pbla20240930

pbla20240930_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 No.: 001-39468

Panbela Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware		88-2805017
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

712 Vista Blvd #305, Waconia, Minnesota 55387

(Address of principal executive offices)

(952) 479-1196

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

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

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

On November 11, 2024 there were 4,854,831 shares of the registrant’s common stock, par value $0.001, outstanding.

Panbela Therapeutics, Inc.
Index to Quarterly Report on Form 10-Q

Page

PART I – FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited).	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	26
Item 4.	Controls and Procedures.	26

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	27
Item 1A.	Risk Factors.	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities.	29
Item 4.	Mine Safety Disclosures.	29
Item 5.	Other Information.	29
Item 6.	Exhibits.	29

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Panbela Therapeutics, Inc.
Condensed Consolidated Balance Sheets

(In thousands, except share amounts)

	September 30, 2024			December 31, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	142		$	2,578
Prepaid expenses		109			299
CRO deposits		4,585			-
Income tax receivable		332			183
Total current assets		5,168			3,060
Other non-current assets		-			8,742
Total assets	$	5,168		$	11,802

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	10,950		$	9,939
Accrued expenses		5,469			1,141
Accrued interest payable		523			238
Notes payable		2,200			-
Debt, current portion		1,000			1,000
Total current liabilities		20,142			12,318

Debt, net of current portion		3,194			4,194
Total non-current liabilities		3,194			4,194

Total liabilities		23,336			16,512

Stockholders' deficit:
Preferred stock, $0.001par value; 10,000,000 authorized; no shares issued or outstanding as of September 30, 2024 and December 31, 2023		-			-
Common stock, $0.001 par value; 100,000,000 authorized; 4,854,931 and 480,095 issued as of September 30, 2024 and December 31, 2023 respectively; 4,854,861 and 480,025 shares outstanding as of September 30, 2024 and December 31, 2023, respectively		5			-
Treasury Stock at cost; 70 shares at both of September 30, 2024 and December 31, 2023		(1	)		(1	)
Additional paid-in capital		128,223			120,043
Accumulated deficit		(146,936	)		(125,497	)
Accumulated comprehensive income		541			745
Total stockholders' deficit		(18,168	)		(4,710	)
Total liabilities and stockholders' deficit	$	5,168		$	11,802

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Panbela Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Operating expenses:
General and administrative	$	1,113		$	1,107		$	3,422		$	4,102
Research and development		6,052			6,739			18,570			14,501
Operating loss		(7,165	)		(7,846	)		(21,992	)		(18,603	)

Other income (expense):
Interest income		-			49			-			114
Gain on sale of intellectual property		-			400			775			400
Interest expense		(442	)		(71	)		(564	)		(245	)
Other income (expense)		435			(382	)		203			(622	)
Total other income (expense)		(7	)		(4	)		414			(353	)

Loss before income tax benefit		(7,172	)		(7,850	)		(21,578	)		(18,956	)

Income tax benefit		-			19			139			167

Net loss		(7,172	)		(7,831	)		(21,439	)		(18,789	)
Foreign currency translation adjustment		(422	)		381			(204	)		612
Comprehensive loss	$	(7,594	)	$	(7,450	)	$	(21,643	)	$	(18,177	)

Basic and diluted net loss per share	$	(1.48	)	$	(53.74	)	$	(5.00	)	$	(287.01	)
Weighted average shares outstanding - basic and diluted		4,854,861			145,711			4,289,989			65,463

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Panbela Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

(In thousands, except share amounts)

(Unaudited)

	For the Nine Months Ended September 30, 2024
	Common Stock				Treasury Stock					Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Stockholders'
	Shares		Amount		Shares		Amount			Capital		Deficit			Income			Equity (Deficit)
Balance as of January 1, 2024		480,025	$	-		70	$	(1	)	$	120,043	$	(125,497	)	$	745		$	(4,710	)
Proceeds from sale of common stock and warrants		4,374,836		5		-		-			8,077		-			-			8,082
Stock-based compensation		-		-		-		-			103		-			-			103
Net loss		-		-		-		-			-		(7,121	)		-			(7,121	)
Foreign currency translation adjustment		-		-		-		-			-		-			459			459
Balance as of March 31, 2024		4,854,861	$	5		70	$	(1	)	$	128,223	$	(132,618	)	$	1,204		$	(3,187	)

