G1 Therapeutics(GTHX) - 2023 Q4 - Annual Report

PART I Business G1 Therapeutics is a commercial-stage biopharmaceutical company focused on developing and commercializing COSELA® (trilaciclib) for myeloprotection, with strategic expansion into TNBC and ADC combinations - G1 Therapeutics is a commercial-stage biopharmaceutical company focused on developing and commercializing novel small molecule therapeutics for cancer treatment, with COSELA® (trilaciclib) as its first FDA-approved product[18] - COSELA is the first and only therapy indicated to proactively protect bone marrow from chemotherapy damage, approved in the U.S. and China[18] - The core development strategy for trilaciclib focuses on triple-negative breast cancer (TNBC) and combinations with antibody-drug conjugates (ADCs)[19][27] - The product portfolio includes trilaciclib, lerociclib, and a CDK2 inhibitor, with lerociclib and the CDK2 inhibitor having been out-licensed[25][72][73] Development Pipeline and Clinical Trials The development pipeline focuses on trilaciclib, with ongoing registrational Phase 3 trials in mTNBC (PRESERVE 2) and a post-marketing trial in 2L ES-SCLC, alongside completed trials including a discontinued Phase 3 in CRC Trilaciclib Development Pipeline Highlights | Indication | Phase / Status | Key Milestone | Primary Endpoint(s) | | :--- | :--- | :--- | :--- | | 1L metastatic TNBC (PRESERVE 2) | Registrational Phase 3 (enrollment complete) | Final OS analysis expected in 3Q 2024 | Overall Survival (OS) | | ADC combination in mTNBC | Phase 2 (enrollment complete) | Additional survival results expected mid-2024 | Progression-Free Survival (PFS) | | 1L Bladder cancer (mUC) | Phase 2 (trial complete) | Results to be presented at a future medical meeting | PFS | | 1L metastatic Colorectal cancer (CRC) | Phase 3 (trial discontinued) | Results announced in February 2023 | Co-primary: Severe neutropenia measures | - The pivotal Phase 3 PRESERVE 2 trial in mTNBC completed enrollment in October 2022, with final OS analysis expected in Q3 2024 after an interim analysis did not meet early stopping criteria[57][58] - The Phase 3 PRESERVE 1 trial in colorectal cancer was discontinued in February 2023 due to early anti-tumor efficacy data favoring the placebo arm, despite meeting myeloprotection endpoints[51][52] - A post-marketing trial in 2L ES-SCLC with topotecan was initiated in October 2023 to evaluate survival outcomes as a condition of marketing approval[26][65] Commercialization and Market Opportunity COSELA launched commercially in the U.S. in March 2021 for ES-SCLC, supported by NCCN/ASCO guidelines and a permanent J-code, with estimated addressable markets exceeding $700 million for ES-SCLC and $1 billion for mTNBC - COSELA became commercially available in the U.S. on March 2, 2021, following its FDA approval on February 12, 2021[23] - The estimated total addressable U.S. market for trilaciclib exceeds $700 million for ES-SCLC and $1 billion for metastatic TNBC[35] - COSELA is included in NCCN and ASCO clinical practice guidelines, and CMS has issued a permanent J-code for standardized insurance claims and payment[75] Intellectual Property The company's intellectual property portfolio includes over 385 global patent applications, with trilaciclib's composition-of-matter patents expiring in 2031 (potentially extended to 2034/2035) and method-of-use patents expiring between 2034 and 2042 - As of December 31, 2023, the patent estate includes over 385 granted or pending patent applications worldwide, with more than 55 granted U.S. patents[83] - Trilaciclib's composition-of-matter patents are expected to expire in 2031, with a potential patent term extension to December 2034 or February 2035 if granted[87][88] - Patents covering methods of use for trilaciclib will expire between 2034 and 2039, with pending applications potentially extending to 2042[87][89][92] License Agreements G1 Therapeutics holds key out-licensing agreements, including an exclusive license with Simcere for trilaciclib in Greater China (amended for a $30 million payment), Genor Biopharma for lerociclib in Asia-Pacific, and Incyclix for a CDK2 inhibitor, while a previous EQRx agreement for lerociclib was terminated - An exclusive license agreement with Simcere for trilaciclib in Greater China was amended in April 2023, resulting in a one-time $30.0 million payment in exchange for waiving future royalty payments[105][106] - An exclusive license with Genor Biopharma covers the development and commercialization of lerociclib in various Asia-Pacific territories[108] - The exclusive license agreement with EQRx for lerociclib in the U.S., Europe, and Japan was terminated by EQRx on August 1, 2023[115][117] Government Regulation The company operates under extensive FDA and global regulations, including the FDC Act, PREA, Hatch-Waxman, Anti-Kickback Statute, and pricing pressures from the Inflation Reduction Act, while also complying with data privacy laws like HIPAA, CCPA/CPRA, and GDPR - COSELA received a 5-year New Chemical Entity (NCE) exclusivity period upon its approval in February 2021, expiring on February 12, 2026[188] - The company is subject to healthcare cost-containment measures, including the Inflation Reduction