Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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In addition to historical information, the following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements as defined under
Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe harbor created therein for forward-looking statements. Such statements include, but are not limited to, statements concerning our anticipated operating
results, research and development, clinical trials, regulatory proceedings, and financial resources, and can be identified by use of words such as, for example, “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and
“would,” “should,” “could” or “may.” All statements, other than statements of historical facts, included herein that address activities, events, or developments that the Company expects or anticipates will or may occur in the future, are
forward-looking statements, including statements regarding: plans and expectations regarding clinical trials; plans and expectations regarding regulatory approvals; our strategy and expectations for clinical development and commercialization of
our products; potential strategic partnerships; expectations regarding the effectiveness of our products; plans for research and development and related costs; statements about accounting assumptions and estimates; expectations regarding
liquidity and the sufficiency of cash to fund currently planned operations through at least December 31, 2024; our commitments and contingencies; and our market risk exposure. Forward-looking statements are based on current expectations,
estimates and projections about the industry and markets in which Galectin Therapeutics operates, and management’s beliefs and assumptions. These statements are not guarantees of future performance and involve certain known and unknown risks and
uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties are related to and include, without limitation,
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our early stage of development,
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we have incurred significant operating losses since our inception and cannot assure you that we will generate revenue or profit,
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our dependence on additional outside capital,
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we may be unable to enter into strategic partnerships for the development, commercialization, manufacturing and distribution of our proposed product candidates,
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uncertainties related to any litigation, including shareholder class actions and derivative lawsuits filed,
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uncertainties related to our technology and clinical trials, including expected dates of availability of clinical data,
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we may be unable to demonstrate the efficacy and safety of our developmental product candidates in human trials,
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we may be unable to improve upon, protect and/or enforce our intellectual property,
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we are subject to extensive and costly regulation by the U.S. Food and Drug Administration (FDA) and by foreign regulatory authorities, which must approve our product candidates in development and could restrict the sales and marketing
and pricing of such products,
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competition and stock price volatility in the biotechnology industry,
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limited trading volume for our stock, concentration of ownership of our stock, and other risks detailed herein and from time to time in our SEC reports,
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the impact resulting from the outbreak of COVID-19, which has delayed and may continue to delay our clinical trial and development efforts, as well as the impact that COVID-19 has on the volatility of the capital market and our ability
to access the capital market and,
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other risks detailed herein and from time to time in our SEC reports, including our Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2021, and our subsequent SEC filings.
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The following discussion should be read in conjunction with the accompanying consolidated financial statements and notes thereto of Galectin Therapeutics appearing elsewhere herein.
Overview
We are a clinical stage biopharmaceutical company engaged in drug research and development to create new therapies for fibrotic disease, cancer and selected other diseases. Our drug candidates are based on our
method of targeting galectin proteins, which are key mediators of biologic and pathologic functions. We use naturally occurring, readily-available plant products as starting material in manufacturing processes to create proprietary, patented
complex carbohydrates with specific molecular weights and other pharmaceutical properties. These complex carbohydrate molecules are appropriately formulated into acceptable pharmaceutical formulations. Using these unique carbohydrate-based
candidate compounds that largely bind and inhibit galectin proteins, particularly galectin-3, we are undertaking the focused pursuit of therapies for indications where galectin proteins have a demonstrated role in the pathogenesis of a given
disease. We focus on diseases with serious, life-threatening consequences and those where current treatment options are limited specifically in NASH (non-alcoholic steatohepatitis) with cirrhosis and certain cancer indications. Our strategy is to
establish and implement clinical development programs that add value to our business in the shortest period of time possible and to seek strategic partners when one of our programs becomes advanced and requires significant additional resources.
Our lead galectin-3 inhibitor is belapectin (GR-MD-02), which has been demonstrated in preclinical models to reverse liver fibrosis and cirrhosis and in clinical studies to decrease portal
hypertension and prevent its complication: the development of esophageal varices. Belapectin has the potential to treat many diseases due to galectin-3’s involvement in multiple key biological pathways such as fibrosis, immune cell function and
immunity, cell differentiation, cell growth, and apoptosis (cell death). The importance of galectin-3 in the fibrotic process is supported by experimental evidence. Animals with the galectin-3 gene “knocked-out” can no longer develop fibrosis in
response to experimental stimuli compared to animals with an intact galectin-3 gene. We are using our galectin-3 inhibitor to treat advanced liver fibrosis and liver cirrhosis in NASH patients. We have completed two Phase 1 clinical studies, a
Phase 2 clinical study in NASH patients with advanced fibrosis (NASH-FX) and a second Phase 2b clinical trial in NASH patients with compensated cirrhosis and portal hypertension (NASH-CX).
