gtbp_424b3
Filed pursuant to Rule 424(b)(3)
Registration No. 333-239858
PROSPECTUS SUPPLEMENT NO. 7
TO THE PROSPECTUS DATED JULY 31, 2020
GT BIOPHARMA, INC.
This prospectus supplement no. 7 (the “Prospectus
Supplement”) supplements information contained in the
prospectus, dated July 28, 2020 (the “Prospectus”),
relating to the resale by selling stockholders of up to 31,924,929
shares of common stock, par value $0.001 per share of GT Biopharma,
Inc., a Delaware corporation (the
“Company”).
This Prospectus Supplement is being filed to update and
supplement the information in the Prospectus with the information
contained in our Quarterly Report on Form 10-Q (the “Form
10-Q”) filed with the Securities and Exchange Commission
(“SEC”) on November 13, 2020, which is set forth
below.
This Prospectus Supplement should be read in conjunction with the
Prospectus. This Prospectus Supplement is not complete without, and
may not be delivered or utilized except in connection with the
Prospectus, including any amendments or supplements thereto. Any
statement contained in the Prospectus shall be deemed to be
modified or superseded to the extent that information in this
Prospectus Supplement modifies or supersedes such statement. Any
statement that is modified or superseded shall not be deemed to
constitute a part of the Prospectus except as modified or
superseded by this Prospectus Supplement.
Neither the SEC nor any state securities commission has approved or
disapproved of these securities or determined if this Prospectus
Supplement is truthful or complete. Any representation to the
contrary is a criminal offense.
The date of this Prospectus Supplement is November 13,
2020
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑
Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30,
2020.
☐
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 0000-08092
GT BIOPHARMA, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
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94-1620407
(I.R.S. Employer
Identification Number)
|
9350 Wilshire Blvd. Suite 203
Beverly Hills, CA 90212
(Address of principal executive offices and zip
code)
(800) 304-9888
(Registrant’s telephone number, including area
code)
|
N/A
(Former
name, former address and former fiscal year, if changed since last
report)
Securities
registered pursuant to Section 12(b) of the Act:
Title of Each Class
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|
Trading Symbol
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Name of exchange on which registered
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N/A
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N/A
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N/A
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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 during the
preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Yes ☑ No ☐
Indicate by check mark
whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer,
a smaller reporting company
or an
emerging growth company.
See the definitions of “large accelerated
filer,” “accelerated filer,” “smaller
reporting company” and
“emerging growth company” in Rule
12b-2 of the Exchange Act.
Large
accelerated filer ☐
|
Accelerated
filer ☐
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Non-accelerated
filer ☑
|
Smaller
reporting company ☑
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Emerging
growth company ☐
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|
|
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No ☑
As of
November
11, 2020, the issuer had 78,268,614 shares
of common stock
outstanding.
GT Biopharma, Inc. and Subsidiaries
FORM 10-Q
For the Quarter
Ended September 30,
2020
Table of Contents
PART
I FINANCIAL INFORMATION
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Page
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Item
1.
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Financial
Statements
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Consolidated
Balance Sheets as of September 30, 2020 (Unaudited) and December
31, 2019
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1
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Consolidated
Statements of Operations for the three and nine months ended
September 30, 2020 and 2019 (Unaudited)
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2
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Consolidated
Statements of Cash Flows for the nine months ended September 30,
2020 and 2019 (Unaudited)
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4
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Condensed
Notes to Consolidated Financial Statements
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5
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Item
2.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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19
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Item
3.
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Quantitative
and Qualitative Disclosures About Market Risk
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25
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Item
4.
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Controls
and Procedures
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26
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PART
II OTHER INFORMATION
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Item
1.
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Legal
Proceedings
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26
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Item
1A.
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Risk
Factors
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26
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Item
2.
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Unregistered
Sales of Securities and Use of Proceeds
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27
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Item
3.
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Defaults
Upon Senior Securities
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27
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Item
4.
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Mine
Safety Disclosures
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27
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Item
5.
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Other
Information
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27
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Item
6.
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Exhibits
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30
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SIGNATURES
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32
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GT BIOPHARMA, INC. AND SUBSIDIARIES
As of September 30, 2020 and December 31, 2019
Consolidared Balance Sheets
(In Thousands, Except Par Value and Share Data)
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ASSETS
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Current
Assets:
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Cash and cash
equivalents
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$350
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$28
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Prepaid
expenses
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483
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246
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Total Current
Assets
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833
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274
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Deposits
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12
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12
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Operating lease
right-to-use asset
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72
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110
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Total Other
Assets
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84
|
122
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$917
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$396
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LIABILITIES
AND STOCKHOLDERS’ DEFICIT
|
|
|
Current
Liabilities:
|
|
|
Accounts
payable
|
$2,171
|
$1,940
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Accrued
expenses
|
1,228
|
2,379
|
Accrued
interest
|
4,182
|
2,029
|
Operating lease
liability
|
82
|
120
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Line of
credit
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31
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31
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Convertible
notes
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23,000
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13,207
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Total Current
Liabilities
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30,694
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19,706
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Total
liabilities
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30,694
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19,706
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Stockholders’
Deficit:
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Convertible preferred
stock - $0.01 par value; 15,000,000 shares
authorized:
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Series C - 96,230 and
96,230 shares issued and outstanding at September 30, 2020 and
December 31, 2019, respectively
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1
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1
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Series J-1 –
2,353,548 shares issued and outstanding at September 30, 2020 and
December 31, 2019, respectively
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24
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24
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Common stock - $0.001
par value; 750,000,000 shares authorized; and 77,518,614 and
69,784,699 shares issued and outstanding at September 30, 2020 and
December 31, 2019, respectively
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78
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70
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Additional paid-in
capital
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550,984
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548,096
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Accumulated
deficit
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(580,695)
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(567,332)
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Noncontrolling
interest
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(169)
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(169)
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Total
Stockholders’ Deficit
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(29,777)
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(19,310)
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TOTAL LIABILITIES AND
STOCKHOLDERS’ DEFICIT
|
$917
|
$396
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The
accompanying notes are an integral part of these consolidated
financial statements.
GT BIOPHARMA, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
|
Three Months
Ended
September
30,
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Nine Months
Ended
September
30,
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Operating
expenses:
|
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Research and
development
|
(84)
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671
|
252
|
1,659
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Selling, general
and administrative expenses
|
2,029
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3,585
|
4,321
|
8,932
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Loss on
impairment
|
-
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4,599
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-
|
4,599
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Total operating
expenses
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1,945
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8,855
|
4,573
|
15,190
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Loss from
operations
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(1,945)
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(8,855)
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(4,573)
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(15,190)
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Other
income (expense):
|
|
|
|
|
Loss on disposal of
assets
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-
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(20,463)
|
-
|
(20,494)
|
Settlement
expense
|
-
|
-
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(2,563)
|
-
|
Interest
expense
|
(931)
|
(560)
|
(6,227)
|
(1,493)
|
Total other income
(expense)
|
(931)
|
(21,023)
|
(8,790)
|
(21,987)
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Loss before
provision for income taxes
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(2,876)
|
(29,878)
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(13,363)
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(31,177)
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Provision for
income tax
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-
|
-
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-
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-
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Net
loss
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(2,876)
|
(29,878)
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(13,363)
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(31,177)
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Net loss per common
share – basic and diluted
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$(0.04)
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$(0.51)
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$(0.18)
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$(0.69)
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Weighted average
common shares outstanding – basic and diluted
|
76,730,076
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58,805,997
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72, 909,738
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53,967,298
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The
accompanying notes are an integral part of these consolidated
financial statements.
GT Biopharma, Inc. and Subsidiaries
Consolidated Statement of Stockholders’ Deficit
(In thousands)
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|
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Balance at January 1, 2020
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2,450
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$25
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69,785
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$70
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$548,096
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$(567,332)
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Issuance of
common stock for convertible notes
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3,147
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3
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626
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Beneficial
conversion feature of convertible notes
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27
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Issuance of
common stock for settlement of litigation
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3,500
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4
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1,909
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Issuance of
warrants for compensation
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180
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Issuance of
common stock for compensation
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1,086
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1
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146
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Net
loss
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(13,363)
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Balance at September 30, 2020
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2,450
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$25
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77,518
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$78
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$550,984
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$(580,695)
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Balance at January 1, 2019
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1,260
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$13
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50,650
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$51
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$540,160
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$(528,685)
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Issuance of
preferred stock
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1,190
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12
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1,128
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Issuance of
common stock for convertible notes
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2,741
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3
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1,160
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Beneficial
conversion feature of convertible notes
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158
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Issuance of
common stock for compensation
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13,500
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13
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5,047
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Net
loss
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|
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(37,177)
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Balance at September 30, 2019
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2,450
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$25
|
66,891
|
$67
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$547,653
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$(565,862)
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The accompanying notes are an integral part of these consolidated
financial statements.
GT Biopharma, Inc. and Subsidiaries
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Consolidated Statements of Cash Flows
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For the Nine Months Ended September 30, 2020 and 2019
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(in Thousands)
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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Net
loss
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$(13,363)
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$(37,177)
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Adjustments
to reconcile net loss to net cash used in operating
activities:
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Depreciation
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-
|
10
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Stock
compensation expense for options and warrants issued to
employees and non-employees
|
327
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6,202
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Amortization
of debt discounts
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-
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451
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Non-cash
interest expense
|
3,970
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1,140
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Loss
on disposal of assets
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-
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20,494
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Impairment
of intangible assets
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-
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4,599
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Settlement
expense
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2,363
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-
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Changes
in operating assets and liabilities:
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Other
assets
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3
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6
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Accounts
payable and accrued liabilities
|
1,365
|
1,101
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Net
cash used in operating activities
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(5,335)
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(3,174)
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Disposal
of fixed assets
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-
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200
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Net
cash used by investing activities
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0
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200
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CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
Proceeds
from notes payable
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5,657
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3,327
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Repayment
of note payable
|
-
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(100)
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Net
cash provided by financing activities
|
5,657
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3,227
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Minority
interest
|
-
|
-
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
322
|
253
|
CASH
AND CASH EQUIVALENTS - Beginning of period
|
28
|
60
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CASH
AND CASH EQUIVALENTS - End of period
|
$350
|
$313
|
|
|
|
Supplemental
disclosures:
|
|
|
Interest
paid
|
$69
|
$-
|
Income
taxes paid
|
$-
|
$-
|
|
|
|
Supplemental
disclosures:
|
|
|
Issuance
of common stock upon conversion of convertible notes
|
$598
|
$1,150
|
Issuance
of common stock upon conversion of accrued interest
|
$32
|
$14
|
The accompanying condensed notes are an integral part of these
consolidated financial statements.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(UNAUDITED)
1.
The Company and Summary of Significant Accounting
Policies
Business
In
1965, the corporate predecessor of GT Biopharma, Diagnostic Data,
Inc. was incorporated in the State of California. Diagnostic Data
changed its incorporation to the State of Delaware in 1972. and
changed its name to DDI Pharmaceuticals, Inc. in 1985. In 1994, DDI
Pharmaceuticals merged with International BioClinical, Inc. and
Bioxytech S.A. and changed its name to OXIS International, Inc. In
July 2017, the Company changed its name to GT Biopharma,
Inc.
The Company is a clinical stage biopharmaceutical company focused
on the development and commercialization of novel immuno-oncology
products based off our proprietary Tri-specific Killer Engager
(TriKE™), Tetra-specific Killer Engager (Dual Targeting
TriKEDual Targeting TriKE) platforms. The Company’s TriKE and
Dual Targeting TriKE platforms generate proprietary therapeutics
designed to harness and enhance the cancer killing abilities of a
patient’s own natural killer cells, or NK cells. Once bound
to an NK cell, the Company’s moieties are designed to enhance
the NK cell, and precisely direct it to one or more
specifically-targeted proteins expressed on a specific type of
cancer cell or virus infected cell, ultimately resulting in the
targeted cell’s death. TriKEs and Dual Targeting TriKEs are
made up of recombinant fusion proteins, can be designed to target
any number of tumor antigens on hematologic malignancies, sarcomas
or solid tumors and do not require patient-specific
customization.
