GlycoMimetics(GLYC) - 2019 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents GlycoMimetics, Inc.'s unaudited financial statements and management's analysis, detailing financial performance, liquidity, and market risks ITEM 1. FINANCIAL STATEMENTS This section presents GlycoMimetics, Inc.'s unaudited financial statements, reflecting continued operating losses and decreased equity due to R&D and lack of financing Balance Sheets Balance Sheet Highlights (Unaudited): | Metric | September 30, 2019 | December 31, 2018 | | :-------------------------------- | :------------------- | :------------------- | | Cash and cash equivalents | $170,886,792 | $209,917,595 | | Total current assets | $174,796,771 | $212,269,119 | | Total assets | $180,454,643 | $214,839,272 | | Total current liabilities | $10,436,339 | $8,763,154 | | Total liabilities | $13,373,666 | $9,374,777 | | Accumulated deficit | $(243,716,333) | $(200,550,739) | | Total stockholders' equity | $167,080,977 | $205,464,495 | - Cash and cash equivalents decreased by approximately $39 million from December 31, 2018, to September 30, 2019[8] - Total stockholders' equity decreased by approximately $38.4 million, primarily due to the accumulated deficit increasing by $43.1 million[8] Unaudited Statements of Operations and Comprehensive Loss Statements of Operations and Comprehensive Loss (Unaudited): | Metric | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenue | $0 | $0 | $0 | $0 | | Research and development expense | $10,724,178 | $9,729,089 | $35,562,202 | $28,052,777 | | General and administrative expense | $3,380,932 | $2,790,431 | $10,491,991 | $8,492,194 | | Total costs and expenses | $14,105,110 | $12,519,520 | $46,054,193 | $36,544,971 | | Loss from operations | $(14,105,110) | $(12,519,520) | $(46,054,193) | $(36,544,971) | | Interest income | $853,228 | $944,409 | $2,888,599 | $2,178,253 | | Net loss and comprehensive loss | $(13,251,882) | $(11,575,111) | $(43,165,594) | $(34,366,718) | | Basic and diluted net loss per common share | $(0.31) | $(0.27) | $(1.00) | $(0.85) | - Net loss increased by $1.68 million (14.5%) for the three months ended September 30, 2019, and by $8.80 million (25.6%) for the nine months ended September 30, 2019, compared to the respective prior year periods[10] - Research and development expenses increased by $995,089 (10.2%) for the three months and $7,509,425 (26.8%) for the nine months ended September 30, 2019, year-over-year[10] Unaudited Statements of Stockholders' Equity Changes in Stockholders' Equity (Nine Months Ended September 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 | 199,198 | $199 | $292,892 | — | $293,091 | | Stock-based compensation | — | — | $4,488,985 | — | $4,488,985 | | Net loss | — | — | — | $(43,165,594) | $(43,165,594) | | Balance at Sep 30, 2019 | 43,359,949 | $43,358 | $410,753,952 | $(243,716,333) | $167,080,977 | - Total stockholders' equity decreased by $38.38 million during the nine months ended September 30, 2019, primarily due to the net loss[13] Unaudited Statements of Cash Flows Statements of Cash Flows (Nine Months Ended September 30): | Activity | 2019 | 2018 | | :-------------------------------- | :----------- | :------------ | | Net cash used in operating activities | $(39,191,323) | $(33,351,130) | | Net cash used in investing activities | $(132,571) | $(68,614) | | Net cash provided by financing activities | $293,091 | $129,323,640 | | Net change in cash and cash equivalents | $(39,030,803) | $95,903,896 | | Cash and cash equivalents, end of period | $170,886,792 | $219,828,634 | - Net cash used in operating activities increased by $5.84 million in 2019 compared to 2018[16] - Net cash provided by financing activities significantly decreased from $129.3 million in 2018 (due to a public offering) to $0.29 million in 2019[16] Notes to Unaudited Financial Statements - GlycoMimetics, Inc. is a clinical-stage biotechnology company focused on discovering and developing novel glycomimetic drugs for diseases where carbohydrate biology plays a key role, such as inflammation, cancer, and infection. The company has not commercialized any drug candidates and expects to incur significant operating losses for the foreseeable future[19][20] - The company adopted ASU 2016-02 Leases (Topic 842) effective January 1, 2019, recognizing right-of-use assets of approximately $3.6 million and related lease liabilities of $4.3 million for operating leases. The adoption did not materially affect net earnings or cash flows[46][58] - Under the Pfizer Agreement for rivipansel, Pfizer announced on August 2, 2019, that the pivotal Phase 3 clinical trial