Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
|
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(State or other jurisdiction of incorporation)
|
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(I.R.S. Employer Identification No.)
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|
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(Address of Principal Executive Offices)
|
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(Zip Code)
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Title of each class
|
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Trading
Symbol(s)
|
|
Name of each exchange
on which registered
|
|
|
|
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Large Accelerated Filer
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☐ |
Accelerated Filer
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☐ |
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☒ |
Smaller reporting company
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Emerging growth company
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PAGE
|
PART I — FINANCIAL INFORMATION
|
||
ITEM 1.
|
Unaudited Condensed Consolidated Financial Statements (unaudited)
|
|
3
|
||
4
|
||
5
|
||
6
|
||
9
|
||
ITEM 2.
|
16
|
|
ITEM 3.
|
24
|
|
ITEM 4.
|
24
|
|
PART II — OTHER INFORMATION
|
||
ITEM 1.
|
25
|
|
ITEM 1A.
|
25
|
|
ITEM 2.
|
25
|
|
ITEM 3.
|
25
|
|
ITEM 4.
|
25
|
|
ITEM 5.
|
25
|
|
ITEM 6.
|
25
|
|
26
|
|
September 30,
2021 |
December 31,
2020 |
||||||
|
(in thousands)
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Prepaid expenses and other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
|
$
|
|
||||
Accrued expenses and other
|
|
|
||||||
Accrued dividends payable
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Convertible notes payable and accrued interest, net of debt discounts – related party (Note 4)
|
|
|
||||||
Derivative liabilities (Note 4) |
|
|
||||||
Other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (Note 10)
|
||||||||
Series C super dividend redeemable convertible preferred stock;
|
|
|
||||||
Stockholders’ equity:
|
||||||||
Undesignated stock, $
|
|
|
||||||
Series A 12% convertible preferred stock;
|
|
|
||||||
Common stock, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Retained deficit
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ equity
|
|
|
||||||
Total liabilities, redeemable convertible preferred stock and stockholders’ equity
|
$
|
|
$
|
|
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
||||||||||||||
|
2021
|
2020
|
2021
|
2020
|
||||||||||||
|
(in thousands, except per share data)
|
(in thousands, except per share data)
|
||||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
General and administrative
|
|
|
|
|
||||||||||||
Total operating expenses
|
|
|
|
|
||||||||||||
Total operating loss
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Other income (expense):
|
||||||||||||||||
Interest income
|
|
|
|
|
||||||||||||
Interest expense
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Change in fair value of derivative
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Total other income (expense)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Preferred stock dividends
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Net loss applicable to common stockholders
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Net loss per common share — basic and diluted
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
Weighted average common shares outstanding — basic and diluted
|
|
|
|
|
|
Nine Months Ended
September 30, |
|||||||
|
2021
|
2020
|
||||||
|
(in thousands)
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Adjustments to reconcile net loss to net cash flows from operating activities:
|
||||||||
Stock-based compensation expense
|
|
|
||||||
Amortization of right to use lease asset
|
|
|
||||||
Non-cash interest expense
|
|
|
||||||
Change in fair value of derivative
|
|
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Prepaid expenses and other assets
|
|
(
|
)
|
|||||
Accounts payable, accrued expenses and other liabilities
|
|
(
|
)
|
|||||
Net cash flows from operating activities
|
(
|
)
|
(
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Net proceeds from convertible notes payable – related party
|
|
|
||||||
Net proceeds from issuance of common stock
|
|
|
||||||
Net cash flows from financing activities
|
|
|
||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
(
|
)
|
|||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
|
$
|
|
||||
NONCASH FINANCING ACTIVITIES:
|
||||||||
Payment of preferred stock dividends in common stock
|
$
|
|
$
|
|
||||
Fair value of derivatives related to related party convertible notes payable
|
|
|
||||||
Reclassification of accrued bonus to additional paid in capital
|
|
|
|
Series C Super
Dividend Redeemable Convertible Preferred Stock |
|||||||
|
Number of
Shares |
Amount
|
||||||
Balance at December 31, 2019
|
|
$
|
|
|||||
Balance at September 30, 2020
|
|
$
|
|
|||||
Balance at December 31, 2020
|
|
$
|
|
|||||
Balance at September 30, 2021
|
|
$
|
|
|
Series A 12%
Convertible Preferred Stock |
Common Stock
|
||||||||||||||||||||||||||
|
Number
of Shares |
Amount
|
Number
of Shares |
Amount
|
Additional
Paid-In
Capital |
Retained
Deficit |
Total
Stockholders’ Equity (Deficit) |
|||||||||||||||||||||
Balance at June 30, 2020
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Series A 12% convertible preferred stock dividend
|
|
|
||||||||||||||||||||||||||
Series C super dividend redeemable convertible preferred stock dividend
|
(
|
)
|
|
|||||||||||||||||||||||||
Issuance of common stock for conversion of Series A 12% Convertible Preferred Stock |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Stock-based compensation expense
|
|
|
||||||||||||||||||||||||||
Net loss
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||||
Balance at September 30, 2020
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Balance at June 30, 2021
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Series A 12% convertible preferred stock dividend
|
(
|
)
|
|
|||||||||||||||||||||||||
Series C super dividend redeemable convertible preferred
stock dividend |
(
|
)
|
|
|||||||||||||||||||||||||
Issuance of common stock from exercise of warrants and options
|
|
|||||||||||||||||||||||||||
Stock-based compensation expense
|
|
|
||||||||||||||||||||||||||
Net loss
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||||
Balance at September 30, 2021
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|
Series A 12%
Convertible Preferred Stock |
Common Stock
|
||||||||||||||||||||||||||
|
Number
of Shares |
