ITEM
1. FINANCIAL STATEMENTS
GREENWICH
LIFESCIENCES, INC.
BALANCE
SHEETS
AS
OF SEPTEMBER 30, 2021 (UNAUDITED AND DECEMBER 31, 2020
See
accompanied notes to unaudited financial statements.
GREENWICH
LIFESCIENCES, INC.
STATEMENTS
OF OPERATIONS
FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED)
See
accompanied notes to unaudited financial statements.
GREENWICH
LIFESCIENCES, INC.
STATEMENTS
OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER, 2021 AND 2020 (UNAUDITED)
See
accompanied notes to unaudited financial statements.
GREENWICH
LIFESCIENCES, INC.
STATEMENTS
OF CASH FLOWS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED)
See
accompanied notes to unaudited financial statements.
GREENWICH
LIFESCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1.
Organization and Description of the Business
Greenwich
LifeSciences, Inc. (the “Company”) was incorporated in the state of Delaware in 2006 under the name Norwell, Inc. In March
2018, Norwell, Inc. changed its name to Greenwich LifeSciences, Inc. The Company is developing a breast cancer immunotherapy focused
on preventing the recurrence of breast cancer following surgery.
2.
Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally
accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with
the audited financial statements and notes thereto of the Company contained elsewhere herein.
In
the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial
position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the
interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that
would substantially duplicate the disclosures contained in the audited financial statements of the Company for the years ended December
31, 2020 and 2019 as reported in the Company’s Form 10-K have been omitted.
Basic
and Diluted Loss per Share
As
of September 30, 2021 and 2020, the Company has common stock equivalents related to underwriter warrants outstanding to acquire 100,870
shares of the Company’s common stock.
As
of September 30, 2021 and 2020, the Company has no common stock equivalents related to convertible preferred stock issued and outstanding.
The
following table sets forth the computation of basic and diluted net loss per common share for the periods indicated:
Schedule of Basic and Diluted Net Loss Per Common Share
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Nine Months Ended
September 30,
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2021
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2020
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Basic and diluted net loss per share calculation:
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Net loss, basic
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(2,209,871
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)
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(711,936
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)
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Change in fair value of warrants
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—
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—
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Net loss, diluted
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(2,209,871
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)
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(711,936
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)
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Weighted average common shares outstanding, basic and diluted
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12,826,249
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8,628,958
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Net loss per common share, basic and diluted
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$
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(0.17
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)
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$
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(0.08
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)
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3.
Related Party Transactions
Unreimbursed
expenses have been accrued and incurred by management, which total $159,274 as of September 30, 2021 and $59,367 as of December 31, 2020.
Between January 1, 2021 and March 15, 2021, the Company paid off the remaining related party loans of $155,154 and $120,000 to Snehal
Patel and the Kenneth Hallock and Annette Hallock Revocable Trust, respectively.
4.
Commitments and Contingencies
License
Obligation, Legal Expenses, and Manufacturing Agreements
The
Company entered into an exclusive license agreement with The Henry M. Jackson Foundation (“HJF”) in April 2009, as amended,
pursuant to which it acquired exclusive marketing rights to GP2, the Company’s product candidate. In consideration for such licensed
rights, the Company issued HJF 202,619 shares of the Company’s common stock valued at $0.267 per share, which is amortized over
15 years at $3,607 per year. Pursuant to the exclusive license agreement, the Company is required to pay an annual maintenance fee, milestone
payments and royalty payments based on sales of GP2 and to reimburse HJF for patent expenses related to GP2. The Company currently depends
on third-party contract manufacturers for all required raw materials, active pharmaceutical ingredients, and finished product candidate
for the Company’s clinical trials.
The
Company paid HJF an aggregate total of $434,732 in July 2021 related to annual maintenance fees and reimbursement of patent expenses.
Accounts payable includes accrued patent and license obligations to HJF, including accrued interest, plus accrued expenses for manufacturing
of GP2 for the upcoming Phase III clinical trial, which total $295,845 as of September 30, 2021 and $710,971 as of December 31, 2020.
Legal
Proceedings
From
time to time, the Company may be involved in disputes, including litigation, relating to claims arising out of operations in the normal
course of business. Any of these claims could subject the Company to costly legal expenses and, while management generally believes that
there will be adequate insurance to cover different liabilities at such time the Company becomes a public company and commences clinical
trials, the Company’s future insurance carriers may deny coverage or policy limits may be inadequate to fully satisfy any damage
awards or settlements. If this were to happen, the payment of any such awards could have a material adverse effect on the results of
operations and financial position. Additionally, any such claims, whether or not successful, could damage the Company’s reputation
and business. The Company is currently not a party to any legal proceedings, the adverse outcome of which, in management’s opinion,
individually or in the aggregate, could have a material adverse effect on our results of operations or financial position.
5.
Stockholders’ Equity
As
of September 30, 2021, 599,493 shares
of the 908,242 shares
of the common stock grant had vested at approximately $1,348,859 value
and 308,749 shares
remain unvested and unrecognized at approximately $694,685 value.