did not meet its primary or key secondary efficacy endpoints. As a result, GlycoMimetics does not currently expect to receive any further milestone payments or royalties under this agreement[34][74][77] Stock-Based Compensation Expense: | Expense Category | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Research and development expense | $610,506 | $429,477 | $1,697,171 | $1,282,040 | | General and administrative expense | $976,641 | $741,646 | $2,791,814 | $2,155,301 | | Total stock-based compensation expense | $1,587,147 | $1,171,123 | $4,488,985 | $3,437,341 | - As of September 30, 2019, there was $13,050,347 of total unrecognized compensation expense related to unvested options under the 2013 Plan, to be recognized over a weighted-average period of approximately 2.7 years[70] - In September 2019, the company granted 332,106 Restricted Stock Units (RSUs) to non-executive employees, with $1,477,649 of associated unrecognized compensation expense to be recognized over approximately two years[71] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses the company's financial condition and operational results, focusing on clinical drug development, ongoing losses, increasing R&D, and future capital needs Overview - GlycoMimetics is a clinical-stage biotechnology company developing glycomimetic drugs for rare diseases, focusing on inflammation, cancer, and infection[84][85] - Uproleselan, a lead drug candidate for Acute Myeloid Leukemia (AML), is in a randomized, double-blind, placebo-controlled Phase 3 clinical trial, with top-line results expected by the end of 2020. It has received Orphan Drug, Fast Track, and Breakthrough Therapy designations from the FDA[86][87][88][128] - GMI-1359, targeting E-selectin and CXCR4 for solid tumors metastasizing to bone, completed a Phase 1 trial, and a Phase 1b trial in breast cancer patients is anticipated in Q4 2019[90] - The Phase 3 clinical trial for rivipansel, licensed to Pfizer, did not meet its primary or key secondary efficacy endpoints, leading to no expected future milestone or royalty payments from Pfizer[92] - The company has incurred significant operating losses since inception, with an accumulated deficit of $243.7 million as of September 30, 2019, and expects continued losses[94] Our Collaboration with Pfizer - The 2011 license agreement with Pfizer for rivipansel granted Pfizer exclusive worldwide rights for development and commercialization[97] - GlycoMimetics received an upfront payment of $22.5 million and $35.0 million in milestone payments through September 30, 2019[98] - Following Pfizer's announcement on August 2, 2019, that the rivipansel Phase 3 trial failed, GlycoMimetics does not expect further milestone payments or royalties[97][98] Critical Accounting Policies and Significant Judgments and Estimates - Financial statement preparation requires management estimates and judgments, particularly in revenue recognition, accrued R&D expenses, stock-based compensation, and income taxes[100] - No material changes to critical accounting policies have occurred since December 31, 2018[102] Components of Operating Results - The company has not generated revenue from drug sales; revenue primarily stems from Pfizer agreement payments and nominal research grants[103][104] - Research and development expenses are expensed as incurred and are expected to significantly increase as drug candidates progress through clinical development[105][107][108] - General and administrative expenses are expected to increase to support continued research and development activities[112] Results of Operations for the Three and Nine Months Ended September 30, 2019 and 2018 Net Loss and Comprehensive Loss (in thousands): | Period | 2019 | 2018 | Change | | :-------------------------------- | :--- | :--- | :----- | | Three Months Ended Sep 30 | $(13,252) | $(11,575) | $(1,677) | | Nine Months Ended Sep 30 | $(43,166) | $(34,367) | $(8,799) | Research and Development Expense (in thousands): | Period | 2019 | 2018 | Change | | :-------------------------------- | :--- | :--- | :----- | | Three Months Ended Sep 30 | $10,724 | $9,729 | $995 | | Nine Months Ended Sep 30 | $35,562 | $28,053 | $7,509 | - The increase in R&D expense was primarily due to higher clinical development expenses for the uproleselan Phase 3 trial and increased manufacturing costs for clinical supply, though manufacturing costs decreased in Q3 2019 year-over-year due to lower raw material purchases[116] General and Administrative Expense (in thousands): | Period | 2019 | 2018 | Change | | :-------------------------------- | :--- | :--- | :----- | | Three Months Ended