UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to _______
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
(Zip Code) |
(
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
$0.001 par value per share |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 10, 2023, the registrant had
Table of Contents
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Page |
PART I. |
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Item 1. |
1 |
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1 |
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2 |
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3 |
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4 |
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5 |
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Notes to Unaudited Interim Consolidated Financial Statements |
6 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 |
Item 3. |
24 |
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Item 4. |
24 |
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PART II. |
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Item 1. |
25 |
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Item 1A. |
25 |
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Item 2. |
Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities |
31 |
Item 3. |
31 |
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Item 4. |
31 |
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Item 5. |
31 |
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Item 6. |
32 |
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33 |
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i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. All statements other than statements of historical fact contained in this Quarterly Report, including without limitation statements regarding the expected financial and operational impacts of our recent reduction in force; our plans to evaluate strategic alternatives; our plans to develop and commercialize our product candidates, the timing of and our plans regarding our ongoing or planned clinical trials, the timing of and our ability to obtain and maintain regulatory approvals, the clinical utility of our product candidates, our commercialization, manufacturing capabilities and strategy, our expectations about the willingness of healthcare professionals to use our product candidates, expected coverage and reimbursement for avasopasem and our other product candidates, the sufficiency of our cash, cash equivalents and short-term investments and our ability to raise additional capital to fund our operations, the anticipated impact of the COVID-19 pandemic and general economic conditions on our business, and the plans and objectives of management for future operations, capital needs, and capital expenditures are forward-looking statements.
The forward-looking statements in this Quarterly Report are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward-looking statements, including, but not limited to, the following: our limited operating history; anticipating continued losses for the foreseeable future; needing substantial funding and the ability to raise capital; our dependence on avasopasem manganese (GC4419) and our other product candidates; uncertainties inherent in the conduct of clinical trials; difficulties or delays enrolling patients in clinical trials; the FDA’s acceptance of data from clinical trials outside the United States; undesirable side effects from our product candidates; risks relating to the regulatory approval process; failure to capitalize on more profitable product candidates or indications; ability to receive and/or maintain Breakthrough Therapy Designation or Fast Track Designation for product candidates; failure to obtain regulatory approval of product candidates in the United States or other jurisdictions; ongoing regulatory obligations and continued regulatory review; risks related to commercialization; risks related to competition; ability to retain key employees; risks related to intellectual property; inability to maintain collaborations or the failure of these collaborations; our reliance on third parties; the possibility of system failures or security breaches; liability related to the privacy of health information obtained from clinical trials and product liability lawsuits; unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives; environmental, health and safety laws and regulations; our recent reduction in force undertaken to significantly reduce our ongoing operating expenses may not result in our intended outcomes and may yield unintended consequences and additional costs; we may not be able to enter into any desired strategic alternative or partnership on a timely basis, on acceptable terms, or at all; if we are unable to secure additional funding or enter into any desired strategic alternative or partnership, we may need to cease operations; the impact of the COVID-19 pandemic and general economic conditions on our business and operations, including clinical trials; risks related to ownership of our common stock; significant costs as a result of operating as a public company; Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions; and those described under the sections in our Annual Report on Form 10-K for the year ended December 31, 2022 and this Quarterly Report entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations."
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
ii
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
GALERA THERAPEUTICS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
(unaudited)
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September 30, 2023 |
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December 31, 2022 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Restricted cash |
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Refundable PDUFA fee |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Acquired intangible asset |
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Goodwill |
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Right-of-use lease assets |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ deficit |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Lease liabilities |
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Total current liabilities |
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Royalty purchase liability |
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Lease liabilities, net of current portion |
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Deferred tax liability |
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Total liabilities |
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Stockholders’ deficit: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
) |
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Accumulated deficit |
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( |
) |
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( |
) |
Total stockholders’ deficit |
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( |
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( |
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Total liabilities and stockholders’ deficit |
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$ |
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$ |
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See accompanying notes to unaudited interim consolidated financial statements.
1
GALERA THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
(unaudited)
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Three months ended |
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Nine months ended |
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2023 |
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2022 |
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2023 |
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2022 |
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Operating expenses: |
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Research and development |
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$ |
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$ |
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$ |
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$ |
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General and administrative |
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Restructuring costs |
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Loss from operations |
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( |
) |
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( |
) |
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( |
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( |
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Other income (expenses): |
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Interest income |
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Interest expense |
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( |
) |
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( |
) |
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( |
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( |
) |
Foreign currency loss |
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( |
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( |
) |
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( |
) |
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( |
) |
Net loss |
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( |
) |
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( |
) |
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( |
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( |
) |
Net loss per share of common stock, basic and diluted |
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$ |
( |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Weighted-average shares of common stock outstanding, basic and diluted |
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See accompanying notes to unaudited interim consolidated financial statements.
2
GALERA THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(IN THOUSANDS)
(unaudited)
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Three months ended |
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Nine months ended |
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2023 |
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2022 |
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2023 |
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2022 |
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Net loss |
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$ |
( |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Unrealized gain (loss) on short-term investments |
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( |
) |
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( |
) |
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Comprehensive loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
( |
) |
See accompanying notes to unaudited interim consolidated financial statements.
3
GALERA THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
(unaudited)
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Common stock |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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capital |
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gain (loss) |
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Deficit |
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Deficit |
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Balance at January 1, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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Sale of common stock and common stock warrants |
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— |
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— |
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Unrealized gain on short-term |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at March 31, 2023 |
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( |
) |
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( |
) |
||||
Share-based compensation expense |
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— |
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— |
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— |
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— |
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Exercise of common stock warrants |
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— |
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— |
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Unrealized loss on short-term |
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— |
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— |
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— |
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( |
) |
|
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— |
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( |
) |
Net loss |
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— |
|
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— |
|
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— |
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— |
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( |
) |
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( |
) |
Balance at June 30, 2023 |
|
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( |
) |
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( |
) |
||||
Share-based compensation expense |
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— |
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— |
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— |
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— |
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||
Exercise of stock options |
|
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— |
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|
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— |
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— |
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Exercise of common stock warrants |
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— |
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— |
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— |
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Sale of shares under Open Market Sale |
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— |
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— |
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Unrealized loss on short-term |
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— |
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— |
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— |
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( |
) |
|
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance at September 30, 2023 |
|
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$ |
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$ |
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$ |
— |
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$ |
( |
) |
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$ |
( |
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|||
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Common stock |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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capital |
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loss |
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Deficit |
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Deficit |
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Balance at January 1, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
|||
Share-based compensation expense |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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Sale of shares under Open Market Sale |
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— |
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— |
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||||
Unrealized loss on short-term |
|
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— |
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— |
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|
|
— |
|
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( |
) |
|
|
— |
|
|
|
( |
) |
Net loss |
|
|
— |
|
|
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— |
|
|
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— |
|
|
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— |
|
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|
( |
) |
|
|
( |
) |
Balance at March 31, 2022 |
|
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|
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|
|
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|
( |
) |
|
|
( |
) |
|
|
( |
) |
|||
Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
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||
Exercise of stock options |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
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|||
Unrealized loss on short-term |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
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— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|||
Share-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
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||
Exercise of stock options |
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|
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— |
|
|
|
|
|
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— |
|
|
|
— |
|
|
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|||
Unrealized gain on short-term |
|
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— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
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|
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||
Net loss |
|
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— |
|
|
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— |
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— |
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|
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— |
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|
|
( |
) |
|
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( |
) |
Balance at September 30, 2022 |
|
|
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$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||
See accompanying notes to unaudited interim consolidated financial statements.
4
GALERA THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(unaudited)
|
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Nine months ended |
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2023 |
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2022 |
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Operating activities: |
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Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Noncash interest expense |
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Share-based compensation expense |
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Gain on disposal of property and equipment |
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( |
) |
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Changes in operating assets and liabilities: |
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Refundable PDUFA fee |
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Prepaid expenses and other current assets |
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Other assets |
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Accounts payable |
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( |
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Accrued expenses |
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( |
) |
|
|
|
|
Other liabilities |
|
|
( |
) |
|
|
( |
) |
Cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Investing activities: |
|
|
|
|
|
|
||
Purchases of short-term investments |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of short-term investments |
|
|
|
|
|
|
||
Purchase of property and equipment |
|
|
( |
) |
|
|
( |
) |
Cash provided by investing activities |
|
|
|
|
|
|
||
Financing activities: |
|
|
|
|
|
|
||
Proceeds from the sale of common stock and common stock warrants in registered direct offering, net of issuance costs |
|
|
|
|
|
|
||
Proceeds from the sale of common stock under the Open Market Sale Agreement, net of issuance costs |
|
|
|
|
|
|
||
Proceeds from the exercise of common stock warrants |
|
|
|
|
|
|
||
Proceeds from exercise of stock options |
|
|
|
|
|
|
||
Cash provided by financing activities |
|
|
|
|
|
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
|
|
|
( |
) |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash at end of period |
|
$ |
|
|
$ |
|
||
Supplemental schedule of non-cash investing and financing activities: |
|
|
|
|
|
|
||
Right-of-use asset obtained in exchange for lease obligation |
|
$ |
|
|
$ |
|
||
Sale of property and equipment in exchange for prepaid future services |
|
$ |
|
|
$ |
|
||
See accompanying notes to unaudited interim consolidated financial statements.
5
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Galera Therapeutics, Inc. was incorporated as a Delaware corporation on November 19, 2012 (inception) and together with its subsidiaries (the Company, or Galera) is a clinical stage biopharmaceutical company focused on developing a pipeline of novel, proprietary therapeutics that have the potential to transform radiotherapy in cancer. Galera's technology consists of selective small molecule dismutase mimetics that are in late-stage development in patients with cancer. Avasopasem manganese (avasopasem, or GC4419) is in development for radiotherapy-induced toxicities, including severe oral mucositis (SOM) in patients with locally advanced head and neck cancer (HNC) and esophagitis in patients with lung cancer, and cisplatin-induced kidney damage in patients with cancer. The U.S. Food and Drug Administration (FDA) has granted Fast Track and Breakthrough Therapy designations to avasopasem for the reduction of SOM induced by radiotherapy. Galera’s second dismutase mimetic product candidate, rucosopasem manganese (rucosopasem, or GC4711), is in clinical-stage development to augment the anti-cancer efficacy of stereotactic body radiation therapy (SBRT) in patients with non-small cell lung cancer (NSCLC) and locally advanced pancreatic cancer (LAPC). The FDA and European Medicines Agency (EMA) have granted orphan drug designation and orphan medicinal product designation, respectively, to rucosopasem for the treatment of pancreatic cancer.
On August 9, 2023, the Company announced that it had received a Complete Response Letter (CRL) from the FDA regarding the Company’s New Drug Application (NDA) for avasopasem for radiotherapy-induced SOM in patients with HNC undergoing standard-of-care treatment. In the CRL, the FDA communicated that the results from the Phase 3 ROMAN trial together with the supporting data from the Phase 2b GT-201 trial were not sufficiently persuasive to establish substantial evidence of avasopasem’s effectiveness and safety for reducing SOM in patients with HNC. FDA stated that results from an additional clinical trial will be required for resubmission. The Company requested a Type A meeting with the FDA to understand the FDA’s rationale for its decision and discuss next steps to support an NDA resubmission seeking approval of avasopasem. In the Type A meeting held on September 28, 2023, and in the subsequently received meeting minutes, the FDA reiterated the need for an additional Phase 3 trial to support resubmission of the NDA. The Company is exploring potential strategic alternatives, as it is not feasible to conduct an additional trial with the Company’s current resources.
In connection with the CRL announcement, on August 9, 2023, the Company further announced that it would focus resources on exploring a potential approval path for avasopasem in radiotherapy-induced SOM, progressing its ongoing clinical trials for rucosopasem, and concurrently evaluating strategic alternatives, including partnering, for the continued development of avasopasem and rucosopasem. As a result, the Company wound down its commercial readiness efforts for avasopasem and reduced headcount across several departments. This reduction in force, which was approved by the Company’s Board of Directors, reduced the Company’s workforce by
In addition to developing avasopasem for the reduction of normal tissue toxicity from radiotherapy, the Company has been developing its second dismutase mimetic product candidate, rucosopasem, to increase the anti-cancer efficacy of higher daily doses of radiotherapy, or SBRT. In September 2021, in support of rucosopasem, the Company announced final results from its Phase 1/2 pilot trial of avasopasem in combination with SBRT in patients with unresectable or borderline resectable LAPC. In this proof-of-concept trial, survival and tumor outcome benefits were observed. The Company used its observations from this pilot trial to inform the design of rucosopasem clinical trials in combination with SBRT. The Company successfully completed Phase 1 trials of intravenous rucosopasem in healthy volunteers and is currently evaluating rucosopasem in combination with SBRT in a Phase 1/2 safety and anti-cancer efficacy trial in NSCLC (GRECO-1) and a Phase 2b trial of rucosopasem in combination with SBRT in patients with LAPC (GRECO-2).
On October 31, 2023, the Company announced the decision to halt the GRECO-1 and GRECO-2 trials, following a futility analysis of the GRECO-2 trial. The analysis indicated that the trial was unlikely to succeed as designed. The Company believes this decision will enable the Company to conserve cash while it continues to explore potential strategic alternatives with the goal of maximizing shareholder value.
The Company has engaged Stifel, Nicolaus & Company, Inc. (Stifel), as its financial advisor, to assist in reviewing strategic alternatives. Such alternatives may include a merger, sale, divestiture of assets, licensing, or other strategic transaction.
Liquidity
The Company has incurred recurring losses and negative cash flows from operations since inception and has an accumulated deficit of $
6
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
short-term investments as of September 30, 2023, taking into account the discontinuation of the GRECO-1 and GRECO-2 trials, will enable the Company to fund its operating expenses and capital expenditure requirements into 2025.
The Company has engaged Stifel, as its financial advisor, to assist in reviewing strategic alternatives with the goal of maximizing value for its shareholders. Such alternatives may include a merger, sale, divestiture of assets, licensing, or other strategic transaction. If the Company is unable to undertake any strategic alternative, it may be required to cease operations altogether.
The summary of significant accounting policies disclosed in the Company’s annual consolidated financial statements for the years ended December 31, 2022 and 2021 included in the Company’s annual report on Form 10-K filed with the SEC on March 8, 2023 have not materially changed, except as set forth below.
Basis of presentation and consolidation
The accompanying unaudited interim consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) of the Financial Accounting Standards Board (FASB).
In the opinion of management, the accompanying interim consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of September 30, 2023 and its results of operations for the three and nine months ended September 30, 2023 and 2022, and statements of changes in stockholders’ deficit and cash flows for the nine months ended September 30, 2023 and 2022. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or for any future period. The interim consolidated financial statements, presented herein, do not contain the required disclosures under U.S. GAAP for annual financial statements. Therefore, these interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and related notes as of and for the year ended December 31, 2022, included in the Company’s annual report on Form 10-K and filed with the SEC on March 8, 2023.
