GT Biopharma, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Dollar figures below are in millions unless stated otherwise. GT Biopharma is a clinical-stage biopharmaceutical company developing cancer immunotherapies based on its TriKE and Dual Targeting TriKE platforms. It has no approved products and reported no revenue.
Financial performance and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $1.36 | $2.74 | $5.11 | $5.97 |
| Selling, general and administrative | $1.76 | $4.28 | $5.30 | $9.51 |
| Operating loss | $3.12 | $7.02 | $10.41 | $15.48 |
| Net loss | $2.42 | $6.88 | $4.64 | $15.30 |
| Basic and diluted loss per share | $0.06 | $0.22 | $0.12 | $0.48 |
- At September 30, cash and cash equivalents were $2.65 and short-term investments were $13.37, totaling about $16.01. Total current assets were $16.05 and current liabilities were $5.09, for working capital of approximately $10.96. Stockholders’ equity was $10.01.
- Cash used in operating activities was $6.81 for the first nine months, versus $10.92 in the prior-year period. Investing activities used $2.49, while financing provided $6.27, principally from the January 2023 stock and warrant offering. Cash declined by $3.02 to $2.65 over the period.
- The filing reports no conventional interest-bearing debt at September 30; liabilities included accounts payable and accrued expenses, lease obligations, and a $1.05 warrant liability. Accounts payable totaled $3.97, including $3.14 due to a third-party manufacturer.
- Margins are not meaningful because the company had no revenue. The filing does not provide a clear gross-margin measure.
Changes versus prior periods and unusual items
- Operating expenses declined year over year: nine-month R&D fell about $0.86 and SG&A fell $4.21. Management attributed lower R&D primarily to reduced in-house staffing, partly offset by consultant costs; lower SG&A reflected reduced stock compensation, professional and legal fees, investor-relations costs, and payroll.
- The nine-month net loss improvement was substantially affected by non-operating and noncash items, including a $4.80 gain from revaluing warrant liabilities and a $0.55 gain on settling payables with shares. Interest income increased to $0.60 from $0.15. These items do not represent product revenue or operating cash generation.
- Common shares outstanding increased from 32.72 million at December 31, 2022 to 41.42 million at September 30, 2023. The company raised $6.5 million gross in a January private placement and issued shares to settle payables. It also had 9.15 million warrants and 3.74 million options outstanding at quarter-end.
Outlook, development plans, and risks
- Management estimated cash needs for the 12 months following the filing date of $3–4 million for SG&A and $10–12 million for R&D, and stated that cash and short-term investments should fund operations for more than 12 months. The filing also notes that additional financing may be needed and cannot be assured on acceptable terms; absent sufficient funding, the company may delay, reduce, or eliminate discretionary spending.
- GTB-3650, a next-generation CD33-targeted TriKE for AML and high-risk MDS, had completed preclinical studies and produced a cGMP batch. Management said it was preparing an IND submission in the second half of 2023. GTB-5550, targeting B7-H3-positive solid tumors, was progressing through preclinical work; the company had filed a Pre-IND package with the FDA and initiated GMP manufacturing.
- The company discontinued further clinical development of first-generation GTB-3550 and is replacing it with GTB-3650. Its scientific research agreement with the University of Minnesota expired June 30, 2023; the parties were negotiating a replacement and expected to finalize it by December 15, 2023. The filing describes a fixed project sum of $2.1 million and $2.1 million of cumulative expense recorded by quarter-end.
- Key risks include ongoing losses, reliance on external financing, clinical and regulatory uncertainty, dependence on a third-party manufacturer, and possible inflation, supply-chain, and broader economic disruptions. The company identified significant vendor concentration and reported $3.14 million payable to its manufacturer.
- Legal matters include a former interim CEO’s retaliation complaint, with outcome and potential losses not estimable at this stage; an arbitration decision pending in the company’s dispute with a former CFO; and a dispute over conversion shares claimed by TWF Global and Z One LLC. TWF dismissed its California complaint without prejudice; the company filed an interpleader action in New York. The company says it intends to defend the matters.
- Management reported disclosure controls and internal control over financial reporting as effective at September 30, 2023, while noting ongoing remediation of previously disclosed material weaknesses.
Most important facts for investors to verify
- Whether the company’s roughly $16.01 million of cash and investments and stated runway remain sufficient against its projected $13–16 million of annual cash needs.
- Timing and outcome of the GTB-3650 IND submission and the next regulatory and manufacturing milestones for GTB-5550.
- Actual operating cash burn and the extent to which reported loss reductions depend on warrant revaluation gains and other noncash or nonrecurring items.
- Potential dilution from outstanding warrants and options, and the terms and availability of future financing.
- Resolution of the University of Minnesota research agreement and the legal proceedings, including any resulting costs or obligations.
- Reconcile figures in the MD&A with the financial statements: the statements report nine-month 2023 R&D of $5.11 million and net loss of $4.64 million, while some MD&A passages give different amounts.