GlycoMimetics(GLYC) - 2019 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Provides GlycoMimetics, Inc.'s unaudited financial statements and management's discussion and analysis ITEM 1. FINANCIAL STATEMENTS Presents GlycoMimetics, Inc.'s unaudited financial statements, including balance sheets, statements of operations, stockholders' equity, cash flows, and detailed notes Balance Sheets Presents the company's financial position through comparative balance sheets Balance Sheet Highlights (June 30, 2019 vs. December 31, 2018) | Metric | June 30, 2019 (Unaudited) | December 31, 2018 | | :-------------------------------- | :------------------------ | :-------------------- | | Assets | | | | Cash and cash equivalents | $184,167,114 | $209,917,595 | | Total current assets | $186,468,724 | $212,269,119 | | Total assets | $192,334,843 | $214,839,272 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $10,632,887 | $8,763,154 | | Total liabilities | $13,775,900 | $9,374,777 | | Total stockholders' equity | $178,558,943 | $205,464,495 | | Accumulated deficit | $(230,464,451) | $(200,550,739) | - Total assets decreased from $214.8 million at December 31, 2018, to $192.3 million at June 30, 2019, primarily driven by a reduction in cash and cash equivalents[8] - Total liabilities increased from $9.4 million at December 31, 2018, to $13.8 million at June 30, 2019, largely due to the recognition of operating lease liabilities[8] Statements of Operations and Comprehensive Loss Details the company's financial performance and comprehensive loss for the reported periods Statements of Operations and Comprehensive Loss Highlights | Metric (in thousands) | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :---------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue | $— | $— | $— | $— | | Research and development expense | $13,065 | $9,302 | $24,838 | $18,324 | | General and administrative expense | $3,751 | $2,847 | $7,111 | $5,702 | | Total costs and expenses | $16,816 | $12,149 | $31,949 | $24,026 | | Loss from operations | $(16,816) | $(12,149) | $(31,949) | $(24,026) | | Interest income | $986 | $870 | $2,035 | $1,234 | | Net loss and comprehensive loss | $(15,830) | $(11,279) | $(29,914) | $(22,792) | | Basic and diluted net loss per common share | $(0.37) | $(0.26) | $(0.69) | $(0.58) | - Net loss increased significantly for both the three-month and six-month periods ended June 30, 2019, compared to 2018, primarily due to higher research and development expenses[10] - Research and development expenses increased by $3.8 million (40%) for the three months and $6.5 million (36%) for the six months ended June 30, 2019, driven by clinical trial activities for uproleselan[10] Statements of Stockholders' Equity Outlines changes in stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit Stockholders' Equity Changes (Six-Month Period Ended June 30, 2019) | Item | Common Stock Shares | Common Stock Amount | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders' Equity | | :---------------------- | :-------------------- | :------------------ | :------------------------- | :------------------ | :------------------------- | | Balance at Dec 31, 2018 | 43,160,751 | $43,159 | $405,972,075 | $(200,550,739) | $205,464,495 | | Exercise of options | 32,439 | $33 | $106,288 | — | $106,321 | | Stock-based compensation | — | — | $2,901,839 | — | $2,901,839 | | Net loss | — | — | — | $(29,913,712) | $(29,913,712) | | Balance at June 30, 2019 | 43,193,190 | $43,192 | $408,980,202 | $(230,464,451) | $178,558,943 | - Total stockholders' equity decreased from $205.5 million at December 31, 2018, to $178.6 million at June 30, 2019, primarily due to the net loss incurred during the period[13] - Additional paid-in capital increased by approximately $3.0 million, mainly from stock-based compensation and option exercises[13] Statements of Cash Flows Summarizes the company's cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary (Six Months Ended June 30) | Activity (in thousands) | 2019 | 2018 | | :---------------------- | :----- | :----- | | Net cash used in operating activities | $(25,742) | $(23,267) | | Net cash used in investing activities | $(114) | $(42) | | Net cash provided by financing activities | $106 | $128,819 | | Net change in cash and cash equivalents | $(25,750) | $105,510 | | Cash and cash equivalents, end of period | $184,167 | $229,435 | - Net cash used in operating activities increased to $25.7 million in 2019 from $23.3 million in 2018, driven by higher clinical development and manufacturing costs[16][132] - Financing activities provided significantly less cash in 2019 ($0.1 million) compared to 2018 ($128.8 million), as 2018 included proceeds from a public offering[16][134] Notes to Unaudited Financial Statements Provides detailed explanations and disclosures supporting the unaudited financial statements 1. Description of the Business Describes the company's core business, drug development focus, and financial outlook - GlycoMimetics, Inc. is a clinical-stage biotechnology company focused on discovering and developing novel glycomimetic drugs