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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
10-Q
(Mark One)
|
|
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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the quarterly period ended
March 31,
2022
or
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|
|
☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the transition period from _______ to _______
Commission File Number:
001-39114
Galera Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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46-1454898
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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2 W. Liberty Blvd #100
Malvern,
Pennsylvania
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19355
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(Address of principal executive offices)
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(Zip Code)
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(610)
725-1500
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock,
$0.001 par value per share
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GRTX
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The Nasdaq Stock Market LLC (Nasdaq
Global Market)
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes
☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes
☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☒
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Smaller reporting company
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☒
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Emerging growth company
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|
☒
|
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
☒
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes
☐
No ☒
As of May 11, 2022, the registrant had
26,821,589
shares
of common stock, $0.001 par value per share,
outstanding.
Table of Contents
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking
statements within the meaning of the safe harbor provisions of
Section 27A of the Securities Act of 1933, as amended, or the
Securities Act, and Section 21E of the Securities Exchange Act of
1934, as amended, or the Exchange Act. All statements other than
statements of historical facts contained in this Quarterly Report
are forward-looking statements. In some cases, you can identify
forward-looking statements by terms such as “may,” “will,”
“should,” “expect,” “plan,” “anticipate,” “could,” “intend,”
“target,” “project,” “contemplate,” “believe,” “estimate,”
“predict,” “potential” or “continue” or the negative of these terms
or other similar expressions, although not all forward-looking
statements contain these words. All statements other than
statements of historical fact contained in this Quarterly Report,
including without limitation statements regarding our plans to
develop and commercialize our product candidates, the timing of our
ongoing or planned clinical trials, the timing of and our ability
to obtain and maintain regulatory approvals, the clinical utility
of our product candidates, our commercialization, manufacturing
capabilities and strategy, our expectations about the willingness
of healthcare professionals to use our product candidates, the
sufficiency of our cash, cash equivalents and short-term
investments and our ability to raise additional capital to fund our
operations, the anticipated impact of the COVID-19 pandemic on our
business, and the plans and objectives of management for future
operations, capital needs, and capital expenditures are
forward-looking statements.
The forward-looking statements in this Quarterly Report are only
predictions and are based largely on our current expectations and
projections about future events and financial trends that we
believe may affect our business, financial condition and results of
operations. These forward-looking statements speak only as of the
date of this Quarterly Report and are subject to a number of known
and unknown risks, uncertainties and assumptions that could cause
actual results to differ materially from those projected in the
forward-looking statements, including, but not limited to, the
following: our limited operating history; anticipating continued
losses for the foreseeable future; needing substantial funding and
the ability to raise capital; our dependence on avasopasem
manganese (GC4419) and our other product candidates; uncertainties
inherent in the conduct of clinical trials; difficulties or delays
enrolling patients in clinical trials; the FDA’s acceptance of data
from clinical trials outside the United States; undesirable side
effects from our product candidates; risks relating to the
regulatory approval process; failure to capitalize on more
profitable product candidates or indications; ability to receive
and/or maintain Breakthrough Therapy Designation or Fast Track
Designation for product candidates; failure to obtain regulatory
approval of product candidates in the United States or other
jurisdictions; ongoing regulatory obligations and continued
regulatory review; risks related to commercialization; risks
related to competition; ability to retain key employees and manage
growth; risks related to intellectual property; inability to
maintain collaborations or the failure of these collaborations; our
reliance on third parties; the possibility of system failures or
security breaches; liability related to the privacy of health
information obtained from clinical trials and product liability
lawsuits; unfavorable pricing regulations, third-party
reimbursement practices or healthcare reform initiatives;
environmental, health and safety laws and regulations; the impact
of the COVID-19 pandemic on our business and operations, including
preclinical studies and clinical trials, and general economic
conditions; risks related to ownership of our common stock;
significant costs as a result of operating as a public company; and
those described under the sections in our Annual Report on Form
10-K for the year ended December 31, 2021 and this Quarterly Report
entitled “Risk Factors” and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations.”
Because forward-looking statements are inherently subject to risks
and uncertainties, some of which cannot be predicted or quantified
and some of which are beyond our control, you should not rely on
these forward-looking statements as predictions of future events.
Moreover, we operate in an evolving environment. New risk factors
and uncertainties may emerge from time to time, and it is not
possible for management to predict all risk factors and
uncertainties. Except as required by applicable law, we do not plan
to publicly update or revise any forward-looking statements
contained herein, whether as a result of any new information,
future events, changed circumstances or otherwise.
ii
PART I—FINANCIAL
INFORMATION
Item 1. Financial
Statements.
GALERA THERAPEUTICS, INC.