Use of estimates
The preparation of unaudited interim consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited interim consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the unaudited interim consolidated financial statements in the period they are determined to be necessary. Significant areas that require management’s estimates include share-based compensation assumptions, royalty purchase liability assumptions and accrued research and development expenses.
Cash and cash equivalents
The Company considers all highly liquid investments that have maturities of three months or less when acquired to be cash equivalents. Cash and cash equivalents as of September 30, 2023 and December 31, 2022 consisted of bank deposits, U.S. Treasury obligations, U.S. government agency securities, and a money market mutual fund invested in U.S. Treasury obligations. We maintain a portion of our cash and cash equivalents in accounts with major financial institutions, and our deposits at these institutions exceed insured limits.
Restricted cash
Restricted cash represents collateral provided under a commercial credit card agreement entered into with TD Bank, N.A. during July 2022. Restricted cash was $
7
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Refundable PDUFA fee
In December 2022, the Company paid a $
Research and development expenses
Research and development costs are expensed as incurred and consist primarily of funds paid to third parties for the provision of services for product candidate development, clinical and preclinical development and related supply and manufacturing costs, and regulatory compliance costs. The Company accrues and expenses preclinical studies and clinical trial activities performed by third parties based upon estimates of the proportion of work completed over the term of the individual trial and patient enrollment rates in accordance with agreements with clinical research organizations and clinical trial sites. The Company determines the estimates by reviewing contracts, vendor agreements and purchase orders, and through discussions with internal clinical personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services. However, actual costs and timing of clinical trials are highly uncertain, subject to risks and may change depending upon a number of factors, including the Company’s clinical development plan.
Management makes estimates of the Company’s accrued expenses as of each balance sheet date in the Company’s consolidated financial statements based on facts and circumstances known to the Company at that time. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Nonrefundable advance payments for goods and services, including fees for process development or manufacturing and distribution of clinical supplies that will be used in future research and development activities, are deferred and recognized as expense in the period that the related goods are consumed or services are performed.
Restructuring Costs
As a result of the Workforce Reduction, the Company incurred total restructuring-related charges of $
Net loss per share
The Company uses the two-class method to compute net income per common share during periods the Company realizes net income and has securities that entitle the holder to participate in dividends and earnings of the Company. The two-class method is not applicable during periods with a net loss, as the participating securities are not obligated to fund losses. Basic loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period. Diluted loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as stock options and common stock warrants, which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive.
The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:
|
|
September 30, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Stock options |
|
|
|
|
|
|
||
Common stock warrants |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Recent Accounting Pronouncements
In August 2020, FASB issued 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” which simplifies accounting for convertible instruments by removing major separation models required
8
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. This guidance is effective for fiscal years beginning after December 15, 2023, including interim periods therein. Early adoption is permitted. The Company adopted this ASU on January 1, 2023. There was no impact to the Company's consolidated financial statements.
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis (amounts in thousands):
|
|
September 30, 2023 |
|
|||||||||
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|||
Assets |
|
|
|
|
|
|
|
|
|
|||
Money market funds and U.S. Treasury obligations |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Short-term investments |
|
|
|
|
|
|
|
|
|
|||
U.S. government agency securities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
U.S. Treasury obligations |
|
|
|
|
|
|
|
|
|
|||
Total short-term investments |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
December 31, 2022 |
|
|||||||||
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|||
Assets |
|
|
|
|
|
|
|
|
|
|||
Money market funds and U.S. Treasury obligations |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Short-term investments |
|
|
|
|
|
|
|
|
|
|||
U.S. government agency securities |
|
$ |
|
|
$ |
|
|
$ |
|
|||
U.S. Treasury obligations |
|
|
|
|
|
|
|
|
|
|||
Total short-term investments |
|
$ |
|
|
$ |
|
|
$ |
|
|||
There were
9
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Property and equipment consist of (amounts in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Laboratory equipment |
|
$ |
|
|
$ |
|
||
Computer hardware and software |
|
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Furniture and fixtures |
|
|
|
|
|
|
||
Property and equipment, gross |
|
|
|
|
|
|
||
Less: Accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation and amortization expense was $
Accrued expenses consist of (amounts in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Compensation and related benefits |
|
$ |
|
|
$ |
|
||
Restructuring costs |
|
|
|
|
|
|
||
Research and development expenses |
|
|
|
|
|
|
||
Professional fees and other expenses |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Pursuant to our Amended and Restated Purchase and Sale Agreement (the Royalty Agreement), with Clarus IV Galera Royalty AIV, L.P., Clarus IV-A, L.P., Clarus IV-B, L.P., Clarus IV-C, L.P. and Clarus IV-D, L.P. (collectively, Blackstone or Blackstone Life Sciences), Blackstone agreed to pay up to $
In May 2020, the Company entered into Amendment No. 1 to the Royalty Agreement (the Amendment) with Clarus IV Galera Royalty AIV, L.P. (the Blackstone Purchaser). The Blackstone Purchaser is affiliated with Blackstone Life Sciences, the successor in interest to Clarus Ventures. The Amendment increased the Royalty Purchase Price by $
The Company accounts for the Royalty Agreement as a debt instrument. The $
10
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
corresponding increase in the liability balance. The Company updated the assumptions underlying the calculation of interest expense on the royalty purchase liability based on the CRL received from the FDA in August 2023 on the Company's NDA for avasopasem for radiotherapy-induced SOM. The Company recognized $
Pursuant to the Royalty Agreement and the Amendment, in connection with the payment of each tranche of the Royalty Purchase Price, the Company has agreed to sell, convey, transfer and assign to Blackstone all of its right, title and interest in a high single-digit percentage of (i) worldwide net sales of avasopasem and rucosopasem (collectively, the Products) and (ii) all amounts received by the Company or its affiliates, licensees and sublicensees with respect to Product-related damages (collectively, the Product Payments) during the Royalty Period. The Royalty Period means, on a Product-by-Product and country-by-country basis, the period of time commencing on the commercial launch of such Product in such country and ending on the latest to occur of (i) the 12th anniversary of such commercial launch, (ii) the expiration of all valid claims of the Company’s patents covering such Product in such country, and (iii) the expiration of regulatory data protection or market exclusivity or similar regulatory protection afforded by the health authorities in such country, to the extent such protection or exclusivity effectively prevents generic versions of such Product from entering the market in such country.
The Royalty Agreement and the Amendment will remain in effect until the date on which the aggregate amount of the Product Payments paid to Blackstone exceeds a fixed single-digit multiple of the actual amount of the Royalty Purchase Price received by the Company, unless earlier terminated pursuant to the mutual written agreement of the Company and Blackstone. If no Products are commercialized, the Company would not have an obligation to make Product Payments to Blackstone, which is the sole mechanism for repaying the liability.
Upon execution of the Amendment, the Company issued common stock warrants to the Blackstone Purchaser, each of which became exercisable upon the receipt by the Company of the applicable specified milestone payment. The issued warrants expire
|
|
Shares |
|
|
Exercise Price |
|
|
Initial Exercise Date |
|
Expiration Date |
||
New Milestone Warrant |
|
|
|
|
$ |
|
|
|
||||
Fourth Milestone Warrant |
|
|
|
|
$ |
|
|
|
||||
The warrants are equity-classified and were valued at $
The Company has a non-cancelable operating lease for office space in Malvern, Pennsylvania which, as of September 30, 2023, has a remaining lease term of approximately 7.0 years. The discount rate used to account for the Company’s operating leases under FASB ASU No. 2018-11, Leases (Topic 842), was the Company’s estimated incremental borrowing rate of
Supplemental balance sheet information related to leases was as follows:
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Operating Leases |
|
|
|
|
|
|
||
Right-of-use lease assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Lease liabilities, current |
|
|
|
|
|
|
||
Lease liabilities, net of current portion |
|
|
|
|
|
|
||
Total operating lease liabilities |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Lease cost, as presented below, includes costs associated with leases for which right-of-use (ROU) assets have been recognized as well as short-term leases.
11
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Operating lease costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating lease rental expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total operating lease expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Supplemental cash flow information related to leases was as follows:
|
|
Nine months ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Cash paid for amounts included in the measurement of lease liabilities |
|
|
|
|
|
|
||
Operating cash flows for operating leases |
|
$ |
|
|
$ |
|
||
Right-of-use assets obtained in exchange for lease obligation |
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
|
|
||
Future minimum rental payments under the Company’s non-cancelable operating lease liabilities as of September 30, 2023 (amounts in thousands):
Remainder of 2023 |
|
|
|
|
2024 |
|
|
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 and after |
|
|
|
|
Total |
|
|
|
|
Less: imputed interest |
|
|
( |
) |
|
|
$ |
|
Equity offerings
In February 2023, the Company completed a registered direct offering, which resulted in the issuance and sale of
In December 2020, the Company entered into an Open Market Sale Agreement (the Sales Agreement) with Jefferies LLC (Jefferies) as sales agent, pursuant to which it may, from time to time, issue and sell common stock with an aggregate value of up to $
12
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Share-based compensation
Equity Incentive Plan
In November 2012, the Company adopted the Galera Therapeutics, Inc. Equity Incentive Plan (the Prior Plan). The Prior Plan provided for the grant of incentive stock options, nonstatutory stock options, restricted stock awards, and stock appreciation rights. In connection with the adoption of the 2019 Plan (as defined below), the Company ceased issuing awards under the Prior Plan. As a result, no shares remain available for issuance under the Prior Plan; however, the Prior Plan continues to govern awards that are outstanding under it. The total number of shares subject to outstanding awards under the Prior Plan as of September 30, 2023 was
2019 Incentive Award Plan
In connection with the Company’s Initial Public Offering, or IPO, in November 2019, the Company’s board of directors adopted and the Company’s stockholders approved the Galera Therapeutics, Inc. 2019 Incentive Award Plan (the 2019 Plan), which became effective upon the effectiveness of the registration statement on Form S-1 for the IPO. Upon effectiveness of the 2019 Plan, the Company ceased granting new awards under the Prior Plan.
The 2019 Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock awards, restricted stock units, stock appreciation rights and other stock-based awards. The number of shares of common stock initially available for issuance under the 2019 Plan was
In November 2019, the Company’s board of directors adopted and the Company’s stockholders approved the Galera Therapeutics, Inc. 2019 Employee Stock Purchase Plan (the ESPP). The ESPP allows employees to buy Company stock through after-tax payroll deductions at a discount from market value. The number of shares of common stock initially available for issuance under the ESPP was
2023 Employment Inducement Award Plan
On April 28, 2023, the Board of Directors adopted the Galera Therapeutics, Inc. 2023 Employment Inducement Award Plan (Inducement Plan), which became effective on such date without stockholder approval pursuant to Rule 5635(c)(4) of The Nasdaq Stock Market LLC listing rules (“Rule 5635(c)(4)”). The Inducement Plan provides for the grant of nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards. In accordance with Rule 5635(c)(4), awards under the Inducement Plan may only be granted to persons who (a) were not previously an employee or director of the Company, or (b) are commencing employment with the Company following a bona fide period of non-employment, in either case as an inducement material to the individual’s entering into employment with the Company. A total of
13
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Share-based Compensation
Share-based compensation expense was as follows for the three and nine months ended September 30, 2023 and 2022 (in thousands):
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Research and development |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following table summarizes the activity related to stock option grants for the nine months ended September 30, 2023:
|
|
Shares |
|
|
Weighted |
|
|
Weighted- |
|
|||
Outstanding at January 1, 2023 |
|
|
|
|
$ |
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|||
Exercised |
|
|
( |
) |
|
|
|
|
|
|
||
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
||
Outstanding at September 30, 2023 |
|
|
|
|
$ |
|
|
|
6.2 |
|
||
Vested and exercisable at September 30, 2023 |
|
|
|
|
$ |
|
|
|
|
|||
Vested and expected to vest at September 30, 2023 |
|
|
|
|
$ |
|
|
|
|
|||
The Company’s stock option awards vest based on the terms in the governing agreements and generally vest over
As of September 30, 2023, the unrecognized compensation cost was $
The fair value of options is estimated using the Black-Scholes option pricing model, which takes into account inputs such as the exercise price, the estimated fair value of the underlying common stock at the grant date, expected term, expected stock price volatility, risk-free interest rate and dividend yield. The fair value of stock options during the nine months ended September 30, 2023 and 2022 was determined using the methods and assumptions discussed below.
14
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The grant date fair value of each option grant was estimated throughout the nine months ended September 30, 2023 and 2022 using the Black-Scholes option-pricing model using the following weighted-average assumptions:
|
|
Nine months ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Expected term (in years) |
|
|
|
|
|
|
||
Expected stock price volatility |
|
|
% |
|
|
% |
||
Risk-free interest rate |
|
|
% |
|
|
% |
||
Expected dividend yield |
|
|
% |
|
|
% |
||
IntellectMap provides information technology advisory services to the Company. The chief executive officer of IntellectMap is the brother of the Company’s chief executive officer. Fees incurred by the Company with respect to IntellectMap during both of the nine months ended September 30, 2023 and 2022 were $
10. Restructuring charges
On August 9, 2023, the Company announced a plan to reduce expenses and extend its cash runway. In connection with this plan, the Board of Directors of the Company approved the Workforce Reduction. The decision was based on cost-reduction initiatives intended to reduce operating expenses. The Company incurred a $
The following table summarizes the restructuring balances at September 30, 2023 (in thousands):
|
|
2023 |
|
|
Balance, January 1 |
|
$ |
|
|
Current year restructuring costs |
|
|
|
|
Payment of employee severance and related costs |
|
|
( |
) |
Balance, September 30 |
|
$ |
|
|
11. Subsequent events
On October 31, 2023, the Company announced the decision to halt the GRECO-1 and GRECO-2 trials, following a futility analysis of the GRECO-2 trial. The analysis indicated that the trial was unlikely to succeed as designed. The Company believes this decision will enable the Company to conserve cash while it continues to explore potential strategic alternatives with the goal of maximizing shareholder value. The discontinuation of the GRECO trials is expected to have an impact on the amounts the Company records for interest expense on the royalty purchase liability under the Royalty Agreement and may impact the carrying value of the royalty purchase liability, and such impacts may be material. In addition, the Company may perform impairment testing on the carrying value of the acquired intangible asset and goodwill on the balance sheet during the fourth quarter of 2023.
15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many important factors, including those set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 8, 2023, or the 2022 Form 10-K, and this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in, or implied, by these forward-looking statements.
