Galecto(GLTO) - 2023 Q2 - Quarterly Report

Drug Development - The company is developing GB0139, an inhaled small molecule inhibitor of galectin-3, for idiopathic pulmonary fibrosis (IPF), which affects approximately 100,000 people in the U.S.[67] - In the Phase 1b/2a GULLIVER-2 trial for GB1211 in patients with decompensated liver cirrhosis, statistically significant reductions in ALT (p<0.0005), AST (p<0.005), and GGT (p<0.05) were observed after 12 weeks of treatment[71] - The GALACTIC-1 trial for GB0139, a 52-week Phase 2b trial, aims to assess the annual rate of decline in forced vital capacity (FVC) as the primary endpoint, with topline results expected in August 2023[69] - GB1211 has shown antifibrotic and anticancer activity in multiple preclinical models and was well-tolerated in a Phase 1 trial involving 78 healthy volunteers[70] - The GALLANT-1 trial is evaluating GB1211 in combination with atezolizumab for non-small cell lung cancer (NSCLC), with a focus on tumor shrinkage based on RECIST criteria[73] - In the GALLANT-1 trial, a patient treated with GB1211 200 mg twice daily showed a tumor shrinkage of greater than 70% after 30 weeks[79] - The company plans to initiate a long-term Phase 2a trial for GB1211 in patients with decompensated NASH cirrhosis in early 2024, pending additional financing[71] - An agreement was made with Providence Portland Medical Center to evaluate GB1211 in combination with pembrolizumab in a Phase 2 trial for metastatic melanoma and HNSCC, expected to begin in the second half of 2023[80] - GB1211 is being studied for its potential to enhance immune response in cancer therapy by targeting galectin-3, which is linked to chemotherapy resistance[72] - GB2064 has shown promising results in the MYLOX-1 trial, with four out of five patients experiencing a ≥ 1-grade reduction in collagen fibrosis, indicating potential disease-modifying effects[83] Financial Performance - The company reported a net loss of $10.7 million for the three months ended June 30, 2023, a 36.4% decrease from a net loss of $16.9 million for the same period in 2022[101] - Total operating expenses decreased by 34.8% to $11.2 million for the three months ended June 30, 2023, compared to $17.1 million for the same period in 2022[101] - As of June 30, 2023, the company had an accumulated deficit of $241.5 million and $52.1 million in cash, cash equivalents, and marketable securities[85] - The company expects to report topline results from the MYLOX-1 trial in the second half of 2023, following the achievement of its predefined target for collagen fibrosis reduction[84] - Research and development expenses for the three months ended June 30, 2023, were $8.1 million, a 41.0% decrease from $13.7 million in the same period in 2022[101] - The company has enrolled and treated 18 patients in the MYLOX-1 trial, with two patients continuing treatment and four in the extension phase due to clinical responsiveness[84] - The company anticipates that existing cash resources will be sufficient to fund operations into the second half of 2024, but additional capital will be needed thereafter[87] - The company has not generated any product revenue to date and does not expect to do so until successful development and regulatory approval of its product candidates[89] - Economic uncertainties, including geopolitical tensions and inflation, could materially impact the company's financial condition and operations[90] - Research and development expenses for the three months ended June 30, 2023, were $8.1 million, a decrease of 41.0% from $13.7 million in the same period of 2022[102] - For the six months ended June 30, 2023, research and development expenses totaled $18.5 million, down 31.5% from $26.9 million in the prior year[107] - General and administrative expenses for the three months ended June 30, 2023, were $3.1 million, a decrease of 8.8% from $3.4 million in the same period of 2022[103] - The net loss for the six months ended June 30, 2023, was $23.7 million, a reduction of 29.8% compared to a net loss of $33.8 million for the same period in 2022[111] - Cash used in operating activities for the six months ended June 30, 2023, was $17.0 million, compared to $21.6 million in the same period of 2022[113] - As of June 30, 2023, the company had $52.1 million in cash, cash equivalents, and marketable securities, expected to fund operations into the second half of 2024[119] - The company raised $86.3 million in net proceeds from its IPO completed on November 2, 2020[110] - During the six months ended June 30, 2023, the company sold 1,369,507 shares under its ATM Program at a weighted average selling price of $2.07 per share[110] - Other income for the six months ended June 30, 2023, was $0.9 million, an increase of 288.5% from $0.2 million in the same period of 2022[109] - The company anticipates continued increases in research and development and general administrative expenses, necessitating additional capital to fund operations[118] Accounting and Compliance - The company has recorded a full valuation allowance against its net deferred tax assets, indicating that it is more likely than not that these assets will not be realized[132] - The company is classified as an emerging growth company, allowing it to delay the adoption of certain accounting standards until they apply to private companies[136] - The company may remain classified as an emerging growth company until the end of the fiscal year following the fifth anniversary of its IPO, unless certain revenue or market value thresholds are exceeded[138] - The company is also a smaller reporting company, with a market value of shares held by non-affiliates less than $700 million and annual revenue below $100 million[139] - The company monitors the impact of inflation on its expenses and resources, although its monetary assets are not directly affected by inflation[140] - The company has not incurred any interest or penalties related to uncertain tax positions and does not expect material changes in unrecognized tax positions over the next 12 months[133] - The company uses significant estimates and assumptions in preparing its financial statements, which may differ from actual results under different conditions[26]