Galera(GRTX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited interim consolidated financial statements and management's discussion and analysis of its financial condition and results of operations Item 1. Financial Statements (Unaudited) This section presents the unaudited interim consolidated financial statements, including balance sheets, statements of operations, changes in stockholders' deficit, and cash flows, along with detailed notes explaining the company's organization, accounting policies, recent acquisition, fair value measurements, and equity structure Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' deficit at specific points in time Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | Change (%) | | :-------------------------------- | :------------ | :---------------- | :----- | :--------- | | Cash and cash equivalents | $5,230 | $8,289 | $(3,059) | -36.9% | | Total current assets | $5,947 | $10,001 | $(4,054) | -40.5% | | Total assets | $6,048 | $10,101 | $(4,053) | -40.1% | | Total current liabilities | $347 | $1,666 | $(1,319) | -79.2% | | Total liabilities | $151,396 | $153,770 | $(2,374) | -1.5% | | Total stockholders' deficit | $(147,945) | $(148,041) | $96 | -0.1% | Consolidated Statements of Operations This section presents the company's financial performance over specific periods, detailing revenues, expenses, and net loss Consolidated Statements of Operations Highlights (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | Change (%) | | :------------------------------------------ | :--------------------------- | :--------------------------- | :----- | :--------- | :--------------------------- | :--------------------------- | :----- | :--------- | | Research and development | $84 | $1,430 | $(1,346) | -94.1% | $177 | $2,918 | $(2,741) | -93.9% | | General and administrative | $1,051 | $2,779 | $(1,728) | -62.2% | $2,921 | $5,868 | $(2,947) | -50.2% | | Loss from operations | $(1,135) | $(4,209) | $3,074 | -73.0% | $(3,098) | $(8,786) | $5,688 | -64.7% | | Net loss | $(1,075) | $(4,064) | $2,989 | -73.5% | $(2,667) | $(8,445) | $5,778 | -68.4% | | Net loss per share (basic and diluted) | $(0.00) | $(0.07) | $0.07 | -100.0% | $(0.01) | $(0.16) | $0.15 | -93.8% | Consolidated Statements of Changes in Stockholders' Deficit This section outlines the changes in the company's equity over time, including preferred stock, common stock, additional paid-in capital, and accumulated deficit Changes in Stockholders' Deficit Highlights (in thousands) | Item | January 1, 2025 | March 31, 2025 | June 30, 2025 | | :------------------------------------------ | :-------------- | :------------- | :------------ | | Redeemable convertible preferred stock | $4,372 | $2,864 | $2,597 | | Common stock | $75 | $75 | $75 | | Additional paid-in capital | $308,247 | $310,653 | $311,010 | | Accumulated deficit | $(456,363) | $(457,955) | $(459,030) | | Total Stockholders' Deficit | $(148,041) | $(147,227) | $(147,945) | - Share-based compensation expense: $227 thousand (total for 6 months)[19] - Accretion of redeemable convertible preferred stock to redemption value: $(1,775) thousand (total for 6 months)[19] - Reclassification of pre-funded stock warrants: $761 thousand[19] - Net loss: $(2,667) thousand (total for 6 months)[19] Consolidated Statements of Cash Flows This section details the cash inflows and outflows from operating, investing, and financing activities over specific periods Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :----- | | Net cash used in operating activities | $(3,694) | $(7,508) | $3,814 | | Net cash provided by financing activities | $635 | $0 | $635 | | Net decrease in cash and cash equivalents | $(3,059) | $(7,508) | $4,449 | | Cash and cash equivalents at end of period | $5,230 | $10,749 | $(5,519) | Notes to Unaudited Interim Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the interim consolidated financial statements, covering accounting policies, acquisitions, and equity Note 1. Organization and description of business This note describes the company's biopharmaceutical focus, strategic shift post-FDA setback, acquisition of Nova Pharmaceuticals, and ongoing going concern challenges - Galera Therapeutics, Inc. is a biopharmaceutical company focused on developing small molecule dismutase (SOD) mimetics to improve radiotherapy in cancer. Its lead product candidate, avasopasem, received Fast Track and Breakthrough Therapy designations for reducing severe oral mucositis (SOM) induced by radiotherapy[24] - In August 2023, the FDA issued a Complete Response Letter (CRL) for avasopasem's NDA, requiring an additional Phase 3 trial, which the company deemed infeasible with current resources. This led to winding down commercial readiness, a 70% workforce reduction, and exploration of strategic alternatives[25][26] - After stockholders rejected a liquidation plan, Galera acquired Nova