CONSOLIDATED BALANCE
SHEETS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
(unaudited)
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|
|
|
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|
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|
|
March 31, 2022
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|
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December 31, 2021
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|
|
|
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Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
19,645
|
|
|
$
|
19,859
|
|
|
Short-term investments
|
|
|
41,302
|
|
|
|
51,358
|
|
|
Prepaid expenses and other current assets
|
|
|
4,329
|
|
|
|
6,175
|
|
|
Total current assets
|
|
|
65,276
|
|
|
|
77,392
|
|
|
Property and equipment, net
|
|
|
509
|
|
|
|
527
|
|
|
Acquired intangible asset
|
|
|
2,258
|
|
|
|
2,258
|
|
|
Goodwill
|
|
|
881
|
|
|
|
881
|
|
|
Right-of-use lease assets
|
|
|
229
|
|
|
|
296
|
|
|
Other assets
|
|
|
1,946
|
|
|
|
1,957
|
|
|
Total assets
|
|
$
|
71,099
|
|
|
$
|
83,311
|
|
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Liabilities and stockholders’ deficit
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Current liabilities:
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Accounts payable
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$
|
4,131
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|
|
$
|
5,044
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|
|
Accrued expenses
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|
|
6,566
|
|
|
|
7,633
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|
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Lease liabilities
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|
|
234
|
|
|
|
258
|
|
|
Total current liabilities
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|
10,931
|
|
|
|
12,935
|
|
|
Royalty purchase liability
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|
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130,366
|
|
|
|
128,063
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|
|
Lease liabilities, net of current portion
|
|
|
—
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|
|
|
44
|
|
|
Deferred tax liability
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|
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273
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|
|
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273
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|
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Total liabilities
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141,570
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|
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141,315
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Stockholders’ deficit:
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|
|
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Preferred stock, $0.001 par
value:
10,000,000 shares
authorized;
no shares
issued and outstanding.
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—
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—
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Common stock, $0.001 par
value:
200,000,000 shares
authorized;
26,819,421 and
26,458,767 shares
issued and outstanding at
March 31, 2022 and December 31, 2021,
respectively
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27
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|
|
26
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|
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Additional paid-in capital
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261,108
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258,086
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Accumulated other comprehensive loss
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|
|
(61
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)
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|
|
(14
|
)
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Accumulated deficit
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|
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(331,545
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)
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(316,102
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)
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Total stockholders’ deficit
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(70,471
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)
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(58,004
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)
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Total liabilities and stockholders’ deficit
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$
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71,099
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|
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$
|
83,311
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|
See accompanying notes to unaudited interim consolidated financial
statements.
1
GALERA THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS
OF OPERATIONS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
(unaudited)
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Three months ended
March 31,
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2022
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2021
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|
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Operating expenses:
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Research and development
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$
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8,107
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$
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12,423
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General and administrative
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5,047
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|
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5,058
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|
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Loss from operations
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|
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(13,154
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)
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|
|
(17,481
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)
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Other income (expenses):
|
|
|
|
|
|
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Interest income
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|
|
14
|
|
|
|
19
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Interest expense
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|
|
(2,303
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)
|
|
|
(1,253
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)
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Net loss
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|
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(15,443
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)
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|
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(18,715
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)
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Net loss per share of common stock, basic and diluted
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$
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(0.58
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)
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$
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(0.75
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)
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Weighted-average shares of common stock outstanding, basic and
diluted
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26,749,379
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|
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24,988,198
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|
See accompanying notes to unaudited interim consolidated financial
statements.
2
GALERA THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS
OF COMPREHENSIVE LOSS
(IN THOUSANDS)
(unaudited)
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Three months ended
March 31,
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|
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2022
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|
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2021
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Net loss
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$
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(15,443
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)
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$
|
(18,715
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)
|
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Unrealized loss on short-term investments
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|
|
(47
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)
|
|
|
(2
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)
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Comprehensive loss
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$
|
(15,490
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)
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|
$
|
(18,717
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)
|
See accompanying notes to unaudited interim consolidated financial
statements.
3
GALERA THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(DEFICIT)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
(unaudited)
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|
|
|
|
|
|
|
|
|
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|
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|
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Common stock
|
|
|
Additional
paid-in
|
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Accumulated
other
comprehensive
|
|
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Accumulated
|
|
|
Total
Stockholders’
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
capital
|
|
|
loss
|
|
|
Deficit
|
|
|
Deficit
|
|
|
Balance at January 1, 2022
|
|
|
26,458,767
|
|
|
$
|
26
|
|
|
$
|
258,086
|
|
|
$
|
(14
|
)
|
|
$
|
(316,102
|
)
|
|
$
|
(58,004
|
)
|
|
Share-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
1,848
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,848
|
|
|
Exercise of stock options
|
|
|
46,358
|
|
|
|
—
|
|
|
|
58
|
|
|
|
—
|
|
|
|
—
|
|
|
|
58
|
|
|
Sale of shares under Open Market Sale
Agreement, net
|
|
|
314,296
|
|
|
|
1
|
|
|
|
1,116
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,117
|
|
|
Unrealized loss on short-term
investments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(47
|
)
|
|
|
—
|
|
|
|
(47
|
)
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(15,443
|
)
|
|
|
(15,443
|
)
|
|
Balance at March 31, 2022
|
|
|
26,819,421
|
|
|
|
27
|
|
|
|
261,108
|
|
|
|
(61
|
)
|
|
|
(331,545
|
)
|
|
|
(70,471
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
Additional
paid-in
|
|
|
Accumulated
other
comprehensive
|
|
|
Accumulated
|
|
|
Total
Stockholders’
Equity
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
capital
|
|
|
income (loss)
|
|
|
Deficit
|
|
|
(Deficit)
|
|
|
Balance at January 1, 2021
|
|
|
24,976,142
|
|
|
$
|
25
|
|
|
$
|
241,649
|
|
|
$
|
12
|
|
|
$
|
(235,568
|
)
|
|
$
|
6,118
|
|
|
Share-based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
1,791
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,791
|
|
|
Exercise of stock options
|
|
|
217,015
|
|
|
|
—
|
|
|
|
235
|
|
|
|
—
|
|
|
|
—
|
|
|
|
235
|
|
|
Unrealized loss on short-term
investments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
(2
|
)
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(18,715
|
)
|
|
|
(18,715
|
)
|
|
Balance at March 31, 2021
|
|
|
25,193,157
|
|
|
|
25
|
|
|
|
243,675
|
|
|
|
10
|
|
|
|
(254,283
|
)
|
|
|
(10,573
|
)
|
See accompanying notes to unaudited interim consolidated financial
statements.