Overview
We are a clinical stage biopharmaceutical company focused on developing a pipeline of novel, proprietary therapeutics that have the potential to transform radiotherapy in cancer. We leverage our expertise in superoxide dismutase mimetics to design drugs to reduce normal tissue toxicity from radiotherapy and to increase the anti-cancer efficacy of radiotherapy. Avasopasem manganese (avasopasem, or GC4419) is a highly selective small molecule dismutase mimetic in development for the reduction of severe oral mucositis, or SOM, in patients with head and neck cancer, or HNC, the reduction of esophagitis in patients with lung cancer, and the reduction of cisplatin-induced kidney damage in patients with cancer. SOM is a common, debilitating complication of radiotherapy in patients with HNC. The U.S. Food and Drug Administration, or FDA, has granted Fast Track and Breakthrough Therapy designations to avasopasem for the reduction of SOM induced by radiotherapy. Our second dismutase mimetic product candidate, rucosopasem manganese (rucosopasem, or GC4711), is in clinical-stage development to augment the anti-cancer efficacy of stereotactic body radiation therapy, or SBRT, in patients with non-small cell lung cancer, or NSCLC, and locally advanced pancreatic cancer, or LAPC. The FDA and European Medicines Agency, or EMA, have granted orphan drug designation and orphan medicinal product designation, respectively, to rucosopasem for the treatment of pancreatic cancer.
On August 9, 2023, we announced receipt of a Complete Response Letter, or CRL, from the FDA regarding our New Drug Application (NDA) for avasopasem for radiotherapy-induced SOM in patients with HNC undergoing standard-of-care treatment. In the CRL, the FDA communicated that the results from the Phase 3 ROMAN trial together with the supporting data from the Phase 2b GT-201 trial were not sufficiently persuasive to establish substantial evidence of avasopasem’s effectiveness and safety for reducing SOM in patients with HNC. FDA stated that results from an additional clinical trial will be required for resubmission. We requested a Type A meeting with the FDA to understand the FDA’s rationale for its decision and discuss next steps to support an NDA resubmission seeking approval of avasopasem. During the Type A meeting held on September 28, 2023, and in the subsequently received meeting minutes, the FDA reiterated the need for an additional Phase 3 trial to support resubmission of the NDA. We are exploring potential strategic alternatives, as it is not feasible to conduct an additional trial with our current resources.
In connection with the avasopasem CRL announcement, on August 9, 2023, we further announced that we would focus resources on exploring a potential approval path for avasopasem in radiotherapy-induced SOM, progressing our ongoing clinical trials for rucosopasem, and concurrently evaluating potential strategic alternatives, including partnering, for the continued development of avasopasem and rucosopasem. As a result, we wound down our commercial readiness efforts for avasopasem and reduced headcount across several departments. This reduction in force, which was approved by our Board of Directors, reduced our workforce by 22 employees, or approximately 70%, as of August 9, 2023, or the Workforce Reduction. The decision was based on cost-reduction initiatives intended to reduce operating expenses.
In addition to developing avasopasem for the reduction of normal tissue toxicity from radiotherapy, we have been developing rucosopasem to increase the anti-cancer efficacy of higher daily doses of radiotherapy, or SBRT. In September 2021, in support of rucosopasem, we announced final results from our pilot Phase 1/2 safety and anti-cancer efficacy trial of avasopasem in combination with SBRT in patients with unresectable or borderline resectable LAPC. In this proof-of-concept trial, improvements were observed with avasopasem plus SBRT in overall survival, progression-free survival, local tumor control and time to distant metastases relative to patients treated with placebo plus SBRT.
We used our observations from the pilot LAPC trial to inform the design of our rucosopasem clinical trials in combination with SBRT. We successfully completed Phase 1 trials of intravenous rucosopasem in healthy volunteers, and in October 2020, initiated a Phase 1/2 trial in patients with NSCLC, which we refer to as the GRECO-1 trial, and in May 2021, initiated a Phase 2b trial in patients with LAPC, which we refer to as the GRECO-2 trial.
On October 31, 2023, we announced the decision to halt the GRECO-1 and GRECO-2 trials, following a futility analysis of the GRECO-2 trial. The analysis indicated that the trial was unlikely to succeed as designed. We believe this decision enables us to conserve cash while we continue to explore potential strategic alternatives.
16
We have engaged Stifel, Nicolaus & Company, Inc., as our financial advisor, to assist in reviewing strategic alternatives with the goal of maximizing value for our shareholders. Such alternatives may include a merger, sale, divestiture of assets, licensing, or other strategic transaction. If we are unable to undertake any strategic alternative, we may be required to cease operations altogether.
Nasdaq Listing Notification
On September 22, 2023, we received two written notices, or the Notices, from The Nasdaq Stock Market LLC, or Nasdaq, indicating that (i) we are no longer in compliance with the minimum Market Value of Listed Securities, or MVLS, of $50.0 million required for continued listing on The Nasdaq Global Market, as set forth in Nasdaq Listing Rule 5450(b)(2)(A), or the MVLS Requirement, and (ii) for the last 30 consecutive business days, the bid price for our common stock, par value $0.001 per share, had closed below the $1.00 per share minimum bid price requirement for continued inclusion on the Nasdaq Global Market as set forth in Nasdaq Listing Rule 5450(a)(1), or the Minimum Bid Price Requirement. The Notices have no effect at this time on the listing of our common stock, which continues to trade on The Nasdaq Global Market under the symbol “GRTX.” In accordance with Nasdaq Listing Rule 5810(c)(3)(C), we have a period of 180 calendar days, or until March 20, 2024 to regain compliance with the MVLS Requirement and the Minimum Bid Price Requirement, respectively.
On September 25, 2023, we received an additional written notice, or the Additional Notice, from Nasdaq, indicating that we are no longer in compliance with the minimum Market Value of Publicly Held Shares, or MVPHS, of $15.0 million required for continued listing on The Nasdaq Global Market, as set forth in Nasdaq Listing Rule 5450(b)(2)(C), or the MVPHS Requirement. The Additional Notice has no effect at this time on the listing of our common stock, which continues to trade on The Nasdaq Global Market under the symbol “GRTX.” In accordance with Nasdaq Listing Rule 5810(c)(3)(C), we have a period of 180 calendar days, or until March 25, 2024 to regain compliance with the MVPHS Requirement.
Delisting from the Nasdaq Global Market or any Nasdaq market could make trading our common stock more difficult for investors, potentially leading to declines in our share price and liquidity. In addition, delisting from Nasdaq could also make it more difficult for us to raise additional capital. See “Risk Factors—Our common stock may be delisted from The Nasdaq Global Market if we cannot regain compliance with Nasdaq’s continued listing requirements, which could harm our business, the trading price of our common stock, our ability to raise additional capital and the liquidity of the market for our common stock” in Part II, Item 1A of this Quarterly Report on Form 10-Q.
Recent Developments
Cost-reduction Plan Implementation and Reduction in Workforce
In connection with the CRL announcement, on August 9, 2023, we further announced that we will focus resources on exploring a potential approval path for avasopasem in radiotherapy-induced SOM, progressing our ongoing clinical trials for rucosopasem, and concurrently evaluating strategic alternatives, including partnering, for the continued development of avasopasem and rucosopasem. As a result, we wound down our commercial readiness efforts for avasopasem and reduced headcount across several departments. This reduction in force, which was approved by our Board of Directors, reduced our workforce by 22 employees, or approximately 70%, as of August 9, 2023, or the Workforce Reduction. The decision was based on cost-reduction initiatives intended to reduce operating expenses. We recorded a $2.3 million charge in connection with the Workforce Reduction in the third quarter of 2023, primarily consisting of severance payments, employee benefits and related costs.
Discontinuation of GRECO Trials and Assessment of Potential Strategic Alternatives
On October 31, 2023, we announced the decision to halt the GRECO-1 and GRECO-2 trials, following a futility analysis of the GRECO-2 trial. The analysis indicated that the trial was unlikely to succeed as designed. We believe this decision enables us to conserve cash while we continue to explore potential strategic alternatives with the goal of maximizing shareholder value. Potential strategic alternatives may include a merger, sale, divestiture of assets, licensing, or other strategic transaction. We are actively working with an investment bank in this assessment process. If we are unable to undertake any strategic alternative, we may be required to cease operations altogether.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of
17
assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those described below. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in the 2022 Form 10-K and the notes to the unaudited interim consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q. During the nine months ended September 30, 2023 there were no material changes to our critical accounting policies from those discussed in the 2022 Form 10-K.
Components of Results of Operations
Research and Development Expense
Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates. We expense research and development costs as incurred. These expenses include:
We track our external research and development expenses on a program-by-program basis, such as fees paid to CROs, CMOs and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities. However, we do not track our internal research and development expenses on a program-by-program basis as they primarily relate to personnel-related and share-based compensation expense, early-stage research expenses and other costs that are deployed across multiple projects under development.
The following table summarizes our research and development expenses by program for the three and nine months ended September 30, 2023 and 2022 (in thousands):
|
|
Three months ended |
|
|
Nine months ended |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Avasopasem manganese |
|
$ |
1,108 |
|
|
$ |
2,646 |
|
|
$ |
4,491 |
|
|
$ |
6,922 |
|
Rucosopasem manganese |
|
|
3,417 |
|
|
|
2,284 |
|
|
|
9,670 |
|
|
|
6,818 |
|
Other research and development expense |
|
|
478 |
|
|
|
955 |
|
|
|
1,830 |
|
|
|
2,248 |
|
Personnel related and share-based compensation |
|
|
1,090 |
|
|
|
2,220 |
|
|
|
4,935 |
|
|
|
6,860 |
|
|
|
$ |
6,093 |
|
|
$ |
8,105 |
|
|
$ |
20,926 |
|
|
$ |
22,848 |
|
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the
18
increased size and duration of later-stage clinical trials. We expect that our research and development expense will decrease in the near future due to the discontinuation of our GRECO-1 and GRECO-2 trials, and the completion of our Phase 3 ROMAN trial.
General and Administrative Expense
General and administrative expense consists primarily of personnel expenses, including salaries, benefits and share-based compensation expense for employees in executive, finance, accounting, legal, information technology, commercial, business development and human resource functions. General and administrative expense also includes corporate facility costs, including rent, utilities, depreciation and maintenance, not otherwise included in research and development expense, as well as legal fees related to intellectual property and corporate matters and fees for accounting and consulting services.
We expect that our general and administrative expense will decrease in the near future due to our recent Workforce Reduction. We may incur significant costs, however, related to our exploration of strategic alternatives, including legal, accounting and advisory expenses and other related charges.
Interest Income
Interest income consists of amounts earned on our cash and cash equivalents held with large institutional banks, U.S. Treasury obligations and a money market mutual fund invested in U.S. Treasury obligations, and our short-term investments in U.S. Treasury and government agency obligations.
Interest Expense
Interest expense consists of non-cash interest on proceeds received under the Royalty Agreement with Blackstone and non-cash interest expense associated with the amortization of the debt discount recorded for the Blackstone warrants.
Foreign Currency Loss
Foreign currency loss consists primarily of exchange rate fluctuations on transactions denominated in a currency other than the U.S. dollar.
Net Operating Loss and Research and Development Tax Credit Carryforwards
As of December 31, 2022, we had federal and state tax net operating loss carryforwards of $162.3 million and $184.4 million, respectively, which each begin to expire in 2032 unless previously utilized. We also had foreign net operating loss carryforwards of $1.7 million which do not expire. As of December 31, 2022, we also had federal, state and foreign research and development tax credit carryforwards of $7.3 million. The federal and state research and development tax credit carryforwards will begin to expire in 2032 and 2036, respectively, unless previously utilized. The foreign research and development tax credit carryforwards do not have an expiration date.
Utilization of the federal and state net operating losses and credits may be subject to a substantial annual limitation. The annual limitation may result in the expiration of our net operating losses and credits before we can use them. We have recorded a valuation allowance on substantially all of our deferred tax assets, including our deferred tax assets related to our net operating loss and research and development tax credit carryforwards, given the current uncertainty over our ability to utilize such amounts.
Results of Operations
Comparison of the Three and Nine Months Ended September 30, 2023 and 2022
The following table sets forth our results of operations for the three and nine months ended September 30, 2023 and 2022 (in thousands):
19
|
|
Three Months Ended |
|
|
|
|
|
Nine months ended |
|
|
|
|
||||||||||||
|
|
2023 |
|
|
2022 |
|
|
Change |
|
|
2023 |
|
|
2022 |
|
|
Change |
|
||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Research and development |
|
$ |
6,093 |
|
|
$ |
8,105 |
|
|
$ |
(2,012 |
) |
|
$ |
20,926 |
|
|
$ |
22,848 |
|
|
$ |
(1,922 |
) |
General and administrative |
|
|
4,994 |
|
|
|
4,853 |
|
|
|
141 |
|
|
|
20,849 |
|
|
|
15,193 |
|
|
|
5,656 |
|
Restructuring costs |
|
|
2,309 |
|
|
|
— |
|
|
|
2,309 |
|
|
|
2,309 |
|
|
|
— |
|
|
|
2,309 |
|
Loss from operations |
|
|
(13,396 |
) |
|
|
(12,958 |
) |
|
|
(438 |
) |
|
|
(44,084 |
) |
|
|
(38,041 |
) |
|
|
(6,043 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest income |
|
|
411 |
|
|
|
171 |
|
|
|
240 |
|
|
|
1,300 |
|
|
|
256 |
|
|
|
1,044 |
|
Interest expense |
|
|
(2,087 |
) |
|
|
(3,245 |
) |
|
|
1,158 |
|
|
|
(10,709 |
) |
|
|
(8,247 |
) |
|
|
(2,462 |
) |
Foreign currency loss |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
(2 |
) |
|
|
— |
|
Net loss |
|
$ |
(15,073 |
) |
|
$ |
(16,033 |
) |
|
$ |
960 |
|
|
$ |
(53,495 |
) |
|
$ |
(46,034 |
) |
|
$ |
(7,461 |
) |
Research and Development Expense
Research and development expense decreased by $2.0 million from $8.1 million for the three months ended September 30, 2022 to $6.1 million for the three months ended September 30, 2023. Avasopasem development costs decreased by $1.5 million due to decreased costs for the ROMAN trial as it neared completion, personnel related and share-based compensation expense decreased $1.1 million, primarily due to the Workforce Reduction, and other research and development expenses decreased $0.5 million. Partially offsetting these decreases, rucosopasem development costs increased by $1.1 million due to increased expenses in the GRECO-2 trial reflecting increased enrollment.
Research and development expense decreased by $1.9 million from $22.8 million for the nine months ended September 30, 2022 to $20.9 million for the nine months ended September 30, 2023. Avasopasem development costs decreased by $2.4 million, primarily due to decreased costs for the AESOP and EUSOM trials, both of which were completed in 2022, and for the ROMAN trial, personnel related and share-based compensation cost decreased $1.9 million, primarily due to the Workforce Reduction, and other research and development expenses decreased $0.4 million. Partially offsetting these decreases, rucosopasem development costs increased by $2.9 million, due to increased expenses for the GRECO trials.
