Greenwich LifeSciences, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. The company is a clinical-stage biopharmaceutical developer of GP2, an immunotherapy intended to prevent breast cancer recurrence following surgery. The unaudited financial statements are prepared under U.S. GAAP.
Financial results and liquidity
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| Revenue | $0 in 2021 and 2020 | $0 in 2021 and 2020 |
| Research and development | $657,096 vs. $158,031 | $1,495,607 vs. $458,726 |
| General and administrative | $209,590 vs. $98,834 | $725,130 vs. $253,210 |
| Total operating expenses | $866,686 vs. $256,865 | $2,220,737 vs. $711,936 |
| Net loss | $863,118 vs. $256,865 | $2,209,871 vs. $711,936 |
| Loss per share, basic and diluted | $0.07 vs. $0.03 | $0.17 vs. $0.08 |
There is no revenue or gross profit, so operating margins are not meaningful. For the nine months, operating cash use was $2,027,228, compared with $0 reported in the prior-year period. Financing provided $2,272,846, including $2,548,000 of net proceeds from the underwriter’s exercise of the follow-on offering greenshoe, partly offset by repayment of $275,154 in related-party loans. Cash increased by $245,618 to $28,905,993.
At September 30, cash was the principal current asset; total assets were $28,919,511. Current and total liabilities were $455,119, comprising accounts payable and accrued interest of $295,845 and unreimbursed expenses of $159,274. No related-party loan balance remained, and the filing reports no off-balance-sheet arrangements. Stockholders’ equity was $28,464,392. The company reported a cumulative deficit of $31,286,824 and states it will require additional capital for long-term operating needs.
Changes versus prior comparable periods
- Nine-month net loss rose to $2.21 million from $0.71 million. Management attributed the increase primarily to higher compensation, manufacturing and clinical-trial expenses, and capital-raising costs.
- Nine-month R&D expense increased 226% and G&A expense increased 186%; for Q3, R&D rose 316% and G&A rose 112%. Management attributed R&D growth to compensation and manufacturing and clinical expenses, and G&A growth to capital-raising costs.
- Cash was $28.91 million, up from $28.66 million at December 31, 2020. Total liabilities declined from $1.05 million, primarily reflecting repayment of related-party loans.
- Common shares outstanding increased from 12,703,541 at December 31, 2020 to 12,993,609 at September 30, 2021. The filing reports 13,123,377 shares issued and outstanding as of November 1, 2021.
Outlook, risks, and unusual items
- Management planned to commence a Phase III clinical trial “shortly,” while completing steps to release GP2 drug product and open clinical sites. No specific financial guidance, trial start date, or cash-runway estimate is provided.
- The company expects continued losses and significant expenses as it develops GP2, conducts clinical trials, and builds manufacturing and operating capabilities. It expects to seek additional capital through equity and/or debt offerings, with no assurance of success. The financial statements assume the company continues as a going concern.
- The company depends on third-party contract manufacturers for clinical-trial materials and product. It paid the Henry M. Jackson Foundation $434,732 in July 2021 for annual maintenance fees and patent expense reimbursement; accounts payable also included accrued license, patent, interest, and manufacturing obligations.
- Management concluded disclosure controls and procedures were not effective at September 30, 2021 because of material weaknesses: inadequate segregation of duties due to limited personnel and insufficient written accounting, IT, and financial-reporting policies and procedures. A remediation plan was being developed; the filing reports no material quarterly change in internal control over financial reporting.
- No material legal proceedings were reported, and the company said there were no material changes to the risk factors in its 2020 Form 10-K. The filing identifies potential clinical, regulatory, financing, manufacturing, and insurance-related risks.
- Subsequent event: On October 19, 2021, underwriter warrants were partially exercised, issuing 80,696 shares for gross proceeds of $562,596; warrants for 20,174 shares remained outstanding as of that date.
Important facts for investors to verify
- Whether the Phase III trial began as planned, and the timing and costs of drug-product release and site activation.
- Expected cash runway and financing needs relative to projected clinical, manufacturing, and operating expenses.
- Progress in remediating the disclosed material weaknesses in financial reporting controls.
- Current accounts payable and accrued manufacturing/license obligations, and the status of third-party manufacturing arrangements.
- Post-quarter warrant exercises, resulting share count, and any further dilution or capital raised.