may limit the scope of patent protection that may be obtained. We cannot assure that all of the potentially relevant prior art relating to our patents and patent applications has been found. If such prior art exists, it can invalidate a patent or prevent a patent application from being issued as a patent. Even if patent applications do successfully issue as patents and even if such patents cover our product candidates, third parties may initiate an opposition, interference, reexamination, post grant review, inter partes review, nullification or derivation action in courts or before patent offices, or similar proceedings challenging the validity, enforceability, or scope of such patents, which may result in the patent claims being narrowed or invalidated. Our and our licensors’ patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless and until a patent is issued from such patent applications, and then only to the extent the issued claims cover the technology.

Because patent applications are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we or our licensors were the first to file any patent application related to our product candidates. Furthermore, in the U.S., if third parties have filed such patent applications on or before March 15, 2013, the date on which the U.S. changed from a first to invent to a first to file patent system, an interference proceeding can be initiated by such third parties to determine who was the first to invent any of the subject matter covered by the patent claims of our applications. If third parties have filed such applications after March 15, 2013, a derivation proceeding can be initiated by such third parties to determine whether our invention was derived from such third parties’ product candidates. Even where we have a valid and enforceable patent, we may not be able to exclude others from practicing our invention where the other party can show that they used the invention in commerce before our filing date or the other party benefits from a compulsory license.

We enjoy only limited geographical protection with respect to certain patents and may not be able to protect our intellectual property rights throughout the world.

Filing and prosecuting patent applications and maintaining and defending patents covering our product candidates in all countries throughout the world would be prohibitively expensive. Competitors may use our and our licensors’ technologies in jurisdictions where we have not obtained patent protection to develop their competitor’s own product candidates and, further, may export otherwise infringing product candidates to territories where we and our licensors have patent protection, but enforcement rights are not as strong as that in the U.S. These product candidates may compete with our product candidates, and our and our licensors’ patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

In addition, we may decide to abandon national and regional patent applications before grant. The examination of each national or regional patent application is an independent proceeding. As a result, patent applications in the same family may issue as patents in some jurisdictions, such as in the U.S., but may issue as patents with claims of different scope or may even be refused in other jurisdictions, such as in China, which has different requirements for patentability, including a stringent requirement for a detailed description of medical uses of a claimed drug. It is also quite common that depending on the country, the scope of patent protection may vary for the same product or technology.

The laws of some jurisdictions do not protect intellectual property rights to the same extent as the laws or rules and regulations in the U.S., and many companies have encountered significant difficulties in protecting and defending such rights in such jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents or marketing of competing product candidates in violation of our proprietary rights generally. Proceedings to enforce our patent rights in other jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing as patents, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license. Furthermore, while we intend to protect our intellectual property rights in our expected significant markets, we cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market our product candidates. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate, which may have an adverse effect on our ability to successfully commercialize our product candidates in all of our expected significant foreign markets. If we or our licensors encounter difficulties in protecting, or are otherwise precluded from effectively protecting, the intellectual property rights important for our business in such jurisdictions, the value of these rights may be diminished and we may face additional competition from others in those jurisdictions.

Some countries also have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, some countries limit the enforceability of patents against government agencies or government contractors. In those countries, the patent owner may have limited remedies, which could materially diminish the value of such patents. If we or any of our licensors is forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired.

Our patents and other proprietary rights may not adequately protect our technologies and product candidates and may not necessarily address all potential threats to our competitive advantage.

The degree of protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. The following examples are illustrative:

We may become subject to third parties’ claims alleging infringement of third-party patents and proprietary rights, or we may be involved in lawsuits to protect or enforce our patents and other proprietary rights, which could be costly and time consuming, delay or prevent the development and commercialization of our product candidates, or put our patents and other proprietary rights at risk.

Our commercial success depends, in part, upon our ability to develop, manufacture, market, and sell our product candidates without alleged or actual infringement, misappropriation, or other violation of the patents and proprietary rights of third parties. Litigation relating to patents and other intellectual property rights in the pharmaceutical industries is common, including patent infringement lawsuits and interferences, oppositions, and reexamination proceedings before the U.S. Patent and Trademark Office (the “USPTO”), and foreign patent offices. The various markets in which we plan to operate are subject to frequent and extensive litigation regarding patents and other intellectual property rights. In addition, many companies in intellectual property-dependent industries, including in the pharmaceutical industries, have employed intellectual property litigation as a means to gain an advantage over their competitors. Numerous U.S., and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing product candidates. Some claimants may have substantially greater resources than we have and may be able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could. In addition, patent holding companies that focus solely on extracting royalties and settlements by enforcing patent rights may target us. As the pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the intellectual property rights of third parties.

We may be subject to third-party claims including infringement, interference or derivation proceedings, post-grant review and inter partes review before the USPTO, or similar adversarial proceedings or litigation in the U.S. and other jurisdictions. Even if we believe such claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, and the holders of any such patents may be able to block our ability to commercialize the applicable product unless we obtained a license under the applicable patents, or until such patents expire or are finally determined to be invalid or unenforceable. Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our compositions, formulations, or methods of treatment, prevention, or use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product unless we obtained a license or until such patent expires or is finally determined to be invalid or unenforceable. In addition, defending such claims would cause us to incur substantial expenses and could cause us to pay substantial damages, if we are found to be infringing a third party’s patent rights. These damages potentially include increased damages and attorneys’ fees if we are found to have infringed such rights willfully.

