10-Q 1 maia-20240331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 March 31, 2024

OR

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: 001-41455

 

MAIA BIOTECHNOLOGY, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

83-1495913

(State or other jurisdiction of

incorporation or organization)

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

444 West Lake Street, Suite 1700

Chicago, IL

60606

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (312) 416-8592

 

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

 

MAIA

 

NYSE American

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

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

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

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

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

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

 


 

As of May 14, 2024, the registrant had 21,837,149 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

Page

 

Note About Forward-Looking Statements

1

 

 

 

 

PART I—FINANCIAL INFORMATION

2

Item 1.

Financial Statements

2

Condensed Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and December 31, 2023

2

Condensed Consolidated Statements of Operations (Unaudited) for the three months ended March 31, 2024 and 2023

3

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) for the three months ended March 31, 2024 and 2023

4

 

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) for the three months ended March 31, 2024 and 2023

5

Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2024 and 2023

7

Notes to Unaudited Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

 

PART II—OTHER INFORMATION

32

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

33

Item 3.

Defaults Upon Senior Securities

33

Item 4.

Mine Safety Disclosures

33

Item 5.

Other Information

33

Item 6.

Exhibits

35

Signatures

36

 

i


 

NOTE ABOUT FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, business strategy, product candidates, planned preclinical studies and clinical trials, research and development costs, regulatory approvals, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "could," "would," "expect," "objective," "plan," "potential," "seek," "grow," "target," "if," and similar expressions intended to identify forward-looking statements. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors, including those which we discuss under “Risk Factors,” elsewhere in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission (the "SEC").

 

We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward‑looking statements.

 

Unless the context indicates or otherwise requires, “the Company,” “our Company,” “we,” “us,” and “our” refer to MAIA Biotechnology, Inc., a Delaware corporation, and its consolidated subsidiaries.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1


 

PART I—FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

MAIA Biotechnology, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

 

March 31,
2024

 

 

December 31,
2023

 

 

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash

 

$

8,271,449

 

 

$

7,150,695

 

Prepaid expenses and other current assets

 

 

272,583

 

 

 

268,677

 

Australia research and development incentives receivable

 

 

155,969

 

 

 

144,680

 

Total current assets

 

 

8,700,001

 

 

 

7,564,052

 

Deferred offering costs

 

 

13,235

 

 

 

 

Other assets

 

 

2,800

 

 

 

2,800

 

Total assets

 

$

8,716,036

 

 

$

7,566,852

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

1,872,502

 

 

$

1,638,546

 

Accrued expenses

 

 

3,035,265

 

 

 

3,298,607

 

Total current liabilities

 

 

4,907,767

 

 

 

4,937,153

 

Long term liabilities:

 

 

 

 

 

 

Warrant liability

 

 

9,573,197

 

 

 

2,152,188

 

Total liabilities

 

 

14,480,964

 

 

 

7,089,341

 

Commitments and contingencies (Note 7)

 

 

 

 

Stockholders' equity (deficit)

 

 

 

 

Preferred stock, $0.0001 par value, 30,000,000 shares
     authorized at March 31, 2024 and December 31, 2023,
     
0 shares issued and outstanding

 

 

 

 

  Common stock, $0.0001 par value, 70,000,000 shares authorized at
       March 31, 2024 and December 31, 2023,
20,581,469 and 16,986,254 
       shares issued and outstanding at March 31, 2024 and December 31, 2023,
       respectively

 

 

2,059

 

 

 

1,699

 

  Additional paid-in capital

 

 

66,310,691

 

 

 

64,472,249

 

  Accumulated deficit

 

 

(72,047,632

)

 

 

(63,980,177

)

  Accumulated other comprehensive loss

 

 

(30,046

)

 

 

(16,260

)

  Total stockholders' equity (deficit)

 

 

(5,764,928

)

 

 

477,511

 

  Total liabilities and stockholders' equity (deficit)

 

$

8,716,036

 

 

$

7,566,852

 

 

See the accompanying notes to the unaudited condensed consolidated financial statements.

2


 

MAIA Biotechnology, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

Three Months Ended March 31,

 

 

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

Research and development expenses

 

$

2,320,742

 

 

$

2,195,991

 

General and administrative expenses

 

 

1,628,134

 

 

 

1,988,259

 

Total operating expenses

 

 

3,948,876

 

 

 

4,184,250

 

Loss from operations

 

 

(3,948,876

)

 

 

(4,184,250

)

Other (expense) income:

 

 

 

 

 

 

Interest expense

 

 

 

 

 

(5,147

)

Interest income

 

 

44,118

 

 

 

336

 

Australian research and development
   incentives

 

 

 

18,601

 

 

 

51,243

 

Change in fair value of warrant liability

 

 

(4,181,298

)

 

 

20,942

 

Other income, net

 

 

(4,118,579

)

 

 

67,374

 

Net loss

 

 

(8,067,455

)

 

 

(4,116,876

)

Net loss attributable to MAIA
   Biotechnology, Inc. shareholders

 

$

(8,067,455

)

 

$

(4,116,876

)

Net loss per share

 

 

 

 

Basic and diluted

 

$

(0.46

)

 

$

(0.38

)

Weighted average common shares
  outstanding basic and diluted

 

 

17,601,407

 

 

 

10,977,054

 

 

 

See the accompanying notes to the unaudited condensed consolidated financial statements.

 

3


 

MAIA Biotechnology, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

 

 

 

 

Three Months Ended
March 31,

 

 

 

 

2024

 

 

2023

 

Net loss

 

$

(8,067,455

)

 

$

(4,116,876

)

 Foreign currency translation adjustment

 

 

(13,786

)

 

 

(9,301

)

Comprehensive loss

 

$

(8,081,241

)

 

$

(4,126,177

)

 

See the accompanying notes to the unaudited condensed consolidated financial statements.

 

 

4


 

MAIA Biotechnology, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited)

 

For the Three Months Ended March 31,

 

2024

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional Paid-In Capital

 

 

Accumulated Deficit

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Total Stockholders' Equity (Deficit)

 

Balance at December 31, 2023

 

 

 

 

$

 

 

 

16,986,254

 

 

$

1,699

 

 

$

64,472,249

 

 

$

(63,980,177

)

 

$

(16,260

)

 

$

477,511

 

Issuance of restricted stock

 

 

 

 

 

 

 

 

12,500

 

 

 

1

 

 

 

11,499

 

 

 

 

 

 

 

 

 

11,500

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

349,965

 

 

 

 

 

 

 

 

 

349,965

 

Issuance of common shares in connection with At-The-Market financing, net of $179,628 of issuance costs

 

 

 

 

 

 

 

 

507,754

 

 

 

51

 

 

 

565,572

 

 

 

 

 

 

 

 

 

565,623

 

Issuance of common shares in connection with the Private Placement Offering #1, net of $50,000 of issuance costs

 

 

 

 

 

 

 

 

2,496,318

 

 

 

250

 

 

 

590,161

 

 

 

 

 

 

 

 

 

590,411

 

Issuance of common shares in connection with the Private Placement Offering #2, net of $47,261 of issuance costs

 

 

 

 

 

 

 

 

578,643

 

 

 

58

 

 

 

90,560

 

 

 

 

 

 

 

 

 

90,618

 

Issuance of warrants in connection with the Private Placement Offering #1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

230,685

 

 

 

 

 

 

 

 

 

230,685

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,786

)

 

 

(13,786

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,067,455

)

 

 

 

 

 

(8,067,455

)

Balance at March 31, 2024

 

 

 

 

$

 

 

 

20,581,469

 

 

$

2,059

 

 

$

66,310,691

 

 

$

(72,047,632

)

 

$

(30,046

)

 

$

(5,764,928

)

 

See the accompanying notes to the unaudited condensed consolidated financial statements.

