Annual 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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(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
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Name of each exchange
on which registered
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Large accelerated filer
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☐
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Accelerated filer
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☐
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☒
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Smaller reporting company
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Emerging growth company
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PAGE
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||||||||||||||||||||||||||||
PART 1
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ITEM 1.
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1
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|||||||||||||||||||||||||||
ITEM 1A.
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9
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ITEM 1B.
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20
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ITEM IC
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20 |
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ITEM 2.
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20
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ITEM 3.
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20
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ITEM 4.
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20
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PART II
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ITEM 5.
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21
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ITEM 6.
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21
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ITEM 7.
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21
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ITEM 7A.
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25
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ITEM 8.
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26
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ITEM 9.
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26
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ITEM 9A.
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26
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ITEM 9B.
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27
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ITEM 9C
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27 | |||||||||||||||||||||||||||
PART III
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ITEM 10.
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28
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ITEM 11.
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31
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ITEM 12.
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39
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ITEM 13.
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41
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ITEM 14.
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42
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PART IV
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ITEM 15.
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43
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ITEM 16
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46 |
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47
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Item 1. |
Business
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Indication
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Drug
|
Status
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Prevention of esophageal varices in
NASH cirrhosis
|
||
Phase 1 interaction trial:
NASH-CX trial and
NASH-FX trial
|
belapectin
|
IND submitted January 2013. Results from the Phase 1 interaction trial were reported in 2014, with final results reported in January 2015.
The Phase 2 NASH FX trial was conducted in 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 and published in Alimentary Pharmacology and Therapeutics in 2016.
The Phase 2 NASH CX trial was conducted in patients with compensated cirrhosis and portal hypertension. The NASH CX trial top line data was reported in
December 2017 and was published in Gastroenterology in 2020.
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|
|
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NASH NAVIGATE
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Following FDA feedback, the NAVIGATE trial is an adaptive Phase 2b/3 trial for the prevention of esophageal varices in NASH patients with compensated cirrhosis and clinical
signs of portal hypertension. 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. If required, the Phase 3 end of study analysis
will evaluate the development of esophageal varices as the same primary outcome of efficacy and a composite clinical endpoint including progression to varices requiring treatment as a key secondary outcome of efficacy
(www.clinicaltrials.gov NCT04365868). The final patient was randomized in February 2023 and an interim analysis is expected in the fourth quarter of 2024.
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|
|
||
Phase 1 study: hepatic insufficiency
|
A hepatic impairment study is being conducted in subjects with normal hepatic function and subjects with varying degrees of hepatic impairment (www.clinicaltrials.gov
NCT04332432) and began enrolling patients in the second quarter of 2020. The study completed enrollment in February 2022 and favorable results were presented in 2023.
|
|
Cancer Immunotherapy
|
||
Melanoma, Head, Neck Squamous Cell belapectin Carcinoma (HNSCC)
|
Investigator IND study was completed. A Phase 1B study began in Q-1 2016. Early data was reported in February 2017 and additional data were reported in
September 2018. Data from an extension trial was reported in July 2021 for additional melanoma and HNSCC patients which provided a rational basis for additional trials which the Company is exploring. In the third quarter of 2022, the
Company announced its IND application for belapectin in combination with a checkpoint inhibitor for the treatment of HNSCC was filed and a Study May Proceed letter was received from FDA. The Company is reviewing options for financing
this trial which will determine when such trial could commence.
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1. |
Pre-clinical laboratory tests, animal studies, and formulation studies,
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2. |
Submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin,
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3. |
Adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug for each indication,
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4. |
Submission to the FDA of a NDA,
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5. |
Satisfactory completion of an FDA inspection of the manufacturing facility or facilities, at which the drug is produced to assess compliance with current good manufacturing procedures (“cGMP”) established by the FDA,
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6. |
FDA review and approval of the NDA, and
|
7. |
FDA review and approval of a trademark used in connection with a pharmaceutical.
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Item 1A. |
Risk Factors
|
• |
successfully complete development activities, including the necessary clinical trials;
|
• |
complete and submit new drug applications, or NDAs, to the U.S. Food and Drug Administration, or FDA, and obtain regulatory approval for indications for which there is a commercial market;
|
• |
complete and submit applications to, and obtain regulatory approval from, foreign regulatory authorities;
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• |
successfully complete all required regulatory agency inspections;
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• |
set a commercially viable price for our products;
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• |
obtain commercial quantities of our products at acceptable cost levels;
|
• |
find suitable distribution partners to help us market, sell and distribute our approved products in other markets; and
|
• |
obtain coverage and adequate reimbursement from third parties, including government and private payers.
|
• |
the duration of the clinical trials;
|
• |
the number of sites included in the trials;
|
• |
the countries in which the trial is conducted;
|
• |
the length of time required and ability to enroll eligible patients;
|
• |
the number of patients that participate in the trials;
|
• |
the number of doses that patients receive;
|
• |
the drop-out or discontinuation rates of patients;
|
• |
per patient trial costs;
|
• |
third party contractors failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner;
|
• |
our drug product candidates having different chemical and pharmacological properties in humans than in lab testing;
|
• |
the need to suspend or terminate our clinical trials;
|
• |
insufficient or inadequate supply or quality of drug product candidates or other necessary materials to conduct our trials;
|
• |
potential additional safety monitoring, or other conditions required by FDA or comparable foreign regulatory authorities regarding the scope or design of our clinical trials, or other studies requested by regulatory agencies;
|
• |
problems engaging IRBs to oversee trials or in obtaining and maintaining IRB approval of studies;
|
• |
the duration of patient follow-up;
|
• |
the efficacy and safety profile of the product candidate;
|
• |
the costs and timing of obtaining regulatory approvals; and
|
• |
the costs involved in enforcing or defending patent claims or other intellectual property rights.
|
• |
we may be forced to suspend marketing of such product;
|
• |
regulatory authorities may withdraw their approvals of such product;
|
• |
regulatory authorities may require additional warnings on the label that could diminish the usage or otherwise limit the commercial success of such products;
|
• |
we may be required to conduct post-market studies;
|
• |
we could be sued and held liable for harm caused to subjects or patients; and
|
• |
our reputation may suffer.
|
• |
others may be able to make compounds that are competitive with our product candidates but are not covered by the claims of our patents;
|
• |
we might not have been the first to make the inventions covered by our pending patent applications;
|
• |
we might not have been the first to file patent applications for these inventions;
|
• |
it is possible that our pending patent applications will not result in issued patents;
|
• |
we may not develop additional proprietary technologies that are patentable; or
|
• |
the patents of others may have an adverse effect on our business.
|
• |
the results of our pre-clinical studies and clinical trials, including interim results, as well as those of our competitors;
|
• |
regulatory actions with respect to our products or our competitors’ products;
|
• |
our ability to integrate operations, technology, products and services;
|
• |
our ability to execute our business plan;
|
• |
operating results below expectations;
|
• |
our issuance of additional securities, including debt or equity or a combination thereof, which may be necessary to fund our operating expenses and the cost of our clinical trials;
|
• |
announcements of technological innovations or new products by us or our competitors;
|
• |
the success of competitive products;
|
• |
loss of any strategic relationship;
|
• |
industry developments, including, without limitation, changes in healthcare policies or practices or third-party reimbursement policies;
|
• |
regulatory or legal developments in the United States and other countries;
|
• |
the level of expenses related to any of our product candidates or clinical development programs;
|
• |
disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technologies;
|
• |
economic and other external factors;
|
• |
period-to-period fluctuations in our financial results;
|
• |
sales of our common stock by us, our insiders or our other stockholders;
|
• |
whether an active trading market in our common stock develops and is maintained;
|
• |
engagement and retention of senior management needed for our clinical trials; and
|
• |
novel and unforeseen market forces and trading strategies, such as the massive short squeeze rally caused by retail investors on companies such as Gamestop.
|
• |
to elect or defeat the election of our directors;
|
• |
to amend or prevent amendment of our certificate of incorporation or bylaws;
|
• |
to effect or prevent a merger, sale of assets or other corporate transaction; and
|
• |
to control the outcome of any other matter submitted to our stockholders for vote.
|
• |
delays or difficulties in enrolling patients in our clinical trials;
|
• |
delays or disruptions in non-clinical experiments due to unforeseen circumstances at contract research organizations and vendors along their supply chain;
|
• |
increased rates of patients withdrawing from our clinical trials following enrollment as a result of contracting a contagious illness, being forced to quarantine, or not accepting in office or home health visits;
|
• |
diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as sites for our NAVIGATE trial and hospital staff supporting the conduct of such trials;
|
• |
interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial
subject visits and study procedures (particularly any procedures that may be deemed non-essential), which may impact the integrity of subject data and clinical study endpoints;
|
• |
interruption or delays in the operations of the FDA and comparable foreign regulatory agencies, which may impact review and approval timelines;
|
• |
interruption of, or delays in receiving, supplies of our product candidates from our contract manufacturing organizations due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems; and
|
• |
limitations on employee resources that would otherwise be focused on the conduct of our preclinical studies and clinical trials, including because of sickness of employees or their families, the desire of employees to avoid contact
with large groups of people, an increased reliance on working from home or mass transit disruptions.
|
Item 1B. |
Unresolved Staff Comments
|
Item 1C. |
Cybersecurity
|
Item 2. |
Properties
|
Item 3. |
Legal Proceedings
|
Item 4. |
Mine Safety Disclosures
|
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
Item 6. |
[Reserved]
|
Item 7. |
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,
|
• |
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, and
|
• |
the impact resulting from a pandemic or the reemergence of COVID-19, which delayed our clinical trial and development efforts, as well as the impact that such a pandemic has on the volatility of the capital market and our ability to
access the capital market.
|
Year ended
December 31,
|
2023 as Compared to 2022
|
|||||||||||||||
2023
|
2022
|
$Change
|
% Change
|
|||||||||||||
(in thousands, except %)
|
||||||||||||||||
Research and development
|
$
|
32,130
|
$
|
31,737
|
$
|
393
|
1
|
%
|
Year Ended
December 31,
|
||||||||
2023
|
2022
|
|||||||
Direct external expenses:
|
(in thousands)
|
|||||||
Clinical programs
|
$
|
23,942
|
$
|
26,746
|
||||
Pre-clinical activities
|
3,021
|
1,262
|
||||||
Other research and development expenses:
|
||||||||
Payroll and other including stock-based compensation
|
5,167
|
3,727
|
||||||
$
|
32,130
|
$
|
31,737
|
Year ended
December 31,
|
2023 as Compared to 2022
|
|||||||||||||||
2023
|
2022
|
$ Change
|
% Change
|
|||||||||||||
(in thousands, except %)
|
||||||||||||||||
General and administrative
|
$
|
5,942
|
$
|
6,615
|
$
|
(673
|
)
|
(10
|
%)
|
Year ended
December 31,
|
2022 as Compared to 2021
|
|||||||||||||||
2022
|
2021
|
$Change
|
% Change
|
|||||||||||||
(in thousands, except %)
|
||||||||||||||||
Research and development
|
$
|
31,737
|
$
|
23,818
|
$
|
7,919
|
33
|
%
|
Year Ended
December 31,
|
||||||||
2022
|
2021
|
|||||||
Direct external expenses:
|
(in thousands)
|
|||||||
Clinical programs
|
$
|
26,748
|
$
|
20,830
|
||||
Pre-clinical activities
|
1,262
|
562
|
||||||
Other research and development expenses:
|
||||||||
Payroll and other including stock-based compensation
|
3,727
|
2,426
|
||||||
$
|
31,737
|
$
|
23,818
|
Year ended
December 31,
|
2022 as Compared to 2021
|
|||||||||||||||
2022
|
2021
|
$ Change
|
% Change
|
|||||||||||||
(in thousands, except %)
|
||||||||||||||||
General and administrative
|
$
|
6,615
|
$
|
6,361
|
$
|
254
|
4
|
%
|
Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk
|
Item 8. |
Financial Statements and Supplementary Data
|
Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A. |
Controls and Procedures
|
Item 9B. |
Other Information
|
Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
|
Item 10. |
Directors, Executive Officers and Corporate Governance
|
Name
|
Age
|
Director Since
|
|||
Gilbert F. Amelio, Ph.D. (2)(3)
|
80
|
2009
|
|||
Benjamin S. Carson, Sr., M.D.
|
72
|
2023
|
|||
Kary Eldred (1)
|
50
|
2018
|
|||
Kevin D. Freeman (1)(2)(3)
|
62
|
2011
|
|||
Joel Lewis
|
54
|
2017
|
|||
Gilbert S. Omenn, M.D., Ph.D. (2)
|
82
|
2014
|
|||
Marc Rubin, M.D. (3)
|
69
|
2011
|
|||
Elissa J. Schwartz, Ph.D. (3)
|
53
|
2020
|
|||
Harold H. Shlevin, Ph.D.
|
74
|
2019
|
|||
Richard E. Uihlein, Chairman
|
78
|
2017
|
|||
Richard A. Zordani (1)
|
51
|
2020
|
(1) |
Member of audit committee
|
(2) |
Member of compensation committee
|
(3) |
Member of nominating and governance committee
|
• |
Use of multiple compensation vehicles that provide a balance of long- and short-term incentives with fixed and variable components; and
|
• |
Equity incentive awards that generally vest over several years, so while the potential compensation payable for equity incentive awards is tied directly to appreciation of our stock price, taking excessive risk for a short term gain
is discouraged because it would not maximize the value of equity incentive awards over the long-term.
|
Item 11. |
Executive Compensation
|
Name
|
Title
|
|
Joel Lewis
|
Chief Executive Officer and President
|
|
Pol F. Boudes, M.D.
|
Chief Medical Officer
|
|
Jack W. Callicutt
|
Chief Financial Officer
|
• |
provide competitive compensation that will help attract, retain and reward qualified executives;
|
• |
align executives’ interests with our success by making a portion of the executive’s compensation dependent upon corporate performance; and
|
• |
align executives’ interests with the interests of stockholders by including long-term equity incentives.
|
• |
base salary;
|
• |
performance and retention bonuses;
|
• |
long-term compensation in the form of equity-based awards.
|
Name
|
2023 Base Salary
|
2022 Base Salary
|
||||||
Joel Lewis
|
$
|
578,000
|
(1)
|
$
|
525,000
|
(1)
|
||
Pol F. Boudes, M.D.
|
$
|
535,000
|
$
|
475,000
|
||||
Jack W. Callicutt
|
$
|
368,000
|
$
|
320,000
|
(1) |
Pursuant to Mr. Lewis’s Employment Agreement and Deferred Stock Unit Agreement, 20% of Mr. Lewis’ base salary will be paid in cash and 80% will be paid in the form of deferred-stock units in accordance with the terms and subject to
the provisions of the DSU Agreement.
|
Name
|
Performance
Bonus
Amount
|
Awarded Amount
As % of Base Salary
|
||||||
Joel Lewis
|
$
|
289,000
|
50
|
%
|
||||
Pol F. Boudes, M.D.
|
$
|
160,500
|
30
|
%
|
||||
Jack W. Callicutt
|
$
|
110,400
|
30
|
%
|
Name
|
Grant Date
|
Number of Securities
Underlying Options
|
Exercise Price
|
|||||||
Joel Lewis
|
1/26/2023
|
70,000
|
$
|
1.11
|
||||||
Pol Boudes, M.D.