General and Administrative Expense
General and administrative expense increased by $0.1 million from $4.9 million for the three months ended September 30, 2022 to $5.0 million for the three months ended September 30, 2023, principally due to avasopasem commercial preparations and medical affairs activities, as well as increased legal expenses, largely offset by reduced personnel related and share-based compensation expenses due to the Workforce Reduction and reduced insurance expense.
General and administrative expense increased by $5.6 million from $15.2 million for the nine months ended September 30, 2022 to $20.8 million for the nine months ended September 30, 2023, due to avasopasem commercial preparations and medical affairs activities, as well as increased legal expenses.
Restructuring Costs
In connection with the CRL announcement, we restructured our operations and reduced our workforce by 22 employees, or approximately 70%, as of August 9, 2023. As a result of these restructuring initiatives, we incurred total restructuring-related charges of $2.3 million during the three and nine months ended September 30, 2023. No such costs were incurred during the three and nine months ended September 30, 2022.
Interest Income
Interest income increased from $0.2 million for the three months ended September 30, 2022 to $0.4 million for the three months ended September 30, 2023, and increased from $0.3 million for the nine months ended September 30, 2022 to $1.3 million for the nine months ended September 30, 2023, due to increased interest rates on invested cash and securities.
Interest Expense
We recognized $2.1 million and $3.2 million in non-cash interest expense during the three months ended September 30, 2023 and 2022, respectively, and $10.7 million and $8.2 million in non-cash interest expense during the nine months ended
20
September 30, 2023 and 2022, respectively, in connection with the Royalty Agreement with Blackstone Life Sciences. The decrease in the interest expense during the three months ended September 30, 2023 was due to a decrease in the imputed interest rate during the period. In August 2023, we received the CRL from the FDA, and as a result we updated the assumptions underlying the calculation of imputed interest expense on the royalty purchase liability.
Liquidity and Capital Resources
We do not currently have any approved products and have never generated any revenue from product sales. Through September 30, 2023, we have funded our operations primarily through the sale and issuance of equity and $117.5 million of proceeds received under the Royalty Agreement with Blackstone Life Sciences, receiving aggregate gross proceeds of $374.7 million. In November 2019, we completed our IPO, which resulted in the issuance and sale of 5,000,000 shares of common stock at a public offering price of $12.00 per share, generating net proceeds of $53.0 million after deducting underwriting discounts and other offering costs. On December 9, 2019, in connection with the partial exercise of the over-allotment option granted to the underwriters of our IPO, 445,690 additional shares of common stock were sold at the IPO price of $12.00 per share, generating net proceeds of approximately $5.0 million after deducting underwriting discounts and other offering costs.
In February 2023, we completed a registered direct offering, which resulted in the issuance and sale of 14,320,000 shares of our common stock and warrants to purchase up to 14,320,000 shares of common stock at a combined offering price of $2.095 per share and accompanying warrant, and received net proceeds of $27.6 million, after deducting placement agent fees and offering expenses. The warrants are equity-classified, have an exercise price of $1.97 per share of common stock, are exercisable immediately following their issuance and will expire five years from the date of issuance. During the nine months ended September 30, 2023, warrants were exercised in exchange for 1,020,000 shares of common stock resulting in proceeds of $2.0 million.
In December 2020, we entered into an Open Market Sale Agreement, or the Sales Agreement, with Jefferies LLC, or Jefferies, as sales agent, pursuant to which we may, from time to time, issue and sell common stock with an aggregate value of up to $50.0 million in “at-the-market,” or ATM, offerings under our Registration Statement on Form S-3 (File No. 333-251061) filed with the SEC on December 1, 2020. Sales of common stock, if any, pursuant to the Sales Agreement, may be made in sales deemed to be an “at the market offering” as defined in Rule 415(a) of the Securities Act, including sales made directly through the Nasdaq Global Market or on any other existing trading market for our common stock. During the nine months ended September 30, 2023, 9,805,457 shares were sold under the Sales Agreement at a weighted average price per share of $0.21, resulting in net proceeds after deducting fees, commissions and other expenses related to the offering of approximately $1.9 million. There is approximately $35.6 million of available capacity under the Sales Agreement as of the date of this Quarterly Report on Form 10-Q.
As of September 30, 2023, we had $28.4 million in cash, cash equivalents and short-term investments and an accumulated deficit of $431.8 million. We expect our existing cash, cash equivalents and short-term investments as of September 30, 2023, taking into account the discontinuation of the GRECO-1 and GRECO-2 trials, will enable us to fund our operating expenses and capital expenditure requirements into 2025. We maintain a portion of our cash and cash equivalents in accounts with major financial institutions, and our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business and financial position. We have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years.
Cash Flows
The following table shows a summary of our cash flows for the periods indicated (in thousands):
|
|
Nine months ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Net cash used in operating activities |
|
$ |
(34,933 |
) |
|
$ |
(29,481 |
) |
Net cash provided by investing activities |
|
|
23,318 |
|
|
|
21,215 |
|
Net cash provided by financing activities |
|
|
31,728 |
|
|
|
1,187 |
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
$ |
20,113 |
|
|
$ |
(7,079 |
) |
Operating Activities
During the nine months ended September 30, 2023, we used $34.9 million of net cash in operating activities. Cash used in operating activities reflected our net loss of $53.5 million, partially offset by non-cash charges of $15.1 million primarily related to
21
share-based compensation, interest expense on our Royalty Agreement with Blackstone Life Sciences and depreciation expense, $3.2 million from the refund of the PDUFA fee, and $0.3 million from other changes in operating assets and liabilities. The primary use of cash was to fund our operations related to the development of our product candidates.
During the nine months ended September 30, 2022, we used $29.5 million of net cash in operating activities. Cash used in operating activities reflected our net loss of $46.0 million, partially offset by non-cash charges of $13.8 million related to share-based compensation, interest expense on our Royalty Agreement with Blackstone Life Sciences and depreciation expense, and $2.8 million from changes in operating assets and liabilities. The primary use of cash was to fund our operations related to the development of our product candidates.
Investing Activities
During the nine months ended September 30, 2023, investing activities provided $23.3 million in cash proceeds, primarily from the net sales of our short-term investments.
During the nine months ended September 30, 2022, investing activities provided $21.2 million in cash proceeds from the net sales of our short-term investments.
Financing Activities
During the nine months ended September 30, 2023, financing activities provided $31.7 million from the sale of our common stock and common stock warrants in our registered direct offering in February 2023, from the sale of our common stock under the Sales Agreement with Jefferies, and from the exercise of common stock warrants and stock options during the period.
During the nine months ended September 30, 2022, financing activities provided $1.2 million from the sale of our common stock under the Sales Agreement with Jefferies and the exercise of stock options.
Funding Requirements
Our future success is dependent on our ability to identify and ultimately consummate a strategic transaction. Potential strategic alternatives to be explored and evaluated during the review process may include a merger, the sale of our company, acquisition or other business combination, a strategic partnership with one or more parties, or the licensing, sale or divestiture of some of our proprietary technologies. We are actively working with an investment bank in this assessment process. If we are unable to undertake any strategic alternative, we may be required to cease operations altogether.
Our future funding requirements will depend on many factors, including:
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Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of product candidates, if approved. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. For example, the trading prices for our and other biopharmaceutical companies’ stock have been highly volatile as a result of disruptions and extreme volatility in the global economy, including rising inflation and interest rates, declines in economic growth, the conflicts between Russia and Ukraine and Israel and its surrounding regions, the COVID-19 pandemic and uncertainty about economic stability. As a result, we may face difficulties raising capital through sales of our common stock and any such sales may be on unfavorable terms. See “Risk Factors” in Part I, Item 1A of the 2022 Form 10-K.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our shareholders’ ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our existing stockholders’ rights. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our assessment of strategic alternatives. If we do not successfully consummate a strategic alternative, our board of directors may decide to pursue a dissolution and liquidation of our company.
If we raise funds through additional collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Royalty Agreement with Blackstone Life Sciences (Formerly Known as Clarus Ventures)
In November 2018, we entered into the Royalty Agreement with Blackstone Life Sciences. Pursuant to the Royalty Agreement, Blackstone agreed to pay us, in the aggregate, up to $80.0 million, or the Royalty Purchase Price, in four tranches of $20.0 million each upon the achievement of specified clinical milestones in our ROMAN trial. We agreed to apply the proceeds from such payments primarily to support clinical development and regulatory activities for avasopasem, rucosopasem and any pharmaceutical product comprising or containing avasopasem or rucosopasem, or, collectively, the Products, as well as to satisfy working capital obligations and for general corporate expenses. We received the first tranche of the Royalty Purchase Price in November 2018, the second tranche of the Royalty Purchase Price in April 2019, and the third tranche of the Royalty Purchase Price in February 2020, in each case in connection with the achievement of the first three milestones, respectively, under the Royalty Agreement.
In May 2020, we entered into Amendment No. 1 to the Royalty Agreement, or the Amendment, with Clarus IV Galera Royalty AIV, L.P., or the Blackstone Purchaser. The Blackstone Purchaser is affiliated with Blackstone Life Sciences, successor in interest to Clarus Ventures. The Amendment increased the Royalty Purchase Price by $37.5 million to $117.5 million by increasing the fourth tranche from $20.0 million to $37.5 million and adding a new $20.0 million tranche upon the achievement of an additional clinical enrollment milestone. We received the new $20.0 million tranche of the Amendment in June 2021, in connection with the enrollment of the first patient in the GRECO-2 trial. Also in June 2021, we completed enrollment in the ROMAN trial, thereby achieving the milestone associated with the fourth tranche, and received the associated $37.5 million in July 2021.
Pursuant to the amended Royalty Agreement, in connection with the payment of each tranche of the Royalty Purchase Price, we have agreed to sell, convey, transfer and assign to Blackstone all of our right, title and interest in a high single-digit percentage of (i) worldwide net sales of the Products and (ii) all amounts received by us or our affiliates, licensees and sublicensees with respect to Product-related damages (collectively, the Product Payments) during the Royalty Period. The Royalty Period means, on a Product-by-Product and country-by-country basis, the period of time commencing on the commercial launch of such Product in such country and ending on the latest to occur of (i) the 12th anniversary of such commercial launch, (ii) the expiration of all valid claims of our patents covering such Product in such country, and (iii) the expiration of regulatory data protection or market exclusivity or similar regulatory protection afforded by the health authorities in such country, to the extent such protection or exclusivity effectively prevents generic versions of such Product from entering the market in such country.
The amended Royalty Agreement will remain in effect until the date on which the aggregate amount of the Product Payments paid to Blackstone exceeds a fixed single-digit multiple of the actual amount of the Royalty Purchase Price received by us, unless earlier terminated pursuant to the mutual written agreement of us and Blackstone. If no Products are commercialized, we would not have an obligation to make Product Payments to Blackstone, which is the sole mechanism for repaying the liability.
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In May 2020, as partial consideration for the Amendment, we issued two warrants to the Blackstone Purchaser to purchase an aggregate of 550,661 shares of our common stock at an exercise price equal to $13.62 per share, each of which became exercisable upon the receipt by us of the applicable specified milestone payment. The issued warrants expire six years after the initial exercise date of each respective warrant.
JOBS Act Transition Period
In April 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we have chosen to opt out of such extended transition period and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. However, we may take advantage of the other exemptions discussed below.
Subject to certain conditions, as an emerging growth company we may rely on certain exemptions and reduced reporting requirements, including, without limitation, (1) not being required to provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (2) not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an emerging growth company until the earlier to occur of (a) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more, (b) the last day of the fiscal year following the fifth anniversary of the date of the completion of our IPO (December 31, 2024), (c) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years, or (d) the date on which we are deemed to be a large accelerated filer under the rules of the SEC, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item 3.
Item 4. Controls and Procedures.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2023.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended September 30, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be involved in claims and proceedings arising in the course of our business. The outcome of any such claim or proceeding, regardless of the merits, is inherently uncertain.
On May 30, 2023, we filed a lawsuit in the Court of Common Pleas in Chester County, Pennsylvania, or the Court, against Alira Health Clinical, LLC and IQVIA Biotech, LLC, or the CROs, alleging breach of contract and negligence specifically related to an error by the CROs in 2021 in the statistical program for the Phase 3 ROMAN trial of avasopasem for the reduction of severe oral mucositis induced by radiotherapy in patients with locally advanced head and neck cancer (the Phase 3 ROMAN trial) and seeking damages. In December 2021, we announced that the error in the statistical program for the Phase 3 ROMAN trial had been detected and that correction of this error yielded the correct, statistically significant p-values for the primary endpoint and a key secondary endpoint of the Phase 3 ROMAN trial. In October 2023, the Court granted a joint motion to stay the lawsuit and also ordered that the parties provide a written update to the Court on the earlier of the business day that is (1) twenty-one (21) days after we receive from the FDA the FDA’s meeting minutes from the Type A meeting with the FDA, or (2) ninety (90) days after the date of the entry of the Court’s order.
Item 1A. Risk Factors.
Investing in our common stock involves a high degree of risk. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 8, 2023. Except as disclosed below, there have been no material changes to the risk factors described in that report. The occurrence of any of the events or developments described in our Risk Factors could adversely affect our business, financial condition, results of operations and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.
Risks Related to Our Financial Position and Capital Needs
We will need substantial funding to meet our financial obligations and to pursue our business objective. If we are unable to raise capital when needed, we could be forced to curtail our planned operations and the pursuit of our growth strategy.
Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval and achieve product sales. We currently expect our expenses to decrease following the implementation of a reduction in our workforce by 70% approved in August 2023, or the Workforce Reduction, the wind-down of our commercial readiness efforts for avasopasem, and the discontinuation of our GRECO-1 and GRECO-2 clinical trials. In addition, while we wound down our commercial readiness efforts, if in the future we were to obtain marketing approval for any of our product candidates, we would expect to incur significant commercialization expenses related to manufacturing, product sales, marketing and distribution. Furthermore, we will continue to incur significant costs associated with operating as a public company and we may incur significant costs related to our exploration of strategic alternatives, including legal, accounting and advisory expenses and other related charges. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed on attractive terms, if at all, we will be forced to delay, reduce or eliminate certain of our clinical development plans, research and development programs or future commercialization efforts, or cease our operations altogether.
The development process for our product candidates is highly uncertain, and we cannot estimate with certainty the actual amounts necessary to successfully complete the development, regulatory approval process and commercialization of our product candidates. Based on our current operating plan and assumptions, including the implementation of the Workforce Reduction and taking into account the discontinuation of the GRECO-1 and GRECO-2 trials, we believe that our existing cash, cash equivalents and short-term investments as of September 30, 2023 will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into 2025. Our resource requirements could materially change depending on the outcome of our ongoing strategic alternative review process. As a result, we are unable to estimate the exact amount of our working capital requirements.
