Gain Therapeutics(GANX) - 2023 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements The unaudited condensed consolidated financial statements for Gain Therapeutics, Inc. as of September 30, 2023, highlight decreased cash, increased net loss from higher operating expenses, and going concern uncertainty Condensed Consolidated Balance Sheets The balance sheet as of September 30, 2023, shows a significant decrease in total assets to $14.1 million from $24.1 million at year-end 2022, primarily due to a reduction in cash, cash equivalents, and marketable securities Condensed Consolidated Balance Sheet Highlights (Unaudited) | Metric | September 30, 2023 (USD) | December 31, 2022 (USD) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $4.3M | $7.3M | | Marketable securities (current & non-current) | $8.0M | $14.8M | | Total Assets | $14.1M | $24.1M | | Liabilities & Equity | | | | Total Liabilities | $6.8M | $5.2M | | Accumulated Deficit | $(56.1M) | $(38.5M) | | Total Stockholders' Equity | $7.3M | $18.9M | Condensed Consolidated Statements of Operations For the nine months ended September 30, 2023, the company reported a net loss of $17.5 million, a significant increase from the $12.9 million loss in the same period of 2022, primarily driven by increased R&D and G&A expenses Operating Results (Unaudited) | Metric | Nine Months Ended Sep 30, 2023 (USD) | Nine Months Ended Sep 30, 2022 (USD) | | :--- | :--- | :--- | | Total Revenues | $55K | $140K | | Research and Development Expenses | $(9.1M) | $(6.1M) | | General and Administrative Expenses | $(8.8M) | $(7.3M) | | Loss from Operations | $(17.8M) | $(13.2M) | | Net Loss | $(17.5M) | $(12.9M) | | Net Loss Per Share (basic and diluted) | $(1.42) | $(1.09) | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2023, net cash used in operating activities increased to $13.2 million, while investing activities provided $7.1 million and financing activities provided $3.1 million, resulting in a $3.0 million overall decrease in cash Cash Flow Summary (Unaudited) | Metric | Nine Months Ended Sep 30, 2023 (USD) | Nine Months Ended Sep 30, 2022 (USD) | | :--- | :--- | :--- | | Cash used in operating activities | $(13.2M) | $(10.8M) | | Cash provided by/(used in) investing activities | $7.1M | $(14.9M) | | Cash provided by/(used in) financing activities | $3.1M | $(57K) | | Net decrease in cash, cash equivalents and restricted cash | $(3.0M) | $(26.0M) | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies and financial statement line items, critically disclosing a 'Going Concern' evaluation indicating insufficient cash to fund operations for 12 months and plans for additional capital - The company is a biotechnology firm developing small molecule therapeutics using its in-licensed SEE-Tx® platform for CNS disorders, LSDs, and oncology[37] - There is substantial doubt about the company's ability to continue as a going concern. Existing cash, cash equivalents, and marketable securities of $12.3 million are not sufficient to fund operations for at least 12 months from the report's issuance date. The company will need to raise additional capital to continue operations beyond Q3 2024[46][47] - During the nine months ended September 30, 2023, the company sold 740,131 shares under its ATM Program for gross proceeds of $3.5 million. As of September 30, 2023, $12.5 million remained available under the program[120][50] - As of September 30, 2023, the company had research commitments of $4.6 million for activities to be performed within one year[142] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the company's financial condition and operations, highlighting the initiation of a Phase 1 clinical trial for GT-02287, significant financial challenges including a going concern doubt, and plans for capital raising Overview and Recent Developments The company, a biotechnology firm utilizing its SEE-Tx® platform, initiated a Phase 1 clinical trial for its lead candidate, GT-02287, in September 2023, while streamlining operations and seeking partnerships for capital efficiency - The company's lead product candidate, GT-02287 for GBA1 Parkinson's disease, received approval to conduct a Phase 1 clinical trial in Australia in September 2023[145] - The Phase 1 trial for GT-02287 is expected to be completed in the first half of 2024. The first cohort of the single ascending dose part was completed with no drug-related adverse effects observed[145] - In response to the current financing environment, the company is streamlining operations, pursuing partnering opportunities, and seeking non-dilutive funding to advance its pipeline[146] Results of Operations The company's net loss increased for both the three and nine-month periods ended September 30, 2023, primarily due to higher Research and Development and General and Administrative expenses, alongside a decrease in collaboration revenues Comparison of Operating Expenses (Nine Months Ended Sep 30) | Expense Category | 2023 (USD) | 2022 (USD) | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Research & Development | $9.1M | $6.1M | +$3.0M | Increase in fees for third-party personnel assisting with the Parkinson's disease program | | General & Administrative | $8.7M | $7.2M | +$1.5M | Increase in legal fees (IP & corporate), accounting services, and personnel costs | - For the nine months ended September 30, 2023, total revenues were $55 thousand, down from $140 thousand in the same period of 2022, mainly from the Zentalis Collaboration Agreement[174] Liquidity and Capital Resources As of September 30, 2023, the company had $12.3 million in cash, cash equivalents, and marketable securities, which are only sufficient to fund operations through Q3 2024, necessitating additional capital raising efforts - As of September 30, 2023, the company had $12.3 million in cash, cash equivalents, and marketable securities, with an accumulated deficit of $56 million[179] - The company's cash is expected to be sufficient to fund operations only through the third quarter of 2024, which raises substantial doubt about its ability to continue as a going concern[179] - The company has an ATM Program with $12.5 million of remaining capacity as of September 30, 2023, which it plans to use along with other financing options to raise capital[184][186] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is a "smaller reporting company" and is therefore not required to provide the information for this item - As a "smaller reporting company," the registrant is not required to provide quantitative and qualitative disclosures about market risk[203] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control over financial reporting during the quarter - Management concluded that as of September 30, 2023, the company's disclosure controls and procedures were effective at the reasonable assurance level[204] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[205] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings and is unaware of any pending or threatened legal actions that could materially adversely affect its business or financial condition - The company is not currently a party to any material legal proceedings[210] Item 1A. Risk Factors Key risks include substantial doubt about the company's going concern ability, early-stage product development, reliance on third parties and intellectual property, intense competition, and stock price volatility - There is substantial doubt about the company's ability to continue as a going concern due to a history of operating losses and the need for future financing[214][216] - 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[214] - The company relies on a license from Minoryx Therapeutics for its core SEE-Tx® technology, and termination of this agreement would have a material adverse effect on the business[220][313] - The company will need to raise additional capital, which may not be available on favorable terms, or at all, and could lead to dilution or require relinquishing rights to technologies[215][291] - Global and macroeconomic conditions, including economic instability, political conflicts (e.g., Ukraine, Hamas-Israel), and supply chain disruptions, could adversely affect operations and financial condition[220][366] 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 proceeds from its March 2021 IPO - There were no unregistered sales of equity securities in the period[457] - The company received net proceeds of $40.5 million from its IPO in March 2021. There has been no material change in the planned use of these proceeds[458][459] Item 3. Defaults Upon Senior Securities. Not applicable - Not applicable[460] Item 4. Mine Safety Disclosures Not applicable - Not applicable[461] Item 5. Other Information Not applicable - Not applicable[462] Item 6. Exhibits This section lists all exhibits filed with the quarterly report, including corporate governance documents, material contracts, and required certifications - Lists all exhibits filed with the Form 10-Q, including corporate governance documents, material contracts, and required certifications[464]