Going Concern
The
Company’s current operations have focused on business
planning, raising capital, establishing an intellectual property
portfolio, hiring, and conducting preclinical studies and clinical
trials. The Company does not have any product candidates approved
for sale and has not generated any revenue from product sales. The
Company has sustained operating losses since inception and expects
such losses to continue over the foreseeable future.
The
financial statements of the Company have been prepared on a
goingconcern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of
business. Accordingly, the financial statements do not include any
adjustments that might be necessary should the Company be unable to
continue in existence.
The
Company has incurred substantial losses and negative cash flows
from operations since its inception and has an accumulated deficit
of $580 million and cash of $350 thousand as of September 30, 2020.
The Company anticipates incurring additional losses until such
time, if ever, that it can generate significant sales of its
products currently in development. Substantial additional financing
will be needed by the Company to fund its operations and to
commercially develop its product candidates. These factors raise
substantial doubt about the Company’s ability to continue as
a going concern.
Management is currently evaluating different strategies to obtain
the required funding for future operations. These strategies may
include but are not limited to: public offerings of equity and/or
debt securities, payments from potential strategic research and
development, and licensing and/or marketing arrangements with
pharmaceutical companies. If
the Company is unable to secure
adequate additional funding, its business, operating results,
financial condition and cash flows may be materially and adversely
affected.
Use of Estimates
The financial statements and notes are
representations of the Company’s
management, which is responsible for their integrity and
objectivity. These accounting policies conform to accounting
principles generally accepted in the United States of America, and
have been consistently applied in the preparation of the financial
statements. The preparation of financial statements requires
management to make estimates and assumptions that affect the
reported amounts of assets, liabilities revenues and expenses and
disclosures of contingent assets and liabilities at the date of the
financial statements. Actual results could differ from those
estimates.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(UNAUDITED)
Basis of Consolidation and Comprehensive Income
The accompanying consolidated financial statements include the
accounts of GT Biopharma, Inc. and its subsidiaries. All
intercompany balances and transactions have been eliminated.
The Company’s financial
statements are prepared using the accrual method of
accounting.
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted in the U.S. (“U.S. GAAP”)
and the rules and regulations of the U.S. Securities and Exchange
Commission (“SEC”). Certain information and disclosures
required by U.S. GAAP for complete consolidated financial
statements have been condensed or omitted herein. The interim
condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements
and notes thereto included in
the Company’s Form 10-K
for the year ended December 31, 2019 filed with the SEC on March
27, 2020. The unaudited interim condensed consolidated financial
information presented herein reflects all normal adjustments that
are, in the opinion of management, necessary for a fair statement
of the financial position, results of operations and cash flows for
the periods presented. The Company is responsible for the unaudited interim
consolidated financial statements included in this
report. The results of operations of
any interim period are not necessarily indicative of the results
for the full year.
Cash and Cash Equivalents
The Company considers all
highly liquid investments with original maturities of three months
or less to be cash equivalents.
Concentrations of Credit Risk
The Company’s cash and
cash equivalents, marketable securities and accounts receivable are
monitored for exposure to concentrations of credit risk. The
Company maintains substantially all of
its cash balances in a limited number of financial
institutions. The balances are
each insured by the Federal Deposit Insurance Corporation up to
$250,000. The Company had a
balance of approximately $100,000 in excess of this limit at
September 30, 2020.
Stock Based Compensation to Employees
The
Company accounts for its stock-based compensation for employees in
accordance with Accounting Standards Codification
(“ASC”) 718. The Company recognizes in the
statement of operations the grant-date fair value of stock options
and other equity-based compensation issued to employees and
non-employees over the related vesting period.
The
Company granted no stock options during the nine months ended
September 30, 2020 and 2019, respectively.
Long-Lived Assets
Our
long-lived assets include property, plant and equipment,
capitalized costs of filing patent applications and other
indefinite lived intangible assets. We evaluate our long-lived
assets for impairment, other than indefinite lived intangible
assets, in accordance with ASC 360, whenever events or changes in
circumstances indicate that the carrying amount of such assets may
not be recoverable. Estimates of future cash flows and timing of
events for evaluating long-lived assets for impairment are based
upon management’s judgment. If any of our intangible or
long-lived assets are considered to be impaired, the amount of
impairment to be recognized is the excess of the carrying amount of
the assets over its fair value.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(UNAUDITED)
Applicable
long-lived assets are amortized or depreciated over the shorter of
their estimated useful lives, the estimated period that the assets
will generate revenue, or the statutory or contractual term in the
case of patents. Estimates of useful lives and periods of expected
revenue generation are reviewed periodically for appropriateness
and are based upon management’s judgment.
Impairment of Long-Lived Assets
The
Company evaluates indefinite lived intangible assets for impairment
at least annually and whenever impairment indicators are present in
accordance with ASC 350. When necessary, the Company records an
impairment loss for the amount by which the fair value is less than
the carrying value of these assets. The fair value of intangible assets other than
goodwill is typically determined using the “relief from
royalty method”, specifically the discounted cash flow
method utilizing Level 3 fair value inputs. Some of the more
significant estimates and assumptions inherent in this approach
include: the amount and timing of the projected net cash flows,
which includes the expected impact of competitive, legal and/or
regulatory forces on the projections and the impact of
technological risk associated with IPR&D assets, as well as the
selection of a long-term growth rate; the discount rate, which
seeks to reflect the various risks inherent in the projected cash
flows; and the tax rate, which seeks to incorporate the geographic
diversity of the projected cash flows.
The
Company performs impairment testing for all other long-lived assets
whenever impairment indicators are present. When necessary, the
Company calculates the undiscounted value of the projected cash
flows associated with the asset, or asset group, and compares this
estimated amount to the carrying amount. If the carrying amount is
found to be greater, we record an impairment loss for the excess of
book value over fair value.
Income Taxes
The Company accounts for income
taxes using the asset and liability approach, whereby deferred
income tax assets and liabilities are recognized for the estimated
future tax effects, based on current enacted tax laws, of temporary
differences between financial and tax reporting for current and
prior periods. Deferred tax assets are reduced, if necessary, by a
valuation allowance if the corresponding future tax benefits may
not be realized.
Net Income (Loss) per Share
Basic net income (loss) per share is computed by dividing the net
income (loss) for the period by the weighted average number of
common shares outstanding during the period. Diluted net income
(loss) per share is computed by dividing the net income (loss) for
the period by the weighted average number of common shares
outstanding during the period, plus the potential dilutive effect
of common shares issuable upon exercise or conversion of
outstanding, convertible notes and debentures (including shares
issuable upon conversion of accrued interest or other default
amounts with respect to such convertible notes or debentures),
stock options and warrants
during the period. The weighted
average number of potentially dilutive common shares excluded from
the calculation of net income (loss) per share totaled in
114,887,906 and 73,520,680 as of September 30, 2020 and 2019,
respectively.
Patents
Acquired patents are capitalized at their acquisition cost or fair
value. The legal costs, patent registration fees and models and
drawings required for filing patent applications are capitalized if
they relate to commercially viable technologies. Commercially
viable technologies are those technologies that are projected to
generate future positive cash flows in the near term. Legal costs
associated with patent applications that are not determined to be
commercially viable are expensed as incurred. All research and
development costs incurred in developing the patentable idea are
expensed as incurred. Legal fees from the costs incurred in
successful defense to the extent of an evident increase in the
value of the patents are capitalized.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(UNAUDITED)
Capitalized cost for pending patents are amortized on a
straight-line basis over the remaining twenty year legal life of
each patent after the costs have been incurred. Once each patent is
issued, capitalized costs are amortized on a straight-line basis
over the shorter of the patent’s remaining statutory life, estimated
economic life or ten years.
Fixed Assets
Fixed assets are stated at cost. Depreciation is computed on a
straight-line basis over the estimated useful lives of the assets,
which are 3 to 10 years for machinery and equipment and the
shorter of the lease term or estimated economic life for leasehold
improvements.
Fair Value
The carrying amounts reported in the balance sheets for receivables
and current liabilities each qualify as financial instruments and
are a reasonable estimate of fair value because of the short period
of time between the origination of such instruments and their
expected realization and their current market rate of
interest. The three
levels are defined as follows:
●
Level 1 inputs to
the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets. The
Company’s Level 1 assets include cash equivalents, primarily
institutional money market funds, whose carrying value represents
fair value because of their short-term maturities of the
investments held by these funds.
●
Level 2 inputs to
the valuation methodology include quoted prices for similar assets
and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for
substantially the full term of the financial instrument. There were
not such liabilities at September 30, 2020.
●
Level 3 inputs to
the valuation methodology are unobservable and significant to the
fair value measurement. There were no such assets or liabilities as
of September 30, 2020.
Research and Development
Research and development costs are expensed as incurred and
reported as research and development expense. Research and
development costs totaled $0.3
million and $1.6 million for the nine months ended September 30,
2020 and 2019, respectively.
Revenue Recognition
License Revenue
License
arrangements may consist of non-refundable upfront license fees,
exclusive licensed rights to patented or patent pending technology,
and various performance or sales milestones and future product
royalty payments. Some of these arrangements are multiple element
arrangements.
Non-refundable,
up-front fees that are not contingent on any future performance by
us, and require no consequential continuing involvement on our
part, are recognized as revenue when the license term commences and
the licensed data, technology and/or compound is
delivered. We defer recognition of non-refundable
upfront fees if we have continuing performance obligations without
which the technology, right, product or service conveyed in
conjunction with the non-refundable fee has no utility to the
licensee that is separate and independent of our performance under
the other elements of the arrangement. In addition, if we have
continuing involvement through research and development services
that are required because our know-how and expertise related to the
technology is proprietary to us, or can only be performed by us,
then such up-front fees are deferred and recognized over the period
of continuing involvement.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(UNAUDITED)
Payments
related to substantive, performance-based milestones in a research
and development arrangement are recognized as revenue upon the
achievement of the milestones as specified in the underlying
agreements when they represent the culmination of the earnings
process. As of September 30, 2020, the Company has not generated
any licensing revenue.
Leases
In February 2016, the FASB issued Accounting Standards Update No.
2016-02, Leases (Topic
842) (“Topic 842”). Topic 842
requires the entity to recognize the assets and liabilities for the
rights and obligations created by leased assets. Leases will be
classified as either finance or operating, with classification
affecting expense recognition in the income
statement.
On
January 1, 2019, the Company adopted Topic 842 applying the
optional transition method, which allows an entity to apply the new
standard at the adoption date with a cumulative effect adjustment
to the opening balance of retained earnings in the period of
adoption. As a result of adopting Topic 842, the Company recognized
assets and liabilities for the rights and obligations created by
operating leases totaling approximately $174 thousand.
The
Company determines if a contract contains a lease at inception
based on whether it conveys the right to control the use of an
identified asset. Substantially all of the Company’s leases
are classified as operating leases. The Company records operating
lease right-of-use assets within “Other assets” and
lease liabilities are recorded within “current and noncurrent
liabilities” in the consolidated balance sheets. Lease
expenses are recorded within “General and administrative
expenses” in the consolidated statements of operations.
Operating lease payments are presented within “Operating cash
flows” in the consolidated statements of cash
flows.
Operating
lease right-of-use assets and lease liabilities are recognized
based on the net present value of future minimum lease payments
over the lease term starting on the commencement date. The Company
generally is not able to determine the rate implicit in its leases
and, as such, applies an incremental borrowing rate based on the
Company’s cost of borrowing for the relevant terms of each
lease. Lease expense for minimum lease payments is recognized on a
straight-line basis over the lease term. Lease terms may include an
option to extend or terminate a lease if it is reasonably certain
that the Company will exercise such options. The Company has
elected the practical expedient to not separate lease components
from non-lease components, and also has elected not to record a
right-of-use asset or lease liability for leases which, at
inception, have a term of twelve months or less. Variable lease
payments are recognized in the period in which the obligation for
those payments is incurred.
