Galera(GRTX) - 2020 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited interim consolidated financial statements for Q3 2020 reflect decreased assets, increased liabilities, and a higher net loss from rising operating expenses Consolidated Balance Sheets As of September 30, 2020, total assets decreased to $98.1 million, total liabilities increased to $73.4 million, and stockholders' equity declined significantly Consolidated Balance Sheets (in thousands) | Financial Metric | September 30, 2020 (in thousands) | December 31, 2019 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $15,232 | $18,356 | | Short-term investments | $73,919 | $93,934 | | Total current assets | $92,304 | $117,570 | | Total assets | $98,075 | $123,376 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $10,503 | $9,694 | | Royalty purchase liability | $62,114 | $43,251 | | Total liabilities | $73,380 | $53,768 | | Total stockholders' equity | $24,695 | $69,608 | | Total liabilities and stockholders' equity | $98,075 | $123,376 | Consolidated Statements of Operations For the nine months ended September 30, 2020, net loss increased to $54.2 million, driven by higher Research and Development and General and Administrative expenses Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | | Research and development | $40,225 | $29,057 | | General and administrative | $11,384 | $5,466 | | Loss from operations | $(51,609) | $(34,523) | | Net loss | $(54,152) | $(35,258) | | Net loss per share, basic and diluted | $(2.18) | $(137.85) | Consolidated Statements of Cash Flows For the nine months ended September 30, 2020, net cash used in operating activities increased to $43.1 million, resulting in a $3.1 million decrease in cash and cash equivalents Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | | Cash used in operating activities | $(43,087) | $(31,385) | | Cash provided by investing activities | $19,689 | $13,965 | | Cash provided by financing activities | $20,274 | $18,328 | | Net (decrease) increase in cash | $(3,124) | $908 | Notes to Unaudited Interim Consolidated Financial Statements Notes detail the company's biopharmaceutical business, liquidity, COVID-19 impact on trials, and the amended royalty purchase liability with Blackstone - The company is a clinical-stage biopharmaceutical company focused on developing therapeutics to transform radiotherapy, with its lead product candidate, avasopasem manganese (GC4419), in a Phase 3 registrational trial (ROMAN) for the reduction of severe oral mucositis (SOM)[31] - The company anticipates that its existing cash, cash equivalents, short-term investments, and expected payments from Blackstone Life Sciences of $57.5 million will fund its operating expenses and capital requirements into the second half of 2022[32] - Due to COVID-19, the company delayed its Phase 2a trial in Europe (EUSOM) and now expects to enroll approximately 35 patients instead of 70, increasing the target enrollment for the ROMAN trial to approximately 450 patients to compensate[46] - The company entered into an amended Royalty Agreement with Blackstone, increasing the total potential Royalty Purchase Price by $37.5 million to $117.5 million, with proceeds accounted for as a debt instrument[54][56] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses radiotherapy therapeutics development, increased R&D and G&A expenses, liquidity into H2 2022, and COVID-19 impacts on clinical trials Overview and Business Update Galera is a clinical-stage biopharmaceutical company with lead candidate avasopasem in a Phase 3 trial, impacted by COVID-19 delays and increased ROMAN trial enrollment - The company's lead product candidate, avasopasem, is in a Phase 3 registrational trial (ROMAN) for severe oral mucositis (SOM), with topline data expected in the second half of 2021[76] - Interim data from a pilot Phase 1/2 trial of avasopasem with SBRT in pancreatic cancer showed a positive trend in overall survival (HR=0.4)[77] - Due to COVID-19, the European EUSOM trial was delayed and enrollment target was reduced, while the ROMAN trial enrollment target was increased to approximately 450 patients to maintain the planned safety database size[85] - In September 2020, the company initiated a pilot Phase 2 clinical trial of avasopasem to evaluate its ability to improve 28-day mortality in hospitalized patients critically ill with COVID-19[87] Results of Operations For the nine months ended September 30, 2020, R&D expenses increased by $11.2 million and G&A expenses rose by $5.9 million, driven by trial costs and public company operations R&D Expenses by Program (in thousands) | R&D Expenses by Program (in thousands) | Nine months ended Sep 30, 2020 | Nine months ended Sep 30, 2019 | | :--- | :--- | :--- | | Avasopasem manganese (GC4419) | $25,776 | $18,471 | | GC4711 | $3,935 | $4,367 | | Other research and development expense | $3,180 | $1,425 | | Personnel related and share-based compensation | $7,334 | $4,794 | | Total | $40,225 | $29,057 | - Research and development expense increased by $11.2 million for the nine months ended September 30, 2020, primarily due to a $7.3 million increase in avasopasem development costs for the ROMAN trial and manufacturing scale-up activities[107] - General and administrative expense increased by $5.9 million for the nine months ended September 30, 2020, mainly due to increased employee headcount, share-based compensation, insurance, and professional fees associated with being a public company[109] Liquidity and Capital Resources As of September 30, 2020, the company had $89.2 million in cash and investments, with existing funds and expected Blackstone payments projected to fund operations into H2 2022 - As of September 30, 2020, the company had $89.2 million in cash, cash equivalents, and short-term investments[112] - Net cash used in operating activities for the nine months ended September 30, 2020, was $43.1 million, compared to $31.4 million for the same period in 2019[113][114][115] - The company expects its existing cash and expected payments from Blackstone Life Sciences will be sufficient to fund operating expenses and capital expenditure requirements into the second half of 2022[121] - In May 2020, the Royalty Agreement with Blackstone was amended, increasing the total potential proceeds by $37.5 million to $117.5 million[128] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Galera Therapeutics, Inc. is not required to provide market risk disclosures - The company is a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and is not required to provide the information otherwise required under this Item[137] Item 4. Controls and Procedures As of September 30, 2020, management concluded disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2020[139] - No changes in internal control over financial reporting were identified during the quarter ended September 30, 2020, that materially affected, or are reasonably likely to materially affect, internal controls[140] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently subject to any material legal proceedings - The company is not subject to any material legal proceedings[143] Item 1A. Risk Factors This section highlights new and evolving risks, particularly those associated with the COVID-19 pandemic, impacting clinical trial timelines, regulatory approvals, and supply chain - The COVID-19 pandemic has adversely impacted the business, including preclinical studies and clinical trials, leading to the delay of the Phase 2a trial in Europe and an increased enrollment target for the ROMAN trial[146] - Potential future disruptions from the pandemic include delays in regulatory approvals, difficulties in patient enrollment, interruption of clinical trial activities, and delays in receiving supplies from contract manufacturing organizations[147][155] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Net proceeds of approximately $58.0 million from the IPO have been invested in money market funds and U.S. Treasury obligations, with no material change in planned use - Net proceeds of approximately $58.0 million from the company's IPO have been invested in money market funds and U.S. Treasury obligations, with no material change in the expected use of proceeds[149][150] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[151] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[153] Item 5. Other Information The company reports no other information for this item - None[154] Item 6. Exhibits This section lists exhibits filed or furnished with the Quarterly Report on Form 10-Q, including corporate governance documents and officer certifications