We are now engaged in a large, global Phase 2b/3 clinical trial. Our study protocol was filed with the FDA on April 30, 2020, for a seamless adaptively-designed Phase 2b/3 clinical study, the
NAVIGATE trial (formerly called NASH-RX), evaluating the safety and efficacy of our galectin-3 inhibitor, belapectin, for the prevention of esophageal varices in patients with non-alcoholic steatohepatitis (NASH) cirrhosis (Further details are
available at www.clinicaltrials.gov under study NCT04365868); this study began enrolling patients in Q2-2020. In September 2020, the Company received a letter from the FDA providing comments, asking questions and providing guidance on
various aspects of the ongoing NAVIGATE trial. These comments were addressed, and the study proceeded accordingly.
Additionally, a study protocol entitled “A Single-dose, Open-label, Pharmacokinetic Study of Belapectin (GR-MD-02) in Subjects With Normal Hepatic Function and Subjects With Varying Degrees of
Hepatic Impairment” has been filed with the FDA to examine the effects of the drug in subjects with normal hepatic function and subjects with varying degrees of hepatic impairment (study details are listed under study NCT04332432 on www.clinicaltrials.gov);
this study became fully enrolled in February 2022.
We endeavor to leverage our scientific and product development expertise as well as established relationships with outside sources to achieve cost-effective and efficient drug development. These
outside sources, amongst others, provide us with expertise in preclinical models, pharmaceutical development, toxicology, clinical trial operations, pharmaceutical manufacturing, including physical and chemical drug characterization, and
commercial development. We also have established through our majority-owned joint venture subsidiary, Galectin Sciences LLC, a discovery program developing small molecules that inhibit galectin-3 and may afford alternative drug delivery (e.g.,
oral) and as a result expand the potential uses of galectin-3 inhibitor beyond belapectin. Three chemical series of composition of matter patents have been filed.
We are also pursuing a development pathway to clinical enhancement and commercialization for our lead compounds in immuno-oncology following our previous successful collaboration with Providence
Portland Cancer Center. We filed a new IND with FDA for advanced or metastatic head and neck cancer using belapectin in combination with a checkpoint (PD-1) inhibitor and received a Study May Proceed letter. The proposed phase 2 trial
commencement is dependent on timing of financing. All of our proposed products are presently in development, including pre-clinical and clinical trials.
Our Drug Development Programs
Galectins are a class of proteins that are made by many cells in the body, but predominantly in cells of the immune system. As a group, these proteins are able to bind to
sugar molecules that are attached to other proteins, called glycoproteins that are responsible for various functions within the body, most notably inflammation and fibrosis. Galectins, in particular galectin-3,act as a molecular glue, bringing
together molecules that have sugars on them.
Galectin-3, is known to be markedly increased in a number of important diseases including inflammatory diseases leading to organs scarring (e.g. liver, lung, kidney, and heart) and cancers. The increase in galectin-3
, by creating the so-called galectin-3 fibrosome, promotes the progression of multiple diseases. Published data substantiating the importance of galectin-3 in the fibrotic process arises from gene knockout experiments in animal studies. For
instance, mice genetically altered to eliminate the galectin-3 gene, and thus unable to produce galectin-3, do not develop liver fibrosis in response to toxic insult to the liver.
We have one new proprietary chemical entity (NCE) in development, belapectin, which has shown promise in preclinical and clinical studies for the treatment of liver fibrosis, severe skin
disease, and cancer (melanoma and head and neck squamous cell carcinoma). Currently we are focusing on development of belapectin for the treatment of NASH cirrhosis and Head and neck cancer. Belapectin is a proprietary, patented compound derived
from natural, plant-based, starting materials, which, following chemical processing, exhibits the properties of binding to and inhibiting galectin-3.
Indication
Fibrosis
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Drug
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Status
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NASH with Advanced Fibrosis:
NASH-CX trial and NASH-FX trial
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belapectin
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IND submitted January 2013. Results from the Phase 1 clinical trial were reported in 2014, with final results reported in January 2015.
The Phase 2 NASH FX trial was designed for patients with advanced fibrosis but not cirrhosis. Its principal purpose was to evaluate various imaging modalities. The NASH FX trial top line data was reported in September 2016
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The Phase 2 NASH CX trial, was designed for patients with well compensated cirrhosis. The NASH CX trial top line data was reported in December 2017 and was published in Gastroenterology in
2020.