for diseases where carbohydrate biology is key, such as inflammation, cancer, and infection[19] - The company has not commercialized any drug candidates and has incurred significant operating losses since inception, relying on equity financings and expects continued losses[20] - Management believes current funds are sufficient for operations through at least 12 months from the report filing date and plans to fund future operations through additional equity/debt offerings or strategic partnerships[20] 2. Significant Accounting Policies Outlines the key accounting principles and policies applied in preparing the financial statements - The financial statements are unaudited and prepared in accordance with U.S. GAAP and SEC rules for interim financial information, reflecting normal recurring adjustments[22] - The company adopted ASU 2016-02 Leases (Topic 842) effective January 1, 2019, recognizing right-of-use assets and lease liabilities of approximately $3.6 million and $4.3 million, respectively, with no material impact on net earnings or cash flows[46] - Revenue recognition for licensing agreements follows ASC Topic 606, where non-refundable up-front fees are recognized when the license is transferred, and milestone payments are included in the transaction price if probable of not resulting in a significant revenue reversal[27][28][31] 3. Prepaid Expenses and Other Current Assets Details the composition and changes in prepaid expenses and other current assets Prepaid Expenses and Other Current Assets | Item | June 30, 2019 | December 31, 2018 | | :-------------------------------- | :------------ | :---------------- | | Prepaid research and development expenses | $1,594,492 | $1,608,768 | | Other prepaid expenses | $394,006 | $329,634 | | Other receivables | $313,112 | $413,122 | | Total | $2,301,610 | $2,351,524 | - Total prepaid expenses and other current assets slightly decreased from $2.35 million at December 31, 2018, to $2.30 million at June 30, 2019[50] 4. Property and Equipment Summarizes the company's property and equipment, net of accumulated depreciation Property and Equipment, Net | Item | June 30, 2019 | December 31, 2018 | | :----------------------- | :------------ | :---------------- | | Property and equipment | $2,654,149 | $2,540,868 | | Less accumulated depreciation | $(1,724,251) | $(1,583,642) | | Property and equipment, net | $929,898 | $957,226 | | Depreciation expense (3 months) | $71,191 | $69,560 | | Depreciation expense (6 months) | $141,631 | $138,317 | - Net property and equipment decreased slightly from $957,226 at December 31, 2018, to $929,898 at June 30, 2019[51] 5. Accrued Expenses Presents the breakdown and changes in accrued expenses Accrued Expenses | Item | June 30, 2019 | December 31, 2018 | | :-------------------------------- | :------------ | :---------------- | | Accrued research and development expenses | $4,663,931 | $3,483,741 | | Accrued consulting and other professional fees | $431,754 | $140,397 | | Accrued employee benefits | $513,787 | $385,789 | | Other accrued expenses | $153,340 | $263,693 | | Total | $5,762,812 | $4,273,620 | - Total accrued expenses increased by approximately $1.5 million, or 34.8%, from $4.27 million at December 31, 2018, to $5.76 million at June 30, 2019, primarily due to higher accrued research and development expenses[52] 6. Leases Details the company's lease arrangements and related financial impacts - Upon adoption of ASU 2016-02 on January 1, 2019, the Company recorded a right-of-use asset of $3.6 million and a corresponding lease liability of $4.3 million for its operating lease of office and research space[58] - The weighted-average remaining lease term as of June 30, 2019, was 4.3 years, with a discount rate of 8.01% used for present value calculations[58][59][60] Operating Lease Costs and Liabilities | Item | 3 Months Ended June 30, 2019 | 6 Months Ended June 30, 2019 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Operating lease cost | $232,036 | $464,026 | | Variable lease cost | $84,723 | $176,481 | | Total operating lease cost | $316,759 | $640,507 | | Cash paid for operating leases | $255,493 | $508,880 | Maturities of Lease Liability (as of June 30, 2019): | Period | Operating Lease Obligation | | :-------------------------- | :------------------------- | | July 1, 2019 - Dec 31, 2019 | $518,028 | | 2020 | $1,052,581 | | 2021 | $1,078,895 | | 2022 | $1,105,867 | | 2023 | $846,830 | | Total | $4,602,201 | | Present value of lease payments | $3,904,324 | 7. Stockholders' Equity Provides information on stock option activity and changes in stockholders' equity - As of June 30, 2019, $80.0 million remained available to be sold under the September 2017 at-the-market sales agreement, with no shares sold during the six months ended June 30, 2019 or 2018[62] Stock Option Activity (2013 Plan, Six Months Ended June 30, 2019) | Item | Outstanding Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (In thousands) | | :-------------------------- | :------------------ | :------------------------------ | :-------------------------------------------------- | :--------------------------------------- | | Outstanding