Net loss		-		-		-		-			-		(7,146	)		-			(7,146	)
Foreign currency translation adjustment		-		-		-		-			-		-			(241	)		(241	)
Balance as of June 30, 2024		4,854,861	$	5		70	$	(1	)	$	128,223	$	(139,764	)	$	963		$	(10,574	)

Net loss		-		-		-		-			-		(7,172	)		-			(7,172	)
Foreign currency translation adjustment		-		-		-		-			-		-			(422	)		(422	)
Balance as of September 30, 2024		4,854,861	$	5		70		(1	)	$	128,223	$	(146,936	)	$	541		$	(18,168	)

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Panbela Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ (Deficit) Equity

(In thousands, except share amounts)

(Unaudited)

	For the Nine Months Ended September 30, 2023
	Common Stock					Treasury Stock				Additional Paid-In			Accumulated			Accumulated Other Comprehensive		Total Stockholders'
	Shares			Amount		Shares		Amount		Capital			Deficit			Income		Equity (Deficit)
Balance as of January 1, 2023		1,738		$	-		-	$	-	$	82,286		$	(91,094	)	$	759	$	(8,049	)
Proceeds from sale of common stock and warrants		11,853			-		-		-		15,358			-			-		15,358
Cash paid for fractional shares		-			-		-		-		(4	)		-			-		(4	)
Warrant exchange cashless		13,197			-		-		-		-			-			-		-
Stock-based compensation		-			-		-		-		180			-			-		180
Net loss		-			-		-		-		-			(5,113	)		-		(5,113	)
Foreign currency translation adjustment		-			-		-		-		-			-			163		163
Balance as of March 31, 2023		26,788		$	-		-	$	-	$	97,820		$	(96,207	)	$	922	$	2,535

Proceeds from sale of common stock and warrants		100,442		$	-		-		-		7,712		$	-		$	-	$	7,712
Cash paid for fractional shares		-			-		-		-		(5	)		-			-		(5	)
Warrant exchange cashless		3,384			-		-		-		1			-			-		1
Adjust for Stock Split on 6/1/2023		(30	)		-		-		-		-			-			-		-
Stock-based compensation		-			-		-		-		329			-			-		329
Net loss		-			-		-		-		-			(5,845	)		-		(5,845	)
Foreign currency translation adjustment		-			-		-		-		-			-			68		68
Balance as of June 30, 2023		130,584		$	-		-	$	-	$	105,857		$	(102,052	)	$	990	$	4,795

Proceeds from Sale of Common Stock		13,197		$	-		-		-	$	(18	)	$	-		$	-	$	(18	)
Warrant exchange cashless		6,037			-		-		-		-			-			-		-
Treasury Stock		(20	)		-		-		-		-			-			-		-
Stock-based compensation		-			-		-		-		190			-			-		190
Net loss		-			-		-		-		-			(7,831	)		-		(7,831	)
Foreign currency translation adjustment		-			-		-		-		-			-			381		381
Balance as of September 30, 2023		149,798		$	-		-	$	-	$	106,029		$	(109,883	)	$	1,371	$	(2,483	)

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Panbela Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows
(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2024			2023
Cash flows from operating activities:
Net loss	$	(21,439	)	$	(18,789	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		103			699
Non-cash interest expense		523			172
Gain on sale of intellectual property		(775	)		(400	)
Changes in operating assets and liabilities:
Income tax receivable		(140	)		(112	)
Prepaid expenses and other current assets		(170	)		(381	)
Other non-current assets		4,516			(5,541	)
Accounts payable		798			4,370
Accrued liabilities		4,091			(2,187	)
Net cash used in operating activities		(12,493	)		(22,169	)

Cash flows from investing activities:
Proceeds from sale of intellectual property		775			400
Net cash provided by investing activities		775			400