Any of our patents may be challenged, narrowed, circumvented, or invalidated by third parties. The issuance of a patent is not conclusive as to its inventorship, scope, validity, or enforceability, and our patents may be challenged in the courts or patent offices in the U.S. and abroad. We may be subject to a third party pre-issuance submission of prior art to the USPTO or become involved in opposition, derivation, revocation, reexamination, post-grant and inter partes review, or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights. Moreover, we may have to participate in interference proceedings declared by the USPTO to determine priority of invention or in post-grant challenge proceedings, such as oppositions in a foreign patent office, that challenge priority of invention or other features of patentability. Such challenges may result in loss of patent rights, loss of exclusivity, or in patent claims being narrowed, invalidated, or held unenforceable, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and product candidates.

There is a risk that one or more third parties may choose to engage in litigation with us to enforce or to otherwise assert their patent rights against us. Even if we believe such claims are without merit, a court of competent jurisdiction could hold that one or more of these patents is valid, enforceable, and infringed, in which case the owners of any such patents may be able to block our ability to commercialize a product candidate unless we obtain a license under the applicable patents, or until such patents expire. However, such a license may not be available on commercially reasonable terms or at all. Such proceedings also may result in substantial cost and require significant time from us, even if the eventual outcome is favorable to us.

Further, if a patent infringement suit is brought against us or our third-party service providers, our development, manufacturing or sales activities relating to the product or product that is the subject of the suit may be delayed or terminated. As a result of patent infringement claims, or in order to avoid potential infringement claims, we may choose to seek, or be required to seek, a license from the third party, which would be likely to include a requirement to pay license fees or royalties or both. These licenses may not be available on acceptable terms or at all. Even if a license can be obtained on acceptable terms, the rights may be nonexclusive, which would give our competitors access to the same intellectual property rights. If we are unable to enter into a license on acceptable terms, we could be prevented from commercializing one or more of our product candidates, or forced to modify such product candidates, or to cease some aspect of our business operations, which could harm our business significantly. We might, if possible, also be forced to redesign our product candidates so that we no longer infringe the third-party intellectual property rights, which may result in significant cost and delay to us, or which redesign could be technically infeasible. Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business.

If we were to initiate legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim that our patent is invalid or unenforceable. In patent litigation in the U.S. and in Europe, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, for example, lack of novelty, obviousness, or non-enablement. Third parties might allege unenforceability of our patents because someone connected with prosecution of the patent withheld relevant information, or made a misleading statement, during prosecution. The outcome of proceedings involving assertions of invalidity and unenforceability during patent litigation is unpredictable. With respect to the validity of patents, for example, we cannot be certain that there is no invalidating prior art of which we and the patent examiner were unaware during prosecution. There is a risk that in connection with such proceedings, a court will decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates. There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that our patent claims do not cover the invention. Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy. An adverse outcome in a litigation or proceeding involving one or more of our patents could limit our ability to assert those patents against those parties or other competitors, and may curtail or preclude our ability to exclude third parties from making and selling similar or competing product candidates. In addition, if the breadth or strength of protection provided by our patents is threatened, it could dissuade companies from collaborating with us to license, develop, or commercialize our current or future product candidates.

Furthermore, our patents and other intellectual property rights also will not protect our technology if competitors and other third parties design around our protected technology without infringing our patents or other intellectual property rights. For example, a third party may develop a competitive product that provides benefits similar to our product candidates but that uses a technology that falls outside the scope of our patent protection. Our competitors may also seek approval to market generic versions of any approved products and in connection with seeking such approval may claim that our patents are invalid, unenforceable or not infringed. In these circumstances, we may need to defend or assert our patents, or both, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find our patents invalid or unenforceable, or that our competitors are competing in a non-infringing manner. Thus, even if we have valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve our business objectives. If the patent protection provided by the patents and patent applications we hold or pursue with respect to our product candidates is not sufficiently broad to impede such competition, our ability to successfully commercialize our product candidates could be negatively affected.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. Such litigation or proceedings could substantially increase our operating losses and reduce our resources available for development activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have an adverse effect on our ability to compete in the marketplace. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors view these announcements in a negative light, the price of our stock could be adversely affected.

We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent which might adversely affect our ability to develop, manufacture and market our product candidates.

