gnpx20240930

gnpx20240930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2024

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

For the transition period from __________________ to ______________

Commission File Number: 001-38244

GENPREX, INC.

(Exact name of registrant as specified in its charter)

Delaware	90-0772347
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

3300 Bee Cave Road, #650-227, Austin, TX	78746
(Address of principal executive offices)	(Zip Code)

(512) 537-7997

(Registrant’s telephone number, including area code)

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

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

GNPX

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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

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

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

As of November 5, 2024, the registrant had 8,508,068 shares of common stock, par value $0.001 per share, outstanding.

Table of Contents

GENPREX, INC.

FORM 10-Q TABLE OF CONTENTS

			Page No.

PART I	FINANCIAL INFORMATION		3

ITEM 1.	FINANCIAL STATEMENTS		3
	Condensed Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023		3
	Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2024, and 2023 (unaudited)		4
	Condensed Statements of Changes in Stockholders' Equity for the Three and Nine Months Ended September 30, 2024, and 2023 (unaudited)		5
	Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2024, and 2023 (unaudited)		6
	Notes to Unaudited Condensed Financial Statements		7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		21
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		28
ITEM 4.	CONTROLS AND PROCEDURES		28

PART II	OTHER INFORMATION		29

ITEM 1.	LEGAL PROCEEDINGS		29
ITEM 1A.	RISK FACTORS		29
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		29
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES		29
ITEM 4.	MINE SAFETY DISCLOSURES		29
ITEM 5.	OTHER INFORMATION		29
ITEM 6.	EXHIBITS		29
SIGNATURES		31

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Genprex, Inc.

Condensed Balance Sheets

	*September 30,*			*December 31,*
	*2024*			*2023*
Assets	*(unaudited)*			*(see Note 2)*
Current assets:
Cash and cash equivalents	$	1,488,281		$	6,737,629
Prepaid expenses and other		429,222			794,138
Total current assets		1,917,503			7,531,767
Property and equipment, net		463			7,859
Other non-current assets:
Security deposits		—			10,000
Research and development supplies		1,989,299			2,347,488
Intellectual property, net		—			773,478
Total other assets		1,989,299			3,130,966
Total assets	$	3,907,265		$	10,670,592
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,304,121		$	1,397,610
Other current liabilities		938,173			1,856,598
Total current liabilities		2,242,294			3,254,208
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		—			—
Common stock $0.001 par value: 200,000,000 shares authorized; 5,489,152 and 1,485,902 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		5,489			1,486
Additional paid-in capital		152,128,463			141,103,178
Accumulated deficit		(150,468,981	)		(133,688,280	)
Total stockholders’ equity		1,664,971			7,416,384
Total liabilities and stockholders’ equity	$	3,907,265		$	10,670,592

See accompanying notes to the unaudited condensed financial statements.

Table of Contents

Genprex, Inc.

Condensed Statements of Operations (unaudited)

	*Three Months Ended*						*Nine Months Ended*
	*September 30,*						*September 30,*
	*2024*			*2023*			*2024*			*2023*
Operating expenses:
Depreciation	$	1,272		$	3,724		$	6,230		$	11,578
Research and development		2,756,081			4,616,546			7,696,982			13,903,611
General and administrative		1,566,085			3,166,057			9,135,225			11,173,643
Total operating expenses		4,323,438			7,786,327			16,838,437			25,088,832
Operating loss		(4,323,438	)		(7,786,327	)		(16,838,437	)		(25,088,832	)
Interest income		8,080			51,391			58,851			175,413
Realized loss		(629	)		(13,307	)		(1,115	)		(17,790	)
Net loss	$	(4,315,987	)	$	(7,748,243	)	$	(16,780,701	)	$	(24,931,209	)
Net loss per share—basic and diluted	$	(1.23	)	$	(5.36	)	$	(6.90	)	$	(18.77	)
Weighted average number of common shares—basic and diluted		3,499,802			1,445,172			2,431,695			1,327,930

See accompanying notes to the unaudited condensed financial statements.

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Genprex, Inc.

Condensed Statements of Changes in Stockholders' Equity (unaudited)