We maintain a portion of our cash and cash equivalents in accounts with major financial institutions, and our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business and financial position.
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Our operating plans may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than expected, through public or private equity, debt financings or other sources. Our future capital requirements will depend on and could increase significantly as a result of many factors, including:
Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates. Dislocations in the financial markets may make equity and debt financing more difficult to obtain and may have a material adverse effect on our ability to meet our fundraising needs when they arise. Additional funds may not be available when we need them, on terms that are acceptable to us, or at all. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our preclinical studies, clinical trials or other research or development programs, or the commercialization of any product candidate. We may also be unable to expand our operations or otherwise capitalize on our business opportunities or may be required to relinquish rights to our product candidates or products. Any of these occurrences could materially affect our business, financial condition and results of operations. If we continue to have insufficient funds, particularly if we are unable to undertake any strategic alternative, we may be required to cease our operations altogether.
Any financial or strategic option we pursue may not be successful.
In August 2023, in connection with the Complete Response Letter announcement, we initiated a process to explore potential strategic alternatives. We have engaged Stifel, Nicolaus & Company, Inc., as our financial advisor, to assist in reviewing
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strategic alternatives with the goal of maximizing value for our shareholders. Such alternatives may include a merger, sale, divestiture of assets, licensing, or other strategic transaction. If we are unable to undertake any strategic alternative, we may be required to cease operations altogether. The process of continuing to evaluate these strategic options may be costly, time-consuming and complex and we may incur significant costs related to this continued evaluation, such as legal, accounting and advisory fees and expenses and other related charges. There can be no assurance of completion of any particular course of action or a defined timeline for completion, and we can provide no assurance that any strategic alternative we pursue will have a positive impact on our results of operations or financial condition.
Risks Related to the Discovery and Development of Our Product Candidates
We are heavily dependent on the success of our lead product candidate, avasopasem, and if avasopasem does not receive regulatory approval, our business may be harmed.
We currently have no products that are approved for commercial sale.
On August 9, 2023, we announced that we had received a Complete Response Letter, or CRL, from the FDA regarding our NDA for avasopasem for radiotherapy-induced SOM in patients with HNC undergoing standard-of-care treatment. In the CRL, the FDA communicated that the results from the Phase 3 ROMAN trial together with the supporting data from the Phase 2b GT-201 trial are not sufficiently persuasive to establish substantial evidence of avasopasem’s effectiveness and safety for reducing SOM in patients with HNC. FDA stated that results from an additional clinical trial will be required for resubmission. We requested a Type A meeting with the FDA to understand the FDA’s rationale for its decision and discuss next steps to support an NDA resubmission seeking approval of avasopasem. During the Type A meeting held on September 28, 2023, and in the subsequently received meeting minutes, the FDA reiterated the need for an additional Phase 3 trial to confirm the efficacy and safety of avasopasem for radiotherapy-induced SOM.
We cannot be certain that we will have the resources required to pursue additional development activities for avasopasem or that avasopasem will receive regulatory approval, or be successfully commercialized even if we receive regulatory approval. We have not completed the development of any product candidates and we may never be able to develop marketable products. The research, testing, manufacturing, labeling, approval, sale, marketing and distribution of products are, and will remain, subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries that each have differing regulations. We are not permitted to market avasopasem in the United States until we receive approval of a New Drug Application, or NDA, or in any foreign country until we receive the requisite approvals from the appropriate authorities in such countries for marketing authorization.
Obtaining approval of an NDA or similar regulatory approval is an extensive, lengthy, expensive and inherently uncertain process, and the FDA or other foreign regulatory authorities may delay, limit or deny approval of any of our current or future product candidates for many reasons, including the following risks, certain of which have already materialized in connection with our receipt of the CRL from FDA:
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The regulatory approval process is lengthy, expensive and uncertain, and we may be unable to obtain regulatory approval for our product candidates under applicable regulatory requirements. The denial or delay of any such approval would delay commercialization of our product candidates and adversely impact our ability to generate revenue, our business and our results of operations.
The development, research, testing, manufacturing, labeling, approval, selling, import, export, marketing, promotion and distribution of drug products are subject to extensive and evolving regulation by federal, state and local governmental authorities in the United States, principally the FDA, and by foreign authorities, such as the EU institutions or the competent authorities of the member states of the EU, which regulations differ from country to country. Neither we nor any future collaborator is permitted to market any of our product candidates in the United States or foreign jurisdictions until we receive regulatory approval of an NDA from the FDA or similar approval from foreign regulatory authorities.
Obtaining regulatory approval of an NDA or a similar foreign application can be a lengthy, expensive and uncertain process. Prior to obtaining approval to commercialize a product candidate in the United States or abroad, we or our collaborators must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA or other foreign regulatory agencies, that such product candidates are safe and effective for their intended uses. The number of preclinical studies and clinical trials that will be required for FDA or a foreign regulatory authority's approval varies depending on the product candidate, the disease or condition that the product candidate is designed to address, and the regulations applicable to any particular product candidate.
Results from preclinical studies and clinical trials can be interpreted in different ways. Even if we believe the preclinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities. Administering product candidates to humans may produce undesirable side effects, which could interrupt, delay or halt clinical trials and result in the FDA or other regulatory authorities denying approval of a drug candidate for any or all indications. The FDA or foreign regulatory authorities may also require us to conduct additional studies or trials for our product candidates either prior to or post-approval, such as additional drug-drug interaction studies or safety or efficacy studies or trials, or it may object to elements of our clinical development program such as the number of subjects in our current clinical trials from the United States or abroad. We may experience difficulty in identifying and enrolling patients in such a trial, if one were to be required, which could interrupt, delay or halt the process of obtaining regulatory approval of our product candidates.
The FDA or any foreign regulatory bodies can delay, limit or deny approval of our product candidates or require us to conduct additional preclinical studies or clinical testing or abandon a program for many reasons, including:
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For example, in the CRL we received from the FDA in August 2023 related to our NDA for avasopasem for the reduction of SOM in patients with HNC, the FDA communicated that the results from the Phase 3 ROMAN trial together with the supporting data from the Phase 2b GT-201 trial are not sufficiently persuasive to establish substantial evidence of avasopasem’s effectiveness and safety for reducing SOM in patients with HNC. FDA stated that results from an additional clinical trial will be required for resubmission. We requested a Type A meeting with the FDA to understand the FDA’s rationale for its decision and discuss next steps to support an NDA resubmission seeking approval of avasopasem. During the Type A meeting held on September 28, 2023, and in the subsequently received meeting minutes, the FDA reiterated the need for an additional Phase 3 trial to confirm the efficacy and safety of avasopasem for radiotherapy-induced SOM, but there can be no assurance we will be able to secure the funding required to conduct an additional Phase 3 trial and make such a resubmission.
Of the large number of drugs in development, only a small percentage successfully complete the FDA or other regulatory approval processes and are commercialized. The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our product candidates, which would significantly harm our business, financial condition, results of operations and prospects.
Even if we receive FDA approval of an NDA or foreign marketing application for avasopasem or our other product candidates, the FDA or the applicable foreign regulatory agency may grant approval contingent on the performance of costly additional clinical trials, including Phase 4 clinical trials, and/or in the case of the FDA, the implementation of a REMS, which may be required to ensure safe use of the drug after approval. The FDA or the applicable foreign regulatory agency also may approve a product candidate for a more limited indication or a narrower patient population than we originally requested, and the FDA or applicable foreign regulatory agency may not approve the labeling that we believe is necessary or desirable for the successful commercialization of a product candidate. Any delay in obtaining, or inability to obtain, applicable regulatory approval would delay or prevent commercialization of that product candidate and would materially adversely impact our business and prospects.
Risks Related to Our Dependence on Third Parties
If we seek, but are not able to establish, collaborations, we may have to alter our development and commercialization plans.
Our product development programs and the potential commercialization of our product candidates will require substantial additional capital. For some of our product candidates, we may decide to collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates. For example, in connection with the CRL announcement, in August 2023 we announced that we will focus resources on exploring a potential approval path for avasopasem in radiotherapy-induced SOM, progressing our ongoing clinical trials for rucosopasem, and concurrently evaluating strategic alternatives, including partnering, for the continued development of avasopasem and rucosopasem.
We face significant competition in seeking appropriate collaborators. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or comparable regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product
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candidate. Collaborations are complex and time-consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.
We may not be able to negotiate collaborations or strategic partnerships on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of such product candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop our product candidates or bring them to market and generate revenue, or we may need to cease our operations altogether.
Risks Related to Competition, Retaining Key Employees and Managing Growth
Our recent reduction in force undertaken to significantly reduce our ongoing operating expenses may not result in our intended outcomes and may yield unintended consequences and additional costs.
In August 2023, we implemented a reduction in force affecting 22 employees, or 70% of our workforce, or the Workforce Reduction. The decision was based on cost-reduction initiatives intended to reduce operating expenses. We incurred a $2.3 million charge in connection with the Workforce Reduction in the third quarter of 2023, primarily consisting of severance payments, employee benefits and related costs. In connection with the Workforce Reduction, we wound down our commercial readiness efforts for avasopasem and reduced headcount across several departments. We are concurrently evaluating strategic alternatives with the goal of maximizing value for our shareholders. Such alternatives may include a merger, sale, divestiture of assets, licensing, or other strategic transaction.
The Workforce Reduction may result in unintended consequences and costs, such as the loss of institutional knowledge and expertise, attrition beyond the intended number of employees, decreased morale among our remaining employees, and the risk that we may not achieve the anticipated benefits of the Workforce Reduction. In addition, while positions have been eliminated certain functions necessary to our operations remain, and we may be unsuccessful in distributing the duties and obligations of departed employees among our remaining employees. We may also be unsuccessful in negotiating any desired strategic alternative or partnership relating to such functions on a timely basis, on acceptable terms, or at all. The Workforce Reduction could also make it difficult for us to pursue, or prevent us from pursuing, new opportunities and initiatives due to insufficient personnel, or require us to incur additional and unanticipated costs to hire new personnel to pursue such opportunities or initiatives. Further, inflationary pressure may increase our costs, including employee compensation costs, or result in employee attrition to the extent our compensation does not keep up with inflation, particularly if our competitors’ compensation does. If we are unable to realize the anticipated benefits from the Workforce Reduction, if we experience significant adverse consequences from the reduction in force, or if we are otherwise unable to retain our employees, our business, financial condition, and results of operations may be materially adversely affected.
Risks Related to Our Common Stock
Our common stock may be delisted from The Nasdaq Global Market if we cannot regain compliance with Nasdaq’s continued listing requirements, which could harm our business, the trading price of our common stock, our ability to raise additional capital and the liquidity of the market for our common stock.
Our common stock is currently listed on The Nasdaq Global Market. To maintain the listing of our common stock on The Nasdaq Global Market, we are required to meet certain listing requirements, including related to the price of our common stock. On September 22, 2023, we received two written notices, or the Notices, from The Nasdaq Stock Market LLC, or Nasdaq, indicating that (i) we are no longer in compliance with the minimum Market Value of Listed Securities, or MVLS, of $50.0 million required for continued listing on The Nasdaq Global Market, as set forth in Nasdaq Listing Rule 5450(b)(2)(A), or the MVLS Requirement, and (ii) for the last 30 consecutive business days, the bid price for our common stock, par value $0.001 per share, had closed below the $1.00 per share minimum bid price requirement for continued inclusion on the Nasdaq Global Market as set forth in Nasdaq Listing Rule 5450(a)(1), or the Minimum Bid Price Requirement. The Notices have no effect at this time on the listing of our common stock, which continues to trade on The Nasdaq Global Market under the symbol “GRTX.” In accordance with Nasdaq Listing Rule 5810(c)(3)(C), we have a period of 180 calendar days, or until March 20, 2024 to regain compliance with the MVLS Requirement and the Minimum Bid Price Requirement, respectively.
On September 25, 2023, we received an additional written notice, or the Additional Notice, from Nasdaq, indicating that we are no longer in compliance with the minimum Market Value of Publicly Held Shares, or MVPHS, of $15.0 million required for continued listing on The Nasdaq Global Market, as set forth in Nasdaq Listing Rule 5450(b)(2)(C), or the MVPHS Requirement. The
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Additional Notice has no effect at this time on the listing of our common stock, which continues to trade on The Nasdaq Global Market under the symbol “GRTX.” In accordance with Nasdaq Listing Rule 5810(c)(3)(C), we have a period of 180 calendar days, or until March 25, 2024 to regain compliance with the MVPHS Requirement.
In the event we do not regain compliance with the MVLS Requirement, the Minimum Bid Price Requirement, and the MVPHS Requirement prior to the respective compliance dates above, Nasdaq will notify us that our securities are subject to delisting, at which point we may appeal the delisting determination to a Nasdaq hearings panel. If we do not regain compliance with the Minimum Bid Price Requirement by March 20, 2024, we may be eligible for a second 180 calendar day compliance period. To qualify, we must submit an application to transfer the listing of our common stock to The Nasdaq Capital Market, which requires we meet the continued listing requirement for the market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement. We would also need to pay an application fee to Nasdaq and to provide written notice of our intention to cure the deficiency during the additional compliance period. As part of its review process, Nasdaq will make a determination of whether it believes we will be able to cure this deficiency. If we do not qualify for or fail to regain compliance during the additional compliance period, then Nasdaq will notify us of its determination to delist our common stock, at which point we would have an opportunity to appeal the delisting determination to a Nasdaq hearings panel. There can be no assurance that, if we decide to appeal any delisting determination, such appeal would be successful.
We intend to actively monitor our MVLS, closing bid price of our common Stock, and our MVPHS and may, if appropriate, consider implementing available options to regain compliance with the MVLS Requirement, the Minimum Bid Price Requirement, and the MVPHS Requirement. We may also choose to transfer the listing of our common stock to The Nasdaq Capital Market. However, there can be no assurance that we will be able to regain compliance with the MVLS Requirement, the Minimum Bid Price Requirement, and the MVPHS Requirement, or maintain compliance with any other listing requirements, or satisfy the requirements necessary to transfer the listing of our common stock to The Nasdaq Capital Market. Delisting from the Nasdaq Global Market or any Nasdaq market could make trading our common stock more difficult for investors, potentially leading to declines in our share price and liquidity. In addition, without a Nasdaq market listing, stockholders may have a difficult time getting a quote for the sale or purchase of our common stock, the sale or purchase of our common stock would likely be made more difficult and the trading volume and liquidity of our common stock could decline. Delisting from Nasdaq could also result in negative publicity and could also make it more difficult for us to raise additional capital. The absence of such a listing may adversely affect the acceptance of our common stock as currency or the value accorded by other parties. If our common stock is delisted by Nasdaq, our common stock may be eligible to trade on an over-the-counter quotation system, such as the OTCQB market, where an investor may find it more difficult to sell our common stock or obtain accurate quotations as to the market value of our common stock. We cannot assure you that our common stock, if delisted from Nasdaq, will be listed on another national securities exchange or quoted on an over-the counter quotation system.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
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Item 6. Exhibits.