Convertible Notes/Debentures
As of
September 30, 2020, the Company had approximately $23 million
aggregate principal amount of convertible notes and debentures
(collectively, the “Convertible Notes”) outstanding
that were issued pursuant to securities purchase agreements (or, in
the case of the Settlement Notes (as defined herein), the
Settlement Agreement (as defined herein)) entered into with
numerous investors.
The
Convertible Notes are convertible at any time, at the
holder’s option, into shares of the Company’s common
stock at an initial conversion price, subject to certain beneficial
ownership limitations (which vary between maximum ownership of
between 4.99% and 9.99%). The conversion price of the Convertible
Notes is also generally subject to adjustment due to certain
events, including stock dividends, stock splits and in connection
with the issuance by the Company of common stock or common stock
equivalents at an effective price per share lower than the
conversion price then in effect. The conversion price for each of
the Company’s outstanding Convertible Notes is currently
$0.20 per share. In addition, approximately $5.3 million aggregate
principal amount of the Company’s Convertible Notes will be
subject to mandatory conversion in connection with the completion
of a future financing in the amount of at least $15 million,
subject to the beneficial ownership limitations described
above.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(UNAUDITED)
The
Convertible Notes generally have terms of six months to one year
and mature between August 2, 2019 and January 7, 2021, unless earlier converted or repurchased.
The Convertible Notes each accrue interest at a rate of 10% per
annum, subject to increase to 18% per annum upon and during the
occurrence of an event of default with respect to certain of the
Convertible Notes. Interest is payable in cash or, with respect to
certain of the Convertible Notes, and at the holder’s option,
in shares of common stock based on the conversion price then in
effect.
Pursuant
to the terms of the Settlement Notes, the Company is required to
make an offer to repurchase, at the holder’s option, the
Settlement Notes at price in cash equal to 100% of the aggregate
principal amount of the Settlement Note plus accrued and unpaid
interest, if any, to, but excluding, the date of repurchase
following the consummation by the Company of a financing
transaction, or a series of transactions, resulting in aggregate
gross proceeds to the Company in excess of $7.5 million. Generally,
the Company otherwise does not have the right to prepay any of the
Convertible Notes without the prior written consent of the holders
of such securities.
The
Convertible Notes contain a number of affirmative and negative
covenants and customary events of default. As of September 30,
2020, approximately $13.2 aggregate principal amount of our
Convertible Notes were in default. See “Forbearance Agreements”
below.
The
securities purchase agreements and Settlement Agreement, as
applicable, also generally contain certain ongoing covenants of the
Company, including rights of participation in certain future
financing transactions, limitations on future variable rate
transactions and “at-the-market” offerings and
“most favored nation” provisions giving holders of
certain of the Convertible Notes the benefit of any terms or
conditions under which the Company agrees to issue or sell any
common stock or common stock equivalents that are more favorable to
an investor than the terms and conditions granted to such holder
under the applicable securities purchase agreement and the
transactions contemplated thereby.
The
Convertible Notes are senior obligations of the Company. In
addition, approximately $8.9 million aggregate principal amount of
the Convertible Notes are secured by a first priority security
interest in substantially all of the assets of the Company and its
subsidiaries. Convertible Notes are also secured by individual
pledges by certain of our current and former officers and directors
of our common stock owned by such officer and
directors.
For
additional information about the Convertible Notes, see Note 4,
Debt to the Company’s
audited consolidated financial statements included in the
Company’s Form 10-K for the year ended December 31,
2019.
Forbearance Agreements
Effective as of June 23, 2020, the Company entered into Standstill
and Forbearance Agreements (collectively, the “Forbearance
Agreements”) with the holders of $13.2 million aggregate
principal amount of the Convertible Notes (the “Default
Notes”), which are currently in default. Pursuant to the
Forbearance Agreements, the holders of the Default Notes have
agreed to forbear from exercising their rights and remedies under
the Default Notes (including declaring such Default Notes (together
with any default amounts and accrued and unpaid interest)
immediately due and payable) until the earlier of (i) the date that
the Company completes a future financing in the amount of $15
million and, in connection therewith, commences listing on NASDAQ
(collectively, the “New Financing”) or (ii) January 31,
2021 (the “Termination Date”). As a result of the
ongoing default, the Default Notes are currently accruing interest
at the default rate of 18% per annum and have accrued additional
default amounts of approximately $3.9 million in the aggregate as
of September 30, 2020.
The obligations of the holders to forbear from exercising their
rights and remedies under the Default Notes pursuant to the
Forbearance Agreements will terminate on the earliest of (i) the
Termination Date, (ii) the date of any bankruptcy filing by the
Company or its subsidiaries, (iii) the date on which the Company
defaults on any of the terms and conditions of the Forbearance
Agreements or (iv) the date the Forbearance Agreements are
otherwise terminated or expire.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(UNAUDITED)
The Forbearance Agreements contain various customary and other
representations, warranties and covenants of the Company and the
holders of the Default Notes, including an agreement that the
Default Notes (together with default amounts and accrued and unpaid
interest) will be converted into common stock upon the closing of a
New Financing at a conversion price equal to the lesser of (i) the
conversion price in effect for the Default Notes on the date of
such New Financing or (ii) 75% of the lowest per share price at
which common stock is or may be issued in connection with such New
Financing, in each case, subject to certain beneficial ownership
limitations (with a maximum ownership limit of 9.99%). Shares of
the Company’s preferred stock, which are convertible into the
Company’s common stock, will be issued in lieu of common
stock to the extent that conversion of the Default Notes is
prohibited by such beneficial ownership limitations.
Settlement Notes
On June 19, 2020, the Company entered into a
settlement agreement (the “Settlement Agreement”)
with Empery Asset Master Ltd., Empery Tax Efficient, LP and Empery
Tax Efficient II, LP (collectively, the “Empery
Funds”), Anthony Cataldo and Paul Kessler resolving all
remaining disputes between the parties pertaining to certain
Convertible Notes and warrants to purchase common
stock of the Company (collectively, the “Original
Securities”) issued by the Company to the Empery Funds in
January 2018 pursuant to a securities purchase
agreement. In connection with
the Settlement Agreement, the Company issued Convertible Notes in
an aggregate principal amount of $450,000 (the “Settlement
Notes”) to the Empery Funds on June 19, 2020. The
Settlement Notes are convertible at any time, at the holder’s
option, into shares of our common stock at an initial conversion
price of $0.20 per share,
subject to certain beneficial ownership limitations (with a
maximum ownership limit of 4.99%).
The Settlement Notes mature on December 19, 2020, unless earlier
converted or repurchased. The
terms of the Settlement Notes are generally the same as the
Company’s other Convertible Notes, except that the Company is
required to make an offer to repurchase, at the option of each
holder, the Settlement Notes at price in cash equal to 100% of the
aggregate principal amount of the Settlement Notes plus accrued and
unpaid interest, if any, to, but excluding, the date of repurchase
following the consummation by the Company of a financing
transaction, or a series of transactions, resulting in aggregate
gross proceeds to the Company in excess of $7.5
million.
Fiscal 2019 and Fiscal 2020 Convertible Notes
Transactions
On February 4, 2019, the Company entered into a securities purchase
agreement with certain purchasers pursuant to which it issued
secured Convertible Notes in an aggregate principal amount of
$1,352,224, consisting of gross proceeds of $1,052,224 and
settlement of existing debt of $300,000, which Convertible Notes
were convertible into common stock at an initial conversion price
of $0.60 per share.
On May
22, 2019, the Company entered into a securities purchase agreement
with certain purchasers pursuant to which the Company issued
Convertible Notes in an aggregate principal amount of $1,300,000,
which Convertible Notes were convertible into the Company’s
common stock at an initial conversion price of $0.35 per
share.
Between
July 31 and August 28, 2019,
the Company entered into a securities purchase agreement with
certain purchasers pursuant to which the Company issued Convertible
Notes in an aggregate principal amount of $975,000, which
Convertible Notes are convertible into the Company’s common
stock at an initial conversion price of $0.20 per
share.
On
December 19, 2019, the Company entered into a securities purchase
agreement with one purchaser pursuant to which the Company issued
Convertible Notes in an aggregate principal amount of $200,000,
which Convertible Notes are convertible into the Company’s
common stock at an initial conversion price of $0.20 per
share.
On
January 30, 2020, the Company entered into a securities purchase
agreement with one purchaser pursuant to which the Company issued
Convertible Notes in an aggregate principal amount of $200,000,
which Convertible Notes are convertible into the Company’s
common stock at an initial conversion price of $0.20 per
share.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(UNAUDITED)
Between
April 20 and May 7, 2020, the
Company entered into a securities purchase agreement with certain
purchasers pursuant to which the Company issued Convertible Notes
in an aggregate principal amount of $2,017,000, which Convertible
Notes are convertible into the Company’s common stock at an
initial conversion price of $0.20 per share.
On June 19, 2020, the Company entered into the Settlement Agreement
pursuant to which the Company issued the Settlement Notes in an
aggregate principal amount of $450,000, which Settlement
Notes are convertible into the Company’s common stock
at an initial conversion price of $0.20 per share.
On July 7, 2020, the Company entered into a securities
purchase agreement with certain purchasers pursuant to which the
Company issued Convertible Notes in an aggregate principal amount
of $3,190,000, which Convertible Notes are convertible into the
Company’s common stock at an initial conversion price of
$0.20 per share.
On September 16, 2020, the Company entered into a securities
purchase agreement with certain purchasers pursuant to which the
Company issued Convertible Notes in an aggregate principal amount
of $250,000, which Convertible Notes are convertible into the
Company’s common stock at an initial conversion price of
$0.20 per share.
Gemini Financing Agreement
On
November 8, 2010, the Company entered into a financing arrangement
with Gemini Pharmaceuticals, Inc., a product development and
manufacturing partner of the Company, pursuant to which Gemini
Pharmaceuticals made a $250,000 strategic equity investment in the
Company and agreed to make a $750,000 purchase order line of credit
facility available to the Company. The outstanding principal of all
advances under the line of credit will bear interest at the rate of
interest of prime plus 2% per annum. There is $31,000 due on this
credit line at September 30, 2020.
Common Stock
Our authorized capital stock consists of 750,000,000 shares
of common stock, par value
$0.001 per share, and 15,000,000 shares of preferred stock, par
value $0.01 per share. As of September 30, 2020, 77,518,614 shares
of common stock were issued and outstanding.
During the nine months ended September 30, 2020, the Company issued
3,147,486 shares of common
stock upon conversion of $629,497 in principal and interest on
Convertible Notes.
On May 1, 2020, the Company issued 1,086,429 shares of
common stock for consulting services.
On June 19, 2020, the Company issued 3,500,000 shares of
common stock pursuant to the Settlement Agreement.
Preferred Stock
The 96,230 shares of Series C
preferred stock, par value $0.01 per share (the “Series C
Preferred Stock”), are convertible into 111 shares of
the Company’s
common stock at the option of the
holders at any time. The conversion ratio is based on the average
closing bid price of the common
stock for the fifteen consecutive trading days ending on the date
immediately preceding the date notice of conversion is given, but
cannot be less than 0.20 or
more than 0.2889 common shares
for each share of Series C Preferred Stock. The conversion ratio
may be adjusted under certain circumstances such as stock splits or
stock dividends. The Company has the right to automatically convert
the Series C Preferred Stock
into common stock if the
Company lists its shares of common stock on the Nasdaq National Market and the average closing bid
price of the Company’s common stock on the Nasdaq National Market for 15 consecutive trading
days exceeds $3,000.00. Each share of Series C Preferred Stock is entitled to the number
of votes equal to 0.26 divided
by the average closing bid price of the Company’s common stock during the fifteen consecutive
trading days immediately prior to the date such shares of
Series C Preferred Stock were
purchased. In the event of liquidation, the holders of the
Series C Preferred Stock shall
participate on an equal basis with the holders of the
common stock (as if the
Series C Preferred Stock had converted
into common stock) in any
distribution of any of the assets or surplus funds of the Company.