		*Common Stock*				*Additional*			*Accumulated*			*Total*
	*Shares*		*Amount*		*Paid-In Capital*			*Deficit*			*Stockholders' Equity*
Balance at December 31, 2023		1,485,902	$	1,486	$	141,103,178		$	(133,688,280	)	$	7,416,384
Issuance of common stock, pre-funded warrants, and warrants for cash, net of issuance costs		323,474		323		6,792,876			—			6,793,199
Issuance of common stock for services		36,375		36		180,684			—			180,720
Company issued rounding of street name accounts for reverse stock split		64,690		65		(65	)		—			—
RSUs conversion to common stock		12,145		13		(13	)		—			—
Share-based compensation		—		—		335,246			—			335,246
Net loss		—		—		—			(5,968,869	)		(5,968,869	)
Balance at March 31, 2024		1,922,586	$	1,923	$	148,411,906		$	(139,657,149	)	$	8,756,680
Issuance of common stock, pre-funded warrants, and warrants for cash, net of issuance costs		608,671		609		20,153			—			20,762
Issuance of common stock for services		5,000		5		14,845			—			14,850
RSUs conversion to common stock		19,478		19		(19	)		—			—
Share-based compensation		—		—		2,049,103			—			2,049,103
Net loss		—		—		—			(6,495,845	)		(6,495,845	)
Balance at June 30, 2024		2,555,735	$	2,556	$	150,495,988		$	(146,152,994	)	$	4,345,550
Issuance of common stock, pre-funded warrants, and warrants for cash, net of issuance costs		2,928,417		2,928		1,212,254			—			1,215,182
Issuance of common stock for services		5,000		5		9,645			—			9,650
Share-based compensation		—		—		410,576			—			410,576
Net loss		—		—		—			(4,315,987	)		(4,315,987	)
Balance at September 30, 2024		5,489,152	$	5,489	$	152,128,463		$	(150,468,981	)	$	1,664,971

Balance at December 31, 2022		1,202,677	$	1,203	$	125,101,356		$	(102,827,819	)	$	22,274,740
Issuance of common stock, pre-funded warrants, and warrants for cash, net of issuance costs		96,581		96		4,080,684			—			4,080,780
Issuance of common stock for services		125		—		21,885			—			21,885
Share-based compensation		—		—		1,310,230			—			1,310,230
Net loss		—		—		—			(9,202,774	)		(9,202,774	)
Balance at March 31, 2023		1,299,383	$	1,299	$	130,514,155		$	(112,030,593	)	$	18,484,861
Issuance of common stock, pre-funded warrants, and warrants for cash, net of issuance costs		—		—		—			—			—
Issuance of common stock for services		125		1		4,399			—			4,400
Share-based compensation		—		—		1,541,805			—			1,541,805
Net loss		—		—		—			(7,980,192	)		(7,980,192	)
Balance at June 30, 2023		1,299,508	$	1,300	$	132,060,359		$	(120,010,785	)	$	12,050,874
Issuance of common stock, pre-funded warrants, and warrants for cash, net of issuance costs		186,144		186		6,512,407			—			6,512,593
Issuance of common stock for services		125		—		4,795			—			4,795
Share-based compensation		—		—		1,485,474			—			1,485,474
Net loss		—		—		—			(7,748,243	)		(7,748,243	)
Balance at September 30, 2023		1,485,777	$	1,486	$	140,063,035		$	(127,759,028	)	$	12,305,493

See accompanying notes to the unaudited condensed financial statements.

Table of Contents

Genprex, Inc.

Condensed Statements of Cash Flows (unaudited)

	*Nine Months Ended September 30,*
	*2024*			*2023*
Cash flows from operating activities:
Net loss	$	(16,780,701	)	$	(24,931,209	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		6,230			11,578
Share-based compensation and issuance of stock for services		3,000,145			4,368,589
Intellectual property		773,478			—
Changes in operating assets and liabilities:
Accounts receivable		—			34,852
Prepaid expenses and other		374,916			(656,871	)
Research and development supplies		358,189			(129,523	)
Accounts payable		(93,488	)		736,266
Other current liabilities		(918,427	)		791,578
Net cash used in operating activities		(13,279,658	)		(19,774,740	)
Cash flows from investing activities:
Disposals of property and equipment		1,167			—
Additions to intellectual property		—			(61,383	)
Net cash provided by (used in) investing activities		1,167			(61,383	)
Cash flows from financing activities:
Net proceeds from issuances of common stock, pre-funded warrants, and warrants		8,029,143			10,593,373
Net cash provided by financing activities		8,029,143			10,593,373
Net decrease in cash and cash equivalents		(5,249,348	)		(9,242,750	)
Cash and cash equivalents, beginning of period		6,737,629			20,954,069
Cash and cash equivalents, end of period	$	1,488,281		$	11,711,319

See accompanying notes to the unaudited condensed financial statements.

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GENPREX, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

Note 1 - Description of Business and Basis of Presentation

Unless the context requires otherwise, references to “Genprex,” the “Company,” “we,” “us” or “our” in this Quarterly Report on Form 10-Q refer to Genprex, Inc. Genprex, incorporated in Delaware in April 2009, is a clinical stage gene therapy company pioneering the development of gene-based therapies for large patient populations with unmet medical needs. The Company’s oncology platform utilizes its systemic, non-viral Oncoprex® Delivery System which uses lipid-based nanoparticles in a lipoplex form to deliver tumor suppressor gene-expressing plasmids to cancer cells. The product is administered intravenously, where it is taken up by tumor cells that then express tumor suppressor proteins that were deficient in the tumor. The Company’s diabetes technology is designed to work in Type 1 diabetes by transforming alpha cells in the pancreas into functional beta-like cells, which can produce insulin but may be distinct enough from beta cells to evade the body’s immune system. In Type 2 diabetes, the Company’s technology is believed to work by replenishing and rejuvenating exhausted beta cells that make insulin.