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NASH NAVIGATE
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Based on FDA feedback, the NAVIGATE trial is an adaptive Phase 2b/3 trial for the prevention of esophageal varices in NASH patients with compensated cirrhosis. A Phase 2b interim efficacy analysis will be incorporated to confirm
previous Phase 2 data, select an optimal dose and reaffirm the risk/benefit of belapectin. The Phase 3 end of study analysis will evaluate the development of esophageal varices as the primary outcome of efficacy and a composite clinical
endpoint including progression to varices requiring treatment as a key secondary outcome of efficacy. See www.clinicaltrials.gov NCT04365868. The first patient was randomized in the third quarter of 2020.
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A hepatic impairment is being conducted in subjects with normal hepatic function and subjects with varying degrees of hepatic impairment (CF: www.clinicaltrials.gov NCT04332432) and began enrolling patients in the second quarter of
2020.
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Cancer Immunotherapy
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Melanoma, Head, Neck Squamous Cell
Carcinoma (HNSCC)
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belapectin
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Investigator IND study in process. A Phase 1B study began in Q-1 2016. Early data was reported in February 2017 and additional data were reported in September 2018. Data from an extension trial was reported
in July 2021 for additional melanoma and HNSCC patients which provided a rational basis for additional trials which the Company is exploring. In the third quarter of 2022, the Company announced its IND application for belapectin in
combination with a checkpoint inhibitor for the treatment of HNSCC was filed and a Study May Proceed letter was received from FDA. The Company is reviewing options for financing this trial which will determine when such trial could
commence.
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Liver cirrhosis. Belapectin is our lead product candidate for treatment of compensated NASH cirrhosis in patients with portal hypertension. Our preclinical data show that belapectin has a significant therapeutic effect on liver fibrosis as shown in several relevant animal models. In addition, in NASH animal models, belapectin has been shown to reduce liver fat,
inflammation, portal pressure, and ballooning degeneration (death of liver cells). Therefore, we chose belapectin as the lead candidate in a development program targeted initially at fibrotic liver disease associated with non-alcoholic
steatohepatitis (NASH). In January 2013, an Investigational New Drug (“IND”) was submitted to the FDA with the goal of initiating a Phase 1 study in patients with NASH and advanced liver fibrosis to evaluate the safety of belapectin and
pharmacodynamics biomarkers of disease. On March 1, 2013, the FDA indicated we could proceed with a US Phase 1 clinical trial for belapectin with a development program aimed at obtaining support for a proposed indication of belapectin for
treatment of NASH with advanced fibrosis. The Phase 1 trial was completed and demonstrated that belapectin up to 8 mg/kg Lean Body Mass (LBM), i.v. was safe and well tolerated.
Additionally, an open label drug-drug phase 1 interaction study was completed in healthy volunteers during the second quarter of 2015 with belapectin and it showed that with 8 mg/kg LBM dose of
belapectin and 2 mg/kg LBM dose of midazolam there was no drug-drug interaction, and no serious adverse events or drug-related adverse events were observed. The secondary objective was to assess the safety and tolerability of belapectin when
administered concomitantly with midazolam.
Our Phase 2 program in fibrotic disease consisted of two separate human clinical trials. The main clinical trial was the Phase 2b NASH-CX study for one year for patients with NASH with
compensated cirrhosis and portal hypertension, which began enrolling patients in June 2015. This study was a randomized, placebo-controlled, double-blind, parallel-group Phase 2b trial to evaluate the safety and efficacy of belapectin for
treatment of liver fibrosis and resultant portal hypertension in NASH patients with compensated cirrhosis. A smaller, exploratory NASH-FX trial was conducted to explore potential use of various non-invasive imaging techniques in NASH patients
with advanced fibrosis but not cirrhosis.
NASH-FX Trial: The NASH-FX trial was a Phase 2a pilot trial for patients with NASH and advanced fibrosis that explored use of three non-invasive imaging technologies. It was
a short, single site, four-month trial in 30 NASH patients with advanced fibrosis (F3) randomized 1:1 to either 9 bi-weekly doses of 8 mg/kg LBM of belapectin or placebo. The trial did not meet its primary endpoint as measured using
multi-parametric magnetic resonance imaging (LiverMultiScan(R), Perspectum Diagnostics). The trial also did not meet secondary endpoints that measure liver stiffness
as a surrogate for fibrosis using, magnetic resonance-elastography and FibroScan® score. With a four-month treatment period and a small number of patients per arm
the study was not powered to demonstrate efficacy results in established advanced liver fibrosis. In the trial however, belapectin was found to be safe and well tolerated with no serious adverse events and showing evidence of a pharmacodynamic
effect. These results provided support for further development in NASH.