 

5


 

 

MAIA Biotechnology, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

 

For the Three Months Ended March 31,

 

2023

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional Paid-In Capital

 

 

Accumulated Deficit

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

Total Stockholders' Equity

 

Balance at December 31, 2022

 

 

 

 

$

 

 

 

10,955,904

 

 

$

1,096

 

 

$

52,729,942

 

 

$

(44,207,272

)

 

$

(15,973

)

 

$

8,507,793

 

Issuance of restricted stock

 

 

 

 

 

 

 

 

40,500

 

 

 

4

 

 

 

164,066

 

 

 

 

 

 

 

 

 

164,070

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

537,522

 

 

 

 

 

 

 

 

 

537,522

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,301

)

 

 

(9,301

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,116,876

)

 

 

 

 

 

(4,116,876

)

Balance at March 31, 2023

 

 

 

 

$

 

 

 

10,996,404

 

 

$

1,100

 

 

$

53,431,530

 

 

$

(48,324,148

)

 

 

(25,274

)

 

$

5,083,208

 

 

See the accompanying notes to the unaudited condensed consolidated financial statements.

6


 

MAIA Biotechnology, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

Three Months Ended
March 31,

 

2024

 

2023

 

Cash flows from operating activities:

 

 

 

Net loss

 

$

(8,067,455

)

 

$

(4,116,876

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Stock-based compensation

 

 

349,965

 

 

537,522

 

Consulting expense for restricted shares issued

 

 

11,500

 

 

 

164,070

 

Change in fair value of warrant liability

 

 

4,181,298

 

 

(20,942

)

Change in operating assets and liabilities:

 

 

 

 

 

Prepaid expenses and other current assets

 

 

67,091

 

 

 

153,775

 

Australia research and development incentives receivable

 

 

(18,602

)

 

 

(51,243

)

Other receivables

 

 

(71,856

)

 

 

 

Accounts payable

 

 

237,018

 

 

(35,163

)

Accrued expenses

 

 

(275,759

)

 

8,208

 

Net cash used in operating activities

 

 

(3,586,800

)

 

(3,360,649

)

Cash flows from financing activities:

 

 

 

Proceeds from sale of common stock in private placement offering #1

 

 

2,920,696

 

 

 

 

Proceeds from sale of common stock in private placement offering #2

 

 

1,327,990

 

 

 

 

Proceeds from At-The-Market offering

 

 

745,251

 

 

 

 

Payment of offering transactions costs

 

 

(276,889

)

 

 

Net cash provided by financing activities

 

 

4,717,048

 

 

 

Net effect of foreign currency exchange on cash

 

 

(9,494

)

 

(3,966

)

Net increase (decrease) in cash

 

 

1,120,754

 

 

 

(3,364,615

)

Cash at beginning of period

 

 

7,150,695

 

 

10,950,927

 

Cash at end of period

 

$

8,271,449

 

$

7,586,312

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Warrants issued in connection with private placement offering #1

 

$

2,049,600

 

 

 

 

Warrants issued in connection with private placement offering #2

 

$

1,190,111

 

 

 

 

 

See the accompanying notes to the unaudited condensed consolidated financial statements.

 

 

7


 

MAIA Biotechnology, Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

1.
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business, Organization, and Principles of Consolidation

MAIA Biotechnology, Inc. and Subsidiaries (collectively, "the Company") is a biopharmaceutical company that develops oncology drug candidates to improve and extend the lives of people with cancer. MAIA Biotechnology, Inc. ("MAIA") was incorporated in the state of Delaware on August 3, 2018. These consolidated financial statements include the accounts of MAIA and its subsidiaries, as follows:

THIO Therapeutics, Inc. ("THIO"), incorporated in the state of Delaware on November 26, 2018. On August 13, 2021, MAIA and THIO completed a plan of reorganization in which THIO merged with and into MAIA. Prior to the merger, MAIA owned 93.3% of the outstanding shares of THIO common stock, which were canceled in connection with the merger. The remaining 6.7% minority stockholder of THIO received one share of MAIA common stock for each share of THIO common stock owned prior to the merger.
DGD Pharmaceuticals Corporation ("DGD"), incorporated in the state of Delaware of April 1, 2019. In July 2020, the board of directors approved the dissolution of DGD, and shortly thereafter also approved a special dividend/return of capital to its stockholders. On August 13, 2021, DGD was officially dissolved via a filing of a Certificate of Dissolution with the state of Delaware.
MAIA Drug Development Corporation ("MAIA DD") incorporated in the state of Texas on September 10, 2018, and was 100% owned by MAIA, until MAIA DD was legally dissolved in July 2021. The operations of MAIA DD were nominal.
In July 2021, the Company established a wholly owned Australian subsidiary, MAIA Biotechnology Australia Pty Ltd, to conduct various pre-clinical and clinical activities for the development of the Company's product candidates.
In April 2022, the Company established a wholly owned Romanian subsidiary, MAIA Biotechnology Romania S.R.L., to conduct various pre-clinical and clinical activities for the development of the Company's product candidates.

Going Concern Considerations

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

To date, the Company has incurred recurring losses, negative cash flow from operations and has accumulated a deficit of $72,047,632 from the Company’s inception through March 31, 2024. As of March 31, 2024, the Company had $8,271,449 in cash and cash equivalents and working capital of approximately $3,792,234.

To meet the Company’s future working capital needs, the Company will need to raise additional equity or enter into debt financing. While the Company has historically been able to raise additional capital through issuance of equity and/or debt financing, and while the Company has implemented a plan to control its expenses in order to satisfy its obligations due within one year from the date of issuance of these financial statements, the Company cannot guarantee that it will be able to raise additional equity, raise debt, or contain expenses. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern within one year after these financial statements are issued.

 

8


 

Basis of Presentation

Basis of presentation and consolidation principles

The accompanying condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated financial statements may not include all disclosures required by GAAP; however, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the fiscal year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed on March 21, 2024. The condensed consolidated balance sheet as of December 31, 2023 was derived from the audited financial statements.

 

In the opinion of management, all adjustments, consisting of only normal recurring adjustments that are necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, have been made. The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future periods.

The unaudited interim condensed consolidated financial statements include the accounts of the Company's wholly owned subsidiaries. All transactions and accounts between and among its subsidiaries have been eliminated. All adjustments and disclosures necessary for a fair presentation of these unaudited interim condensed consolidated financial statements have been included.

Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker in deciding how to allocate resources and assess performance. The Company and the Company’s chief operating decision-maker, the Company’s Chief Executive Officer, view the Company’s operations and manage its business as a single operating segment, which is the business of discovering and developing products for the treatment of immunotherapies for cancer.