Oncology Platform

Genprex’s lead oncology drug candidate, Reqorsa® (quaratusugene ozeplasmid), previously referred to as GPX-001, is a gene therapy initially being developed in combination with prominent, approved cancer drugs to treat Non-Small Cell Lung Cancer (“NSCLC”) and Small Cell Lung Cancer (“SCLC”). REQORSA has multimodal effects on cancer cells. It harms the metabolism of cancer cells, which leads to reduced cancer cell growth. It also interrupts cell signaling pathways that cause replication and proliferation of cancer cells, re-establishes pathways for apoptosis, or programmed cell death, in cancer cells, and increases the immune response against cancer cells. In preclinical studies, REQORSA has been shown to be complementary with targeted drugs and immunotherapies. The Company’s strategy is to develop REQORSA in combination with current approved therapies and the Company believes REQORSA’s unique attributes position it to provide treatments that improve on these current therapies for patients with NSCLC, SCLC, and possibly other cancers.

The TUSC2 gene, which is the key component of REQORSA and plays a vital role in cancer suppression and normal cell metabolism, is one of a series of genes on the short arm of Chromosome 3 whose therapeutic use is covered by the Company’s exclusive worldwide licenses from The University of Texas MD Anderson Cancer Center (“MD Anderson”). Genprex believes that its ONCOPREX Delivery System allows for the delivery of a number of cancer-fighting tumor suppressor genes, alone or in combination with other cancer therapies, to combat multiple types of cancer and the Company is in early stages of discovery programs to identify other cancer candidates. In August 2022, Genprex entered into a three-year sponsored research agreement with MD Anderson to support further preclinical studies of TUSC2 and other tumor suppressor genes. Additionally, the Company is collaborating with MD Anderson to discover, develop and utilize biomarkers to select the patient population most likely to respond to REQORSA and enable decisions on progression of the Company’s drug candidates to the next phase of development. MD Anderson is currently analyzing biomarkers that would indicate lack of response in lung cancer that could enrich the Company’s population of responders in its clinical trials and enhance patient screening and enrollment in order to increase the likelihood of potential success of the Acclaim studies for the Company.

Acclaim-3: The Company is currently enrolling and treating patients in the Phase 1 dose escalation portion of its Phase 1/2 Acclaim-3 clinical trial. The Acclaim-3 clinical trial uses a combination of REQORSA and Genentech, Inc.’s Tecentriq® (atezolizumab) as maintenance therapy in patients with extensive stage small cell lung cancer (“ES-SCLC”) who did not develop tumor progression after receiving Tecentriq and chemotherapy as initial standard treatment. Patients are treated with REQORSA and Tecentriq until disease progression or unacceptable toxicity is experienced. In January 2024, the Company opened the Phase 1 portion of the Acclaim-3 study for enrollment and enrolled and dosed the first patient in May 2024. In October 2024, the Company announced the completion of the 0.09 mg/kg dose group of the Phase 1 portion and that there were no dose limiting toxicities in this dose group. The Acclaim-3 Safety Review Committee therefore approved escalation to the highest dose group of 0.12 mg/kg, which will now be enrolled. The Company continues to anticipate completion of enrollment in the Phase 1 dose escalation portion of the study and to start the Phase 2 expansion portion of the study in the second half of 2024, dependent on the number of patients needed to be enrolled in the 0.12 mg/kg dose group. The first patient treated in the Phase 1 dose escalation portion of the Acclaim-3 trial experienced an initial positive response after enrollment and dosing commenced in May. The patient had a partial remission (“PR”), which is defined as at least a thirty percent (30%) decrease in tumor size, from the time the patient had a baseline CT scan after induction therapy and prior to the start of maintenance therapy to the time of the CT scan performed after two cycles of maintenance therapy. As the maintenance therapy consists of REQORSA and Tecentriq, and the patient had already received four cycles of Tecentriq during induction therapy and thus responses to Tecentriq would likely have occurred earlier, the Company believes this suggests that REQORSA may be providing clinical benefit. A follow-up CT scan, performed after four cycles of maintenance therapy (three months), confirmed that the patient still had a 30% decrease in tumor size in measurable lesions; however, one lesion not previously measurable had grown in size, thus leading to a conclusion of disease progression at three months. In June 2023, the United States Food and Drug Administration (“FDA”) granted Fast Track Designation for the Acclaim-3 treatment combination of REQORSA and Tecentriq as maintenance therapy in patients with ES-SCLC who did not develop tumor progression after receiving Tecentriq and chemotherapy as initial standard treatment. In August 2023, the FDA granted Orphan Drug Designation to REQORSA for the treatment of SCLC. 