Cash flows from financing activities:
Proceeds from public offering of common stock and warrants, net of fees and offering costs of $0.9 million and $2.1 million respectively		8,082			23,052
Cash paid for fractional shares		-			(9	)
Proceeds from sale of promissory notes		2,200			-
Principal payments on notes		(1,000	)		(1,650	)
Net cash provided by financing activities		9,282			21,393

Effect of exchange rate changes on cash		-			(2	)

Net change in cash		(2,436	)		(378	)
Cash and cash equivalents at beginning of period		2,578			1,285
Cash and cash equivalents at end of period	$	142		$	907

Supplemental disclosure of cash flow information:
Cash paid during period for interest	$	279		$	398

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

Panbela Therapeutics, Inc.
Notes to Condensed Consolidated Financial Statements

1.	Business

Panbela Therapeutics, Inc. (“Panbela”) and its direct wholly owned subsidiaries: Panbela Research, Inc. (“Panbela Research”), Cancer Prevention Pharmaceuticals, Inc. (“CPP”) and Cancer Prevention Pharma (Ireland) Limited (“Cancer Prevention”) exist for the primary purpose of developing disruptive therapeutics for the treatment of patients with urgent unmet medical needs. Panbela Therapeutics Pty Ltd is a wholly owned subsidiary of Panbela Research organized under the laws of Australia. Cancer Prevention has two wholly owned dormant subsidiaries: Cancer Prevention Pharma Limited, a United Kingdom entity, and Cancer Prevention Pharmaceuticals Subsidiary, LLC, an Arizona limited liability company. Panbela Therapeutics, Inc., together with its direct and indirect subsidiaries are collectively referred to throughout this report as “we,” “us,” “our,” and the “Company.”

The primary objective of our pipeline is the utilization of pharmacotherapies to reduce or normalize increased disease-associated polyamines using complementary pharmacotherapies. Our lead candidates are ivospemin (SBP-101), for which we have exclusively licensed the worldwide rights from the University of Florida Research Foundation, Inc., Flynpovi™, a combination of eflornithine (CPP-1X) and sulindac and eflornithine (CPP-1X), alone in tablet or sachet form. We have exclusively licensed rights from the Arizona Board of Regents of the University of Arizona to commercialize Flynpovi.

Reverse stock splits

Effective January 13, 2023, June 1, 2023, and January 18, 2024, the Company's Board of Directors approved one-for-forty, one-for-thirty, and one-for-twenty reverse stock splits of its common stock, respectively. The par value and authorized shares of the Company's common stock were not affected by the reverse stock splits. Unless specifically provided otherwise herein, all share and per share amounts of our common stock presented have been retroactively adjusted to reflect all reverse stock splits. See Note 7 for more information.

2.	Risks and Uncertainties

The Company operates in a highly regulated and competitive environment. The development, manufacturing and marketing of pharmaceutical products require approval from, and are subject to ongoing oversight by, the Food and Drug Administration (the “FDA”) in the United States, the Therapeutic Goods Administration in Australia, the European Medicines Agency in the European Union, and comparable agencies in other countries. Obtaining approval for a new pharmaceutical product is never certain, may take many years, and is normally expected to involve substantial expenditures.

On March 5, 2024, the Nasdaq Stock Market LLC (“Nasdaq”) notified us that the Nasdaq Hearings Panel had determined to delist our common stock and trading of our common stock was suspended on Nasdaq effective March 7, 2024. On April 17, 2024, our common stock became eligible for quotation on the OTCQB. Also in April 2024, Nasdaq filed a Form 25 Notification of Removal from Listing with the U.S. Securities and Exchange Commission (the “SEC”) and the delisting of our common stock from Nasdaq became effective ten days later.

We have applied to relist our common stock on the Nasdaq. No assurances can be given that we will satisfy the initial listing criteria, the application will be approved, or, if listed, that a trading market will develop or be maintained. In the interim, we intend to maintain the existing eligibility for quotation of our common stock on the OTCQB under its current symbol, “PBLA.”