Use of Estimates

The preparation of the Company’s unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The most significant estimates in the Company’s financial statements relate to the valuation of common stock, stock options and warrants, the embedded features in convertible notes, and accruals for outsourced research and development activities. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Certain Risks and Uncertainties

The Company’s activities are subject to significant risks and uncertainties including the risk of failure to secure additional funding to properly execute the Company’s business plan. The Company is subject to risks that are common to companies in the pharmaceutical industry, including, but not limited to, development by the Company or its competitors of new technological innovations, dependence on key personnel, reliance on third party manufacturers, protection of proprietary technology, and compliance with regulatory requirements.

 

 

 

 

9


 

 

Foreign Currency Translation

 

The financial statements of the Company’s foreign subsidiaries, where the local currency is the functional currency, are translated using exchange rates in effect as of the applicable balance sheet dates for assets and liabilities and average exchange rates during the period for results of operations. The resulting foreign currency translation adjustment is included in stockholders’ equity as accumulated other comprehensive loss.

Off-Balance Sheet Risk and Concentrations of Credit Risk

The Company has no significant off-balance sheet risks, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Cash accounts are maintained at financial institutions that potentially subject the Company to concentrations of credit risk. At March 31, 2024 and December 31, 2023, substantially all of the Company’s cash was deposited in accounts at two financial institutions. The Company maintains its cash deposits, which at times may exceed the federally insured limits, with a reputable financial institution, and accordingly, the Company believes such funds are subject to minimal credit risk.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with maturities of three months or less to be cash equivalents. As of March 31, 2024 and December 31, 2023 cash includes cash in a depository bank accounts. The Company had no cash equivalents as of March 31, 2024 or December 31, 2023.

Fair Value Measurements

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available.

 

Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1 - Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2 - Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3 - Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the three months ended March 31, 2024, and as of and during the twelve months ended December 31, 2023. The carrying amount of accounts payable approximated fair value as they are short term in nature. The fair value of warrants issued for services is estimated based on the Black-Scholes-Merton model during the three months ended March 31, 2024. The estimated fair value of warrants issued to underwriters represented Level 3 measurements.

 

 

10


 

General and Administrative

General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses, rent, outside legal expenses, insurance costs, and other general and administrative costs.

Research and Development

The Company’s research and development expenses consist primarily of costs associated with the Company’s clinical trials, salaries, payroll taxes, employee benefits, and stock-based compensation charges for those individuals involved in ongoing research and development efforts. Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received.

As part of the process of preparing the condensed consolidated financial statements, the Company is required to estimate its accrued expenses. This process involves reviewing quotations and contracts, identifying services that have been performed on the Company’s behalf and estimating the level of service performed and the associated cost incurred for the service when the Company has not yet been invoiced or otherwise notified of the actual cost. The majority of the Company’s service providers invoice the Company monthly in arrears for services performed or when contractual milestones are met. The Company makes estimates of its accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to the Company at that time. The Company periodically confirms the accuracy of its estimates with the service providers and makes adjustments if necessary. The estimates in the Company’s accrued research and development expenses are related to expenses incurred with respect to CROs, CMOs and other vendors in connection with research and development and manufacturing activities.

The Company bases its expense related to CROs and CMOs on its estimates of the services received and efforts expended pursuant to quotations and contracts with such vendors that conduct research and development and manufacturing activities on the Company’s behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to the Company’s vendors will exceed the level of services provided and result in a prepayment of the applicable research and development or manufacturing expense. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from its estimate, the Company adjusts the accrual or prepaid expense accordingly. Although the Company does not expect its estimates to be materially different from amounts actually incurred, the Company’s understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in us reporting amounts that are too high or too low in any particular period. There have been no material changes in estimates for the periods presented.

Research and Development Incentive

The Company recognizes other income from Australian research and development incentives when there is reasonable assurance that the income will be received, the relevant expenditure has been incurred, and the consideration can be reliably measured. The research and development incentive is one of the key elements of the Australian Government’s support for Australia’s innovation system and is supported by legislative law primarily in the form of the Australian Income Tax Assessment Act 1997, as long as eligibility criteria are met. Under the program, a percentage of eligible research and development expenses incurred by the Company through its subsidiary in Australia are reimbursed.

Management has assessed the Company’s research and development activities and expenditures to determine which activities and expenditures are likely to be eligible under the research and development incentive regime described above. At each period end, management estimates the refundable tax offset available to the Company based on available information at the time and it is included in Australian research and development incentives in the condensed consolidated statements of operations.

11


 

Derivative Financial Instruments

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, to determine if such instruments contain features that qualify as embedded derivatives.

Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the statement of operations each period.

Stock-Based Compensation

The Company records share-based compensation for awards granted to employees, non-employees, and to members of the board of directors based on the grant date fair value of awards issued, and the expense is recorded on a straight-line basis over the requisite service period. Forfeitures are recognized when they occur.

The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of stock options and warrants. The use of the Black-Scholes-Merton option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. The Company has concluded that its historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term. Therefore, the expected term was determined according to the simplified method, which is the average of the vesting tranche dates and the contractual term. Due to the lack of company specific historical and implied volatility data, the estimate of expected volatility is primarily based on the historical volatility of a group of similar companies that are publicly traded. For these analyses, companies with comparable characteristics are selected, including enterprise value and position within the industry, and with historical share price information sufficient to meet the expected life of the share-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of its share-based awards. The risk-free interest rate is determined by reference to U.S. Treasury zero-coupon issues with remaining maturities similar to the expected term of the options. The Company has not paid, and does not anticipate paying, cash dividends on shares of its common stock.

Prior to the initial public offering (IPO) in order to estimate the fair value of shares of the common stock, the Company's board of directors considered, among other things, sales of common stock to third party investors and valuations of common stock, business, financial condition and results of operations, including related industry trends affecting operations; the likelihood of achieving a liquidity event, such as an initial public offering, or sale, given prevailing market conditions; the lack of marketability of our common stock; the market performance of comparable publicly traded companies; and U.S. and global economic and capital market conditions.

During the three months ended March 31, 2024, 12,500 restricted shares of common stock were issued for consulting services. There were no issuances of restricted stock awards during the three months ended March 31, 2023. The fair value of restricted stock awards is based on the common stock price.

All stock-based compensation costs are recorded in general and administrative or research and development costs in the condensed consolidated statements of operations based upon the underlying individual’s role at the Company.

Common Stock Warrants

The Company accounts for common stock warrants as either equity instruments or as liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), depending on the specific terms of the warrant agreement.

 

12


 

When warrants are issued for services provided by non-employees, under ASC 718, Compensation – Stock Compensation (“ASC 718”), the warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the entity can be required under any circumstances to settle the warrant by transferring cash or other assets. The measurement of equity-classified non-employee share-based payments is generally fixed on the grant date and are considered compensatory, as defined by ASC 718.

Income Taxes

Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes any interest and penalties accrued related to unrecognized tax benefits as income tax expense.

Deferred Offering Costs

Deferred offering costs are included in other assets and consist of legal, accounting, underwriting fees and other costs. There are no deferred offering costs as of the December 31, 2023 balance sheet date. Deferred offering costs incurred through the March 31, 2024 balance sheet are directly related to at-the-market offering and will be charged to additional paid-in capital upon the completion of the offering.

Net Loss Per Share

Basic loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. Diluted loss per share excludes, when applicable, the potential impact of stock options, unvested shares of restricted stock awards, and common stock warrants because their effect would be anti-dilutive due to our net loss. Gains on warrant liabilities are only considered dilutive when the average market price of the common stock during the period exceeds the exercise price of the warrants. Since the Company had a net loss in each of the periods presented, basic and diluted net loss per common share are the same.