The exhibits listed on the Exhibit Index are either filed or furnished with this report or incorporated herein by reference.
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3.1 |
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Restated Certificate of Incorporation of Galera Therapeutics, Inc. |
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001-39114 |
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11/12/2019 |
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Amended and Restated Bylaws of Galera Therapeutics, Inc. |
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001-39114 |
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9/25/2020 |
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10.1 |
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Separation Agreement and General Release by Mark Bachleda, dated August 16, 2023 |
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31.1 |
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31.2 |
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32.1 |
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32.2 |
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101.INS |
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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 |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema Document |
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101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF |
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Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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104 |
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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* Filed herewith.
** Furnished herewith.
32
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Galera Therapeutics, Inc. |
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Date: November 14, 2023 |
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By: |
/s/ J. Mel Sorensen, M.D. |
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J. Mel Sorensen, M.D. |
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Chief Executive Officer and President |
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Date: November 14, 2023 |
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By: |
/s/ Christopher Degnan |
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Christopher Degnan |
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Chief Financial Officer |
33
Exhibit 10.1
SEPARATION AGREEMENT AND GENERAL RELEASE
I, Mark Bachleda, in consideration of the obligations of Galera Therapeutics, Inc., a Delaware corporation (the “Company”), under that certain Employment, Confidentiality, Noncompete and Invention Rights Agreement (the “Agreement”), do hereby release and forever discharge, as of the date hereof, the Company and its affiliates and all present and former directors, officers, agents, representatives, employees, successors and assigns of the Company and its affiliates and the Company’s direct and indirect owners (collectively, the “Released Parties”) to the extent provided in this Separation Agreement and General Release (“General Release”) below, effective as of the Effective Date (as defined in Section 14 below).
|US-DOCS\143991513.4||
|US-DOCS\143991513.4||
|US-DOCS\143991513.4||
|US-DOCS\143991513.4||
BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:
DATE: 8/16/2023 /s/ Mark Bachleda
MARK BACHLEDA
Enclosure: Information Disclosure
|US-DOCS\143991513.4||
Exhibit 1
Information Disclosure
|US-DOCS\143991513.4||
Exhibit 31.1
CERTIFICATION
I, J. Mel Sorensen, certify that:
Date: November 14, 2023 |
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By: |
/s/ J. Mel Sorensen, M.D. |
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J. Mel Sorensen, M.D. Chief Executive Officer and President |
Exhibit 31.2
CERTIFICATION
I, Christopher Degnan, certify that:
Date: November 14, 2023 |
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By: |
/s/ Christopher Degnan |
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Christopher Degnan |
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Chief Financial Officer (principal financial officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Galera Therapeutics, Inc. (the “Company”) for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
Date: November 14, 2023 |
By: |
/s/ J. Mel Sorensen, M.D. |
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J. Mel Sorensen, M.D. Chief Executive Officer and President |
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Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Galera Therapeutics, Inc. (the “Company”) for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
Date: November 14, 2023 |
By: |
/s/ Christopher Degnan |
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Christopher Degnan Chief Financial Officer |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized (shares) | 10,000,000 | 10,000,000 |
| Preferred stock, shares issued (shares) | 0 | 0 |
| Preferred stock, shares outstanding (shares) | 0 | 0 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized (shares) | 200,000,000 | 200,000,000 |
| Common stock, shares issued (shares) | 53,734,123 | 28,510,066 |
| Common stock, shares outstanding (shares) | 53,734,123 | 28,510,066 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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| Operating expenses: | ||||
| Research and development | $ 6,093 | $ 8,105 | $ 20,926 | $ 22,848 |
| General and administrative | 4,994 | 4,853 | 20,849 | 15,193 |
| Restructuring costs | 2,309 | 0 | 2,309 | 0 |
| Loss from operations | (13,396) | (12,958) | (44,084) | (38,041) |
| Other income (expenses): | ||||
| Interest income | 411 | 171 | 1,300 | 256 |
| Interest expense | 2,087 | (3,245) | (10,709) | (8,247) |
| Foreign currency loss | (1) | (1) | (2) | (2) |
| Net loss | $ (15,073) | $ (16,033) | $ (53,495) | $ (46,034) |
| Net loss per share of common stock, basic | $ (0.33) | $ (0.6) | $ (1.3) | $ (1.72) |
| Net loss per share of common stock, diluted | $ (0.33) | $ (0.6) | $ (1.3) | $ (1.72) |
| Weighted-average shares of common stock outstanding, basic | 45,477,952 | 26,823,546 | 41,234,679 | 26,798,348 |
| Weighted-average shares of common stock outstanding, diluted | 45,477,952 | 26,823,546 | 41,234,679 | 26,798,348 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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| Statement of Comprehensive Income [Abstract] | ||||
| Net loss | $ (15,073) | $ (16,033) | $ (53,495) | $ (46,034) |
| Unrealized gain (loss) on short-term investments | (5) | 17 | 22 | (79) |
| Comprehensive loss | $ (15,078) | $ (16,016) | $ (53,473) | $ (46,113) |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Parenthetical) $ in Millions |
3 Months Ended |
|---|---|
|
Mar. 31, 2023
USD ($)
| |
| Statement of Stockholders' Equity [Abstract] | |
| Sale of common stock in registered direct offering, issuance costs | $ 2,403 |
Organization and description of business |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Organization and description of business | 1. Organization and description of business
Galera Therapeutics, Inc. was incorporated as a Delaware corporation on November 19, 2012 (inception) and together with its subsidiaries (the Company, or Galera) is a clinical stage biopharmaceutical company focused on developing a pipeline of novel, proprietary therapeutics that have the potential to transform radiotherapy in cancer. Galera's technology consists of selective small molecule dismutase mimetics that are in late-stage development in patients with cancer. Avasopasem manganese (avasopasem, or GC4419) is in development for radiotherapy-induced toxicities, including severe oral mucositis (SOM) in patients with locally advanced head and neck cancer (HNC) and esophagitis in patients with lung cancer, and cisplatin-induced kidney damage in patients with cancer. The U.S. Food and Drug Administration (FDA) has granted Fast Track and Breakthrough Therapy designations to avasopasem for the reduction of SOM induced by radiotherapy. Galera’s second dismutase mimetic product candidate, rucosopasem manganese (rucosopasem, or GC4711), is in clinical-stage development to augment the anti-cancer efficacy of stereotactic body radiation therapy (SBRT) in patients with non-small cell lung cancer (NSCLC) and locally advanced pancreatic cancer (LAPC). The FDA and European Medicines Agency (EMA) have granted orphan drug designation and orphan medicinal product designation, respectively, to rucosopasem for the treatment of pancreatic cancer.
On August 9, 2023, the Company announced that it had received a Complete Response Letter (CRL) from the FDA regarding the Company’s New Drug Application (NDA) for avasopasem for radiotherapy-induced SOM in patients with HNC undergoing standard-of-care treatment. In the CRL, the FDA communicated that the results from the Phase 3 ROMAN trial together with the supporting data from the Phase 2b GT-201 trial were not sufficiently persuasive to establish substantial evidence of avasopasem’s effectiveness and safety for reducing SOM in patients with HNC. FDA stated that results from an additional clinical trial will be required for resubmission. The Company requested a Type A meeting with the FDA to understand the FDA’s rationale for its decision and discuss next steps to support an NDA resubmission seeking approval of avasopasem. In the Type A meeting held on September 28, 2023, and in the subsequently received meeting minutes, the FDA reiterated the need for an additional Phase 3 trial to support resubmission of the NDA. The Company is exploring potential strategic alternatives, as it is not feasible to conduct an additional trial with the Company’s current resources.
In connection with the CRL announcement, on August 9, 2023, the Company further announced that it would focus resources on exploring a potential approval path for avasopasem in radiotherapy-induced SOM, progressing its ongoing clinical trials for rucosopasem, and concurrently evaluating strategic alternatives, including partnering, for the continued development of avasopasem and rucosopasem. As a result, the Company wound down its commercial readiness efforts for avasopasem and reduced headcount across several departments. This reduction in force, which was approved by the Company’s Board of Directors, reduced the Company’s workforce by 22 employees, or approximately 70%, as of August 9, 2023 (the Workforce Reduction). The decision was based on cost-reduction initiatives intended to reduce operating expenses.
In addition to developing avasopasem for the reduction of normal tissue toxicity from radiotherapy, the Company has been developing its second dismutase mimetic product candidate, rucosopasem, to increase the anti-cancer efficacy of higher daily doses of radiotherapy, or SBRT. In September 2021, in support of rucosopasem, the Company announced final results from its Phase 1/2 pilot trial of avasopasem in combination with SBRT in patients with unresectable or borderline resectable LAPC. In this proof-of-concept trial, survival and tumor outcome benefits were observed. The Company used its observations from this pilot trial to inform the design of rucosopasem clinical trials in combination with SBRT. The Company successfully completed Phase 1 trials of intravenous rucosopasem in healthy volunteers and is currently evaluating rucosopasem in combination with SBRT in a Phase 1/2 safety and anti-cancer efficacy trial in NSCLC (GRECO-1) and a Phase 2b trial of rucosopasem in combination with SBRT in patients with LAPC (GRECO-2).
On October 31, 2023, the Company announced the decision to halt the GRECO-1 and GRECO-2 trials, following a futility analysis of the GRECO-2 trial. The analysis indicated that the trial was unlikely to succeed as designed. The Company believes this decision will enable the Company to conserve cash while it continues to explore potential strategic alternatives with the goal of maximizing shareholder value.
The Company has engaged Stifel, Nicolaus & Company, Inc. (Stifel), as its financial advisor, to assist in reviewing strategic alternatives. Such alternatives may include a merger, sale, divestiture of assets, licensing, or other strategic transaction. Liquidity The Company has incurred recurring losses and negative cash flows from operations since inception and has an accumulated deficit of $431.8 million as of September 30, 2023. The Company expects its existing cash, cash equivalents and short-term investments as of September 30, 2023, taking into account the discontinuation of the GRECO-1 and GRECO-2 trials, will enable the Company to fund its operating expenses and capital expenditure requirements into 2025. The Company has engaged Stifel, as its financial advisor, to assist in reviewing strategic alternatives with the goal of maximizing value for its shareholders. Such alternatives may include a merger, sale, divestiture of assets, licensing, or other strategic transaction. If the Company is unable to undertake any strategic alternative, it may be required to cease operations altogether. |
Basis of Presentation and Significant Accounting Policies |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation and Significant Accounting Policies | 2. Basis of presentation and significant accounting policies The summary of significant accounting policies disclosed in the Company’s annual consolidated financial statements for the years ended December 31, 2022 and 2021 included in the Company’s annual report on Form 10-K filed with the SEC on March 8, 2023 have not materially changed, except as set forth below. Basis of presentation and consolidation The accompanying unaudited interim consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) of the Financial Accounting Standards Board (FASB). In the opinion of management, the accompanying interim consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of September 30, 2023 and its results of operations for the three and nine months ended September 30, 2023 and 2022, and statements of changes in stockholders’ deficit and cash flows for the nine months ended September 30, 2023 and 2022. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or for any future period. The interim consolidated financial statements, presented herein, do not contain the required disclosures under U.S. GAAP for annual financial statements. Therefore, these interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and related notes as of and for the year ended December 31, 2022, included in the Company’s annual report on Form 10-K and filed with the SEC on March 8, 2023. Use of estimates The preparation of unaudited interim consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited interim consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the unaudited interim consolidated financial statements in the period they are determined to be necessary. Significant areas that require management’s estimates include share-based compensation assumptions, royalty purchase liability assumptions and accrued research and development expenses.