We cannot guarantee that any of our, our licensors’ patent searches or analyses, including but not limited to the identification of relevant patents, the scope of patent claims, or the expiration of relevant patent applications or patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and patent application in the U.S., and elsewhere that is relevant to or necessary for the commercialization of our product candidates in any jurisdiction. For example, in the U.S., patent applications filed before November 29, 2000 and, upon request, certain patent applications filed after that date that will not be filed outside the U.S., remain confidential until those patent applications issue as patents. Patent applications in the U.S., EU, and elsewhere are published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications covering our product candidates could have been filed by others without our knowledge, including any such patent applications that may claim priority from patent applications for patents that we have determined will expire before we commercialize our product candidates. Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our product candidates or the use of our product candidates. Moreover, as we study our product candidates during development, we may learn new information regarding their structure, composition, properties, or functions that may render third-party patent applications or patents that we had not identified as being, or that we had not believed to be, relevant to our product candidates instead to be relevant to or necessary for the commercialization of our product candidates in a jurisdiction. The scope of a patent claim is determined by an interpretation of the law, the written disclosure in the patent, and the patent’s prosecution history. Our interpretation of the relevance or the scope of a patent or a pending patent application may be incorrect. We may incorrectly determine that our product candidates are not covered by a third-party patent or may incorrectly predict whether a third party’s pending patent application will issue with claims of relevant scope. Our determination of the expiration date or the possibility of an extension of patent term of any patent in the U.S, Europe, or elsewhere that we consider relevant also may be incorrect. Any of the foregoing circumstances, failures, or errors may negatively impact our ability to develop and market our product candidates.

We may enter into additional license agreements in the future. Our existing license agreements impose and any future license agreements are likely to impose various diligence, milestone payment, royalty, insurance and other obligations on us. Any uncured, material breach under these license agreements could result in the loss of our rights to practice such in-licensed intellectual property, and could compromise our development and commercialization efforts for any current or future product candidates.

We may not be successful in maintaining necessary rights to our product candidates or obtaining patent or other intellectual property rights important to our business through acquisitions and in-licenses.

We currently own and have in-licensed rights to intellectual property, including patents, patent applications and know-how, relating to our product candidates, and our success will likely depend on maintaining these rights. Because our programs may require the use of proprietary rights held by third parties, the growth of our business will likely depend in part on our ability to continue to acquire, in-license, maintain, or use these proprietary rights. In addition, our product candidates may require specific formulations to work effectively and the rights to those formulations or methods of making those formulations may be held by others. We may be unable to acquire or in-license any compositions, methods of use, processes, or other third-party intellectual property rights that we identify as necessary for the development and commercialization of our product candidates. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies also are pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, cash resources, and greater clinical development and commercialization capabilities.

In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We may also be unable to license or acquire third-party intellectual property rights on a timely basis, on terms that would allow us to make an appropriate return on our investment, or at all. Even if we are able to obtain a license to intellectual property of interest, we may not be able to secure exclusive rights, in which case others could use the same rights and compete with us. If we are unable to successfully obtain a license to third-party intellectual property rights necessary for the development of our product candidates or a development program on acceptable terms, we may have to abandon development of our product candidates or that development program.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance and annuity fees on any issued patent are due to be paid to the USPTO and foreign patent agencies over the lifetime of a patent. In addition, the USPTO and other foreign patent agencies require compliance with a number of procedural, documentary, fee payment, and other similar provisions during the patent application process. While an inadvertent failure to make payment of such fees or to comply with such provisions can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which such non-compliance will result in the abandonment or lapse of the patent or patent application, and the partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include failure to respond to official actions within prescribed time limits, and non-payment of fees and failure to properly legalize and submit formal documents within prescribed time limits. If we or our licensors fail to maintain the patents and patent applications covering our product candidates or if we or our licensors otherwise allow our patents or patent applications to be abandoned or lapse, our competitors might be able to enter the market, which would hurt our competitive position and could impair our ability to successfully commercialize our product candidates in any indication for which they are approved.

We may be subject to claims challenging the inventorship of our patents and other intellectual property.

We may be subject to claims challenging the inventorship of our patents and patent applications or ownership of our intellectual property. In particular, we may be subject to claims that former employees or other third parties have an interest in our patents or other intellectual property as an inventor or co-inventor. While it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. For example, the assignment of intellectual property rights may not be self-executing or the assignment agreements may be breached, or we may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Changes in patent laws or patent jurisprudence could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.

As is the case with other pharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the pharmaceutical industries involve both technological complexity and legal complexity. Therefore, obtaining and enforcing pharmaceutical patents is costly, time-consuming and inherently uncertain. In addition, the America Invents Act (the “AIA”), which was passed in September 2011, resulted in significant changes to the U.S. patent system. An important change introduced by the AIA is that, as of March 16, 2013, the U.S. transitioned to a “first-to-file” system for deciding which party should be granted a patent when two or more patent applications are filed by different parties claiming the same invention. A third party that files a patent application in the USPTO after that date but before us could therefore be awarded a patent covering an invention of ours even if we made the invention before it was made by the third party. This will require us to be cognizant going forward of the time from invention to filing of a patent application, but circumstances could prevent us from promptly filing patent applications on our inventions.

Among some of the other changes introduced by the AIA are changes to the limitation where a patent may be challenged, thus providing opportunities for third parties to challenge any issued patent in the USPTO. This applies to all of our U.S. patents, even those issued before March 16, 2013. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S. federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.

