GT Biopharma, Inc. — Q1 2022 Form 10-Q
Business and period: Clinical-stage biopharmaceutical company developing immuno-oncology and infectious-disease candidates using its TriKE platform. This unaudited report covers the three months ended March 31, 2022; comparisons are with Q1 2021. The company had no approved products or product-sales revenue.
Financial performance and liquidity
- Revenue: $0 in both periods. Gross margin is not applicable.
- Expenses and loss: R&D expense was $2.1 million, up from $1.6 million. SG&A was $3.4 million, down from $27.4 million. Operating loss was $5.4 million versus $29.0 million; net loss was $5.4 million versus $29.7 million. Basic and diluted loss per share was $0.17 versus $1.83.
- Cash flow: Operating cash use was $5.2 million versus $3.7 million. The company received $3.5 million from investment sales and had no financing cash inflows in Q1 2022. Cash declined by $1.7 million to $7.3 million.
- Liquidity: Cash and cash equivalents were $7.3 million and short-term investments were $19.5 million, totaling $26.7 million at fair value, down from $32.0 million at December 31, 2021. Working capital was $17.7 million.
- Debt and liabilities: The company reported no outstanding notes payable. Total liabilities were $9.7 million, including $8.1 million of accounts payable; $7.4 million was owed to one third-party manufacturer. Stockholders’ equity was $17.8 million.
Changes versus Q1 2021
- Net loss fell by $24.2 million, primarily because Q1 2021 included substantially higher stock-based compensation. SG&A stock compensation was $447,000 in Q1 2022 versus $14.3 million in Q1 2021.
- R&D expense increased by approximately $500,000, which management attributed primarily to additional employees.
- Interest expense declined to zero from $696,000 after convertible notes were converted to common shares in 2021.
- Operating cash use increased by approximately $1.5 million. Q1 2021 cash flow included $25.9 million of financing proceeds; Q1 2022 had none.
Outlook, risks, and notable items
- Management estimated cash needs for the 12 months following the filing at $5–6 million for SG&A and $14–16 million for R&D, and stated available cash and investments should fund operations for more than 12 months from the filing date. The company is evaluating equity or debt offerings and potential strategic, licensing, or marketing arrangements.
- The company expects operating losses to continue. Its clinical-stage programs face development and regulatory uncertainty, and it has no product revenue. Management noted that COVID-19 had limited impact on Q1 results but could not predict future effects.
- Commitments included approximately $13.0 million under manufacturer statements of work and change orders, of which $8.4 million had been incurred and $4.6 million was in process during 2022. The University of Minnesota research agreement has a fixed total cost of $2.1 million; $1.1 million had been expensed through March 31.
- Disclosure controls were deemed ineffective due to material weaknesses involving segregation of duties, executive-override risk, and insufficient accounting and reporting procedures. Remediation efforts included hiring an experienced CFO and engaging a forensic accountant; that review was ongoing.
- A $425,000 settlement of litigation over a license agreement was paid on March 4, 2022. After quarter-end, the company received and cancelled 1,845,000 shares from its former CEO in settlement of its claims.
Important facts for investors to verify
- Whether the stated cash runway remains achievable given quarterly operating cash use, planned R&D spending, and manufacturer commitments.
- Progress, costs, and financing needs for clinical and preclinical programs, including the TriKE platform and manufacturer work.
- Status and outcome of the forensic accountant’s review and remediation of the disclosed material weaknesses.
- The manufacturer payable concentration and timing of the remaining contractual commitments.
- Share-count changes: 32,345,717 common shares were reported outstanding at March 31, while 30,500,717 were reported outstanding at May 16, following the post-quarter share cancellation.