The holders of Series C
Preferred Stock are entitled to noncumulative dividends if and when
declared by the Company’s
board of directors (the “Board”). No dividends to
holders of the Series C Preferred Stock were issued or unpaid
through September 30, 2020.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(UNAUDITED)
On September 1, 2017, the Board designated 2,000,000 shares
of Series J preferred stock
(the “Series J Preferred Stock”). On
the same day, the Board
issued 1,513,548
shares of Series J Preferred
Stock in exchange for the
cancellation of certain
indebtedness. In the first quarter of 2019, it was discovered
that a certificate of designation with respect to the
Series J Preferred Stock had never
been filed with the Office of
the Secretary of State for the State of Delaware. Despite the fact the Company had issued
shares of Series J Preferred
Stock, the issuance of those shares was not valid and was of no
legal effect.
To remedy the situation, on April 4, 2019, the Company filed a
certificate of designation with the Office of the Secretary State for the State of Delaware
designating a series of preferred stock as the Series J-1 preferred stock, par value $0.01 per share (the “Series J-1
Preferred Stock”). On April 19, 2019, the Company
issued 2,353,548 shares of Series J-1 Preferred
Stock. The issuance was
in lieu of the Series J Preferred Stock that should have been
issued on September 1, 2017, and in settlement for not receiving
preferred stock until 20 months after the debt for which the stock
was issued was cancelled. The
Company reflected an expense in general and administrative costs in
the quarter ended September 30, 2019 totaling
$1,140,000.
Shares of the Series J-1 Preferred Stock are convertible at any
time, at the option of the holders, into shares of the
Company’s common stock at an effective conversion price of
$0.20 per share, subject to adjustment for, among other things,
stock dividends, stock splits, combinations, reclassifications of
our capital stock and mergers or consolidations, and subject to a
beneficial ownership limitation which prohibits conversion if such
conversion would result in the holder (together with its
affiliates) being the beneficial owner of in excess of 9.99% of the
Company’s common stock. Shares of the Series J-1 Preferred
Stock have the same voting rights a shares of the Company’s
common stock, with the holders of the Series J-1 Preferred Stock
entitled to vote on an as-converted-to-common stock basis, subject
to the beneficial ownership limitation described above, together
with the holders of the Company’s common stock on all matters
presented to the Company’s stockholders. The Series J-1
Preferred Stock are not entitled to any dividends (unless
specifically declared by the Board), but will participate on an
as-converted-to-common-stock basis in any dividends to the holders
of the Company’s common stock. In the event of the
Company’s dissolution, liquidation or winding up, the holders
of the Series J-1 Preferred Stock will be on parity with the
holders of the Company’s common stock and will participate,
on a on an as-converted-to-common stock basis, in any distribution
to holders of the Company’s common stock.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(UNAUDITED)
4.
Stock Options and Warrants
Stock Options
The
following table summarizes stock option transactions for the nine
months ended September 30, 2020:
|
|
Weighted Average
Exercise Price
|
Outstanding,
December 31, 2019
|
40
|
$877.50
|
Granted
|
-
|
-
|
Exercised
|
-
|
-
|
Expired
|
-
|
-
|
Outstanding,
September 30, 2020
|
40
|
$877.50
|
Exercisable,
September 30, 2020
|
40
|
$877.50
|
Common Stock Warrants
Warrant
transactions for the nine months ended September 30, 2020 are as
follows:
|
|
Weighted Average
Exercise Price
|
Outstanding at
December 31, 2019:
|
1,813,053
|
$0.20
|
Granted
|
6,500,000
|
$0.20
|
Forfeited/canceled
|
480,352
|
$0.20
|
Exercised
|
-
|
-
|
Outstanding at
September 30, 2020
|
7,832,701
|
$0.20
|
Exercisable at
September 30, 2020
|
7,832,701
|
$0.20
|
Compensation Warrant
On July 28, 2020, the Company issued a warrant to purchase up to an
aggregate of 1,000,000 shares of common stock at an exercise price
of $0.20 per share, subject to adjustment in certain circumstances.
The warrant expires on July 28, 2025. The warrant was issued as
compensation for certain services provided to the
Company.
Settlement Warrants
Pursuant to the Settlement Agreement, the Company issued
pre-funded warrants to purchase up to
an aggregate of 5,500,000 shares of common stock
(the “Settlement
Warrants”) at an exercise price of $0.20 per share, subject
to adjustment in certain circumstances. The Settlement Warrants
expire on June 19, 2025. The
aggregate exercise price of the Settlement Warrants was deemed to
be pre-funded to the Company in conjunction with exchange of
previously issued
warrants to purchase 480,352 shares of
common stock pursuant to the Settlement Agreement. Exercise of
the Settlement Warrant is
subject to certain additional terms and conditions, including
certain beneficial ownership limitations.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(UNAUDITED)
Forbearance Agreements
Pursuant to the Forbearance Agreements, (i) the exercise price of all warrants
to purchase common stock held by holders of the Default Notes will
be reduced to equal the conversion price of the Default Notes and
(ii) the number of shares of
common stock underlying such warrants shall be increased so that
the total exercise price of all such warrants after the decrease in
the exercise price equals the total exercise price of all such
warrants prior to the decrease in the exercise price. Further, the
expiration date of all such warrants shall be extended for three
years following the closing date of any New
Financing.
5.
Commitments and Contingencies
Leases
On October 1, 2018, the Company entered into a three-year lease
agreement for its office in Westlake Village, CA. In addition to
minimum rent, certain leases require payment of real estate taxes,
insurance, common area maintenance charges and other executory
costs. The Company recognizes rent expense under such arrangements
on a straight-line basis over the effective term of each
lease.
The following table summarizes the Company’s future minimum
lease commitments as of September 30, 2020:
Year ending
December 31:
|
|
2020
|
18,000
|
2021
|
61,000
|
Total minimum lease
payments
|
$79,000
|
Rent expense for the nine months ended September 30,
2020 and 2019 was $50,000 and $50,000,
respectively.
Convertible Notes
On November 5, 2020, the Company entered into a securities
purchase agreement with certain
purchasers pursuant to which the Company issued Convertible Notes in an aggregate principal
amount of $250,000
(the “November 2020
Notes”). The
November 2020 Notes are convertible at any time, at the
holder’s option, into shares of our common stock at an
initial conversion price of $0.20 per share, subject to certain beneficial
ownership limitations (with a maximum ownership limit of
9.99%).
The November 2020 Notes mature on May 5, 2021, unless earlier
converted or repurchased. The
terms of the July 2020 Notes are generally the same as the
Company’s other Convertible Notes, except that the November
2020 Notes will be subject to mandatory conversion in the event of
the completion of a future financing in the amount of at least $15
million at a conversion price equal to the lesser of (i)
the conversion price in effect for the November 2020 Notes on
the date of completion of such financing or (ii) 75% of the lowest
per share price at which common stock may be issued in
connection with any conversion rights associated with the
financing, in each case, subject to the beneficial ownership
limitations described above. See Note 2, Debt under the caption “Convertible
Notes/Debentures” for additional information regarding the
terms of the Company’s Convertible Notes.
Common Stock
In October 2020, the Company issued 750,000 shares of
common stock upon conversion of
$150,000 aggregate principal amount of Convertible
Notes.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(UNAUDITED)
Theorem Settlement Agreement
On November 9, 2020, the Company, entered into a settlement
agreement (the “Theorem Settlement
Agreement”) with Adam
Kasower (“Kasower”), East Ventures, Inc., A British
Virgin Islands company (“East Ventures”), SV Booth
Investments III, LLC, a Delaware limited liability company
(“SV Booth”) and Theorem Group, LLC, a California
limited liability company (“Theorem Group” and,
collectively with Kasower, East Ventures and SV Booth, the
“Claimants”) resolving all remaining disputes and
claims between the parties pertaining to certain securities
purchase agreements pursuant to which the Claimants purchased from
the Company convertible warrants and preferred
stock.
As a result of the Theorem Settlement Agreement, the Company has
agreed to issue each Claimant a convertible note in the following
amounts (the “Theorem Settlement Notes”):
Theorem
Group
|
$303,726.40
|
East
Venture
|
$112,788.48
|
Kasower
|
$500,078.58
|
SV
Booth
|
$294,245.54
|
The Theorem Settlement Agreement also contains certain
representations and warranties and covenants, including limitations
on future variable rate transactions and “at-the-market
offerings.”
Theorem Settlement Notes
The Theorem Settlement Notes are convertible, at the option of the
applicable Claimant, at any time into shares of common stock at an
initial conversion rate of $0.20 per share, subject to certain
beneficial ownership limitations. The conversion price is also
subject to adjustment due to certain events, including stock
dividends, stock splits and in connection with the issuance by the
Company of common stock or common stock equivalents at an effective
price per share lower than the conversion rate then in effect. The
Theorem Settlement Notes mature on January 31, 2021, and bear
interest at a rate of 10% per annum, subject to increase to 18% per
annum upon and during the occurrence of an event of default.
Interest is payable in cash or, at the holder’s option, in
shares of common stock based on the conversion price then in
effect. The Company may not
prepay the Theorem Settlement Notes without the prior written
consent of the applicable Claimant.
The Theorem Settlement Notes contain a number of other affirmative
and negative covenants and events of default (including events of
default related to certain change of control and other fundamental
change transactions). Following an event of default, the Theorem
Settlement Notes will become immediately due and payable in cash at
a mandatory default amount equal to 130% of the outstanding
principal amount of the Theorem Settlement Notes plus all other
amounts, costs and expenses due in respect of the Theorem
Settlement Notes.
Resignation of Chief Financial Officer
On November 11, 2020, Steven Weldon resigned from the Board and
from his office as Chief Financial Officer of the Company,
effective immediately. His resignation was the result of general
disagreement regarding the Company’s decision making process.
Pursuant to Mr. Weldon’s Employment Contract, dated August
11, 2020, Mr. Weldon is only entitled to such stock options,
restricted stock awards and other Company stock-based awards
granted which have vested as of the date of his resignation. He is
not entitled to any other compensation or benefits.
Appointment of New Interim Chief Financial Officer
Anthony Cataldo, Chief Executive Officer and Chairman of the Board,
assumed the additional role of Chief Financial Officer on
an interim basis, and will be succeeded as Chief
Financial Officer on an interim basis by Michael Handelman
immediately after the filing of this report.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(UNAUDITED)
Mr. Handelman became a Director of the GoooGreen, Inc. in August
2020, and Chairman of the Board of Directors and Secretary in
September 2020. He has served as Chief Financial Officer of
Clickstream Corporation since October 2015. He served as Chief
Financial Officer of Lion Biotechnologies, Inc. from February 2011
until June 2015, and was a member of the Lion Bio Board of
Directors from February 2013 until May 2013. Mr. Handelman served
as the Chief Financial Officer and as a financial management
consultant of Oxis International, Inc., a public company engaged in
the research, development and commercialization of nutraceutical
products, from August 2009 until October 2011. From November 2004
to July 2009, Mr. Handelman served as Chief Financial Officer and
Chief Operating Officer of TechnoConcepts, Inc., formerly a public
company engaged in designing, developing, manufacturing and
marketing wireless communications semiconductors, or microchips.
Prior thereto, Mr. Handelman served from October 2002 to October
2004 as Chief Financial Officer of Interglobal Waste Management,
Inc., a manufacturing company, and from July 1996 to July 1999 as
Vice President and Chief Financial Officer of Janex International,
Inc., a children’s toy manufacturer. Mr. Handelman was also
the Chief Financial Officer from 1993 to 1996 of the Los Angeles
Kings, a National Hockey League franchise. Mr. Handelman is a
certified public accountant and holds a degree in accounting from
the City University of New York.
Mr. Handelman
will receive a monthly consulting fee
of $15,000.00.