An aggregate of 220,068 shares
of common stock were vested at approximately $495,153
value in January through September 2021 in consideration for services rendered.
On
January 29, 2021, in connection with our December 2020 follow-on offering, the underwriter exercised its option to purchase 70,000 additional
shares of common stock at the public offering price of $40.00 per share for gross proceeds of $2,800,000 and net proceeds of $2,548,000,
after deducting underwriting discounts and commissions and offering expenses borne by the Company, which totaled $252,000.
Warrants
At
September 30, 2021, outstanding underwriter warrants to purchase shares of common stock accounted for as equity or liabilities were as
follows with an aggregate intrinsic value as of September 30, 2021 of $3,940,991 based on the September 30, 2021 closing share price
of $39.07:
Schedule
of Outstanding Warrants
Shares Underlying
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Outstanding
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Exercise
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Expiration
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Warrants
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Price(1)
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Date(1)
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100,870
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$
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7.1875
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September 24, 2025
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100,870
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(1)
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The
underwriter warrants are exercisable at any time and from time to time, in whole or in part, during a period commencing March 24,
2021 and expiring September 24, 2025. The exercise price of the warrants is $7.1875 per share or $6.9718 per share if the warrants
are exercised for cash within the first six months of the period in which they are exercisable.
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6.
Subsequent Events
On
October 19, 2021, the underwriter warrants were partially exercised resulting in the issuance of 80,696 shares of common stock and gross
proceeds to the Company of $562,596. As of October 19, 2021, warrants to purchase 20,174 shares of common stock remain outstanding.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking
Statements
This
Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding the future
financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The
words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,”
“intend,” “should,” “plan,” “expect,” and similar expressions, as they relate to us,
are intended to identify forward-looking statements. We have based these forward-looking statements largely on current expectations and
projections about future events and financial trends that we believe may affect our financial condition, results of operations, business
strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions.
In
addition, our business and financial performance may be affected by the factors that are discussed under “Risk Factors” in
the Annual Report on Form 10-K for the year ended December 31, 2020, filed on March 31, 2021. Moreover, we operate in a very competitive
and rapidly changing environment. New risk factors emerge from time to time and it is not possible for us to predict all risk factors,
nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any forward-looking statements.
You
should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances
reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
The
following discussion and analysis is qualified in its entirety by, and should be read in conjunction with, the more detailed information
set forth in the financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion
should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion
reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present
assessment of our management.
Overview
We are a biopharmaceutical
company that is developing GP2, an immunotherapy designed to prevent the recurrence of breast cancer following surgery. GP2 is a 9
amino acid transmembrane peptide of the HER2/neu protein, a cell surface receptor protein that is expressed in a variety of
common cancers, including expression in 75% of breast cancers at low (1+), intermediate (2+), and high (3+ or over-expressor)
levels. In a completed Phase IIb clinical trial led by MD Anderson Cancer Center, no recurrences were observed in the
HER2/neu 3+ adjuvant setting after median 5 years of follow-up, if the patient received the 6 primary intradermal injections
over the first 6 months. We are planning to commence a Phase III clinical trial shortly and are currently completing the last
steps to release GP2 drug product and to open clinical sites.
To
date, we have not generated any revenue and we have incurred net losses. Our net losses were approximately $1.9 million and $3.4 million
for the years ended December 31, 2020 and 2019, respectively and $2.2 million and $0.7 million for the nine months ended September 30,
2021 and 2020.
Our
net losses have resulted from costs incurred in developing the drug in our pipeline, planning and preparing for clinical trials and general
and administrative activities associated with our operations. We expect to continue to incur significant expenses and corresponding increased
operating losses for the foreseeable future as we continue to develop our pipeline. Our costs may further increase as we conduct clinical
trials and seek regulatory approval for and prepare to commercialize our product candidate. We expect to incur significant expenses to
continue to build the infrastructure necessary to support our expanded operations, clinical trials, commercialization, including manufacturing,
marketing, sales and distribution functions. We will also experience increased costs associated with operating as a public company.
Results
of Operations for the Three Months Ended September 30, 2021 and 2020
Research
and Development Expenses
Research
and development expenses increased by $499,065, or 316%, to $657,096 for the three months ended September 30, 2021 from $158,031 for
the three months ended September 30, 2020. The increase was primarily the result of an increase in compensation and manufacturing and
clinical expenses.
General
and Administrative Expenses
General
and administrative expenses increased by $110,756, or 112%, to $209,590 for the three months ended September 30, 2021 from $98,834 for
the three months ended September 30, 2020. The increase was primarily the result of an increase in costs for raising capital.
Results
of Operations for the Nine Months Ended September 30, 2021 and 2020
Research
and Development Expenses
Research
and development expenses increased by $1,036,881, or 226%, to $1,495,607 for the nine months ended September 30, 2021 from $458,726 for
the nine months ended September 30, 2020. The increase was primarily the result of an increase in compensation and manufacturing and
clinical expenses.