4
GALERA THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS
OF CASH FLOWS
(IN THOUSANDS)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(15,443
|
)
|
|
$
|
(18,715
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
31
|
|
|
|
106
|
|
|
Noncash interest expense
|
|
|
2,303
|
|
|
|
1,253
|
|
|
Share-based compensation expense
|
|
|
1,848
|
|
|
|
1,791
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
1,846
|
|
|
|
(1,568
|
)
|
|
Other assets
|
|
|
78
|
|
|
|
4
|
|
|
Accounts payable
|
|
|
(913
|
)
|
|
|
4,071
|
|
|
Accrued expenses
|
|
|
(1,067
|
)
|
|
|
(2,242
|
)
|
|
Other liabilities
|
|
|
(68
|
)
|
|
|
(3
|
)
|
|
Cash used in operating activities
|
|
|
(11,385
|
)
|
|
|
(15,303
|
)
|
|
Investing activities:
|
|
|
|
|
|
|
|
Purchases of short-term investments
|
|
|
(15,651
|
)
|
|
|
(6,931
|
)
|
|
Proceeds from sales of short-term investments
|
|
|
25,660
|
|
|
|
20,000
|
|
|
Purchase of property and equipment
|
|
|
(13
|
)
|
|
|
(186
|
)
|
|
Cash provided by investing activities
|
|
|
9,996
|
|
|
|
12,883
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
Proceeds from the sale of common stock,
net of issuance costs
|
|
|
1,117
|
|
|
|
—
|
|
|
Proceeds from exercise of stock options
|
|
|
58
|
|
|
|
235
|
|
|
Cash provided by financing activities
|
|
|
1,175
|
|
|
|
235
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(214
|
)
|
|
|
(2,185
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
|
19,859
|
|
|
|
15,872
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
19,645
|
|
|
$
|
13,687
|
|
|
Supplemental schedule of non-cash investing activities:
|
|
|
|
|
|
|
|
Unrealized loss on marketable securities
|
|
$
|
(47
|
)
|
|
$
|
(2
|
)
|
See accompanying notes to unaudited interim consolidated financial
statements.
5
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
1.
Organization and description of business
Galera Therapeutics, Inc. was incorporated as a Delaware
corporation on
November 19, 2012
(inception) and together with its subsidiaries (the Company, or
Galera) is a clinical stage biopharmaceutical company focused on
developing and commercializing a pipeline of novel, proprietary
therapeutics that have the potential to transform radiotherapy in
cancer. Galera's technology consists of selective small molecule
dismutase mimetics that are in late-stage development in patients
with cancer. Avasopasem manganese (GC4419, also referred to as
avasopasem) is in development for radiotherapy-induced toxicities,
including severe oral mucositis (SOM) in patients with locally
advanced head and neck cancer (HNC) and esophagitis in patients
with lung cancer. In February 2018, the U.S. Food and Drug
Administration (FDA) granted Breakthrough Therapy Designation to
avasopasem for the reduction of SOM induced by radiotherapy with or
without systemic therapy.
Galera’s second dismutase mimetic product candidate, rucosopasem
manganese (GC4711, also referred to as rucosopasem), is in
clinical-stage development to augment the anti-cancer efficacy of
stereotactic body radiation therapy (SBRT) in patients with
non-small cell lung cancer (NSCLC) and locally advanced pancreatic
cancer (LAPC).
In December 2021, the Company announced corrected topline efficacy
results from a Phase 3 trial (referred to as the ROMAN trial)
evaluating avasopasem for the reduction of radiotherapy-induced SOM
in patients with locally advanced HNC. The Company had previously
announced topline results from the ROMAN trial in October 2021.
Upon further analysis following the October topline data
announcement, an error by the contract research organization was
identified in the statistical program. Correction of this error
resulted in improved p-values for the primary and secondary
endpoints. The corrected results demonstrated efficacy across
multiple SOM endpoints with a statistically significant reduction
on the primary endpoint of reduction in the incidence of SOM and a
statistically significant reduction on the secondary endpoint of
number of days of SOM. The ROMAN trial is the Company’s second
randomized trial conducted in patients with HNC to achieve
statistical significance and demonstrate improved clinical benefit
in reducing SOM. Based on these data, the Company plans to submit
to the FDA a New Drug Application, or NDA, of avasopasem for
radiotherapy-induced SOM by the end of 2022.
