ITEM
1. FINANCIAL STATEMENTS
GREENWICH
LIFESCIENCES, INC.
CONSOLIDATED BALANCE
SHEETS
AS
OF MARCH 31, 2023 AND DECEMBER 31, 2022 (UNAUDITED)
See
accompanying notes to unaudited financial statements.
GREENWICH
LIFESCIENCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR
THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (UNAUDITED)
See
accompanying notes to unaudited financial statements.
GREENWICH
LIFESCIENCES, INC.
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR
THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (UNAUDITED)
See
accompanying notes to unaudited financial statements.
GREENWICH
LIFESCIENCES, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (UNAUDITED)
See
accompanying 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. In February 2023, Greenwich LifeSciences Europe Limited was incorporated
as a wholly owned subsidiary in Ireland. 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, 2022 and 2021 as reported in the Company’s Form 10-K have been omitted.
Leases
In
February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02-Leases (Topic 842), which significantly amends
the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported
previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was
previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company elected
to adopt this update using the modified retrospective transition method and prior periods have not been restated. The current monthly
rent is approximately $2,555. The month-to-month sub-lease is from a related party and the underlying lease expires in May of 2024. Any
right of use asset and liability is deemed to be nominal as of March 31, 2023 and December 31, 2022.
Basic
and Diluted Loss per Share
As
of March 31, 2023 and 2022, the Company had common stock equivalents related to warrants outstanding to acquire 20,174 shares of the
Company’s common stock.
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
| |
2023 | | |
2022 | |
| |
Three Months Ended March 31, | |
| |
2023 | | |
2022 | |
Basic and diluted net loss per share calculation: | |
| | | |
| | |
Net loss, basic | |
| (2,124,902 | ) | |
| (1,969,628 | ) |
Change in fair value of warrants | |
| — | | |
| — | |
Net loss, diluted | |
| (2,124,902 | ) | |
| (1,969,628 | ) |
Weighted average common shares outstanding, basic and diluted | |
| 12,848,165 | | |
| 13,063,710 | |
Net loss per common share, basic and diluted | |
$ | (0.17 | ) | |
$ | (0.15 | ) |
3.
Related Party Transactions
Unreimbursed
expenses have been accrued and incurred by management, which total $14,730 as of March 31, 2023 and $42,060 as of December 31, 2022.
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.
Accounts
payable includes accrued interest obligations to HJF which total $220,845 as of March 31, 2023 and December 31, 2022.
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 March 31, 2023, 893,181
shares of the 908,362
shares of the common stock grant, which includes an additional grant of 120
shares issued during the vesting period due to rounding up of fractional shares, had vested at approximately $2,009,657
value and 15,181
shares remain unvested and unrecognized at approximately $34,157
value. There were no shares vested during the three
months ended March 31, 2023.
On January 23, 2022,
the Board of Directors authorized the Company’s management to implement a stock repurchase program for up to $10
million of the Company’s common stock at any time. The term of the Board of Directors authorization of the repurchase program
is until March 31, 2023. The repurchase program may be suspended or discontinued at any time and will be funded using the
Company’s working capital. As of March 31, 2023, approximately 519,828
shares of the Company’s common stock has been repurchased and cancelled at an aggregate purchase price, including all
transactions costs, of approximately $7,536,216.
There were no shares repurchased during the three months ended March 31, 2023. As of March 31, 2022, approximately 269,828
shares of the Company’s common stock had been repurchased and cancelled at an aggregate purchase price, including all
transactions costs, of approximately $5,513,711.
On
January 23, 2022, the Board of Directors extended the lock-up of the shares owned by the Company’s directors, officers, and existing
pre-IPO investors to March 24, 2023 (30 months from date of the Company’s IPO) from March 24, 2022 (18 months from date of the
Company’s IPO). On November 30, 2022, the Board of Directors further extended the lock-up of the shares owned by the Company’s
directors, officers, and existing pre-IPO investors to December 31, 2023 (approximately 39 months from date of the Company’s IPO)
from March 24, 2023 (30 months from date of the Company’s IPO). During this period, current officers, directors and certain shareholders
will not be able to sell their shares of the Company’s common stock unless otherwise modified by the Board of Directors.
Warrants
At
March 31, 2023, outstanding warrants to purchase shares of common stock accounted for as equity or liabilities were as follows with an
aggregate intrinsic value as of March 31, 2023 of $133,199 based on the March 31, 2023 closing share price of $13.79:
Schedule of Outstanding Warrants
Shares Underlying | | |
| | |
|
Outstanding | | |
Exercise | | |
Expiration |
Warrants | | |
Price(1) | | |
Date(1) |
| | |
| | |
|
| 20,174 | | |
$ | 7.1875 | | |
September
24, 2025 |
| 20,174 | | |
| | | |
|
(1) |
The
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. |
Options
On June 22, 2022, prior to the close of the Nasdaq
market, 1,498,128 shares of common stock were granted to employees, consultants, and directors issuable upon exercise of outstanding stock
options under the Company’s 2019 Equity Incentive Plan at an exercise price of $7.63 per share, which was the most recent prior
closing share price on June 21, 2022. The options had a fair value on the grant date of $9,512,356, based on a risk-free rate of 3.2%
and an annualized volatility of 106%, of which $1,843,018 was expensed through March 31, 2023 and $7,669,338 will be expensed in the future
if and as vesting occurs. Vesting will be based on time of service over a four year period and certain additional performance milestones
for senior management, primarily related to the Phase III clinical trial.