Mr. Handelman
has no direct or indirect material
interest in any transaction required to be disclosed pursuant to
Item 404(a) of Regulation S-K, has no arrangement or
understanding between him and any other person required to be
disclosed pursuant to Item 401(b) of Regulation
S-K and has no family relationships required to be disclosed
pursuant to Item 401(d) of Regulation
S-K.
Mr. Handelman
has entered into a Consulting
Agreement with the Company, effective as of November 13,
2020.
Appointment of New Directors
On November 12, 2020, the Board appointed Bruce Wendel, age 67, and
Greg Berk, age 62, as directors of the Company. Following the
filing of this Quarterly Report on
Form 10-Q, Mr.
Cataldo will resign as interim
Chief Financial Officer, and Michael Handelman, age
61, will be appointed as
the interim Chief Financial Officer in his
place.
From April 2018 to May 2019, Mr. Wendel served as the Chief
Business Development Officer for Prometic Biotherapeutics, Inc., a
pharmaceutical development company. Mr. Wendel also served as Chief
Strategic Officer of Hepalink USA, the U.S. subsidiary of Shenzhen
Hepalink Pharmaceutical Company from February 2012 to July 2017,
and Chief Executive Officer of Scientific Protein Laboratories, LLC
from December 2014 to June 2015. He also served as a director of
ProMetic Life Sciences Inc. and Vice Chairman and Chief Executive
Officer at Abraxis BioScience, LLC, where he oversaw the
development and commercialization of Abraxane® and led the
negotiations that culminated in the acquisition of the company by
Celgene Corporation in 2010. He began his 14 years with
Bristol-Myers Squibb as in-house counsel before shifting to global
business and corporate development, where he served in business and
corporate development roles of increasing responsibility at
American Pharmaceutical Partners, IVAX Corporation and
Bristol-Myers Squibb. Mr. Wendel earned a juris doctorate degree
from Georgetown University Law School, and a B.S. from Cornell
University.
Mr. Wendel has no direct or indirect material interest in any
transaction required to be disclosed pursuant to
Item 404(a) of Regulation S-K, has no arrangement or
understanding between him and any other person required to be
disclosed pursuant to Item 401(b) of Regulation
S-K and has no family relationships required to be disclosed
pursuant to Item 401(d) of Regulation
S-K.
Prior to joining the Company, Dr. Berk has served as a private
consultant in the field of drug development and is the Chief
Medical Officer of Celularity, a privately owned company.
Previously, he served as Chief Medical Officer at Verastem as and
President, Chief Medical Officer and Board Member of Sideris
Pharmaceuticals. From May 2012 until January 2014, Dr. Berk was
Chief Medical Officer of BIND Therapeutics. Prior to this, he was
Chief Medical Officer at Intellikine, a privately held
biotechnology company focused on the discovery and development of
novel PI3 Kinase and mTOR inhibitors. Intellikine was acquired by
Takeda/Millennium in January 2012. He also served as Senior Vice
President of Global Clinical Development at Abraxis BioScience,
where he was responsible for the company’s overall clinical
strategy, including efforts to expand the indications for their
lead clinical program (Abraxane®). Dr. Berk obtained his
medical degree from Case Western Reserve University, and completed
his internship, residency and fellowship in internal medicine,
hematology and medical oncology, at the Weill Medical College of
Cornell University and New York Presbyterian Hospital, where he
also served as a faculty member from 1989-2004. During this time
Dr. Berk served as an investigator on several industry-sponsored
and cooperative group oncology clinical trials, including the
pivotal trials for Gleevec® and
Avastin®.
GT BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(UNAUDITED)
Dr. Berk has no direct or indirect material interest in any
transaction required to be disclosed pursuant to
Item 404(a) of Regulation S-K, has no arrangement or
understanding between him and any other person required to be
disclosed pursuant to Item 401(b) of Regulation
S-K and has no family relationships required to be disclosed
pursuant to Item 401(d) of Regulation
S-K.
Mr. Wendel and Dr. Berk will each receive an annual stipend of
$20,000.00 for director compensation, with Mr. Wendel receiving an
additional $5,000.00 annually for chairing the Nominating Committee
and $5,000.00 annually as a member of the Audit Committee, and Dr.
Berk receiving an additional $5,000.00 annually for chairing the
Compensation Committee and $5,000.00 annually as a member of the
Nominating Committee. The Company will also grant stock awards of
shares of common stock of the Company equal to 1.25%, in the case
of Mr. Wendel, and 1.00%, in the case of Dr. Berk, of the number of
fully diluted shares of common stock of the Company, calculated on
the fully diluted equity of the Company upon the Company’s
national exchange financing date.
Mr. Wendel and Dr. Berk have each entered into Board Service
Agreements with the Company, effective as of November 11, 2020,
which supplement the indemnification provisions of the
Company’s bylaws and obligate the company to insure them both
under the Company’s director and officer’s insurance
policy.
Item
2.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this Quarterly Report
on Form 10-Q are “forward-looking
statements” within the
meaning of the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements include statements regarding our current beliefs, goals
and expectations about matters such as our expected financial
position and operating results, our business strategy and our
financing plans. The forward-looking statements in
this report
are not based on historical facts, but rather reflect the current
expectations of our management concerning future results and
events. The forward-looking statements generally can be identified
by the use of terms such as “believe,”
“expect,” “anticipate,”
“intend,” “plan,” “foresee,”
“may,”
“guidance,” “estimate,”
“potential,” “outlook,”
“target,” “forecast,” “likely”
or other similar words or phrases. Similarly, statements that
describe our objectives, plans or goals are, or may
be,
forward-looking statements. Forward-looking statements involve
known and unknown risks, uncertainties and other factors that may
cause our actual results, performance or achievements to be
different from any future results, performance and achievements
expressed or implied by these statements. We cannot guarantee that
our forward-looking statements will turn out to be correct or that
our beliefs and goals will not change. Our actual results could be
very different from and worse than our expectations for various
reasons. You should review carefully all information, including the
discussion of risk factors under “Part I. Item 1A: Risk
Factors” and “Part II. Item 7:
Management’s Discussion and Analysis
of Financial Condition and Results of Operations” of the Form
10-K for the year ended December 31, 2019. Any
forward-looking statements in the Form 10-Q are made only as of the
date hereof and, except as may be required by law, we do not have
any obligation to publicly update any forward-looking statements
contained in this Form 10-Q to reflect subsequent events or
circumstances.
Throughout this Quarterly Report on
Form 10-Q, the terms
“GTBP,” “we,”
“us,” “our,” “the
company” and
“our company” refer to
GT Biopharma, Inc., a Delaware corporation formerly known as Oxis
International, Inc., DDI Pharmaceuticals, Inc. and Diagnostic Data,
Inc, together with our subsidiaries.
Overview
We are
a clinical stage biopharmaceutical company focused on the
development and commercialization of novel immuno-therapeutic
products based on our proprietary Tri-specific Killer Engager
(TriKE™) and Tetra-specific Killer Engager (Dual Targeting
TriKE™) platform technologies. Our TriKE and Dual Targeting
TriKE platforms generate proprietary therapeutic candidates that
are designed to harness and enhance the immune response of a
patient’s endogenous NK cells. Once bound to an NK cell, our
platform moieties are designed to enhance the activity of NK cells,
with targeted direction to one or more proteins expressed on a
specific type of cancer cell or virus infected cell, ultimately
resulting in targeted cell death. We have constructed our TriKEs
and Dual Targeting TriKEs of recombinant fusion proteins that can
be designed to target a wide array of tumor antigen that may be
located on hematologic malignancies, sarcomas or solid tumors. Our
TriKEs and Dual Targeting TriKEs do not require patient-specific or
autologous customization.
We are
using our TriKE and Dual Targeting TriKE platforms with the intent
to bring to market products that treat a range of hematologic
malignancies, sarcomas, solid tumors and selected infectious
diseases. Our platforms are scalable, and in addition to our first
clinical indication of our TriKE platform in relapsed or refractory
acute myelogenous leukemia, we are preparing investigational new
drug applications based on a specific TriKE or Dual Targeting TriKE
design. We intend to continue to advance into the clinic, on our
own or through potential collaborations with larger companies,
multiple TriKE or Dual Targeting TriKE product candidates. We
believe our TriKEs and Dual Targeting TriKEs may have the ability,
if approved for marketing, to be used as monotherapy, be dosed
concomitantly with current monoclonal antibody therapeutics, be
used in conjunction with more traditional cancer therapy, and
potentially overcome certain limitations of current chimeric
antigen receptor therapy.
We are
also using our TriKE and Dual Targeting TriKE platforms to develop
therapeutics for the treatment of infectious diseases such as human
immunodeficiency virus (“HIV”) and COVID-19 infection.
For example, while the use of anti-retroviral drugs has
substantially improved the morbidity and mortality of individuals
infected with HIV, these drugs are designed to suppress virus
replication and to help modulate progression to AIDS and to limit
further transmission of the virus. Despite the use of
anti-retroviral drugs, infected individuals retain reservoirs of
latent HIV-infected cells that, upon cessation of anti-retroviral
drug therapy, can reactivate and reestablish an active HIV
infection. Destruction of these latent HIV infected cells is the
primary objective of curative therapy. The HIV-TriKE is designed to
target HIV while redirecting NK cell killing specifically to
actively replicating HIV infected cells. The HIV-TriKE induced NK
cell proliferation and demonstrated the ability in vitro to
reactivate and kill HIV-infected T-cells. These findings indicate a
potential role for the HIV-TriKE in the reactivation and
elimination of the latently infected HIV reservoir cells by
harnessing the NK cell’s ability to mediate the
antibody-directed cellular cytotoxicity.
We have
licensed the exclusive rights from the University of Minnesota to
the TriKE and Dual Targeting TriKE platforms.
Recent Developments
Manufacturing Agreement
On October 5, 2020, we entered into a GMP manufacturing services
agreement (the “MSA”) with Cytovance® Biologics, a
USA-based contract development and manufacturing organization and a
subsidiary of Hepalink (“Cytovance”), to manufacture
three of our TriKE product candidates in accordance with GMP for
use in clinical trials. Under the terms of the MSA, Cytovance
will be the exclusive GMP manufacturer for three of the
Company’s TriKE™ therapeutic product candidates: (1)
GTB-C3550, which targets CD33+ hematological cancers; (2) GTB-4550,
which targets PD-L1+ solid tumor cancers; and (3) GTB-5050, which
targets B7H3+ solid tumor cancers. Cytovance will manufacture
TriKE™ in accordance with GMP using Cytovance’s
proprietary Keystone® E. coli bacterial or CHO mammalian
expression systems.
Subject to the completion of certain milestones by Cytovance, GT
Biopharma has the option to pay Cytovance up to $6 million for its
manufacturing services in either cash or in shares of the
Company’s common stock, valued at the time Cytovance achieves
each of several milestones over the next 12-14
months.
Collaboration Agreement
On March 10, 2020, we entered into a research collaboration
agreement with
Cytovance to provide
development services for a TriKE therapeutic for the treatment of
the coronavirus infection. Under the terms of the
collaboration agreement, the companies will focus on preparing
sufficient quantities of our coronavirus TriKE drug product for preclinical evaluation
using Cytovance’s E. coli-based
Keystone Expression
System™. Upon
successful preclinical evaluation in in vitro
cell assays of COVID-19
infection and corresponding in vivo
animal models of COVID-19
infection, we will scale-up production using Cytovance’s GMP microbial
manufacturing platform for evaluation of TriKE in humans to treat the
coronavirus infection.
Financings
November 2020 Financing
On
November 5, 2020, we entered into a securities purchase agreement
with two purchasers pursuant to which we issued convertible
debentures in an aggregate principal amount of $250,000 (the
“November 2020 Notes”).
The
November 2020 Notes are convertible at any time, at the
holder’s option, into shares of our common stock at an
initial conversion price of $0.20 per share, subject to certain
beneficial ownership limitations (with a maximum ownership
limit of 9.99%). The conversion price is also subject to
adjustment due to certain events, including stock dividends, stock
splits and in connection with the issuance by the Company
of common stock or common stock equivalents at an
effective price per share lower than the conversion rate then in
effect. The November 2020 Notes will be subject to mandatory
conversion in the event of the completion of a future financing in
the amount of at least $15 million at a conversion price equal
to the lesser of (i) the conversion price in effect for the
November 2020 Notes on the date of completion of such financing or
(ii) 75% of the lowest per share price at which common stock
may be issued in connection with any conversion rights associated
with the financing, in each case, subject to the beneficial
ownership limitations described above.