In addition to developing avasopasem for the reduction of normal
tissue toxicity from radiotherapy, the Company is developing its
second dismutase mimetic product candidate, rucosopasem, to
increase the anti-cancer efficacy of higher daily doses of
radiotherapy, or SBRT. In September 2021, in support of
rucosopasem, the Company announced final results from its Phase 1/2
pilot trial of avasopasem in combination with SBRT in patients with
unresectable or borderline resectable LAPC. In this
proof-of-concept trial, survival and tumor outcome benefits were
observed. The Company used its observations from this pilot trial
to inform the design of rucosopasem clinical trials in combination
with SBRT. The Company has successfully completed Phase 1 trials of
intravenous rucosopasem in healthy volunteers and is currently
evaluating rucosopasem in combination with SBRT in a Phase 1/2
safety and anti-cancer efficacy trial in NSCLC, and a Phase 2b
trial of rucosopasem in combination with SBRT in patients with
LAPC.
Liquidity
The Company has incurred recurring losses and negative cash flows
from operations since inception and has an accumulated deficit of
$331.5
million as of
March 31, 2022. The Company anticipates incurring additional losses
until such time, if ever, that it can generate significant sales of
its product candidates currently in development. The Company
expects its existing cash, cash equivalents and short-term
investments as of March 31, 2022 will enable the Company to fund
its operating expenses
and capital expenditure requirements into the second half of 2023.
In the future, if the Company is not able to continue to raise
sufficient capital to fund its operations, the Company may
decide
to delay or discontinue certain activities, including planned
research and development activities, hiring plans, manufacturing
activities and commercial preparation efforts. In December 2020,
the Company filed a registration statement with the Securities and
Exchange Commission (SEC) which covers the offering, issuance and
sale of up to $200.0
million in Company securities, which includes an Open Market Sale
Agreement with Jefferies LLC (the Sales Agreement) covering the
offering, issuance and sale of up to a maximum aggregate offering
price of $50.0
million of the Company’s common stock, which could be utilized to
raise funding for future operating expenses and capital expenditure
requirements. During the
three months ended March 31, 2022,
the Company sold approximately
0.3
million shares of common stock and received net proceeds of
$1.1
million pursuant to the Sales Agreement. As of
March 31, 2022,
there remained approximately $40.6
million available under the Sales Agreement.
2.
Basis of presentation and significant accounting
policies
The summary of significant accounting policies disclosed in the
Company’s annual consolidated financial statements for the years
ended December 31, 2021 and 2020 included in the Company’s annual
report on Form 10-K filed with the SEC on March 10, 2022 have not
materially changed, except as set forth below.
6
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
Basis of presentation and consolidation
The accompanying unaudited interim consolidated financial
statements have been prepared in conformity with U.S. generally
accepted accounting principles (U.S. GAAP) for interim financial
information. Any reference in these notes to applicable guidance is
meant to refer to U.S. GAAP as found in the Accounting Standards
Codification (ASC) and Accounting Standards Updates (ASU) of the
Financial Accounting Standards Board (FASB).
In the opinion of management, the accompanying interim consolidated
financial statements include all normal and recurring adjustments
(which consist primarily of accruals, estimates and assumptions
that impact the financial statements) considered necessary to
present fairly the Company’s financial position as of March 31,
2022 and its results of operations for the three months ended March
31, 2022 and 2021, and statements of changes in stockholder’s
equity (deficit) and cash flows for the three months ended March
31, 2022 and 2021. Operating results for the three months ended
March 31, 2022 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2022, or for any
future period. The interim consolidated financial statements,
presented herein, do not contain the required disclosures under
U.S. GAAP for annual financial statements. Therefore, these interim
consolidated financial statements should be read in conjunction
with the annual audited consolidated financial statements and
related notes as of and for the year ended December 31,
2021,
included in the Company’s annual report on Form 10-K and filed with
the SEC on March 10, 2022.
Use of estimates
The preparation of unaudited interim consolidated financial
statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities as of the date of the unaudited interim consolidated
financial statements and the reported amounts of expenses during
the reporting period. Actual results could differ from those
estimates.
Estimates and assumptions are periodically reviewed and the effects
of revisions are reflected in the unaudited interim consolidated
financial statements in the period they are determined to be
necessary. Significant areas that require management’s estimates
include share-based compensation assumptions, royalty purchase
liability assumptions and accrued research and development
expenses.
Research and development expenses
Research and development costs are expensed as incurred and consist
primarily of funds paid to third parties for the provision of
services for product candidate development, clinical and
preclinical development and related supply and manufacturing costs,
and regulatory compliance costs. The Company accrues and expenses
preclinical studies and clinical trial activities performed by
third parties based upon estimates of the proportion of work
completed over the term of the individual trial and patient
enrollment rates in accordance with agreements with clinical
research organizations and clinical trial sites. The Company
determines the estimates by reviewing contracts, vendor agreements
and purchase orders, and through discussions with internal clinical
personnel and external service providers as to the progress or
stage of completion of trials or services and the agreed-upon fee
to be paid for such services. However, actual costs and timing of
clinical trials are highly uncertain, subject to risks and may
change depending upon a number of factors, including the Company’s
clinical development plan.