Acclaim-2: The Acclaim-2 trial involved a combination of REQORSA and Merck & Co.’s Keytruda® (pembrolizumab) in patients with late-stage NSCLC whose disease has progressed after treatment with Keytruda. As previously announced in August 2024, based on a number of factors, including enrollment challenges and delays due to competition for investigators and eligible patients with numerous other trials involving the same patient population, the Company decided to cease enrollment of new patients in the Acclaim-2 trial to prioritize its resources and focus on the other two Acclaim trials in SCLC and NSCLC, respectively. The one patient continuing to receive REQORSA treatment in the Phase 1 dose escalation portion of the study will continue to be treated until disease progression.

Acclaim-1: The Company is currently enrolling and treating patients in the Phase 2a expansion portion of its Phase 1/2 Acclaim-1 clinical trial. The Acclaim-1 trial uses a combination of REQORSA and AstraZeneca’s Tagrisso® (osimertinib) in patients with late-stage NSCLC that has activating epidermal growth factor receptor (“EGFR”) mutations and progression after treatment with Tagrisso. Following the May 2023 completion of the Phase 1 dose escalation portion of the study, the Acclaim-1 Safety Review Committee (“Acclaim-1 SRC”) approved advancement from the Phase 1 dose escalation portion to the Phase 2a expansion portion of the study. Based on a review of safety data which showed no dose limiting toxicities, the Acclaim-1 SRC determined the recommended Phase 2 dose of REQORSA to be 0.12 mg/kg. This was the highest dose level delivered in the Phase 1 portion of the study and is twice the highest dose level delivered in the Company’s prior clinical trial combining REQORSA with Tarceva® (erlotinib) for the treatment of late-stage lung cancer. There are still two patients originally enrolled in the Phase 1 dose escalation portion of the study who have had prolonged progression-free survival and continue to receive treatment with REQORSA and Tagrisso, one who attained a PR after the second course of REQORSA and Tagrisso and has maintained this response through 41 courses of treatment (approximately 30 months), and one with stable disease without disease progression through 26 courses of treatment (approximately 19 months) who is also continuing to receive REQORSA and Tagrisso treatment. Genprex opened the Phase 2a expansion portion of the study and enrolled and dosed the first patient in January 2024. The initial trial design of the Phase 2a expansion portion of the study included two cohorts with half being patients who received only prior Tagrisso treatment and the other half being patients who received prior Tagrisso treatment and chemotherapy. However, as previously announced in August 2024, based on resource prioritization and to focus on the patients for whom REQORSA is most likely to show a benefit, the Company decided to limit its enrollment efforts moving forward to patients who received only prior Tagrisso treatment and cease enrollment of the second cohort (patients who received prior Tagrisso treatment and chemotherapy). The Phase 2a expansion portion of the trial with one cohort is now expected to enroll approximately 33 patients. The Phase 2b randomized portion of the study, in which patients progressing on prior Tagrisso treatment will be randomized 1:1 to either REQORSA and Tagrisso combination therapy or to platinum-based chemotherapy, will remain unchanged. There will be an interim analysis following the treatment of 19 patients in the Phase 2a portion of the Acclaim-1 study. The Company expects to complete the enrollment of the first 19 patients in the Phase 2a expansion portion of the study and conduct an interim analysis in the first half of 2025. The FDA has granted Fast Track Designation for the Acclaim-1 treatment combination of REQORSA and Tagrisso in NSCLC patients who have progressed after Tagrisso treatment. 

GENPREX, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

Diabetes Gene Therapy

In diabetes, the Company has exclusively licensed from the University of Pittsburgh of the Commonwealth System of Higher Education (“University of Pittsburgh”) multiple technologies relating to the development of a gene therapy product for each of Type 1 and Type 2 diabetes. The same general novel approach is used in each of Type 1 and Type 2 diabetes whereby an adeno-associated virus (“AAV”) vector containing the Pdx1 and MafA genes is administered directly into the pancreatic duct. In humans, this can be done with a routine endoscopy procedure. The Company’s diabetes product candidates are currently being evaluated and optimized in preclinical studies at the University of Pittsburgh. GPX-002 is being developed using the same construct for the treatment of both Type 1 diabetes and Type 2 diabetes. GPX-002 for Type 1 diabetes is designed to work by transforming alpha cells in the pancreas into functional beta-like cells, which can produce insulin but may be distinct enough from beta cells to evade the body’s immune system. In a similar approach, GPX-002 for Type 2 diabetes (formerly known as GPX-003), where autoimmunity is not at play, is believed to work by replenishing and rejuvenating exhausted beta cells that make insulin. Genprex finalized the components of the diabetes construct to take forward for nonclinical studies and in December 2023, the Company submitted a request to meet with the FDA to obtain their guidance on the nonclinical studies needed to file an Investigational New Drug (“IND”) application and initiate first-in-human studies. As a result of the FDA’s response, the Company will continue with its planned additional nonclinical studies before requesting regulatory guidance for the IND-enabling studies. The Company is currently working with the University of Pittsburgh on species analyses for the animal models as well as on other regulatory and clinical strategic planning and anticipates requesting further regulatory guidance from the FDA in the first half of 2025. In October 2023, Genprex entered into a one-year extension to its August 2022 sponsored research agreement with the University of Pittsburgh for the use of GPX-002 in a non-human primate (“NHP”) model in Type 2 diabetes. The extension includes a revised research plan to encompass the Company’s most recent technologies to which it acquired exclusive rights from the University of Pittsburgh in July 2023. These include using a MafB promoter to drive expression of the Pdx1 and MafA transcription factors that can potentially be used for both Type 1 and Type 2 diabetes. Additionally, in September 2024, Genprex announced that it is considering various strategic alternatives and opportunities to enhance stockholder value, including evaluating ways to optimize its clinical and research programs and operational strategies, such as its intention to potentially transfer the Company’s diabetes clinical development program and its diabetes gene therapy assets into a new, initially wholly-owned subsidiary (“NewCo”). NewCo would focus on developing and commercializing GPX-002. The spin-out, if completed as presently contemplated, would result in NewCo focusing on developing GPX-002, while Genprex would retain its oncology clinical development programs and other oncology pipeline assets. The potential formation and transfer of the clinical development program into the wholly-owned subsidiary is currently anticipated to occur by the end of 2024, subject to adequate financing, the satisfaction of customary conditions and final approval from the Genprex management and board of directors.