Accordingly, a third party may attempt to use the USPTO proceedings to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action. It is not clear what, if any, impact the AIA will have on the operation of our business. However, the AIA and its implementation could increase the uncertainties and costs surrounding the prosecution of our or our licensors’ patent applications and the enforcement or defense of our or our licensors’ issued patents.

Additionally, the U.S. Supreme Court has ruled on several patent cases in recent years either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. Similarly, the complexity and uncertainty of European patent laws have also increased in recent years. In addition, the European patent system is relatively stringent in the type of amendments that are allowed during prosecution. Complying with these laws and regulations could limit our ability to obtain new patents in the future that may be important for our business.

If we do not obtain protection under the Hatch-Waxman Amendments and similar non-U.S. legislation for extending the term of patents covering our product candidates, our ability to compete effectively could be impaired.

We are a late-stage pharmaceutical development company currently evaluating Annamycin, also known as L-Annamycin and by its generic name “naxtarubicin”, which we believe is a “next-generation” anthracycline and, with it, are conducting a pivotal Phase 3 trial in combination with cytarabine for the treatment of subjects with relapsed/refractory (R/R) acute myeloid leukemia (AML). We call this the “MIRACLE” trial (derived from Moleculin R/R AML AnnAraC Clinical Evaluation). A blinded preliminary data readout has already been released for the MIRACLE trial, and we expect to have an interim unblinding of data in mid-2026 and an additional unblinding in the second half of 2026, thereby concluding Part A of the two-part trial. We believe such early visibility for a pivotal registration-enabling trial is unique in that stakeholders will receive preliminary safety and efficacy data long before the conclusion of the trial.

We have two additional portfolios of technologies for hard-to-treat cancers and viruses with clinical and preclinical research funded by investigators at academic institutions. One of these portfolios has an ongoing investigator-initiated trial, another one planned and additional active preclinical testing. Since our inception, drug candidates from each of the three core portfolios are in active planning for, have approval to begin, are currently in or have successfully completed eighteen clinical trials.

Each of our three core technologies is based substantially on discoveries made at, made in conjunction with, and/or licensed from the University of Texas MD Anderson Cancer Center (MD Anderson) in Houston, Texas. For each of the core technologies, one or more drug candidates have successfully completed a Phase 1 or greater clinical trial. Three of our drug candidates have shown human activity in clinical trials and are currently or have been in Phase 1B/2, Phase 2, Phase 2B/3 clinical trials. One of those drug candidates is Annamycin, which is currently in the MIRACLE trial.

We believe Annamycin is the first of its kind DNA binding agent, a “next-generation” anthracycline. Whereas first- and second-generation anthracyclines are currently used to treat approximately half of all cancers, they carry with them the burden of dangerous cardiotoxicity and efficacy limitations associated with multidrug resistance mechanisms and poor tissue/organ distribution. Later generation anthracyclines are comprised mainly of attempts to reduce cardiotoxicity or enhance anticancer activity but we believe have failed to deliver the necessary safety and efficacy profiles to win approval or gain market acceptance. Annamycin is an entirely new chemical entity integrating a new molecular structure intended to enhance its ability to selectively kill cancer cells and reduce toxic side effects. Annamycin possesses a unique and innovative multilamellar lipid-based delivery system designed to improve bioavailability and to increase therapeutic window. The result is a next-generation anthracycline that we believe effectively addresses critical problems associated with currently used anthracyclines. It is our lead drug candidate, and we have concluded a Phase 1B/2 clinical trial for treating AML and are now conducting a Phase 3 clinical trial for R/R AML, which we believe will be registration enabling. We have also sponsored two Phase 1B/2 clinical trials of Annamycin for treating Soft Tissue Sarcoma metastasized to the lungs (STS lung metastases, STS lung mets, or Advanced STS), the results of which we believe supports the initiation of a pivotal approval trial in this additional indication.

We are focused on Annamycin and WP1066 program’s internally and externally funded (“internally” and “externally” funded trials are defined in the Funding Strategy section below) development of our core technologies as follows:

We have established a Recommended Phase 2 Dose for WP1122 to potentially enable future externally funded oncology and virology trials. Beyond this, we support development of our core technologies through sponsored (internally funded) non-clinical research at MD Anderson.

Gain from Change in Fair Value of Warrant Liabilities, Loss on Issuance of Warrant Liabilities and Loss on Extinguishment of Warrant Liabilities

During the year ended December 31, 2025, we recognized a non-cash gain of $24.4 million related to the change in fair value of our warrant liabilities, a non-cash loss of $31.0 million associated with the issuance of warrant liabilities in connection with our equity offerings, and a $0.6 million non-cash loss related to the extinguishment of warrant liabilities that were reclassified to equity. Certain of our warrants are classified as liabilities and are remeasured at fair value upon issuance and at each reporting date, as well as upon modification or inducement. Changes in the fair value of these instruments are recognized in the consolidated statements of operations in the period in which they occur. The fair value of these warrant liabilities is estimated using a Monte Carlo simulation model, which incorporates significant assumptions including expected volatility, expected term, risk-free interest rate, and the contractual terms of the warrants, including path-dependent features. Because the valuation is sensitive to changes in our stock price and other inputs, the resulting gains or losses can be significant and may fluctuate materially from period to period. In general, decreases in our stock price during a reporting period result in non-cash gains, while increases in our stock price result in non-cash losses related to the remeasurement of warrant liabilities.