The following table summarizes the Company’s potentially dilutive securities, in common share equivalents, which have been excluded from the calculation of dilutive loss per share as their effect would be anti-dilutive:

 

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Shares issuable upon exercise of stock options

 

 

8,060,978

 

 

 

7,217,915

 

Shares issuable upon exercise of warrants

 

 

6,272,508

 

 

 

796,985

 

 

Recent Accounting Standards

 

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting – Improvements to Reportable Segment Disclosures, which provides updates to qualitative and quantitative reportable segment disclosure requirements, including enhanced disclosures about significant segment expenses and increased interim disclosure requirements, among others. ASU No. 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. Early adoption is permitted, and the amendments should be

13


 

applied retrospectively. We do not expect the amendments in this ASU to have a material impact on our consolidated financial statements.

 

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. ASU No. 2023-09 is effective for fiscal years beginning after December 15, 2024 and allows for adoption on a prospective basis, with a retrospective option. Early adoption is permitted. We do not expect the amendments in this ASU to have a material impact on our consolidated financial statements.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

Reclassification of Prior Year Presentation

 

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported statement of cash flows.

 

2. RELATED PARTY TRANSACTIONS

 

10b5-1 Plan

 

Certain of our directors and executive officers previously adopted written plans, known as Rule 10b5-1 plans, in which they have contracted with a broker to buy shares of our common stock on a periodic basis. Each of these plans have expired as of the date of this Report. Our directors and executive officers may also adopt future Rule 10b5-1 plans in which they contract with a broker to buy or sell shares of our common stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or officer when entering into the plan, without further direction from the director or officer. The director or officer may amend or terminate the plan in limited circumstances. Our directors and executive officers may also buy or sell additional shares of our common stock outside of a Rule 10b5-1 plan when they are not in possession of material, nonpublic information.

 

Private Placement

 

The following Company directors participated in the March 2024 private placement as follows: (i) Stan Smith purchased 170,940 shares of our common stock and warrants to purchase up to 170,940 shares of our common stock for an aggregate purchase price of $200,000; (ii) Louie Ngar Yee purchased 170,940 shares of our common stock and warrants to purchase up to 170,940 shares of our common stock for an aggregate purchase price of $200,000; (iii) Cristian Luput purchased 69,282 shares of our common stock and warrants to purchase up to 69,282 shares of our common stock for an aggregate purchase price of $81,060; (iv) Steven Chaouki purchased 34,641 shares of our common stock and warrants to purchase up to 34,641 shares of our common stock for an aggregate purchase price of $40,530 and (v) Ramiro Guerrero purchased 6,928 shares of our common stock and warrants to purchase up to 6,928 shares of our common stock for an aggregate purchase price of $8,106.

 

 

 

 

 

 

 

 

 

 

14


 

3. ACCRUED EXPENSES

As of March 31, 2024 and December 31, 2023 accrued expenses consisted of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Bonus

 

$

1,006,187

 

 

$

786,999

 

Professional fees

 

 

175,910

 

 

 

77,942

 

Research and development costs

 

 

989,847

 

 

 

998,838

 

Accrued severance

 

 

603,635

 

 

 

824,435

 

Other

 

 

259,686

 

 

 

610,393

 

Total accrued expenses

 

$

3,035,265

 

 

$

3,298,607

 

4.
FAIR VALUE OF FINANCIAL LIABILITIES

Derivative Liability

Financial liabilities consisting of warrant liabilities measured at fair value on a recurring basis are summarized below. The fair value of the warrant liabilities recorded are as follows:

 

Fair value at December 31, 2023

 

Total

 

Level 1

 

Level 2

 

Level 3

 

Liabilities:

 

 

 

 

Warrant liability

 

2,152,188

 

 

 

 

 

 

2,152,188

 

Total liabilities

$

2,152,188

 

$

 

$

 

$

2,152,188

 

 

Fair value at March 31, 2024

 

Total

 

Level 1

 

Level 2

 

Level 3

 

Liabilities:

 

 

 

 

Warrant liability

 

9,573,197

 

 

 

 

 

 

9,573,197

 

Total liabilities

$

9,573,197

 

$

 

$

 

$

9,573,197

 

 

The table below provides a summary of the changes in fair value of the warrant liabilities measured on a recurring basis using significant unobservable inputs (Level 3):

 

Three Months Ended
March 31,

 

Warrant liabilities:

2024

 

2023

 

Balance, beginning of period

$

2,152,188

 

$

245,341

 

Issuance of warrants

 

3,239,711

 

 

 

 

Loss (Gain) on fair value of warrant liability

 

4,181,298

 

 

(20,942

)

Balance, end of period

$

9,573,197

 

$

224,399

 

 

5.
STOCKHOLDERS’ EQUITY

Upon the closing of the Company’s initial public offering, the Company’s shareholders agreement terminated pursuant to its terms. In connection with the closing of the Company’s initial public offering, the Company amended and restated its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”) and amended and restated its Bylaws (the “Amended and Restated Bylaws”). The Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on August 1, 2022 and became effective on that date, and among other things, increased the authorized number of common stock to 70,000,000 shares and decreased the authorized number of preferred stock to 30,000,000 shares.

15


 

 

At-the-Market Equity Offering

 

On February 14, 2024, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), to sell shares of its common stock, par value $0.0001 per share, (the “Shares”) having an aggregate sales price of up to $1,445,000, from time to time, through an “at the market offering” program under which Wainwright will act as sales agent. The sales, if any, of the Shares made under the ATM Agreement will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The Company will pay Wainwright a commission rate equal to 3.0% of the aggregate gross proceeds from each sale of Shares. As of March 24, 2024, the Company has sold 507,754 shares of common stock at an average price of $1.47 per share, resulting in aggregate gross proceeds of approximately $745,251. The Company anticipates that the at-the-market offering will continue throughout the next reporting period.

 

Effective March 25, 2024, the Company filed a prospectus supplement to amend, supplement and supersede certain information contained in the earlier prospectus and prospectus supplement, which increased the number of Shares the Company may offer and sell under the ATM Agreement to an aggregate offering price of up to $4,950,000 from time to time.

 

Share Repurchase Program

On September 28, 2023, the Company announced that its board of directors approved a share repurchase program pursuant to which the Company may repurchase up to $800,000 of the Company’s issued and outstanding shares of common stock, par value $0.0001 per share, through September 2024. The Company expects to fund repurchases by using cash on hand and expected cash flow to be generated in the future. As of March 31, 2024 no shares have been repurchased.

 

Private Placement

 

On March 14, 2024, the Company issued and sold 2,496,318 shares of its common stock and warrants to purchase 2,496,318 shares of its common stock in a private placement to certain accredited investors and Company directors pursuant to securities purchase agreements dated March 25, 2024 at a price per share of $1.17 for which the Company received gross proceeds of approximately $2.92 million. The warrants are exercisable at a price per share of $1.30, are exercisable commencing six months following issuance, and have a term of five year from the initial exercise date. The securities sold to Company directors participating in the private placement were issued pursuant to the Company’s 2021 Equity Incentive Plan.