|
1/26/2023
|
50,000
|
$
|
1.11
|
||||||
Jack W. Callicutt
|
1/26/2023
|
50,000
|
$
|
1.11
|
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Option
Awards
($) (1)
|
All Other
Compensation
($)
|
Total
($)
|
||||||||||||||||
Joel Lewis, Chief Executive Officer & President
|
2023(2)
|
573,583
|
289,000
|
55,924
|
45,140(3
|
)
|
963,647
|
|||||||||||||||
2022(2)
|
522,917
|
262,500
|
103,517
|
85,247(4
|
) |
974,181
|
||||||||||||||||
Pol F. Boudes, M.D., Chief Medical Officer
|
2023(5)
|
530,000
|
160,500
|
39,946
|
39,834(6
|
)
|
770,280
|
|||||||||||||||
2022(5)
|
473,333
|
142,500
|
73,940
|
104,804(7
|
) |
794,577
|
||||||||||||||||
Jack W. Callicutt, Chief Financial Officer
|
2023(8)
|
364,000
|
110,400
|
39,946
|
47,073(9
|
)
|
561,419
|
|||||||||||||||
2022(8)
|
318,508
|
96,000
|
73,940
|
78,116(10
|
)
|
566,564
|
(1) |
Represents the aggregate grant date fair value of option awards made during 2023 and 2022 computed in accordance with the Stock Compensation Topic of the FASB ASC, as modified of supplemented. Fair value was calculated using the
Black-Scholes options pricing model. For a description of the assumptions used to determine these amounts, see Note 9 of the Notes to the Consolidated Financial Statements in our Annual Reports on Form 10-K for the fiscal years ended
December 31, 2023 and 2022.
|
(2) |
Mr. Lewis’s performance bonuses for 2023 and 2022 were approved in January 2023 and January 2024, respectively. Pursuant to his employment agreement 20% of his salary and bonus were paid in cash and 80% were awarded in deferred stock
units through December 31, 2023.
|
(3) |
Includes $33,244 for health and other insurance and $11,896 for 401(k) plan contributions.
|
(4) |
Includes $73,047 for health and other insurance and $12,200 for 401(k) plan contributions.
|
(5) |
Dr. Boudes’ performance bonuses for 2023 and 2022 were approved in January 2023 and January 2022, respectively.
|
(6) |
Includes $26,634 for health and other insurance and $13,200 for 401(k) plan contributions.
|
(7) |
Includes $92,604 for health and other insurance and $11,200 for 401(k) plan contributions.
|
(8) |
Mr. Callicutt’s performance bonuses for 2023 and 2022 were approved in January 2023 and January 2022, respectively.
|
(9) |
Includes $33,873 for health and other insurance and $12,200 for 401(k) plan contributions.
|
(10) |
Includes $65,916 for health and other insurance and $12,200 for 401(k) plan contributions.
|
Option Awards
|
Stock Awards
|
||||||||||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)
|
Market
Value of
Shares
or Units
of Stock
That
Have Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)
|
||||||||||||||||||||||||
Joel Lewis
|
54,250(1
|
)
|
—
|
2.39
|
12/14/2027
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
35,000(2
|
)
|
—
|
4.72
|
01/16/2029
|
|||||||||||||||||||||||||||||
40,000(3
|
)
|
—
|
2.86
|
01/09/2030
|
|||||||||||||||||||||||||||||
250,000(4
|
)
|
—
|
2.65
|
08/31/2030
|
|||||||||||||||||||||||||||||
70,000(5
|
)
|
—
|
2.11
|
03/25/2031
|
|||||||||||||||||||||||||||||
—
|
140,000(6
|
)
|
2.11
|
03/25/2031
|
|||||||||||||||||||||||||||||
70,000(7
|
)
|
—
|
1.98
|
01/24/2032
|
|||||||||||||||||||||||||||||
35,000(8
|
)
|
35,000(8
|
)
|
1.11
|
01/26/2033
|
||||||||||||||||||||||||||||
Pol F. Boudes, M.D.
|
180,000(9
|
)
|
120,000(9
|
)
|
1.75
|
03/12/2030
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||
50,000(5
|
)
|
—
|
2.11
|
03/25/2031
|
|||||||||||||||||||||||||||||
—
|
100,000(6
|
)
|
2.11
|
03/25/2031
|
|||||||||||||||||||||||||||||
50,000(7
|
)
|
—
|
1.98
|
01/24/2032
|
|||||||||||||||||||||||||||||
25,000(8
|
)
|
25,000(8
|
)
|
1.11
|
01/26/2033
|
||||||||||||||||||||||||||||
Jack W. Callicutt
|
26,000(10
|
)
|
—
|
13.38
|
01/21/2024
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
8,706(11
|
)
|
—
|
1.37
|
01/20/2026
|
|||||||||||||||||||||||||||||
90,000(12
|
)
|
—
|
5.87
|
01/15/2028
|
|||||||||||||||||||||||||||||
90,000(13
|
)
|
—
|
4.16
|
05/22/2028
|
|||||||||||||||||||||||||||||
50,000(14
|
)
|
—
|
4.72
|
01/16/2029
|
|||||||||||||||||||||||||||||
50,000(15
|
)
|
—
|
2.86
|
01/09/2030
|
|||||||||||||||||||||||||||||
50,500(5
|
)
|
—
|
2.11
|
03/25/2031
|
|||||||||||||||||||||||||||||
—
|
100,000(6
|
)
|
2.11
|
03/25/2031
|
|||||||||||||||||||||||||||||
50,000(7
|
)
|
—
|
1.98
|
01/24/2032
|
|||||||||||||||||||||||||||||
25,000(8
|
)
|
25,000(8
|
)
|
1.11
|
01/26/2033
|
(1) |
100% of the options vested in full on December 14, 2018.
|
(2) |
100% of the options vested in full on January 16, 2020.
|
(3) |
100% of the options vested in full on December 31, 2020.
|
(4) |
One-twelfth of the total options vest quarterly from August 31, 2020, which was the grant date.
|
(5) |
25% of the options vested on September 30, 2021, 25% vested on March 31, 2022, 25% vested on September 30, 2022, 25% vest on March 31, 2023.
|
(6) |
100% of the options vest when the Company has received the interim results of the NAVIGATE clinical trial and makes a public announcement that it has received the interim results.
|
(7) |
25% of the options vested on June 30, 2022, 25% vested on December 31, 2022, 25% vest on June 30, 2023, 25% vest on December 31, 2023.
|
(8) |
25% of the options vested on June 30, 2023, 25% vested on December 31, 2023, 25% vest on June 30, 2024, 25% vest on December 31, 2024.
|
(9) |
20% of the options vest on each of March 2, 2021, March 2, 2022, and March 2023 and 40% of the options vest on March 2, 2024.
|
(10) |
25% of the options vested on January 21, 2014, the grant date with the remainder vested ratably on a monthly basis over a three-year period.
|
(11) |
25% of the options vested on January 29, 2015, the grant date with the remainder vested ratably on a monthly basis over a three-year period.
|
(12) |
25% of the options vested on January 15, 2018 (grant date), 25% vested on June 30, 2018, and 50% vested on December 31, 2018.
|
(13) |
25% of the options vested on June 30, 2018, 25% vested on September 30, 2018, and 50% vested on December 31, 2018.
|
(14) |
25% of the options vested on June 30, 2019, 25% vested on December 31, 2019, 25% vested on June 30, 2020, and 25% vested on December 31, 2020.
|
(15) |
25% of the options vested on June 30, 2020, 25% vested on December 31, 2020, 25% vested on June 30, 2021, and 25% vested on December 31, 2021.
|
Name
|
Fees Earned
or Paid in
Cash ($)
|
Restricted
Stock
Awards
($) (1)
|
Option
Awards
($) (2)
|
Non-Equity
Incentive Plan
Compensation
($)
|
All Other
Compensation
($) (3)
|
Total
($)
|
||||||||||||||||||
Gilbert F. Amelio, Ph.D.
|
55,500
|
—
|
31,735
|
—
|
—
|
87,235
|
||||||||||||||||||
Benjamin S. Carson, Sr., M.D.
|
2,717
|
—
|
—
|
—
|
—
|
2,717
|
||||||||||||||||||
James C. Czirr (5)
|
40,000
|
—
|
31,735
|
—
|
—
|
71,735
|
||||||||||||||||||
Kary Eldred
|
47,500
|
—
|
31,735
|
—
|
—
|
79,235
|
||||||||||||||||||
Kevin D. Freeman
|
56,000
|
—
|
31,735
|
—
|
—
|
87,735
|
||||||||||||||||||
Gilbert S. Omenn, M.D., Ph.D.
|
50,000
|
—
|
31,735
|
—
|
—
|
81,735
|
||||||||||||||||||
Marc Rubin, M.D.
|
43,500
|
—
|
31,735
|
—
|
—
|
75,235
|
||||||||||||||||||
Elissa J. Schwartz, Ph.D.
|
43,500
|
—
|
31,735
|
—
|
—
|
75,235
|
||||||||||||||||||
Harold H. Shlevin, Ph.D.
|
40,000
|
—
|
31,735
|
—
|
—
|
71,735
|
||||||||||||||||||
Richard Uihlein
|
—
|
40,000
|
31,735
|
—
|
—
|
71,735
|
||||||||||||||||||
Richard A. Zordani
|
55,000
|
—
|
31,735
|
—
|
—
|
86,735
|
(1) |
Mr. Uihlein elected to receive restricted stock in lieu of cash retainer for their service. The restricted shares vested in full on December 31, 2023.
|
(2) |
Represents the grant date fair value of option awards based upon the Black Scholes valuation model made in 2023. The option grants were made on January 26, 2023. Each non-employee director received one grant of 40,000 options which
will vest in full on December 31, 2023. For a description of the assumptions used to determine these amounts, see Note 9 to the Notes to the Consolidated Financial Statements herein our Annual Report on Form 10-K for the fiscal year
ended December 31, 2023.
|
(3) |
Excludes travel expense reimbursements.
|
(4) |
Dr. Carson joined the Board of Directors in December 2023.
|
(5) |
Mr. Czirr retired from the Board of Directors in December 2023.
|
Name
|
Number of
Shares
Subject
to Option
Awards Held
as of
December 31,
2023
|
|||
Gilbert F. Amelio, Ph.D.
|
255,000
|
|||
Benjamin S. Carson, Sr., M.D.
|
100,000
|
|||
James C. Czirr
|
455,125
|
|||
Kary Eldred
|
291,875
|
|||
Kevin D. Freeman
|
353,125
|
|||
Gilbert S. Omenn, M.D., Ph.D.
|
368,750
|
|||
Marc Rubin, M.D.
|
294,565
|
|||
Elissa J. Schwartz, Ph.D.
|
190,000
|
|||
Harold H. Shlevin, Ph.D.
|
583,000
|
|||
Richard Uihlein
|
256,362
|
|||
Richard A. Zordani
|
190,000
|
|||
TOTAL
|
3,337,802
|
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Name and Address (1)
|
Shares of
Common
Stock
Beneficially
Owned (2)
|
Percent of
Common
Stock (3)
|
Shares of
Series A
Preferred
Stock
Beneficially
Owned
|
Percent of
Series A
Preferred
Stock (4)
|
|
|||||||||||
5% Stockholders
|
||||||||||||||||
James C. Czirr
|
12,839,201(5
|
)
|
18.9
|
%
|
100,000
|
7.9
|
%
|
|||||||||
10X Fund, L.P. (8)
|
11,679,460(6
|
)
|
17.3
|
%
|
—
|
—
|
||||||||||
David Smith (9)
|
—
|
—
|
175,000
|
13.9
|
%
|
|||||||||||
Early Equities LLC (9)
|
—
|
—
|
100,000(7
|
)
|
7.9
|
%
|
||||||||||
Richard E. Uihlein (11)
|
32,771,532(12
|
)
|
28.7
|
%
|
—
|
—
|
||||||||||
Directors and Named Executive Officers
|
||||||||||||||||
Benjamin S. Carson, Sr., M.D.
|
100,000
|
*
|
—
|
—
|
||||||||||||
Gilbert F. Amelio, Ph.D.
|
215,614
|
*
|
—
|
—
|
||||||||||||
Kevin Freeman
|
984,184(10
|
)
|
1.6
|
%
|
—
|
—
|
||||||||||
Joel Lewis
|
1,600,762
|
2.5
|
%
|
—
|
—
|
|||||||||||
Gilbert S. Omenn, M.D., Ph.D.
|
380,990
|
*
|
50,000
|
3.8
|
%
|
|||||||||||
Marc Rubin, M.D.
|
238,146
|
*
|
—
|
—
|
||||||||||||
Richard E. Uihlein
|
32,771,532(12
|
)
|
28.7
|
%
|
—
|
—
|
||||||||||
Richard A. Zordani
|
150,353
|
*
|
—
|
—
|
||||||||||||
Elissa J. Schwartz, Ph.D.
|
121,000
|
*
|
—
|
—
|
||||||||||||
Kary Eldred
|
713,739(13
|
)
|
1.1
|
%
|
—
|
—
|
||||||||||
Harold H. Shlevin, Ph.D.
|
483,706
|
*
|
—
|
—
|
||||||||||||
Pol F. Boudes
|
305,000
|
*
|
—
|
—
|
||||||||||||
Jack W. Callicutt
|
421,905
|
*
|
—
|
—
|
||||||||||||
All executive officers and directors as a group (13 persons)
|
38,526,931(14
|
)
|
43.9
|
%
|
50,000
|
3.8
|
%
|
(1) |
Except as otherwise indicated, the address for each named person is c/o Galectin Therapeutics Inc., 4960 Peachtree Industrial Blvd., Suite 240, Norcross, GA 30071.
|
(2) |
Includes the following number of shares of our common stock issuable upon exercise of outstanding stock options granted to our named executive officers and directors that are exercisable within 60 days after February 29, 2024.
|
Directors, Nominees and Named Executive Officers
|
Options Exercisable
Within 60 Days
|
|||
Benjamin S. Carson, Sr., M.D.
|
100,000
|
|||
Gilbert F. Amelio, Ph.D.
|
195,000
|
|||
Marc Rubin, M.D.
|
224,565
|
|||
Gilbert S. Omenn, M.D., Ph.D
|
298,750
|
|||
Kevin Freeman
|
283,125
|
|||
Kary Eldred
|
221,875
|
|||
Joel Lewis
|
554,250
|
|||
Richard E. Uihlein.
|
186,362
|
|||
Harold Shlevin, Ph.D.
|
475,000
|
|||
Richard A. Zordani
|
120,000
|
|||
Elissa J. Schwartz, Ph.D.
|
120,000
|
|||
Pol F. Boudes, M.D.
|
305,000
|
|||
Jack Callicutt
|
413,706
|
|||
All executive officers and directors as a group
|
3,497,633
|
(3) |
For each named person and group included in this table, percentage ownership of our common stock is calculated by dividing the number of shares of our common stock beneficially owned by such person or group by the sum of (i)
61,903,672 shares of our common stock outstanding as of February 29, 2024 and (ii) the number of shares of our common stock that such person has the right to acquire within 60 days after February 29, 2024.
|
(4) |
Based on 1,235,000 shares of Series A preferred stock outstanding as of February 29, 2024.
|
(5) |
Includes (i) 5,947,207 shares of common shares, and (ii) 5,732,253 common shares issuable upon exercise of warrants as to which Mr. Czirr, in his capacity as a managing member of 10X Capital Management Fund, LLC, a Florida limited
liability company and general partner of 10X Fund (referred to herein as 10X Management) has shared voting and investment power, and disclaims beneficial ownership, also includes 775,616 shares of common stock owned directly by Mr.
