Galecto(GLTO) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Galecto, Inc.'s unaudited condensed consolidated financial statements for Q2 2025, including balance sheets, statements of operations, and cash flows, reveal liquidity challenges and going concern doubt - Galecto, Inc. is a clinical-stage biotechnology company focused on developing small molecule inhibitors for cancer and severe liver diseases, undergoing a strategic shift in September 2023 to focus on GB3226 and GB1211 while discontinuing GB2064[31][33][34] - The company's existing cash and cash equivalents of $10.2 million as of June 30, 2025, are insufficient to fund operations for the next twelve months, raising substantial doubt about its ability to continue as a going concern; management plans to raise additional capital[37][41] Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change (2025 vs 2024) | | :-------------------------------- | :------------ | :---------------- | :-------------------- | | Cash and cash equivalents | $10,211 | $14,175 | $(3,964) | | Total current assets | $13,027 | $16,839 | $(3,812) | | Total assets | $13,691 | $17,132 | $(3,441) | | Total current liabilities | $2,629 | $1,197 | $1,432 | | Total liabilities | $2,738 | $1,301 | $1,437 | | Total stockholders' equity | $10,953 | $15,831 | $(4,878) | Condensed Consolidated Statements of Operations and Comprehensive Loss Highlights (in thousands) | Metric (Three Months Ended June 30) | 2025 | 2024 | Change (2025 vs 2024) | | :---------------------------------- | :-------- | :-------- | :-------------------- | | Research and development | $1,465 | $1,834 | $(369) (-20.1%) | | General and administrative | $1,956 | $2,775 | $(819) (-29.5%) | | Restructuring costs | $0 | $968 | $(968) (-100.0%) | | Total operating expenses | $3,421 | $5,577 | $(2,156) (-38.7%) | | Net loss | $(3,437) | $(5,338) | $1,901 (-35.6%) | | Net loss per common share (basic & diluted) | $(2.60) | $(4.92) | $2.32 | | Metric (Six Months Ended June 30) | 2025 | 2024 | Change (2025 vs 2024) | | :---------------------------------- | :-------- | :-------- | :-------------------- | | Research and development | $2,143 | $4,297 | $(2,154) (-50.1%) | | General and administrative | $3,877 | $6,053 | $(2,176) (-35.9%) | | Restructuring costs | $0 | $968 | $(968) (-100.0%) | | Total operating expenses | $6,020 | $11,318 | $(5,298) (-46.8%) | | Net loss | $(5,970) | $(10,815) | $4,845 (-44.8%) | | Net loss per common share (basic & diluted) | $(4.51) | $(9.97) | $5.46 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric (Six Months Ended June 30) | 2025 | 2024 | Change (2025 vs 2024) | | :-------------------------------- | :-------- | :--------- | :-------------------- | | Net cash used in operating activities | $(4,676) | $(10,036) | $5,360 | | Net cash provided by investing activities | $0 | $11,650 | $(11,650) | | Net cash provided by financing activities | $0 | $0 | $0 | | Net increase (decrease) in cash and cash equivalents | $(4,676) | $1,614 | $(6,290) | Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Changes in Stockholders' Equity Condensed Consolidated Statements of Cash Flows Notes to Unaudited Interim Condensed Consolidated Financial Statements 1. DESCRIPTION OF BUSINESS, ORGANIZATION AND LIQUIDITY 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 3. PROPERTY AND EQUIPMENT, NET 4. FAIR VALUE MEASUREMENTS 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS 6. LEASES 7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES 8. COMMITMENTS AND CONTINGENCIES 9. STOCKHOLDERS' EQUITY 10. INCOME TAXES 11. NET LOSS PER SHARE 12. SEGMENT REPORTING 13. SUBSEQUENT EVENTS Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Galecto's financial condition and operations, noting strategic shifts, ongoing losses, and capital needs - Galecto is a clinical-stage biotechnology company focused on developing novel small molecule therapeutics for cancer and liver diseases, with a strategic focus on GB3226 and GB1211 following a corporate restructuring in September 2023[79][80] - Existing cash and cash equivalents are projected to fund preclinical development of GB3226 into 2026, including IND submission, but substantial additional capital is required for clinical development of GB3226 and GB1211[81][96] - GB3226, a dual ENL-YEATS and FLT3 inhibitor, is in preclinical development for acute myeloid leukemia (AML), with an IND submission planned for Q1 2026 and initial Phase 1a clinical data expected in 2027[82][83][88] - GB1211, a selective oral galectin-3 inhibitor, is being evaluated in an investigator-initiated Phase 2 trial in combination with pembrolizumab for metastatic melanoma and HNSCC, following promising partial responses in the GALLANT-1 trial (Part A) with atezolizumab[89][90][92] Operating Expenses Comparison (in thousands) | Operating Expense | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (Amount) | Change (Percent) | | :---------------- | :------------------------------- | :------------------------------- | :-------------- | :--------------- | | R&D | $1,465 | $1,834 | $(369) | -20.1% | | G&A | $1,956 | $2,775 | $(819) | -29.5% | | Restructuring | $0 | $968 | $(968) | -100.0% | | Total | $3,421 | $5,577 | $(2,156) | -38.7% | | Operating Expense | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (Amount) | Change (Percent) | | :---------------- | :----------------------------- | :----------------------------- | :-------------- | :--------------- | | R&D | $2,143 | $4,297 | $(2,154) | -50.1% | | G&A | $3,877 | $6,053 | $(2,176) | -35.9% | | Restructuring | $0 | $968 | $(968) | -100.0% | | Total | $6,020 | $11,318 | $(5,298) | -46.8% | Overview GB3226 GB1211 Financial Overview Components of Operating Results Results of Operations Liquidity and Capital Resources Critical Accounting Policies and Significant Judgments and Estimates Recently Adopted Accounting Pronouncements Emerging Growth Company and Smaller Reporting Company Status Effects of Inflation Item 3. Quantitative and Qualitative Disclosures About Market Risk Galecto, as a smaller reporting company, is exempt from providing quantitative and qualitative market risk disclosures - Galecto, Inc. is a smaller reporting company and is therefore not required to provide quantitative and qualitative disclosures about market risk[155] Item 4. Controls and Procedures Management found disclosure controls effective, with no material changes to internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[156] - There have been no material changes in internal control over financial reporting during the most recently completed fiscal quarter[158] PART II. OTHER INFORMATION Item 1. Legal Proceedings Galecto is not currently involved in any material legal matters or claims - The company is not currently involved in any material legal matters or claims[160] Item 1A. Risk Factors No material changes or additions to previously disclosed risk factors have occurred - No material changes or additions to the risk factors have occurred since the previous filings[161] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds IPO proceeds funded working capital and clinical development; no recent unregistered equity sales or repurchases - The company completed its IPO on November 2, 2020, raising $86.3 million in net proceeds[163] - As of June 30, 2025, $79.5 million of IPO net proceeds have been used for general working capital and funding clinical development programs, including GB3226 and GB1211[164] - No sales under the ATM Program occurred during the reported periods, and there were no purchases of equity securities by the issuer or affiliated purchasers[124][165] Item 3. Defaults Upon Senior Securities Galecto reported no defaults upon senior securities - There were no defaults upon senior securities[166] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[167] Item 5. Other Information No officers or directors adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No officers or directors adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[168] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications and XBRL documents - Exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32.1) and Inline XBRL documents (101.INS, 101.SCH, 104)[169]