We have incurred losses of $146.9 million since our inception in 2011. For the nine months ended September 30, 2024, we incurred a net loss of $21.4 million. We also incurred negative cash flows from operating activities of approximately $12.5 million for this period. As we continue to pursue development activities and seek commercialization, we expect to incur substantial losses, which are likely to generate negative net cash flows from operating activities. As of September 30, 2024, we had cash of approximately $142,000, working capital deficit of $15.0 million (working capital is defined as current assets less current liabilities), and stockholders’ deficit of $18.2 million. The Company’s principal sources of cash have historically included the issuance of debt and equity securities.

On August 19, 2024, our contract research organization (“CRO”) for the ASPIRE trial began the process of terminating our relationship as we were unable to pay invoiced amounts within a satisfactory timeframe. The trial continues and the Company has been working closely with regulatory authorities, the clinical sites, existing and new vendors to ensure that the trial will be completed as intended. As a result of the termination of the contract with this CRO, the Company will be responsible for making payments directly to clinical sites for costs incurred during the conduct of the trial and the Company has now accounted for these estimated costs incurred through September 30, 2024.

The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts of liabilities that might result from the outcome of these uncertainties. Our current independent registered public accounting firm included a paragraph emphasizing this going concern uncertainty in their audit report regarding our 2023 financial statements dated March 26, 2024. Our ability to continue as a going concern, realize the carrying value of our assets and discharge our liabilities in the ordinary course of business is dependent upon a number of factors, including our ability to obtain additional financing, the success of our development efforts, our ability to obtain marketing approval for our product candidates in the United States, Australia, the European Union or other markets and ultimately our ability to market and sell our product candidates. These factors, among others, raise substantial doubt about our ability to continue operations as a going concern. See Note 4 titled “Liquidity and Business Plan.”

3.	Basis of Presentation

We have prepared the accompanying interim condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These interim condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals, which, in the opinion of management, are necessary to present fairly our consolidated financial position, consolidated results of operations and consolidated cash flows for the periods and as of the dates presented. Our fiscal year ends on December 31. The condensed consolidated balance sheet as of December 31, 2023, was derived from audited consolidated financial statements but does not include all disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements and the notes thereto included in our most recent filed Annual Report on Form 10-K and our subsequent filings with the SEC. The nature of our business is such that the results of any interim period may not be indicative of the results to be expected for the entire year.

4.	Liquidity and Business Plan

After the end of the periods presented, on October 22, 2024, Panbela Therapeutics, Inc. entered into a Note Purchase Agreement (the “Nant Capital Agreement”) with Nant Capital, LLC (the “Investor”). Pursuant to the Agreement, the Company (i) issued an interest-bearing Senior Convertible Promissory Tranche A Note (the “Tranche A Note”) for the principal sum of $2,850,000, and (ii) agreed to issue, on or before November 15, 2024, an interest-bearing Senior Convertible Promissory Tranche B Note (the “Tranche B Note,” and, together with the Tranche A Note, the “Nant Capital Notes”) for the principal sum of $9,150,000, in each case in exchange for a cash purchase price by the Investor to the Company equal to the same principal amounts. A portion of the proceeds of the Tranche A Note were used by the Company to repay certain existing indebtedness, including the USWM Notes Payable and Schemel Note (defined below). The Nant Capital Agreement and Nant Capital Notes are described in more detail in Note 10 titled “Subsequent Events.”

During the quarter ended September 30, 2024 the Company sold subordinated promissory notes to several investors totaling $700,000.

On July 24, 2024, Panbela and its wholly-owned subsidiary, CPP, entered into a Loan Agreement (the “Loan Agreement”) with USWM, LLC (“USWM”) by executing and delivering to the Lender a Term Promissory Note (the “USWM Term Note”). Pursuant to the Loan Agreement, Panbela and CPP obtained a term loan from USWM in the original principal amount of $1,500,000 (the “USWM Loan”). The Loan Agreement and USWM Term Note are described in more detail in Note 6 titled “Notes Payable”.

On January 31, 2024, the Company completed a registered public offering of common stock and warrants to purchase shares of common stock which resulted in gross proceeds of approximately $9.0 million.