Transaction Costs Allocated to Warrant Liabilities

During the year ended December 31, 2025, we recognized $1.4 million of transaction costs associated with the issuance of Series E and Series F warrant liabilities in June and August 2025, respectively.

Interest income, net decreased by approximately $0.4 million for the year ended December 31, 2025 from the comparable period in 2024 due to a decreasing cash balance during the past year.

Net loss for the year ended December 31, 2025 was $33.6 million, compared to a net loss of $26.0 million for the prior year. The current-year net loss includes a $31.0 million non-cash loss related to the issuance of warrant liabilities, a $24.4 million non-cash gain from the change in the fair value of warrant liabilities, and a $0.6 million non-cash loss on the extinguishment of warrant liabilities that were reclassified to equity.

We have historically funded our operations through a combination of at-the-market equity sales, public offerings, and warrant exercises, including warrant exercise inducement transactions, and we expect to continue to rely on these sources of capital to support our operations.

On February 19, 2026, we entered into warrant inducement agreements with certain holders of our existing equity-classified Series E and Series F warrants. Pursuant to these agreements, the holders exercised warrants to purchase an aggregate of 2,122,652 shares of our common stock at an exercise price of $3.90 per share, resulting in gross proceeds of approximately $8.3 million. In consideration for such exercises, we issued new Series H warrants to purchase up to 6,367,956 shares of common stock. The Series H warrants are exercisable upon shareholder approval, have a term of five years from such approval, and an exercise price of $2.3976 per share. The Series H warrants contain customary anti-dilution adjustments and beneficial ownership limitations. We have agreed to file a resale registration statement covering the shares of common stock issuable upon exercise of the Series H warrants on or before March 31, 2026, and to use commercially reasonable efforts to cause such registration statement to be declared effective by April 30, 2026. Due to the completion of this transaction, the exercise price of our outstanding Series E warrants was adjusted to $3.00 per share, the exercise price of our outstanding Series F warrants was adjusted to $2.75 per share, and the exercise price of our outstanding Series G and Series H warrants was adjusted to $2.3976 per share.

On December 23, 2025, we increased the maximum aggregate gross sales price of our common stock that may be offered, issued and sold under our at the market equity offering agreement (the “2025 ATM Agreement”) with Roth Capital Partners, LLC (“Roth”), which we initially entered into in July 2025, from $6.5 million to $8.2 million. Pursuant to the terms of the 2025 ATM Agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to $8.2 million from time to time through or to Roth, acting as sales agent or principal. Roth may sell shares of our common stock in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices. We pay Roth a commission equal to 3.0% of the gross proceeds from any shares of common stock sold under the 2025 ATM Agreement. During the fourth quarter of 2025, we sold 1,130,420 shares of common stock pursuant to the 2025 ATM Agreement for gross proceeds of approximately $1.1 million.

On December 21, 2025, we entered into separate warrant amendment agreements (collectively, the “Warrant Amendment”) with the holders of our Series E, Series F, and Series G warrants (each as defined below, and collectively, the “Warrants”). Pursuant to the Warrant Amendment, the exercise prices of the Warrants were reduced to $3.90 per share (which was subsequently adjusted as described above). In addition, the Series E and Series F warrants were amended to eliminate certain price adjustment provisions and to revise the definition of “Black-Scholes Value". The revised definition of Black-Scholes Value modified the expected volatility input used in the Black-Scholes option pricing model by eliminating the use of 30-day and 365-day historical volatility measures and limiting the volatility input to the greater of (i) 100-day historical volatility, as obtained from Bloomberg, or (ii) 100%. All other inputs to the Black-Scholes model, including the risk-free interest rate, underlying stock price, expected term, and cost of borrow, remained unchanged. As a result of the Warrant Amendment, we determined that the Series E and Series F warrants qualified for equity classification prospectively under applicable accounting guidance. Accordingly, upon the effectiveness of the Warrant Amendment, the Series E and Series F warrants were reclassified from liability to equity. In connection with the reclassification, we remeasured the Series E and Series F warrant liabilities to fair value immediately prior to reclassification, resulting in the recognition of a $21.5 million gain in the consolidated statement of operations. We then reclassified approximately $16.0 million of Series E and Series F warrant liabilities to additional paid-in capital. In addition, we recorded a loss on extinguishment of warrant liabilities of $0.6 million and a warrant-related deemed dividend of $0.1 million, which was recorded within additional paid-in capital and recognized as a reduction to income available to common stockholders. See Note 5 of our consolidated financial statements in Item 8 in this Annual Report on Form 10-K for further discussion. If exercised in full, the Warrants could result in gross proceeds to us of up to approximately $29.4 million.