Capital Requirements, Liquidity and Going Concern Considerations

The Company's unaudited condensed financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has sustained substantial losses from operations since inception and has no current source of revenue. In addition, the Company has used, rather than provided, cash in its operations. Genprex expects to continue to incur significant expenditures to further clinical trials for the commercial development of its patents.

The Company recognizes that it must obtain additional capital resources to successfully commercialize its product candidates. To date, Genprex has received funding in the form of equity and debt, and the Company plans to seek additional funding in the future. However, no assurances can be given that it will be successful in raising additional capital. If the Company is not able to timely and successfully raise additional capital, the timing of its clinical trials, financial condition and results of operations may be materially and adversely affected. These unaudited condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities.

Genprex believes that its current cash and cash equivalents will be sufficient to fund expenditure requirements for its necessary operations and expected clinical trial activities into December 2024. The Company has based these estimates, however, on assumptions that may prove to be wrong, and could spend available financial resources much faster than it currently expects. The Company will need to raise additional funds to continue funding its development and operations. The Company plans to secure such additional funding, although there are no guarantees or commitments for additional funding.

As a result of its recurring losses from operations and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern. The unaudited condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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GENPREX, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

Note 2 - Summary of Significant Accounting Policies

Genprex’s unaudited condensed financial statements have been prepared in accordance with US GAAP and the requirements of the United States Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that is normally required by US GAAP can be condensed or omitted. Accordingly, they do not include all of the information and footnotes normally included in financial statements prepared in conformity with US GAAP. The December 31, 2023 condensed balance sheet was derived from the December 31, 2023 audited financial statements. Genprex’s unaudited condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s 2023 Annual Report on Form 10-K, filed with the SEC on April 1, 2024 (the “Form 10-K”).

The accompanying condensed financial statements are unaudited and include all adjustments (consisting of normal recurring adjustments) that management considers necessary for a fair presentation of Genprex’s condensed financial position and results of operations for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year.

A summary of Genprex’s significant accounting policies consistently applied in the preparation of the accompanying unaudited condensed financial statements follows.

Change in Accounting Principle

During the nine months ended September 30, 2024, the Company changed an accounting principle related to accounting treatment of intellectual property expenditures. Previously, the Company capitalized certain intellectual property costs associated with the filing or maintenance of specific patents, including application costs, filing fees, and patent prosecution, in accordance with ASC 350-30. The Company voluntarily changed this accounting principle to expense, rather than capitalize, these intellectual property costs on the basis that the new treatment is favorable.

Reverse Stock Split

On February 2, 2024, Genprex completed a 1-for-40 reverse stock split (“Reverse Split”) of its issued and outstanding shares of common stock. The Reverse Split did not change the number of authorized shares of common stock or par value. All references in these unaudited condensed financial statements to shares, share prices, exercise prices, and other per share information in all periods have been adjusted, on a retroactive basis, to reflect the Reverse Split (see Note 4 – Equity – Reverse Stock Split).

Use of Estimates

The preparation of Genprex’s unaudited condensed financial statements in conformity with US GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Genprex considers all highly liquid short-term investments with an initial maturity of three months or less to be cash equivalents. Any amounts of cash in financial institutions which exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits expose the Company to cash concentration risk. The Company has cash in a money market account and had $1,238,246 and $6,490,117 in excess of FDIC insured limits of $250,000 at September 30, 2024 and December 31, 2023, respectively. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive shares of common stock, which includes common stock equivalents consisting of (i) 2,264,871 unexercised options granted by the Company’s board of directors and unexercised warrants to purchase shares of common stock, and (ii) 10,143 unvested restricted stock units granted by the Company’s board of directors representing the right upon vesting to receive shares of common stock as of September 30, 2024.