Sep 30 | $3,381 | $2,790 | $591 | | Nine Months Ended Sep 30 | $10,492 | $8,492 | $2,000 | - G&A expense increased due to higher headcount, salary adjustments, stock option awards, and increased legal expenses[118] Interest Income (in thousands): | Period | 2019 | 2018 | Change | | :-------------------------------- | :--- | :--- | :----- | | Three Months Ended Sep 30 | $853 | $944 | $(91) | | Nine Months Ended Sep 30 | $2,888 | $2,178 | $710 | - Nine-month interest income increased due to higher cash balances from a March 2018 public offering, while three-month interest income decreased due to lower cash balances[120] Liquidity and Capital Resources - As of September 30, 2019, cash and cash equivalents totaled $170.9 million[121] - Existing cash and cash equivalents are expected to fund operations through at least the end of 2020, covering preliminary results from the uproleselan Phase 3 clinical trial[128] - The company will need to raise additional capital through equity or debt financings or collaboration arrangements to fund future operations, as profitability is uncertain[96][127] - The successful development of drug candidates is highly uncertain, making it difficult to estimate the nature, timing, and costs of future development or when material net cash inflows will commence[124] Cash Flows Summary of Cash Flows (Nine Months Ended September 30, in thousands): | Activity | 2019 | 2018 | | :-------------------------------- | :--- | :--- | | Net cash used in operating activities | $(39,191) | $(33,351) | | Net cash used in investing activities | $(133) | $(69) | | Net cash provided by financing activities | $293 | $129,324 | | Net change in cash and cash equivalents | $(39,031) | $95,904 | - Net cash used in operating activities increased in 2019, primarily due to ongoing costs for uproleselan clinical development programs, including manufacturing and patient enrollment for the Phase 3 trial[130] - Net cash provided by financing activities significantly decreased in 2019 compared to 2018, as 2018 included $128.4 million from a public offering, while 2019 only saw proceeds from stock option exercises[132] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company's primary market risk is interest rate sensitivity on cash and cash equivalents, with no material impact expected from a 100 basis point rate change - The primary market risk is interest rate sensitivity, affecting cash and cash equivalents held in interest-bearing money market accounts[135] - An immediate 100 basis point change in interest rates would not materially affect the fair market value of cash equivalents due to their short-term maturities and low-risk profile[135] ITEM 4. CONTROLS AND PROCEDURES Management concluded that disclosure controls and procedures were effective as of September 30, 2019, with no material changes in internal controls over financial reporting - Disclosure controls and procedures were evaluated as effective at a reasonable assurance level as of September 30, 2019[138] - No material changes in internal controls over financial reporting occurred during the fiscal quarter ended September 30, 2019[139] PART II. OTHER INFORMATION This section covers other information including legal proceedings, risk factors, equity sales, exhibits, and official signatures ITEM 1. LEGAL PROCEEDINGS The company is not currently involved in any material legal proceedings, nor are any pending or threatened actions expected to have a material adverse effect - The company is not currently a party to any material legal proceedings[140] - No pending or threatened legal proceedings are expected to have a material adverse effect on the business[140] ITEM 1A. RISK FACTORS Risk factors affecting the company's business remain materially unchanged from those disclosed in the prior Annual Report on Form 10-K - 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[141] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS No unregistered sales of equity securities or use of proceeds were reported for the period covered by this quarterly report - No unregistered sales of equity securities or use of proceeds to report[142] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, certifications, and XBRL files - Exhibits include Amended and Restated Certificate of Incorporation, Bylaws, Specimen stock certificate, Section 302 and 906 certifications, and XBRL documents[144] Signatures The Form 10-Q report was officially signed by Brian M. Hahn, CFO and SVP of GlycoMimetics, Inc., on November 7, 2019 - The report was signed by Brian M. Hahn, Chief Financial Officer and Senior Vice President, on November 7, 2019[149]