GT Biopharma(GTBP) - 2022 Q4 - Annual Report

PART I Item 1. Business GT Biopharma is a clinical-stage biopharmaceutical company developing immuno-oncology products via its TriKE platform, targeting hematologic malignancies and solid tumors, with key candidates GTB-3650 and GTB-5550 - The company's core technology is the Tri-specific Killer Engager (TriKE) platform, which creates fusion proteins to engage a patient's NK cells and direct them to kill specific cancer or virus-infected cells[14] - The first-generation product, GTB-3550, has completed its Phase 1 trial and is being replaced by a more potent, next-generation camelid nanobody TriKE, GTB-3650, for treating Acute Myeloid Leukemia (AML) and Myelodysplastic Syndromes (MDS)[35][39] - The product pipeline includes GTB-3650 (targeting CD33 for AML/MDS) with an anticipated IND filing in H1 2023, and GTB-5550 (targeting B7-H3 for solid tumors) with an anticipated IND filing in late H2 2023[44][45] - The company operates without its own manufacturing facilities, relying on third-party contract manufacturers for the production of its product candidates for clinical and potential commercial needs[48] License Agreements with University of Minnesota (UofMN) | Agreement | Key Terms | | :--- | :--- | | 2016 Exclusive License | Upfront payment of $200,000, annual maintenance fees of $100,000 (starting 2021), 4% royalties, and up to $9.1 million in milestone payments | | 2021 B7H3 TriKE License | Upfront fee of $20,000, annual maintenance fees of $5,000 (starting 2022), 2.5%-5% royalties, and up to $9.1 million in milestone payments (non-duplicative of the 2016 agreement) | Item 1A. Risk Factors The company faces significant risks including early development stage, substantial operating losses, capital needs, clinical trial uncertainties, regulatory hurdles, and Nasdaq delisting risk - Financial Risks: The company has a history of operating losses, reporting a net loss of $20.9 million for the year ended December 31, 2022, and an accumulated deficit of $674.5 million, expecting to incur future losses and requiring substantial additional capital[57][60] - Operational & Development Risks: The business is at an early stage with no products in late-stage clinical trials, relying heavily on third parties for manufacturing and conducting clinical trials, which introduces risks of delays and lack of control[56][126][146] - Regulatory Risks: The company is subject to extensive, costly, and time-consuming regulation by the FDA and other authorities, with product candidates potentially causing undesirable side effects that could delay or prevent regulatory approval[105][121] - Intellectual Property Risks: The business depends on licenses from third parties, such as the University of Minnesota, where failure to meet license obligations could result in the loss of rights to key technologies[86] - Market & Stock Risks: The company's common stock has a limited public market and may be deemed a 'penny stock', making it a high-risk investment, and on February 22, 2023, it received a deficiency letter from Nasdaq for its stock price falling below the $1.00 minimum bid requirement[155][159][161] Item 1B. Unresolved Staff Comments The company reports no unresolved comments from the SEC staff - The company has no unresolved comments from the SEC staff[168] Item 2. Properties The company subleases 4,500 square feet of office space in Brisbane, CA, with the agreement expiring on June 30, 2024 - The company's principal executive offices are located in Brisbane, CA, under a sublease agreement expiring June 30, 2024[169] Item 3. Legal Proceedings The company is involved in legal matters including a convertible note holder demand, an arbitration claim against its former CFO, and previously settled disputes - In March 2023, the company received a demand letter from a convertible note holder alleging failure to deliver shares upon conversion and claiming liquidated damages[170] - The company has a pending arbitration claim against its former CFO, Michael Handelman, seeking monetary damages of approximately $370,000 and the return of shares for alleged misappropriation[171] - A lawsuit with Jeffrey Lion and Daniel Vallera regarding a 2015 license agreement was settled for $425,000, paid on March 4, 2022[173] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable to the company[174] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on Nasdaq under 'GTBP', with 46 stockholders of record as of March 30, 2023, and no history or plans for dividend payments - The company's common stock is listed on the Nasdaq Capital Market under the ticker 'GTBP'[175] - As of March 30, 2023, there were 46 stockholders of record[177] - The company has never paid dividends and does not intend to pay them in the foreseeable future[179] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The company's net loss decreased to $20.9 million in 2022 from $58.0 million in 2021, driven by lower SG&A expenses, with management projecting sufficient capital for the next 12 months Results of Operations In 2022, R&D expenses decreased to $8.8 million and SG&A expenses significantly fell to $12.4 million, resulting in a net loss of $20.9 million compared to $58.0 million in 2021 Comparison of Operating Results (in millions) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Research and Development Expenses | $8.8 | $9.6 | | Selling, General and Administrative Expenses | $12.4 | $47.9 | | Loss from Operations | ($21.3) | ($57.5) | | Net Loss | ($20.9) | ($58.0) | - The significant decrease in SG&A expenses was mainly due to a reduction in payroll and stock compensation expenses of approximately $27.0 million, along with lower marketing, legal, and professional fees[212] Liquidity and Capital Resources The company had an accumulated deficit of $674.5 million as of December 31, 