NASH-CX Trial: The NASH-CX trial was a larger multi-center clinical trial that explored the use of belapectin for the treatment of patients with well-compensated NASH cirrhosis and portal hypertension. Enrollment was completed in September 2016, and a total of 162 patients at 36 sites in the United States were randomized to receive either 2 mg/kg LBM
of belapectin, 8 mg/kg LBM of belapectin or placebo. Approximately 50% of patients at baseline had esophageal varices (a complication of portal hypertension). The primary endpoint was a reduction in hepatic venous pressure gradient (HVPG), a
hemodynamic measure that estimates portal hypertension. Patients received an infusion of belapectin or placebo every other week for one year and were evaluated to determine the change in HVPG as compared with placebo. Secondary or exploratory
endpoints included evaluation of fibrosis on liver biopsy, measurement of liver stiffness (FibroScan) and assessment of liver metabolism (13C-methacetin breath
test). Top line data readout was reported in December 2017. The study demonstrated a favorable safety profile and clinically meaningful efficacy results in patients without esophageal varices at baseline as demonstrated by a decrease in portal
pressure associated with the prevention of development of varices when compared to placebo.
In the total patient population, the primary endpoint HVPG showed a trend toward benefit with belapectin treatment, but the difference from placebo was not statistically significant. The mean
change in HVPG of placebo from baseline to week 54 was 0.3 mm Hg. The mean change in HVPG from baseline was -0.37 and -0.42 for the 2 mg/kg LBM dose and 8 mg/kg LBM dose of belapectin, respectively.
In those NASH cirrhosis patients with portal hypertension who have not yet developed esophageal varices at baseline (about 50% of the total population), there was a statistically significant
effect of the 2 mg/kg LBM dose of belapectin on the absolute change in HVPG (-1.08 mm Hg, p<0.01). The effect of the 8 mg/Kg LBM dose of belapectin on absolute or percent change in HVPG from baseline to week 54 was not significant.
Also because of the clinical relevance of this population, a responder analysis was performed on those patients without esophageal varices at baseline. Analysis was performed looking at two
groups: those with an equal to or greater than 2 mm Hg decrease in HVPG from baseline or those with an equal to or greater than 2 mm Hg and a greater than or equal to 20% decrease in HVPG from baseline. In both cases, the change observed in the
belapectin 2 mg/kg LBM group was statistically significant (p<0.01) while that of the 8 mg/kg LBM group was not.
Over the 54-week treatment period, in patients without varices at baseline there were also a statistically significantly fewer new varices that developed in the belapectin treatment groups (0%
and 4% in the 2 mg/kg LBM and the 8 mg/kg LBM, respectively) vs placebo (18%). This meant that the decrease seen in portal pressure was associated with a decreased incidence of esophageal varices. The results were noticeable in the belapectin 2
mg/Kg LBM group as statistical significance against placebo was achieved for both parameters. As esophageal varices can lead to hemorrhagic complication, which can be fatal, and are a severe complication of liver cirrhosis, we believe the
prevention of esophageal varices may represent a clinically relevant measure of clinical efficacy in patients with NASH cirrhosis.
The major conclusions from the NASH-CX trial results were that: (i) belapectin had a statistically significant and clinically meaningful effect in improving HVPG vs placebo in patients with NASH
cirrhosis who did not have esophageal varices at baseline, (ii) Belapectin in the total patient population was associated with a statistically significant improvement in hepatocyte ballooning (ie cell death), (iii) There was a statistically
significant reduction (p=0.02) in the development of new esophageal varices in drug-treated patients compared to placebo. We believe that the prevention of esophageal varices is a clinically relevant endpoint related to patient outcomes, (iv)
While there was a drug effect in both the 2 mg/kg LBM and 8 mg/kg LBM groups on the development of varices and liver biopsy there was a consistently greater and statistically significant effect of the 2 mg/kg LBM dose of belapectin, (v)
belapectin appears to be safe and well tolerated in this one year clinical trial, a feature that is of prime importance for a cirrhotic population and (vi) This is the first large, randomized clinical trial to demonstrate a clinically meaningful
improvement in portal hypertension in patients with compensated NASH cirrhosis who have not yet developed esophageal varices.
Further information and details on the NASH-CX results is available in public presentations posted to our website and filed with the SEC and in a peer reviewed publication in Gastroenterology 2020;158:1334–1345.