During the year ended December 31, 2023, the Company completed two registered offerings of common stock and warrants to purchase shares of common stock. On June 21, 2023 and January 31, 2023, the Company completed registered public offerings for gross proceeds of approximately $8.5 million and $15.0 million, respectively.

The Company provided inducement warrants to certain shareholders to exercise their warrants. On November 2, 2023 gross proceeds were approximately $1.9 million and on December 21, 2023 the gross proceeds were approximately $2.0 million from these transactions.

During 2023, the Company also sold shares of common stock via an At the Market (ATM) facility with net proceeds of approximately $1.6 million.

We need to raise additional capital to support our current business plans. We may seek to raise additional funds through various sources, such as equity and debt financing, or through strategic collaborations and license agreements. We can give no assurances that we will be able to secure additional sources of funds to support our operations, or if such funds are available to us, that such additional financing will be sufficient to meet our needs or on terms acceptable to us. This risk would increase if our clinical data were not positive or economic and market conditions deteriorate.

Our future success is dependent upon our ability to obtain additional financing, the success of our development efforts, our ability to obtain marketing approval for our product candidates ivospemin, Flynpovi and eflornithine in the United States or other markets and ultimately our ability to market and sell product candidates. If we are unable to obtain additional financing when needed, if our clinical trials are not successful or if we are unable to obtain marketing approval, we would not be able to continue as a going concern and would be forced to cease operations and liquidate our company.

There can be no assurances that we will be able to obtain additional financing on commercially reasonable terms, or at all. The sale of additional convertible debt or equity securities would likely result in dilution to our current stockholders.

5.	Summary of Significant Accounting Policies

Principles of consolidation

The accompanying condensed consolidated financial statements include the assets, liabilities, and expenses of the Company. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of estimates

The preparation of condensed consolidated financial statements requires management 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 condensed consolidated financial statements and the reported amount of expenses during the reporting period. Actual results could differ from those estimates, particularly given the significant social and economic disruptions and uncertainties with the ongoing pandemic and control responses.

Research and development costs

Research and development costs include expenses incurred in the conduct of our clinical trials; for third-party service providers performing various testing and accumulating data related to our preclinical studies; sponsored research agreements; developing and scaling the manufacturing process necessary to produce sufficient amounts of drug product for our product candidates for use in our pre-clinical studies and human clinical trials; consulting resources with specialized expertise related to execution of our development plan for our product candidates; personnel costs, including salaries, benefits and share-based compensation; and costs to license and maintain licensed intellectual property.

We charge research and development costs, including clinical trial costs, to expense when incurred. Our human clinical trials are, and will be, performed at clinical trial sites and are administered jointly by us with assistance from CROs. Costs of setting up clinical trial sites are accrued upon execution of the study agreement. Expenses related to the performance of clinical trials generally are accrued based on contracted amounts and the achievement of agreed upon milestones, such as patient enrollment, patient follow-up, etc. We monitor levels of performance under each significant contract, including the extent of patient enrollment and other activities through communications with the clinical trial sites and CROs, and adjust the estimates, if required, on a quarterly basis so that clinical expenses reflect the actual effort expended at each clinical trial site as reported by each CRO or, in the absence of a CRO, as reported directly by the clinical trial sites.

The cost to secure certain third-party drug product for the clinical trials, which is often paid for in advance of delivery, is charged to research and development when it is received and available to be shipped to clinical sites.

All material CRO contracts are terminable by us upon written notice, and we are generally only liable for actual effort expended by the CROs and certain non-cancelable expenses incurred at any point of termination.

In response to the termination of the Clinical Research Services Agreement with the CRO for the ASPIRE trial during the three months ended September 30, 2024, the Company is in discussions with the CRO to agree on the final reconciliation of amounts owed and how the existing deposits will be applied against such amounts owed.

We expense costs associated with obtaining licenses for patented technologies when it is determined there is no alternative future use of the intellectual property subject to the license.

