Gain Therapeutics(US:GANX)2022-11-09 16:00PART I FINANCIAL INFORMATION Presents the unaudited condensed consolidated financial statements and management's discussion for the period ended September 30, 2022, along with disclosures on market risk and controls Item 1. Condensed Consolidated Financial Statements Presents the unaudited condensed consolidated financial statements for Gain Therapeutics, Inc., including balance sheets, statements of operations, and cash flows, reporting a $12.9 million net loss for the nine months ended September 30, 2022 Condensed Consolidated Balance Sheets Details the company's financial position, including assets, liabilities, and stockholders' equity as of September 30, 2022, and December 31, 2021 Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $10,879,884 | $36,880,673 | | Marketable securities (current & non-current) | $14,766,944 | $0 | | Total current assets | $24,349,323 | $37,722,044 | | Total assets | $28,325,619 | $38,985,071 | | Liabilities & Stockholder's Equity | | | | Total current liabilities | $4,332,293 | $2,552,546 | | Total liabilities | $5,662,858 | $4,167,525 | | Accumulated deficit | ($33,841,731) | ($20,925,459) | | Total stockholders' equity | $22,662,761 | $34,817,546 | Condensed Consolidated Statements of Operations Presents the company's revenues, expenses, and net loss for the three and nine months ended September 30, 2022 and 2021 Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $0 | $27,345 | $140,108 | $121,786 | | Research and development | ($1,964,784) | ($2,476,739) | ($6,103,448) | ($5,691,756) | | General and administrative | ($2,786,200) | ($2,186,531) | ($7,252,506) | ($5,047,434) | | Loss from operations | ($4,750,984) | ($4,635,925) | ($13,215,846) | ($10,617,404) | | Net loss | ($4,558,209) | ($4,663,533) | ($12,916,272) | ($10,670,673) | | Net loss per share (basic and diluted) | ($0.38) | ($0.39) | ($1.09) | ($1.11) | Condensed Consolidated Statements of Cash Flows Outlines the cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2022 and 2021 Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Cash used in operating activities | ($10,787,526) | ($8,219,305) | | Cash used in investing activities | ($14,908,643) | ($83,114) | | Cash (used in)/provided by financing activities | ($57,192) | $41,776,510 | | Net (decrease)/increase in cash | ($26,003,209) | $33,510,361 | | Cash at beginning of period | $36,911,952 | $7,504,281 | | Cash at end of period | $10,908,743 | $41,014,642 | Notes to Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated financial statements - The company is a biotechnology firm developing small molecule therapeutics for CNS disorders, LSDs, and oncology using its in-licensed SEE-Tx® platform to discover novel allosteric binding sites37 - Operations to date have focused on organization, financing, R&D, and preclinical studies, with no approved products and no revenue from product sales39 - In March 2021, the company completed its IPO, raising aggregate net proceeds of $40.56 million after deducting underwriting discounts and offering expenses43 - The company expects its cash, cash equivalents, and marketable securities as of September 30, 2022, to be sufficient to fund operations for at least the next 12 months4659 - Under a collaboration agreement with Zentalis Pharmaceuticals, the company recognized $133 thousand in revenues for the nine months ended September 30, 2022162165 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's therapeutic development, financial condition, and operating results, highlighting a $12.9 million net loss and extended cash runway into Q2 2024 Overview and Recent Developments Provides an overview of the company's therapeutic development strategy and recent operational milestones, including pipeline advancements and cash runway extension - The company is developing small molecule therapeutics for CNS disorders, LSDs, and oncology using its SEE-Tx® platform to identify novel allosteric binding sites172 - The lead compound, GT-02287 for GBA1 Parkinson's disease, is expected to complete IND-enabling studies in Q1 2023, with a Phase 1 first-in-human study planned to start in mid-2023 in Australia174 - Due to the financing environment, the company has streamlined operations to focus on Parkinson's and Gaucher disease programs, extending its cash runway into Q2 2024177225 Results of Operations Analyzes the company's revenues, research and development, and general and administrative expenses, explaining changes in operating results for the period Comparison of Operating Results (Nine Months Ended Sep 30) | Item | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $140,108 | $121,786 | $18,322 | | R&D Expenses | $6,103,448 | $5,691,756 | $411,692 | | G&A Expenses | $7,252,506 | $5,047,434 | $2,205,072 | | Net Loss | $12,916,272 | $10,670,673 | $2,245,599 | - The increase in R&D expenses for the nine months ended Sep 