On December 9, 2025, we entered into warrant exercise inducement agreements with holders of certain outstanding Series C, Series D and Series F warrants, pursuant to which such holders agreed to exercise warrants to purchase an aggregate of 1,044,329 shares of our common stock at reduced or existing exercise prices in exchange for the issuance of Series G warrants to purchase up to 2,610,823 shares of common stock, representing 250% of the shares underlying the exercised warrants, with a five-year exercise term. We received gross proceeds of approximately $6.8 million from the warrant exercises. Pursuant to ASC 815, and in accordance with our accounting policy, we determined that Series G warrants met the criteria for equity classification as of their issuance date. Additionally, we utilized our ATM on this date and sold 86,475 shares for gross proceeds of $0.6 million.

In August 2025, we entered into a warrant exercise inducement offer letter with holders of certain existing warrants pursuant to which the holders agreed to exercise Series E warrants to purchase up to 648,649 shares of common stock with an exercise price of $9.25 per share in exchange for our issuing new Series F warrants to purchase 2,594,595 shares of our common stock. Each Series F warrant had an exercise price of $13.75 per share (which was subsequently adjusted as described above) and is exercisable as of the date of issuance to October 16, 2030. We received gross proceeds of $6.0 million. In addition, during August and September 2025, 119,848 shares of Series E warrants were exercised for $1.1 million. Upon issuance the Series F warrants were initially classified as liability warrants. Pursuant to the Warrant Amendment described above, the Series F warrants were equity-classified as of December 21, 2025. In total, we received gross proceeds of $7.1 million.

On February 25, 2025, we entered into a securities purchase agreement with an institutional investor for the sale of 46,000 shares of common stock, and 84,841 pre-funded warrants to purchase shares of common stock, and Series D warrants to purchase up to 261,722 shares of common stock. The combined purchase price for the securities was $26.75 per share of common stock (or pre-funded warrant in lieu thereof). Each pre-funded warrant was exercisable for one share of common stock at an exercise price of $0.025 per share. All pre-funded warrants were exercised in June 2025. The Series D warrants expire five years from the initial exercise date, or August 18, 2030. We received gross proceeds of $3.5 million.

On August 19, 2024, we completed a public offering of 11,320 shares of common stock and 87,355 pre-funded warrants to purchase shares of common stock, Series A warrants to purchase up to 98,655 shares of common stock and Series B warrants to purchase up to 98,655 shares of common stock, at a combined public offering price of $55.75 per share (or per pre-funded warrant in lieu thereof) and accompanying warrants. We received gross proceeds of $5.5 million, before deducting the placement agent's fees and other offering expenses.

Net cash provided by financing activities was $27.3 million for the year ended December 31, 2025, During 2025, we generated cash from financing activities primarily through at-the-market equity sales, public offerings, and warrant exercises, including warrant exercise inducement transactions. In the aggregate, these activities generated $27.3 million in net proceeds, including $1.0 million from at-the-market equity sales during the fourth quarter of 2025, $24.8 million from the issuance of common stock as a result of warrant inducement, pre-funded warrants, and common warrants, and $1.5 million from warrant exercises. Net cash provided by financing activities was $4.6 million for the year ended December 31, 2024, consisting of proceeds from the August 2024 stock offering.

Contractual Obligations

Our contractual obligations and commitments relate primarily to our operating leases and license, sponsored research, consulting, and laboratory access agreements with various research and development centers for the development and commercialization of our drug candidates targeting acute myeloid leukemia and certain hard to treat cancers. See Note 8 to our consolidated financial statements in Item 8 of this Annual Report on Form 10-K for further discussion.

When the Company enters into arrangements pursuant to which warrants are issued, modified, or amended, we evaluate the terms of the warrants to determine the appropriate accounting and classification in accordance with FASB Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity (“ASC 480”), ASC Topic 505, Equity (“ASC 505”), ASC Topic 815, Derivatives and Hedging (“ASC 815”), and ASC Topic 718, Compensation—Stock Compensation (“ASC 718”).

Warrants that meet the criteria for liability classification under ASC 480, or that do not meet the criteria for equity classification under ASC 815 due to exercise contingencies, settlement provisions, or other contractual terms, are accounted for as derivative liabilities. These warrants are measured at fair value in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in earnings, and are presented as warrant liabilities on the Company’s consolidated balance sheets. Warrants that meet the criteria for equity classification are recorded in stockholders’ equity.

During the year ended December 31, 2025, we changed our accounting policy related to the classification of certain outstanding warrants. Prior to the change in accounting policy, our policy was to account for warrants with a certain contingent settlement provision as liability warrants, initially measuring them at fair value on the date of issuance. The warrants were previously remeasured at fair value at the end of each reporting period, with the related liability reflected on our balance sheet. The changes in fair value during each previous reporting period were recognized as a gain (loss) from change in fair value of warrant liability in our consolidated statement of operations. We changed our policy and warrants that contain this certain contingent settlement provision are now accounted for as equity under ASC 815-40-15-7C through 15-7F and ASC 505. We concluded that accounting for our warrants as equity instruments is preferable under ASC 250, as equity classification better reflects the economic substance of the arrangement and enhances the clarity and consistency of our financial reporting. As a result of this change in accounting policy, all warrants issued prior to 2025, and certain warrants issued in 2025, that were previously accounted for as liability awards due to the certain contingent settlement provision now meet the equity classification criteria under ASC 815-40 and are classified as equity instruments. The effects of the change in accounting policy from warrant liabilities to equity have been retrospectively applied to all periods presented in these consolidated financial statements. See Note 2 and Note 5 of our consolidated financial statements in Item 8 in this Annual Report on Form 10-K for further discussion.