NASH NAVIGATE Trial: Building on the experience of the NASH-CX trial, the NAVIGATE Trial is a seamless adaptively-designed Phase 2b/3 clinical study evaluating the safety and efficacy of our galectin-3 inhibitor, belapectin, for the prevention of esophageal varices in patient with non-alcoholic steatohepatitis (NASH) cirrhosis. The major
features of this innovative Phase 2b/3 study design are: i) In patients with NASH cirrhosis and clinical signs of portal hypertension but without esophageal varices at baseline, this trial will assess the effect of belapectin on the incidence of
new varices (the primary endpoint) – as well as assessing the effect of belapectin on the incidence of additional clinically significant cirrhosis-related outcomes (a key secondary efficacy endpoint), (ii) The study targets NASH patients with a
clearly identified unmet medical need: patients with compensated cirrhosis who have clinical signs of portal hypertension and, thus, are at risk of developing esophageal varices, a potentially life-threatening complication of cirrhosis (bleeding
varices are a cause of death in about one-third of cirrhotic patients). There is currently no approved treatment for preventing varices in these patients. In addition, the development of esophageal varices reflects the progression of hepatic
cirrhosis and thus portends the development of other cirrhosis complications such as ascites, hepatic encephalopathy, and liver failure, and (iii) During the first 18 months, two belapectin dose levels (2 mg/kg LBM and 4 mg/kg LBM) will be
compared to placebo (phase 2b). Then, at the interim analysis (IA), the best belapectin dose will be selected, based on efficacy and safety, for continued evaluation (Phase 3). The belapectin dose selected for the phase 2b/3 were based on the
analysis of the NASH-CX trial. Prior belapectin clinical studies have also indicated the good tolerance and safety profile of belapectin with doses of up to 8 mg/kg LBM for up to 52 weeks, an important feature to inform the future risk benefit
analysis in patients with NASH cirrhosis.
The study design provides for a pre-specified interim analysis (IA). The IA of efficacy and safety data will be conducted after all planned subjects in Phase 2b component have completed at least 78 weeks (18
months) of treatment and a second esophago-gastro-duodeno endoscopic assessment. The purpose of the IA is to allow potential seamless adaptive modifications of the study, including: (1) the selection of the optimal dose of belapectin for Phase 3,
(2) the re-estimation of the study sample size for Phase 3 portion of the trial, (3) the re-evaluation of the randomization ratio for the Phase 3 portion of the trial, (4) the refinement of the inclusion and exclusion criteria for the Phase 3
portion of the trial, including the cirrhosis status, (5) and/or termination of the study for overwhelming efficacy or for futility.
The trial design also includes a blinded sample size re-estimation (“SSR”) during the Phase 2b, prior to the IA, to allow for potential sample size readjustment. The SSR will be conducted when
50% of the patients have completed 18 months of therapy. This will allow us to confirm the underlying assumption regarding the rate of varices development, currently estimated from our prior Phase 2b trial (NASH-CX). The study design also
minimizes invasive testing requirements, such as the measurement of HVPG or repeated liver biopsies, which we believe are particularly risky in patients with portal hypertension and will facilitate enrollment and retention of patients. It also
provides for a seamless transition of patients from the Phase 2b component into the phase 3 stage, including the potential addition of new patients. The trial design preserves the surrogate end-point concepts (development of new varices versus
variceal hemorrhage) previously discussed with FDA.
We believe that these adaptations taken together are innovative and optimize conduct of the NAVIGATE trial with a clinically relevant primary outcome giving belapectin the best opportunity to
show a positive therapeutic effect to address an unmet medical need. As a testimony of this innovation, the NAVIGATE trial design was presented to the hepatology community and featured during the last meeting of the American Association for the
Study of Liver Diseases, in November 2021. If the IA results of the NAVIGATE trial are compelling, there could be the potential for accelerated FDA approval and/or partnership opportunity with a pharmaceutical company.
In the Phase 3 component of this trial, as proposed in the protocol, the primary endpoint remain the development of varices. Secondary endpoints include a composite clinical outcomes endpoint,
including varices requiring treatment (development of large varices or varices with a red wale), decompensating events, all-cause mortality, MELD score increase, liver transplant. Also, NASH non-invasive biomarkers will be evaluated. To target a
population at risk of developing esophageal varices, patient selection will be based on clinical signs of portal hypertension, including, but not limited to, a low platelet count, an increased spleen size and/or evidence of abdominal collaterals
circulation.
The focus and goal of the therapeutic program is to stop the progression of and/or reverse portal hypertension and thereby prevent the development of varices, potentially one of the most
immediately life-threatening complication of cirrhosis. Based on the results of the NASH-CX trial and subject to confirmation in later stage clinical trials, we believe that this goal is achievable in a significant portion of the NASH cirrhosis
patient population i.e. those NASH cirrhosis patients with clinical signs of portal hypertension for whom, currently no specific, liver targeted, treatment are available.
