Galera(US:GRTX)2024-12-13 12:17PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The company's financial position significantly weakened by September 30, 2024, marked by substantial decreases in cash and total assets, a reduced net loss due to expense cuts, and negative operating cash flow without 2024 financing activities Consolidated Balance Sheets As of September 30, 2024, total assets sharply declined to $8.9 million from $26.1 million, primarily due to reduced cash and asset write-offs, while total liabilities decreased slightly and the stockholders' deficit widened Consolidated Balance Sheet Highlights (in thousands) | Metric | September 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $8,455 | $18,257 | | Total Assets | $8,901 | $26,141 | | Total Liabilities | $151,963 | $157,326 | | Royalty purchase liability | $151,049 | $151,049 | | Total stockholders' deficit | $(143,062) | $(131,185) | - In August 2024, the company wrote off its IPR&D asset ($2.3 million) and related goodwill ($0.9 million) in their entirety after the board approved a Plan of Dissolution, concluding the assets were impaired48 Consolidated Statements of Operations For the nine months ended September 30, 2024, the company significantly reduced its net loss to $14.0 million from $53.5 million in 2023, driven by sharp cuts in R&D and G&A expenses, alongside asset write-offs and a litigation settlement gain Operating Results (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Research and development | $3,223 | $20,926 | | General and administrative | $9,307 | $20,849 | | Write-off of intangible asset & goodwill | $3,139 | $0 | | Gain on litigation settlement | $(975) | $0 | | Loss from operations | $(14,694) | $(44,084) | | Net loss | $(14,026) | $(53,495) | | Net loss per share | $(0.26) | $(1.30) | Consolidated Statements of Cash Flows Net cash used in operating activities significantly decreased to $9.8 million for the nine months ended September 30, 2024, with no financing activities, resulting in a $9.8 million reduction in cash and cash equivalents Cash Flow Summary (in thousands) | Metric | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(9,806) | $(34,933) | | Net cash provided by investing activities | $4 | $23,318 | | Net cash provided by financing activities | $0 | $31,728 | | Net (decrease) increase in cash | $(9,802) | $20,113 | | Cash and cash equivalents at end of period | $8,455 | $24,429 | Management's Discussion and Analysis of Financial Condition and Results of Operations Following the cessation of clinical development and unapproved dissolution plan, management is exploring strategic alternatives, with operations scaled back and current cash expected to fund operations for at least twelve months despite Nasdaq delisting - Following the FDA's CRL for avasopasem requiring an additional trial, the company halted development, wound down commercial readiness, and reduced its workforce by approximately 70% in August 2023303195 - A plan of dissolution and liquidation was not approved by stockholders on October 17, 2024. The company is now exploring other alternatives, including a merger, asset sale, or another dissolution attempt later3499101 - The company's common stock was delisted from Nasdaq and began trading on the OTC Pink Market on June 4, 2024, which may negatively impact stock price and liquidity103 - As of September 30, 2024, the company had $8.5 million in cash and cash equivalents, which is expected to fund operating expenses for at least twelve months135 Results of Operations Operating expenses significantly decreased in the first nine months of 2024 due to reduced R&D and G&A following clinical trial cessation, alongside non-cash impairment charges and a litigation settlement gain Comparison of Operating Results (in thousands) | Metric | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | Change | | :--- | :--- | :--- | :--- | | Research and development | $3,223 | $20,926 | $(17,703) | | General and administrative | $9,307 | $20,849 | $(11,542) | | Write-off of intangible asset & goodwill | $3,139 | $— | $3,139 | | Gain on litigation settlement | $(975) | $— | $(975) | | Restructuring costs | $— | $2,309 | $(2,309) | | Loss from operations | $(14,694) | $(44,084) | $29,390 | Liquidity and Capital Resources The company, historically funded by equity and a royalty agreement, holds $8.5 million in cash as of September 30, 2024, expected to fund operations for twelve months, with no 2024 financing activities and suspended interest accretion on its royalty liability - The company has funded operations through $377.0 million in aggregate gross proceeds from equity sales and $117.5 million from a Royalty Agreement with Blackstone Life Sciences132 - The company suspended accreting interest on its royalty purchase liability in October 2023 due to the unlikelihood of generating future royalties after halting its clinical programs66130 Quantitative and Qualitative Disclosures About Market Risk The company is a smaller reporting company and is not required to provide the information for this item - As a smaller reporting company as defined in Rule 12b-2 of the Exchange Act, the company is not required to provide the information otherwise required under this Item 3154 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal control over financial reporting identified during the quarter - Based on an evaluation as of the end of the reporting period, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective157 - There were no changes in internal control over financial reporting during the quarter ended September 30, 2024, that materially affected, or are reasonably likely to materially affect, internal controls158 PART II. OTHER INFORMATION Legal Proceedings On August 2, 2024, the company settled a lawsuit against its CROs, receiving $975,000 in exchange for mutual releases and termination of the litigation - The company settled litigation against its CROs for $975,000 on August 2, 2024, related to an error in the Phase 3 ROMAN trial statistical program161 Risk Factors The company highlights substantial risks for investors, including the failure to approve dissolution, stock delisting to the OTC Pink Market impacting liquidity, and a history of significant, ongoing operating losses - The failure of stockholders to approve the Plan of Dissolution means the company must continue to explore other, potentially less valuable, strategic alternatives like a merger, asset sale, or bankruptcy165 - The company's common stock is quoted on the OTC Pink Market, which is less regulated than Nasdaq and may result in lower liquidity and a depressed trading price171 - The company has a history of significant operating losses ($59.1 million in 2023) and an accumulated deficit of $437.4 million as of December 31, 2023, with losses expected to continue167168 Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the reporting period - None175 Defaults Upon Senior Securities There were no defaults upon senior securities during the reporting period - None176 Mine Safety Disclosures This item is not applicable to the company - Not applicable177 Other Information This section discloses material impairments to the company's IPR&D asset and goodwill, resulting in non-cash charges of $2.3 million and $0.9 million respectively, with no Rule 10b5-1 trading plan changes by officers or directors - The company recognized non-cash impairment charges of $2.3 million for its IPR&D asset and $0.9 million for goodwill during the third quarter of 2024180 Exhibits This section lists the exhibits filed or furnished with the quarterly report, including corporate governance documents, a separation agreement, and officer certifications