GT Biopharma, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. The company is a clinical-stage biopharmaceutical developer of TriKE immuno-oncology products and reported no revenue in either 2022 or the comparable 2021 periods. Financial statement amounts below are in millions, except per-share data.
Financial performance
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $1.139 | $0.639 | $3.226 | $2.279 |
| Selling, general and administrative | $1.875 | $3.742 | $5.230 | $31.104 |
| Operating loss | $3.014 | $4.381 | $8.456 | $33.383 |
| Net loss | $2.979 | $4.861 | $8.419 | $34.538 |
| Basic and diluted loss per share | $0.10 | $0.15 | $0.26 | $1.39 |
Gross margin and operating margin are not meaningful because the company had no revenue. Lower net losses versus 2021 mainly reflect reduced stock-based compensation and, for the six-month comparison, the absence of prior-year interest expense and lower derivative remeasurement expense. R&D increased, principally due to additional personnel and development and manufacturing work on GTB-3650 and GTB-5550.
Cash, liquidity and obligations
- At June 30, 2022, cash and cash equivalents were $5.358 million and short-term investments were $18.367 million, totaling $23.725 million, versus $31.979 million at December 31, 2021.
- Working capital was $15.3 million; stockholders’ equity was $15.4 million. Total liabilities were $8.730 million, including $8.610 million current liabilities. The company reported no outstanding convertible notes; current obligations included a $0.115 million derivative liability and operating lease liabilities.
- Operating cash use was $8.001 million for the first half, compared with $7.972 million in 2021. Investing activities provided $4.614 million from sales of short-term investments; financing activities used $0.223 million. Cash declined $3.610 million to $5.358 million.
- Accounts payable included $6.440 million due to a third-party manufacturer. Manufacturing statements of work totaled approximately $13.0 million, of which $9.8 million had been incurred and $3.2 million was in process. The University of Minnesota research agreement is for a fixed $2.1 million and runs through June 2023.
Changes, outlook and key risks
- Six-month SG&A fell $25.9 million from 2021, primarily due to lower stock-based compensation; 2021 also included elevated legal, finance, consulting and public-company compliance costs. Six-month R&D rose $0.9 million.
- Management expects cash and investments to fund operations for more than 12 months from the filing date. It anticipated $5–6 million of SG&A and $14–16 million of R&D spending over the following 12 months, and was evaluating equity or debt offerings, grants, licensing and other arrangements for future funding.
- The company remains loss-making, has no approved products or product-sales revenue, and expects losses to continue. Its ability to fund ongoing clinical and development work is a material risk. Management noted that COVID-19 had limited effect on results in the first half, but future effects were uncertain; inflation, supply-chain constraints and geopolitical disruption could raise costs.
- Disclosure controls were assessed as ineffective at June 30, 2022 because of material weaknesses involving segregation of duties, executive override risk, and insufficient accounting and financial-reporting policies. Remediation efforts included an experienced CFO, outside consultants, and plans for additional accounting staffing and documented controls.
- Other items: a former CEO settlement returned 1.845 million shares to the company, which were cancelled; related legal and professional costs were $0.223 million. A separate $0.425 million license-dispute settlement was paid in March 2022 after being accrued at year-end 2021. Subsequent to quarter-end, the company granted options for 1,532,952 shares and 398,940 fully vested shares.
Investor verification priorities
- Confirm cash burn and the assumptions behind management’s more-than-12-month liquidity estimate and spending outlook.
- Review progress, costs and timelines for GTB-3650, GTB-5550 and the manufacturing commitments, including the substantial vendor payable concentration.
- Monitor financing needs, potential dilution and outstanding warrants, options and subsequent-quarter equity awards.
- Track remediation of the disclosed internal-control material weaknesses and any changes in disclosure-control effectiveness.
- Review the full filing and risk-factor disclosures for clinical, regulatory, intellectual-property, contractual and other contingent risks.