Czirr, 384,125 shares issuable upon the exercise of vested stock options owned by Mr. Czirr, and 16,667 shares of our common stock issuable upon conversion of Series A preferred stock owned by Mr. Czirr.
|
(6) |
Includes (i) 5,947,207 shares of common shares, and (ii) 5,732,253 common shares issuable upon exercise of warrants.
|
(7) |
Mr. Smith is the manager of Early Equities LLC, a Connecticut limited liability company, and may be deemed to have voting and investment control over, but disclaims beneficial ownership of, the shares of Series A preferred stock.
|
(8) |
Contact: c/o 10X Capital Management, LLC at Investment Law Group attn: Bob Mottern 545 Dutch Valley Road NE, Suite A, Atlanta, GA 30324.
|
(9) |
Contact: c/o David Smith 34 Shorehaven Road E., Norwalk, CT 06855.
|
(10) |
Includes 511,158 shares of the Company’s common stock managed by Cross Consulting and Services, LLC, a Texas limited liability company, d/b/a Freeman Global Investment Counsel. Mr. Freeman, in his capacity as CEO of Freeman Global
Investment Counsel, has voting and investment control over, but disclaims beneficial ownership of, these shares.
|
(11) |
Contact: c/o Uline Corporation, 12575 Uline Drive, Pleasant Prairie, WI 53158
|
(12) |
Includes (i) 10,296,461 shares of common stock, (ii) 1,700,180 common shares issuable upon the exercise of common stock purchase warrants, (iii) 186,362 common shares issuable upon the exercise of common stock options, (iv) 83,334
common shares issuable upon conversion of Series C preferred non-voting stock, (iv) 6,519,821 common shares issuable upon conversion of convertible notes payable and (v) 13,985,374 common shares issuable upon conversion of convertible
line of credit.
|
(13) |
Includes 49,313 shares of common stock, 6,599 common stock purchase warrants, and 221,875 common stock options personally owned by Mr. Eldred and 431,527 shares of common, and 4,425 shares of Common Stock held in a trust for a minor
child; however, Mr. Eldred disclaims beneficial ownership of the shares and warrants owned by such private foundations and trust.
|
Plan Category
|
Number of Securities
to be issued upon
exercise of
outstanding options
|
Weighted-
average
exercise
price of
outstanding
options
|
Number of
securities
remaining
available for
future
issuance
under
equity
compensation
plans
(excluding
securities
reflected in
column (a))
|
|||||||||
Equity compensation plans approved by security holders
|
6,333,841
|
$
|
2.66
|
3.954.727
|
Item 13. |
Certain Relationships, Related Transactions and Director Independence
|
Item 14. |
Principal Accountant Fees and Services
|
Fiscal Year
2023
|
Fiscal Year
2022
|
|||||||
Audit Fees (1)
|
$
|
177,000
|
$
|
155,000
|
||||
Audit-Related Fees (2)
|
8,000
|
15,000
|
||||||
Tax Fees
|
48,812
|
35,750
|
||||||
All Other Fees
|
—
|
—
|
||||||
Total Fees
|
$
|
233,812
|
$
|
205,750
|
(1) |
Audit Fees. These are fees for professional services for the audit of our annual financial statements dated December 31, 2023 and 2022 included in our Annual
Reports on Form 10-K for fiscal years then ended, and review of financial statements included in our Quarterly Reports on Form 10-Q for each fiscal quarter during the 2023 and 2022 fiscal years.
|
(2) |
Audit-Related Fees. These are fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements, including financial
disclosures made in our equity finance documentation and registration statements filed with the SEC that incorporate financial statements and the auditors’ report thereon and reviewed with our Audit Committee on financial
accounting/reporting standards.
|
Item 15. |
Exhibits and Financial Statement Schedules
|
Exhibit
Number
|
Description of Document
|
3.1
|
|
3.2
|
|
3.3
|
|
3.4
|
|
3.5
|
|
3.6
|
|
3.7
|
|
4.1
|
|
4.2
|
|
4.3
|
|
4.4
|
|
4.5
|
Exhibit
Number
|
Description of Document
|
4.6
|
|
4.7
|
|
4.8
|
|
4.09
|
|
4.10
|
|
4.11*
|
|
4.12* | Form of
Common Stock Purchase Warrant |
10.1†
|
|
10.2*
|
|
10.3*
|
Exhibit
Number
|
Description of Document
|
10.4†
|
|
10.5†
|
|
10.6†
|
|
10.7***
|
|
10.8***
|
|
10.9***
|
|
10.10
|
|
10.11
|
|
10.12
|
|
10.13
|
|
10.14
|
|
10.15
|
|
10.16
|
|
10.17
|
|
10.18
|
|
10.19*
|
Supplemental Line of Credit Agreement, dated as of March 29, 2024, by and between Richard E. Uihlein and the Company. |
10.20*
|
Form of Convertible Promissory Note issued to Richard E. Uihlein |
Exhibit
Number
|
Description of Document
|
21.1*
|
|
23.1*
|
|
31.1*
|
|
31.2*
|
|
32.1#
|
|
32.2#
|
|
97*
|
|
101.INS
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
104 |
The cover page for the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, has been formatted in Inline XBRL and contained in Exhibit 101
|
* |
Filed herewith.
|
# |
Furnished herewith and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
|
*** |
Galectin Therapeutics, Inc. has requested confidential treatment with respect to portions of this exhibit. Those portions have been omitted from the exhibit and filed separately with the U.S. Securities and Exchange Commission.
|
† |
Executive Compensation Arrangement pursuant to 601(b)(10)(iii)(A) of Regulation S-K
|
Item 16. |
Form 10–K Summary
|
GALECTIN THERAPEUTICS INC.
|
||
By: | /S/ JOEL LEWIS | |
Name: JOEL LEWIS. | ||
Title: Chief Executive Officer and President |
Signature |
Title
|
Date
|
||
/S/ JOEL LEWIS
|
Chief Executive Officer, President and Director
|
March 29, 2024
|
||
Joel Lewis
|
(principal executive officer)
|
|||
/S/ JACK W. CALLICUTT
|
Chief Financial Officer
|
March 29, 2024
|
||
Jack W. Callicutt
|
(principal financial and accounting officer)
|
|||
/S/ RICHARD E. UIHLEIN
|
Director and Chairman of the Board
|
March 29, 2024
|
||
Richard E. Uihlein
|
||||
/S/ GILBERT F. AMELIO, Ph.D.
|
Director
|
March 29, 2024
|
||
Gilbert F. Amelio, Ph.D.
|
||||
/S/ BENJAMIN S. CARSON, SR., M.D.
|
Director
|
March 29, 2024
|
||
Benjamin S. Carson, Sr., M.D. | ||||
/S/ KARY ELDRED
|
Director
|
March 29, 2024
|
||
Kary Eldred
|
||||
/S/ KEVIN D. FREEMAN
|
Director
|
March 29, 2024
|
||
Kevin D. Freeman
|
||||
/S/ GILBERT S. OMENN, M.D., Ph.D.
|
Director
|
March 29, 2024
|
||
Gilbert S. Omenn, M.D., Ph.D.
|
||||
/S/ MARC RUBIN, M.D.
|
Director
|
March 29, 2024
|
||
Marc Rubin, M.D.
|
||||
/S/ ELISSA J. SCHWARTZ, Ph.D.
|
Director
|
March 29, 2024
|
||
Elissa J. Schwartz, Ph.D.
|
||||
/S/ HAROLD H. SHLEVIN, Ph.D.
|
Director
|
March 29, 2024
|
||
Harold H. Shlevin, Ph.D.
|
||||
/S/ RICHARD A. ZORDANI
|
Director
|
March 29, 2024
|
||
Richard A. Zordani |
1. |
F-1
|
|
2. |
F-3
|
|
3. |
F-4
|
|
4. |
F-5
|
|
5. |
F-7
|
|
6. |
F-8
|
Description of Matter
|
Going Concern
|
||
As described further in Note 1 to the consolidated financial statements, the Company has incurred losses each year from inception through December 31, 2023,
and expects to incur additional losses in the foreseeable future. Currently, management’s forecasts and related assumptions illustrate the Company’s ability to sufficiently fund operations and satisfy the Company’s obligations as they come
due for at least one year from the financial statement issuance date.
Management made judgments to conclude that it is probable the Company’s plans will be effectively implemented and will provide the necessary cash flows to fund
the Company’s obligations as they become due. The judgments with the highest degree of impact and subjectivity in reaching this conclusion included management’s estimates of research and development clinical trial costs and other general
and administrative costs. As a result, a high degree of auditor judgment and increased audit effort was required in performing audit procedures to evaluate the reasonableness of management’s estimates.
|
|||
How We Addressed the Matter in Our Audit
|
Our audit procedures included the following:
|
||
• | Obtained an understanding of the internal controls and processes in place over the Company’s preparation of forecasted information and considerations of the Company’s obligations. | ||
• |
Tested the reasonableness of the forecasted research and development expenses, operating expenses, and uses and sources of cash used in
management’s assessment of whether the Company has sufficient liquidity to fund operations for at least one year from the consolidated financial statement issuance date. This testing included inquiries with management, comparison of prior
period forecasts to actual results, consideration of positive and negative evidence impacting management’s forecasts, the Company’s financing arrangements in place as of the report date, consideration of the Company’s relationships with
its financing partners, performance of a sensitivity analysis of accelerated uses of cash, and creation of an independent estimate of expected future cash flows.
|
||
Description of Matter
|
Valuation of Derivative Liabilities and Warrant Modification
|
||
As discussed in Note 5 to the consolidated financial statements, during the year ended December 31, 2021, the Company and a related party entered into three
debt financing arrangements for a total of $30 million loaned to the Company. These arrangements include various conversion and other features, including a contingent interest component that has been bifurcated and recognized as a
derivative liability. At December 31, 2023, the Company’s derivative liabilities related to the related party convertible notes payable totaled $1,004 thousand. Additionally, as discussed in Note 8, the Company modified common stock
purchase warrants held by a related party on September 22, 2023, which led to the recognition of a deemed dividend for the change in fair value of the warrants of $3,319 thousand. As more fully described in Note 6 and Note 8 to the
consolidated financial statements, the Company utilized a Monte Carlo Geometric Brownian Stock Path Model and Black-Scholes option pricing model in measuring the fair value of these instruments, which requires the use of estimates and
assumptions.
Auditing management’s valuations of the derivative liabilities and warrant modification was challenging due to the complexity of the valuation models and the
inputs that are highly sensitive to changes such as the common stock market price, volatility, risk free rates, and yields.
|
|||
How We Addressed the Matter in Our Audit
|
Our audit procedures included, among others, the following:
|
||
• | Obtained an understanding of the internal controls and processes in place over the Company’s process used in determining the valuation of the derivative liabilities and warrant modification. | ||
• | Evaluated the Company’s use of the models used and tested the significant assumptions used in the models, as described above. | ||
• | Evaluated the completeness and accuracy of underlying data used in supporting the assumptions and estimates. | ||
• | In addition, we involved valuation specialists to assist in assessing the significant assumptions and methodologies used by the Company. |
Description of Matter
|
Accrued and Prepaid Clinical Trial Expenses
|
||
The Company’s accrued expenses total approximately $9.2 million at December 31, 2023, which included the estimated obligation for clinical trial expenses
incurred as of December 31, 2023, but not paid as of that date in the amount of approximately $8.0 million. In addition, the Company’s total prepaid expenses and other current assets totaled $2.1 million, which included amounts that were
paid in advance of services incurred pursuant to clinical trials in the amount of approximately $1.1 million.
|
|||
Our audit procedures included, among others, the following:
|
|||
• |
Obtained an understanding of the internal controls and processes in place over the Company’s process used in determining the completeness and existence of
accrued and prepaid clinical trial expenses.
|
||
• |
Tested the accuracy and completeness of the underlying data used in determining the accrued and prepaid clinical trial expenses and evaluating the assumptions
and estimates used by management to adjust the actual information received. We corroborated the schedules of the underlying data used in the accrual calculation with the Company’s third party contract research organization who oversees the
clinical trials. To evaluate the completeness of the accrual, we also tested subsequent invoices received to assess the impact to the accrual.
|
December 31,
|
||||||||
2023
|
2022
|
|||||||
(in thousands, except per share
amounts)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Prepaid expenses and other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Property and equipment, net
|
|
|
||||||
Other
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
|
$
|
|
||||
Accrued expenses
|
|
|
||||||
Accrued dividends payable
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Convertible notes payable and accrued interest, net of debt discounts – related party (Note 5)
|
|
|
||||||
Derivative liabilities (Note 6)
|
|
|
||||||
Borrowing and accrued interest under convertible line of credit, net of debt discount – related party (Note 10)
|
||||||||
Other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (Note 12)
|
||||||||
Series C 6% super dividend redeemable convertible preferred stock;
|
|
|
||||||
Stockholders’ equity (deficit):
|
||||||||
Undesignated stock, $
|
|
|
||||||
Series A 12% convertible preferred stock;
|
|
|
||||||
Common stock, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
Total stockholders’ deficit
|
(
|
)
|
(
|
)
|
||||
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit
|
$
|
|
$
|
|
Year Ended
December 31,
|
||||||||
2023
|
2022
|
|||||||
(in thousands, except
per share amounts)
|
||||||||
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 derivatives
|
(
|
)
|
|
|||||
Total other expense
|
(
|
)
|
(
|
)
|
||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Preferred stock dividends
|
(
|
)
|
(
|
)
|
||||
Warrant modification | ( |
) | ||||||
Net loss applicable to common stockholders
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Basic and diluted net loss per share
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Weighted average common and potential common shares outstanding basic and diluted
|
Series C Super
Dividend Redeemable
Convertible
Preferred Stock
|
||||||||
Number of
Shares
|
Amount
|
|||||||
Balance at January 1, 2022
|
|
$
|
|
|||||
Balance at December 31, 2022
|
|
$
|
|
|||||
Balance at December 31, 2023
|
|
$
|
|
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 January 1, 2022
|
|
$
|
|
|
$ |
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||||||
Series A 12% convertible preferred stock dividend
|
|
|
(
|
)
|
||||||||||||||||||||||||
Series C super dividend redeemable convertible preferred stock dividend
|
|
(
|
)
|
|||||||||||||||||||||||||
Conversion of Series A Convertible Preferred to common |
( |
) | ( |
) | ||||||||||||||||||||||||
Issuance of common stock purchase warrants in connection with related party line of credit |
||||||||||||||||||||||||||||
Stock-based compensation expense
|
|
|
|
|||||||||||||||||||||||||
Net loss
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||||
Balance at December 31, 2022
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||||||||||
Series A 12% convertible preferred stock dividend
|
|
|
(
|
)
|
||||||||||||||||||||||||
Series C super dividend redeemable convertible preferred stock dividend
|
|
|
(
|
)
|
||||||||||||||||||||||||
Conversion of Series A Convertible Preferred to common
|
( |
) | ( |
) | ||||||||||||||||||||||||
Issuance of common stock from exercise of warrants |
||||||||||||||||||||||||||||
Issuance of common stock purchase warrants in connection with related party line of credit
|
||||||||||||||||||||||||||||
Warrant modification |
( |
|||||||||||||||||||||||||||
Stock-based compensation expense
|
|
|
|
|||||||||||||||||||||||||
Net loss
|
(
|
)
|
(
|
)
|
||||||||||||||||||||||||
Balance at December 31, 2023
|
|
$
|
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
Year Ended
December 31,
|
||||||||
2023
|
2022
|
|||||||
(in thousands)
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Adjustments to reconcile net loss to net cash from operating activities:
|
||||||||
Amortization of right to use asset
|
|
|
||||||
Stock-based compensation expense
|
|
|
||||||
Non-cash interest expense
|
|
|
||||||
Change in fair value of derivatives
|
|
(
|
)
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Prepaid expenses and other assets
|
(
|
)
|
|
|||||
Accrued interest on convertible notes payable and convertible line of credit – related party | ||||||||
Accounts payable, accrued expenses and other liabilities
|
|
|
||||||
Net cash from operating activities
|
(
|
)
|
(
|
)
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Net cash from investing activities
|
|
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Net proceeds from convertible line of credit – related party
|
||||||||
Net proceeds from exercise of common stock purchase warrants
|
||||||||
Net cash from financing activities
|
|
|
||||||
NET (DECREASE) INCREASE 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
|
$
|
|
$
|
|
||||
Reclassification of accrued bonus to additional paid in capital
|
||||||||
Noncash right to use lease asset |
||||||||
Common stock purchase warrants issued in connection with related party line of credit |
1. |
Nature of Business, Basis of Presentation and Liquidity
|
2. |
Summary of Significant Accounting Policies
|
3. |
Property and Equipment
|
2023
|
2022
|
|||||||
(in thousands)
|
||||||||
Leasehold improvements
|
$
|
|
$
|
|
||||
Computer and office equipment
|
|
|
||||||
Furniture and fixtures
|
|
|
||||||
Total
|
|
|
||||||
Less accumulated depreciation and amortization
|
(
|
)
|
(
|
)
|
||||
Property and equipment — net
|
$
|
|
$
|
|
4. |
Accrued Expenses
|
2023
|
2022
|
|||||||
(in thousands)
|
||||||||
Legal and accounting fees
|
$
|
|
$
|
|
||||
Accrued compensation
|
|
|
||||||
Lease liability
|
|
|
||||||
Accrued research and development costs and other
|
|
|
||||||
|
$
|
|
$
|
|
5. |
Convertible Notes Payable – Related Party
|
6. |
Fair Value of Financial Instruments
|
|
December 31, 2023
|
December 31, 2022
|
||||||
Derivative Liability – Contingent Interest April Note
|
$
|
|
$
|
|
||||
Derivative Liability – Contingent Interest September Note
|
$
|
|
$
|
|
||||
Derivative Liability – Contingent Interest December Note
|
$
|
|
$
|
|
December 31, 2023
|
December 31, 2022
|
|||||||
Stock Price
|
$
|
|
$
|
|
||||
Conversion Price of conversion feature
|
$
|
|
$
|
|
||||
Term
|
|
|
||||||
Risk Free Interest Rate
|
|
%
|
|
%
|
||||
Credit Adjusted Discount Rate
|
|
%
|
|
%
|
||||
Volatility
|
|
%
|
|
%
|
||||
Dividend Rate
|
|
%
|
|
%
|
Balance – December 31, 2021
|
$
|
|
||
Fair Value Adjustment
|
(
|
)
|
||
Balance – December 31, 2022
|
|
|||
Fair Value Adjustment | ||||
Balance – December 31, 2023 | $ |
December 31, 2023
|
December 31, 2022
|
|||||||
Stock Price
|
$
|
|
$
|
|
||||
Conversion Price of conversion feature
|
$
|
|
$
|
|
||||
Term
|
||||||||
Risk Free Interest Rate
|
|
%
|
|
%
|
||||
Credit Adjusted Discount Rate
|
|
%
|
|
%
|
||||
Volatility
|
|
%
|
|
%
|
||||
Dividend Rate
|
|
%
|
|
%
|
Balance – December 31, 2021
|
$
|
|
||
Fair Value Adjustment
|
(
|
)
|
||
Balance – December 31, 2022
|
|
|||
Fair Value Adjustment | ||||
Balance – December 31, 2023 | $ |
December 31, 2023
|
December 31, 2022
|
|||||||
Stock Price
|
$
|
|
$
|
|
||||
Conversion Price of conversion feature
|
$
|
|
$
|
|
||||
Term
|
|
|
||||||
Risk Free Interest Rate
|
|
%
|
|
%
|
||||
Credit Adjusted Discount Rate
|
|
%
|
|
%
|
||||
Volatility
|
|
%
|
|
%
|
||||
Dividend Rate
|
|
%
|
|
%
|
Balance – December 31, 2021
|
$
|
|
||
Fair Value Adjustment
|
(
|
)
|
||
Balance – December 31, 2022
|
|
|||
Fair Value Adjustment | ( |
) | ||
Balance – December 31, 2023 | $ |
7. |
Stockholders’ Equity
|
|
before the second anniversary of the date of issuance;
|
|
on or after the second anniversary of the date of issuance, but before the third anniversary of the date of issuance;
|
|
on or after the third anniversary of the date of issuance, but before the fourth anniversary of the date of issuance;
|
|
on or after the fourth anniversary of the date of issuance, but before the fifth anniversary of the date of issuance;
|
|
on or after the fifth anniversary of the date of issuance, but before the sixth anniversary of the date of issuance;
|
|
on or after the sixth anniversary of the date of issuance, but before the seventh anniversary of the date of issuance;
|
|
on or after the seventh anniversary of the date of issuance, but before the eighth anniversary of the date of issuance; and
|
|
on or after the eighth anniversary of the date of issuance, but before the ninth anniversary of the date of issuance.
