Galectin Therapeutics Inc. — Form 10-Q Summary
Reporting period: Three months ended March 31, 2021; filed May 17, 2021. Financial statements are unaudited. Galectin is a clinical-stage biopharmaceutical company developing belapectin and other galectin-targeting compounds for fibrotic disease and cancer. The company has had no revenues since inception.
Financial Results and Liquidity
| Metric | Q1 2021 | Q1 2020 | Change |
|---|---|---|---|
| Revenue | $0 | $0 | No change |
| Research and development expense | $4.899 million | $2.144 million | Up 128% |
| General and administrative expense | $1.418 million | $1.440 million | Down 2% |
| Total operating loss | $6.317 million | $3.584 million | Loss increased $2.733 million |
| Net loss | $6.338 million | $3.556 million | Loss increased $2.782 million |
| Net loss applicable to common stockholders | $6.340 million | $3.550 million | Loss increased $2.790 million |
| Basic and diluted loss per share | $0.11 | $0.06 | Loss per share increased |
| Net cash used in operating activities | $6.382 million | $4.371 million | Use increased $2.011 million |
| Cash and cash equivalents at period end | $20.760 million | $43.328 million | Down $22.568 million year over year |
There were no operating revenues or meaningful operating margins. Clinical activities accounted for $4.283 million of Q1 2021 research and development expense, compared with $1.019 million in the prior-year quarter, primarily reflecting increased NAVIGATE trial activity. Stock-based compensation was $254,000, compared with $430,000.
At March 31, 2021, total assets were $22.897 million, total liabilities were $4.663 million, and stockholders’ equity was $16.511 million. The company had no borrowings under its $10 million unsecured line of credit with director and shareholder Richard E. Uihlein. Series C super dividend redeemable convertible preferred stock had a redemption value of $8.467 million.
Material Changes Versus the Prior Comparable Period
- Research and development expense rose 128%, driven primarily by the NAVIGATE Phase 2b/3 clinical trial.
- Operating cash burn increased 46% to $6.382 million.
- Cash and cash equivalents declined from $27.142 million at December 31, 2020 to $20.760 million at March 31, 2021.
- General and administrative expense was broadly stable, with lower investor relations, business development and stock-based compensation costs offset by higher insurance expense.
- No equity was issued under the company’s $40 million 2020 at-the-market facility during the quarter. Options exercised resulted in the issuance of 46,282 net shares.
Programs, Outlook, Risks and Unusual Items
The principal development program is belapectin for prevention of esophageal varices in patients with NASH cirrhosis. The adaptively designed NAVIGATE Phase 2b/3 trial began enrolling in 2020. Management estimated enrollment completion by the end of 2022, although COVID-19 had delayed site recruitment and patient enrollment. The planned interim analysis is expected in the second half of 2023.
Management stated that the $20.760 million of unrestricted cash at March 31, together with the available $10 million line of credit and subsequent financing, was expected to fund currently planned operations through at least September 30, 2022. The company expects to require approximately $35 million to $40 million of additional capital to fund the NAVIGATE trial through the planned interim analysis and related manufacturing, scientific and corporate costs. Management cautioned that additional financing may not be available on favorable terms; failure to raise capital before September 30, 2022 could require the company to cease operations.
On April 16, 2021, after quarter-end, the company received $10 million from a convertible promissory note issued to Mr. Uihlein. The note matures April 16, 2025, bears 2% annual interest, and is convertible at the holder’s option at $5.00 per common share. Additional interest of 2.5% per quarter accrues only if the holder elects to convert the entire balance.
- The company remains dependent on external capital and has incurred losses since inception.
- Clinical, regulatory and manufacturing activities may be delayed or fail, and product candidates may not demonstrate safety or efficacy.
- COVID-19 may continue to affect clinical-site recruitment, patient enrollment and capital-market access.
- The company faces extensive FDA and foreign regulatory requirements, competition, intellectual-property risks and potential stock-price volatility.
- Clinical-trial expense accruals are based partly on estimates of work performed by contract research organizations and may require future adjustments.
No significant pending legal proceedings were reported. Management concluded that disclosure controls and procedures were effective as of March 31, 2021, and reported no material change in internal control over financial reporting during the quarter.
Investor Verification Points
- Verify NAVIGATE enrollment progress, site activation, COVID-19-related delays and the timing and results of the planned interim analysis.
- Confirm the terms, conversion economics, accrued interest and use of proceeds of the April 16, 2021 $10 million convertible note.
- Assess projected cash burn, access to the unused $10 million line of credit and the probability and terms of the estimated $35 million to $40 million future financing requirement.
- Review the potential dilution from 12.538 million outstanding warrants, 5.763 million options and preferred-stock conversion rights.
- Evaluate whether clinical results, regulatory feedback or trial-cost estimates could materially change the company’s liquidity outlook.