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, 2022, filed on March 31, 2023. 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 clinical-stage biopharmaceutical company focused on the development of GP2, an immunotherapy to prevent breast cancer recurrences
in patients who have previously undergone 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. The combination of GP2 + GM-CSF is called GLSI-100. In a completed randomized,
single-blinded, placebo-controlled, multi-center Phase IIb clinical trial led by MD Anderson Cancer Center, no recurrences were observed
in patients treated with GLSI-100 in the HER2/neu 3+ adjuvant setting after median 5 years of follow-up, if the patients were
treated, followed, and remained disease free over the first 6 months, which is the time required to reach peak immunity and thus maximum
efficacy and protection (p = 0.0338). For the 146 patients who have been treated with GLSI-100 to date over 4 clinical trials, treatment
was well tolerated and no serious adverse events were observed related to the immunotherapy.
We
have commenced Flamingo-01, a Phase III clinical trial with Baylor College of Medicine as the global primary investigator site. Flamingo-01
is designed to evaluate the safety and efficacy of GLSI-100 in HER2/neu positive patients with residual disease or high-risk
pathologic complete response at surgery and who have completed both neoadjuvant and postoperative adjuvant trastuzumab based treatment.
To
date, we have not generated any revenue and we have incurred net losses. Our net losses were approximately $7.8 million and $4.6 million
for the years ended December 31, 2022 and 2021, respectively and $2.1 million and $1.9 million for the three months ended March 31,
2023 and 2022, respectively.
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 March 31, 2023 and 2022
Research
and Development Expenses
Research
and development expenses increased by $167,086, or 10%, to $1,827,907 for the three months ended March 31, 2023 from $1,660,821 for the
three months ended March 31, 2022. The increase was primarily the result of an increase in cash compensation, clinical, and manufacturing
expenses.
General
and Administrative Expenses
General
and administrative expenses increased by $84,793, or 26%, to $413,175 for the three months ended March 31, 2023 from $328,382 for the
three months ended March 31, 2022.
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 March 31, 2023 and December 31, 2022, our principal source of liquidity was our cash,
which totaled $11,911,219 and $13,468,026, 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 Three Months Ended March 31, 2023 and 2022
We
incurred net losses of $2,124,902 and $1,969,628 during the three month periods ended March 31, 2023 and 2022, respectively. The increase
was primarily the result of an increase in cash compensation, clinical, and manufacturing expenses.
Operating
Activities
Net
cash used in operating activities was $1,556,807 for the three months ended March 31, 2023 and $1,947,462 for the three months ended March
31, 2022.
Investing
Activities
We
did not use or generate cash from investing activities during the three months ended March 31, 2023 and March 31, 2022.
Financing
Activities
We
used a total of $0 and $5,513,711 cash for the stock buy back program, net of costs, during the three months ended March 31, 2023
and March 31, 2022, respectively.
Contractual
Obligations and Commitments
As
of March 31, 2023, we did not have any material contractual obligations, other than employment and shareholder agreements, license for
GP2 from HJF, and manufacturing and clinical trial obligations related to the planned Phase III clinical trial.
Off-Balance
Sheet Arrangements
As
of March 31, 2023, we did not have any off-balance sheet arrangements as described by Item 303(a)(4) of Regulation S-K.
Critical
Accounting Policies and Estimates
Our
financial statements are prepared in conformity with U.S. GAAP, which require the use of estimates, judgments and assumptions that affect
the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements, and
the reported amounts of expenses in the periods presented.
On
an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses and stock-based compensation.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts
of expenses that are not readily apparent from other sources. Actual results could differ from those estimates, particularly given the
significant social and economic disruptions and uncertainties associated with the ongoing coronavirus pandemic and the COVID-19 control
responses.
Recent
Accounting Pronouncements
In
June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-13, “Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU
2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration
of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years
beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2016-13 effective January
1, 2023. The Company determined that the update applied to trade receivables, but that there was no material impact to the consolidated
financial statements from the adoption of ASU 2016-13.
From
time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board or other standard setting bodies that
the Company adopts as of the specified effective date. The Company does not believe that the impact of recently issued standards that
are not yet effective will have a material impact on the Company’s financial position or results of operations upon adoption.
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.