Management makes estimates of the Company’s accrued expenses as of
each balance sheet date in the Company’s consolidated financial
statements based on facts and circumstances known to the Company at
that time. If the actual timing of the performance of services or
the level of effort varies from the estimate, the Company will
adjust the accrual accordingly. Nonrefundable advance payments for
goods and services, including fees for process development or
manufacturing and distribution of clinical supplies that will be
used in future research and development activities, are deferred
and recognized as expense in the period that the related goods are
consumed or services are performed.
In September 2020, the Company was awarded a Small Business
Innovation Research grant from the National Cancer Institute of the
National Institutes of Health, which will partially fund its Phase
1/2 safety and anti-cancer efficacy trial in NSCLC (the Grant).
Costs entitled to reimbursement under the Grant are accounted for
as a reduction to research and development expenses. During the
three months ended March 31, 2021,
the Company recorded a reduction to research and development
expense of $0.3
million
for expenses for which it has been reimbursed, or is entitled to
reimbursement, under the Grant. The Company has fully
7
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
utilized
the $1.1
million of available funding under the Grant and did not receive
any reimbursement during the
three months ended March 31, 2022.
Net loss per share
Basic loss per share of common stock is computed by dividing net
loss attributable to common stockholders by the weighted-average
number of shares of common stock outstanding during each period.
Diluted loss per share of common stock includes the effect, if any,
from the potential exercise or conversion of securities, such as
stock options and common stock warrants, which would result in the
issuance of incremental shares of common stock. For diluted net
loss per share, the weighted-average number of shares of common
stock is the same for basic net loss per share due to the fact that
when a net loss exists, dilutive securities are not included in the
calculation as the impact is anti-dilutive.
The following potentially dilutive securities have been excluded
from the computation of diluted weighted-average shares of common
stock outstanding, as they would be anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Stock options
|
|
|
5,976,403
|
|
|
|
5,173,716
|
|
|
Common stock warrants
|
|
|
550,661
|
|
|
|
550,661
|
|
|
|
|
|
6,527,064
|
|
|
|
5,724,377
|
|
3.
Fair value measurements
The Company utilizes valuation techniques that maximize the use of
observable inputs and minimize the use of unobservable inputs to
the extent possible. The Company determines fair value based on
assumptions that market participants would use in pricing an asset
or liability in the principal or most advantageous market. When
considering market participant assumptions in fair value
measurements, the following fair value hierarchy distinguishes
between observable and unobservable inputs, which are categorized
in one of the following levels:
•
Level 1 Inputs: Unadjusted quoted prices in active markets for
identical assets or liabilities accessible to the reporting entity
at the measurement date.
•
Level 2 Inputs: Other than quoted prices included in Level 1 inputs
that are observable for the asset or liability, either directly or
indirectly, for substantially the full term of the asset or
liability.
•
Level 3 Inputs: Unobservable inputs for the asset or liability used
to measure fair value to the extent that observable inputs are not
available, thereby allowing for situations in which there is
little, if any, market activity for the asset or liability at
measurement date.
The following table presents the Company’s assets and liabilities
that are measured at fair value on a recurring basis (amounts in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Money market funds and U.S. Treasury obligations
(included in cash equivalents)
|
|
$
|
13,362
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury obligations
|
|
$
|
41,302
|
|
|
|
—
|
|
|
|
—
|
|
8
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Money market funds and U.S. Treasury obligations
(included in cash equivalents)
|
|
$
|
12,346
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
|
|
|
|
|
|
|
|
|
U.S. government agency securities
|
|
$
|
—
|
|
|
$
|
5,413
|
|
|
$
|
—
|
|
|
U.S. Treasury obligations
|
|
|
45,945
|
|
|
|
—
|
|
|
|
—
|
|
|
Total short-term investments
|
|
$
|
45,945
|
|
|
$
|
5,413
|
|
|
$
|
—
|
|
There were
no
changes in valuation techniques during the
three months ended March 31, 2022.
The Company’s short-term investment instruments classified using
Level 1 inputs within the fair value hierarchy are classified as
such because they are valued using quoted market prices, broker or
dealer quotations, or alternative pricing sources with reasonable
levels of price transparency. The fair value of Level 2 securities
is estimated based on observable inputs other than quoted prices in
active markets for identical assets and liabilities, quoted prices
for identical or similar assets or liabilities in inactive markets,
or other inputs that are observable or can be corroborated by
observable market data for substantially the full term on the
assets or liabilities.
4.
Property and equipment
Property and equipment consist of (amounts in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Laboratory equipment
|
|
$
|
1,393
|
|
|
$
|
1,379
|
|
|
Computer hardware and software
|
|
|
292
|
|
|
|
292
|
|
|
Leasehold improvements
|
|
|
264
|
|
|
|
264
|
|
|
Furniture and fixtures
|
|
|
179
|
|
|
|
179
|
|
|
Property and equipment, gross
|
|
|
2,128
|
|
|
|
2,114
|
|
|
Less: Accumulated depreciation and amortization
|
|
|
(1,619
|
)
|
|
|
(1,587
|
)
|
|
Property and equipment, net
|
|
$
|
509
|
|
|
$
|
527
|
|
Depreciation and amortization expense was
$31,000
and $0.1
million for the
three months ended March 31, 2022 and 2021,
respectively.