|
8. |
Warrants
|
Warrants
|
Weighted average
exercise price
|
|||||||
Outstanding at December 31, 2021
|
|
$
|
|
|||||
Issued
|
|
|||||||
Exercised
|
|
|||||||
Canceled/Expired
|
|
|||||||
Outstanding at December 31, 2022
|
|
$
|
|
|||||
Issued
|
|
|||||||
Exercised
|
(
|
)
|
||||||
Canceled/Expired
|
(
|
)
|
||||||
Outstanding at December 31, 2023
|
|
$
|
|
Issued in Connection With |
Number
Outstanding
|
Exercise
Price
|
Exercisable Date | Expiration Date | ||||||
|
|
$ | ||||||||
|
$ |
|||||||||
|
|
$ | |
|
||||||
|
$ |
|||||||||
|
|
$ | |
|||||||
|
$ |
|||||||||
|
|
$ |
|
|||||||
|
$ |
|||||||||
|
|
$ |
|
|
||||||
|
$ |
|||||||||
|
|
$
|
|
|
|
|||||
|
$ |
|||||||||
|
|
$
|
|
|
|
|||||
|
$ |
|||||||||
|
|
$
|
|
|
|
|||||
|
$ |
|||||||||
|
|
$
|
|
|
|
|||||
|
$ |
|||||||||
|
|
$
|
|
|
|
|||||
|
$ |
|||||||||
|
|
$
|
|
|
|
|||||
|
|
$
|
|
|
|
|||||
|
|
$
|
|
|
|
|||||
|
|
$
|
|
|
|
|||||
|
|
$
|
|
|
|
|||||
2018 and 2017 Warrants issued for services
|
|
$
|
|
Various dates in 2017
and 2018
|
Various dates in 2024
and 2025
|
|||||
|
|
$
|
|
|
|
|||||
|
$ |
|||||||||
|
$ |
|||||||||
Total Outstanding Warrants
|
|
9. |
Stock-Based Compensation
|
Year Ended
December 31,
|
||||||||
2023
|
2022
|
|||||||
Research and development
|
$
|
|
$
|
|
||||
General and administrative
|
|
|
||||||
Total stock-based compensation expense
|
$
|
|
$
|
|
2023
|
2022
|
|||||||
Risk-free interest rate
|
|
%
|
|
%
|
||||
Expected life of the options
|
|
|
||||||
Expected volatility of the underlying stock
|
|
%
|
|
%
|
||||
Expected dividend rate
|
|
%
|
|
%
|
Number of
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life
(in years)
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||||||||||
Outstanding, December 31, 2021
|
|
$
|
|
|||||||||||||
Granted
|
|
|
||||||||||||||
Forfeited/Cancelled
|
(
|
)
|
|
|||||||||||||
Exercised
|
|
|
||||||||||||||
Outstanding, December 31, 2022
|
|
$
|
|
|||||||||||||
Granted
|
|
|
||||||||||||||
Forfeited/Cancelled
|
(
|
)
|
|
|||||||||||||
Exercised
|
|
|
||||||||||||||
Outstanding, December 31, 2023
|
|
$
|
|
|
$ |
|
||||||||||
Exercisable, December 31, 2023
|
|
$ |
|
$ |
|
Options Outstanding
|
Options Exercisable
|
||||||||||||||||||||
Exercise
Price (Range)
|
Number of
Shares
|
Weighted
Average
Remaining
Contractual
Life
|
Weighted
Average
Exercise
Price
|
Number of
Shares
|
Weighted
Average
Exercise
Price
|
||||||||||||||||
(in years)
|
|||||||||||||||||||||
$
|
|
|
$
|
|
|
$
|
|
||||||||||||||
$
|
|
|
|
|
|
||||||||||||||||
$
|
|
|
|
|
|
||||||||||||||||
$
|
|
|
|
|
|
||||||||||||||||
$
|
|
|
|
|
|
||||||||||||||||
|
|
$
|
|
|
$
|
|
10. |
Convertible Line of Credit – Related Party
|
11. |
Loss Per Share
|
Year Ended
December 31,
|
||||||||
2023
(Shares)
|
2022
(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 – related party
|
|
|||||||
Shares of common stock issuable upon conversion of convertible line of credit – related party
|
||||||||
Shares of common stock issuable upon conversion preferred stock
|
|
|||||||
|
12. |
Commitments and Contingencies
|
2024
|
$
|
|
||
2025 | ||||
Total
|
|
|||
Less imputed interest
|
|
|||
Present value of lease liability
|
$
|
|
13. |
Galectin Sciences LLC
|
14. |
Income Taxes
|
2023
|
2022
|
|||||||
(in thousands)
|
||||||||
Operating loss carryforwards
|
$ |
$
|
|
|||||
Tax credit carryforwards
|
|
|||||||
Other temporary differences
|
|
|||||||
|
||||||||
Less valuation allowance
|
( |
) |
(
|
)
|
||||
Net deferred tax asset
|
$ |
$
|
|
2023
|
2022
|
|||||||
Tax benefit at U.S. statutory rates
|
(
|
%)
|
(
|
%)
|
||||
State tax benefit
|
(
|
%)
|
|
%
|
||||
Permanent differences
|
|
%
|
|
%
|
||||
Other
|
|
%
|
(
|
%)
|
||||
Changes in valuation allowance
|
|
%
|
|
%
|
||||
|
%
|
|
%
|
15.
|
Subsequent
Event
|
Re:
|
Amendment and Restatement of 5,732,253 Common Stock Purchase Warrants held by 10X Fund L.P. or 10X Capital Management LLC
|
i. |
Revise the exercise period of the Series B Warrants until the earliest of (a) September 30, 2026, (b) thirty days after 10X fails to vote all of the shares of common stock in the Company then owned by it in the manner recommended by the
board of directors of the Company in any vote of the stockholders of the Company; or (c) thirty days after the shares of common stock of the Company have a closing price of $6.00 or greater for 10 consecutive trading days;
|
ii. |
Delete the cashless exercise option that is in certain of the Series B Warrants;
|
iii. |
Add a Beneficial Ownership Limitation provision in the Series B Warrants, which would have the effect of decreasing 10X Fund’s beneficial ownership to 9.99% and would bar the voluntary exercise of any warrants that would result in 10X
Fund’s ownership beyond 9.99% without at least 61 days’ prior notice from 10X Fund; and
|
iv. |
Delete the Board Nomination right in section 6.1 of certain of the Series B Warrants.
|
Very truly yours,
|
|||
Galectin Therapeutics, Inc
|
|||
/s/ Joel Lewis
|
By:
|
Joel Lewis | |
Its:
|
president and CEO |
ACCEPTED AND AGREED TO:
|
||
10X CAPITAL MANAGEMENT, LLC, a Florida limited liability company
|
||
/s/ James C. Czirr
|
||
By:
|
James C. Czirr | |
Its: |
Managing Member | |
10X FUND, L.P., a Delaware limited partnership
|
||
By: 10X CAPITAL MANAGEMENT, LLC, a Florida limited liability company
|
||
/s/ James C. Czirr
|
||
By:
|
James C. Czirr | |
Its: |
General Partner Managing Member |
Warrant No.
|
Holder
|
Number of warrants
|
Expiration date
|
Series B 1 & 2
|
|||
W-2009-B-02H
|
10X Capital Management LLC
|
108,452
|
5/13/2024
|
W-2009-B-03F
|
10X Capital Management LLC
|
56,547
|
6/30/2024
|
W-2009-B-04F
|
10X Capital Management LLC
|
33,928
|
8/12/2024
|
W-2009-B-05H
|
10X Capital Management LLC
|
69,256
|
9/30/2024
|
W-2009-B-06I
|
10X Capital Management LLC
|
2,871
|
11/3/2024
|
W-2009-B-07L
|
10X Capital Management LLC
|
1,204
|
12/8/2024
|
W-2009-B-08H
|
10X Capital Management LLC
|
25,138
|
1/29/2025
|
W-2009-B-09H
|
10X Capital Management LLC
|
41,798
|
3/8/2025
|
W-2009-B-010H
|
10X Capital Management LLC
|
118,689
|
4/30/2025
|
W-2009-B-011J
|
10X Capital Management LLC
|
32,298
|
5/10/2025
|
W-2009-B-01B
|
10X Fund LP
|
1,200,000
|
2/10/2024
|
W-2009-B-02I
|
10X Fund LP
|
416,667
|
5/13/2024
|
W-2009-B-03D
|
10X Fund LP
|
250,000
|
6/30/2024
|
W-2009-B-04D
|
10X Fund LP
|
150,000
|
8/12/2024
|
W-2009-B-05I
|
10X Fund LP
|
126,666
|
9/30/2024
|
W-2009-B-06J
|
10X Fund LP
|
82,592
|
11/3/2024
|
W-2009-B-07J
|
10X Fund LP
|
109,715
|
12/8/2024
|
W-2009-B-08I
|
10X Fund LP
|
173,526
|
1/29/2025
|
W-2009-B-09I
|
10X Fund LP
|
142,334
|
3/8/2025
|
W-2009-B-010I
|
10X Fund LP
|
62,000
|
4/30/2025
|
W-2009-B-011K
|
10X Fund LP
|
80,333
|
5/10/2025
|
Series B 3 warrants
|
|||
W-2016-B-3-1
|
10X Fund LP
|
104,408
|
9/22/2023
|
W-2016-B-3-2
|
10X Fund LP
|
564,850
|
9/29/2023
|
W-2016-B-3-3
|
10X Fund LP
|
672,747
|
12/23/2023
|
Series B 3 lockup warrants
|
|||
W-2016-B-3/LU-1
|
10X Fund LP
|
500,000
|
9/22/2023
|
W-2016-B-3/LU-2A
|
10X Fund LP
|
13,165
|
9/22/2023
|
W-2016-B-3/LU-2B
|
10X Capital Management LLC
|
2,499
|
9/22/2023
|
W-2016-B-3/LU-3
|
10X Fund LP
|
62,500
|
9/22/2023
|
W-2016-B-3/LU-5A
|
10X Fund LP
|
90,559
|
9/29/2023
|
W-2016-B-3/LU-5B
|
10X Capital Management LLC
|
442
|
9/29/2023
|
W-2016-B-3/LU-4
|
10X Fund LP
|
187,500
|
9/29/2023
|
W-2016-B-3/LU-7A
|
10X Fund LP
|
81,141
|
12/23/2023
|
W-2016-B-3/LU-7B
|
10X Capital Management LLC
|
395
|
12/23/2023
|
W-2016-B-3/LU-6
|
10X Fund LP
|
168,033
|
12/23/2023
|
TOTAL
|
5,732,253
|
Warrant No.