The
November 2020 Notes each have a term of six months and mature on
May 5, 2021, unless earlier converted or repurchased. The November
2020 Notes accrue interest at a rate of 10% per annum, subject to
increase to 18% per annum upon and during the occurrence of an
event of default. Interest is payable in cash or, at the
holder’s option, in shares of common stock based on
the conversion price then in effect. We may not prepay the
November 2020 Notes without the prior written consent of the
applicable holder.
September 2020 Financing
On
September 16, 2020, we entered into a securities purchase agreement
with two purchasers pursuant to which we issued convertible
debentures in an aggregate principal amount of $250,000 (the
“September 2020 Notes”).
The
September 2020 Notes are convertible at any time, at the
holder’s option, into shares of our common stock at an
initial conversion price of $0.20 per share, subject to certain
beneficial ownership limitations (with a maximum ownership
limit of 9.99%). The conversion price is also subject to
adjustment due to certain events, including stock dividends, stock
splits and in connection with the issuance by the Company
of common stock or common stock equivalents at an
effective price per share lower than the conversion rate then in
effect. The September 2020 Notes will be subject to mandatory
conversion in the event of the completion of a future financing in
the amount of at least $15 million at a conversion price equal
to the lesser of (i) the conversion price in effect for the
September 2020 Notes on the date of completion of such financing or
(ii) 75% of the lowest per share price at which common stock
may be issued in connection with any conversion rights associated
with the financing, in each case, subject to the beneficial
ownership limitations described above.
The
September 2020 Notes each have a term of six months and mature on
March 16, 2021, unless earlier converted or repurchased. The
September 2020 Notes accrue interest at a rate of 10% per annum,
subject to increase to 18% per annum upon and during the occurrence
of an event of default. Interest is payable in cash or, at the
holder’s option, in shares of common stock based on
the conversion price then in effect. We may not prepay the
September 2020 Notes without the prior written consent of the
applicable holder.
July 2020 Financing
On July
7, 2020, we entered into a securities purchase agreement with
ten purchasers pursuant to which we issued convertible notes
in an aggregate principal amount of approximately $3.2 million
(collectively, the “July 2020 Notes”).
The
July 2020 Notes are convertible at any time, at the holder’s
option, into shares of our common stock at an
initial conversion price of $0.20 per share, subject to
certain beneficial ownership limitations (with a maximum
ownership limit of 9.99%). The conversion price is also
subject to adjustment due to certain events, including stock
dividends, stock splits and in connection with the issuance by the
Company of common stock or common stock equivalents at an
effective price per share lower than the conversion rate then in
effect. The July 2020 Notes will be subject to mandatory conversion
in the event of the completion of a future financing in the amount
of at least $15 million at a conversion price equal to the
lesser of (i) the conversion price in effect for the July 2020
Notes on the date of completion of such financing or (ii) 75% of
the lowest per share price at which common stock may be issued
in connection with any conversion rights associated with the
financing, in each case, subject to the beneficial ownership
limitations described above.
The
July 2020 Notes each have a term of six months and mature on
January 7, 2021, unless earlier converted or repurchased. The July
2020 Notes accrue interest at a rate of 10% per annum, subject to
increase to 18% per annum upon and during the occurrence of an
event of default. Interest is payable in cash or, at the
holder’s option, in shares of common stock based on
the conversion price then in effect. We may not prepay the
July 2020 Notes without the prior written consent of the applicable
holder.
May 2020 Financing
Between
April 20, 2020 and May 7, 2020, we entered into
securities purchase agreements with eight purchasers pursuant
to which we issued convertible notes in an aggregate principal
amount of approximately $2.0 million (collectively, the “May
2020 Notes”).
The May
2020 Notes are convertible at any time, at the holder’s
option, into shares of our common stock at an
initial conversion price of $0.20 per share, subject to
certain beneficial ownership limitations (with a maximum
ownership limit of 9.99%). The conversion price is also
subject to adjustment due to certain events, including stock
dividends, stock splits and in connection with the issuance by the
Company of common stock or common stock equivalents at an
effective price per share lower than the conversion rate then in
effect. The May 2020 Notes will be subject to mandatory conversion
in the event of the completion of a future financing in the amount
of at least $15 million at a conversion price equal to the
lesser of (i) the conversion price in effect for the May 2020
Notes on the date of completion of such financing or (ii) 75% of
the lowest per share price at which common stock may be issued
in connection with any conversion rights associated with the
financing, in each case, subject to the beneficial ownership
limitations described above.
The May
2020 Notes each have a term of six months and mature between
October 20, 2020 and November 7, 2020, unless earlier converted or
repurchased. The May 2020 Notes accrue interest at a rate of 10%
per annum, subject to increase to 18% per annum upon and during the
occurrence of an event of default. Interest is payable in cash or,
at the holder’s option, in shares of common stock based
on the conversion price then in effect. We may not prepay the
May 2020 Notes without the prior written consent of the applicable
holder.
January 2020 Financing
On
January 30, 2020, we entered into a securities purchase
agreement with one purchaser pursuant to which we issued convertible notes in
an aggregate principal amount of $0.2 million (the “January
2020 Notes”).
The
January 2020 Notes are convertible at any time, at the
holder’s option, into shares of our common stock at an
initial conversion price of $0.20 per share, subject to
certain beneficial ownership limitations (with a maximum
ownership limit of 9.99%). The conversion price is also
subject to adjustment due to certain events, including stock
dividends, stock splits and in connection with the issuance by the
Company of common stock or common stock equivalents at an
effective price per share lower than the conversion rate then in
effect.
The
January 2020 Notes have a term of eight months and mature on
September 30, 2020, unless earlier converted or repurchased. The
January 2020 Notes accrue interest at a rate of 10% per annum,
subject to increase to 18% per annum upon and during the occurrence
of an event of default. Interest is payable in cash or, at the
holder’s option, in shares of common stock based on
the conversion price then in effect. We may not prepay the
January 2020 Notes without the prior written consent of the
holder.
The
January 2020 Notes, together with the September 2020 Notes, July
2020 Notes, the May 2020 Notes and the $0.2 million aggregate
principal amount of convertible notes issued in December 2019
(the “December 2019 Notes”) pursuant to a
securities purchase agreement, dated December 19, 2019,
between the Company and one purchaser, are referred to herein as
the “Bridge Notes.”
For
additional information about our convertible notes and debentures,
see Note 2 to our unaudited financial statements, Debt.
Forbearance Agreements
Effective as of June 23, 2020, we entered into the Forbearance
Agreements with the holders of approximately $13.2 million
aggregate principal amount of the Default Notes, which are
currently in default. Pursuant to the Forbearance Agreements, the
holders of the Default Notes have agreed to forbear from exercising
their rights and remedies under the Default Notes (including
declaring such Default Notes (together with default amounts and
accrued and unpaid interest) immediately due and payable) until the
earlier of (i) the date that we complete a New Financing or (ii) January 31, 2020
(the “Termination Date”).
Pursuant to the Forbearance Agreement, the holders of the Default
Notes have also agreed that the Default Notes (together with
default amounts and accrued and unpaid interest) will be converted
into common stock
upon the closing of a New Financing at a conversion price equal to the lesser of
(i) the conversion
price in effect for the Default Notes on the date of such
New Financing or (ii) 75%
of the lowest per share price at which common stock is or may be issued in
connection with such New Financing, in each case, subject to
certain beneficial ownership limitations (with a maximum ownership
limit of 9.99%). Shares of our preferred stock, which
are convertible into the Company’s common stock, will be issued in lieu
of common stock to
the extent that conversion of the Default Notes is prohibited by
such beneficial ownership limitations.
In addition, to the extent that any holders of the Default Notes
also hold warrants to purchase shares of the Company’s common
stock, the exercise price, number of underlying shares and
expiration date of such warrants will also be subject to adjustment
upon closing of a New Financing in accordance with the terms of the
Forbearance Agreements.
Settlement with Empery Funds
Settlement Agreement
On June 19, 2020, we entered into the Settlement Agreement with the
Empery Funds, Anthony Cataldo and Paul Kessler resolving
all remaining disputes
between the parties pertaining to the Original Securities. See Part
II, Item 1. “Legal Proceedings.”
As a result of the Settlement Agreement, the Company paid
the Empery Funds
cash payments in an aggregate amount of $0.2 million. In addition,
pursuant to the Settlement Agreement, the Company issued to
the Empery Funds,
solely in exchange for the outstanding Original Securities, (i) an aggregate
of 3.5 million shares of common stock, (ii) pre-funded
warrants to purchase an
aggregate of 5.5 million shares of common stock and (iii)
Convertible Notes in
an aggregate principal amount of $0.45 million.
Settlement Notes
The Settlement Notes
are convertible at any time, at the holder’s option, into
shares of common
stock at an initial conversion price of $0.20 per share, subject to
certain beneficial ownership limitations (with a maximum
ownership limit of 4.99%). The Settlement Notes mature on December 19,
2020. The terms of the
Settlement Notes are generally the same as the Company’s
other Convertible Notes, except that the Company is required to
make an offer to repurchase, at the holder’s option, the
Settlement Notes at
price in cash equal to 100% of the aggregate principal amount of
the Settlement Notes
plus accrued and unpaid interest, if any, to, but excluding, the
date of repurchase following the consummation by the Company of a
financing transaction, or a series of transactions, resulting in
aggregate gross proceeds to the Company in excess of $7.5
million.
Settlement Warrants
The Settlement Warrants provide for the purchase of up to an
aggregate of 5.5 million shares of common stock at an exercise price of
$0.20 per share, subject to adjustment in certain circumstances,
and expire on June 19, 2025. Exercise of the warrant is subject to certain
additional terms and conditions, including certain beneficial
ownership limitations (with a maximum ownership limit of
4.99%).
Results of Operations
Comparison of the Three Months Ended September 30, 2020 and
2019
Research and Development Expenses
During the three months ended September 30, 2020 and 2019, we
incurred $0 and $.6 thousand of research and development
expenses, respectively.
Research and development costs decreased less clinical expenses. We
anticipate our direct clinical costs will increase in the last
quarter of 2020 with the continuation of our Phase I clinical trial
of our most advanced TriKe product candidate,
GTB-3550.
Selling, general and administrative expenses
During the three months ended September 30, 2020 and 2019, we
incurred $2 million and $3.6 million of selling, general and
administrative expenses,
respectively. The decrease in selling, general and
administrative expenses is primarily attributable the reduction of
payroll and stock compensation expenses.
Loss on impairment
For the three months ended September 30, 2019, the Company recorded
an intangible asset impairment charge of $4.6 million related to
the portfolio of CNS IPR&D assets, which represents the excess
carrying value compared to fair value. The impairment charge was
the result the sale of certain assets and prioritization for
immuno-oncology development candidates.
Interest Expense
Interest expenses were $.9
million and $.6 million for the three months ended September 30,
2020 and 2019,
respectively. The
increase is primarily due to the accrual of default
interest under the Default
Notes.
Comparison of the Nine Months Ended September 30, 2020 and
2019
Research and Development Expenses
During the nine months ended September 30, 2020 and 2019, we
incurred $252 thousand and $1.7 million of research and development
expenses, respectively.
Research and development costs decreased due primarily to the
reduction of employee, consultant and preclinical expenses. We
anticipate our direct clinical costs will increase in the
4th
quarter of 2020 upon the continuation of our Phase I clinical trial
of our most advanced TriKE product candidate,
GTB-3550.
Selling, general and administrative expenses
During the nine months ended September 30, 2020 and 2019, we
incurred $4.3 million and $8.9 million of selling, general and
administrative expenses,
respectively. The decrease in selling, general and
administrative expenses is primarily attributable the reduction of
payroll and stock compensation expenses.