Accrued expenses consist of (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Compensation and related benefits
|
|
$
|
945
|
|
|
$
|
2,038
|
|
|
Research and development expenses
|
|
|
5,330
|
|
|
|
5,360
|
|
|
Professional fees and other expenses
|
|
|
291
|
|
|
|
235
|
|
|
|
|
$
|
6,566
|
|
|
$
|
7,633
|
|
9
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
6.
Royalty purchase liability
Pursuant to our Amended and Restated Purchase and Sale Agreement
(the Royalty Agreement), with Clarus IV Galera Royalty AIV, L.P.,
Clarus IV-A, L.P., Clarus IV-B, L.P., Clarus IV-C, L.P. and Clarus
IV-D, L.P. (collectively, Blackstone or Blackstone Life Sciences),
Blackstone agreed to pay up to $80.0
million (the Royalty Purchase Price) in four tranches of
$20.0
million each upon the achievement of specific Phase 3 clinical
trial patient enrollment milestones. The Company received the first
tranche of the Royalty Purchase Price in November 2018, the second
tranche of the Royalty Purchase Price in April 2019, and the third
tranche of the Royalty Purchase Price in February 2020, in each
case in connection with the achievement of the first three
milestones, respectively.
In May 2020, the Company entered into Amendment No. 1 to the
Royalty Agreement (the Amendment) with Clarus IV Galera Royalty
AIV, L.P. (the Blackstone Purchaser). The Blackstone Purchaser is
affiliated with Blackstone Life Sciences, the successor in interest
to Clarus Ventures. The Amendment increased the Royalty Purchase
Price by $37.5
million, to $117.5
million by increasing the fourth tranche from $20.0
million to $37.5
million and adding a new $20.0
million tranche upon the achievement of an additional clinical
enrollment milestone. The Company accounted for the Amendment as a
debt modification and is amortizing fees paid to the Blackstone
Purchaser related to the Amendment over the estimated term of the
royalty purchase liability utilizing the effective-interest method.
In June 2021, the Company received the new tranche
($20.0
million) under the Amendment in connection with the enrollment of
the first patient in a Phase 2b trial of rucosopasem in combination
with SBRT in patients with locally advanced pancreatic cancer,
which the Company refers to as the GRECO-2 trial. Also in June
2021, the Company completed enrollment in the ROMAN trial, thereby
achieving the milestone associated with the fourth tranche
($37.5
million) under the Amendment, which was received in July
2021.
The Company accounts for the Royalty Agreement as a debt
instrument. The $117.5
million in proceeds received as of
March 31, 2022 have been recorded as a liability on the
accompanying consolidated balance sheets. Interest expense is
imputed based on the estimated royalty repayment period described
below, which takes into consideration the probability and timing of
obtaining FDA approval and the potential future revenue from
commercializing its product candidates, and which results in a
corresponding increase in the liability balance. As the Company
continues to evaluate the next steps for its programs focused on
the reduction of radiotherapy-induced toxicity, planned or possible
next steps may have a material impact on the royalty purchase
liability. The Company recognized
$2.3
million and $1.3
million in noncash interest expense during the
three months ended March 31, 2022 and 2021, respectively. As of
March 31, 2022, the effective interest rate was
7.2%.
Pursuant to the Royalty Agreement and the Amendment, in connection
with the payment of each tranche of the Royalty Purchase Price, the
Company has agreed to sell, convey, transfer and assign to
Blackstone all of its right, title and interest in a high
single-digit percentage of (i) worldwide net sales of avasopasem
and rucosopasem (collectively, the Products) and (ii) all amounts
received by the Company or its affiliates, licensees and
sublicensees with respect to Product-related damages (collectively,
the Product Payments) during the Royalty Period. The Royalty Period
means, on a Product-by-Product and country-by-country basis, the
period of time commencing on the commercial launch of such Product
in such country and ending on the latest to occur of (i) the 12th
anniversary of such commercial launch, (ii) the expiration of all
valid claims of the Company’s patents covering such Product in such
country, and (iii) the expiration of regulatory data protection or
market exclusivity or similar regulatory protection afforded by the
health authorities in such country, to the extent such protection
or exclusivity effectively prevents generic versions of such
Product from entering the market in such country.
The Royalty Agreement and the Amendment will remain in effect until
the date on which the aggregate amount of the Product Payments paid
to Blackstone exceeds a fixed single-digit multiple of the actual
amount of the Royalty Purchase Price received by the Company,
unless earlier terminated pursuant to the mutual written agreement
of the Company and Blackstone. If no Products are commercialized,
the Company would not have an obligation to make Product Payments
to Blackstone, which is the sole mechanism for repaying the
liability.
Upon execution of the Amendment, the Company issued common stock
warrants to the Blackstone Purchaser, each of which became
exercisable upon the receipt by the Company of the applicable
specified milestone payment. The issued warrants expire
six years
after the initial exercise dates, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Exercise Price
|
|
|
Initial Exercise Date
|
|
Expiration Date
|
|
New Milestone Warrant
|
|
|
293,686
|
|
|
$
|
13.62
|
|
|
6/7/2021
|
|
6/6/2027
|
|
Fourth Milestone Warrant
|
|
|
256,975
|
|
|
$
|
13.62
|
|
|
7/19/2021
|
|
7/18/2027
|
10
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
The warrants are equity-classified and were valued at
$4.7
million using the Black-Scholes option pricing model. The warrants
were recorded as a discount to the royalty purchase liability. The
Company amortizes the debt discount to interest expense over the
estimated term of the royalty purchase liability utilizing the
effective-interest method.