|
Holder
|
Number of warrants
|
Expiration date
|
Series B 1 & 2
|
|||
W-2009-B-02HH
|
10X Capital Management LLC
|
108,452
|
9/30/2026
|
W-2009-B-03FF
|
10X Capital Management LLC
|
56,547
|
9/30/2026
|
W-2009-B-04FF
|
10X Capital Management LLC
|
33,928
|
9/30/2026
|
W-2009-B-05HH
|
10X Capital Management LLC
|
69,256
|
9/30/2026
|
W-2009-B-06II
|
10X Capital Management LLC
|
2,871
|
9/30/2026
|
W-2009-B-07LL
|
10X Capital Management LLC
|
1,204
|
9/30/2026
|
W-2009-B-08HH
|
10X Capital Management LLC
|
25,138
|
9/30/2026
|
W-2009-B-09HH
|
10X Capital Management LLC
|
41,798
|
9/30/2026
|
W-2009-B-010HH
|
10X Capital Management LLC
|
118,689
|
9/30/2026
|
W-2009-B-011JJ
|
10X Capital Management LLC
|
32,298
|
9/30/2026
|
W-2009-B-01BB
|
10X Fund LP
|
1,200,000
|
9/30/2026
|
W-2009-B-02II
|
10X Fund LP
|
416,667
|
9/30/2026
|
W-2009-B-03DD
|
10X Fund LP
|
250,000
|
9/30/2026
|
W-2009-B-04DD
|
10X Fund LP
|
150,000
|
9/30/2026
|
W-2009-B-05II
|
10X Fund LP
|
126,666
|
9/30/2026
|
W-2009-B-06JJ
|
10X Fund LP
|
82,592
|
9/30/2026
|
W-2009-B-07JJ
|
10X Fund LP
|
109,715
|
9/30/2026
|
W-2009-B-08II
|
10X Fund LP
|
173,526
|
9/30/2026
|
W-2009-B-09II
|
10X Fund LP
|
142,334
|
9/30/2026
|
W-2009-B-010II
|
10X Fund LP
|
62,000
|
9/30/2026
|
W-2009-B-011KK
|
10X Fund LP
|
80,333
|
9/30/2026
|
Series B 3 warrants
|
|||
W-2016-B-3-1A
|
10X Fund LP
|
104,408
|
9/30/2026
|
W-2016-B-3-2A
|
10X Fund LP
|
564,850
|
9/30/2026
|
W-2016-B-3-3A
|
10X Fund LP
|
672,747
|
9/30/2026
|
Series B 3 lockup warrants
|
|||
W-2016-B-3/LU-1A
|
10X Fund LP
|
500,000
|
9/30/2026
|
W-2016-B-3/LU-2AA
|
10X Fund LP
|
13,165
|
9/30/2026
|
W-2016-B-3/LU-2BB
|
10X Capital Management LLC
|
2,499
|
9/30/2026
|
W-2016-B-3/LU-3A
|
10X Fund LP
|
62,500
|
9/30/2026
|
W-2016-B-3/LU-5AA
|
10X Fund LP
|
90,559
|
9/30/2026
|
W-2016-B-3/LU-5BB
|
10X Capital Management LLC
|
442
|
9/30/2026
|
W-2016-B-3/LU-4A
|
10X Fund LP
|
187,500
|
9/30/2026
|
W-2016-B-3/LU-7AA
|
10X Fund LP
|
81,141
|
9/30/2026
|
W-2016-B-3/LU-7BB
|
10X Capital Management LLC
|
395
|
9/30/2026
|
W-2016-B-3/LU-6A
|
10X Fund LP
|
168,033
|
9/30/2026
|
TOTAL
|
5,732,253
|
Dated: ___________, 2024.
|
||
GALECTIN THERAPEUTICS, INC.
|
||
Name:
|
Jack W. Callicutt
|
|
Title:
|
CFO
|
To:
|
Date:
|
Signature
|
|||
(Signature must conform in all respects to name of Holder as specified on the face of the Warrant or on the form of Assignment attached as Exhibit B thereto.)
|
|||
Address
|
|||
[Signature Guarantee]
|
Name of Assignee
|
Address
|
||
No of Shares: Warrants
|
Dated:
|
Signature
|
|||
(Signature must conform in all respects to name of Holder as specified on the face of the Warrant.)
|
||||
Address
|
||||
![]() |
Exhibit 10.2 |
Percentage of Shares
|
Vesting Date
|
|
![]() |
Exhibit 10.2 |
![]() |
Exhibit 10.2 |
![]() |
Exhibit 10.2 |
COMPANY:
|
||
GALECTIN THERAPEUTICS INC. | ||
A Nevada corporation | ||
By:
|
||
Name:
|
||
Title:
|
OPTIONEE:
|
||
By:
|
Number of RSUs Granted:
|
[ ]
|
|
Grant Date:
|
[_______, 20__]
|
|
Vesting Commencement Date:
|
[_______, 20__]
|
GALECTIN THERAPEUTICS INC.
|
||
By:
|
||
Name:
|
||
Title:
|
Address:
|
||
4960 Peachtree Industrial
|
||
Boulevard | ||
Suite 240
|
||
Norcross, GA 30071
|
GRANTEE:
|
|
Name:
|
Very truly yours,
|
|
/s/ Richard E. Uihlein
|
|
Richard E. Uihlein
|
GALECTIN THERAPEUTICS, INC.
|
||
By:
|
/s/ Joel Lewis
|
Name:
|
Joel Lewis | |
Title:
|
Chief Executive Officer |
Date
|
Lender
|
Amount
of
Advance
|
Unpaid
Aggregate
Principal
Balance
|
Notation
Made By
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
__________
|
$
|
Atlanta, Georgia
|
||
Dated as of ___, 2024
|
GALECTIN THERAPEUTICS, INC.
|
||
By:
|
Name:
|
Joel Lewis
|
|
Title:
|
Chief Executive Officer
|
NAME
|
STATE OR JURISDICTION
OF ORGANIZATION
|
|
Galectin Therapeutics Security Corp.
|
Delaware
|
|
Galectin Sciences LLC
|
Georgia
|
1. |
I have reviewed this annual report on Form 10-K 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.
|
March 29, 2024
|
/s/ Joel Lewis
|
|
Name:
|
Joel Lewis
|
|
Title:
|
Chief Executive Officer and President
|
|
(principal executive officer)
|
1. |
I have reviewed this annual report on Form 10-K 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.
|
March 29, 2024
|
/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 result of operations of the Company.
|
March 29, 2024
|
/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 result of operations of the Company.
|
March 29, 2024
|
/s/ Jack W. Callicutt
|
|
Name:
|
Jack W. Callicutt
|
|
Title:
|
Chief Financial Officer and President
|
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(principal financial and accounting officer)
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• |
Annual bonuses and other short- and long-term cash incentives;
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• |
Stock options;
|
• |
Stock appreciation rights;
|
• |
Restricted stock;
|
• |
Restricted stock units;
|
• |
Performance shares; and
|
• |
Performance units.
|
• |
Company stock price;
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• |
Total shareholder return;
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• |
Revenues;
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• |
Net income;
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• |
Earnings before interest, taxes, depreciation and amortization, EBITDA, or adjusted EBITDA;
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Funds from operations;
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• |
Liquidity measures, such as working capital or operating cash flow;
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• |
Return measures, such as return on invested capital or return on assets; and
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• |
Earnings measures, such as earnings per share.
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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Operating expenses: | ||
Research and development | $ 32,130 | $ 31,737 |
General and administrative | 5,942 | 6,615 |
Total operating expenses | 38,072 | 38,352 |
Total operating loss | (38,072) | (38,352) |
Other income (expense): | ||
Interest income | 230 | 52 |
Interest expense | (2,792) | (1,033) |
Change in fair value of derivatives | (432) | 557 |
Total other expense | (2,994) | (424) |
Net loss | (41,066) | (38,776) |
Preferred stock dividends | (120) | (97) |
Warrant modification | (3,619) | 0 |
Net loss applicable to common stockholders | $ (44,805) | $ (38,873) |
Net loss per common share - basic (in dollars per share) | $ (0.74) | $ (0.65) |
Net loss per common share - diluted (in dollars per share) | $ (0.74) | $ (0.65) |
Weighted average common and potential common shares outstanding - basic (in shares) | 60,159 | 59,391 |
Weighted average common and potential common shares outstanding - diluted (in shares) | 60,159 | 59,391 |
Nature of Business, Basis of Presentation and Liquidity |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 | |||
Nature of Business, Basis of Presentation and Liquidity [Abstract] | |||
Nature of Business, Basis of Presentation and Liquidity |
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 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.
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 December 31, 2023, the company had $25,660,000 of unrestricted cash and cash equivalents available to fund future operations. In July 2022, the Company entered into a $60 million unsecured line of credit financing, of which $20
million remains available at December 31, 2023, with its chairman, Richard E. Uihlein (See Note 10). Additionally, on March 29, 2024, the Company entered into a supplemental unsecured $10 million line of credit financing also provided by our chairman (See Note 15). The Company believes there is sufficient cash, including availability of the line of credit, to fund
currently planned operations at least through March 31, 2025. To meet its future capital needs, the Company intends to raise additional capital through debt or equity financings, collaborations, partnerships or other strategic transactions.
However, there can be no assurance that the Company will be able to complete any such transactions on acceptable terms or otherwise. The inability of the Company to obtain sufficient funds on acceptable terms when needed could have a material
adverse effect on the Company’s business, results of operations and financial condition. The Company has the ability to delay certain research activities and related clinical expenses if necessary due to liquidity concerns until a date when those
concerns are relieved.
The Company is subject to a number of risks similar to those of clinical stage companies, including dependence on key individuals, uncertainty of product development
and generation of revenues, dependence on outside sources of capital, risks associated with clinical trials of products, dependence on third-party collaborators for research operations, need for regulatory approval of products, risks associated with
protection of intellectual property, and competition with larger, better-capitalized companies. Successful completion of the Company’s development program and, ultimately, the attainment of profitable operations is dependent upon future events,
including obtaining adequate financing to fulfill its development activities and achieving a level of revenues adequate to support the Company’s cost structure. There are no assurances that the Company will be able to obtain additional financing on
favorable terms, or at all, or successfully market its products.
|
Summary of Significant Accounting Policies |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 | |||
Summary of Significant Accounting Policies [Abstract] | |||
Summary of Significant Accounting Policies |
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”).
Basis of Consolidation. The consolidated
financial statements include the accounts of the Company and Galectin Therapeutics Security Corp., its wholly-owned subsidiary, which was incorporated in Delaware on December 23, 2003 and Galectin Sciences LLC (see Note 13). All intercompany
transactions have been eliminated.
Use of Estimates. The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that may affect the reported amounts of assets, liabilities, equity, revenue, expenses and
related disclosure of contingent assets and liabilities. Management’s estimates and judgments include assumptions used in stock option valuations, useful lives of property and equipment and intangible assets, accrued liabilities, derivative
valuations, deferred income taxes and various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates under different assumptions or conditions.
Fair Value Measurements. 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 estimated value of accounts payable and accrued expenses approximates their carrying value due to their short-term nature. See Footnote 6 for Fair Value of Derivatives related to Convertible Notes Payable at
December 31, 2023 and 2022, which are level 3 liabilities.
Cash and Cash Equivalents. The Company
considers all highly-liquid investments with original maturities of 90 days or less at the time of acquisition to be cash equivalents. The Company had no cash equivalents at December 31, 2023 or 2022.
Prepaid Expenses and Other Current Assets.
Prepaid expenses and other assets consist principally of prepaid insurance, deposits related to the NAVIGATE trial and deferred financing costs (see Note 10).
Property and Equipment. Property and equipment,
including leasehold improvements, are stated at cost, net of accumulated depreciation and amortization, and are depreciated or amortized using the straight-line method over the estimated useful lives of the related assets of generally three years for computers and office equipment, five years for furniture and fixtures and the shorter of the useful life or life of the lease for leasehold improvements.
Security Deposit. At December 31, 2023 and
2022, the Company had a security deposit of $6,000 for leased office space included in Prepaid Expenses and Other Current Assets.
Long-Lived Assets. The Company reviews all
long-lived assets for impairment whenever events or circumstances indicate the carrying amount of such assets may not be recoverable. Recoverability of assets to be held or used is measured by comparison of the carrying value of the asset to the
future undiscounted net cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment recognized is measured by the amount by which the carrying value of the asset exceeds the discounted future cash
flows expected to be generated by the asset. There were no impairments of long-lived assets at December 31, 2023 or 2022.
Accrued Expenses. As part of the process of
preparing our consolidated financial statements, we are required to estimate accrued expenses. This process involves identifying services that third parties have performed on our behalf and estimating the level of service performed and the
associated cost incurred on these services as of each balance sheet date in our consolidated financial statements. Examples of estimated accrued expenses include professional service fees, such as those arising from the services of attorneys and
accountants and accrued payroll expenses. In connection with these service fees, our estimates are most affected by our understanding of the status and timing of services provided relative to the actual services incurred by the service providers.
In the event that we do not identify certain costs that have been incurred or we under- or over-estimate the level of services or costs of such services, our reported expenses for a reporting period could be understated or overstated. The date on
which certain services commence, the level of services performed on or before a given date, and the cost of services are often subject to our judgment. We make these judgments based upon the facts and circumstances known to us in accordance with
accounting principles generally accepted in the U.S.
Warrants. The Company has issued common stock
warrants in connection with the execution of certain equity and debt financings. The fair value of warrants is determined using the Black-Scholes option-pricing model using assumptions regarding volatility of our common share price, remaining
life of the warrant, and risk-free interest rates at each period end. There were no warrant liabilities as of December 31, 2023 or
2022.
Research and Development Expenses. 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.
Income Taxes. The Company accounts for income
taxes in accordance with the accounting rules that requires an asset and liability approach to accounting for income taxes based upon the future expected values of the related assets and liabilities. Deferred income tax assets and liabilities are
determined based on the differences between the financial reporting and tax bases of assets and liabilities and for tax loss and credit carry forwards and are measured using the expected tax rates estimated to be in effect when such basis
differences reverse. Valuation allowances are established, if necessary, to reduce the deferred tax asset to the amount that will, more likely than not, be realized.
Concentration of Credit Risk. Financial
instruments that subject the Company to credit risk consist of cash and cash equivalents. The Company maintains cash and cash equivalents and certificates of deposit with well-capitalized financial institutions. At times, those amounts may exceed
federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk beyond the normal credit risk associated with commercial banking relationships. The Company has no
other significant concentrations of credit risk.
Stock-Based Compensation. Stock-based
compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the service period, which generally represents the vesting period. For awards that have performance-based vesting conditions
the Company recognizes the expense over the estimated period that the awards are expected to be earned. The Company generally uses the Black-Scholes option-pricing model to calculate the grant date fair value of stock options. The expense
recognized over the service period is required to include an estimate of the awards that will be forfeited.
Recent Accounting Standards. In August 2020, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to
simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope
exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s
own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified
retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2022. The adoption of ASU 2020-06 did not have an impact on the Company’s financial statements. See Notes 5 and 10
for disclosures related to convertible borrowings.
|
Property and Equipment |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment |
Property and equipment consist of the following at December 31:
Depreciation and amortization expense for the years ended December 31, 2023 and 2022 was $0 and $0, respectively.
|
Accrued Expenses |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses |
Accrued expenses consist of the following at December 31:
|
Convertible Notes Payable - Related Party |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 | |||
Convertible Notes Payable - Related Party [Member] | |||
Debt Instrument [Line Items] | |||
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 2021 Note”) in the principal amount of ten million dollars.
The April 2021 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 2021 Note bears interest at the rate of two percent (2%)
per annum, compounded annually with an effective interest rate of approximately 3%. For the years ended December 31, 2023 and 2022,
approximately $207,000 and $200,000,
respectively, of interest expense was accrued and included with the principal in the financial statements.
The April 2021 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 2021 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 2021 Note at its inception. The fair value of the contingent interest derivative liability was $420,000
at note inception (April 16, 2021). The fair value of the contingent interest derivative liability was $431,000 and $249,000 and December 31, 2023 and 2022, respectively, and is recognized as a derivative liability in the consolidated balance sheet. The change in the
fair value of the derivative liability for the years ended December 31, 2023 and 2022 of $182,000 and ($246,000), respectively, was charged to other expense/(income) for the years ended December 31, 2023 and 2022. The amortization of the original $420,000 debt discount of $105,000 and $105,000 was recorded as additional interest expense for the years ended December 31, 2023 and 2022, respectively.
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 2021 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 occurred on December 20, 2021.
The September 2021 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 2021 Note bears interest at the rate of two percent (2%)
per annum, compounded annually with an effective interest rate of approximately 3%. For the years ended December 31, 2023 and 2022,
approximately $206,000 and $200,000,
respectively, of interest expense was accrued and included with the principal in the financial statements.
The September 2021 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 2021
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
at note inception (September 17, 2021). The fair value of the contingent interest derivative liability was $169,000 and $109,000 and December 31, 2023 and 2022, respectively, and is recognized as a derivative liability in the consolidated balance sheet. The change in the
fair value of the derivative liability for the years ended December 31, 2023 and 2022 of $60,000 and ($141,000), respectively, was recorded to other expense/(income) for the years ended December 31, 2023 and 2022. The amortization of the original $433,000 debt discount of $108,000 and $108,000 was recorded as additional interest expense for the years ended December 31, 2023 and 2022, respectively.
On December 20, 2021, the second of the two promissory
notes under the Loan Agreement was executed and delivered, (the “December 2021 Note”) to evidence the second loan in the principal amount of $10,000,000.