 

On March 28, 2024, the Company issued and sold (i) 578,643 shares of its common stock, and (ii) warrants to purchase up to 578,643 shares of its common stock, to accredited investors pursuant to securities purchase agreements dated March 25, 20241 at a price per share of $2.295 for which the Company received gross proceeds of approximately $1.33 million. The warrants are exercisable at a price per share of $2.55, are exercisable commencing six months following issuance, and have a term of five years from the initial exercise date.

MAIA Biotechnology, Inc. Restricted Stock Awards

 

During the three months ended March 31, 2023, the company expensed $164,070 to consulting for investor relations related to the grant of 40,500 restricted shares of common stock. There were no unvested restricted shares as of March 31, 2023.

 

During the three months ended March 31, 2024, the company expensed $11,500 to consulting expense related to the grant of 12,500 restricted shares of common stock. There are no unvested restricted shares as of March 31, 2024.

 

 

 

 

MAIA Stock Warrants

16


 

 

Concurrently with the closing of the Company’s initial public offering, the Company issued warrants to purchase an aggregate of up to 100,000 shares of its common stock to the representative or its designees, at an exercise price of $6.25 per share (the “Representative’s Warrants”). The Representative’s Warrants are exercisable beginning on January 23, 2023, and expire on July 27, 2027, pursuant to the terms and conditions of the Representative’s Warrants. On August 3, concurrently with the full exercise of the Underwriter’s over-allotment option, the Company issued additional Representative’s Warrants to purchase an aggregate of up to 15,000 shares of its common stock to the Representative or its designees on the same terms. The Representative’s Warrants are not indexed to the Company’s own stock and therefore meet the definition of a derivative liability. The Representative’s Warrants are liability classified instruments and were initially recorded as $343,735, which was the value determined using the Black-Scholes-Merton method using a term of five years, risk free interest rate of 2.82% and volatility of 77.5%. As of March 31, 2024 and December 31, 2023 the Company remeasured the warrant liability resulting in a value of $112,878 and $40,211 respectively. The loss on remeasurement of the warrant liability in the amount of $72,666 was included in other expense for the three months ended March 31, 2024.

 

On November 9, 2023, the Company issued warrants to purchase an aggregate of up to 239,234 shares of its common stock to Alumni Capital LP, at an exercise price of $2.09 per share. The warrants were exercisable beginning on November 10, 2023, and expire on November 10, 2027, pursuant to the terms and conditions of the warrants. The warrants are not indexed to the Company’s own stock and therefore meet the definition of a derivative liability. On November 13, 2023, 131,578 warrant shares vested in accordance with the terms. The warrants are liability classified instruments and were initially recorded as $84,251, which was the value determined using the Black-Scholes-Merton method using a term of 3.87 years, risk free interest rate of 3.93% and volatility of 90.0%. Laidlaw & Company Ltd. acted as the financial advisor to the Company in connection with the warrant and were paid a cash fee of $13,750. As of March 31, 2024 and December 31, 2023 the Company remeasured the warrant liability resulting in a value of $199,902 and $84,251 respectively. The loss on remeasurement of the warrant liability in the amount of $115,651 is included in other expense for the three months ended March 31, 2024.

 

On November 17, 2023, the Company issued warrants concurrently with the Company’s registered direct offering to purchase an aggregate of up to 2,424,243 shares of its common stock to the investors in the registered direct offering, at an exercise price of $1.86 per share (subject to customary adjustments as set forth in the Warrants), are exercisable six months following issuance and will have a term of five years from the initial exercise date. The Warrants contain customary anti-dilution adjustments to the exercise price, including for share splits, share dividends, rights offerings and pro rata distributions. The warrants are not indexed to the Company’s own stock and therefore meet the definition of a derivative liability. The warrants are liability classified instruments and were initially recorded as $1,903,915, which was the value determined using the Black-Scholes-Merton method using a term of 5.38 years, risk free interest rate of 3.85% and volatility of 90.0%. As of March 31, 2024 and December 31, 2023 the Company remeasured the warrant liability resulting in a value of $4,211,746 and $1,903,915 respectively. The loss on remeasurement of the warrant liability in the amount of $2,307,832 is included in other expense for the three months ended March 31, 2024.

 

On November 17, 2023, concurrently with the closing of the Company’s registered direct offering, the Company issued warrants to purchase an aggregate of 169,697 shares of its common stock to the Representative or its designees, at an exercise price of $2.06 per share. The Representative’s Warrants are exercisable beginning November 15, 2023, and expire on November 15, 2028, pursuant to the terms and conditions of the Representative’s Warrants. The warrants are not indexed to the Company’s own stock and therefore meet the definition of a derivative liability. The warrants are liability classified instruments and were initially recorded as $123,811, which was determined using the Black-Scholes-Merton method using a term of 4.88 years, risk free interest rate of 3.84% and volatility of 90.0%. As of March 31, 2024 and December 31, 2023 the Company remeasured the warrant liability resulting in a value of $280,770 and $123,811 respectively. The loss on remeasurement of the warrant liability in the amount of $156,959 is included in other expense for the three months ended March 31, 2024.

 

Concurrently with the closing of the Company’s private placement on March 14, 2024, the Company issued warrants to purchase an aggregate of up to 2,496,318 shares of its common stock to the investors in the private placement, at an exercise price of $1.30 per share are exercisable beginning on September 14, 2024, and expire on September 14, 2029. The warrants issued were divided into two groups, warrants issued to outside investors and warrants issued to directors. The warrants issued to outside investors of 2,043,587 are not indexed to the Company’s own stock and therefore meet the definition of a derivative liability. The warrants are liability classified instruments and were initially recorded as $2,049,600, which was determined using the Black-Scholes-Merton method using a term of 5.5 years, risk free interest rate of 4.20% and volatility of 95.0%. As of March 31, 2024, the Company

17


 

remeasured the warrant liability resulting in a value of $3,793,921. The loss on remeasurement of the warrant liability in the amount of $1,744,321 is included in other expense for the three months ended March 31, 2024. The warrants issued to directors of 452,731 are equity classified instruments and the value of these warrants determined using the Black-Scholes-Merton method was $230,685 using a term of 5.5 years, risk free interest rate of 4.20% and volatility of 95%.

 

Concurrently with the closing of the Company’s private placement offering on March 28, 2024, the Company issued warrants to purchase an aggregate of up to 578,643 shares of its common stock to the investors in the private placement at an exercise price of $2.55 per share. The warrants are exercisable beginning on September 28, 2024, and expire on September 28, 2029. The warrants are not indexed to the Company’s own stock and therefore meet the definition of a derivative liability. The warrants are liability classified instruments and were initially recorded as $1,190,111, which was determined using the Black-Scholes-Merton method using a term of 5.5 years, risk free interest rate of 4.20% and volatility of 95.0%. As of March 31, 2024, the Company remeasured the warrant liability resulting in a value of $973,980. The gain on remeasurement of the warrant liability in the amount of $216,131 is included in other expense for the three months ended March 31, 2024.