2022, with $16.5 million in cash and investments, and raised $6.5 million in January 2023, sufficient for the next 12 months - The company had $5.7 million in cash and cash equivalents and $10.8 million in short-term investments as of December 31, 2022[184][216] - An additional $6.5 million was raised on January 4, 2023, from an institutional investor through a sale of common stock and warrants[216][396] - Management expects cash needs of approximately $15.0 million for the next twelve months and believes current funds are sufficient to fund operations for that period[216] Significant Agreements Key agreements include a $2.1 million research agreement with the University of Minnesota expiring June 2023, and a revised manufacturer agreement involving $3.2 million in stock and $3.3 million in cash - A scientific research agreement with the University of Minnesota for $2.1 million is in place to support TriKE development, with $1.7 million incurred as of December 31, 2022, and the agreement expires on June 30, 2023[207] - In August 2022, the company revised its agreement with a third-party manufacturer, issuing 1.22 million shares of common stock (valued at $3.2 million) and paying $3.3 million in cash as part of a payment arrangement[208] Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, GT Biopharma is exempt from providing this information - The company qualifies as a smaller reporting company and is not required to provide this information[228] Item 8. Financial Statements and Supplementary Data This section presents audited consolidated financial statements for 2022 and 2021, showing a net loss of $20.9 million, reduced total assets to $16.7 million, and total liabilities to $5.0 million Consolidated Balance Sheets As of December 31, 2022, total assets were $16.7 million (down from $32.2 million), total liabilities were $5.0 million, and total stockholders' equity was $11.7 million Key Balance Sheet Data (in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $5,672 | $8,968 | | Short-term investments | $10,836 | $23,011 | | Total Assets | $16,736 | $32,169 | | Accounts payable | $3,140 | $8,189 | | Total Liabilities | $5,002 | $10,259 | | Total Stockholders' Equity | $11,734 | $21,910 | Consolidated Statements of Operations For 2022, the company reported no revenue and a net loss of $20.9 million (or $0.66 per share), a significant improvement from the $58.0 million loss in 2021 Key Operations Data (in thousands, except per share data) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Revenues | $0 | $0 | | Research and development | $8,811 | $9,591 | | Selling, general and administrative | $12,446 | $47,924 | | Net Loss | ($20,884) | ($58,013) | | Net Loss Per Share | ($0.66) | ($2.06) | Consolidated Statements of Cash Flows In 2022, net cash used in operating activities was $15.2 million, net cash provided by investing activities was $12.1 million, leading to a net decrease in cash of $3.3 million, ending with $5.7 million Key Cash Flow Data (in thousands) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($15,217) | ($15,606) | | Net Cash Provided by (Used in) Investing Activities | $12,145 | ($23,040) | | Net Cash (Used in) Provided by Financing Activities | ($224) | $42,317 | | Net (Decrease) Increase in Cash | ($3,296) | $3,671 | Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting or financial disclosure matters - There were no disagreements with accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure[230] Item 9A. Controls and Procedures Management concluded disclosure controls and procedures were effective as of December 31, 2022, having fully remediated material weaknesses in internal control over financial reporting from 2021 - Based on an evaluation as of December 31, 2022, the company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective[231] - Material weaknesses in the Control Environment and Risk Assessment components, previously disclosed in the 2021 Form 10-K, were fully remediated as of December 31, 2022[232][233] Item 9B. Other Information No other information is reported under this item - There is no information to be reported under this item[240] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - This item is not applicable to the company[241] PART III Item 10. Directors, Executive Officers and Corporate Governance Information for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders - Information regarding directors, executive officers, and corporate governance will be filed in the 2023 Proxy Statement[242] Item 11. Executive Compensation Information for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders - Information regarding executive compensation will be filed in the 2023 Proxy Statement[243] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders - Information regarding security ownership will be filed in the 2023 Proxy Statement[244] Item 13. Certain Relationships and Related Transactions, and Director Independence Information for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders - Information regarding related transactions and director independence will be filed in the 2023 Proxy Statement[245] Item 14. Principal Accounting Fees and Services Information for this item is incorporated by reference from the company's definitive proxy statement for its 2023 Annual Meeting of Stockholders - Information regarding principal accounting fees and services will be filed in the 2023 Proxy Statement[246] PART IV Item 15. Exhibits and Financial Statement Schedules This section provides an index of all exhibits filed with the Form 10-K, including articles of incorporation, bylaws, material contracts, and certifications - This section contains the index of all exhibits filed with the Form 10-K[248] Item 16. Form 10-K Summary No summary is provided under this item - No summary is provided under this item[253]