The December 2021 Note has a maturity date of December 20, 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 $5.43 per share at the option of the noteholder.
The December Note bears interest at the rate of two percent (2%) per annum, compounded annually with an effective interest rate of
approximately 3%. For the years ended December 31, 2023 and 2022, approximately $204,000 and $200,000, respectively, of interest expense was accrued and
included with the principal in the financial statements.
The December 2021 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 December 2021 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 December Note at its inception. The fair value of the contingent interest derivative liability was $415,000
at note inception (December 20, 2021). The fair value of the contingent interest derivative liability was $404,000 and $214,000 at December 31, 2023 and 2022, respectively, and is recognized as a derivative liability in the consolidated balance sheet. The change in the
fair value of the derivative liability for the years ended December 31, 2023 and 2022 of $190,000 and ($170,000), respectively was recorded to other expense/(income) for the years ended December 31, 2023 and 2022. The amortization of the original $415,000 debt discount of $104,000 and $104,000 was recorded as additional interest expense for the years ended December 31, 2023 and 2022, respectively.
The Company’s contractual cash obligations related to the outstanding convertible notes payable is a repayment of the April 2021 Note of the $10,000,000 plus accrued interest on April 16, 2025 and a repayment of the September 2021 Note of the $10,000,000 plus accrued interest on September 17, 2025 and a repayment of the December 2021 Note of the $10,000,000 plus accrued interest on December 30, 2025, unless converted at the option of the noteholder.
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Fair Value of Financial Instruments |
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Fair Value of Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments |
There were no level 1 or 2 assets or liabilities at December 31, 2023 or 2022.
Level 3 assets and liabilities measured and recorded at fair value on a recurring basis at December 31, 2023 and 2022 were as follows:
The April 2021 Note derivative liability – contingent interest was valued using a Monte Carlo Geometric Brownian Stock Path Model. The key assumptions used in the model
at December 31, 2023 and 2022 are as follows:
The roll forward of the April 2021 Note derivative liability – contingent interest is as follows:
The September 2021 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 December 31, 2023 and 2022 are as follows:
The roll forward of the September 2021 Note derivative liability – contingent interest is as follows:
The December 2021 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 December 31, 2023 and 2022 are as follows:
The roll forward of the December 2021 Note derivative liability – contingent interest is as follows:
|
Stockholders' Equity |
12 Months Ended | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2023 | |||||||||||||||||||||
Stockholders' Equity [Abstract] | |||||||||||||||||||||
Stockholders' Equity |
At December 31, 2022, the Company had 150,000,000
shares of common stock and 20,000,000 undesignated shares authorized. As of December 31, 2023, 1,742,500 shares have been designated for Series A 12% Convertible Preferred Stock, 900,000 shares have been designated for Series B-1 Convertible Preferred Stock, 2,100,000 shares have
been designated for Series B-2 Convertible Preferred Stock, 1,000 shares have been designated for Series C Super Dividend Convertible
Preferred Stock, 2,508,000 shares have been designated for Series B-3 Convertible Preferred Stock, 12,748,500 have been designated as common stock and no shares remain undesignated. All issued and outstanding shares of Series B-1, Series B-2 and
Series B-3 Preferred Stock were converted into Common Stock on January 19, 2019.
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. There were no issuances of common stock under the 2020 At Market Agreement during the year ended December
31, 2023 or 2022.
Series A 12% Convertible Preferred
Stock — February 4, 2008 Private Placement
On February 4, 2008, the Company closed a private placement begun in October 2007 of its Series A 12% Convertible Preferred Stock (“Series A”) and related warrants. In this transaction, the Company sold units of securities at $6.00 per unit, each unit comprised of (i) one share of Series A
Preferred, (ii) a warrant to purchase one share of common stock for $9.00, and (iii) a warrant to purchase one share of common stock for
$12.00. Each share of the Series A is entitled to dividends at the rate of 12% per annum payable at the Company’s option in cash or shares of common stock valued at the higher of $6.00 per share or 100% of the value weighted average price of
the Company’s share price for the 20 consecutive trading days prior to the applicable dividend payment date. Dividends are payable
semi-annually on March 30 and September 30. The dividend paid on the initial dividend payment date is calculated from the date the Company deposited each subscription advance.
The shares of Series A are entitled to vote as a class with the Company’s common stock and each share of Series A is convertible at any time to one-sixth of a share
of common stock, subject to adjustment in the event of a stock dividend, stock split or combination, reclassification or similar event. The Company has the right to require conversion if the closing price of the common stock exceeds $18.00 for 15 consecutive trading days
and a registration statement covering the resale of the shares of common stock issuable upon conversion of the Series A is then in effect. Each warrant is exercisable solely for cash beginning August 3, 2008 and expired on February 4, 2012. The
exercise price of each warrant is adjustable in the event of a stock split or stock combination, capital reorganization, merger or similar event.
In 2023, 25,000 shares of Series A were converted into
4,257 shares of common stock. In 2022, 42,500
shares of Series A were converted into 7,287 shares of common stock. Prior to 2021, a total of 465,000 shares of Series A had been converted into 73,865 shares
of common stock.
Series C 6% Super Dividend Redeemable
Convertible Preferred Stock
On December 29, 2010, the Company designated and authorized the sale and issuance of up to 1,000 shares of Series C Super Dividend Redeemable Convertible Preferred Stock (“Series C”) with a par value of $0.01 and a stated value equal to $10,000 (the “Stated Value”).
On December 30, 2010, the Company sold and issued 212
shares of Series C at a price of $10,000 per share for gross proceeds of $2,120,000. The Company incurred $47,000 of cash transaction costs
resulting in net cash proceeds of $2,073,000. In addition, the Company issued 500 warrants exercisable at $7.20 to a placement agent which had
a de minimis value. Additionally, in January 2011, the Company sold and issued 13 shares of Series C at a price of $10,000 per share for gross proceeds of $130,000.
The terms of the Series C are as follows:
Conversion Rights. Each holder of Series C may
convert all, but not less than all, of his Series C shares plus accrued and unpaid dividends into Common Stock at the price of $6.00
per share of Common Stock (“Conversion Price”), such that approximately 1,667 shares of Common Stock will be issued per each converted
share of Series C (accrued and unpaid dividends will be issued as additional shares). At December 31, 2018 and 2017, the 176
outstanding shares of Series C were convertible into a total of approximately 293,340 shares of Common Stock.
Subject to the continuing obligation to pay post conversion dividends, the Company may convert all, but not less than all, of the Series C (plus all accrued and
unpaid dividends) into Common Stock, at the Conversion Price, upon such time that the closing price of the Common Stock is no less than $18.00
per share for 15 consecutive trading days.
Dividends. Holders of Series C shall be
entitled to receive cumulative non-compounding dividends at the rate per share of Series C equal to the greater of (i) 6% per annum of
the Stated Value (also defined as the “Floor”) or (ii) 2.5% of net sales until the total dividends paid is equal to the initial
investment and 1.25% of net sales thereafter. The maximum amount each Series C shareholder will receive in dividend payments is equal
to $100,000 (the “Maximum Payout”). For purposes of this dividend calculation, net sales shall mean gross revenues actually received by
the Company, from the sale or licensing of the product DAVANAT® (GM-CT-01), less chargebacks, returns, expenses attributable to product recalls, duties, customs,
sales tax, freight, insurance, shipping expenses, allowances and other customary deductions.
The dividend shall be payable in arrears semiannually on March 31 and September 30, beginning with the first such date after the original issue date; provided,
however, that all dividends and all other distributions shall cease, and no further dividends or other distributions shall be paid, in respect of each share of Series C from and after such time that the Maximum Payout has been paid in respect of
such share of Series C. Such dividends shall be payable at the Company’s option either in cash or in duly authorized, fully paid and non-assessable shares of Common Stock valued at the higher of (i) $3.00 per share or (ii) the average of the Common Stock trading price for the ten (10)
consecutive trading days ending on the trading day that is immediately prior to the dividend payment date.
Series C Post Conversion Dividend Right. In the
event that any share of Series C is converted into Common Stock before the Maximum Payout is paid in respect of such converted share of Series C, then the holder shall have the right to continue to receive dividends in respect of such converted
share of Series C equal to the remaining payout (the “Series C Preferred Stock Post Conversion Dividend Right”) which shall be equal to the Maximum Payout less the cumulative dividends received through the conversion date. One share of Series C
Preferred Stock Post Conversion Dividend Right shall be issued for each such converted share of Series C. The holder of each Series C Preferred Stock Post Conversion Dividend Right shall receive the remaining payout on an equal basis and in
conjunction with the then outstanding shares of Series C and all the other then outstanding Series C Post Conversion Dividend Rights, in the same manner and subject to the same terms and conditions as applicable to the payment of dividends on
each share of Series C, except that for purposes of calculating the dividend the Floor shall not apply. The Series C Preferred Stock Post Conversion Dividend Right shall have no stated value, liquidation preference or right to any dividends or
distributions other than the remaining payout. The Series C Preferred Stock Post Conversion Right is subject to redemption in the same manner as outstanding Series C shares.
At the date of issuance, the Series C have an embedded dividend right to continue to receive dividend payments after conversion to common stock (the Series C Post
Conversion Dividend Right) which requires bifurcation. The value of this post conversion dividend right on the date of issuance was determined to be de minimis due to the fact that the payment of a dividend stream other than the 6% dividend and conversion of Series C prior to the Company achieving sales of GM-CT-01 was deemed improbable at that time. Upon a conversion of the
Series C, the Company will be required to record a liability and the related expense during the period of conversion.
In July 2011, 5 shares of Series C were converted into 8,334
shares of common stock and 5 Series C Post Conversion Dividend Rights (Dividend Rights) were issued. In 2013, 24 shares of Series C were
converted into 40,193 shares of common stock and 24 Dividend Rights were issued. In 2014, 20 shares of Series C were converted into 33,756 shares of
common stock and 20 Dividend Rights were issued. Per the terms of the Series C, these Dividend Rights shall continue to participate in
dividends, however the Floor shall not apply. At December 31, 2016 and 2015, these Dividend Rights were determined to have a de minimis value, as the payment of a dividend is considered improbable at this time. The Company will continue to evaluate
and assess the Series C Post Conversion Dividend Right for each reporting period.
Liquidation Rights. In the event of any
liquidation, dissolution or winding up of the Company, either voluntarily or involuntarily, the holders of Series C will receive $10,000
per share plus accrued and unpaid dividends, payable prior and in preference to any distributions to the holders of Common Stock but after and subordinate to the Series A 12% Convertible Preferred Stock (“Series A”), Series B-1 and Series B-2, subject to the Maximum Payout.
Redemption. Upon a sale of the Company, the
Company shall redeem all of the then outstanding shares of Series C and Series C Preferred Stock Post Conversion Rights within thirty (30)
days after the transaction constituting the sale of the Company is closed and such closing is fully funded. The price to redeem a share of Series C and each redeemed Series C Preferred Stock Post Conversion Redemption Right shall be equal to (i)
(A) the applicable return on investment (“ROI”) percentage, multiplied by (B) $10,000, minus (ii) the cumulative dividends received
through the redemption date. The redemption price shall be payable at the Company’s option either in cash or in shares of common stock valued at the higher of (i) $3.00 per share or (ii) the average market price for the consecutive trading days ending
immediately prior to the date of redemption. The ROI Percentage shall mean the percentage that applies as of the redemption date, as follows:
ROI Percentage
Due to the redemption feature, the Company has presented the Series C outside of permanent equity, in the mezzanine of the consolidated balance sheets at December 31,
2023 and 2022. At December 31, 2023, the Series C redemption value was $8,177,000.
Voting Rights. The Series C shares have no voting rights.
|
Warrants |
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Warrants [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants |
Warrant activity is summarized as follows:
The weighted average expiration of the warrants outstanding as of December 31, 2023 is 4.2 years.
On September 22, 2023, the Company executed an agreement with 10X Fund L.P., and 10X Capital Management LLC (which had been a related party due to having nominated a
board member) whereby the Company extended the exercise date for a total of 5,732,253 common stock purchase warrants to the earliest of
(a) September 30, 2026, (b) thirty days after 10X fails to vote all of the shares of common stock in the Company then owned by it in the
manner recommended by the board of directors of the Company in any vote of the stockholders of the Company; or (c) thirty days after the
shares of common stock of the Company have a closing price of $6.00 or greater for 10 consecutive trading days. Previously, the common stock purchase warrants exercise dates would have expired at various dates from September 22, 2023 through May 10, 2025.
Also pursuant to the terms of the agreement, the right of the 10X Fund L.P. to nominate a member of the board of directors was eliminated, and the cashless exercise
option in certain of the common stock purchase warrants was deleted. Finally, a beneficial ownership limitation provision was added in the Series B Warrants, which would have the effect of decreasing 10X Fund’s beneficial ownership to 9.99% and would bar the voluntary exercise of any warrants that would result in 10X Fund’s ownership beyond 9.99% without at least 61 days’ prior notice from 10X Fund.
The Company has accounted for the modified terms of the warrants pursuant to ASC 815, Derivatives and Hedging, whereby the Company has recognized a deemed dividend for
the change in fair value of the warrants immediately before and immediately after the modification. In September 2023, the Company recognized a non cash deemed dividend of $3,619,000 related to the extension of the 5,732,253 warrants. The following
assumptions were used to value the extension of the warrants immediately before and immediately after the modification: a) immediately before the modification — an expected life range of 0 to 1.63 years, volatility range of 71% to 77%%, risk free interest rate range of 5.37% and zero dividends and; b)
immediately following the modification — an expected life of 3 years, volatility of 79%, risk free interest rate range of 4.59% and zero dividends.
The following table summarizes information with regard to outstanding warrants issued in connection with equity and debt financings and consultants as of December 31,
2023.
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Stock-Based Compensation |
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Stock-Based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation |
Summary of Stock-Based Compensation Plans
At December 31, 2023, the Company has a stock-based compensation plan where the Company’s common stock has been made available for equity-based incentive grants as part
of the Company’s compensation programs. In December 2019, the Company adopted the 2019 Omnibus Equity Incentive Plan (the “2019 Plan”) which provided originally for the issuance of up to 4,000,000 shares of the Company’s common stock, subsequently increased to 7,000,000
in December 2021, and increased to 10,000,000 in December 2023 in the form of options, stock appreciation rights, restricted stock and
other stock-based awards to employees, officers, directors, consultants and other eligible persons. At December 31, 2023, 3,954,727 shares
were available for future grant under the 2019 Plan. Also, the Company previously had the 2009 Incentive Compensation Plan (the “2009 Plan”) which, after amendments, provided for issuance of up to 6,733,334 shares of the Company’s common stock in the form of options, stock appreciation rights, restricted stock and other stock-based awards to employees, officers, directors,
consultants and other eligible persons. Provisions of the 2009 Plan stipulated that no grants could be made after February 2019; however, grants made prior to that date remain outstanding for their legal term.
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 fair value of the options granted is determined using the Black-Scholes option-pricing model. The following weighted average assumptions were used:
As noted above, the fair value of stock options is determined by using the Black-Scholes option pricing model. For all options granted since January 1, 2006 the Company
has generally used option terms of between 5 to 10 years, generally with 5 to 6 years representing the estimated life of options granted to employees. The volatility of the common stock is estimated using historical volatility over a period equal to the
expected life at the date of grant. The risk-free interest rate used in the Black-Scholes option pricing model is determined by reference to historical U.S. Treasury constant maturity rates with terms equal to the expected terms of the awards. An
expected dividend yield of zero is used in the option valuation model, because the Company does not expect to pay any cash dividends on
common stock in the foreseeable future. At December 31, 2023, the Company does not anticipate any option awards will be forfeited in the calculation of compensation expense due to the limited number of employees that receive stock option grants and
the Company’s historical employee turnover; however, any forfeitures will be accounted for as incurred.