Amount
|
Number
of Shares |
Amount
|
Additional
Paid-In
Capital |
Retained
Deficit |
Total
Stockholders’ Equity (Deficit) |
|||||||||||||||||||||
Balance at December 31, 2019
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Series A 12% convertible preferred stock dividend
|
|
|
(
|
)
|
||||||||||||||||||||||||
Series C super dividend redeemable convertible preferred
stock dividend
|
|
|
(
|
)
|
|
|||||||||||||||||||||||
Issuance of common stock for conversion of Series A 12% Convertible Preferred Stock |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Issuance of common stock
|
|
|
|
|||||||||||||||||||||||||
Issuance of common stock for exercise of warrants and options
|
|
|
|
|||||||||||||||||||||||||
Stock-based compensation expense
|
|
|
|
|||||||||||||||||||||||||
Net loss
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||||
Balance at September 30, 2020
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Balance at December 31, 2020
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||||||||||
Series A 12% convertible preferred stock dividend
|
|
|
(
|
)
|
||||||||||||||||||||||||
Series C super dividend redeemable convertible preferred stock dividend
|
|
|
(
|
)
|
||||||||||||||||||||||||
Issuance of common stock
|
|
|
|
|
||||||||||||||||||||||||
Issuance of common stock for exercise of warrants and options
|
|
|
|
|
||||||||||||||||||||||||
Stock-based compensation expense
|
|
|
|
|||||||||||||||||||||||||
Net loss
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||||
Balance at September 30, 2021
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|
September 30,
2021 |
December 31,
2020 |
||||||
|
(in thousands)
|
|||||||
Legal and accounting fees
|
$
|
|
$
|
|
||||
Accrued compensation
|
|
|
||||||
Lease liability
|
|
|
||||||
Accrued research and development costs and other
|
|
|
||||||
Total
|
$
|
|
$
|
|
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
||||||||||||||
|
2021
|
2020
|
2021
|
2020
|
||||||||||||
|
in thousands
|
|||||||||||||||
Research and development
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
General and administrative
|
|
|
|
|
||||||||||||
Total stock-based compensation expense
|
$
|
|
$
|
|
$
|
|
$
|
|
|
Shares
|
Weighted Average
Exercise Price |
||||||
Outstanding, December 31, 2020
|
|
$
|
|
|||||
Granted
|
|
|
||||||
Exercised
|
(
|
)
|
|
|||||
Options forfeited/cancelled
|
(
|
)
|
|
|||||
Outstanding, September 30, 2021
|
|
$
|
|
|
Nine
Months Ended September 30, |
Nine
Months Ended September 30, |
||||||
|
2021
|
2020
|
||||||
Risk-free interest rate
|
|
%
|
|
%
|
||||
Expected life of the options
|
|
|
||||||
Expected volatility of the underlying stock
|
|
%
|
|
%
|
||||
Expected dividend rate
|
|
% |
|
% |
|
Shares
|
Weighted Average
Exercise Price |
||||||
Outstanding, December 31, 2020
|
|
$
|
|
|||||
Granted
|
|
|
||||||
Exercised
|
(
|
)
|
|
|||||
Forfeited/cancelled
|
|
|
||||||
Outstanding, September 30, 2021
|
|
$
|
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Derivative Liability – Contingent Interest April Note
|
$ | $ |
$
|
|
$
|
|
||||||||||
Derivative Liability – Contingent Interest September Note |
$ | $ | $ |
$ |
|
Inception
|
September 30, 2021
|
||||||
Stock Price
|
$
|
|
$
|
|
||||
Conversion Price of conversion feature
|
$
|
|
$
|
|
||||
Term
|
|
|
||||||
Risk Free Interest Rate
|
|
%
|
|
%
|
||||
Credit Adjusted Discount Rate
|
|
%
|
|
%
|
||||
Volatility
|
|
%
|
|
%
|
||||
Dividend Rate
|
|
% |
|
% |
Balance – December 31, 2020
|
$
|
|
||
Issuance of April convertible note payable – related party
|
|
|||
Fair Value Adjustment
|
|
|||
Balance – September 30, 2021
|
$
|
|
|
Inception
|
September 30, 2021
|
|||||||
Stock Price
|
$
|
|
$
|
|
||||
Conversion Price of conversion feature
|
$
|
|
$
|
|
||||
Term
|
|
|
||||||
Risk Free Interest Rate
|
|
%
|
|
%
|
||||
Credit Adjusted Discount Rate
|
|
%
|
|
%
|
||||
Volatility
|
|
%
|
|
%
|
||||
Dividend Rate
|
|
% |
|
% |
Balance – December 31, 2020
|
$
|
|
||
Issuance of September convertible note payable – related party
|
|
|||
Fair Value Adjustment
|
(
|
)
|
||
Balance – September 30, 2021
|
$
|
|
|
September 30, 2021
(shares) |
September 30, 2020
(shares) |
||||||
Warrants to purchase shares of common stock
|
|
|
||||||
Options to purchase shares of common stock
|
|
|
||||||
Shares of common stock issuable upon conversion of convertible notes payable
|
|
|
||||||
Shares of common stock issuable upon conversion of preferred stock
|
|
|
||||||
|
|
|
2021
|
|
|||
2022
|
|
|||
Total
|
|
|||
Less imputed interest
|
(
|
)
|
||
Present value of lease liability
|
$
|
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
• |
our early stage of development,
|
• |
we have incurred significant operating losses since our inception and cannot assure you that we will generate revenue or profit,
|
• |
our dependence on additional outside capital,
|
• |
we may be unable to enter into strategic partnerships for the development, commercialization, manufacturing and distribution of our proposed product candidates,
|
• |
uncertainties related to any litigation, including shareholder class actions and derivative lawsuits filed,
|
• |
uncertainties related to our technology and clinical trials, including expected dates of availability of clinical data,
|
• |
we may be unable to demonstrate the efficacy and safety of our developmental product candidates in human trials,
|
• |
we may be unable to improve upon, protect and/or enforce our intellectual property,
|
• |
we are subject to extensive and costly regulation by the U.S. Food and Drug Administration (FDA) and by foreign regulatory authorities, which must approve our product candidates in development and could restrict the sales and marketing
and pricing of such products,
|
• |
competition and stock price volatility in the biotechnology industry,
|
• |
limited trading volume for our stock, concentration of ownership of our stock, and other risks detailed herein and from time to time in our SEC reports,
|
• |
the impact resulting from the outbreak of COVID-19, which has delayed and may continue to delay our clinical trial and development efforts, as well as the impact that COVID-19 has on the volatility of the capital market and our ability
to access the capital market and,
|
• |
other risks detailed herein and from time to time in our SEC reports, including our Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2020, and our subsequent SEC filings.
|
Indication
Fibrosis
|
Drug
|
Status
|
NASH with Advanced Fibrosis:
NASH-CX trial and
NASH-FX trial
|
belapectin
|
IND submitted January 2013. Results from the Phase 1 clinical trial were reported in 2014, with final results reported in January 2015.
