GT Biopharma, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. GT Biopharma is a clinical-stage biopharmaceutical company developing TriKE and Dual Targeting TriKE immuno-oncology therapies. It reported no product revenue.
Financial performance and position
- Revenue: $0, unchanged from Q1 2022.
- Operating expenses: $3.665 million, down from $5.442 million. Research and development was $1.650 million versus $2.087 million; selling, general and administrative expense was $2.015 million versus $3.355 million.
- Operating loss: $3.665 million, compared with $5.442 million. No meaningful revenue-based margin is available.
- Net loss: $227,000, or $0.01 per share, versus $5.440 million, or $0.17 per share. The improvement primarily reflects non-operating gains, including a $2.924 million gain from revaluing warrant liabilities and a $533,000 gain on settling vendor payables with shares; it does not represent operating profitability.
- Cash flow: $2.906 million used in operating activities, versus $5.215 million used in Q1 2022. Cash declined by $3.627 million to $2.045 million. Investing activities used $6.989 million, primarily for investment purchases; financing provided $6.268 million from the stock offering.
- Liquidity: Cash and short-term investments totaled $19.9 million at quarter-end; working capital was $15.9 million. Total assets were $20.086 million and stockholders’ equity was $13.053 million.
- Liabilities and debt: Total liabilities were $7.033 million, including a $2.926 million warrant liability and operating lease liabilities. The balance sheet reports no conventional borrowing balance.
Material changes and financing
- On January 4, 2023, the company received $6.5 million gross proceeds in a registered direct offering, before $232,000 in placement-agent fees and other offering expenses. The offering included 3.6 million common shares and pre-funded warrants for up to 2.9 million shares, as well as warrants for up to 6.5 million shares and placement-agent warrants for up to 390,000 shares.
- Accounts payable to the third-party manufacturer were $2.114 million at March 31. During the quarter, the company paid $600,000 and issued 486,819 shares valued at $287,000 to settle $820,000 of payables.
- R&D and SG&A fell year over year, attributed respectively to lower staffing and consultant compensation, and lower stock-based compensation, investor-relations, legal and professional costs.
Outlook, risks and contingencies
- Management said available cash and investments should fund operations for more than 12 months from the filing date. It estimated cash use over the following 12 months of $10–12 million for R&D and $3–4 million for SG&A.
- The company has no approved products or product-sale revenue, has incurred operating losses since inception, and expects losses to continue. It is evaluating equity or debt offerings and potential strategic, research, licensing or marketing arrangements; additional financing on acceptable terms is not assured.
- Management anticipated filing an IND for GTB-3650 in the second half of 2023. GTB-5550 was advancing through preclinical work, with GMP manufacturing initiated in preparation for an IND and a proposed study in B7-H3-positive solid tumors. These are forward-looking plans, not assured outcomes.
- The filing describes uncertainty from clinical development, financing needs, reliance on a third-party manufacturer, economic and supply-chain disruption, and the continuing uncertain effects of COVID-19. It also notes concentration in expenses and payables with a single vendor.
- Legal matters include a March 2023 demand letter from an alleged convertible-note holder claiming shares were not delivered upon conversion and seeking per diem damages; the company denies liability. The company is also pursuing claims against its former CFO, with an arbitration hearing scheduled for October 26, 2023.
- A subsequent event: on April 28, 2023, the company issued 552,220 shares to settle $239,000 of vendor payables.
Important facts for investors to verify
- Confirm the timing and actual cash requirements of the GTB-3650 and GTB-5550 development plans, and whether additional financing will be needed.
- Track operating cash burn separately from reported net loss, which was materially affected by warrant remeasurement and the vendor-payable settlement gain.
- Assess potential dilution from the offering’s common shares, pre-funded warrants, other warrants and outstanding options.
- Review the manufacturer payable balance, vendor concentration, and status and potential exposure of the legal matters.
- Reconcile the filing’s inconsistent common-stock figures: the equity disclosure gives differing issued-and-outstanding share counts and authorized-share figures, while the cover reports 37,434,944 common shares outstanding as of May 15, 2023.