Pharmaceuticals, Inc. in December 2024, shifting its strategic focus to developing a pan-inhibitor of nitric oxide synthase for highly resistant breast cancers (MpBC and TNBC). The company's clinical portfolio now includes this pan-NOS inhibitor and two SOD mimetics[28][29][30] - The company has incurred recurring losses and negative cash flows, with an accumulated deficit of $459.0 million as of June 30, 2025. Management concluded that substantial doubt exists about the company's ability to continue as a going concern beyond the first quarter of 2026, necessitating additional capital or expense deferrals[31] Note 2. Basis of presentation and significant accounting policies This note details the accounting principles used in preparing the financial statements, including U.S. GAAP conformity, segment reporting, and treatment of warrants and R&D costs - The interim consolidated financial statements are prepared in conformity with U.S. GAAP and include all normal and recurring adjustments. They do not include adjustments for liquidation basis accounting, despite the going concern doubt[34][35] - The company's CEO manages business activities as a single operating and reportable segment, using consolidated income/loss from operations and net income/loss to assess performance and allocate resources[39] - Pre-funded warrants issued in December 2024 were initially classified as liabilities due to redemption terms outside the company's control but were reclassified to equity in March 2025 after an amendment[42] - Research and development costs are expensed as incurred, based on estimates of work completed by third parties. Net loss per share calculations treat Series B preferred stock as a second class of common stock due to similar characteristics and pro rata loss allocation[44][46] Note 3. Asset acquisition This note describes the acquisition of Nova Pharmaceuticals, Inc. in December 2024, including the consideration issued and conversion terms of Series B preferred stock - On December 30, 2024, Galera acquired Nova Pharmaceuticals, Inc., issuing 119,318 shares of Series B preferred stock with an aggregate fair value of $2.6 million as upfront consideration. Stockholder approval is required for the conversion of Series B into common stock, to be sought 12-18 months post-closing[53][54] Note 4. Fair value measurements This note provides details on the fair value of financial instruments, including money market funds and warrant liabilities, and changes in their valuation Fair Value Measurements (in thousands) | Asset/Liability | June 30, 2025 (Level 1) | December 31, 2024 (Level 1) | December 31, 2024 (Level 2) | | :------------------------------------ | :---------------------- | :------------------------ | :------------------------ | | Money market funds | $5,131 | $6,115 | — | | Warrant liability | — | — | $1,055 | Change in Fair Value of Warrant Liability (6 months ended June 30, 2025, in thousands) | Item | Amount | | :--------------------------- | :----- | | Balance at December 31, 2024 | $1,055 | | Change in fair value | $(294) | | Reclassification to equity | $(761) | | Balance at June 30, 2025 | $0 | Note 5. Prepaid expenses and other current assets This note details the composition of prepaid expenses and other current assets, including prepaid insurance and other miscellaneous prepayments Prepaid Expenses and Other Current Assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Prepaid insurance | $392 | $795 | | Other prepaid expenses and other current assets | $325 | $282 | | Total | $717 | $1,077 | Note 6. Property and equipment This note explains the write-off of fixed assets and the impact on depreciation and amortization expenses due to office lease termination - The company wrote off its remaining fixed assets in Q3 2024 due to office lease termination. Depreciation and amortization expense was $15,000 for the six months ended June 30, 2024, but zero for the same period in 2025[60] Note 7. Accrued expenses This note provides a breakdown of accrued expenses, including compensation, research and development, and professional fees Accrued Expenses (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Compensation and related benefits | $14 | $48 | | Research and development expenses | $32 | $31 | | Professional fees and other expenses | $99 | $312 | | Total | $145 | $391 | Note 8. Royalty purchase liability This note details the Royalty Agreement with Blackstone Life Sciences, its accounting as a debt instrument, and the suspension of interest expense recognition - Galera has a Royalty Agreement with Blackstone Life Sciences, under which it received $117.5 million in proceeds. This is accounted for as a debt instrument, with interest imputed based on estimated royalty repayment[63][64][65] - Interest expense recognition on the royalty purchase liability was suspended after October 2023 due to uncertainty of future royalties following the