Greenwich LifeSciences, Inc. — Q3 2020 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2020. The company is a clinical-stage biopharmaceutical developer with no product revenue, developing GP2, an immunotherapy intended to prevent breast cancer recurrence following surgery.
Financial position and performance
| Metric | Q3 / September 30, 2020 | Comparable period / prior balance |
|---|---|---|
| Revenue | $0 | $0 in Q3 2019 |
| Net loss | $256,865 for Q3; $711,936 for nine months | $336,013 for Q3 2019; $3,088,771 for nine months 2019 |
| R&D expense | $158,031 for Q3; $458,726 for nine months | $284,504 for Q3 2019; $2,347,746 for nine months 2019 |
| General and administrative expense | $98,834 for Q3; $253,210 for nine months | $51,509 for Q3 2019; $741,025 for nine months 2019 |
| Cash | $6,214,337 | $6,835 at December 31, 2019 |
| Current assets / liabilities | $6,256,917 / $1,615,962 | $6,835 / $1,377,089 at December 31, 2019 |
| Total assets / liabilities | $6,274,047 / $1,615,962 | $26,671 / $1,377,089 at December 31, 2019 |
| Stockholders’ equity (deficit) | $4,658,085 | $(1,350,418) at December 31, 2019 |
| Cash flow | $0 net cash used in operations and $6,207,502 provided by financing for nine months | $79,100 used in operations and no financing cash flow for nine months 2019 |
There was no operating profit or margin because the company had no revenue and incurred operating expenses. Nine-month loss per share was $0.08, versus $13.26 in 2019; weighted-average shares increased substantially, so per-share comparisons reflect the changed share base as well as lower losses. The company reported no investing cash flows in either nine-month period.
Material changes and capital structure
- In September 2020, the company completed its IPO, selling 1,260,870 shares at $5.75 per share for $7.25 million gross proceeds and $6.21 million net proceeds after $1.04 million of offering costs. Management said the IPO alleviated substantial doubt about going concern and provided sufficient liquidity for the next 12 months.
- All preferred stock converted to common stock in connection with the IPO. Common shares outstanding were 11,970,185 at September 30, 2020 and 12,019,089 at November 16, 2020.
- Nine-month R&D expense fell 80% and G&A expense fell 66% year over year. Management attributed the R&D reduction primarily to lower related-party payables; G&A changed primarily due to lower related-party payables and higher stock-based compensation. Q3 R&D declined 44%, attributed primarily to lower accrued manufacturing expenses, while Q3 G&A rose 92%, primarily due to stock-based compensation.
Liquidity, obligations, and risks
- The company had $635,154 in unsecured, non-interest-bearing related-party advances payable on demand, plus $800,219 in accounts payable and accrued interest, including patent/license and GP2 manufacturing costs. Unreimbursed expenses were $138,009. The filing does not identify other conventional borrowings.
- Management expects continuing losses and significant expenses as it advances development, clinical trials, manufacturing, and public-company operations. It cautioned that future capital may be needed and is not assured.
- The company plans to commence a Phase III trial in 2021. It said the FDA had reviewed the manufacturing plan and protocol, final protocol revisions were underway and could include interim analysis or an adaptive design, and it was finalizing contract manufacturer and research organization arrangements.
- Management reported Phase IIb results in a defined HER2/neu 3+ patient subgroup: no recurrences among 46 fully treated GP2 patients versus an 11% recurrence rate among 50 placebo patients after median five-year follow-up (p=0.0338). The company also reported no GP2-related serious adverse events among 138 patients across Phase I and IIb studies. These are reported clinical findings, not proof of future efficacy or approval.
- Key risks include clinical-trial outcomes, regulatory approval, reliance on third-party manufacturers and trial providers, additional financing needs, intellectual-property disputes, competition, and possible COVID-19 impacts. The filing reports no material legal proceedings and no off-balance-sheet arrangements.
- Disclosure controls were deemed ineffective as of September 30, 2020 because of material weaknesses: inadequate segregation of duties due to limited personnel and insufficient written accounting, IT, financial-reporting, and record-keeping procedures. Management said it was developing a remediation plan.
Most important facts for investors to verify
- Phase III trial start, final protocol and design, enrollment timetable, and associated costs and funding runway.
- Whether reported Phase IIb findings are applicable to the planned Phase III population and are confirmed in further trials.
- Actual use of IPO proceeds, quarterly cash burn, and whether liquidity remains adequate as development spending increases.
- Manufacturing and clinical-trial vendor arrangements, and the status of the $635,154 demand advances and other accrued obligations.
- Progress in remediating the disclosed internal-control material weaknesses.