The Company has a non-cancelable operating lease for office space
in Malvern, Pennsylvania which, as of March 31,
2022,
has a remaining lease term of approximately
0.9
years. The discount rate used to account for the Company’s
operating leases under FASB ASU No. 2018-11,
Leases (Topic 842),
is the Company’s estimated incremental borrowing rate of
5.3%.
Supplemental balance sheet information related to leases was as
follows:
|
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|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Operating Leases
|
|
|
|
|
|
|
|
Right-of-use lease assets
|
|
$
|
229
|
|
|
$
|
296
|
|
|
|
|
|
|
|
|
|
|
Lease liabilities, current
|
|
|
234
|
|
|
|
258
|
|
|
Lease liabilities, net of current portion
|
|
|
—
|
|
|
|
44
|
|
|
Total operating lease liabilities
|
|
$
|
234
|
|
|
$
|
302
|
|
|
|
|
|
|
|
|
|
The components of lease expense were as follows:
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|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
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|
|
|
2022
|
|
|
2021
|
|
|
Operating lease costs
|
|
|
|
|
|
|
|
Operating lease rental expense
|
|
$
|
68
|
|
|
$
|
73
|
|
|
Interest on lease liabilities
|
|
|
3
|
|
|
|
7
|
|
|
Total operating lease expense
|
|
$
|
71
|
|
|
$
|
80
|
|
Supplemental cash flow information related to leases was as
follows:
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|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
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|
|
2022
|
|
|
2021
|
|
|
Cash paid for amounts included in the measurement of lease
liabilities
|
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|
|
|
|
|
|
Operating cash flows for operating leases
|
|
$
|
71
|
|
|
$
|
81
|
|
|
Right-of-use assets obtained in exchange for lease
obligation
|
|
|
|
|
|
|
|
Operating leases
|
|
|
—
|
|
|
|
70
|
|
Future minimum rental payments under the Company’s non-cancelable
operating lease liabilities as of
March 31, 2022 (amounts in thousands):
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|
|
|
Remainder of 2022
|
|
$
|
195
|
|
|
2023
|
|
|
44
|
|
|
Total
|
|
|
239
|
|
|
Less: imputed interest
|
|
|
(5
|
)
|
|
|
|
$
|
234
|
|
11
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
Equity offerings
In December 2020, the Company entered into the Sales Agreement with
Jefferies LLC (Jefferies) as sales agent, pursuant to which it may,
from time to time, issue and sell common stock with an aggregate
value of up to $50.0
million in “at-the-market” (ATM) offerings under the Company’s
Registration Statement on Form S-3 (File No. 333-251061) filed with
the SEC on December 1, 2020. Sales of common stock, if any,
pursuant to the Sales Agreement, may be made in sales deemed to be
an “at the market offering” as defined in Rule 415(a) of the
Securities Act, including sales made directly through the Nasdaq
Global Market or on any other existing trading market for the
Company’s common stock. The Company is required to pay Jefferies a
commission equal to
three
percent of the gross sales proceeds and has provided Jefferies with
customary indemnification rights. During the
three months ended March 31, 2022,
314,296
shares were sold under the Sales Agreement at a weighted average
price per share of $3.70.
Net proceeds to the Company after deducting fees, commissions and
other expenses related to the offering were approximately
$1.1
million for the
three months ended March 31, 2022. As of March 31,
2022,
there was approximately $40.6
million of available capacity under the Sales Agreement.
Share-based compensation
In connection with the Company’s Initial Public Offering, or IPO,
in November 2019, the Company’s board of directors adopted and the
Company’s stockholders approved the Galera Therapeutics, Inc. 2019
Incentive Award Plan
(the 2019 Plan), which became effective upon the effectiveness of
the registration statement on Form S-1 for the IPO. Upon
effectiveness of the 2019 Plan, the Company ceased granting new
awards under the Prior Plan (as defined herein).
The 2019 Plan provides for the grant of incentive stock options,
nonstatutory stock options, restricted stock awards, restricted
stock units, stock appreciation rights and other stock-based
awards. The number of shares of common stock initially available
for issuance under the 2019 Plan was
1,948,970
shares of common stock plus the number of shares subject to awards
outstanding under the Prior Plan that expire, terminate or are
otherwise surrendered, cancelled, forfeited or repurchased by the
Company on or after the effective date of the 2019 Plan. In
addition, the number of shares of common stock available for
issuance under the 2019 Plan is subject to an annual increase on
the first day of each calendar year beginning on January 1, 2020
and ending on and including January 1, 2029 equal to the lesser of
(i)
4%
of the Company’s outstanding shares of common stock on the final
day of the immediately preceding calendar year, and (ii) such
smaller number of shares of common stock as determined by the
Company’s board of directors. As of
March 31, 2022,
there were
1,258,494
shares available for future issuance under the 2019 Plan,
including
1,058,350
shares added pursuant to this provision effective January 1, 2022.
The maximum number of shares of common stock that may be issued
under the 2019 Plan upon the exercise of incentive stock options
is
14,130,029.