Stock-based compensation

In accounting for stock-based incentive awards, we measure and recognize the cost of employee and non-employee services received in exchange for awards of equity instruments based on the fair value of those awards on the grant date. Calculating stock-based compensation expense requires the input of highly subjective assumptions, which represent our best estimates and involve inherent uncertainties and the application of management’s judgment. Compensation cost is recognized ratably using the straight-line attribution method over the vesting period, which is considered to be the requisite service period. Compensation expense for performance-based stock option awards is recognized when “performance” has occurred or is probable of occurring.

The fair value of stock-based awards is estimated at the date of grant using the Black-Scholes option pricing model. The determination of the fair value of stock-based awards is affected by our stock price, as well as assumptions regarding a number of complex and subjective variables. Risk free interest rates are based upon U.S. Treasury rates appropriate for the expected term of each award. Expected volatility rates are based on historical company share price volatility. The assumed dividend yield is zero, as we do not expect to declare any dividends in the future. The expected term of options granted is determined using the “simplified” method. Under this approach, the expected term is presumed to be the mid-point between the average vesting date and the end of the contractual term.

Foreign currency translation adjustments

The functional currency of Panbela Therapeutics Pty Ltd is the Australian Dollar. Accordingly, assets and liabilities, and equity transactions of Panbela Therapeutics Australia Pty Ltd, are translated into U.S. dollars at period-end exchange rates. Revenues and expenses are translated at the average exchange rate in effect for the period. The resulting translation gains and losses are recorded as a component of accumulated comprehensive loss presented within the stockholders’ equity. During the nine-month periods ended September 30, 2024 and 2023, any reclassification adjustments from accumulated other comprehensive loss to operations were inconsequential.

Comprehensive loss

Comprehensive loss consists of our net loss and the effects of foreign currency translation.

Net loss per share

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is based on the weighted average of common shares outstanding during the period plus dilutive potential common shares calculated using the treasury stock method. Such potentially dilutive shares are excluded when the effect is anti-dilutive or reduce a net loss per share. The Company’s potentially dilutive shares, which include outstanding common stock options, and warrants, have not been included in the computation of diluted net loss per share for all periods as the result would be anti-dilutive.

The following table sets forth the potential shares of common stock that were not included in the calculation of diluted net loss per share as their effects would have been anti-dilutive as of the dates indicated:

	September 30,
	2024		2023
Employee and non-employee stock options		607		607
Common stock issuable under common stock purchase warrants		9,090,939		203,161
		9,091,546		203,768

6.	Notes Payable

USWM promissory note

On July 24, 2024, Panbela and its wholly-owned subsidiary, CPP, entered into the Loan Agreement with USWM by executing and delivering to USWM the USWM Term Note. Pursuant to the Loan Agreement, Panbela and CPP obtained a term loan from USWM in the original principal amount of $1,500,000, the USWM Loan. The USWM Loan is scheduled to mature on the first to occur of: (i) the closing of a Qualifying Financing (as defined in the USWM Term Note); (ii) the closing of a Qualifying Transaction (as defined in the USWM Term Note) (the “Transaction Maturity Date”); and (iii) December 31, 2024 (as applicable, the “Financing Maturity Date”).

As used in the USWM Term Note, (a) “Qualifying Financing” means any capital increase, issue of equity-linked instruments, capital stock, shares or other equivalent instruments, subordinated debt or other securities by Borrower whether through a private placement, uplisting or otherwise raising net proceeds in an aggregate amount equal to or greater than One Million Eight Hundred Seventy-Five Thousand and 00/100ths US Dollars ($1,875,000.00); and (b) “Qualifying Transaction” means the closing of any sale, assignment, license, royalty or other agreement or transaction with a third-party other than Lender having the effect of assigning, transferring or granting, or committing to assign, transfer or grant, any right, title, license or interest in, to or under Borrower’s asset known as “ivospemin (SBP-101)” or any patent, patent application, trademark, copyright, know-how, trade secret or other intellectual property related to such asset.

The USWM Term Note had an original principal amount of $1,500,000 and bears interest and premium as follows: (i) interest and premium in the amount of $375,000 due and payable on the Financing Maturity Date; plus (ii) interest and premium in an amount equal to ten percent (10%) of all proceeds generated by the Company pursuant to a Qualifying Transaction (the “Qualifying Transaction Payment”), due and payable on the Transaction Maturity Date, provided, however, that the Qualifying Transaction Payment shall not exceed $1,000,000. The Company may prepay all or part of the USWM Term Note at any time without penalty.