discontinuation of rucosopasem trials and the infeasibility of a new avasopasem Phase 3 trial. No interest expense was recognized in the first six months of 2025 or 2024[65][68] - The agreement grants Blackstone a high single-digit percentage of worldwide net sales of avasopasem and rucosopasem (the Products) during the Royalty Period. If no Products are commercialized, the company has no obligation to make Product Payments[66][67] Note 9. Leases This note describes the termination of a previous office lease and the commencement of a new operating lease, along with associated rental expenses - The company terminated its previous office lease in August 2024 for a $0.4 million fee and entered into a new 12-month operating lease in Malvern, Pennsylvania, commencing February 1, 2025[69][70] Operating Lease Costs (in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating lease rental expense | $4 | $54 | $7 | $108 | | Operating cash flows for operating leases | N/A | N/A | $7 | $88 | Note 10. Commitments and contingencies This note outlines Nova's exclusive license agreement with Houston Methodist, including due diligence requirements, milestone payments, and royalty obligations - Nova, a Galera subsidiary, holds an exclusive worldwide license with Houston Methodist for oncology patents. The license includes due diligence requirements for IND submission by January 31, 2028, and subsequent clinical trials and BLA filing by specified dates[71][72] - Fees are payable upon commercial milestones and low-to-mid single-digit royalties on net sales if FDA approval is received. An assignment fee of $200,000 is payable if the license is assigned before the first Phase III trial[72][74] Note 11. Equity This note details changes in the company's equity structure, including the termination of the Stockholder Rights Agreement, private placement, Series B Preferred Stock issuance, and share-based compensation - The Stockholder Rights Agreement, which declared a dividend of one preferred share purchase right for each common stock share, terminated upon the closing of the Nova acquisition[75] - In December 2024, a private placement generated $2.9 million net proceeds from issuing common stock and pre-funded warrants. The pre-funded warrants were initially liability-classified but reclassified to equity in March 2025 after an amendment[76][77][78] - 119,318.285 shares of Series B Preferred Stock were issued to Nova securityholders, convertible into 1,000 common shares each, subject to stockholder approval 12-18 months post-issuance. If not approved within 24 months, holders can elect cash redemption at fair value[80][84][85][87] - Share-based compensation expense for the six months ended June 30, 2025, was $227,000, a significant decrease from $1,598,000 in the prior year, primarily due to reduced R&D and G&A personnel[96] Stock Option Activity (6 months ended June 30, 2025) | Item | Shares | Weighted-average exercise price per share | | :-------------------------------- | :------- | :-------------------------------------- | | Outstanding at January 1, 2025 | 4,384,108 | $6.01 | | Granted | 8,488,000 | $0.02 | | Forfeited/Expired | (1,756,041) | $6.57 | | Outstanding at June 30, 2025 | 11,116,067 | $1.35 | | Vested and exercisable at June 30, 2025 | 2,562,871 | $5.58 | Note 12. Related party transactions This note discloses transactions with related parties, including fees paid to IntellectMap Advisory Services and equity issued to board members post-Nova acquisition - Fees incurred with IntellectMap Advisory Services, whose CEO is the brother of Galera's CEO, were $73,000 for the six months ended June 30, 2025, down from $92,000 in 2024[103] - In connection with the Nova acquisition, Dr. Chang and Mr. Friedman (now board members) received Series B shares convertible into 1,841,920 and 8,326,269 common shares, respectively. Mr. Friedman also entered an Independent Contractor Agreement for corporate and business development services, incurring $60,000 in fees[104][105] Note 13. Subsequent events This note addresses the assessment of new budget and tax legislation signed in July 2025 and its expected impact on the financial statements - New budget and tax legislation signed on July 4, 2025, is being assessed for its effect on consolidated financial statements. However, due to a full valuation allowance against U.S. federal deferred tax assets, no material impact is currently expected[106] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results, emphasizing the strategic shift post-Nova acquisition, ongoing liquidity challenges, and the need for future financing Overview This overview summarizes Galera's strategic pivot from SOD mimetics to a pan-NOS inhibitor for advanced breast cancers following FDA setbacks and the Nova acquisition, highlighting ongoing going concern issues - Galera Therapeutics, a biopharmaceutical company, initially focused on SOD