General
and Administrative Expenses
General
and administrative expenses increased by $471,920, or 186%, to $725,130 for the nine months ended September 30, 2021 from $253,210 for
the nine months ended September 30, 2020. The increase was primarily the result of an increase in costs for raising capital.
Liquidity
and Capital Resources
Since
our inception in 2006, we have devoted most of our cash resources to research and development and general and administrative activities.
We have not yet achieved commercialization of our product and have a cumulative net loss from our operations. We will continue to incur
net losses for the foreseeable future. Our financial statements have been prepared assuming that we will continue as a going concern.
We
will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through the sale
of equity and/or debt securities; however, there is no assurance that we will be successful at raising additional capital in the future.
If our plans are not achieved and/or if significant unanticipated events occur, we may have to further modify our business plan, which
may require us to raise additional capital. As of September 30, 2021 and December 31, 2020, our principal source of liquidity was our
cash, which totaled $28,905,993 and $28,660,375, respectively, and additional loans and accrued unreimbursed expenses from related parties.
Historically, our principal sources of cash have included proceeds from the sale of common stock and preferred stock and related party
loans. Our principal uses of cash have included cash used in operations. We expect that the principal uses of cash in the future will
be for continuing operations, funding of research and development, including our clinical trials, and general working capital requirements.
Cash
Flow Activities for the Nine Months Ended September 30, 2021 and 2020
We
incurred net losses of $2,209,871 and $711,936 during the nine month periods ended September 30, 2021 and 2020, respectively.
The increase was primarily the result of an increase in compensation, manufacturing and clinical trial expenses, and costs for raising
capital.
Operating
Activities
Net
cash used in operating activities was $2,027,228 for the nine months ended September 30, 2021 and $0 for the nine months ended September
30, 2020.
Investing
Activities
We
did not use or generate cash from investing activities during the nine months ended September 30, 2021 and September 30, 2020.
Financing
Activities
We
used and generated cash netting a total of $2,272,846 from financing activities during the nine months ended September 30, 2021 and $6,207,502
from financing activities during the nine months ended September 30, 2020.
Off-Balance
Sheet Arrangements
As
of September 30, 2021, we did not have any off-balance sheet arrangements as described by Item 303(a)(4) of Regulation S-K.
Critical
Accounting Policies
Stock-Based
Compensation
Compensation
expense related to warrants and stock granted to employees and non-employees is measured at the grant date based on the estimated fair
value of the award and is recognized on a straight-line basis over the requisite service period. Forfeitures are recognized as a reduction
of stock-based compensation expense as they occur. Stock-based compensation expense for an award with a performance condition is recognized
when the achievement of such performance condition is determined to be probable. If the outcome of such performance condition is not
determined to be probable or is not met, no compensation expense is recognized and any previously recognized compensation expense is
reversed.
Recent
Accounting Pronouncements
We
have evaluated the following recent accounting pronouncements through the date the financial statements were issued and filed with the
SEC and believe that none of them will have a material effect on our financial statements:
In
February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.
2016-02, “Leases: Topic 842” (“ASU 2016-02”), to supersede nearly all existing lease guidance under GAAP. The
guidance would require lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use
assets. ASU 2016-02 is effective for the Company in the first quarter of its fiscal year ending December 31, 2019 using a modified retrospective
approach with the option to elect certain practical expedients. The Company has no material leases, thus the adoption of ASU 2016-02
will have no material impact on the Company’s financial statements.
In
May 2016, the FASB issued ASU 2016-12, Revenue from Contracts from Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.
The amendments in this update affect the guidance in ASU 2014-09. The core principle of the guidance in Topic 606 is that an entity should
recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or services. The amendments in ASU 2016-12 do not change the core principle
of the guidance in Topic 606, but instead affect only the narrow aspects noted in Topic 606. Topic 606 became effective for the Company
on December 1, 2018. The Company has no revenue, thus the adoption of ASU 2016-12 will have no material impact on the Company’s
financial statements.
In
June 2018, the FASB issued ASU 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment
Accounting,” which modifies the accounting for share-based payment awards issued to nonemployees to largely align it with the accounting
for share-based payment awards issued to employees. ASU 2018-07 is effective for us for annual periods beginning January 1, 2019. The
Company evaluated ASU 2018-07 and determined that the adoption of this new accounting standard did not have a material impact on the
Company’s financial statements.
JOBS
Act
On
April 5, 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take
advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (“Securities
Act”) for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay
the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We
have chosen to take advantage of the extended transition periods available to emerging growth companies under the JOBS Act for complying
with new or revised accounting standards until those standards would otherwise apply to private companies provided under the JOBS Act.
As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates for
complying with new or revised accounting standards.
Subject
to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions,
including, without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial
reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the Public
Company Accounting Oversight Board (“PCAOB”) regarding mandatory audit firm rotation or a supplement to the auditor’s
report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We
will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total
annual gross revenues of $1.07 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the
completion of our initial public offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during
the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.