Cash and cash equivalents
The Company considers all highly liquid investments that have maturities of three months or less when acquired to be cash equivalents. Cash and cash equivalents as of September 30, 2023 and December 31, 2022 consisted of bank deposits, U.S. Treasury obligations, U.S. government agency securities, and a money market mutual fund invested in U.S. Treasury obligations. We maintain a portion of our cash and cash equivalents in accounts with major financial institutions, and our deposits at these institutions exceed insured limits. Restricted cash Restricted cash represents collateral provided under a commercial credit card agreement entered into with TD Bank, N.A. during July 2022. Restricted cash was $50,000 as of September 30, 2023. The Company has recorded this deposit and accumulated interest thereon as restricted cash on its consolidated balance sheet. In October 2023, the commercial credit card agreement was terminated by the Company and the bank removed the restriction on the cash. Refundable PDUFA fee In December 2022, the Company paid a $3.2 million PDUFA fee to the FDA in conjunction with the filing of its NDA for avasopasem. The Company requested and was granted a small business waiver of this PDUFA fee from the FDA. The Company received the refund of the PDUFA fee from the FDA in May 2023. Research and development expenses Research and development costs are expensed as incurred and consist primarily of funds paid to third parties for the provision of services for product candidate development, clinical and preclinical development and related supply and manufacturing costs, and regulatory compliance costs. The Company accrues and expenses preclinical studies and clinical trial activities performed by third parties based upon estimates of the proportion of work completed over the term of the individual trial and patient enrollment rates in accordance with agreements with clinical research organizations and clinical trial sites. The Company determines the estimates by reviewing contracts, vendor agreements and purchase orders, and through discussions with internal clinical personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services. However, actual costs and timing of clinical trials are highly uncertain, subject to risks and may change depending upon a number of factors, including the Company’s clinical development plan. Management makes estimates of the Company’s accrued expenses as of each balance sheet date in the Company’s consolidated financial statements based on facts and circumstances known to the Company at that time. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Nonrefundable advance payments for goods and services, including fees for process development or manufacturing and distribution of clinical supplies that will be used in future research and development activities, are deferred and recognized as expense in the period that the related goods are consumed or services are performed. Restructuring Costs As a result of the Workforce Reduction, the Company incurred total restructuring-related charges of $2.3 million during the three months ended September 30, 2023. See Note 10. As of September 30, 2023, $1.6 million of the total restructuring-related charges remain unpaid and are included in accrued expenses in the accompanying consolidated balance sheet. See Note 5. Net loss per share The Company uses the two-class method to compute net income per common share during periods the Company realizes net income and has securities that entitle the holder to participate in dividends and earnings of the Company. The two-class method is not applicable during periods with a net loss, as the participating securities are not obligated to fund losses. Basic loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period. Diluted loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as stock options and common stock warrants, which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:
Recent Accounting Pronouncements In August 2020, FASB issued 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. This guidance is effective for fiscal years beginning after December 15, 2023, including interim periods therein. Early adoption is permitted. The Company adopted this ASU on January 1, 2023. There was no impact to the Company's consolidated financial statements. |
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Fair Value Measurements |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements | 3. Fair value measurements The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: • Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. • Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. • Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis (amounts in thousands):
There were no changes in valuation techniques during the nine months ended September 30, 2023. The Company’s short-term investment instruments classified using Level 1 inputs within the fair value hierarchy are classified as such because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The fair value of Level 2 securities is estimated based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term on the assets or liabilities. |
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Property and Equipment |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment | 4. Property and equipment Property and equipment consist of (amounts in thousands):
Depreciation and amortization expense was $44,000 and $0.1 million for the nine months ended September 30, 2023 and 2022, respectively. |
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Accrued Expenses |
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| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued Expenses | 5. Accrued expenses Accrued expenses consist of (amounts in thousands):
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Royalty Purchase Liability |
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| Royalty Purchase Liability [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Royalty Purchase Liability | 6. Royalty purchase liability Pursuant to our Amended and Restated Purchase and Sale Agreement (the Royalty Agreement), with Clarus IV Galera Royalty AIV, L.P., Clarus IV-A, L.P., Clarus IV-B, L.P., Clarus IV-C, L.P. and Clarus IV-D, L.P. (collectively, Blackstone or Blackstone Life Sciences), Blackstone agreed to pay up to $80.0 million (the Royalty Purchase Price) in four tranches of $20.0 million each upon the achievement of specific Phase 3 clinical trial patient enrollment milestones. The Company received the first tranche of the Royalty Purchase Price in November 2018, the second tranche of the Royalty Purchase Price in April 2019, and the third tranche of the Royalty Purchase Price in February 2020, in each case in connection with the achievement of the first three milestones, respectively. In May 2020, the Company entered into Amendment No. 1 to the Royalty Agreement (the Amendment) with Clarus IV Galera Royalty AIV, L.P. (the Blackstone Purchaser). The Blackstone Purchaser is affiliated with Blackstone Life Sciences, the successor in interest to Clarus Ventures. The Amendment increased the Royalty Purchase Price by $37.5 million, to $117.5 million by increasing the fourth tranche from $20.0 million to $37.5 million and adding a new $20.0 million tranche upon the achievement of an additional clinical enrollment milestone. The Company accounted for the Amendment as a debt modification and is amortizing fees paid to the Blackstone Purchaser related to the Amendment over the estimated term of the royalty purchase liability utilizing the effective-interest method. In June 2021, the Company received the new tranche ($20.0 million) under the Amendment in connection with the enrollment of the first patient in a Phase 2b trial of rucosopasem in combination with SBRT in patients with locally advanced pancreatic cancer, which the Company refers to as the GRECO-2 trial. Also in June 2021, the Company completed enrollment in the ROMAN trial, thereby achieving the milestone associated with the fourth tranche ($37.5 million) under the Amendment, which was received in July 2021. The Company accounts for the Royalty Agreement as a debt instrument. The $117.5 million in proceeds received as of September 30, 2023 have been recorded as a liability on the accompanying consolidated balance sheets. Interest expense is imputed based on the estimated royalty repayment period described below, which takes into consideration the probability and timing of obtaining FDA approval and the potential future revenue from commercializing its product candidates, and which results in a corresponding increase in the liability balance. The Company updated the assumptions underlying the calculation of interest expense on the royalty purchase liability based on the CRL received from the FDA in August 2023 on the Company's NDA for avasopasem for radiotherapy-induced SOM. The Company recognized $10.7 million and $8.2 million in noncash interest expense during the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, the effective interest rate was 5.6%. Pursuant to the Royalty Agreement and the Amendment, in connection with the payment of each tranche of the Royalty Purchase Price, the Company has agreed to sell, convey, transfer and assign to Blackstone all of its right, title and interest in a high single-digit percentage of (i) worldwide net sales of avasopasem and rucosopasem (collectively, the Products) and (ii) all amounts received by the Company or its affiliates, licensees and sublicensees with respect to Product-related damages (collectively, the Product Payments) during the Royalty Period. The Royalty Period means, on a Product-by-Product and country-by-country basis, the period of time commencing on the commercial launch of such Product in such country and ending on the latest to occur of (i) the 12th anniversary of such commercial launch, (ii) the expiration of all valid claims of the Company’s patents covering such Product in such country, and (iii) the expiration of regulatory data protection or market exclusivity or similar regulatory protection afforded by the health authorities in such country, to the extent such protection or exclusivity effectively prevents generic versions of such Product from entering the market in such country. The Royalty Agreement and the Amendment will remain in effect until the date on which the aggregate amount of the Product Payments paid to Blackstone exceeds a fixed single-digit multiple of the actual amount of the Royalty Purchase Price received by the Company, unless earlier terminated pursuant to the mutual written agreement of the Company and Blackstone. If no Products are commercialized, the Company would not have an obligation to make Product Payments to Blackstone, which is the sole mechanism for repaying the liability. Upon execution of the Amendment, the Company issued common stock warrants to the Blackstone Purchaser, each of which became exercisable upon the receipt by the Company of the applicable specified milestone payment. The issued warrants expire six years after the initial exercise dates, as follows:
The warrants are equity-classified and were valued at $4.7 million using the Black-Scholes option pricing model. The warrants were recorded as a discount to the royalty purchase liability. The Company amortizes the debt discount to interest expense over the estimated term of the royalty purchase liability utilizing the effective-interest method. |
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Leases |
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| Leases | 7. Leases The Company has a non-cancelable operating lease for office space in Malvern, Pennsylvania which, as of September 30, 2023, has a remaining lease term of approximately 7.0 years. The discount rate used to account for the Company’s operating leases under FASB ASU No. 2018-11, Leases (Topic 842), was the Company’s estimated incremental borrowing rate of 5.4%. Supplemental balance sheet information related to leases was as follows:
Lease cost, as presented below, includes costs associated with leases for which right-of-use (ROU) assets have been recognized as well as short-term leases. The components of lease expense were as follows:
Supplemental cash flow information related to leases was as follows:
Future minimum rental payments under the Company’s non-cancelable operating lease liabilities as of September 30, 2023 (amounts in thousands):
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Equity |
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| Equity | 8. Equity
Equity offerings In February 2023, the Company completed a registered direct offering, which resulted in the issuance and sale of 14,320,000 shares of its common stock and warrants to purchase up to 14,320,000 shares of common stock at a combined offering price of $2.095 per share and accompanying warrant, and received net proceeds of $27.6 million after deducting placement agent fees and offering expenses. The warrants are equity-classified, have an exercise price of $1.97 per share of common stock, are exercisable immediately following their issuance, and will expire five years from the date of issuance. During the nine months ended September 30, 2023, warrants were exercised in exchange for 1,020,000 shares of common stock resulting in proceeds of $2.0 million. In December 2020, the Company entered into an Open Market Sale Agreement (the Sales Agreement) with Jefferies LLC (Jefferies) as sales agent, pursuant to which it may, from time to time, issue and sell common stock with an aggregate value of up to $50.0 million in “at-the-market” (ATM) offerings under the Company’s Registration Statement on Form S-3 (File No. 333-251061) filed with the SEC on December 1, 2020. Sales of common stock, if any, pursuant to the Sales Agreement, may be made in sales deemed to be an “at the market offering” as defined in Rule 415(a) of the Securities Act, including sales made directly through the Nasdaq Global Market or on any other existing trading market for the Company’s common stock. The Company is required to pay Jefferies a commission equal to three percent of the gross sales proceeds and has provided Jefferies with customary indemnification rights. During the nine months ended September 30, 2023, 9,805,457 shares were sold under the Sales Agreement at a weighted average price per share of $0.21, resulting in net proceeds to the Company after deducting fees, commissions and other expenses related to the offering of approximately $1.9 million. There is approximately $35.6 million of available capacity under the Sales Agreement as of the date of this Quarterly Report on Form 10-Q. Share-based compensation Equity Incentive Plan In November 2012, the Company adopted the Galera Therapeutics, Inc. Equity Incentive Plan (the Prior Plan). The Prior Plan provided for the grant of incentive stock options, nonstatutory stock options, restricted stock awards, and stock appreciation rights. In connection with the adoption of the 2019 Plan (as defined below), the Company ceased issuing awards under the Prior Plan. As a result, no shares remain available for issuance under the Prior Plan; however, the Prior Plan continues to govern awards that are outstanding under it. The total number of shares subject to outstanding awards under the Prior Plan as of September 30, 2023 was 1,714,906. 2019 Incentive Award Plan In connection with the Company’s Initial Public Offering, or IPO, in November 2019, the Company’s board of directors adopted and the Company’s stockholders approved the Galera Therapeutics, Inc. 2019 Incentive Award Plan (the 2019 Plan), which became effective upon the effectiveness of the registration statement on Form S-1 for the IPO. Upon effectiveness of the 2019 Plan, the Company ceased granting new awards under the Prior Plan. The 2019 Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock awards, restricted stock units, stock appreciation rights and other stock-based awards. The number of shares of common stock initially available for issuance under the 2019 Plan was 1,948,970 shares of common stock plus the number of shares subject to awards outstanding under the Prior Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company on or after the effective date of the 2019 Plan. In addition, the number of shares of common stock available for issuance under the 2019 Plan is subject to an annual increase on the first day of each calendar year beginning on January 1, 2020 and ending on and including January 1, 2029 equal to the lesser of (i) 4% of the Company’s outstanding shares of common stock on the final day of the immediately preceding calendar year, and (ii) such smaller number of shares of common stock as determined by the Company’s board of directors. As of September 30, 2023, there were 1,562,083 shares available for future issuance under the 2019 Plan, including 1,140,402 shares added pursuant to this provision effective January 1, 2023. The maximum number of shares of common stock that may be issued under the 2019 Plan upon the exercise of incentive stock options is 14,130,029. In November 2019, the Company’s board of directors adopted and the Company’s stockholders approved the Galera Therapeutics, Inc. 2019 Employee Stock Purchase Plan (the ESPP). The ESPP allows employees to buy Company stock through after-tax payroll deductions at a discount from market value. The number of shares of common stock initially available for issuance under the ESPP was 243,621 shares of common stock. In addition, the number of shares of common stock available for issuance under the ESPP is subject to an annual increase on the first day of each calendar year beginning on January 1, 2020 and ending on and including January 1, 2029 equal to the lesser of (i) 1% of the Company’s outstanding shares of common stock on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of common stock as determined by the Company’s board of directors, provided that not more than 3,288,886 shares of common stock may be issued under the ESPP. As of September 30, 2023, there were 1,291,184 shares available for issuance under the ESPP, including 285,100 shares added pursuant to this provision effective January 1, 2023. 2023 Employment Inducement Award Plan
On April 28, 2023, the Board of Directors adopted the Galera Therapeutics, Inc. 2023 Employment Inducement Award Plan (Inducement Plan), which became effective on such date without stockholder approval pursuant to Rule 5635(c)(4) of The Nasdaq Stock Market LLC listing rules (“Rule 5635(c)(4)”). The Inducement Plan provides for the grant of nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards. In accordance with Rule 5635(c)(4), awards under the Inducement Plan may only be granted to persons who (a) were not previously an employee or director of the Company, or (b) are commencing employment with the Company following a bona fide period of non-employment, in either case as an inducement material to the individual’s entering into employment with the Company. A total of 1,500,000 shares of common stock was reserved for issuance under the Inducement Plan. Any shares subject to awards previously granted under the Inducement Plan that expire, terminate or are otherwise surrendered, canceled, or forfeited, in a manner that results in the Company (i) acquiring the shares covered by the award at a price not greater than the price (as adjusted to reflect any equity restructuring) paid by the participant for such shares or (ii) not issuing any shares covered by the award, the unused shares covered by such awards will again be available for award grants under the Inducement Plan. As of September 30, 2023, there were 1,500,000 shares available for issuance under the Inducement Plan. Share-based Compensation Share-based compensation expense was as follows for the three and nine months ended September 30, 2023 and 2022 (in thousands):
The following table summarizes the activity related to stock option grants for the nine months ended September 30, 2023:
The Company’s stock option awards vest based on the terms in the governing agreements and generally vest over four years and have a term of 10 years.
As of September 30, 2023, the unrecognized compensation cost was $5.5 million and will be recognized over an estimated weighted-average amortization period of 1.9 years. The aggregate intrinsic value of options outstanding and of options exercisable as of September 30, 2023 were zero. Options granted during the nine months ended September 30, 2023 and 2022 had weighted-average grant-date fair values of $1.66 and $1.57 per share, respectively. The fair value of options is estimated using the Black-Scholes option pricing model, which takes into account inputs such as the exercise price, the estimated fair value of the underlying common stock at the grant date, expected term, expected stock price volatility, risk-free interest rate and dividend yield. The fair value of stock options during the nine months ended September 30, 2023 and 2022 was determined using the methods and assumptions discussed below. • The expected term of employee stock options with service-based vesting is determined using the “simplified” method, as prescribed in SEC’s Staff Accounting Bulletin (SAB) No. 107, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option due to the Company’s lack of sufficient historical data. The expected term of nonemployee options is equal to the contractual term. • The expected stock price volatility is based on historical volatilities of comparable public entities within the Company’s industry which were commensurate with the expected term assumption as described in SAB No. 107. • The risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the expected term. • The expected dividend yield is 0% because the Company has not historically paid, and does not expect for the foreseeable future to pay, a dividend on its common stock. • The Company’s board of directors has determined the per share value of the Company’s common stock based on the closing price as reported by the NASDAQ Global Market on the date of the grant. The grant date fair value of each option grant was estimated throughout the nine months ended September 30, 2023 and 2022 using the Black-Scholes option-pricing model using the following weighted-average assumptions:
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Related Party Transactions |
9 Months Ended |
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Sep. 30, 2023 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | 9. Related party transactions IntellectMap provides information technology advisory services to the Company. The chief executive officer of IntellectMap is the brother of the Company’s chief executive officer. Fees incurred by the Company with respect to IntellectMap during both of the nine months ended September 30, 2023 and 2022 were $0.2 million. |
Restructuring charges |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||
| Restructuring Charges [Abstract] | |||||||||||||||||||||||||||||||
| Restructuring charges | 10. Restructuring charges
On August 9, 2023, the Company announced a plan to reduce expenses and extend its cash runway. In connection with this plan, the Board of Directors of the Company approved the Workforce Reduction. The decision was based on cost-reduction initiatives intended to reduce operating expenses. The Company incurred a $2.3 million charge in the third quarter of 2023 in connection with the Workforce Reduction, primarily consisting of severance payments, employee benefits and related costs.