mimetics to reduce radiotherapy side effects. Its lead candidate, avasopasem, received Fast Track and Breakthrough Therapy designations for severe oral mucositis (SOM)[108] - In August 2023, the FDA issued a Complete Response Letter for avasopasem, requiring a second Phase 3 trial, which was not feasible. This led to winding down avasopasem commercial efforts, significant headcount reduction, and halting rucosopasem clinical trials[109] - Following stockholder rejection of a liquidation plan, Galera acquired Nova Pharmaceuticals in December 2024, shifting its strategic focus to developing a pan-inhibitor of nitric oxide synthase for advanced breast cancers (MpBC and TNBC)[110][111] - The current lead program is an investigator-sponsored Phase 1/2 trial of the pan-NOS inhibitor for MpBC, funded by an NIH grant. A second trial for TNBC is planned, and an investigator-sponsored trial for avasopasem in HR+ breast cancer is expected to commence in H2 2025[112] - The company has an accumulated deficit of $459.0 million as of June 30, 2025, and $5.2 million in cash and cash equivalents, expected to fund operations only through Q1 2026, raising substantial doubt about its ability to continue as a going concern[115][116] Critical Accounting Policies and Estimates This section confirms the consistency of critical accounting policies and estimates with the prior year's Form 10-K, noting no material changes - The company's critical accounting policies and estimates are consistent with those discussed in the 2024 Form 10-K, with no material changes identified during the six months ended June 30, 2025[119] Components of Results of Operations This section details the nature of research and development, general and administrative expenses, and the company's tax loss carryforwards and valuation allowance - Research and development expenses are expensed as incurred, primarily covering third-party services for product candidate development, clinical trials, manufacturing, and regulatory compliance. Internal R&D expenses are not tracked program-by-program[120][123] - General and administrative expenses include personnel costs (salaries, benefits, share-based compensation), corporate facility costs, legal fees, and accounting/consulting services. These expenses are expected to increase with continued R&D and operational expansion, assuming additional capital is secured[130][131] - The company had federal and state net operating loss carryforwards of $209.5 million and $231.9 million, respectively, and federal R&D tax credit carryforwards of $9.0 million as of December 31, 2024. A full valuation allowance is recorded against deferred tax assets due to uncertainty of utilization[133][134] Results of Operations - Comparison of the Three and Six months ended June 30, 2025 and 2024 This section compares the company's financial performance for the three and six months ended June 30, 2025 and 2024, highlighting significant reductions in R&D and G&A expenses Results of Operations (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :------------------------------------------ | :--------------------------- | :--------------------------- | :----- | :--------------------------- | :--------------------------- | :----- | | Research and development | $84 | $1,430 | $(1,346) | $177 | $2,918 | $(2,741) | | General and administrative | $1,051 | $2,779 | $(1,728) | $2,921 | $5,868 | $(2,947) | | Loss from operations | $(1,135) | $(4,209) | $3,074 | $(3,098) | $(8,786) | $5,688 | | Interest income | $60 | $149 | $(89) | $137 | $345 | $(208) | | Change in fair value of warrant liability | $0 | $0 | $0 | $294 | $0 | $294 | | Net loss | $(1,075) | $(4,064) | $2,989 | $(2,667) | $(8,445) | $5,778 | - Research and development expense decreased significantly by $1.3 million (94.1%) for the three months and $2.7 million (93.9%) for the six months ended June 30, 2025, primarily due to the termination of R&D employees and halting rucosopasem trials[138][139] - General and administrative expense decreased by $1.7 million (62.2%) for the three months and $3.0 million (50.2%) for the six months ended June 30, 2025, mainly due to reduced headcount, vested stock options, and lower legal/professional fees[140][141] - Interest income decreased due to a reduction in investable cash and securities. A $0.3 million change in the fair value of warrant liability was recognized in the six months ended June 30, 2025, prior to reclassification to equity[142][143] Liquidity and Capital Resources This section discusses the company's cash position, accumulated deficit, and the substantial doubt about its ability to continue as a going concern without additional financing - As of June 30, 2025, the company had $5.2 million in cash and cash equivalents and an accumulated deficit of $459.0 million. Existing cash is expected to fund operations only through Q1 2026, indicating substantial doubt about its