In November 2019, the Company’s board of directors adopted and the
Company’s stockholders approved the Galera Therapeutics, Inc. 2019
Employee Stock Purchase Plan (the ESPP). The ESPP allows employees
to buy Company stock through after-tax payroll deductions at a
discount from market value. The number of shares of common stock
initially available for issuance under the ESPP was
243,621
shares of common stock. In addition, the number of shares of common
stock available for issuance under the ESPP is subject to an annual
increase on the first day of each calendar year beginning on
January 1, 2020 and ending on and including January 1, 2029 equal
to the lesser of (i)
1%
of the Company’s outstanding shares of common stock on the final
day of the immediately preceding calendar year and (ii) such
smaller number of shares of common stock as determined by the
Company’s board of directors, provided that not more than
3,288,886
shares of common stock may be issued under the ESPP. As of
March 31, 2022,
there were
1,006,084
shares available for issuance under the ESPP, including
264,587
shares added pursuant to this provision effective January 1,
2022.
In November 2012, the Company adopted the Equity Incentive Plan
(the Prior Plan). The total number of shares subject to outstanding
awards under the Prior Plan as of March 31, 2022
was
2,093,811.
No
shares
remain available for issuance under the Prior Plan and no further
grants will be made under the Prior Plan; however, the Prior Plan
continues to govern awards that are outstanding under
it.
The Company’s stock option awards vest based on the terms in the
governing agreements and generally vest over
four years
and have a term of
10 years.
12
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
Share-based compensation expense was as follows for the
three months ended March 31, 2022 and 2021 (in
thousands):
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|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Research and development
|
|
$
|
661
|
|
|
$
|
784
|
|
|
General and administrative
|
|
|
1,187
|
|
|
|
1,007
|
|
|
|
|
$
|
1,848
|
|
|
$
|
1,791
|
|
The following table summarizes the activity related to stock option
grants for the
three months ended March 31, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Weighted
average
exercise
price per
share
|
|
|
Weighted-
average
remaining
contractual
life (years)
|
|
|
Outstanding at January 1, 2022
|
|
|
4,970,975
|
|
|
|
8.45
|
|
|
|
|
|
Granted
|
|
|
1,250,900
|
|
|
|
2.24
|
|
|
|
|
|
Exercised
|
|
|
(46,358
|
)
|
|
|
1.26
|
|
|
|
|
|
Forfeited
|
|
|
(199,114
|
)
|
|
|
11.31
|
|
|
|
|
|
Outstanding at March 31, 2022
|
|
|
5,976,403
|
|
|
$
|
7.11
|
|
|
|
7.4
|
|
|
Vested and exercisable at March 31, 2022
|
|
|
2,906,783
|
|
|
$
|
6.91
|
|
|
|
5.7
|
|
|
Vested and expected to vest at March 31, 2022
|
|
|
5,976,403
|
|
|
$
|
7.11
|
|
|
|
7.4
|
|
As of March 31, 2022, the unrecognized compensation
cost
was $15.8
million and will be recognized over an estimated weighted-average
amortization period of
2.6
years. The aggregate intrinsic value of options outstanding and
options exercisable as of
March 31, 2022
was $0.4
million and $0.3
million, respectively. Options granted during the
three months ended March 31, 2022 and 2021
had weighted-average grant-date fair values of $1.71
and $9.00
per
share, respectively.
The fair value of options is estimated using the Black-Scholes
option pricing model, which takes into account inputs such as the
exercise price, the estimated fair value of the underlying common
stock at the grant date, expected term, expected stock price
volatility, risk-free interest rate and dividend yield. The fair
value of stock options during the three months ended March 31, 2022
and 2021 was determined using the methods and assumptions discussed
below.
•
The expected term of employee stock options with service-based
vesting is determined using the “simplified” method, as prescribed
in SEC’s Staff Accounting Bulletin (SAB) No. 107, whereby the
expected life equals the arithmetic average of the vesting term and
the original contractual term of the option due to the Company’s
lack of sufficient historical data. The expected term of
nonemployee options is equal to the contractual term.
•
The expected stock price volatility is based on historical
volatilities of comparable public entities within the Company’s
industry which were commensurate with the expected term assumption
as described in SAB No. 107.
•
The risk-free interest rate is based on the interest rate payable
on U.S. Treasury securities in effect at the time of grant for a
period that is commensurate with the expected term.
•
The expected dividend yield is
0%
because the Company has not historically paid, and does not expect
for the foreseeable future to pay, a dividend on its common
stock.
•
The Company’s board of directors has determined the per share value
of the Company’s common stock based on the closing price as
reported by the NASDAQ Global Market on the date of the
grant.
13
GALERA THERAPEUTICS, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
The grant date fair value of each option grant was estimated
throughout the
three months ended March 31, 2022 and 2021 using the Black-Scholes
option-pricing model using the following weighted-average
assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Expected term (in years)
|
|
|
6.3
|
|
|
|
6.2
|
|
|
Expected stock price volatility
|
|
|
92.4
|
%
|
|
|
91.6
|
%
|
|
Risk-free interest rate
|
|
|
1.74
|
%
|
|
|
0.59
|
%
|
|
Expected dividend yield
|
|
|
|