The Phase 2 NASH FX trial was designed for patients with advanced fibrosis but not cirrhosis. Its principal purpose was to evaluate various imaging modalities. The NASH FX trial top line data was reported in September 2016
|
The Phase 2 NASH CX trial, was designed for patients with well compensated cirrhosis. The NASH CX trial top line data was reported in December 2017 and was published in Gastroenterology in 2020.
|
||
NASH NAVIGATE
|
Based on FDA feedback, the NAVIGATE trial is an adaptive Phase 2b/3 trial for the prevention of esophageal varices in NASH patients with compensated cirrhosis. A Phase 2b interim efficacy analysis will be incorporated to confirm previous
Phase 2 data, select an optimal dose and reaffirm the risk/benefit of belapectin. The Phase 3 end of study analysis will evaluate the development of esophageal varices as the primary outcome of efficacy and a composite clinical endpoint
including progression to varices requiring treatment as a key secondary outcome of efficacy. See www.clinicaltrials.gov NCT04365868. The first patient was randomized in the third quarter of 2020.
A hepatic impairment is being conducted in subjects with normal hepatic function and subjects with varying degrees of hepatic impairment (CF: www.clinicaltrials.gov NCT04332432) and began enrolling patients in the second quarter of 2020.
|
|
Lung Fibrosis
|
belapectin
|
In pre-clinical development
|
Kidney Fibrosis
|
belapectin
|
In pre-clinical development
|
Indication
|
Drug
|
Status
|
Cardiac and Vascular Fibrosis
|
belapectin and
GM-CT-01
|
In pre-clinical development
|
Cancer Immunotherapy
|
||
Melanoma, Head, Neck Squamous Cell
Carcinoma (HNSCC)
|
belapectin
|
Investigator IND study in process. A Phase 1B study began in Q-1 2016. Early data was reported in February 2017 and additional data were reported in September 2018. A further expansion cohort of patients with melanoma and HNSCC was
reported in July 2021.
|
Psoriasis
|
||
Moderate to Severe Plaque Psoriasis
Severe Atopic Dermatitis
|
belapectin
|
IND submitted March 2015. A Phase 2a trial in moderate to severe plaque psoriasis patients began in January 2016. Interim data on the first four patients were positive and were reported in May 2016. Further positive data was reported in
September 2016. Investigator initiated IND submitted for treatment of three patients with severe atopic dermatitis, with positive preliminary data presented in February 2017. Further studies are dependent on finding a suitable strategic
partner which is unlikely.
|
Three Months Ended
|
Nine Months Ended
|
2021 as Compared to 2020
|
||||||||||||||||||||||||||||||
September 30,
|
September 30,
|
Three Months
|
Nine Months
|
|||||||||||||||||||||||||||||
2021
|
2020
|
2021
|
2020
|
$ Change
|
% Change
|
$ Change
|
% Change
|
|||||||||||||||||||||||||
(In thousands, except %)
|
||||||||||||||||||||||||||||||||
Research and development
|
$
|
6,613
|
$
|
4,780
|
$
|
17,962
|
$
|
11,605
|
$
|
1,833
|
38
|
%
|
$
|
6,357
|
55
|
%
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Direct external expenses:
|
||||||||||||||||
Clinical programs
|
$
|
5,768
|
$
|
3,768
|
$
|
15,928
|
$
|
8,566
|
||||||||
Pre-clinical activities
|
237
|
64
|
418
|
427
|
||||||||||||
All other research and development expenses
|
608
|
948
|
1,616
|
2,612
|
||||||||||||
$
|
6,613
|
$
|
4,780
|
$
|
17,962
|
$
|
11,605
|
2021 as Compared to 2020
|
||||||||||||||||||||||||||||||||
Three Months
Ended
September 30,
|
Nine Months
Ended
September 30,
|
Three Months
|
Nine Months
|
|||||||||||||||||||||||||||||
2021
|
2020
|
2021
|
2020
|
$ Change
|
% Change
|
$ Change
|
% Change
|
|||||||||||||||||||||||||
(In thousands, except %)
|
||||||||||||||||||||||||||||||||
General and administrative
|
$
|
1,631
|
$
|
1,146
|
$
|
4,792
|
$
|
4,007
|
$
|
485
|
42
|
%
|
$
|
785
|
20
|
%
|
Item 1. |
Legal Proceedings
|
Item 1A. |
Risk Factors
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3. |
Defaults Upon Senior Securities
|
Item 4. |
Mine Safety Disclosures
|
Item 5. |
Other Information
|
Item 6. |
Exhibits
|
Exhibit
Number
|
Description of Document
|
Note
Reference
|
Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
|
||
Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
|
||
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
The following financial statements and footnotes from the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2021 formatted in Inline Extensible Business Reporting Language (Inline XBRL):
|
||
101.INS
|
Inline XBRL Instance Document**
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document*
|
|
101.CAL
|
Inline XBRL Taxonomy Calculation Linkbase Document*
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document*
|
|
101.LAB
|
Inline XBRL Taxonomy Label Linkbase Document*
|
|
101.PRE
|
Inline XBRL Taxonomy Presentation Linkbase Document*
|
|
104
|
Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document and included in Exhibit 101)*
|
*
|
Filed herewith.
|
GALECTIN THERAPEUTICS INC.