as of Dec 31, 2018 | 3,265,254 | $8.39 | 7.1 | | | Options granted | 1,172,596 | $11.00 | | | | Options exercised | (16,606) | $5.66 | | | | Options forfeited | (4,175) | $16.24 | | | | Outstanding as of June 30, 2019 | 4,417,069 | $10.45 | 7.4 | $12,795 | | Exercisable as of June 30, 2019 | 2,450,440 | $9.00 | 6.1 | $9,830 | - Total unrecognized compensation expense related to unvested options under the 2013 Plan was $14.6 million as of June 30, 2019, to be recognized over approximately 2.8 years[70] 8. Income Taxes Discusses the company's income tax position and deferred tax assets - The Company has not recorded any tax provision or benefit for the six months ended June 30, 2019 and 2018[73] - A full valuation allowance has been provided for net deferred tax assets, as realization of future benefits is not more-likely-than-not[73] 9. Research and License Agreements Outlines key research and license agreements, including milestone and royalty terms - The Pfizer Agreement grants Pfizer an exclusive worldwide license to rivipansel, with GlycoMimetics responsible for Phase 2 clinical trials and Pfizer for further development and commercialization[74] - GlycoMimetics received an up-front payment of $22.5 million and is eligible for potential milestone payments up to $115.0 million for development, $70.0 million for regulatory, and $135.0 million for sales milestones, plus tiered royalties[74][97] - No revenue was recognized under the Pfizer Agreement during the six months ended June 30, 2019 or 2018, as all milestone amounts were fully constrained[76][99] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Provides management's perspective on the company's financial condition and operational results for the three and six months ended June 30, 2019, compared to 2018 Overview Provides a high-level overview of the company's business, drug pipeline, and financial status - GlycoMimetics is a clinical-stage biotechnology company developing novel glycomimetic drugs for diseases involving carbohydrate biology, focusing on orphan diseases[82][84] - Rivipansel, a pan-selectin antagonist for vaso-occlusive crisis in sickle cell disease, is in Phase 3 clinical trials by Pfizer, with top-line data expected in Q3 2019[84][85] - Uproleselan, an E-selectin inhibitor for AML, is in a randomized Phase 3 clinical trial for relapsed/refractory AML (enrollment began Q4 2018, top-line results expected by end of 2020) and a Phase 2/3 trial for newly untreated AML in collaboration with NCI (enrollment began early 2019)[86][87][89] - The company is also developing GMI-1359, targeting E-selectin and CXCR4 for solid tumors, with a Phase 1b trial in breast cancer patients expected in H2 2019[91] - Since inception, the company has incurred significant operating losses, with an accumulated deficit of $230.5 million as of June 30, 2019, and expects continued losses[95] Our Collaboration with Pfizer Details the collaboration agreement with Pfizer for rivipansel, including milestone and royalty terms - The 2011 license agreement grants Pfizer exclusive worldwide rights to rivipansel, with GlycoMimetics eligible for up to $320 million in potential milestone payments and tiered royalties[97] - Milestone payments of $15.0 million (May 2014) and $20.0 million (June 2015) were received and recognized as revenue[99] - No milestone payments were received or recorded as revenue from Pfizer for the six months ended June 30, 2019 or 2018[99] - GlycoMimetics owes the University of Basel 10% of all milestone and royalty payments received from Pfizer for rivipansel, with no payments due for the six months ended June 30, 2019 or 2018[100] Critical Accounting Policies and Significant Judgments and Estimates Highlights critical accounting policies and significant management judgments and estimates - Management's financial statements rely on estimates and judgments, particularly for revenue recognition, accrued R&D expenses, stock-based compensation, and income taxes[101] - No material changes to critical accounting policies have occurred since December 31, 2018[102] Components of Operating Results Provides an overview of components of operating results Revenue Discusses the company's revenue sources and recognition policies - The company has not generated revenue from drug sales and does not expect to in the near future; all revenue to date consists of up-front and milestone payments from Pfizer and nominal research grants[103][104] Research and Development Explains the nature and trends of research and development expenses - R&D expenses are recognized as incurred and include compensation, facilities, supplies, clinical trials, manufacturing, and consulting fees[105][108] - R&D expenses are expected to increase as uproleselan, GMI-1359, and other drug candidates progress through clinical development, including scaling up manufacturing for potential marketing approval[109] - The duration, costs, and timing of clinical trials are highly uncertain and depend on factors like patient enrollment, trial sites, regulatory requirements, and drug