 

 

 

 

Warrants
Outstanding

 

 

Weighted
Average
Exercise
Price

 

 

Weighted
Average
Remaining
Contractual
Term in
Years

 

Balance at January 1, 2024

 

 

3,650,278

 

 

$

2.82

 

 

 

5.00

 

Issued

 

 

2,622,230

 

 

 

1.58

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

Expired

 

 

 

 

 

 

 

 

 

Balance at March 31, 2024

 

 

6,272,508

 

 

$

2.30

 

 

 

2.76

 

 

MAIA Biotechnology, Inc. Stock Award Plans

In 2018, the Company adopted the MAIA Biotechnology, Inc. 2018 Stock Option Plan (the “MAIA 2018 Plan”). MAIAs board of directors administers the MAIA Plan for the purposes of attracting, retaining, and motivating key employees, directors, and consultants of MAIA. The terms of the MAIA 2018 Plan continue to govern the 1,924,500 options outstanding in the plan as of March 31, 2024.

In 2020, the Company adopted the MAIA Biotechnology, Inc. Amended and Restated 2020 Equity Incentive Plan (the “MAIA 2020 Plan’’), also administered by the board of directors. The MAIA 2020 Plan permitted awards to take the form of stock options, restricted stock and restricted stock units. The terms of the MAIA 2020 Plan continue to govern the 3,532,125 options outstanding in the plan as of March 31, 2024. There are no shares reserved for future issuance in the MAIA 2018 Plan or the MAIA 2020 Plan.

 

On August 1, 2022 the Company approved the MAIA Biotechnology, Inc. 2021 Equity Incentive Plan (the “MAIA 2021 Plan’’) with 1,909,518 shares of common stock reserved for issuance. On May 25, 2023 the MAIA 2021 Plan was amended to include an automatic increase to the plan in the amount equal to ten percent (10%) of the total number of shares of stock outstanding on a fully diluted basis on December 31 of the preceding calendar year (the “Increase Date”); provided that, the board of directors may act prior to any Increase Date to provide that there will be no increase for such year or that the increase for such year will be a lesser number of shares of stock. The amount reserved for issuance under the MAIA 2021 Plan increased by 1,956,993 based on the fully diluted shares outstanding as of December 31, 2022. The amount reserved for issuance under the MAIA 2021 Plan increased by 2,838,668 based on the fully diluted shares outstanding as of December 31, 2023. As of March 31, 2024 there are 4,098,243 shares of common stock available for future issuance under the MAIA 2021 Plan and 2,604,353 options are outstanding in the MAIA 2021 Plan.

Stock options are to be granted with an exercise price which is at least equal to the stock’s estimated fair value at the date of grant, and with a contractual term of no more than ten years from the date of grant. In the case of an option granted to a 10% stockholder, the exercise price shall be generally no less than 110% of the fair market value per

18


 

share on the date of grant, and the contractual term shall be seven years. Outstanding options awarded under the MAIA 2021 Plan may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The option may be subject to other terms and conditions as to the time or times when it may be exercised (which may be based on performance or other criteria) as the board of directors may deem appropriate. Unexercised options are canceled ninety days after termination of an employee, director, founder, or consultant. Unexercised options are canceled immediately if an employee, director, founder, or consultant is terminated for cause; under certain other circumstances, the period to cancellation may differ as described in the respective plan documents. Certain clauses in the Plans also govern the Company’s exercise repurchase rights and various other features of awards granted under the plans.

As of March 31, 2024, only stock options have been awarded pursuant to the MAIA stock award plans.

The following table summarizes the activity and information regarding MAIA’s outstanding and exercisable options for the three months ended March 31, 2024:

 

 

 

Options Outstanding

 

 

Weighted
Average
Exercise
Price

 

 

Weighted
Average
Remaining
Contractual
Term in
Years

 

 

Aggregate
Intrinsic
Value

 

Balance at January 1, 2024

 

 

7,750,152

 

 

$

2.53

 

 

 

7.29

 

 

 

Granted

 

 

984,455

 

 

 

1.42

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

 

 

Cancelled/forfeited

 

 

(673,629

)

 

 

3.58

 

 

 

 

 

 

Balance at March 31, 2024

 

 

8,060,978

 

 

$

2.31

 

 

 

7.14

 

 

 

2,588,003

 

Options exercisable at March 31, 2024

 

 

6,649,017

 

 

$

2.29

 

 

6.84

 

 

 

2,237,777

 

The value of option grants is calculated using the Black-Scholes-Merton option pricing model with the following assumptions for options granted during the three months ended March 31, 2024 and 2023:

 

 

 

2024

 

 

2023

 

Risk-free interest rate

 

3.98% - 4.49%

 

 

3.64% - 4.23%

 

Expected term (in years)

 

5 - 6.08

 

 

5 - 6.08

 

Expected volatility

 

95% - 152.5%

 

 

99.6% - 101.1%

 

Expected dividend yield

 

 

-

 

 

 

 

 

The weighted-average grant date fair value of stock options issued during the three months ended March 31, 2024 and 2023 was $1.42 and $3.27, respectively. As of March 31, 2024, the total unrecognized compensation related to unvested employee and non-employee stock option awards granted was $2,080,928, which the Company expects to recognize over a weighted average period of approximately 3.2 years.

Stock based compensation related to the Company’s stock plans are as follows:

 

Three Months Ended

 

 

 

March 31,

 

2024

 

2023

 

General and administrative

$

230,989

 

 

$

256,677

 

Research and development

 

118,976

 

 

 

280,845

 

Total stock-based compensation

$

349,965

 

$

537,522

 

 

19


 

6.
COMMITMENTS AND CONTINGENCIES

Legal

From time to time, the Company is involved in legal actions and claims arising in the normal course of business. Management believes there are no matters which will have a material adverse effect on the Company's financial position, operations or cash flows.

Patent Licensing, Sponsored Research, and Patent & Technology Agreements

THIO – In November 2018 and as amended in December 2020, the Company entered into a Global Patent Licensing Agreement (“PLA”) titled “Patent and Technology License Agreement AGT. NO. L2264 – MAIA Biotechnology” with the University of Texas Southwestern (“UTSW”) to license patent families for a specific compound (“THIO”) from UTSW to MAIA. The agreement, as amended, has a term of 20 years. The agreement requires MAIA to reimburse UTSW for agreed-upon expenses related to THIO. The agreement requires certain payments upon assignment of the license to a third party as well as upon reaching specific milestones, ranging between $1,000,000 and $50,000,000, not to exceed a combined milestone payment total of $112,000,000. As of March 31, 2024, no assignment has occurred and none of the defined milestones have been completed and therefore no payments are due to UTSW related to the milestones. The agreement requires royalties of 2-4% (depending on THIO reaching specified sales levels in the respective jurisdictions) royalty payments on net sales up to $1,000,000,000, and 2.5-5% on net sales above $1,000,000,000.

 

Also in December 2020, the Company entered into a second license agreement with UTSW titled “Patent and Technology License Agreement AGT. NO. L3648 — MAIA Biotechnology” pursuant to which UTSW is licensing an additional compound to MAIA. The agreement has a term of 20 years and requires the Company to reimburse UTSW for certain agreed-upon expenses. The agreement requires certain payments upon assignment of the license to a third party as well as upon reaching specific milestones, ranging between $1,000,000 and $50,000,000, not to exceed a combined milestone payment total of $112,000,000. As of March 31, 2024, no assignment has occurred and none of the defined milestones have been completed and therefore no payments are due to UTSW related to the milestones.

The agreement requires royalties of 2-4% (depending on THIO reaching specified sales levels in the respective jurisdictions) royalty payments on net sales up to $1,000,000,000, and 2.5-5% on net sales above $1,000,000,000.