|
||
By:
|
/s/ Joel Lewis
|
|
Name:
|
Joel Lewis
|
|
Title:
|
Chief Executive Officer and President
(principal executive officer)
|
|
By:
|
/s/ Jack W. Callicutt
|
|
Name:
|
Jack W. Callicutt
|
|
Title:
|
Chief Financial Officer
(principal financial and accounting officer)
|
1. |
I have reviewed this quarterly report on Form 10-Q of Galectin Therapeutics 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 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 we 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) |
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;
|
(c) |
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
|
(d) |
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
|
5. |
The registrant’s other certifying officer 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):
|
(a) |
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
|
(b) |
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.
|
Date: November 15, 2021
|
/s/ Joel Lewis
|
|
Name:
|
Joel Lewis
|
|
Title:
|
Chief Executive Officer and President
|
|
(principal executive officer)
|
1. |
I have reviewed this quarterly report on Form 10-Q of Galectin Therapeutics 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 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 we 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) |
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;
|
(c) |
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
|
(d) |
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
|
5. |
The registrant’s other certifying officer 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):
|
(a) |
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
|
(b) |
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.
|
Date: November 15, 2021
|
/s/ Jack W. Callicutt
|
|
Name:
|
Jack W. Callicutt
|
|
Title:
|
Chief Financial Officer
|
|
(principal financial and accounting officer)
|
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; 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 15, 2021
|
/s/ Joel Lewis
|
|
Name:
|
Joel Lewis
|
|
Title:
|
Chief Executive Officer and President
|
|
(principal executive officer)
|
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; 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 15, 2021
|
/s/ Jack W. Callicutt
|
|
Name:
|
Jack W. Callicutt
|
|
Title:
|
Chief Financial Officer
|
|
(principal financial and accounting officer)
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Operating expenses: | ||||
Research and development | $ 6,613 | $ 4,780 | $ 17,962 | $ 11,605 |
General and administrative | 1,631 | 1,146 | 4,792 | 4,007 |
Total operating expenses | 8,244 | 5,926 | 22,754 | 15,612 |
Total operating loss | (8,244) | (5,926) | (22,754) | (15,612) |
Other income (expense): | ||||
Interest income | 1 | 5 | 3 | 64 |
Interest expense | (111) | (22) | (217) | (65) |
Change in fair value of derivative | (166) | 0 | (338) | 0 |
Total other income (expense) | (276) | (17) | (552) | (1) |
Net loss | (8,520) | (5,943) | (23,306) | (15,613) |
Preferred stock dividends | (37) | (12) | (104) | (72) |
Net loss applicable to common stockholders | $ (8,557) | $ (5,955) | $ (23,410) | $ (15,685) |
Net loss per common share - basic (in dollars per share) | $ (0.14) | $ (0.10) | $ (0.40) | $ (0.28) |
Net loss per common share - diluted (in dollars per share) | $ (0.14) | $ (0.10) | $ (0.40) | $ (0.28) |
Weighted average common shares outstanding - basic (in shares) | 59,290 | 57,047 | 58,253 | 57,013 |
Weighted average common shares outstanding - diluted (in shares) | 59,290 | 57,047 | 58,253 | 57,013 |
Basis of Presentation |
9 Months Ended |
---|---|
Sep. 30, 2021 | |
Basis of Presentation [Abstract] | |
Basis of Presentation |
1. Basis of Presentation
Galectin Therapeutics Inc. and subsidiaries (the “Company”) is a clinical stage biopharmaceutical company that is applying its leadership in galectin science and
drug development to create new therapies for fibrotic disease and cancer. These candidates are based on the Company’s targeting of galectin proteins which are key mediators of biologic and pathologic function. These compounds also may have
application for drugs to treat other diseases and chronic health conditions.
The unaudited condensed consolidated financial statements as reported in this Quarterly Report on Form 10-Q reflect all adjustments which are, in the opinion of
management, necessary to present fairly the financial position of the Company as of September 30, 2021 and the results of its operations for the three and nine months ended September 30, 2021 and 2020 and its cash flows for the three and nine
months ended September 30, 2021 and 2020. All adjustments made to the interim financial statements include all those of a normal and recurring nature. Amounts presented in the condensed consolidated balance sheet as of December 31, 2020 are
derived from the Company’s audited consolidated financial statements as of that date, but do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete
financial statements. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that
require additional disclosure. Subsequent events have been evaluated through the date these financial statements are available to be issued. The results for interim periods are not necessarily indicative of results that may be expected for any
other interim period or for the full year. The unaudited condensed consolidated financial statements of the Company should be read in conjunction with its Annual Report on Form 10-K for the year ended December 31, 2020.
The
Company has operated at a loss since its inception and has had no revenues. The Company anticipates that losses will continue for the foreseeable future. At September 30, 2021, the Company had $36,600,000 of unrestricted cash and cash equivalents available to fund future operations. The Company believes there is sufficient cash, including a $10,000,000 convertible note payable that will close in December 2021 (see Note 4), to fund currently planned operations at least through March 31,
2023. We will require more cash to fund our operations after March 31, 2023 and believe we will be able to obtain additional financing. The currently planned operations include costs related to our adaptively designed NAVIGATE Phase 2b/3
clinical trial. Currently, we expect to require an additional approximately $30-$35 million to cover costs of the trial to reach the planned interim analysis estimated to occur around the end of the first quarter of 2024 along with drug manufacturing
and other scientific support activities and general and administrative costs. However, there can be no assurance that we will be successful in obtaining such new financing or, if available, that such financing will be on terms favorable to us.
If we are unsuccessful in raising additional capital to fund operations before March 31, 2023, we may be required to cease operations. Accordingly, based on the forecasts and estimates underlying our current operating plan, the financial
statements do not currently include any adjustments that might be necessary if we are unable to continue as a going concern.