Fair Value of Financial Instruments

The carrying amounts reported in the condensed balance sheets for cash, money-market savings account, accounts receivable, and accounts payable approximate fair value because of the immediate or short-term maturity of these condensed financial instruments.

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GENPREX, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Routine maintenance and repairs are charged to expense as incurred and major renovations or improvements are capitalized.

Research and Development Costs

Research and development expenditures consist of costs incurred to conduct research, develop engineering materials for further study, and develop clinical strategies for current and future programs associated with the Company’s preclinical and Phase 1/2 clinical trials. These expenditures are expensed in the period incurred and include payments to collaborative research partners, manufacturing partners and consultants, and clinical strategy partners, wages and associated employee benefits, facilities, and overhead costs.

Materials acquired to be used in clinical research, that have an alternative future use, are capitalized when the materials are acquired, and included in research and development supplies. These supplies are recognized as expense as they are consumed through use for testing or clinical activities, or have spoiled. The costs of materials that were acquired for a particular research and development activity and have no alternative future use are expensed in the period acquired.

Research and development supplies purchased, valued at cost, and capitalized for future use were $1,989,299 and $2,347,488 at September 30, 2024 and December 31, 2023, respectively.

Intellectual Property

Intellectual property consists of legal and related costs associated with patents, trademarks, and other proprietary technology and rights developed, acquired, or licensed by Genprex. Costs related to filing and pursuing patent applications are expensed as incurred, as recoverability of such expenditures is uncertain. These patent-related legal costs are reported as a component of general and administrative expenses.

Accounting for Stock-Based Compensation

Genprex uses the fair value-based method of accounting for stock-based compensation for options granted to employees, independent consultants and contractors. The Company measures options granted at fair value determined as of the grant date and recognizes the expense over the periods in which the options vest or are expected to vest and related services are rendered based on the terms and conditions of the award. Generally, where the award only has a service condition, the requisite service period is the same as the vesting period.

Long-Lived Assets

Genprex reviews long-lived assets and certain identifiable intangibles held and used for possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating the fair value and future benefits of its intangible assets, the Company performs an analysis of the anticipated undiscounted future net cash flow of the individual assets over the remaining amortization period. The Company recognizes an impairment loss if the carrying value of the asset exceeds the discounted expected future cash flows. During the three and nine months ended September 30, 2024 and 2023, there were no deemed impairments of the Company’s long-lived assets.

Recent Accounting Developments

Accounting pronouncements issued but not effective until after September 30, 2024, are not expected to have a significant effect on the Company’s financial condition, results of operations, or cash flows.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The purpose of the amendment is to enable investors to better understand an entity’s overall performance and assess potential future cash flows. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effect the amendments in ASU 2023-07 will have on its segment disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which modifies the rules on income tax disclosures to require disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effect the amendments in ASU 2023-09 will have on its tax disclosures.

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GENPREX, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

Note 3 - Intellectual Property

As of September 30, 2024, Genprex owned or had exclusive license agreements on 22 granted patents and 26 pending patent applications worldwide for technologies developed in-house or by researchers at the National Cancer Institute, MD Anderson, the University of Texas Southwestern Medical Center, and the University of Pittsburgh. These patents comprise various therapeutic, diagnostic, technical and processing claims and costs are expensed as incurred.

University of Pittsburgh

On February 11, 2020, Genprex entered into an exclusive license agreement with the University of Pittsburgh for patented gene therapy technologies relating to the potential treatment of Type 1 and Type 2 diabetes. This license was first amended on August 17, 2022, to extend the milestone related to the filing of a new investigational drug (“IND”) application. This license was amended again on November 3, 2022, to include a new licensed glucagon promoter technology related to Type 1 diabetes and set FDA and clinical milestones related to the glucagon technology (see Note 7 – Commitments and Contingences – Commitments – University of Pittsburgh).

On November 22, 2022, Genprex entered into an exclusive license agreement with the University of Pittsburgh relating to the transformation of macrophages enabling them to reduce autoimmunity activity in Type 1 diabetes.

On December 29, 2022, Genprex entered into an exclusive license agreement with the University of Pittsburgh relating to the use of an insulin promoter in combination with the Company’s existing gene therapy, including the Pdx1 and MafA transcription factors, as a potential treatment for Type 2 diabetes.

On July 14, 2023, Genprex entered into an exclusive license agreement with the University of Pittsburgh related to a gene therapy for both Type 1 and Type 2 diabetes using a MafB promoter to drive expression of the Pdx1 and MafA transcription factors.

The University of Texas MD Anderson Cancer Center

On May 4, 2020, Genprex entered into an exclusive worldwide license agreement with The Board of Regents of the University of Texas System on behalf of MD Anderson relating to a portfolio of patent applications and related technology for the treatment of cancer using the Company’s lead drug candidate and immunotherapies.