Loss on impairment
For the three months ended September 30, 2019, the Company recorded
an intangible asset impairment charge of $4.6 million related to
the portfolio of CNS IPR&D assets, which represents the excess
carrying value compared to the fair value. The impairment charge
was the result of the sale of certain assets and prioritization for
immuno-oncology development candidates.
Interest Expense
Interest expenses were $6.2
million and $1.5 million for the
nine months ended September 30, 2020 and 2019
respectively. The
increase is primarily due to the accrual of default
interest under the Default
Notes.
Liquidity and Capital Resources
The
Company’s current operations have focused on business
planning, raising capital, establishing an intellectual property
portfolio, hiring, and conducting preclinical studies and clinical
trials. The Company does not have any product candidates approved
for sale and has not generated any revenue from product sales. The
Company has sustained operating losses since inception and expects
such losses to continue over the foreseeable future. During the
nine months ended September 30, 2020, the Company raised $5.7
million through a series of issuances of Convertible Notes.
We anticipate that cash
utilized for selling, general and administrative expenses will
range between $1 and $2 million in the coming quarters, while
research and development expenses will vary depending on clinical
activities. The Company is pursuing several alternatives to address
this situation, including the raising of additional funding through
equity or debt financings. In order to finance existing operations
and pay current liabilities over the next 12 months, the Company
will need to raise an additional $18 million of
capital.
The
financial statements of the Company 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. Accordingly, the financial statements do not include any
adjustments that might be necessary should the Company be unable to
continue in existence.
The
Company has incurred substantial losses and negative cash flows
from operations since its inception and has an accumulated deficit
of $580 million and cash of $350 thousand as of September 30, 2020.
The Company anticipates incurring additional losses until such
time, if ever, that it can generate significant sales or revenue
from out-licensing of its products currently in development.
Substantial additional financing will be needed by the Company to
fund its operations and to commercially develop its product
candidates. These factors raise substantial doubt about the
Company’s ability to continue as a going
concern.
Management
is currently evaluating different strategies to obtain the required
funding for future operations. These strategies may include but are
not limited to: public offerings of equity and/or debt securities,
payments from potential strategic research and development,
licensing and/or marketing arrangements with pharmaceutical
companies. Management has also implemented cost saving efforts,
including reduction in executive salaries and reduced travel.
Management believes that these ongoing and planned financing
endeavors, if successful, will provide adequate financial resources
to continue as a going concern for at least the next nine months
from the date the financial statements are issued; however, there
can be no assurance in this regard. If the Company is unable to
secure adequate additional funding, its business, operating
results, financial condition and cash flows may be materially and
adversely affected.
Critical Accounting Policies
We consider the following accounting policies to be critical given
they involve estimates and judgments made by management and are
important for our investors’ understanding of our operating
results and financial condition.
Basis of Consolidation
The consolidated financial statements contained in this
report
include the accounts of GT Biopharma, Inc. and its
subsidiaries. All intercompany
balances and transactions have been eliminated.
Long-Lived Assets
Our long-lived assets include property, plant and equipment,
capitalized costs of filing patent applications and goodwill and
other assets. We
evaluate our long-lived assets for impairment in accordance
with ASC 360, whenever
events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable. Estimates
of future cash flows and timing of events for evaluating long-lived
assets for impairment are based upon management’s
judgment. If any of
our intangible or long-lived assets are considered to be impaired,
the amount of impairment to be recognized is the excess of the
carrying amount of the assets over its fair
value.
Applicable long-lived assets are amortized or depreciated over the
shorter of their estimated useful lives, the estimated period that
the assets will generate revenue, or the statutory or contractual
term in the case of patents. Estimates
of useful lives and periods of expected revenue generation are
reviewed periodically for appropriateness and are based upon
management’s judgment. Goodwill
and other assets are not amortized.
Certain Expenses and Liabilities
On an ongoing basis, management evaluates its estimates related to
certain expenses and accrued liabilities. We base
our estimates on historical experience and on various other
assumptions that we believe to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying values of liabilities that are not
readily apparent from other sources. Actual
results may differ materially from these estimates under different
assumptions or conditions.
Inflation
We believe that inflation has not had a material adverse impact on
our business or operating results during the periods
presented.
Off-balance
Sheet
Arrangements
We have no off-balance sheet arrangements as of September 30,
2020.
Item 3. Quantitative and Qualitative Disclosures About
Market Risk
This company qualifies as a
smaller reporting company, as defined in
17 C.F.R. §229.10(f)(1) and is not required to provide
information by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our
principal executive officer and principal financial officer
evaluated the effectiveness of our “disclosure controls and
procedures” (as such term is defined in Rules 13a-15(e) and
15d-15(e) of the United States Securities Exchange Act of 1934, as
amended (the “Exchange Act”)), as of September 30,
2020. Based on that evaluation we have concluded that
our disclosure controls and procedures were not effective as of
September 30, 2020 as a result of material weaknesses in internal
control over financial reporting due to (i) inadequate segregation
of duties, (ii) risks of executive override and (iii) insufficient
written policies and procedures for accounting and financial
reporting with respect to the requirements and application of both
U.S. GAAP and SEC regulation, in each case, as described in
“Item 9A. Controls and Procedures” in the
Company’s Form 10-K for the year ended December 31,
2019.
The
Company is taking steps, and intends to take additional steps, to
mitigate the issues identified and implement a functional system of
internal control over financial reporting. Such measures will
include, but not be limited to: hiring of additional employees in
our finance and accounting department; preparation of risk-control
matrices to identify key risks and develop and document policies to
mitigate those risks; and identification and documentation of
standard operating procedures for key financial and SEC reporting
activities.
Changes in Internal Control over Financial Reporting
Except
for the ongoing remediation of the material weaknesses in internal
controls over financial reporting noted above, no changes in our
internal control over financial reporting were made during our most
recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over
financial reporting.
PART
II. OTHER
INFORMATION
Item 1. Legal Proceedings
On
August 28, 2019, a complaint was filed in the Superior Court
of California, County of Los Angeles, West Judicial
District, Santa Monica Courthouse, Unlimited Civil
Division by Jeffrey Lion and Daniel Vallera. Lion and Vallera are
referred to jointly as the “Plaintiffs.” The complaint
was filed against the Company and its subsidiary Oxis Biotech, Inc.
(either of them or jointly, the “Defendant”).
The Plaintiffs allege breach of a license agreement
between the Plaintiffs and the Defendant entered into on
or about September 3, 2015. Lion alleges breach of
a consulting agreement between Lion and the Defendant
entered into on or about September 1, 2015. Vallera alleges breach
of a consulting agreement between Vallera and
the Defendant entered into in or around October, 2018. The
complaint seeks actual damages of $1,670,000, for the fair market
value of the number of shares of the Company’s common
stock that at the time of judgment represent 15,000,000 shares of
such stock as of September 1, 2015, and that the Company issue Lion
the number of common shares the Company’s common stock
that at the time of judgment represent 15,000,000 such shares as of
September 1, 2015.
Item 1A. Risk Factors
Information regarding risk factors appears under
“Risk Factors”
included in Part I. Item 1A. Risk Factors. of our Annual Report on Form 10-K for the year ended December
31, 2019. There have been no material changes from the risk factors
previously disclosed in the above-mentioned periodic
report.
Item 2. Unregistered Sales of Securities and Use of
Proceeds
The Company made the following issuances of its unregistered equity
securities pursuant exemptions contained in Section 4(a)(2) or
3(a)(9) of the Securities Act of 1933, as amended (the
“Securities Act”) and/or Rule 506 of Regulation D
promulgated thereunder that have not previously been
reported:
●
During
the nine months ended September 30, 2020, the Company issued
3,147,486 shares of common stock upon conversion of $629,497 in
principal and interest on Convertible Notes.
●
On May 1, 2020, the Company issued
1,086,429 shares of common stock for consulting
services.
●
On June 19, 2020, the Company issued
3,500,000 shares of common stock pursuant to the Settlement
Agreement.
●
On
July 28, 2020, the Company issued a warrant to purchase up to an
aggregate of 1,000,000 shares of common stock at an exercise price
of $0.20 per share, subject to adjustment in certain circumstances.
The warrant was issued as compensation for certain services
provided to the Company.
Item 3. Defaults Upon Senior Securities.
As of September 30, 2020, convertible notes totaling
approximately $13.2 million are in default.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
Theorem Settlement Agreement
On November 9, 2020, the Company, entered into a settlement
agreement (the “Theorem Settlement Agreement”) with
Adam Kasower (“Kasower”), East Ventures, Inc., A
British Virgin Islands company (“East Ventures”), SV
Booth Investments III, LLC, a Delaware limited liability company
(“SV Booth”) and Theorem Group, LLC, a California
limited liability company (“Theorem Group” and,
collectively with Kasower, East Ventures and SV Booth, the
“Claimants”) resolving all remaining disputes and
claims between the parties pertaining to certain securities
purchase agreements pursuant to which the Claimants purchased from
the Company convertible warrants and preferred stock.
As a result of the Settlement Agreement, the Company has agreed to
issue each Claimant a convertible note in the following amounts
(the “Theorem Settlement Notes”):
Theorem
Group
|
$303,726.40
|
East
Venture
|
$112,788.48
|
Kasower
|
$500,078.58
|
SV
Booth
|
$294,245.54
|
The Theorem Settlement Agreement also contains certain
representations and warranties and covenants, including limitations
on future variable rate transactions and “at-the-market
offerings.”
Theorem Settlement Notes
The Theorem Settlement Notes are convertible, at the option of the
applicable Claimant, at any time into shares of common stock at an
initial conversion rate of $0.20 per share, subject to certain
beneficial ownership limitations. The conversion price is also
subject to adjustment due to certain events, including stock
dividends, stock splits and in connection with the issuance by the
Company of common stock or common stock equivalents at an effective
price per share lower than the conversion rate then in effect. The
Theorem Settlement Notes mature on January 31, 2021, and bear
interest at a rate of 10% per annum, subject to increase to 18% per
annum upon and during the occurrence of an event of default.
Interest is payable in cash or, at the holder’s option, in
shares of common stock based on the conversion price then in
effect. The Company may not
prepay the Theorem Settlement Notes without the prior written
consent of the applicable Claimant.
The Theorem Settlement Notes contain a number of other affirmative
and negative covenants and events of default (including events of
default related to certain change of control and other fundamental
change transactions). Following an event of default, the Theorem
Settlement Notes will become immediately due and payable in cash at
a mandatory default amount equal to 130% of the outstanding
principal amount of the Theorem Settlement Notes plus all other
amounts, costs and expenses due in respect of the Theorem
Settlement Notes.
Resignation of Chief Financial Officer
On November 11, 2020, Steven Weldon resigned from the Board and
from his office as Chief Financial Officer of the Company,
effective immediately. His resignation was the result of general
disagreement regarding the Company’s decision making process.
Pursuant to Mr. Weldon’s Employment Contract, dated August
11, 2020, Mr. Weldon is only entitled to such stock options,
restricted stock awards and other Company stock-based awards
granted which have vested as of the date of his resignation. He is
not entitled to any other compensation or benefits.
Appointment of New Interim Chief Financial Officer
Anthony Cataldo, Chief Executive Officer and Chairman of the Board,
assumed the additional role of Chief Financial Officer on
an interim basis, and will be succeeded as Chief
Financial Officer on an interim basis by Michael Handelman
immediately after the filing of this report.
Mr. Handelman became a Director of the GoooGreen, Inc. in August
2020, and Chairman of the Board of Directors and Secretary in
September 2020. He has served as Chief Financial Officer of
Clickstream Corporation since October 2015. He served as Chief
Financial Officer of Lion Biotechnologies, Inc. from February 2011
until June 2015, and was a member of the Lion Bio Board of
Directors from February 2013 until May 2013. Mr. Handelman served
as the Chief Financial Officer and as a financial management
consultant of Oxis International, Inc., a public company engaged in
the research, development and commercialization of nutraceutical
products, from August 2009 until October 2011. From November 2004
to July 2009, Mr. Handelman served as Chief Financial Officer and
Chief Operating Officer of TechnoConcepts, Inc., formerly a public
company engaged in designing, developing, manufacturing and
marketing wireless communications semiconductors, or microchips.
