Gain Therapeutics, Inc. — FY 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual report; it does not provide standalone fourth-quarter results. Gain Therapeutics is a preclinical-stage biotechnology company developing small-molecule therapies using its licensed SEE-Tx platform to identify allosteric protein-binding sites. Its pipeline spans lysosomal storage, neurological, metabolic and oncology programs. It had no approved products and no product-sale revenue.
Financial and operating performance
| Metric | FY 2021 | FY 2020 |
|---|---|---|
| Total revenue | $165,000 | $29,000 |
| Research and development expense | $7.16 million | $2.26 million |
| General and administrative expense | $6.83 million | $1.25 million |
| Operating loss | $13.83 million | $3.48 million |
| Net loss | $13.89 million | $3.58 million |
| Basic and diluted loss per share | $1.37 | $1.33 |
| Cash used in operating activities | $12.37 million | $3.24 million |
| Cash and cash equivalents at year-end | $36.88 million | $7.49 million |
| Total debt at year-end | $694,000 | $738,000 |
Revenue was mainly collaboration income and office sublease income; it was immaterial relative to operating expenses. Profitability and operating margins are not meaningful given the company’s development-stage status and substantial losses. Current assets were $37.72 million and current liabilities were $2.55 million at year-end. Stockholders’ equity was $34.82 million; accumulated deficit was approximately $20.93 million.
Cash flow from investing activities was a $94,000 outflow; financing activities provided $41.77 million, principally from the March 2021 IPO. The IPO generated approximately $40.56 million in net cash proceeds after offering costs. The company reported no off-balance-sheet arrangements. Its Swiss government-guaranteed loans are zero-interest; the larger loan is repayable in quarterly installments through 2029.
Changes versus FY 2020
- Revenue increased by $136,000, including new collaboration revenue, but remained very small.
- R&D expense rose by $4.91 million, primarily due to external preclinical services and higher personnel costs.
- G&A expense rose by $5.58 million, reflecting public-company, legal, professional-services, investor-relations and personnel costs, among other items.
- Net loss widened by $10.31 million, while operating cash use increased by $9.13 million.
- Cash increased following the IPO; common shares outstanding at year-end rose to 11.88 million from 3.54 million a year earlier, including conversion of preferred shares.
Pipeline, outlook and material matters
- Lead programs include GT-02287 for Parkinson’s disease and GT-02329 for neuronopathic Gaucher disease. The filing describes encouraging preclinical and in-vitro findings, including enzyme activity, lysosomal trafficking and biomarker changes; these are not clinical efficacy results.
- Management planned to complete preclinical development and submit an Australian regulatory dossier to support a first-in-human Phase 1 Parkinson’s study, and to begin Gaucher toxicology studies, in the second half of 2022. The filing notes that no product candidate had entered clinical trials and no IND-enabling or GLP-compliant studies had been completed at the time described.
- Management expected year-end cash to fund operating and capital needs through the second half of 2023, based on assumptions that could prove incorrect. The financial statements also state cash was expected to fund at least 12 months from issuance. Additional financing will be needed to advance development; equity financing could dilute shareholders, while partnering may require rights concessions.
- The Zentalis oncology collaboration may provide initiation fees, expense reimbursement, future milestones of up to $41.5 million for the first target program and royalties if products are commercialized. These contingent amounts are not assured. Zentalis can terminate programs at its discretion.
- After year-end, Sumitomo Dainippon Pharma informed the company on March 22, 2022 that it would not continue its research collaboration and would send formal notice. The filing says the first phase’s goals had been achieved.
- Key risks include preclinical and clinical failure or delay, limited ability to identify and enroll rare-disease patients, regulatory and manufacturing hurdles, reliance on the licensed SEE-Tx technology and third parties, competition, foreign-exchange exposure, COVID-19 disruption and need for further capital.
- Management reported disclosure controls were not effective at December 31, 2021 because a material weakness in timely preparation and review of financial statements remained unremediated. A prior weakness concerning accounting and supervisory staffing was reported as remediated. The auditor issued an unmodified opinion on the financial statements, but did not audit internal-control effectiveness.
Investor verification priorities
- Reconcile collaboration revenue and deferred revenue: MD&A reports $134,000 revenue and $188,000 deferred revenue, while the collaboration note reports $167,000 revenue and $155,000 deferred revenue.
- Confirm actual progress against the stated 2022 Parkinson’s Phase 1 and Gaucher toxicology timelines, and distinguish planned milestones from completed IND-enabling, GLP and clinical work.
- Assess the cash runway assumptions, subsequent spending and financing needs, including potential dilution and the status of planned collaborations.
- Review remediation of the remaining internal-control material weakness and whether disclosure controls have since been deemed effective.
- Check the status and financial implications of the Sumitomo collaboration ending, as well as Zentalis program options, termination rights and any milestone or royalty realization.