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GENPREX, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

Note 4 - Equity

Reverse Stock Split

At Genprex’s special meeting of stockholders held on December 14, 2023, the Company’s stockholders granted the Company’s board of directors the discretion to effect a reverse stock split of the Company’s issued and outstanding common stock through an amendment (the “Certificate of Amendment”) to the Company’s Amended and Restated Certificate of Incorporation, as amended and restated to date, at a ratio of not less than 1-for-10 and not more than 1-for-50, such ratio to be determined by the Company’s board of directors. On January 19, 2024, the Company’s board of directors approved a 1-for-40 reverse stock split and authorized the filing of the Certificate of Amendment for the Reverse Split with the Secretary of State of the State of Delaware. The Reverse Split became effective in accordance with the terms of the Certificate of Amendment on February 2, 2024. The Certificate of Amendment did not change the number of authorized shares of common stock or the par value. All references in these unaudited condensed financial statements to shares, share prices, exercise prices, and other per share information in all periods have been adjusted, on a retroactive basis, to reflect the Reverse Split.

Registered Direct Offerings

On March 1, 2023, Genprex completed a registered direct offering, in which the Company sold to an accredited healthcare-focused institutional investor an aggregate of 95,239 shares of its common stock and warrants to purchase up to 95,239 shares of its common stock, at a combined offering price of $42.00 per share of common stock and accompanying warrant. The warrants are exercisable immediately upon issuance, expire five years from the date of issuance and have an exercise price of $44.00 per share. The Company received net proceeds of approximately $3.6 million after $400,000 of commissions and expenses, excluding any proceeds that may be received in the future from any exercise of the warrants.

On July 21, 2023, Genprex completed a registered direct offering priced at the market under Nasdaq rules, in which the Company sold to accredited healthcare-focused institutional investors an aggregate of (i) 185,644 shares of its common stock, and (ii) warrants to purchase up to 185,644 shares of its common stock, at a combined offering price of $40.40 per share of common stock and accompanying warrant. The warrants are exercisable immediately upon issuance, expire 5 years from the date of issuance and have an exercise price of $35.40 per share. Also, the Company agreed to issue to H.C. Wainwright & Co., LLC or its designees (the “Placement Agent”) warrants to purchase up to an aggregate of 11,140 shares of the Company’s common stock. The warrants issued to the Placement Agent have substantially the same terms as the warrants issued to the investors except that the Placement Agent warrants have an exercise price of $50.50 per share and expire on July 18, 2028. Genprex received net proceeds of approximately $6.7 million after approximately $800,000 of commissions and expenses, excluding any proceeds that may be received in the future from any exercise of the warrants.

On March 21, 2024, the Company completed a registered direct offering priced at the market under Nasdaq rules, in which the Company sold to an institutional investor an aggregate of (i) 165,000 shares of common stock, (ii) pre-funded warrants (the “March 2024 Pre-Funded Warrants”) exercisable for up to an aggregate of 1,377,112 shares of common stock, and (iii) warrants (the “March 2024 Common Warrants”) exercisable for up to an aggregate of 1,542,112 shares of common stock. The offering price for each share of common stock and accompanying March 2024 Common Warrant was $4.215, and the offering price for each March 2024 Pre-Funded Warrant and accompanying March 2024 Common Warrant was $4.2149. The March 2024 Pre-Funded Warrants were exercisable immediately upon issuance at an exercise price of $0.0001 per share and expired when exercised in full. The March 2024 Common Warrants are exercisable immediately upon issuance at an exercise price of $4.09 per share and will expire in five years from the date of issuance. The Company received net proceeds of approximately $5.8 million after commissions and expenses, excluding any proceeds received from any exercise of the March 2024 Common Warrants. In connection with the offering, the Company also amended certain existing warrants to purchase up to an aggregate of 194,248 shares of common stock that were previously issued to investors in March 2023 and July 2023, with exercise prices of $44.00 and $35.40 per share and expiration dates of March 1, 2028 and July 21, 2028 for $0.125 per amended warrant, such that the amended warrants have a reduced exercise price of $4.09 per share and an expiration date of five years from the closing of the March 2024 offering. As of September 30, 2024, all of the 1,377,112 March 2024 Pre-Funded Warrants had been exercised for shares of common stock.