The COVID-19 pandemic has delayed and may continue to delay our regulatory and ethics approvals, recruitment of sites, and enrollment of patients for our Phase 2b/3 NAVIGATE trial despite a
recent uptick in screening activities. Many investigational centers in the United States and Europe have experienced shut-downs, and while some have loosened or removed restrictions, there may be a risk of experiencing new shut-downs and
restrictions. In some countries, shutdown orders have also affected the regulatory process to authorize study starts. Governments and medical facilities have focused their resources for battling the COVID-19 pandemic. For several reasons, the
pandemic makes enrolling patients for the NAVIGATE trial more challenging, including because patients eligible for the NAVIGATE trial have liver cirrhosis and, as such, are at a greater health risk of complications from COVID-19. It is also
important to consider the safety of our candidate participants first, as cirrhotic patients with portal hypertension are immune compromised. We believe that as we continue to emerge from the COVID-19 pandemic, site recruitment and patient
enrollment will accelerate and we have experienced increases in enrollment, particularly in the U.S. However, we have not seen the enrollment in Europe that we anticipated, and conditions there remain uncertain. Consequently, we have activated
multiple sites in Latin America. At this time, enrollment completion of the Phase 2b portion of the trial is expected around the end of 2022.
We have identified and activated approximately 140 clinical trial sites in 15 countries for the NAVIGATE trial.
Further details on the NAVIGATE trial can be found on www.clinicaltrials.gov under study NCT04365868 and on our NAVIGATE website (navigatenash.com).
The Company also has commenced a Hepatic Impairment Study, which will run in parallel with the phase 2b/3 trial as part of the development program. The Hepatic Impairment Study is being conducted at three sites and
involves approximately 40 patients (divided amongst normal healthy volunteers, and patients with hepatic impairment categorized as Child-Turcotte-Pugh (CTP) classes A (mild), B (moderate), and C (severe). Each subject will receive a single
infusion of belapectin (4 mg/kg LBM) and their serum belapectin levels will be monitored for up to approximately two weeks to define the effects of various stages of cirrhosis on serum belapectin levels. The tolerance and safety of belapectin
will be evaluated. Enrollment in this study was completed in February 2022, and the results will be announced when available. Based on the results from this hepatic impairment study, the Company may consider including patients with more advanced
cirrhosis in the Phase 3 portion of its NAVIGATE trial. Until dosing and safety profile is further informed in CTP Class B and/or Class C patients, the NAVIGATE trial will enroll only CTP Class A patients. Further details on this hepatic
impairment study can be found on www.clinicaltrials.gov study NCT04332432.
Cancer Immunotherapy. We believe there is potential for galectin inhibition to play a key role in the innovative area of cancer immunotherapy. For example, there have been several recent approvals of drugs that enhance a patient’s immune system to fight cancer. It is our goal to use ourgalectin-3 inhibitor to further enhance the immune system function
to help the body to fight cancer in a way that complements other approaches to this type of therapy. This hypothesis is supported by the fact that galectin-3 is expressed at high levels in multiple types of tumors and their micro-environment,
where it fosters the malignant nature of the tumors, and protects the tumors from immune attack by the patient’s own defense mechanism. Our drug candidates provide a promising new therapeutic approach to enhance the activity of the immune system
against cancer cells. Preclinical studies have indicated that belapectin enhances the immune response to cancer cells, increased tumor shrinkage and enhanced survival in immune competent mice with prostate, breast, melanoma and sarcoma cancers
when combined with one of the immune checkpoint inhibitors, anti-CTLA-4 or anti-PD-1, or with the immune cell activator anti-OX40. These preclinical data led to the filing of two Investigator-sponsored INDs and the initiation of Phase 1B studies
of belapectin in combination with Yervoy® (ipilimumab) in metastatic melanoma and another phase 1B study in combination with KEYTRUDA (pembrolizumab) in patients
with metastatic melanoma and head and neck squamous cell carcinoma. These studies were conducted under the sponsorship of Providence Portland Medical Center’s Earle A. Chiles Research Institute (EACRI).
The phase IB study in combination with Yervoy was rapidly discontinued after the first patients were recruited because of the availability on new treatment in the selected population.