As a result of the change in accounting policy, we adjusted accumulated deficit, and additional paid-in capital to reverse previously recorded mark-to-market fair value changes of the liability-classified warrants.

Valuation of Warrant Liabilities

The fair value of the warrant liabilities is estimated using a Monte Carlo simulation model. This model is utilized due to certain features of the warrants, including path-dependent or market-based provisions, which cannot be appropriately valued using simpler option pricing models. The valuation model incorporates assumptions related to:

We are not currently in compliance with Nasdaq’s continued listing requirements related to the bid price of our common stock and if we are unable to regain compliance with the listing requirements, our common stock will be delisted from Nasdaq which could have a material adverse effect on our financial condition and could make it more difficult for stockholders to sell their shares.

Since July 31, 2026, the closing price of our common stock has been below $1.00, and if our common stock remains below $1.00 for 30 consecutive business days we will not be in compliance with Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). In accordance with Nasdaq rules, we would normally be provided with a grace period of 180 calendar days to regain compliance with the Bid Price Rule. However, since we completed a reverse stock split on December 1, 2025, which is within the last one-year period, if we do not meet the Bid Price Rule, we will not be eligible for any compliance period and the Nasdaq Staff will provide written notification to us that our common stock may be delisted. We would then be entitled to appeal the Staff’s determination to a Nasdaq Listing Qualifications Panel and request a hearing. There can be no assurance that, if we do appeal the delisting determination by the Staff to the Nasdaq Listing Qualifications Panel, that such appeal would be successful.

Clinical

Blinded data update (n=62): On July 31, 2026, we announced updated preliminary blinded results from Part A of our MIRACLE trial. With 62 subjects evaluable to date in Part A, the preliminary blinded CR rate was 24% and the CRc rate was 37%. Of those 62 subjects, 30, or 48%, had previously received a venetoclax-based regimen. Among that subgroup, the preliminary blinded CR and CRc rates were 23% and 37%, respectively, essentially identical to the evaluable population as a whole. Because this analysis remains blinded, it includes subjects randomized to the control arm and is therefore expected to be lower than the unblinded Annamycin-arm results reported at the June 2026 interim analysis, stated below. The two sets of response rates – blinded data versus unblinded data - are not directly comparable.

Across three successive blinded analyses, at 30, 45 and 62 evaluable subjects, the blinded CRc has remained within a narrow band of approximately 37% to 40%, while the proportion of subjects entering the trial after failure of a first-line venetoclax-based regimen has risen from 31.1% in the n=45 population to 48% in the latest blinded data readout. As of August 6, 2026, enrollment stands at 76 of 90 subjects, and additional subjects continue to be identified by site investigators. The Company expects to treat the 90th subject in September 2026, with unblinding of the comprehensive Part A data anticipated in the December 2026 to February 2027 timeframe. The trial continues with no evidence of drug-related cardiotoxicity.

Unblinded data update (n=45): On June 30, 2026, we announced positive preliminary unblinded efficacy results from the first 45 patients enrolled in Part A of the Company's pivotal Phase 2/3 MIRACLE trial, analyzed on a full intent-to-treat basis with no patient exclusions. Both Annamycin treatment arms demonstrated favorable efficacy trends compared with the control arm in patients with relapsed or refractory acute myeloid leukemia (R/R AML). The interim analysis demonstrated a clear efficacy advantage for both Annamycin treatment arms, 190 mg/m² plus HiDAC and 230 mg/m² plus HiDAC, over the HiDAC control arm. CR reached 43% and 36% in the respective Annamycin cohorts, compared with 12% for control, while CRc reached 50% and 57%, respectively, versus 29% for the control arm. The n=45 population contained 75.6% over 60 years of age, 55.6% 7 days of cytarabine plus 3 days of an anthracycline (7+3) and 31.1% venetoclax regimens for first line (1L) therapies. Importantly, the remission rates for all three arms, including the control arm, reflect outcomes measured after only a single cycle of therapy, as specified by the MIRACLE protocol. The most commonly cited historical benchmarks in this setting, including the MIRROS and CLASSIC I studies, as well as Moleculin’s own MB-106 study, permitted multiple cycles of treatment. The Company therefore expected absolute remission rates for both the control and Annamycin arms in this single-cycle interim analysis to be lower than those reported in such multi-cycle datasets and believes the most meaningful comparison is the performance of the Annamycin arms relative to the concurrent, randomized control arm evaluated on the same single-cycle basis.

