GT Biopharma, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. GT Biopharma is a clinical-stage immuno-oncology company developing TriKE and Dual Targeting TriKE therapies designed to harness natural killer cells. The company has no approved products and generated no revenue in the periods presented. Unless noted, financial amounts below are in millions of dollars.
Financial results and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $2.095 | $1.139 | $3.745 | $3.226 |
| Selling, general and administrative expense | $1.526 | $1.875 | $3.541 | $5.230 |
| Operating loss | $3.621 | $3.014 | $7.286 | $8.456 |
| Net loss | $1.992 | $2.979 | $2.219 | $8.419 |
| Basic and diluted loss per share | $0.05 | $0.10 | $0.06 | $0.26 |
| Cash used in operating activities | Not separately provided for the quarter | $4.841 | $8.001 |
- Margins: Not meaningful because the company reported no revenue.
- Liquidity at June 30, 2023: Cash and cash equivalents were $2.767 million and short-term investments were $15.206 million, or about $18.0 million combined. Working capital was $13.2 million.
- Liabilities: Total liabilities were $6.381 million, including $3.501 million of accounts payable, $1.222 million of accrued expenses, $0.120 million of current lease liabilities, and a $1.538 million warrant liability. The balance sheet reports no conventional debt balance.
- Equity and shares: Stockholders’ equity was $11.763 million. Common shares outstanding increased from 32.7 million at December 31, 2022 to 40.6 million at June 30, 2023. The company also reported 9.15 million warrants outstanding.
Material changes and notable items
- Six-month R&D expense increased $0.5 million year over year, reflecting continued development and production work on GTB-3650 and GTB-5550. Q2 R&D increased $1.0 million year over year.
- Six-month SG&A declined $1.7 million, mainly due to lower advisory board, investor relations, legal and professional, and payroll costs.
- The six-month net loss improved to $2.2 million from $8.4 million. The improvement included a noncash gain from the change in warrant fair value (reported as $4.311 million in the financial statements and approximately $4.4 million in management’s discussion) and a $0.547 million gain on settling vendor payables. These items do not represent operating revenue.
- Operating cash use declined to $4.8 million from $8.0 million. Cash declined by $2.9 million during the half, while the company used $4.3 million for net purchases of investments and received $6.3 million in financing proceeds.
- In January 2023, the company raised $6.5 million gross in a registered offering of common stock and warrants. It also issued 2.9 million shares upon exercise of pre-funded warrants and issued approximately 1.34 million shares to settle vendor payables.
- Accounts payable to the third-party manufacturer rose to $2.9 million from $2.3 million at year-end. The manufacturer is a significant vendor; the company may settle future services through cash and/or common stock at its discretion.
Outlook, risks and contingencies
- Management expects cash and short-term investments to fund operations for more than 12 months from the filing date. It forecasts $3–4 million of SG&A and $10–12 million of R&D spending over the following 12 months. The company has sustained losses since inception and expects losses to continue; management is evaluating equity, debt, and strategic collaboration or licensing alternatives. It cautions that financing may not be available on acceptable terms and that spending could be reduced or delayed if funding is insufficient.
- The company anticipated filing an IND for GTB-3650 in the second half of 2023. GTB-5550 was in preclinical development, with GMP manufacturing underway ahead of a planned IND and clinical study; no specific filing or start date was stated. GTB-3550 is not expected to undergo further clinical development.
- Litigation includes a former interim CEO’s retaliation complaint, a company claim against its former CFO seeking damages and other relief, and TWF Global’s claim concerning alleged failure to deliver shares upon conversion of convertible notes. The company disputes the claims; the filing does not provide a clear estimate of potential losses for these matters.
- Other risks include dependence on external financing and a contract manufacturer, clinical and regulatory uncertainty, potential dilution from warrants and equity issuance, and economic, inflation, supply-chain, and pandemic-related uncertainty.
- Management stated disclosure controls and internal controls over financial reporting were effective at June 30, 2023, while also noting ongoing remediation of previously disclosed material weaknesses. The company reported no off-balance-sheet arrangements.
Important facts for investors to verify
- Actual cash burn and progress against management’s $13–16 million combined 12-month expense forecast, as well as the assumptions behind the stated runway.
- Whether GTB-3650’s anticipated second-half 2023 IND filing and GTB-5550’s development plans were achieved, and the timing and funding required for clinical studies.
- Terms, fair-value sensitivity, potential dilution, and exercise or expiration status of the substantial warrant and option overhang.
- Changes in manufacturer payables, the company’s ability to pay for continued work, and the extent of future settlements in shares.
- Developments and potential financial exposure in the three disclosed legal matters, plus progress on remediation of prior internal-control weaknesses.