The Company was
founded in July 2000, was incorporated in the State of Nevada in January 2001 under the name “Pro-Pharmaceuticals, Inc.,” and changed its name to “Galectin Therapeutics Inc.” on May 26, 2011.
|
Accrued Expenses and Other |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other |
2. Accrued Expenses and Other
Accrued expenses consist of the following:
Research and development expenses, including personnel costs, allocated facility costs, lab supplies, outside services, contract laboratory costs related to
manufacturing drug product, clinical trials and preclinical studies are charged to research and development expense as incurred. The Company accounts for nonrefundable advance payments for goods and services that will be used in future research
and development activities as expense when the service has been performed or when the goods have been received. Our current NAVIGATE clinical trial is being supported by third-party contract research organizations, or CROs, and other vendors. We
accrue expenses for clinical trial activities performed by CROs based upon the estimated amount of work completed on each trial. For clinical trial expenses and related expenses associated with the conduct of clinical trials, the significant
factors used in estimating accruals include the number of patients enrolled, the number of active clinical sites, and the duration for which the patients have been enrolled in the trial. We monitor patient enrollment levels and related activities
to the extent possible through internal reviews, review of contractual terms and correspondence with CROs. We base our estimates on the best information available at the time. We monitor patient enrollment levels and related activities to the
extent possible through discussions with CRO personnel and based our estimates of clinical trial costs on the best information available at the time. However, additional information may become available to us which will allow us to make a more
accurate estimate in future periods. In that event, we may be required to record adjustments to research and development expenses in future periods when the actual level of activity becomes more certain.
|
Line of Credit - Related Party |
9 Months Ended |
---|---|
Sep. 30, 2021 | |
Line of Credit - Related Party [Member] | |
Debt Instrument [Line Items] | |
Line of Credit - Related Party |
3. Line of Credit – Related Party
The Company has a $10 million Line of Credit
arrangement with Richard E. Uihlein, Chairman of Board of Directors and a shareholder pursuant to an agreement established in December, 2017 and amended in December, 2018 and January, 2019. Under the arrangement the Company may borrow up to $10 million from Mr. Uihlein on an unsecured basis and with any borrowings bearing interest at the Applicable Federal Rate for short terms loans
published by the Internal Revenue Service (0.17% in September 2021). Borrowings may be made through December 31, 2021 with repayment
due on December 31, 2022. In connection with the Line of Credit agreement, the Company issued to Mr. Uihlein warrants to purchase 1 million shares of the Company’s common stock for $5
per share. Half of the warrants vested at closing of the Line of Credit and the other half vest ratably with borrowings under the agreement. The 500,000
warrants that vested at closing were exercised in May 2019 for cash proceeds to the Company of $2.5 million. As of the date of this
Quarterly Report, there have been no borrowings under the Line of Credit.
The fair value of the 500,000 warrants vested at
closing in December 2017 was $696,000 at the date of issuance based on the following assumptions: an expected life of 7 years, volatility of 98%, risk free
interest rate of 2.05% and zero
dividends. The fair value of the vested warrants was recorded in other current assets and other assets (non-current) as a deferred financing cost and were to be amortized on a straight-line basis from December 19, 2017 through December 31, 2019.
The remaining unamortized balance of the deferred financing cost on January 11, 2019 was adjusted to be recorded as expense on a straight-line basis through December 31, 2022. Amortization for the nine months ended September 30, 2021 and 2020 of
$65,000 and $65,000,
respectively, was recorded as interest expense. The fair value of warrants that vest in the future based on borrowings will be computed when those borrowings occur and amortized over the remaining period through December 31, 2022 reflecting the
second extension.
|
Convertible Notes Payable - Related Party |
9 Months Ended |
---|---|
Sep. 30, 2021 | |
Convertible Notes Payable - Related Party [Member] | |
Debt Instrument [Line Items] | |
Convertible Notes Payable - Related Party |
4. Convertible Notes Payable – Related Party
On April 16, 2021, the Company and Richard E. Uihlein entered into a debt financing arrangement whereby Mr. Uihlein loaned $10,000,000 to Company. In consideration for the loan, the Company issued a convertible promissory note (the “April Note”) in the principal amount of ten million dollars.
The April Note has a maturity date of April 16, 2025,
is prepayable at the option of the Company in whole or in part at any time and is convertible into the Company’s common stock at a conversion price equal to $5.00 per share at the option of the noteholder. The April Note bears interest at the rate of two percent (2%)
per annum, compounded annually. From April 16, 2021 through September 30, 2021, approximately $92,000 of interest expense was accrued
and included with the principal in the financial statements.
The April Note also includes a contingent interest component that requires the Company to pay additional interest at a rate of two and one-half
percent (2.5%) per quarter (10%
per annum) (the “Additional Interest”) beginning on the date of issuance of this Note and ending on the maturity date, provided however, that such payment is only required if and only if the noteholder elects to convert the entire balance of the
April Note into the Company’s common stock on or prior to maturity. As the contingent event is not based on creditworthiness, such feature is not clearly and closely related to the host instrument and accordingly must be bifurcated and recognized
as a derivative liability and a debt discount on the April Note at its inception. The fair value of the contingent interest derivative liability was $420,000
and $776,000 at note inception (April 16, 2021) and September 30, 2021, respectively, and is recognized as a derivative liability in
the consolidated balance sheet. The change in the fair value of the derivative liability from April 16, 2021 to September 30, 2021 of $356,000
was charged to other expense for the period ended September 30, 2021. The amortization of the debt discount of $420,000 recorded
initially upon note inception of $48,000 was recorded as additional interest expense from April 16, 2021 through September 30, 2021.
On September 17, 2021, the Company and Mr. Uihlein entered into a loan agreement in the aggregate of $20,000,000
(the “Loan Agreement”) to be funded in two closings and evidenced by two separate unsecured convertible promissory notes. The first of the two
promissory notes was also executed and delivered on September 17, 2021, (the “September Note”) to evidence the first loan in the principal amount of $10,000,000.
The second closing under the Loan Agreement for the remaining $10,000,000 will occur on or before December 17, 2021.