The Company will also pay UTSW running royalties on a yearly basis as a percentage of Net Sales of the Company or its sublicensee. There are single digit royalty rates for licensed products and licensed services covered by a Valid Claim (as defined in the agreement) and dependent on whether Net Sales are greater than or less than/equal to $1,000,000,000, with Net Sales above that amount commanding a slightly higher percentage. In each case, the royalty percentage is lower before patent issuance in each jurisdiction. In the event that the licensed product or licensed service is not covered by a Valid Claim, the running royalty rates are reduced by fifty percent (50%). The royalty obligations continue on a country-by-country basis until the later of expiration of the last Valid Claim in each country or ten (10) years after the First Commercial Sale (as defined in UTSW2 Agreement) in each country.

Regeneron – In February 2021, the Company reached an agreement with Regeneron Pharmaceuticals, Inc. (“Regeneron”) to perform one clinical trial for the treatment of patients with Non-Small Cell Lung Cancer (NSCLC) involving a Regeneron drug candidate that utilizes one of the Company’s compounds/agents. The Company is responsible for all costs of the study with Regeneron supplying their drug cemiplimab representing a cost savings for the Company, the first phase of which is expected to take approximately two years. The overall term of the agreement is for five years unless earlier terminated for certain reasons as defined in the agreement. Either party may terminate a study plan in the event that patient screening for the clinical study does not commence within twelve (12) months after (a) the Effective Date, with respect to the initial study, or (b) the execution of the applicable study plan, with respect to each other study. If either party terminates a study plan, the Company shall reimburse Regeneron for the Regeneron product it received in connection with such study plan based on the actual out-of-pocket cost to Regeneron of such Regeneron product. As of March 31, 2024 neither party has terminated the agreement.

20


 

7.
INCOME TAXES

The Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The issuance of shares in connection with the Company’s IPO, as well as prior share issuances, may result in limitations on the utilization of the Company’s net operating loss carryforwards under IRS section 382. As of March 31, 2024, and December 31, 2023, the Company had a full valuation allowance against its deferred tax assets.

For the three months ended March 31, 2024 and 2023, the Company recorded zero income tax expense. No tax benefit has been recorded in relation to the pre-tax losses for the three months ended March 31, 2024, due to full valuation allowance to offset any deferred tax assets.

8.
SUBSEQUENT EVENTS

 

Issuance of Options

 

From April 1 to May 14, 2024, the Company issued 648,263 options at a weighted exercise price of $2.94 to employees and consultants.

 

On May 10, 2024, the Company issued 4,678 shares of Common Stock upon exercise of an existing warrant on a net-exercise basis. These shares were issued pursuant to the exemption from registration provided by Section 4(a)(2) and/or 3(a)(9) of the Securities Act of 1933, as amended.

 

At-The-Market Offering with H.C. Wainwright

 

On February 14, 2024, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), to sell shares of its common stock, par value $0.0001 per share, (the “Shares”) having an aggregate sales price of up to $1,445,000, from time to time, through an “at the market offering” program under which Wainwright will act as sales agent. The sales, if any, of the Shares made under the ATM Agreement will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The Company will pay Wainwright a commission rate equal to 3.0% of the aggregate gross proceeds from each sale of Shares. Effective March 25, 2024, the Company filed a prospectus supplement to amend, supplement and supersede certain information contained in the earlier prospectus and prospectus supplement, which increased the number of Shares the Company may offer and sell under the ATM Agreement to an aggregate offering price of up to $4,950,000 from time to time. Since April 1, 2024, the Company has sold 748,808 shares of its common stock at an average price of $3.03 per share, resulting in aggregate gross proceeds of approximately $2,265,162. The Company anticipates that the at-the-market offering will continue throughout the next reporting period.

 

Private Placement

 

On April 25, 2024, the Company issued and sold 494,096 shares of its common stock and warrants to purchase 494,096 shares of its common stock in a private placement to certain accredited investors and Company directors pursuant to securities purchase agreements dated April 22, 2024 at a price per share of $2.034 for which the Company received gross proceeds of approximately $1.0 million. The warrants are exercisable at a price per share of $2.26, are exercisable commencing six months following issuance, and have a term of five year from the initial exercise date. The securities sold to Company directors participating in the private placement were issued pursuant to the Company’s 2021 Equity Incentive Plan.

 

Related Party Participation in Private Placement

 

The following Company directors participated in the aforementioned April 2024 private placement as follows: (i) Stan Smith purchased 147,492 shares of common stock and warrants to purchase up to 147,492 shares of common

21


 

stock for an aggregate purchase price of approximately $300,000; (ii) Louie Ngar Yee purchased 19,665 shares of common stock and warrants to purchase up to 19,665 shares of common stock for an aggregate purchase price of approximately $40,000.

 

Amendments to Common Stock Purchase Warrants

 

On May 11, 2024, the Company entered into amendments to certain of those common stock purchase warrants originally issued on March 14, 2024 with an exercise price of $1.30 per share with holders of such warrants to purchase 1,794,882 shares of common stock (out of warrants to purchase an aggregate of 2,043,587 shares of common stock issued to non-affiliated investors on March 14, 2024) to amend and restate the “Fundamental Transaction” adjustment provision in such warrants to facilitate such warrants being accounted for on the Company’s balance sheet as equity in future periods as opposed to a warrant liability.

 

On May 11, 2024, the Company entered into amendments to certain of those common stock purchase warrants originally issued on March 28, 2024 with an exercise price of $2.55 per share with holders of such warrants to purchase 349,886 shares of common stock (out of warrants to purchase an aggregate of 578,643 shares of common stock issued to non-affiliated investors on March 28, 2024) to amend and restate the “Fundamental Transaction” adjustment provision in such warrants to facilitate such warrants being accounted for on the Company’s balance sheet as equity in future periods as opposed to a warrant liability.

 

On May 11, 2024, the Company entered into amendments to certain of those common stock purchase warrants originally issued on April 25, 2024 with an exercise price of $2.26 per share with holders of such warrants to purchase 263,027 shares of common stock (out of warrants to purchase an aggregate of 326,939 shares of common stock issued to non-affiliated investors on April 25, 2024) to amend and restate the “Fundamental Transaction” adjustment provision in such warrants to facilitate such warrants being accounted for on the Company’s balance sheet as equity in future periods as opposed to a warrant liability.

 

 

 

 

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

You should read the following discussion together with our financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that are based on our current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors, including those which we discuss under “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

Overview

We are a clinical stage biotechnology company engaged in the discovery, development and commercialization of therapies targeting cancer. Our initial disease target is lung cancer, a serious medical condition with an incidence of over 236,000 new cases in the US in 2022, representing 12.3% of all cancers, and over 130,000 deaths, or 21.4% of all cancers. Worldwide, lung cancer incidence is over 2,200,000 per year (ranking second only after breast cancer), and mortality over 1,800,000 (ranking first). Specifically, we are targeting Non-Small Cell Lung Cancer (NSCLC), which represents 85% of all lung cancers. THIO (6-thio-dG or 6-thio-2 ‘-deoxyguanosine), our lead asset, is an investigational dual mechanism of action drug candidate incorporating telomere targeting and immunogenicity.

We accomplished the following key milestones:

In November 2018, we in-licensed THIO from University of Texas Southwestern, in Dallas. The patent license is global and exclusive for the duration of the patients’ lives.