ability to continue as a going concern[148] - The company has historically funded operations through equity sales and $117.5 million from the Royalty Agreement with Blackstone Life Sciences, totaling $379.9 million in aggregate gross proceeds[145] - Future funding requirements are substantial and uncertain, dependent on clinical trial progress, regulatory review, collaborations, intellectual property costs, and manufacturing. The company anticipates needing to raise additional financing through equity, debt, or strategic transactions, which may result in significant dilution or restrictive covenants[154][155][156] Cash Flows This section summarizes the company's cash flows from operating and financing activities, noting a decrease in cash used in operations and proceeds from financing Summary of Cash Flows (in thousands) | Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(3,694) | $(7,508) | | Net cash provided by financing activities | $635 | $0 | | Net decrease in cash and cash equivalents | $(3,059) | $(7,508) | - Net cash used in operating activities decreased from $7.5 million in H1 2024 to $3.7 million in H1 2025, reflecting a reduced net loss and changes in operating assets and liabilities[150][151] - Financing activities provided $0.6 million in H1 2025 from the sale of common stock in a December 2024 private placement[152] Key Agreements This section outlines significant agreements, including the Royalty Agreement with Blackstone Life Sciences, the Master Manufacturing Services Agreement with Patheon, and Nova's License Agreement with Houston Methodist - The Royalty Agreement with Blackstone Life Sciences provided $117.5 million in proceeds, in exchange for a high single-digit percentage of worldwide net sales of avasopasem and rucosopasem. The agreement remains in effect until Product Payments exceed a fixed multiple of the purchase price[159][160][161][162] - Galera has a Master Manufacturing Services Agreement with Patheon for avasopasem manganese, with an initial term expiring December 31, 2027. There are no current contractual commitments to purchase avasopasem under this agreement[164][165][166][167] - Nova's License Agreement with Houston Methodist grants exclusive rights to oncology patents, with due diligence requirements for IND submission and clinical trials. Fees and low-to-mid single-digit royalties are payable upon commercial milestones and net sales[168][169][170] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Galera Therapeutics, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[173] Item 4. Controls and Procedures Management acknowledges the inherent limitations of controls and procedures, providing only reasonable assurance, and concluded that disclosure controls were effective with no material changes in internal control over financial reporting - Management recognizes that controls and procedures provide only reasonable assurance and require judgment in balancing benefits and costs[174] - As of June 30, 2025, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[175] - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[176] PART II. OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings The company is not currently a party to any legal proceedings that are expected to materially affect its business or financial results - The company is not currently involved in any legal proceedings deemed likely to materially affect its business or financial results[179] Item 1A. Risk Factors Investing in the company's common stock involves a high degree of risk, with no material changes to the risk factors previously described in the 2024 Form 10-K - Investing in the company's common stock involves a high degree of risk. No material changes to the risk factors described in the 2024 Form 10-K have occurred[180] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report during the period - No unregistered sales of equity securities or use of proceeds to report[181] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[182] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[183] Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[184] Item 6. Exhibits This section lists all exhibits filed or furnished with the report, including corporate governance documents, registration rights agreements, and certifications - The report includes a list of exhibits, such as the Restated Certificate of Incorporation, Certificate of Designation for Series B Preferred Stock, Amended and Restated Bylaws, Stockholder Rights Agreement, and various certifications[187] Signatures The report is duly signed on behalf of Galera Therapeutics, Inc. by its Chief Executive Officer and President, J. Mel Sorensen, M.D., and Chief Accounting Officer, Joel Sussman, as of August 13, 2025 - The report is signed by J. Mel Sorensen, M.D., Chief Executive Officer and President, and Joel Sussman, Chief Accounting Officer, on August 13, 2025[193]