Promising results were reported in the Phase 1b trial combining belapectin with pembrolizumab (KEYTRUDA®). When
aggregated cohorts are combined, in advanced melanoma, a 50% objective response rate with belapectin in combination with KEYTRUDA, was documented. In addition, a 33% response rate was documented in patients with head and neck cancer The results
have been published in 2021 in a highly rated peer reviewed journal (Curti et al. Journal of Immunotherapy of cancer 2021;9:e002371). There was also a suggestion that the combination of belapectin with pembrolizumab could decrease the auto-immune
side-effect induced by pembrolizumab. These side-effects, which are directly linked to the mechanism of action of pembrolizumab, can be poorly tolerated and even severe enough to lead to treatment interruption, even if the effect on the cancer
was encouraging. This is of course, a very frustrating situation for patients who have to discontinue an active treatment but have no other options available to them. We believe these data, taken together with the observed favorable safety and
tolerability of the combination, provide a rationale to move the belapectin program in oncology forward.
Results of Operations
Three and Nine Months Ended September 30, 2022 Compared to Three and Nine Months Ended September 30, 2021
Research and Development Expense.
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Three Months Ended
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|
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Nine Months Ended
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|
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2022 as Compared to 2021
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|
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September 30,
|
|
|
September 30,
|
|
|
Three Months
|
|
|
Nine Months
|
|
|
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2022
|
|
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2021
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|
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2022
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|
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2021
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$ Change
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|
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% Change
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|
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$ Change
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|
|
% Change
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|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except %)
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
6,598
|
|
|
$
|
6,613
|
|
|
$
|
22,730
|
|
|
$
|
17,962
|
|
|
$
|
(15
|
)
|
|
|
0
|
% $
|
|
|
4,768
|
|
|
|
27
|
%
|
We generally categorize research and development expenses as either direct external expenses, comprised of amounts paid to third party vendors for services, or all other research and development
expenses, comprised of employee payroll and general overhead allocable to research and development. We consider a clinical program to have begun upon acceptance by the FDA, or similar agency outside of the United States, to commence a clinical
trial in humans, at which time we begin tracking expenditures by the product candidate. Clinical program expenses comprise payments to vendors related to preparation for, and conduct of, all phases of the clinical trial, including costs for drug
manufacture, patient dosing and monitoring, data collection and management, oversight of the trials and reports of results. Pre-clinical expenses comprise all research and development amounts incurred before human trials begin, including payments
to vendors for services related to product experiments and discovery, toxicology, pharmacology, metabolism and efficacy studies, as well as manufacturing process development for a drug candidate.
Our research and development expenses were as follows:
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|
Three Months Ended
|
|
|
Nine Months Ended
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|
|
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September 30,
|
|
|
September 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Direct external expenses:
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clinical programs
|
|
$
|
5,397
|
|
|
$
|
5,768
|
|
|
$
|
19,058
|
|
|
$
|
15,928
|
|
Pre-clinical activities
|
|
|
215
|
|
|
|
237
|
|
|
|
942
|
|
|
|
418
|
|
All other research and development expenses
|
|
|
986
|
|
|
|
608
|
|
|
|
2,730
|
|
|
|
1,616
|
|
|
|
$
|
6,598
|
|
|
$
|
6,613
|
|
|
$
|
22,730
|
|
|
$
|
17,962
|
|
Clinical programs expenses increased primarily due to costs related to our NAVIGATE trial during the nine months ended September 30, 2022.
Both the time required and costs we may incur in order to commercialize a drug candidate that would result in material net cash inflow are subject to numerous variables, and therefore we are
unable at this stage of our development to forecast useful estimates. Variables that make estimates difficult include the number of clinical trials we may undertake, the number of patients needed to participate in the clinical trial, patient
recruitment uncertainties, trial results as to the safety and efficacy of our product, and uncertainties as to the regulatory agency response to our trial data prior to receipt of marketing approval. Moreover, the FDA or other regulatory agencies
may suspend clinical trials if we or an agency believes patients in the trial are subject to unacceptable risks or find deficiencies in the conduct of the clinical trial. Delays or rejections may also occur if governmental regulation or policy
changes during our clinical trials or in the course of review of our clinical data. Due to these uncertainties, accurate and meaningful estimates of the ultimate cost to bring a product to market, the timing of costs and completion of our program
and the period during which material net cash inflows will commence are unavailable at this time.
General and Administrative Expense.
|
|
|
|
|
|
|
|
2022 as Compared to 2021 |
|
|
|
Three Months |
|
|
Nine Months |
|
|
|
|
|
|
|
|
|
Ended September 30, |
|
|
Ended September 30, |
|
|
Three Months |
|
|
Nine Months |
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
|
$ Change
|
|
|
% Change
|
|
|
$ Change
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except %)
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
$
|
1,524
|
|
|
$
|
1,631
|
|
|
$
|
4,989
|
|
|
$
|
4,792
|
|
|
$
|
(107
|
)
|
|
(7
|
)%
|
$ |
197
|
|
|
4
|
%
|
General and administrative expenses consist primarily of salaries including stock-based compensation, legal and accounting fees, insurance, investor relations, business development and other office related expenses.