efficacy/safety[110] General and Administrative Describes the components and trends of general and administrative expenses - G&A expenses primarily cover salaries, stock-based compensation, facility costs, legal fees (patent and corporate), and accounting/consulting services[111] - G&A expenses are anticipated to increase to support ongoing R&D activities[111] Interest Income Details the sources and trends of interest income - Interest income is derived from cash and cash equivalents[112] Results of Operations Analyzes the company's financial performance for the reported periods Research and Development Expense Provides an overview of research and development expense R&D Expense by Functional Area (in thousands) | Functional Area | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | Change | | :------------------------------------ | :--------------------------- | :--------------------------- | :----- | | Clinical development | $2,512 | $1,438 | $1,074 | | Manufacturing and formulation | $6,033 | $4,451 | $1,582 | | Personnel-related | $2,595 | $1,886 | $709 | | Stock-based compensation | $579 | $427 | $152 | | Total R&D expense | $13,065 | $9,302 | $3,763 | | Functional Area | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | Change | | :------------------------------------ | :--------------------------- | :--------------------------- | :----- | | Clinical development | $5,119 | $2,296 | $2,823 | | Manufacturing and formulation | $11,276 | $9,340 | $1,936 | | Personnel-related | $4,914 | $3,745 | $1,169 | | Stock-based compensation | $1,087 | $853 | $234 | | Total R&D expense | $24,838 | $18,324 | $6,514 | - R&D expense increased by $3.8 million (40%) and $6.5 million (36%) for the three and six months ended June 30, 2019, respectively, primarily due to higher clinical development and manufacturing costs for uproleselan's Phase 3 trial[115] R&D Expense by Drug Candidate (in thousands) | Drug Candidate | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | Change | | :------------------------------------ | :--------------------------- | :--------------------------- | :----- | | Uproleselan | $8,870 | $6,099 | $2,771 | | GMI-1359 | $71 | $160 | $(89) | | Other R&D | $950 | $730 | $220 | | Personnel-related and stock-based compensation | $3,174 | $2,313 | $861 | | Total R&D expense | $13,065 | $9,302 | $3,763 | | Drug Candidate | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | Change | | :------------------------------------ | :--------------------------- | :--------------------------- | :----- | | Uproleselan | $16,744 | $12,123 | $4,621 | | GMI-1359 | $237 | $165 | $72 | | Other R&D | $1,857 | $1,438 | $419 | | Personnel-related and stock-based compensation | $6,000 | $4,598 | $1,402 | | Total R&D expense | $24,838 | $18,324 | $6,514 | General and Administrative Expense Provides an overview of general and administrative expense G&A Expense Components (in thousands) | Component | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | Change | | :------------------------------------ | :--------------------------- | :--------------------------- | :----- | | Personnel-related | $1,115 | $837 | $278 | | Stock-based compensation | $941 | $723 | $218 | | Legal, consulting and other professional expenses | $1,490 | $1,088 | $402 | | Total G&A expense | $3,751 | $2,847 | $904 | | Component | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | Change | | :------------------------------------ | :--------------------------- | :--------------------------- | :----- | | Personnel-related | $2,249 | $1,792 | $457 | | Stock-based compensation | $1,815 | $1,414 | $401 | | Legal, consulting and other professional expenses | $2,626 | $2,117 | $509 | | Total G&A expense | $7,111 | $5,702 | $1,409 | - G&A expense increased by $904,000 (32%) and $1.4 million (25%) for the three and six months ended June 30, 2019, respectively, due to increased headcount, salary adjustments, stock option awards, and higher legal expenses[118] Interest Income Provides an overview of interest income - Interest income increased by $116,000 (13%) and $801,000 (65%) for the three and six months ended June 30, 2019, respectively, driven by higher average cash balances following a public offering in March 2018[119] Liquidity and Capital Resources Assesses the company's financial liquidity and capital funding strategies Sources of Liquidity Identifies the primary sources of the company's liquidity - The company's operations are financed primarily through public offerings, private placements of capital stock, and up-front/milestone payments from Pfizer[120] - As of June 30, 2019, cash and cash equivalents totaled $184.2 million[120] - The company has an at-the-market sales agreement with Cowen for up to $100.0 million of common stock, with $80.0 million remaining available as of June 30, 2019, and no sales during the current reporting period[122] Funding Requirements Outlines the company's anticipated capital expenditure and funding needs - Primary capital uses include compensation, R&D services, laboratory supplies, clinical/manufacturing costs, legal/regulatory expenses, and general