The September Note has a maturity date of September 17, 2025, is prepayable at the option of the Company in whole or in part at any time
and is convertible into the Company’s common stock at a conversion price equal to $8.64 per share at the option of the noteholder.
The September Note bears interest at the rate of two percent (2%) per annum, compounded annually. From September 17, 2021 through
September 30, 2021, approximately $7,000 of interest expense was accrued and included with the principal in the financial statements.
The September Note also includes a
contingent interest component that requires the Company to pay additional interest at a rate of
two and one-half percent (2.5%) per quarter (10% per annum) (the “Additional Interest”) beginning on the date of issuance of this Note and ending on the maturity date, provided however, that
such payment is only required if and only if the noteholder elects to convert the entire balance of the September Note into the Company’s common stock on or prior to maturity. As the contingent event is not based on creditworthiness, such
feature is not clearly and closely related to the host instrument and accordingly must be bifurcated and recognized as a derivative liability and a debt discount on the September Note at its inception. The fair value of the contingent interest
derivative liability was $433,000 and $415,000
at note inception (September 17, 2021) and September 30, 2021, respectively, and is recognized as a derivative liability in the consolidated balance sheet. The change in the fair value of the derivative liability from September 17, 2021 to
September 30, 2021 of ($ ) was recorded to other expense for the three month period ended September 30, 2021. The amortization
of the debt discount of $433,000 recorded initially upon note inception of $5,000 was recorded as additional interest expense for the for the three month period ended September 30, 2021.
Under the terms of the Loan Agreement,
the Line of Credit for
$10 million between the Company and Mr. Uihlein, (See Note 3) will be terminated upon closing of the second $10 million unsecured convertible loan in December 2021. Currently there are no borrowings under the Line of Credit.
The Company’s contractual cash
obligations related to the outstanding convertible notes payable is a repayment of the April Note of the $10,000,000 plus accrued
interest on April 16, 2025 and a repayment of the September Note of the $10,000,000 plus accrued interest on September 17, 2025, unless
converted at the option of the noteholder.
|
Stock-Based Compensation |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation |
5. Stock-Based Compensation
Following is the stock-based compensation expense related to common stock options, restricted common stock, common stock warrants and deferred stock units:
The following table summarizes the stock option activity in the Company’s equity incentive plans, including non-plan grants to Company executives, from December 31,
2020 through September 30, 2021:
As of September 30, 2021, there was $3,346,200 of
unrecognized compensation related to 2,401,668 unvested options, which is expected to be recognized over a weighted–average period of
approximately 2 years. The weighted-average grant date fair value for options granted during the nine months ended September 30, 2021
was $1.71. The Company granted 2,260,000
stock options during the nine months ended September 30, 2021. During the nine months ended September 30, 2021, 396,664 stock options
were exercised on a net basis resulting in the issuance of 148,938 shares of common stock.
The fair value of all other options granted is determined using the Black-Scholes option-pricing model. The following weighted average assumptions were used:
In January 2020, two directors elected to take
restricted stock grants in lieu of cash retainers for 2020. A total of 32,693 shares of restricted stock valued at approximately $93,500 was amortized to expense on a straight-line basis until January 9, 2021 when the stock vested in full.
In March 2021, one director elected to take a
restricted stock grant in lieu of cash retainers for 2021. A total of 16,588 shares of restricted stock valued at approximately $35,000 is being amortized to expense on a straight-line basis until December 31, 2021 when the stock vests in full.
In September 2020, the Company entered into an employment agreement with its new Chief Executive Officer whereby 20% of his base salary and performance bonuses will be paid in cash, and 80%
will be paid in the form of deferred stock units (“DSUs”) in accordance with the terms and subject to the provisions set forth in the DSU Agreement. DSUs credited to Mr. Lewis as of any date shall be fully vested and nonforfeitable at all
times. The Company shall issue the shares underlying the outstanding whole number of DSUs credited to Mr. Lewis as follows: twenty five percent
shall be issued on March 1, 2023, twenty five percent shall be issued on September 1, 2023 and fifty percent shall be issued on March 1, 2024. For the nine months ended September 30, 2021, $300,000 of his compensation was recorded as stock compensation expense representing 104,378 shares of common stock to be issued under the DSU agreement with a weighted average grant date fair value of $2.87
per share. Also, Mr. Lewis’ bonus for the year ended December 31, 2020 of $60,000 (which was included in accrued compensation at
December 31, 2020) was approved in March 2021 and represents 27,027 shares of common stock to be issued under the DSU agreement with a
grant date fair value of $2.22 per share. The $60,000 was reclassified from accrued compensation to additional paid in capital in March 2021. There is no
unrecognized compensation expense related to the DSUs.
|
Common Stock Warrants |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock Warrants [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock Warrants |
6. Common Stock Warrants
The following table summarizes the common stock warrant activity from December 31, 2020 through September 30, 2021:
The weighted average expiration of the warrants outstanding as of September 30, 2021 is 3.0 years.
|
Fair Value of Financial Instruments |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments |
7. Fair Value of Financial Instruments
The Company has certain financial assets and liabilities recorded at fair value. Fair values determined by Level 1 inputs utilize observable data such as quoted
prices in active markets. Fair values determined by Level 2 inputs utilize data points other than quoted prices in active markets that are observable either directly or indirectly. Fair values determined by Level 3 inputs utilize unobservable
data points in which there is little or no market data, which require the reporting entity to develop its own assumptions. The carrying amounts reflected in the consolidated balance sheets for cash equivalents, accounts payable and accrued
expenses approximate their carrying value due to their short-term nature. There were no level 2 or level 3 assets or liabilities
at December 31, 2020.