At-The-Market Offering

On December 13, 2023, Genprex entered into an At The Market (“ATM”) Offering Agreement (the “Agreement”) with H.C. Wainwright & Co., LLC, serving as agent (the “Agent”) with respect to an at-the-market offering program (the “2023 ATM Facility”) under which the Company may offer and sell through the Agent, from time to time at its sole discretion, up to such number or dollar amount of shares of its common stock (the “Shares”) as registered on the prospectus supplement covering the 2023 ATM Facility offering, as may be amended or supplemented from time to time. Any Shares offered and sold pursuant to this Agreement will be issued pursuant to the Company’s currently effective shelf Registration Statement on Form S-3 (File No. 333-271386) filed with the SEC on April 21, 2023, which was declared effective on June 9, 2023. The Company has agreed to pay the Agent a commission equal to three percent (3%) of the gross sales proceeds of any Shares sold through the Agent under the Agreement, and also have provided the Agent with customary indemnification and contribution rights. During the three months ended September 30, 2024, the Company sold 2,149,417 shares of common stock for aggregate net proceeds of $1,215,105 under the 2023 ATM Facility. During the nine months ended September 30, 2024, the Company sold 2,318,450 shares of common stock for aggregate net proceeds of $2,117,752 under the 2023 ATM Facility (inclusive of the shares issued during the three months ended September 30, 2024, as described in the immediately preceding sentence).

On November 18, 2022, Genprex entered into an Equity Distribution Agreement with JMP Securities LLC (“JMP Securities”) pursuant to which the Company could sell from time to time, at its option, shares of its common stock through JMP Securities, as sales agent (the “2022 ATM Facility”), up to an aggregate offering price of $50 million. Sales of the shares were made under the Company’s previously filed Registration Statement on Form S-3 (Reg. No. 333-239134), by means of ordinary brokers’ transactions on the NASDAQ Global Market or otherwise. Additionally, under the terms of the Equity Distribution Agreement, the shares could be sold at market prices, at negotiated prices or at prices related to the prevailing market price. Genprex agreed to pay JMP Securities a commission of 3.0% of the gross proceeds from the sale of the shares. The Company did not use the 2022 ATM Facility during the three months ended September 30, 2023. During the nine months ended September 30, 2023, the Company sold 1,342 shares of common stock for aggregate net proceeds of $78,355 under the 2022 ATM Facility. On December 12, 2023, the Company provided notice to JMP Securities of its termination of the 2022 ATM Facility. The termination of the Equity Distribution Agreement with JMP Securities was effective as of December 13, 2023.

GENPREX, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2024

Stock Issuances

During the three months ended September 30, 2024, Genprex issued (i) 5,000 shares of common stock for services provided to the Company valued at $9,650 to the Chairman of its Scientific Advisory Board, (ii) 779,000 shares of common stock upon the exercise of pre-funded warrants at a nominal price associated with the Company's March 2024 offering, and (iii) 2,149,417 shares of common stock sold for aggregate net proceeds of $1,215,105 under the Company’s 2023 ATM Facility.

During the nine months ended September 30, 2024, Genprex issued (i) 10,125 shares of common stock for services provided to the Company valued at $25,670 to the Chairman of its Scientific Advisory Board, (ii) 36,250 shares of common stock to service providers of the Company valued at $179,550, (iii) 31,623 shares of common stock upon the vesting of restricted stock units (“RSUs”) valued at $96,460 to Company executives and employees, non-employee directors, and former Company executives (Mr. Varner and Ms. Vaczy) pursuant to the terms of employment and/or separation agreements, (iv) 64,690 shares of common stock due to adjustments related to the Company's Reverse Split, (v) 165,000 shares of common stock sold for aggregate net proceeds of approximately $5.8 million associated with the Company's March 2024 offering, as described above, (vi) 2,318,450 shares of common stock sold for aggregate net proceeds of $2,117,752 under the Company's 2023 ATM Facility, as described above, and (vii) 1,377,112 shares of common stock upon the exercise of pre-funded warrants at a nominal price associated with the Company's March 2024 offering (inclusive of the shares issued during the three months ended September 30, 2024, as described in the immediately preceding sentence).

During the three months ended September 30, 2023, the Company issued (i) 125 shares of common stock for services provided to the Company valued at $4,800 to the Chairman of our Scientific Advisory Board, (ii) 185,644 shares of common stock sold for aggregate net proceeds of approximately $6.7 million associated with the Company’s July 2023 offering, as described above and (iii) 500 shares of common stock upon the exercise of options by a former board member. During the nine months ended September 30, 2023, the Company issued (i) 375 shares of common stock for services provided to the Company valued at $17,150 to the Chairman of the Company's Scientific Advisory Board (inclusive of the 125 shares issued during the three months ended September 30, 2023, as described in the immediately preceding sentence), (ii) 1,342 shares of common stock for aggregate net proceeds of $78,355 under the 2022 ATM Facility, (iii) 280,883 shares of common stock sold for aggregate net proceeds of approximately $10.5 million associated with the Company's March 2023 and July 2023 offerings, as described above, and (iv) 500 shares of common stock upon the exercise of options by a former board member (inclusive of the shares issued during the three months ended September 30, 2023, as described in the immediately preceding sentence).

Preferred Stock

Genprex is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.001 per share, none of which are outstanding as of September 30, 2024 and December 31, 2023.

Common Stock

Genprex is authorized to issue 200,000,000 shares of common stock with a par value of $

SEC Form 10-Q filed by Genprex Inc.