 

In 2019, we generated the first data for THIO demonstrating complete regression with no recurrence when administered in advance of atezolizumab (TecentriQ®; Genentech), in colorectal and lung cancer preclinical models.

 

In the first quarter 2020, we filed a provisional patent application for THIO in sequential combination with checkpoint inhibitors, covering all tumor types. The patent has not been allowed to date, but if it is allowed will have an expiration date in 2041, excluding any patent term adjustment or patent extension.

 

In the first quarter 2021, we entered into a Drug Supply Agreement with Regeneron Pharmaceuticals, Inc. Under this agreement, Regeneron will provide cemiplimab (LibtayoÒ; anti-PD-1 checkpoint inhibitor) at no charge for the THIO-101 trials, testing THIO administration for immune activation followed by cemiplimab in NSCLC. This drug supply agreement replaces direct drug purchase expense that we would be otherwise required to incur. In exchange, Regeneron received development exclusivity in NSCLC for the duration of the trial meaning we cannot conduct trials in NSCLC with another checkpoint inhibitor during the time of the trial. All other areas of study and development in any other tumor types remain open.

 

In the first quarter 2021, we initiated our clinical supply manufacturing under Good Manufacturing Practices conditions to provide clinical supply for THIO-101 and other development needs.

 

In the first half of 2022, we completed a crossover round consisting of sales of 274,840 shares of our common stock at a price of $9.00 per shares for gross proceeds of approximately $2.5 million.

 

In the first quarter 2022, THIO received approval by the Bellberry Human Research Ethics Committee (”HREC”) in Australia to initiate the THIO-101 Phase 2 clinical study.

 

In March 2022, the U.S. Food and Drug Administration (FDA) granted Orphan Drug Designation (ODD) to THIO for the treatment of hepatocellular carcinoma, and in May 2022, the FDA granted ODD to THIO for the treatment of small-cell lung cancer. The FDA’s Office of Orphan Products Development may grant orphan designation status to drugs and biologics that are intended for the treatment, diagnosis or prevention

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of rare diseases, or conditions that affect fewer than 200,000 people in the U.S. ODD provides certain benefits, including financial incentives, to support clinical development and the potential for up to seven years of market exclusivity for the drug for the designated orphan indication in the U.S. if the drug is ultimately approved for its designated indication.

 

In May 2022, we entered into a research and collaboration agreement with the Nationwide Children’s Hospital to evaluate the potential of THIO in combination with current standard-of-care therapies for brain cancer. The organizations are conducting preclinical studies to assess the efficacy and safety of THIO in combination with radiotherapy and immune checkpoint inhibitors in vitro and in vivo models.

 

In July 2022, we completed our selection process for the clinical sites for our Phase 2 study in Australia and Europe and our application to start the Phase 2 study in Australia has been approved. In July 2022, the first patient was administered with THIO in our Phase 2 human trial (THIO-101) in Australia. We have also submitted a similar application to conduct the same Phase 2 study in Europe.

 

On July 28, 2022, the Company’s shares of common stock began trading on the NYSE American under the symbol MAIA. On August 1, 2022, the Company sold 2,000,000 shares of common stock at $5.00 per share for gross proceeds of $10,000,000 in an initial public offering prior to deducting underwriting discounts, commissions, and other offering expenses. On August 3, 2022, the Company sold an additional 300,000 shares of common stock at $5.00 per share when the underwriter exercised the overallotment for net proceeds of $1,500,000 prior to deducting underwriting discounts, commissions, and other offering expenses. We believe we have raised sufficient capital to fund the THIO-101 lead-in and preliminary efficacy of the phase 2 THIO-101 trial.
In November 2022, we completed a pre-Investigational New Drug meeting with the FDA for the planned U.S. expansion of the THIO-101 Phase 2 trial evaluating THIO, an investigational telomere-targeting agent, in patients with advanced NSCLC.
In December 2022, regulatory authorities in three European countries, Hungary, Poland, and Bulgaria, approved the implementation of THIO-101, MAIA’s Phase 2 clinical trial. THIO-101 is a critical component of THIO’s clinical development process and it is of the utmost importance that we collaborate with leading cancer institutes in Australia and now in Europe, for a target total of 30 clinical trial sites in six countries.
In the first week of March 2023, the first two patients were dosed in Europe in MAIA’s Phase 2 clinical trial, THIO-101 evaluating THIO in patients with advanced Non-Small Cell Lung Cancer (NSCLC). Following regulatory clearances in Hungary, Poland, and Bulgaria, nine clinical sites have been activated in these three European countries.
On April 11, 2023, we announced positive topline data related to the completion of Part A, safety lead-in portion of the THIO-101 trial which showed that administration of THIO, at the highest dose of 360 mg/cycle in sequential combination with Regeneron’s anti-PD-1 therapy, LibtayoÒ was well tolerated with no dose-limiting toxicities or significant treatment-related adverse events reported.
On April 18, 2023, we published data in Hepatocellular Carcinoma (”HCC”) (liver cancer) models: as monotherapy, THIO achieved complete and durable responses in HCC, the dominant histology in primary liver cancer (90%), in in vivo models. When combined with Libtayo®, duration of response was further potentiated. Upon rechallenge with two times more cancer cells and no additional treatment, tumor growth was completely prevented. Administration of THIO alone and in combination with Libtayo® generated anti-cancer immune memory.

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On April 20, 2023, we announced preliminary survival data from Part A of THIO-101. The first two patients enrolled in Part A of the study continue to be alive, approximately 10 and 9 months respectively, from treatment initiation. Both patients have advanced Stage IV metastatic disease and are heavily pretreated, receiving third and fourth line of therapy respectively after previously failing treatment with an immune checkpoint inhibitor. They continue to be progression free following their last dose of THIO, 7 and 6 months respectively, with no new treatment. The current treatment options in patients with advanced relapsed or refractory NSCLC who failed two or more therapy regimens are limited and show minimal benefit. Furthermore, discontinuation of treatment is rapidly followed by physical decline and death, therefore seeing patients with such survival and no disease progression in this clinical setting, is noteworthy. In real-world clinical practice, observed survival in such heavily pretreated patients is 3-4 months.
On April 27, 2023 we closed a follow-on offering and sold 2,555,500 shares of common stock at a public offering price of $2.25 per share, for gross proceeds of approximately $5.75 million, before deducting underwriting discounts and offering expenses. The shares sold in the offering include the exercise in full by the underwriter of its option to purchase an additional 333,300 shares of common stock, in addition to the 2,222,200 shares of common stock which the underwriters initially agreed to purchase.
On June 20, 2023, we announced updates in enrollment in THIO-101 in Europe. To that date, 29 patients had been dosed in THIO-101. With the addition of sites in Hungary, Poland, and Bulgaria in March 2023, THIO-101 has rapidly increased the number of patients enrolled and dosed with THIO. Thirteen sites were activated with another two new additional sites ready to open shortly afterward.
In July 2023, we announced that the first 2 patients dosed with THIO continue to be alive for approximately 12.2 and 11.5 months respectively, from treatment initiation. They have remained free of disease progression for 10.2 and 8.5 months, respectively, without requiring any additional therapy. We also highlighted that out of the first 11 patients with post-baseline scans, 82% (9 patients) met the disease control primary endpoint at first response assessment. For contrast, in similar heavily treated NSCLC patients, typical disease control rates are in the 25-35% range.