Assets and liabilities measured and recorded at fair value on a recurring basis at the end of September 30, 2021 were as follows:
The April Note derivative liability – contingent interest was valued using a Monte Carlo Geometric Brownian Stock Path Model. The key assumptions used in the model at inception, and at
September 30, 2021 are as follows:
The roll forward of the April Note derivative liability – contingent interest is as follows:
The September Note derivative liability – contingent
interest was valued using a Monte Carlo Geometric Brownian Stock Path Model. The key assumptions used in the model at inception, and at September 30, 2021 are as follows:
The
roll forward of the September Note derivative liability – contingent interest is as follows:
|
Loss Per Share |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Per Share |
8. Loss Per Share
Basic net loss per common share is computed by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding
during the period. Diluted net loss per common share is computed by dividing the net loss available to common stockholders by the weighted average number of common shares and other potential common shares then outstanding. Potential common shares
consist of common shares issuable upon the assumed exercise of in-the-money stock options and warrants and potential common shares related to the conversion of the preferred stock. The computation of diluted net loss per share does not assume the
issuance of common shares that have an anti-dilutive effect on net loss per share.
Dilutive shares which could exist pursuant to the exercise of outstanding stock instruments and which were not included in the calculation because their affect would
have been anti-dilutive are as follows:
|
Common Stock |
9 Months Ended |
---|---|
Sep. 30, 2021 | |
Common Stock [Abstract] | |
Common Stock |
9. Common Stock
2020 At Market Issuance of Common Stock
On May 11, 2020, the Company entered into an At Market Issuance Sales Agreement (the “2020 At Market Agreement”) with a sales agent under which the Company may issue
and sell shares of its common stock having an aggregate offering price of up to $40.0 million from time to time through the sales
agent. Sales of the Company’s common stock through the sales agent, if any, will be made by any method that is deemed an “at the market” offering as defined by the U.S. Securities and Exchange Commission. The Company will pay to the sales agent a
commission rate equal to 3.0% of the gross proceeds from the sale of any shares of common stock sold through the sales agent under the
2020 At Market Agreement. During the nine months ended September 30, 2021, the Company issued 845,214 shares of common stock under the
2020 At Market Agreement for net proceeds of $3,864,000.
For the nine months ended September 30, 2021 and 2020, the Company issued a total of 57,162 and 59,716 shares of common stock, respectively, for dividends on
Series A and Series C Preferred Stock.
|
Commitments and Contingencies |
9 Months Ended |
---|---|
Sep. 30, 2021 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies |
10. Commitments and Contingencies
Other Legal Proceedings
The Company records accruals for such contingencies to the extent that the Company concludes that their occurrence is probable, and the related damages are
estimable. There are no significant pending legal proceedings.
Clinical Trial and Research Commitments
The Company has entered into agreements with contractors for research and development activities to further its product candidates. The contracts generally may be
canceled at any time by providing thirty days’ notice.
|
Leases |
9 Months Ended | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||
Leases |
11. Leases
The Company has one operating lease for its office
space which was amended effective January 1, 2019 for a term of 38 months with no residual value guarantees or material restrictive
covenants. The amended lease provided for free rent for the first two months of the lease and continues the security deposit of $6,000. In addition to base rental payments included in the contractual obligations table above, the Company is responsible for our pro-rata share of
the operating expenses for the building. Our lease cost for the nine-month periods ended September 30, 2021 and 2020 was $33,000
for each period and is included in general and administrative expenses. As of September 30, 2021, the right to use lease asset consisted of $18,000
and is included in
. Also, as of September 30, 2021, current lease liability of $19,000 is included in .
Maturity of operating lease as of September 30, 2021 in thousands:
The discount rate used in calculating the present value of the lease payments was 11.04%
|
Galectin Sciences LLC |
9 Months Ended |
---|---|
Sep. 30, 2021 | |
Galectin Sciences LLC [Abstract] | |
Galectin Sciences LLC |
12. Galectin Sciences LLC
In January 2014, we created Galectin Sciences, LLC (the “LLC” or “Investee”), a collaborative joint venture co-owned by SBH Sciences, Inc. (“SBH”),
to research and develop small organic molecule inhibitors of galectin-3 for oral administration. The LLC was initially capitalized with a $400,000
cash investment to fund future research and development activities, which was provided by the Company, and specific in-process research and development (“IPR&D”) contributed by SBH. The estimated fair value of the IPR&D contributed by
SBH, on the date of contribution, was $400,000. Initially, the Company and SBH each had a 50% equity ownership interest in the LLC, with neither party having control over the LLC. Accordingly, from inception through the fourth quarter of 2014, the Company
accounted for its investment in the LLC using the equity method of accounting. Under the equity method of accounting, the Company’s investment was initially recorded at cost with subsequent adjustments to the carrying value to recognize
additional investments in or distributions from the Investee, as well as the Company’s share of the Investee’s earnings, losses and/or changes in capital. The estimated fair value of the IPR&D contributed to the LLC was immediately expensed
upon contribution as there was no alternative future use available at the point of contribution. The operating agreement provides that if either party does not desire to contribute its equal share of funding required after the initial
capitalization, then the other party, providing all of the funding, will have its ownership share increased in proportion to the total amount contributed from inception. In the fourth quarter of 2014, after the LLC had expended the $400,000 in cash, SBH decided not to contribute its share of the funding required. Since then, the Company has contributed a total of $2,585,000, including $56,000 for the
three months ended September 30, 2021, for expenses of the LLC. Since the end of 2014, SBH has contributed $158,000 for expenses in the
LLC. As of September 30, 2021, the Company’s ownership percentage in the LLC was 84.2%. The Company accounts for the interest in the
LLC as a consolidated, less than wholly owned subsidiary. Because the LLC’s equity is immaterial, the value of the non-controlling interest is also deemed to be immaterial.