The following table summarizes the stock option activity in the stock-based compensation plans:
The aggregate intrinsic value in the table above represents the total pre-tax amount, net of exercise price, which would have been received by option holders if all
option holders had exercised all options with an exercise price lower than the market price on December 31, 2023, based on the closing price of the Company’s common stock of $1.66 on that date.
The weighted-average grant-date fair values of options granted during 2023 and 2022 were $0.85 and $1.31, respectively. As of December 31, 2023 and 2022, there were
unvested options to purchase 1,792,080 and 2,194,166
shares of common stock, respectively. Total expected unrecognized compensation cost related to such unvested options is $684,000 at
December 31, 2023, which is expected to be recognized over a weighted-average period of 1.45 years.
During the years ended December 31, 2023 and 2022, 1,119,168
and 1,452,918 options became vested, respectively. The total grant date fair value of options vested during the years ended December 31,
2023 and 2022 was $1,384,284 and $2,382,842,
respectively.
The following table summarizes additional information regarding outstanding and exercisable options under our stock-based compensation plans at December 31, 2023:
Restricted Stock Issuances
In January 2022, one director elected to take a restricted stock grant in lieu of cash retainers for 2022. A total of 17,677 shares of restricted stock valued at approximately $35,000
was amortized to expense on a straight-line basis until December 31, 2022 when the stock vested in full.
In January 2023, one director elected to take a restricted stock grant in lieu of cash retainers for 2022. A total of 36,036 shares of restricted stock valued at approximately $40,000
was amortized to expense on a straight-line basis until December 31, 2023 when the stock vested in full.
Deferred Stock Units
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”) through December 31, 2022 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. Pursuant to an amendment to the DSU Agreement in July
2022, the Company shall issue the
shares earned through December 31, 2022 underlying the outstanding whole number of DSUs credited to Mr. Lewis as follows: twenty five percent
shall be issued on March 1, 2023, fifty percent shall be issued on March 1, 2024 and twenty five percent shall be issued on September 1, 2028. On March 1, 2023, twenty five percent of the DSU’s were issued to Mr. Lewis in accordance with the DSU Agreement. A total of 183,900 shares were
due to be issued; however, 75,529 shares were withheld to cover income tax withholding of $156,345 resulting in 108,371 shares actually issued.
Additionally, a 2023 DSU Agreement was executed in July 2022, whereby Mr. Lewis would continue to receive 20% of salary in cash and 80% in DSUs for 2023. The shares under the 2023 DSU Agreement are to be issued fifty percent on March 1, 2025 and fifty percent on January 5,
2026.
For the year ended December 31, 2023, approximately $459,000 of his compensation was recorded as stock compensation expense
representing 275,126 shares of common stock to be issued under the DSU agreement with a weighted average grant date fair value of $1.71 per share. For the year ended December 31, 2022, approximately $418,000 of his compensation was recorded as stock compensation expense representing 268,596 shares
of common stock to be issued under the DSU agreement with a weighted average grant date fair value of $1.56 per share.
Also, Mr. Lewis’ bonus for the year ended December 31, 2022 of $210,000 (which was included in accrued compensation at December
31, 2022) was approved in January 2023 and represents 143,836 shares of common stock to be issued under the DSU agreement with a grant
date fair value of $1.46 per share. The $210,000
was reclassified from accrued compensation to additional paid in capital in January 2023. Mr. Lewis’ bonus for the year ended December 31, 2021 of $200,000
(which was included in accrued compensation at December 31, 2021) was approved in January 2022, and represents 103,627 shares of
common stock to be issued under the DSU agreement with a grant date fair value of $1.93 per share. The $200,000 was reclassified from accrued compensation to additional paid in capital in January 2022.
There is no unrecognized compensation expense related to the DSUs.
|
Convertible Line of Credit - Related Party |
12 Months Ended | ||
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Dec. 31, 2023 | |||
Line of Credit [Member] | |||
Debt Instrument [Line Items] | |||
Convertible Line of Credit - Related Party |
On July 25, 2022, the Company and Richard E. Uihlein (the “Lender”) entered into a Line of Credit Letter Agreement (the “Credit Agreement”), pursuant
to which the Lender shall provide the Company a line of credit of up to $60.0 million (the “Line of Credit”) to finance the Company’s
working capital needs. The Company may draw upon the Line of Credit through July 31, 2024.
Each advance made pursuant to the Credit Agreement shall be evidenced by an unsecured, convertible promissory note (individually, a “Promissory
Note,” and collectively, the “Promissory Notes”), and bear interest at the Applicable Federal Rate for short term loans, plus two (2%)
percent. Principal and interest on the Promissory Notes are due on or before January 31, 2026. Only with the consent of the Lender,
may the Promissory Notes be prepaid, in whole or in part, at any time without premium or penalty, but with interest on the amount or amounts prepaid.
At the election of Lender, the principal and accrued interest on Promissory Note(s) may be converted into the number of shares of the Company’s
Common Stock equal to the amount of principal and accrued interest on such Promissory Note divided by the price equal to the closing price of the Common Stock on the date of such Promissory Note, but in no event less than $3.00 per share.
In connection with the Credit Agreement, the Company agreed to issue the Lender warrants to purchase up to an aggregate of 1,700,000 shares of the Company’s common stock, par value $0.001 per share (collectively, the “Warrants”). Upon execution of the Credit Agreement, the Company issued the Lender a Warrant to purchase up to 500,000 shares of Company’s Common Stock at an exercise price of $5.00
per share, which Warrant is exercisable upon issuance. Further, pursuant to the Credit Agreement, the Company shall issue to the Lender additional Warrants to purchase up to the remaining 1,200,000 shares of the Company’s common stock, ratably, upon borrowings under the Credit Agreement, with exercise prices equal to 150% of the closing price of the Company’s common Stock on the date of the Promissory Note evidencing such draw, but in no event more than $10.00 per share nor less than $3.00 per
share. The Warrants expire on July 31, 2029.
The fair value of the 500,000
warrants vested at closing on July 25, 2022 was $738,000 at the date of issuance based on the following assumptions: an expected life
of 7 years, volatility of 92%,
risk free interest rate of 3.19% and zero
dividends. The fair value of the vested warrants was recorded in other assets (non-current) as a deferred financing cost and will be amortized on a straight-line basis from July 25, 2022 through January 31, 2026. Amortization for the years ended
December 31, 2023 and 2022 of $209,000 and $92,000, respectively, was recorded as interest expense.
On December 19, 2022, the Company executed a $10
million Promissory Note under the Line of Credit. The interest rate on this draw is 6.46% (Applicable Federal Rate for short term
loans on date of draw of 4.46% plus 2%).
The effective interest rate is approximately 7.1%. Accrued interest on this draw was approximately $688,000 and $23,000 at December 31,
2023 and 2022, respectively. The principal and accrued interest is convertible at the option of the Lender at $3.00 per share. In
accordance with the Credit Agreement, the Company issued the Lender a Warrant to purchase up to 200,000 shares of Company’s Common
Stock at an exercise price of $3.00 per share, which Warrant is exercisable upon issuance.
The fair value of the 200,000
warrants vested at closing on December 19, 2022 was $160,780 at the date of issuance based on the following assumptions: an expected
life of 7 years, volatility of 91%,
risk free interest rate of 4.06% and zero
dividends. The proceeds were allocated between the Promissory Note and the warrants issued, and the amount allocated to the warrants was recorded as a debt discount netted against principal to be amortized on a straight-line basis, which is not
materially different than the effective interest method, from December 19, 2022 through January 31, 2026. Amortization for the years ended December 31, 2023 and 2022 of $51,000 and $2,000, respectively, was recorded as interest expense.
On March 31, 2023, the Company executed an additional $10
million Promissory Note under the Line of Credit. The interest rate on this draw is 6.41% (Applicable Federal Rate for short term
loans on date of draw of 4.41% plus 2%).
The effective interest rate is approximately 7.1%. Accrued interest on this draw was approximately $491,000 at December 31, 2023. The principal and accrued interest is convertible at the option of the Lender at $3.00 per share. In accordance with the Credit Agreement, the Company issued the Lender a Warrant to purchase up to 200,000 shares of Company’s Common Stock at an exercise price of $3.26 per share, which Warrant is exercisable upon issuance.
The fair value of the 200,000
warrants vested at closing on March 31, 2023 was $296,680 at the date of issuance based on the following assumptions: an expected life
of 6.33 years, volatility of 88%,
risk free interest rate of 3.94% and zero
dividends. The proceeds were allocated between the Promissory Note and the warrants issued, and the amount allocated to the warrants was recorded as a debt discount netted against principal amortized on a straight-line basis, which is not
materially different than the effective interest method, from March 31, 2023 through January 31, 2026. Amortization for the year ended December 31, 2023 of $79,000 was recorded as interest expense.
On June 30, 2023, the Company executed an additional $10
million Promissory Note under the Line of Credit. The interest rate on this draw is 6.34% (Applicable Federal Rate for short term
loans on date of draw of 4.34% plus 2%).
The effective interest rate is approximately 7.1%. Accrued interest on this draw was approximately $321,000 at December 31, 2023. The principal and accrued interest is convertible at the option of the Lender at $3.00 per share. In accordance with the Credit Agreement, the Company issued the Lender a Warrant to purchase up to 200,000 shares of Company’s Common Stock at an exercise price of $3.00 per share, which Warrant is exercisable upon issuance.
The fair value of the 200,000
warrants vested at closing on June 30, 2023 was $179,920 at the date of issuance based on the following assumptions: an expected life
of 6.08 years, volatility of 85%,
risk free interest rate of 3.59% and zero
dividends. The proceeds were allocated between the Promissory Note and the warrants issued, and the amount allocated to the warrants was recorded as a debt discount netted against principal amortized on a straight-line basis, which is not
materially different than the effective interest method, from June 30, 2023 through January 31, 2026. Amortization for the year ended December 31, 2023 of $35,000 was recorded as interest expense.
On December 29, 2023, the Company executed an additional $10 million Promissory Note under the Line of Credit. The interest rate on this draw is 7.13%
(Applicable Federal Rate for short term loans on date of draw of 5.13% plus 2%). The effective interest rate is approximately 7.5%. The principal and
accrued interest is convertible at the option of the Lender at $3.00 per share. In accordance with the Credit Agreement, the Company
issued the Lender a Warrant to purchase up to 200,000 shares of Company’s Common Stock at an exercise price of $3.00 per share, which Warrant is exercisable upon issuance.
The fair value of the 200,000 warrants vested at closing on December 31, 2023 was $193,745 at the date of issuance based on the following assumptions: an expected life of 5.7
years, volatility of 79%, risk free interest rate of 4.49% and zero dividends. The proceeds were allocated between the
Promissory Note and the warrants issued, and the amount allocated to the warrants was recorded as a debt discount netted against principal amortized on a straight-line basis, which is not materially different than the effective interest method,
from December 29, 2023 through January 31, 2026.
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 January 31, 2026.
|
Loss Per Share |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. For the years ended December 31, 2023 and 2022, as the Company was in a net loss position, the diluted loss per share computations for such periods did not assume the exercise of warrants and stock options or the conversion of
Convertible Notes, or the conversion of convertible preferred stock as they would have had an anti-dilutive effect on loss per share.
The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as of December 31, 2023 and 2022
as the inclusion thereof would have been anti-dilutive:
|
Commitments and Contingencies |
12 Months Ended | |||||||||||||||||||||||||||
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Dec. 31, 2023 | ||||||||||||||||||||||||||||
Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||||
Commitments and Contingencies |
Lease Commitments
The Company has one operating lease for its office
space which was amended effective March 1, 2022 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 As of December 31, 2022, the right to use lease asset
consisted of $86,000 and is included in The Company renewed its existing office space lease effective in February 2022
for 38 months at substantially the same terms. . Also, at December 31, 2022, current lease liability of $40,000 is included in and the noncurrent lease liability of $66,000
is included in .
of the lease and continues the security
deposit of $6,000. In addition to base rental payments included in the contractual obligations table below, the Company is responsible
for our pro-rata share of the operating expenses for the building. Our lease cost for the years ended December 31, 2023 and 2022 was $44,000
and $44,000, respectively, and is included in general and administrative expenses. As of December 31, 2023, the right to use lease asset
consisted of $53,000 and is included in . Also, at December 31, 2023, current lease liability of $46,000 is included in and the noncurrent lease liability of $20,000
is included in .Maturity of operating lease as of December 31, 2023 in thousands:
The discount rate used in calculating the present value of the lease payments was 11%.
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 pending legal proceedings.
Clinical Trial and Research Contingencies
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.
|
Galectin Sciences LLC |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 | |||
Galectin Sciences LLC [Abstract] | |||
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 have 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. As a result, the Company contributed the $73,000 needed for the fourth quarter of 2014 expenses of the LLC and an additional $2,552,000
in total from 2015 through 2021. The Company contributed $561,000 and $213,000 for the LLC expenses (recorded in research and development expenses) in 2023 and 2022, and SBH has contributed a total of $711,000 since 2014. As of December 31, 2023, 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. The Company’s portion of the LLC’s net loss for 2014, prior to the change in accounting discussed previously, was $400,000, which includes the Company’s proportionate share of the non-cash charge associated with the contributed IPR&D of $200,000.
|
Income Taxes |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
The components of the net deferred tax assets are as follows at December 31:
The primary factors affecting the Company’s income tax rates were as follows:
As of December 31, 2023, the Company has federal and state net operating loss carryforwards totaling $116,781,000 and $123,081,000,
respectively, which will never expire as a result of the 2017 Tax Act. As of December 31, 2023, the Company has federal and state net operating loss carryforwards totaling $127,039,000 and $102,003,000 respectively, which expire through respectively, which expire through . In addition, the Company has federal and state research and development credits of $5,214,000 and $1,262,000, . Ownership changes, as defined by Section 382 of the Internal Revenue Code, may have limited the amount of net operating loss carryforwards that can
be utilized annually to offset future taxable income. Past and subsequent ownership changes could further affect the limitation in future years. Because of the Company’s limited operating history and its recorded losses, management has provided, in
each of the last two years, a 100% valuation allowance against the Company’s net deferred tax assets.
The Company is subject to taxation in the U.S. and various states. Based on the history of net operating losses all jurisdictions and tax years are open for examination
until the operating losses are utilized or the statute of limitations expires. As of December 31, 2023 and 2022, the Company does not have any significant uncertain tax positions.
|
Subsequent Event |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2023 | |||
Subsequent Event [Abstract] | |||
Subsequent Event |
On March 29, 2024, the Company and Richard E. Uihlein (the “Lender”) entered into a Supplemental Line of Credit Letter
Agreement (the “Supplemental Credit Agreement”), pursuant to which the Lender shall provide the Company a line of credit of up to $10.0
million (the “Supplemental Line of Credit”) to finance the Company’s working capital needs. The Company may draw upon the Supplemental Line of Credit through March 31, 2025.
Each advance made pursuant to the Supplemental Credit Agreement shall be evidenced by an unsecured, convertible promissory
note (individually, a “Promissory Note,” and collectively, the “Promissory Notes”), and bear interest at the Applicable Federal Rate for short term loans, plus two (2%) percent. Principal and interest on the Promissory Notes are due on or before March 31, 2026.
Only with the consent of the Lender, may the Promissory Notes be prepaid, in whole or in part, at any time without premium or penalty, but with interest on the amount or amounts prepaid.
At the election of Lender, the principal and accrued interest on Promissory Note(s) may be converted into the number of shares
of the Company’s Common Stock equal to the amount of principal and accrued interest on such Promissory Note divided by the price equal to the closing price of the Common Stock on the date of such Promissory Note, but in no event less than $3.00 per share.