overhead[123] - Future funding needs are uncertain due to the unpredictable nature of drug development, including clinical trial success, regulatory approvals, and commercialization[124][126] - Additional capital may be required through equity/debt financings or collaborations, which could dilute stockholders or impose restrictive covenants[127][128] Outlook Provides management's perspective on future financial and operational expectations - Existing cash and cash equivalents are expected to fund operations at least through the receipt of preliminary results from the Phase 3 clinical trial of uproleselan in relapsed/refractory AML, anticipated by the end of 2020[129] Cash Flows Analyzes cash flows from operating, investing, and financing activities Operating Activities Details cash flows generated from or used in operating activities - Net cash used in operating activities for the six months ended June 30, 2019, was $25.7 million, primarily due to ongoing uproleselan clinical development programs, including significant manufacturing and clinical costs[131][132] Investing Activities Summarizes cash flows related to investing activities - Net cash used in investing activities for the six months ended June 30, 2019, was $114,000, primarily for computer and laboratory equipment[131][133] Financing Activities Explains cash flows from financing activities, including equity offerings - Net cash provided by financing activities for the six months ended June 30, 2019, was $106,000, solely from stock option exercises[131][134] - In contrast, the prior year period (2018) saw $128.8 million from financing activities, including $128.4 million from a public offering[131][134] Off-Balance Sheet Arrangements Reports on any off-balance sheet arrangements impacting the company - The company did not have any off-balance sheet arrangements during the six months ended June 30, 2019[135] JOBS Act Discusses the company's election regarding the JOBS Act accounting transition period - The company has irrevocably elected not to use the extended transition period for complying with new or revised accounting standards provided by the JOBS Act, adopting new standards on the same dates as other public companies[136] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Discloses the company's exposure to market risks, primarily interest rate sensitivity - The company's primary market risk exposure is interest rate sensitivity, affecting its cash and cash equivalents[137] - As of June 30, 2019, cash and cash equivalents totaled $184.2 million, held in interest-bearing money market accounts[137] - Due to the short-term maturities and low-risk profile of investments, a 100 basis point change in interest rates would not materially affect the fair market value of cash equivalents[137] ITEM 4. CONTROLS AND PROCEDURES Details the evaluation of disclosure controls and procedures and changes in internal controls (a) Evaluation of Disclosure Controls and Procedures Reports on the effectiveness of the company's disclosure controls and procedures - Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2019[140] - They concluded that disclosure controls and procedures were effective at a reasonable assurance level[140] (b) Changes in Internal Controls Over Financial Reporting Reports on any material changes in internal controls over financial reporting - There have been no material changes in internal controls over financial reporting during the fiscal quarter ended June 30, 2019[141] PART II. OTHER INFORMATION Presents other required information not covered in the financial statements section ITEM 1. LEGAL PROCEEDINGS Reports on any material legal proceedings involving the company - The company is not currently a party to any material legal proceedings and is unaware of any pending or threatened legal actions that could materially adversely affect its business, operating results, cash flows, or financial condition[142] ITEM 1A. RISK FACTORS Refers to the company's risk factors that could adversely affect its financial condition and results of operations - Risk factors have not materially changed from those described in the Annual Report on Form 10-K for the fiscal year ended December 31, 2018[143] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS Reports on any unregistered sales of equity securities and the use of proceeds - There were no unregistered sales of equity securities or use of proceeds to report[144] ITEM 6. EXHIBITS Lists all exhibits filed with the Form 10-Q, including corporate documents and certifications - The exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, specimen stock certificate, Amended and Restated Non-Employee Director Compensation Policy, and Amended and Restated Executive Employment Agreements for key personnel[145] - Certifications of Principal Executive Officer and Principal Financial Officer under Sections 302 and 906 of the Sarbanes-Oxley Act are also included[145] SIGNATURES Contains the required signatures for the Form 10-Q filing - The report was signed by Brian M. Hahn, Chief Financial Officer and Senior Vice President, on August 1, 2019[150]