Market Research

On June 5, 2026, we announced results from an independent market landscape assessment evaluating Annamycin in relapsed/refractory acute myeloid leukemia (R/R AML). The research demonstrated strong physician interest in Annamycin, with oncologists reporting an average likelihood-to-prescribe score of 6 out of 7. Physicians cited Annamycin's reported complete remission rates, MRD-negative responses, potential to bridge patients to bone marrow transplant, biomarker-agnostic applicability and no evidence of cardiotoxicity as key factors supporting potential adoption.

The study included perspectives from academic and community hematologist-oncologists, medical oncologists and pediatric AML specialists. Respondents consistently identified significant unmet need in R/R AML, particularly for patients without actionable mutations and those who relapse or progress following venetoclax-based therapy. Separately, interviews with hospital administrators and insurers revealed that payers view Annamycin as a potentially meaningful value proposition, driven by its efficacy and safety profile and applicability to a broad patient population.

Scientific/Regulatory

Poster on Cardiac Safety of Annamycin at ASCO

On May 29, 2026, new data were presented at the 2026 American Society of Clinical Oncology (ASCO) Annual Meeting further reinforcing the differentiated cardiac safety profile of our lead drug candidate, Annamycin (also known as “L-Annamycin” or “naxtarubicin”). The poster presentation, titled “Cardiac safety of L-annamycin at high cumulative anthracycline exposure: Pooled analysis,” highlighted findings from a pooled analysis across five completed clinical trials evaluating Annamycin in patients with acute myeloid leukemia (AML) and soft tissue sarcoma. The analysis demonstrated no detectable cardiotoxicity despite cumulative exposure levels that substantially exceeded traditional lifetime anthracycline dose limitations.

The pooled analysis included 90 patients treated with Annamycin across five completed clinical trials, with source-verified paired pre- and post-treatment left ventricular ejection fraction (LVEF) assessments available for 78 patients. Patients received a median cumulative Annamycin dose of 660 mg/m², with exposure ranging from 210 mg/m² to 2,970 mg/m² – levels that, in many cases, substantially exceeded conventional anthracycline lifetime dose thresholds.

Financing in August 2026

On August 3, 2026, we completed a public offering of (i) 12,376,667 shares of common stock, or pre-funded warrants in lieu thereof, and (ii) Series I Warrants to purchase up to 37,130,001 shares of common stock. The combined public offering price was $0.75 per share of common stock (or pre-funded warrant in lieu thereof) and accompanying warrant. Each pre-funded warrant is exercisable into one share of common stock at an exercise price of $0.001 per share and expires when exercised in full. The Series I Warrants are exercisable into one share of common stock at an exercise price of $0.75 per share and expire on the five-year anniversary of the closing date. The Series I Warrants contain anti-dilution provisions that reduce the exercise price (subject to a floor price of $0.21) in the event we issue common stock or common stock equivalents at a price below the then-current exercise price, other than in connection with certain exempt issuances. In connection with the offering, we agreed not to issue any shares of common stock or securities convertible into common stock for 45 days after the closing date, subject to certain exceptions, and agreed not to effect any variable rate transaction for 180 days after the closing date. We received gross proceeds of approximately $9.3 million in the offering, before deducting placement agent fees and other offering expenses. We paid total placement agent fees and other offering expenses of approximately $0.8 million. Due to the pricing of the offering, and certain provisions, the exercise price of our outstanding Series G warrants was adjusted to $1.326 per share, and the exercise price of our outstanding Series H warrants was adjusted to $0.962 per share. We issued 11,088,334 common shares, and prefunded warrants for 1,288,333 shares, which were exercised shortly after the offering.

Other Corporate

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Research and Development Expense. Research and development (R&D) expense was $10.8 million and $7.0 million for the six months ended June 30, 2026 and 2025, respectively. The increase of $3.8 million is primarily related to the MIRACLE clinical trials of $2.7 million, additional nonclinical studies of $0.7 million and other research costs of $0.4 million during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Gain (loss) from Change in Fair Value of Warrant Liability. We recorded a net gain of $10.8 million in the six months ended June 30, 2026 as compared to a net loss of $0.6 million in the six months ended June 30, 2025, for the change in fair value on revaluation of our warrant liability associated with our warrants issued in conjunction with certain of our previous stock offerings. Changes in fair value are reflected in the statement of operations as a gain or loss from the change in fair value of the warrant in the period in which the change occurred. A gain results principally from a decline in our share price during the period and a loss will result principally from an increase in our share price.

Transaction costs allocated to warrant liabilities and Loss on issuance of warrant liabilities. Proceeds of offerings are allocated between common shares and warrants first by allocating to the warrants classified as a liability based on their fair value and then allocating the residual to the equity instruments. Transaction costs on the Series H warrants in February 2026 amounted to $0.7 million. The loss on issuance of the warrant liabilities for the Series H warrants was $15.2 million as compared to a $10.4 million loss for the prior six month period in 2025.

During June of 2026, warrants were exercised for the issuance of 1,396,500 shares at $2.01 per share for proceeds of approximately $2.8 million.

In May 2026, we sold 354,757 shares under the 2025 ATM Agreement for net proceeds of approximately $0.8 million where the lowest price sold was $2.01 per share.