Gain Therapeutics, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. The company is a preclinical-stage biotechnology business developing small-molecule therapeutics using its licensed SEE-Tx platform. It had no approved products or product sales.
Financial performance and position
| Metric | Q2 2023 / June 30, 2023 | Comparable period / prior year-end |
|---|---|---|
| Revenue | $0 for Q2; $55,180 for first half | Q2 2022: $95,102; first half 2022: $140,108 |
| Operating expenses | Q2: $7.73 million; first half: $13.02 million | Q2 2022: $5.27 million; first half 2022: $8.60 million |
| Net loss | Q2: $7.69 million, or $0.62 per share; first half: $12.83 million, or $1.05 per share | Q2 2022: $5.09 million, or $0.43 per share; first half 2022: $8.36 million, or $0.70 per share |
| Operating cash flow | First half: $(9.24) million | First half 2022: $(7.50) million |
| Cash, cash equivalents and marketable securities | $16.19 million | $22.08 million at December 31, 2022 |
| Debt | $578,274 in loans | $603,393 at December 31, 2022 |
| Current liabilities / current assets | $5.59 million / $17.31 million | — |
| Stockholders’ equity | $11.09 million | $18.88 million at December 31, 2022 |
Gross margin is not meaningful for this development-stage company with no product revenue. Cash used in operations increased year over year. Investing activities provided $5.15 million, mainly from Treasury-security maturities; financing activities provided $2.95 million, primarily net ATM proceeds. The company reported accumulated deficit of $51.3 million at June 30, 2023.
Material changes and operating developments
- Q2 research and development expense rose 54% to $3.99 million; first-half expense rose 64% to $6.78 million. Management attributed the increases mainly to third-party services for the Parkinson’s disease program.
- Q2 general and administrative expense increased 39% to $3.74 million; first-half expense increased 40% to $6.24 million, largely due to intellectual-property and corporate legal fees, accounting fees, and personnel costs.
- In the first half, the company sold 681,559 shares through its ATM program at an average $4.86 per share, generating $3.3 million gross and approximately $3.0 million net. About $12.7 million of ATM capacity remained at June 30; future sales are subject to market conditions and the Form S-3 baby-shelf limit.
- Deferred income rose to $1.68 million after an upfront payment related to an Innosuisse research and development grant; the filing does not state the grant payment’s total value.
- The company had $2.1 million of research commitments for work expected to be performed by the end of Q2 2024.
Outlook, risks and other notable items
- Management estimated available resources would fund operating expenses and capital expenditures into Q3 2024. The estimate depends on assumptions that could prove incorrect; the company expects to need additional funding.
- In July 2023, the company submitted an application in Australia to conduct a Phase 1 study of GT-02287, its lead GBA1 Parkinson’s disease candidate, and expected to initiate the study in the second half of 2023. The planned study assesses safety and pharmacokinetics in healthy volunteers. No product candidate had yet been tested in clinical trials.
- Management cited preclinical findings for GT-02287, including restored GCase function and improvements in disease-related measures in animal models; it planned to present additional in-vivo results at scientific conferences in 2023. Preclinical results may not predict human outcomes.
- The company said it was streamlining operations and pursuing partnerships, including for Parkinson’s and lysosomal storage disease programs, while continuing development of its alpha-1 antitrypsin deficiency and oncology programs and seeking non-dilutive funding for other research.
- Key risks include ongoing losses, uncertain access to capital and potential shareholder dilution, clinical and regulatory failure or delay, low-prevalence disease enrollment challenges, dependence on third parties and the SEE-Tx license, and macroeconomic, foreign-exchange, supply-chain and geopolitical uncertainty.
- The Zentalis collaboration had concluded. The company reported no material legal proceedings. Management concluded disclosure controls were effective as of June 30, 2023, with no material change in internal control over financial reporting during the quarter.
Investor verification priorities
- Confirm progress and timing of the Australian Phase 1 study, and review subsequent safety and pharmacokinetic disclosures.
- Track actual cash burn against the Q3 2024 runway estimate, including the effect of research spending, commitments and grant funding.
- Monitor financing needs, ATM share sales, remaining offering capacity and dilution, including Form S-3 restrictions.
- Review the quality and reproducibility of GT-02287’s preclinical evidence and the risks of translating animal findings to clinical results.
- Verify the terms, recognition and continued availability of Innosuisse grant funding and any new collaboration or licensing arrangements.