The following table summarizes the restructuring balances at September 30, 2023 (in thousands):
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2023 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | 11. Subsequent events
On October 31, 2023, the Company announced the decision to halt the GRECO-1 and GRECO-2 trials, following a futility analysis of the GRECO-2 trial. The analysis indicated that the trial was unlikely to succeed as designed. The Company believes this decision will enable the Company to conserve cash while it continues to explore potential strategic alternatives with the goal of maximizing shareholder value. The discontinuation of the GRECO trials is expected to have an impact on the amounts the Company records for interest expense on the royalty purchase liability under the Royalty Agreement and may impact the carrying value of the royalty purchase liability, and such impacts may be material. In addition, the Company may perform impairment testing on the carrying value of the acquired intangible asset and goodwill on the balance sheet during the fourth quarter of 2023. |
Basis of Presentation and Significant Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Liquidity | Liquidity The Company has incurred recurring losses and negative cash flows from operations since inception and has an accumulated deficit of $431.8 million as of September 30, 2023. The Company expects its existing cash, cash equivalents and short-term investments as of September 30, 2023, taking into account the discontinuation of the GRECO-1 and GRECO-2 trials, will enable the Company to fund its operating expenses and capital expenditure requirements into 2025. The Company has engaged Stifel, as its financial advisor, to assist in reviewing strategic alternatives with the goal of maximizing value for its shareholders. Such alternatives may include a merger, sale, divestiture of assets, licensing, or other strategic transaction. If the Company is unable to undertake any strategic alternative, it may be required to cease operations altogether. |
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| Basis of Presentation and Consolidation | Basis of presentation and consolidation The accompanying unaudited interim consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) of the Financial Accounting Standards Board (FASB). In the opinion of management, the accompanying interim consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of September 30, 2023 and its results of operations for the three and nine months ended September 30, 2023 and 2022, and statements of changes in stockholders’ deficit and cash flows for the nine months ended September 30, 2023 and 2022. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or for any future period. The interim consolidated financial statements, presented herein, do not contain the required disclosures under U.S. GAAP for annual financial statements. Therefore, these interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and related notes as of and for the year ended December 31, 2022, included in the Company’s annual report on Form 10-K and filed with the SEC on March 8, 2023. |
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| Use of Estimates | Use of estimates The preparation of unaudited interim consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited interim consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the unaudited interim consolidated financial statements in the period they are determined to be necessary. Significant areas that require management’s estimates include share-based compensation assumptions, royalty purchase liability assumptions and accrued research and development expenses. |
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| Cash and cash equivalents | Cash and cash equivalents
The Company considers all highly liquid investments that have maturities of three months or less when acquired to be cash equivalents. Cash and cash equivalents as of September 30, 2023 and December 31, 2022 consisted of bank deposits, U.S. Treasury obligations, U.S. government agency securities, and a money market mutual fund invested in U.S. Treasury obligations. We maintain a portion of our cash and cash equivalents in accounts with major financial institutions, and our deposits at these institutions exceed insured limits. |
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| Restricted cash | Restricted cash Restricted cash represents collateral provided under a commercial credit card agreement entered into with TD Bank, N.A. during July 2022. Restricted cash was $50,000 as of September 30, 2023. The Company has recorded this deposit and accumulated interest thereon as restricted cash on its consolidated balance sheet. In October 2023, the commercial credit card agreement was terminated by the Company and the bank removed the restriction on the cash. Refundable PDUFA fee In December 2022, the Company paid a $3.2 million PDUFA fee to the FDA in conjunction with the filing of its NDA for avasopasem. The Company requested and was granted a small business waiver of this PDUFA fee from the FDA. The Company received the refund of the PDUFA fee from the FDA in May 2023. |
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| Research and Development Expenses | Research and development expenses Research and development costs are expensed as incurred and consist primarily of funds paid to third parties for the provision of services for product candidate development, clinical and preclinical development and related supply and manufacturing costs, and regulatory compliance costs. The Company accrues and expenses preclinical studies and clinical trial activities performed by third parties based upon estimates of the proportion of work completed over the term of the individual trial and patient enrollment rates in accordance with agreements with clinical research organizations and clinical trial sites. The Company determines the estimates by reviewing contracts, vendor agreements and purchase orders, and through discussions with internal clinical personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services. However, actual costs and timing of clinical trials are highly uncertain, subject to risks and may change depending upon a number of factors, including the Company’s clinical development plan. Management makes estimates of the Company’s accrued expenses as of each balance sheet date in the Company’s consolidated financial statements based on facts and circumstances known to the Company at that time. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Nonrefundable advance payments for goods and services, including fees for process development or manufacturing and distribution of clinical supplies that will be used in future research and development activities, are deferred and recognized as expense in the period that the related goods are consumed or services are performed. Restructuring Costs As a result of the Workforce Reduction, the Company incurred total restructuring-related charges of $2.3 million during the three months ended September 30, 2023. See Note 10. As of September 30, 2023, $1.6 million of the total restructuring-related charges remain unpaid and are included in accrued expenses in the accompanying consolidated balance sheet. See Note 5. |
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| Net Loss Per Share | Net loss per share The Company uses the two-class method to compute net income per common share during periods the Company realizes net income and has securities that entitle the holder to participate in dividends and earnings of the Company. The two-class method is not applicable during periods with a net loss, as the participating securities are not obligated to fund losses. Basic loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period. Diluted loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as stock options and common stock warrants, which would result in the issuance of incremental shares of common stock. For diluted net loss per share, the weighted-average number of shares of common stock is the same for basic net loss per share due to the fact that when a net loss exists, dilutive securities are not included in the calculation as the impact is anti-dilutive. The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:
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| Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2020, FASB issued 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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. This guidance is effective for fiscal years beginning after December 15, 2023, including interim periods therein. Early adoption is permitted. The Company adopted this ASU on January 1, 2023. There was no impact to the Company's consolidated financial statements. |
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Basis of Presentation and Significant Accounting Policies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dilutive Securities Excluded from Computation of Diluted Weighted Average Shares of Common Stock Outstanding | The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:
|
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis (amounts in thousands):
|
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Property and Equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property Plant and Equipment | Property and equipment consist of (amounts in thousands):
|
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Accrued Expenses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accrued Expenses | Accrued expenses consist of (amounts in thousands):
|
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Royalty purchase liability (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Royalty Purchase Liability [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Common Stock Warrants | Upon execution of the Amendment, the Company issued common stock warrants to the Blackstone Purchaser, each of which became exercisable upon the receipt by the Company of the applicable specified milestone payment. The issued warrants expire six years after the initial exercise dates, as follows:
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Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases was as follows:
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| Summary of Components of Lease Expense | The components of lease expense were as follows:
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| Summary of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases was as follows:
|
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| Summary of Future Minimum Rental Payments Under Non Cancelable Operating Leases | Future minimum rental payments under the Company’s non-cancelable operating lease liabilities as of September 30, 2023 (amounts in thousands):
|
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Equity (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Share-based Compensation Expense | Share-based compensation expense was as follows for the three and nine months ended September 30, 2023 and 2022 (in thousands):
|
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| Summary of Activity Related to Stock Option Grants | The following table summarizes the activity related to stock option grants for the nine months ended September 30, 2023:
|
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| Summary of Fair Value of Each Option Grant Estimated Throughout Year Using Black-Scholes Option-pricing Model | The grant date fair value of each option grant was estimated throughout the nine months ended September 30, 2023 and 2022 using the Black-Scholes option-pricing model using the following weighted-average assumptions:
|
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Restructuring charges (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||
| Restructuring Charges [Abstract] | |||||||||||||||||||||||||||||||
| Summary of Restructuring balances | The following table summarizes the restructuring balances at September 30, 2023 (in thousands):
|
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Organization and description of business - Additional Information (Details) $ in Thousands |
Feb. 17, 2023
shares
|
Sep. 30, 2023
USD ($)
|
Aug. 09, 2023
Employees
|
Dec. 31, 2022
USD ($)
|
|---|---|---|---|---|
| Organization And Description Of Business [Line Items] | ||||
| Number of reduction in company's current workforce employees | Employees | 22 | |||
| Workforce Reduction Rate | 70.00% | |||
| Accumulated deficit | $ | $ (431,819) | $ (378,324) | ||
| Issuance and sale of common stock and warrants to purchase shares of common stock | shares | 14,320,000 |
Basis of Presentation and Significant Accounting Policies - Additional Information (Details) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2023
USD ($)
|
Aug. 09, 2023
Employees
|
Dec. 31, 2022
USD ($)
|
|
| Accounting Policies [Abstract] | ||||
| Restricted Cash | $ 50,000 | $ 50,000 | $ 50,000 | |
| Number of reduction in company's current workforce employees | Employees | 22 | |||
| Workforce Reduction Rate | 70.00% | |||
| Restructuring-Related Charge | 2,300,000 | 2,300,000 | ||
| Restructuring-Related Charges Remain Unpaid ed In Accrued Expenses | 1,600,000 | 1,600,000 | ||
| Refundable PDUFA Fee | $ 0 | $ 0 | $ 3,242,000 |
Basis of Presentation and Significant Accounting Policies - Dilutive Securities Excluded from Computation of Diluted Weighted Average Shares of Common Stock Outstanding (Details) - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
| Antidilutive Securities excluded from computation of earnings per share | 20,237,782 | 6,557,618 |
| Stock Options | ||
| Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
| Antidilutive Securities excluded from computation of earnings per share | 6,387,121 | 6,006,957 |
| Common Stock Warrants | ||
| Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
| Antidilutive Securities excluded from computation of earnings per share | 13,850,661 | 550,661 |
Fair Value Measurements - Additional Information (Details) |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
USD ($)
| |
| Fair Value Disclosures [Abstract] | |
| Changes in valuation techniques | $ 0 |
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Property Plant And Equipment [Line Items] | ||
| Property and equipment, gross | $ 1,091 | $ 2,139 |
| Less: Accumulated depreciation and amortization | (893) | (1,701) |
| Property and equipment, net | 198 | 438 |
| Laboratory Equipment | ||
| Property Plant And Equipment [Line Items] | ||
| Property and equipment, gross | 571 | 1,398 |
| Computer Hardware and Software | ||
| Property Plant And Equipment [Line Items] | ||
| Property and equipment, gross | 305 | 292 |
| Leasehold Improvements | ||
| Property Plant And Equipment [Line Items] | ||
| Property and equipment, gross | 36 | 270 |
| Furniture and Fixtures | ||
| Property Plant And Equipment [Line Items] | ||
| Property and equipment, gross | $ 179 | $ 179 |
Property and Equipment - Additional Information (Details) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Property, Plant and Equipment [Abstract] | ||
| Depreciation and amortization | $ 44,000 | $ 88,000 |
Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Payables and Accruals [Abstract] | ||
| Compensation and related benefits | $ 1,262 | $ 2,655 |
| Restructuring Costs | 1,584 | 0 |
| Research and development expenses | 5,609 | 6,764 |
| Professional fees and other expenses | 329 | 335 |
| Accrued expenses | $ 8,784 | $ 9,754 |
Royalty Purchase Liability - Schedule of Common Stock Warrants (Details) |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
$ / shares
shares
| |
| New Milestone Warrant | |
| Class of Warrant or Right [Line Items] | |
| Class of warrant, shares issued | shares | 293,686 |
| Exercise price | $ / shares | $ 13.62 |
| Initial Exercise Date | Jun. 07, 2021 |
| Expiration Date | Jun. 06, 2027 |
| Fourth Milestone Warrant | |
| Class of Warrant or Right [Line Items] | |
| Class of warrant, shares issued | shares | 256,975 |
| Exercise price | $ / shares | $ 13.62 |
| Initial Exercise Date | Jul. 19, 2021 |
| Expiration Date | Jul. 18, 2027 |
Leases - Additional Information (Details) $ in Thousands |
Sep. 30, 2023
USD ($)
|
|---|---|
| Lessee Lease Description [Line Items] | |
| Lease Rental payments | $ 1,542 |
| Operating lease, discount rate | 5.40% |
Leases - Summary of Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Leases [Abstract] | ||
| Right-of-use lease assets | $ 1,249 | $ 43 |
| Lease liabilities, current | 131 | 44 |
| Lease liabilities, net of current portion | 1,155 | 0 |
| Total operating lease liabilities | $ 1,286 | $ 44 |
Leases - Summary of Components of Lease Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Leases [Abstract] | ||||
| Operating lease rental expense | $ 54 | $ 65 | $ 138 | $ 201 |
| Total operating lease expense | $ 54 | $ 65 | $ 138 | $ 201 |
Leases - Summary of Supplemental Cash Flow Information Related to Lease (Details) - USD ($) $ in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Leases [Abstract] | ||
| Operating cash flows for operating leases | $ 97 | $ 200 |
| Right-of-use assets obtained in exchange for lease obligation | ||
| Operating leases | $ 1,310 | $ 0 |
Leases - Summary of Future Minimum Rental Payments Under Non Cancelable Operating Leases (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Leases [Abstract] | ||
| Remainder of 2023 | $ 53 | |
| 2024 | 195 | |
| 2025 | 217 | |
| 2026 | 220 | |
| 2027 And After | 857 | |
| Total | 1,542 | |
| Less: imputed interest | (256) | |
| Operating lease liabilities | $ 1,286 | $ 44 |
Equity - Summary of Share-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Total share-based compensation expense | $ 1,390 | $ 1,750 | $ 4,373 | $ 5,428 |
| Research and Development | ||||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Total share-based compensation expense | 415 | 644 | 1,315 | 1,951 |
| General and Administrative | ||||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
| Total share-based compensation expense | $ 975 | $ 1,106 | $ 3,058 | $ 3,477 |
Equity - Summary of Fair Value of Each Option Grant Estimated Throughout Year Using Black-Scholes Option-pricing Model (Details) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||
| Expected term (in years) | 6 years 2 months 12 days | 6 years 2 months 12 days |
| Expected stock price volatility | 95.30% | 92.70% |
| Risk-free interest rate | 4.05% | 2.06% |
| Expected dividend yield | 0.00% | 0.00% |
Related Party Transactions (Details) - USD ($) $ in Millions |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| IntellectMap | ||
| Related Party Transaction [Line Items] | ||
| Advisory services fees | $ 0.2 | $ 0.2 |
Restructuring charges (Additional Information) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
|
| Restructuring Charges [Abstract] | ||
| Incured Restructuring Charges | $ 2.3 | $ 2.3 |
Restructuring charges - Summary of Restructuring balances (Details) $ in Thousands |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
USD ($)
| |
| Restructuring Charges [Abstract] | |
| Balance, January 1 | $ 0 |
| Current year restructuring costs | 2,309 |
| Payment of employee severance and related costs | (725) |
| Balance, September 30 | $ 1,584 |
Subsequent events (Additional Information) (Details) |
Aug. 09, 2023
Employees
|
|---|---|
| Subsequent Event [Line Items] | |
| Number of reduction in company's current workforce employees | 22 |
| Workforce Reduction Rate | 70.00% |
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