30, 2022, was primarily due to higher personnel-related costs from increased headcount and stock-based compensation, offset by a decrease in outside services207 - The increase in G&A expenses for the nine months ended Sep 30, 2022, was mainly due to higher costs for corporate governance, legal fees, D&O insurance, professional services, and increased personnel costs as a public company208 Liquidity and Capital Resources Examines the company's cash position, capital requirements, and financing activities, detailing its ability to fund future operations - As of September 30, 2022, the company had $25.6 million in cash, cash equivalents, and marketable securities, with an accumulated deficit of $33.8 million183210 - The company believes its existing cash, cash equivalents, and marketable securities will fund operating expenses and capital expenditure requirements into Q2 2024210225 - On May 18, 2022, the company filed a shelf registration statement on Form S-3 for up to $100 million and a sales agreement for up to $16 million in an at-the-market offering, with no shares sold under these agreements as of September 30, 2022186212 Cash Flow Summary (Nine Months Ended Sep 30) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Cash used in operating activities | ($10,787,526) | ($8,219,305) | | Cash used in investing activities | ($14,908,643) | ($83,114) | | Cash (used in)/provided by financing activities | ($57,192) | $41,776,510 | Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Gain Therapeutics, Inc. is not required to provide the information requested under this item - Not required for smaller reporting companies233 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were ineffective as of September 30, 2022, due to an un-remediated material weakness in financial reporting controls - Management concluded that disclosure controls and procedures were not effective as of September 30, 2022, due to a material weakness in internal control over financial reporting235 - The material weakness relates to a lack of adequate procedures and controls to ensure accurate financial statements can be prepared and reviewed on a timely basis237239 - The company is implementing a remediation plan, including a new ERP system which went live as of March 31, 2022, but the material weakness is not yet considered fully remediated238239 PART II OTHER INFORMATION Presents additional information including legal proceedings, risk factors, equity sales, and other disclosures not covered in the financial statements Item 1. Legal Proceedings The company states that it is not currently a party to any material legal proceedings and is not aware of any pending or threatened legal actions that could have a material adverse effect on its business - The company is not currently a party to any material legal proceedings244 Item 1A. Risk Factors Outlines significant risks including a history of operating losses, dependence on novel product development, need for additional capital, reliance on third-party licenses, and uncertainties of clinical trials - The company has a history of operating losses and expects to incur losses for the foreseeable future, with no guarantee of ever achieving profitability246249 - The company's business is highly dependent on a license from Minoryx Therapeutics for its core SEE-Tx® technology platform; termination of this license would have a material adverse effect252334 - The company will need to raise additional capital, which may not be available on favorable terms, if at all, potentially forcing delays or elimination of R&D programs252313 - The company's product candidates are novel and in early development; success in preclinical studies may not be indicative of results in later clinical trials, which are expensive, time-consuming, and have uncertain outcomes246275277 - The business is subject to risks from global and macroeconomic conditions, including economic instability, pandemics (like COVID-19), and geopolitical conflicts, which could adversely affect operations and financing252319391 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the period and confirms no material change in the planned use of $40.5 million net proceeds from its March 2021 IPO - There were no unregistered sales of equity securities in the period469 - There has been no material change in the planned use of proceeds from the March 2021 IPO, which raised net proceeds of $40.5 million470471 Other Items (3, 4, 5) Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information) are all noted as not applicable for this reporting period - Items 3, 4, and 5 are not applicable472473474 Item 6. Exhibits Lists exhibits filed with the Form 10-Q, including corporate governance documents, executive agreements, and officer certifications - Lists exhibits filed with the report, including corporate governance documents, executive agreements, and required officer certifications476