In connection with the Supplemental Credit Agreement, the Company agreed to issue the Lender warrants to purchase up to an
aggregate of 200,000 shares of the Company’s common stock, par value $0.001 per share (collectively, the “Warrants”). The Company shall issue to the Lender Warrants ratably, upon borrowings under the Supplemental Line of Credit, with exercise prices equal to 150% of the closing price of the Company’s common Stock on the date of the Promissory Note evidencing such draw, but in no event more than $10.00 per share nor less than $3.00 per
share. The Warrants expire on July 31, 2029.
|
Insider Trading Arrangements |
3 Months Ended |
---|---|
Dec. 31, 2023 | |
Insider Trading Arrangements [Line Items] | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
---|---|
Dec. 31, 2023 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Consolidation |
Basis of Consolidation. The consolidated
financial statements include the accounts of the Company and Galectin Therapeutics Security Corp., its wholly-owned subsidiary, which was incorporated in Delaware on December 23, 2003 and Galectin Sciences LLC (see Note 13). All intercompany
transactions have been eliminated.
|
Use of Estimates |
Use of Estimates. The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that may affect the reported amounts of assets, liabilities, equity, revenue, expenses and
related disclosure of contingent assets and liabilities. Management’s estimates and judgments include assumptions used in stock option valuations, useful lives of property and equipment and intangible assets, accrued liabilities, derivative
valuations, deferred income taxes and various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates under different assumptions or conditions.
|
Fair Value Measurements |
Fair Value Measurements. 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 estimated value of accounts payable and accrued expenses approximates their carrying value due to their short-term nature. See Footnote 6 for Fair Value of Derivatives related to Convertible Notes Payable at
December 31, 2023 and 2022, which are level 3 liabilities.
|
Cash and Cash Equivalents |
Cash and Cash Equivalents. The Company
considers all highly-liquid investments with original maturities of 90 days or less at the time of acquisition to be cash equivalents. The Company had no cash equivalents at December 31, 2023 or 2022.
|
Prepaid Expenses and Other Current Assets |
Prepaid Expenses and Other Current Assets.
Prepaid expenses and other assets consist principally of prepaid insurance, deposits related to the NAVIGATE trial and deferred financing costs (see Note 10).
|
Property and Equipment |
Property and Equipment. Property and equipment,
including leasehold improvements, are stated at cost, net of accumulated depreciation and amortization, and are depreciated or amortized using the straight-line method over the estimated useful lives of the related assets of generally three years for computers and office equipment, five years for furniture and fixtures and the shorter of the useful life or life of the lease for leasehold improvements.
|
Security Deposit |
Security Deposit. At December 31, 2023 and
2022, the Company had a security deposit of $6,000 for leased office space included in Prepaid Expenses and Other Current Assets.
|
Long-Lived Assets |
Long-Lived Assets. The Company reviews all
long-lived assets for impairment whenever events or circumstances indicate the carrying amount of such assets may not be recoverable. Recoverability of assets to be held or used is measured by comparison of the carrying value of the asset to the
future undiscounted net cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment recognized is measured by the amount by which the carrying value of the asset exceeds the discounted future cash
flows expected to be generated by the asset. There were no impairments of long-lived assets at December 31, 2023 or 2022.
|
Accrued Expenses |
Accrued Expenses. As part of the process of
preparing our consolidated financial statements, we are required to estimate accrued expenses. This process involves identifying services that third parties have performed on our behalf and estimating the level of service performed and the
associated cost incurred on these services as of each balance sheet date in our consolidated financial statements. Examples of estimated accrued expenses include professional service fees, such as those arising from the services of attorneys and
accountants and accrued payroll expenses. In connection with these service fees, our estimates are most affected by our understanding of the status and timing of services provided relative to the actual services incurred by the service providers.
In the event that we do not identify certain costs that have been incurred or we under- or over-estimate the level of services or costs of such services, our reported expenses for a reporting period could be understated or overstated. The date on
which certain services commence, the level of services performed on or before a given date, and the cost of services are often subject to our judgment. We make these judgments based upon the facts and circumstances known to us in accordance with
accounting principles generally accepted in the U.S.
|
Warrants |
Warrants. The Company has issued common stock
warrants in connection with the execution of certain equity and debt financings. The fair value of warrants is determined using the Black-Scholes option-pricing model using assumptions regarding volatility of our common share price, remaining
life of the warrant, and risk-free interest rates at each period end. There were no warrant liabilities as of December 31, 2023 or
2022.
|
Research and Development Expenses |
Research and Development Expenses. 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.
|
Income Taxes |
Income Taxes. The Company accounts for income
taxes in accordance with the accounting rules that requires an asset and liability approach to accounting for income taxes based upon the future expected values of the related assets and liabilities. Deferred income tax assets and liabilities are
determined based on the differences between the financial reporting and tax bases of assets and liabilities and for tax loss and credit carry forwards and are measured using the expected tax rates estimated to be in effect when such basis
differences reverse. Valuation allowances are established, if necessary, to reduce the deferred tax asset to the amount that will, more likely than not, be realized.
|
Concentration of Credit Risk |
Concentration of Credit Risk. Financial
instruments that subject the Company to credit risk consist of cash and cash equivalents. The Company maintains cash and cash equivalents and certificates of deposit with well-capitalized financial institutions. At times, those amounts may exceed
federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk beyond the normal credit risk associated with commercial banking relationships. The Company has no
other significant concentrations of credit risk.
|
Stock-Based Compensation |
Stock-Based Compensation. Stock-based
compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the service period, which generally represents the vesting period. For awards that have performance-based vesting conditions
the Company recognizes the expense over the estimated period that the awards are expected to be earned. The Company generally uses the Black-Scholes option-pricing model to calculate the grant date fair value of stock options. The expense
recognized over the service period is required to include an estimate of the awards that will be forfeited.
|
Recent Accounting Standards |
Recent Accounting Standards. In August 2020, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to
simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope
exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s
own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified
retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2022. The adoption of ASU 2020-06 did not have an impact on the Company’s financial statements. See Notes 5 and 10
for disclosures related to convertible borrowings.
|
Property and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment |
Property and equipment consist of the following at December 31:
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Accrued Expenses (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses |
Accrued expenses consist of the following at December 31:
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Fair Value of Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured and Recorded at Fair Value on Recurring Basis |
Level 3 assets and liabilities measured and recorded at fair value on a recurring basis at December 31, 2023 and 2022 were as follows:
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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 2021 Note derivative liability – contingent interest was valued using a Monte Carlo Geometric Brownian Stock Path Model. The key assumptions used in the model
at December 31, 2023 and 2022 are as follows:
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Roll Forward of Derivative Liability - Contingent Interest |
The roll forward of the April 2021 Note derivative liability – contingent interest is as follows:
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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 2021 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 December 31, 2023 and 2022 are as follows:
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Roll Forward of Derivative Liability - Contingent Interest |
The roll forward of the September 2021 Note derivative liability – contingent interest is as follows:
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December Note [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Key Assumptions Used in Model at Inception |
The December 2021 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 December 31, 2023 and 2022 are as follows:
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Roll Forward of Derivative Liability - Contingent Interest |
The roll forward of the December 2021 Note derivative liability – contingent interest is as follows:
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Warrants (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Warrants Activity, Outstanding Warrants Issued in Connection with Equity and Debt Financings and Consultants |
Warrant activity is summarized as follows:
The following table summarizes information with regard to outstanding warrants issued in connection with equity and debt financings and consultants as of December 31,
2023.
|
Stock-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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Weighted Average Assumptions Used to Determine Fair Value of Options Granted |
The fair value of the options granted is determined using the Black-Scholes option-pricing model. The following weighted average assumptions were used:
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Stock Option Activity |
The following table summarizes the stock option activity in the stock-based compensation plans:
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Outstanding and Exercisable Options under Stock Based Compensation Plans |
The following table summarizes additional information regarding outstanding and exercisable options under our stock-based compensation plans at December 31, 2023:
|
Loss Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share |
The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as of December 31, 2023 and 2022
as the inclusion thereof would have been anti-dilutive:
|
Commitments and Contingencies (Tables) |
12 Months Ended | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2023 | ||||||||||||||||||||||||||
Commitments and Contingencies [Abstract] | ||||||||||||||||||||||||||
Maturity of Operating Lease |
Maturity of operating lease as of December 31, 2023 in thousands:
|
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Deferred Tax Assets |
The components of the net deferred tax assets are as follows at December 31:
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Primary Factors Affecting Income Tax Rates |
The primary factors affecting the Company’s income tax rates were as follows:
|
Nature of Business, Basis of Presentation and Liquidity (Details) - USD ($) $ in Thousands |
Mar. 29, 2024 |
Dec. 31, 2023 |
Dec. 31, 2022 |
Jul. 25, 2022 |
---|---|---|---|---|
Nature of Business, Basis of Presentation and Liquidity [Abstract] | ||||
Cash and cash equivalents | $ 25,660 | $ 18,592 | ||
Richard E. Uihlein [Member] | Line of Credit [Member] | ||||
Nature of Business, Basis of Presentation and Liquidity [Abstract] | ||||
Line of credit | $ 60,000 | |||
Remaining available in line of credit | $ 20,000 | |||
Richard E. Uihlein [Member] | Line of Credit [Member] | Subsequent Event [Member] | ||||
Nature of Business, Basis of Presentation and Liquidity [Abstract] | ||||
Line of credit | $ 10,000 | |||
Richard E. Uihlein [Member] | Supplemental Line of Credit [Member] | Subsequent Event [Member] | ||||
Nature of Business, Basis of Presentation and Liquidity [Abstract] | ||||
Line of credit | $ 10,000 |
Summary of Significant Accounting Policies, Cash and Cash Equivalents (Details) - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Cash and Cash Equivalents [Abstract] | ||
Cash equivalents | $ 0 | $ 0 |
Summary of Significant Accounting Policies, Property and Equipment (Details) |
Dec. 31, 2023 |
---|---|
Computer and Office Equipment [Member] | |
Property and Equipment [Abstract] | |
Estimated useful life | 3 years |
Furniture and Fixtures [Member] | |
Property and Equipment [Abstract] | |
Estimated useful life | 5 years |
Summary of Significant Accounting Policies, Security Deposit (Details) - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Security Deposit [Abstract] | ||
Security deposit for leased office space | $ 6,000 | $ 6,000 |
Summary of Significant Accounting Policies, Long-Lived Assets (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Long-Lived Assets [Abstract] | ||
Impairment of long-lived assets | $ 0 | $ 0 |
Summary of Significant Accounting Policies, Warrants (Details) - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Warrants [Abstract] | ||
Warrant liabilities | $ 0 | $ 0 |
Property and Equipment (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Property and Equipment [Abstract] | ||
Property and equipment | $ 74,000 | $ 74,000 |
Less accumulated depreciation and amortization | (74,000) | (74,000) |
Property and equipment - net | 0 | 0 |
Depreciation and amortization expense | 0 | 0 |
Leasehold Improvements [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | 2,000 | 2,000 |
Computer and Office Equipment [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | 13,000 | 13,000 |
Furniture and Fixtures [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | $ 59,000 | $ 59,000 |
Accrued Expenses (Details) - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Accrued Expenses [Abstract] | ||
Legal and accounting fees | $ 40,000 | $ 65,000 |
Accrued compensation | 1,129,000 | 973,000 |
Lease liability | $ 46,000 | $ 40,000 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Total | Total |
Accrued research and development costs and other | $ 7,967,000 | $ 7,980,000 |
Total | $ 9,182,000 | $ 9,058,000 |
Fair Value of Financial Instruments, Roll Forward of Derivative Liability (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Roll Forward of Derivative Liability [Roll Forward] | ||
Balance | $ 573,000 | |
Fair Value Adjustment | 432,000 | $ (557,000) |
Balance | 1,004,000 | 573,000 |
April Note [Member] | ||
Roll Forward of Derivative Liability [Roll Forward] | ||
Balance | 249,000 | 495,000 |
Fair Value Adjustment | 182,000 | (246,000) |
Balance | 431,000 | 249,000 |
September Note [Member] | ||
Roll Forward of Derivative Liability [Roll Forward] | ||
Balance | 109,000 | 250,000 |
Fair Value Adjustment | 60,000 | (141,000) |
Balance | 169,000 | 109,000 |
December Note [Member] | ||
Roll Forward of Derivative Liability [Roll Forward] | ||
Balance | 214,000 | 384,000 |
Fair Value Adjustment | (190,000) | (170,000) |
Balance | $ 404,000 | $ 214,000 |
Warrants, Summary of Warrant Activity (Details) - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Weighted Average Exercise Price [Abstract] | ||
Outstanding at beginning of period (in dollars per share) | $ 4.37 | $ 4.37 |
Issued (in dollars per share) | 3.09 | 4.43 |
Exercised (in dollars per share) | 4.49 | |
Canceled/Expired (in dollars per share) | 4.94 | |
Outstanding at end of period (in dollars per share) | $ 4.22 | $ 4.37 |
Weighted average expiration term of warrants outstanding | 4 years 2 months 12 days | |
Warrants [Member] | ||
Warrants Activity [Roll Forward] | ||
Outstanding at beginning of period (in shares) | 11,557,964 | 10,857,964 |
Issued (in shares) | 600,000 | 700,000 |
Exercised (in shares) | (2,236,204) | 0 |
Canceled/Expired (in shares) | (665,267) | 0 |
Outstanding at end of period (in shares) | 9,256,493 | 11,557,964 |
Stock-Based Compensation, Summary of Stock-Based Compensation Plans (Details) - shares |
Dec. 31, 2023 |
Dec. 31, 2021 |
Dec. 31, 2019 |
May 31, 2008 |
---|---|---|---|---|
Equity Incentive Plan 2019 [Member] | ||||
Stock-Based Compensation Expense [Abstract] | ||||
Number of shares authorized for issuance (in shares) | 10,000,000 | 7,000,000 | 4,000,000 | |
Stock awards, available for future grant (in shares) | 3,954,727 | |||
Incentive Compensation Plan 2009 [Member] | ||||
Stock-Based Compensation Expense [Abstract] | ||||
Number of shares authorized for issuance (in shares) | 6,733,334 |
Stock-Based Compensation, Components of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Stock-Based Compensation Expense [Abstract] | ||
Total stock-based compensation expense | $ 2,261 | $ 2,867 |
Research and Development [Member] | ||
Stock-Based Compensation Expense [Abstract] | ||
Total stock-based compensation expense | 829 | 810 |
General and Administrative [Member] | ||
Stock-Based Compensation Expense [Abstract] | ||
Total stock-based compensation expense | $ 1,432 | $ 2,057 |
Stock-Based Compensation, Weighted Average Assumptions Used to Determine Fair Value of Options Granted (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Weighted Average Assumptions for Stock Options Granted [Abstract] | ||
Risk-free interest rate | 3.84% | 1.85% |
Expected life of the options | 5 years 7 months 6 days | 5 years 8 months 12 days |
Expected volatility of the underlying stock | 85.60% | 93.70% |
Expected dividend rate | 0.00% | 0.00% |
Expected dividend yield used in the option valuation model | 0.00% | 0.00% |
Minimum [Member] | ||
Weighted Average Assumptions for Stock Options Granted [Abstract] | ||
Expected life of the options | 5 years | |
Award term | 5 years | |
Maximum [Member] | ||
Weighted Average Assumptions for Stock Options Granted [Abstract] | ||
Expected life of the options | 6 years | |
Award term | 10 years |
Stock-Based Compensation, Restricted Stock Issuances (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2023
USD ($)
Director
shares
|
Dec. 31, 2022
USD ($)
Director
shares
|
|
Share-based Payment Arrangement, Noncash Expense [Abstract] | ||
Amortized expense | $ 2,261,000 | $ 2,867,000 |
Restricted Stock [Member] | ||
Share-based Payment Arrangement, Noncash Expense [Abstract] | ||
Number of Directors | Director | 1 | 1 |
Restricted stock awards granted (in shares) | shares | 36,036 | 17,677 |
Amortized expense | $ 40,000 | $ 35,000 |
Income Taxes, Components of Net Deferred Tax Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Deferred Tax Assets [Abstract] | ||
Operating loss carryforwards | $ 61,427 | $ 53,119 |
Tax credit carryforwards | 6,476 | 3,558 |
Other temporary differences | 10,533 | 9,168 |
Deferred tax assets, gross | 78,436 | 65,845 |
Less valuation allowance | (78,436) | (65,845) |
Net deferred tax asset | $ 0 | $ 0 |
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