The Company, in anticipation of a potential prepayment of the USWM Term Note, recognized the full interest and premium amount of $375,000 as interest expense in the three months ended September 30, 2024.

The USWM Loan proceeds could only be used by the Company for payment of fees and expenses owed to its CRO for the ASPIRE trial, for other working capital purposes, and to pay any fees or expenses in connection with the USWM Loan. To secure their obligations under the Loan Agreement and USWM Term Note, Panbela and CPP entered into a Security Agreement in favor of the USWM whereby each granted to USWM a first priority security interest in all of Panbela’s and CPP’s rights, title and interest in the Asset Purchase Agreement, dated July 17, 2023, by and among USWM, Panbela, and CPP.

On October 25, 2024, the Company completed a Qualifying Financing when it received funds totaling $2,850,000 pursuant to the sale of Tranche A Note. See Note 10 titled “Subsequent Events”. Accordingly, the Company paid the USWM Term Note in full on the same date. The payment included the principal amount of $1,500,000 plus interest and premium totaling $375,000.

Other Promissory Notes

Effective as of July 31, 2024, Panbela issued a subordinated promissory note in the principal amount of $100,000 to current member of its Board of Directors, D. Robert Schemel (the “Schemel Note”), in exchange for a short-term loan of the same amount. In accordance with our related party transaction approval policy, the transaction was approved by the audit committee of our Board of Directors, with Mr. Schemel abstaining from deliberation and voting on the matter. The promissory note is scheduled to mature on September 30, 2024, and bears interest at 10% per annum. The promissory note is subordinate to the UWSM Loan in right of repayment. On October 26, 2024, the promissory note plus accrued interest, including an additional 2% default penalty interest for the period after September 30, 2024, was paid. Per the terms of the Tranche A Note issued to Nant Capital, LLC, the Company paid the Schemel Note in full on October 25, 2024. The payment included the principal amount of $100,000 plus interest of approximately $2,500. See Note 10 titled “Subsequent Events.”

Effective as of August 19, 2024, Panbela issued a subordinated promissory note in the principal amount of $50,000 to current member of its Board of Directors, Michael T. Cullen, in exchange for a short-term loan of the same amount. In accordance with our related party transaction approval policy, the transaction was approved by the audit committee of our Board of Directors. The subordinated promissory note is scheduled to mature on December 31, 2024 and bears interest at 10% per annum.

Effective as of August 22, 2024 and August 23, 2024, Panbela issued Promissory notes to two investors in the total principal amount of $550,000. The subordinated promissory notes are scheduled to mature on December 31, 2024 and bear interest at 10% per annum.

Sucampo promissory note

As of September 30, 2024, CPP had a balance outstanding of approximately $4.3 million for principal and interest under an amended and restated promissory note (the “Sucampo Note). The note was issued with an initial principal amount of approximately $6.2 million in favor of Sucampo GmbH dated as of June 15, 2022. The principal balance outstanding as of September 30, 2024, is approximately $4.2 million under the Sucampo Note and it bears simple interest at a rate of 5% per annum. All unpaid principal, together with any then unpaid and accrued interest is payable as follows: (i) $1.0 million, plus all interest accrued but unpaid on or before each of January 31, 2025, and January 31, 2026; and (ii) all remaining principal plus accrued but unpaid interest on or before January 31, 2027. On March 8, 2024, the Company paid the second installment on the balance due of $1.0 million plus accrued interest of approximately $260,000. This payment was made prior to the expiration of a grace period provided by the lender.

As of September 30, 2024, the Company was current in all payments due under the Sucampo Note and the accrued and unpaid interest on this note was approximately $87,000. Panbela has agreed to guarantee CPP’s payment obligations under the Sucampo Note pursuant to a Guaranty dated as of June 15, 2022.