|
Accrued Expenses and Other (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses and Other [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses |
Accrued expenses consist of the following:
|
Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Stock-Based Compensation Expense |
Following is the stock-based compensation expense related to common stock options, restricted common stock, common stock warrants and deferred stock units:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Option Activity |
The following table summarizes the stock option activity in the Company’s equity incentive plans, including non-plan grants to Company executives, from December 31,
2020 through September 30, 2021:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Assumptions Used to Determine Fair Value of Options Granted |
The fair value of all other options granted is determined using the Black-Scholes option-pricing model. The following weighted average assumptions were used:
|
Common Stock Warrants (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock Warrants [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock Warrant Activity |
The following table summarizes the common stock warrant activity from December 31, 2020 through September 30, 2021:
|
Fair Value of Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured and Recorded at Fair Value on Recurring Basis |
Assets and liabilities measured and recorded at fair value on a recurring basis at the end of September 30, 2021 were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
April Note [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Key Assumptions Used in Model at Inception |
The April Note derivative liability – contingent interest was valued using a Monte Carlo Geometric Brownian Stock Path Model. The key assumptions used in the model at inception, and at
September 30, 2021 are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Roll Forward of Derivative Liability - Contingent Interest |
The roll forward of the April Note derivative liability – contingent interest is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
September Note [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Key Assumptions Used in Model at Inception |
The September Note derivative liability – contingent
interest was valued using a Monte Carlo Geometric Brownian Stock Path Model. The key assumptions used in the model at inception, and at September 30, 2021 are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Roll Forward of Derivative Liability - Contingent Interest |
The
roll forward of the September Note derivative liability – contingent interest is as follows:
|
Loss Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Earnings Per Share |
Dilutive shares which could exist pursuant to the exercise of outstanding stock instruments and which were not included in the calculation because their affect would
have been anti-dilutive are as follows:
|
Leases (Tables) |
9 Months Ended | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||
Maturity of Operating Lease |
Maturity of operating lease as of September 30, 2021 in thousands:
|
Basis of Presentation (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
Basis of Presentation[Abstract] | ||
Unrestricted cash and cash equivalents | $ 36,600,000 | $ 27,142,000 |
Convertible note payable | 10,000,000 | |
Minimum [Member] | ||
Basis of Presentation[Abstract] | ||
Additional estimated costs of clinical trial and general overhead | 30,000,000 | |
Maximum [Member] | ||
Basis of Presentation[Abstract] | ||
Additional estimated costs of clinical trial and general overhead | $ 35,000,000 |
Accrued Expenses and Other (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Accrued Expenses and Other [Abstract] | ||
Legal and accounting fees | $ 127,000 | $ 122,000 |
Accrued compensation | 520,000 | 789,000 |
Lease liability | 19,000 | 44,000 |
Accrued research and development costs and other | 5,716,000 | 3,087,000 |
Total | $ 6,382,000 | $ 4,042,000 |
Stock-Based Compensation, Components of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Stock-Based Compensation Expense [Abstract] | ||||
Total stock-based compensation expense | $ 587 | $ 408 | $ 1,422 | $ 1,232 |
Research and Development [Member] | ||||
Stock-Based Compensation Expense [Abstract] | ||||
Total stock-based compensation expense | 91 | 138 | 247 | 378 |
General and Administrative [Member] | ||||
Stock-Based Compensation Expense [Abstract] | ||||
Total stock-based compensation expense | $ 496 | $ 270 | $ 1,175 | $ 854 |
Stock-Based Compensation, Weighted Average Assumptions Used to Determine Fair Value of Options Granted (Details) |
9 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Weighted Average Assumptions for Stock Options Granted [Abstract] | ||
Risk-free interest rate | 0.58% | 1.26% |
Expected life of the options | 6 years | 6 years |
Expected volatility of the underlying stock | 91.00% | 98.00% |
Expected dividend rate | 0.00% | 0.00% |
Fair Value of Financial Instruments, Roll Forward of Derivative Liability (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Roll Forward of Derivative Liability [Roll Forward] | ||
Balance | $ 0 | |
Fair Value Adjustment | 338,000 | $ 0 |
Balance | 1,191,000 | |
April Note [Member] | ||
Roll Forward of Derivative Liability [Roll Forward] | ||
Balance | 0 | |
Issuance of convertible note payable - related party | 420,000 | |
Fair Value Adjustment | 356,000 | |
Balance | 776,000 | |
September Note [Member] | ||
Roll Forward of Derivative Liability [Roll Forward] | ||
Balance | 0 | |
Issuance of convertible note payable - related party | 433,000 | |
Fair Value Adjustment | (18,000) | |
Balance | $ 415,000 |
Common Stock (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
Common Stock [Abstract] | |||
Issuance of common stock (in shares) | 59,341,305 | 57,077,055 | |
Net proceeds from issuance of common stock | $ 6,815 | $ 263 | |
2020 Market Agreement [Member] | |||
Common Stock [Abstract] | |||
Aggregate offering price | $ 40,000 | ||
Percentage of commission rate to be paid to sales agent | 3.00% | ||
Issuance of common stock (in shares) | 845,214 | ||
Net proceeds from issuance of common stock | $ 3,864 | ||
2020 Market Agreement [Member] | Series A and Series C Preferred Stock [Member] | |||
Common Stock [Abstract] | |||
Common stock issued for dividends (in shares) | 57,162 | 59,716 |
Commitments and Contingencies (Details) |
9 Months Ended |
---|---|
Sep. 30, 2021 | |
Commitments and Contingencies [Abstract] | |
Contract cancelation notice period | 30 days |
Leases (Details) |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2021
USD ($)
Lease
|
Sep. 30, 2020
USD ($)
|
Dec. 31, 2020
USD ($)
|
|
Operating Lease [Abstract] | |||
Number of operating leases | Lease | 1 | ||
Term of contract | 38 months | ||
Free rent period | 2 months | ||
Security deposit | $ 6,000 | ||
Right to use lease asset | $ 18,000 | ||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other assets | ||
Current lease liability | $ 19,000 | $ 44,000 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued expenses and other | ||
Maturity of Operating Lease [Abstract] | |||
2021 | $ 12,000 | ||
2022 | 8,000 | ||
Total | 20,000 | ||
Less imputed interest | (1,000) | ||
Present value of lease liability | $ 19,000 | ||
Discount rate on present value of lease payments | 11.04% | ||
General and Administrative Expense [Member] | |||
Operating Lease [Abstract] | |||
Lease cost | $ 33,000 | $ 33,000 |
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