Prior thereto, Mr. Handelman served from October 2002 to October
2004 as Chief Financial Officer of Interglobal Waste Management,
Inc., a manufacturing company, and from July 1996 to July 1999 as
Vice President and Chief Financial Officer of Janex International,
Inc., a children’s toy manufacturer. Mr. Handelman was also
the Chief Financial Officer from 1993 to 1996 of the Los Angeles
Kings, a National Hockey League franchise. Mr. Handelman is a
certified public accountant and holds a degree in accounting from
the City University of New York.
Mr. Handelman
will receive a monthly consulting fee
of $15,000.00.
Mr. Handelman
has no direct or indirect material
interest in any transaction required to be disclosed pursuant to
Item 404(a) of Regulation S-K, has no arrangement or
understanding between him and any other person required to be
disclosed pursuant to Item 401(b) of Regulation
S-K and has no family relationships required to be disclosed
pursuant to Item 401(d) of Regulation
S-K.
Mr. Handelman
has entered into a Consulting
Agreement with the Company, effective as of November 13,
2020.
Appointment of New Directors
On November 12, 2020, the Board appointed Bruce Wendel, age 67, and
Greg Berk, age 62, as directors of the Company. Following the
filing of this Quarterly Report on
Form 10-Q, Mr.
Cataldo will resign as interim
Chief Financial Officer, and Michael Handelman, age
61, will be appointed as
the interim Chief Financial Officer in his
place.
From April 2018 to May 2019, Mr. Wendel served as the Chief
Business Development Officer for Prometic Biotherapeutics, Inc., a
pharmaceutical development company. Mr. Wendel also served as Chief
Strategic Officer of Hepalink USA, the U.S. subsidiary of Shenzhen
Hepalink Pharmaceutical Company from February 2012 to July 2017,
and Chief Executive Officer of Scientific Protein Laboratories, LLC
from December 2014 to June 2015. He also served as a director of
ProMetic Life Sciences Inc. and Vice Chairman and Chief Executive
Officer at Abraxis BioScience, LLC, where he oversaw the
development and commercialization of Abraxane® and led the
negotiations that culminated in the acquisition of the company by
Celgene Corporation in 2010. He began his 14 years with
Bristol-Myers Squibb as in-house counsel before shifting to global
business and corporate development, where he served in business and
corporate development roles of increasing responsibility at
American Pharmaceutical Partners, IVAX Corporation and
Bristol-Myers Squibb. Mr. Wendel earned a juris doctorate degree
from Georgetown University Law School, and a B.S. from Cornell
University.
Mr. Wendel has no direct or indirect material interest in any
transaction required to be disclosed pursuant to
Item 404(a) of Regulation S-K, has no arrangement or
understanding between him and any other person required to be
disclosed pursuant to Item 401(b) of Regulation
S-K and has no family relationships required to be disclosed
pursuant to Item 401(d) of Regulation
S-K.
Prior to joining the Company, Dr. Berk has served as a private
consultant in the field of drug development and is the Chief
Medical Officer of Celularity, a privately owned company.
Previously, he served as Chief Medical Officer at Verastem as and
President, Chief Medical Officer and Board Member of Sideris
Pharmaceuticals. From May 2012 until January 2014, Dr. Berk was
Chief Medical Officer of BIND Therapeutics. Prior to this, he was
Chief Medical Officer at Intellikine, a privately held
biotechnology company focused on the discovery and development of
novel PI3 Kinase and mTOR inhibitors. Intellikine was acquired by
Takeda/Millennium in January 2012. He also served as Senior Vice
President of Global Clinical Development at Abraxis BioScience,
where he was responsible for the company’s overall clinical
strategy, including efforts to expand the indications for their
lead clinical program (Abraxane®). Dr. Berk obtained his
medical degree from Case Western Reserve University, and completed
his internship, residency and fellowship in internal medicine,
hematology and medical oncology, at the Weill Medical College of
Cornell University and New York Presbyterian Hospital, where he
also served as a faculty member from 1989-2004. During this time
Dr. Berk served as an investigator on several industry-sponsored
and cooperative group oncology clinical trials, including the
pivotal trials for Gleevec® and
Avastin®.
Dr. Berk has no direct or indirect material interest in any
transaction required to be disclosed pursuant to
Item 404(a) of Regulation S-K, has no arrangement or
understanding between him and any other person required to be
disclosed pursuant to Item 401(b) of Regulation
S-K and has no family relationships required to be disclosed
pursuant to Item 401(d) of Regulation
S-K.
Mr. Wendel and Dr. Berk will each receive an annual stipend of
$20,000.00 for director compensation, with Mr. Wendel receiving an
additional $5,000.00 annually for chairing the Nominating Committee
and $5,000.00 annually as a member of the Audit Committee, and Dr.
Berk receiving an additional $5,000.00 annually for chairing the
Compensation Committee and $5,000.00 annually as a member of the
Nominating Committee. The Company will also grant stock awards of
shares of common stock of the Company equal to 1.25%, in the case
of Mr. Wendel, and 1.00%, in the case of Dr. Berk, of the number of
fully diluted shares of common stock of the Company, calculated on
the fully diluted equity of the Company upon the Company’s
national exchange financing date.
Mr. Wendel and Dr. Berk have each entered into Board Service
Agreements with the Company, effective as of November 11, 2020,
which supplement the indemnification provisions of the
Company’s bylaws and obligate the company to insure them both
under the Company’s director and officer’s insurance
policy.
Item 6. Exhibits
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|
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Incorporated by Reference
|
Exhibit
|
|
Description
|
|
Herewith
|
|
Form
|
|
SEC File No.
|
|
Filing Date
|
|
|
|
|
|
|
|
|
|
|
|
|
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Securities
Purchase Agreement, dated July 7, 2020, among GT Biopharma, Inc.
and the purchaser named therein
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|
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8-K
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10.1
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000-08092
|
|
07/09/20
|
|
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Registration
Rights Agreement, dated July 7, 2020, among GT Biopharma, Inc. and
the purchaser named therein
|
|
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8-K
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10.2
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000-08092
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07/09/20
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|
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Form of
Convertible Note (related to Securities Purchase Agreement, dated
July 7, 2020)
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8-K
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4.1
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000-08092
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07/09/20
|
|
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Form of
Standstill and Forbearance Agreement, dated June 23, 2020, between
the Company and certain holders of Convertible Notes
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|
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8-K
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10.1
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000-08092
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06/23/20
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|
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Settlement
Agreement, dated June 19, 2020, among GT Biopharma, Inc., Empery
Asset Master Ltd., Empery Tax Efficient, LP and Empery Tax
Efficient II, LP, Anthony Cataldo and Paul Kessler
|
|
|
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8-K
|
10.1
|
000-08092
|
|
06/19/20
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|
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Form of
Convertible Note, dated June 19, 2020 (related to Settlement
Agreement, dated June 19, 2020)
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|
|
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8-K
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10.2
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000-08092
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06/19/20
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Form of
Pre-Funded Warrant to Purchase Common Stock, dated June 19, 2020
(related to Settlement Agreement, dated June 19, 2020)
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|
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8-K
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10.3
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000-08092
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06/19/20
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Employment
agreement with Anthony Cataldo
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10-Q/A
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10.11
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000-08092
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8/18/20
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Employment
agreement with Steven Weldon
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|
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10-Q/A
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10.12
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000-08092
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08/18/20
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Form of
Convertible Note (related to Securities Purchase Agreement, dated
July 7, 2020)
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8-K
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4.1
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000-08092
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09/22/20
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|
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Securities
Purchase Agreement, dated July 7, 2020, among GT Biopharma, Inc.
and the purchaser named therein
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|
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8-K
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10.1
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000-08092
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09/22/20
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|
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Cytovance Biologics, Inc. Master Services Agreement
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|
|
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8-K
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10.1
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000-08092
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10/06/20
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|
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Form of
Standstill and Forbearance Agreement Amendment No. 1, dated October
31, 2020, between the Company and certain holders of Convertible
Notes
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|
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8-K
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10.1
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000-08092
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11/04/20
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|
|
Form of
Convertible Note (related to Securities Purchase Agreement, dated
November 4, 2020)
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|
|
|
8-K
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10.1
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000-08092
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|
11/09/20
|
|
|
Securities
Purchase Agreement, dated November 4, 2020, among GT Biopharma,
Inc. and the purchaser named therein
|
|
|
|
8-K
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10.2
|
000-08092
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11/09/20
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|
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Settlement
Agreement, dated as of November 9, 2020, by and among Adam Kasower,
East Ventures, Inc., A British Virgin Islands company, SV Booth
Investments III, LLC, a Delaware limited liability company and
Theorem Group, LLC, a California LLC and GT Biopharma Inc., a
Delaware corporation.
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X
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Form of Settlement
Note, dated November 9, 2020.
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X
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Steve Weldon
Letter of Resignation, dated November 11, 2020
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X
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Board Service
Agreement with Bruce Wendel, dated November 11,
2020
|
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X
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Board Service
Agreement with Greg Berk, dated November 11,
2020
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X
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Consultant
Agreement with Michael Handelman, dated November 13,
2020
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X
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Certification of
Principal Executive Officer and Principal Financial Officer
pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the
Securities and Exchange Act of 1934, as
amended.
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X
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Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and
Chief Financial Officer).
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X
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101.INS
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Inline XBRL Instance Document.
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X
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101.SCH
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Inline XBRL Taxonomy Extension Schema Document.
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X
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101.CAL
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Inline XBRL Taxonomy Extension Calculation Linkbase
Document.
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X
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101.DEF
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Inline XBRL Taxonomy Extension Definition Linkbase
Document.
|
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X
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101.LAB
|
|
Inline XBRL Taxonomy Extension Label Linkbase
Document.
|
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X
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101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase
Document.
|
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X
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*
|
This certification shall not be deemed “filed” for
purposes of Section 18 of the Exchange Act, or otherwise
subject to the liability of that Section, nor shall it be deemed to
be incorporated by reference into any filing under the Securities
Act or the Exchange Act.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
|
GT Biopharma,
Inc. |
|
|
|
|
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Dated: November 13,
2020
|
By:
|
/s/ Anthony
Cataldo
|
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Anthony
Cataldo
|
|
|
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Chief Executive
Officer, Chief Financial Officer and Chairman of the
Board
|
|
Exhibit 31.1
CERTIFICATIONS
I, Anthony Cataldo, certify that:
1.
|
I have
reviewed this quarterly report on Form 10-Q of GT Biopharma,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
|
4.
|
The
registrant’s other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have for
the registrant and have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the
registrant, including
its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report
is being prepared;
|
|
b)
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Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
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c)
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Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
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d)
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Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
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5.
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The
registrant’s other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and
the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
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a)
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All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
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b)
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Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
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Date:
November 13, 2020
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/s/ Anthony
Cataldo
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Anthony
Cataldo
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Chief
Executive Officer, Chief Financial Officer, Chairman, and
Director
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Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the
Quarterly Report on Form 10-Q of GT Biopharma, Inc. (the
“Company”),
for the quarterly period ended September 30, 2020, as filed with
the Securities and Exchange Commission on the date hereof (the
“Report”),
I, Anthony Cataldo, Chief Executive Officer and Chief Financial
Officer of the Company, pursuant to 18 U.S.C. § 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
do hereby certify, to my knowledge that:
(1) The
Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or
780(d)); and
(2) The
information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
Date:
November 13, 2020
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/s/
Anthony Cataldo
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|
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Anthony
Cataldo
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|
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Chief
Executive Officer, Chief Financial Officer, Chairman, and
Director
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|
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A signed original of this written statement required by Section 906
has been provided to GT Biopharma, Inc. and will be retained by GT
Biopharma, Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.