7.	Stockholders’ Equity

Public offering of common stock and warrants January 2024

On January 31, 2024, the Company completed a registered public offering and issued an aggregate of 794,000 shares of its common stock, pre-funded warrants to purchase up to an aggregate of 3,581,000 shares of common stock at an exercise price of $0.001 per shares and warrants to purchase up to an aggregate of 8,750,000 shares of its common stock. The initial exercise price of the warrants is $2.06 per underlying share. The securities were issued for a combined offering price of $2.06 per share of common stock and 2 warrants, or $2.059 per pre-funded warrant and 2 warrants. Net proceeds from the offering totaled approximately $8.1 million. As of September 30, 2024, all pre-funded warrants had been exercised. The securities were offered pursuant to an effective registration statement on Form S-1.

Reverse stock splits

The Company effected a reverse stock split of one-for-twenty (1:20) on January 18, 2024.

The Company effected a reverse stock split of one-for-thirty (1:30) on June 1, 2023.

The Company effected a reverse stock split of one-for-forty (1:40) on January 18, 2023.

The following shares of common stock were reserved for future issuance as of the date indicated:

	September 30, 2024
Stock options outstanding		607
Shares available for grant under equity incentive plan		163,800
Warrants outstanding		9,090,939
		9,255,346

8.	Stock-based Compensation

2016 Omnibus Incentive Plan

The 2016 Omnibus Incentive Plan, as amended (the “2016 Plan”) initially authorized the issuance of up to 116 shares of our common stock pursuant to awards granted thereunder and 164,246 shares have been added pursuant to its annual evergreen feature. As of September 30, 2024, options to purchase 561 shares of our common stock were outstanding under the 2016 Plan with a weighted average price of $14,420.00 per share and average remaining life of approximately 8.1 years. On September 30, 2024 the Company had 163,800 shares of our common stock available for future grants under the 2016 Plan. On October 1, 2024 163,800 shares of common stock were granted to employees.

2011 Stock Option Plan

Our Board of Directors ceased making awards under the Panbela Therapeutics, Inc. 2011 Stock Option Plan (the “2011 Plan”) upon the original receipt of stockholder approval for the 2016 Plan in May 2016. Awards outstanding under the 2011 Plan remain outstanding in accordance with and pursuant to the terms thereof. As of September 30, 2024, options to purchase 5 shares of our common stock remained outstanding under the 2011 Plan. The weighted average exercise price is $76,200.00 per share, and the average remaining life is approximately 0.4 years.

CPP’s 2010 Equity Incentive Plan

The Company has assumed all remaining rights and obligations with respect to CPP’s 2010 Equity Incentive Plan (the “CPP Plan”) through the issuance of replacement options. As of September 30, 2024, options to purchase 41 shares of our common stock remained outstanding under the CPP Plan, with a weighted average exercise price of $6,743.41 per share, and the average remaining contractual life was 5.9 years.

Stock-based compensation expense

General and administrative (“G&A”) and research and development (“R&D”) expenses include non-cash stock-based compensation expense as a result of our issuance of stock options. The terms and vesting schedules for stock-based awards vary by type of grant and the employment status of the grantee. The awards granted through September 30, 2024, vest based upon time-based and performance conditions. There was no unamortized stock-based compensation expense related to options granted to employees, directors, and consultants as of September 30, 2024.

Stock-based compensation expense for each of the periods presented is as follows (in thousands):

	Nine Months Ended September 30,
	2024		2023
General and Administrative	$	68	$	554
Research and Development		35		145
	$	103	$	699

There were no options granted, exercised, cancelled, or forfeited during the nine months ended September 30, 2024.

Information about stock options outstanding, vested and expected to vest as of September 30, 2024 is as follows:

			Outstanding, Vested and Expected to Vest						Options Vested and Exercisable
Per Share Exercise Price			Shares		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Options Exercisable		Weighted Average Remaining Contractual Life (Years)

$300				503		8.75	$	300.00		503		8.75
$5,280	-	$7,709		39		6.50	$	5,280.00		39		6.50
$26,400	-	$98,160		37		4.79	$	79,787.03		37

SEC Form 10-Q filed by Panbela Therapeutics Inc.