The primary reasons for the decrease in general and administrative expenses for the three months ended September 30, 2022 as compared to the same period in 2021 are due to decreases legal expense of $81,000. The primary reasons for the increase
in general and administrative expenses for the nine months ended September 30, 2022 as compared to the same period in 2021 are due to increases in non-cash stock based compensation expense of $415,000 partially offset by decrease in investor
relations/business development expense of $171,000.
Other Income and Expense.
|
|
|
|
|
|
|
|
|
|
|
2022 as Compared to 2021
|
|
|
|
|
Three Months
|
|
|
|
Nine Months
|
|
|
|
|
|
|
|
|
Ended September 30,
|
|
|
|
Ended September 30,
|
|
|
|
Three Months
|
|
|
|
Nine Months
|
|
|
|
|
2022
|
|
|
|
2021
|
|
|
|
2022
|
|
|
|
2021
|
|
|
|
$ Change
|
|
|
|
% Change
|
|
|
|
$ Change
|
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
$
|
(475
|
)
|
|
$
|
(276
|
)
|
|
$
|
(423
|
)
|
|
$
|
(552
|
)
|
|
$
|
199
|
|
|
|
72
|
%
|
|
$ |
(129
|
)
|
|
|
(23
|
)%
|
Other income and expense consist of interest income, non-cash interest expense and change in fair value of derivatives. The primary reasons for the increase in other income
and expense for the three months ended September 30, 2022 as compared to the same period in 2021 are due to an increase in non-cash interest expense of $158,000 and increase in change in fair value of derivatives $58,000. The primary reasons
for the decrease in other income and expense for the nine months ended September 30, 2022 as compared to the same period in 2021 are due to increase in non-cash interest expense of $508,000 and increase in change in fair value of derivatives
$(618,000).
Liquidity and Capital Resources
Since our inception on July 10, 2000, we have financed our operations from proceeds of public and private offerings of debt and equity. At September 30, 2022, the Company had $15,831,000 of unrestricted cash and
cash equivalents available to fund future operations. In July 2022, the Company entered into a $60 million unsecured line of credit financing with its chairman, Richard E. Uihlein (See Note 12). The Company believes there is sufficient cash,
including availability of the line of credit, to fund currently planned operations at least through December 31, 2024. To meet its future capital needs, the Company intends to raise additional capital through debt or equity financings,
collaborations, partnerships or other strategic transactions. However, there can be no assurance that the Company will be able to complete any such transactions on acceptable terms or otherwise. The inability of the Company to obtain sufficient
funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations and financial condition. The Company has the ability to delay certain research activities and related clinical expenses if
necessary due to liquidity concerns until a date when those concerns are relieved.
Net cash used in operations increased by $6,460,000 to $23,817,000 for the nine months ended September 30, 2022, as compared to $17,357,000 for the nine months ended September 30, 2021. Cash
operating expenses increased principally due to the preparations and expenses related to our NAVIGATE clinical trial with belapectin.
Net cash provided by financing activities for the nine months ended September 30, 2021, of $26,815,000 represents proceeds of $20,000,000 from two convertible notes payable, $2,951,000 from the
exercise of common stock warrants and $3,864,000 in net proceeds from issuance of common shares under our ATM.
Off-Balance Sheet Arrangements
We have not created, and are not a party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating parts of our business that are not
consolidated into our financial statements. We do not have any arrangements or relationships with entities that are not consolidated into our financial statements that are reasonably likely to materially affect our liquidity or the availability
of capital resources.
Application of Critical Accounting Policies and Estimates
The preparation of condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities,
expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to accrued expenses, stock-based compensation, contingencies and litigation. We base our estimates on
historical experience, terms of existing contracts, our observance of trends in the industry, information available from other outside sources and on various other factors that we believe to be appropriate under the circumstances. Actual results
may differ from these estimates under different assumptions or conditions.
Critical accounting policies are those policies that affect our more significant judgments and estimates used in preparation of our consolidated financial statements. We believe our critical
accounting policies include our policies regarding stock-based compensation, accrued expenses, derivatives and income taxes. For a more detailed discussion of our critical accounting policies, please refer to our 2021 Annual Report on Form 10-K.