Act of 2022 (IRA), which allows CMS to negotiate drug prices and imposes rebates for price increases exceeding inflation[147] - The company must comply with complex data privacy laws, including HIPAA, the California Consumer Privacy Act (CCPA), and Europe's General Data Protection Regulation (GDPR)[172][173][176] Risk Factors The company faces significant risks, primarily its near-total dependence on COSELA's commercial success, including market acceptance, pricing, competition, a history of losses requiring additional funding, development delays, reliance on third parties, and intellectual property protection challenges - The company depends almost entirely on the commercial success of COSELA and may fail to achieve necessary market acceptance[207][212] - The company has a history of significant operating losses, with a $48.0 million loss in 2023 and an accumulated deficit of $780.0 million as of December 31, 2023, necessitating substantial additional funding[207][238][243] - Reliance on third parties for COSELA manufacturing and clinical trials increases risks related to supply chain disruptions, quality control, and trial execution[210][343][349] - Risks exist in protecting intellectual property, including potential patent challenges, litigation, and the development of similar competitor products[210][366] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None[407] Cybersecurity The company maintains a cybersecurity program based on the NIST framework, with Board oversight and management-led risk mitigation, and has not experienced any material cybersecurity incidents in the last three fiscal years - Cybersecurity policies and practices are based on recognized frameworks from the National Institute of Standards and Technology (NIST)[408] - The Board of Directors, primarily through its audit committee, provides oversight of cybersecurity risk, with management leading daily risk management processes[416][419] - No material cybersecurity incidents have been experienced in the last three fiscal years[415] Properties The corporate headquarters is a leased 60,000 sq ft facility in Research Triangle Park, NC, with the lease expiring in September 2027, and a portion subleased effective January 2024 - The corporate headquarters is a leased facility of approximately 60,000 sq. ft. in Research Triangle Park, NC, with the lease expiring in September 2027[420] - A sublease agreement for the third floor of the headquarters became effective January 1, 2024, through August 31, 2027[420] Legal Proceedings The company is not currently subject to any material pending legal proceedings - The company is not currently a party to any material legal proceedings[421] Mine Safety Disclosures This item is not applicable to the company - Not applicable[422] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on the Nasdaq Global Select Market under "GTHX", with approximately 10 stockholders of record as of February 2024, and no equity repurchases in fiscal year 2023 - The company's common stock trades on the Nasdaq Global Select Market under the symbol "GTHX"[424] - As of February 26, 2024, there were approximately 10 stockholders of record[425] - The company did not purchase any of its equity securities during fiscal year 2023[431] [Reserved] This item is reserved Management's Discussion and Analysis of Financial Condition and Results of Operations In fiscal year 2023, G1 Therapeutics reported total revenues of $82.5 million (up 61%), driven by COSELA sales and a $30 million Simcere payment, while operating expenses decreased by 35% to $122.0 million, narrowing the net loss to $48.0 million, with $82.1 million in cash sufficient for the next 12 months Financial Highlights (2023 vs. 2022) | Metric | 2023 (in millions) | 2022 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Product sales, net | $46.3 | $31.3 | +48% | | License revenue | $36.2 | $20.0 | +81% | | Total revenues | $82.5 | $51.3 | +61% | | R&D Expenses | $43.7 | $83.3 | -48% | | SG&A Expenses | $71.1 | $100.4 | -29% | | Total operating expenses | $122.0 | $187.5 | -35% | | Net loss | $(48.0) | $(147.6) | +67% | - As of December 31, 2023, cash, cash equivalents, and marketable securities totaled $82.1 million ($32.2 million cash + $49.9 million marketable securities)[434][568] - Management expects existing cash, cash equivalents, and marketable securities are sufficient to fund planned operations for at least the next 12 months[494] Results of Operations For 2023, net product sales of COSELA grew 48% to $46.3 million, license revenue increased 81% to $36.2 million (including a $30 million Simcere payment), R&D expenses decreased 48% to $43.7 million, and SG&A expenses fell 29% to $71.1 million, resulting in a net loss of $48.0 million - 2023 vs. 2022: Net product sales increased by $15.0 million (48%) due to higher sales volume[478] - 2023 vs. 2022: License revenue increased by $16.2 million (81%), primarily due to a one-time $30.0 million payment from Simcere[479] - 2023 vs. 2022: R&D expenses decreased by $39.6 million (48%), mainly from a $37.3 million reduction in clinical program costs[481] - 2023 vs. 2022: SG&A expenses decreased by $29.3 million (29%), driven by reductions in commercialization activities ($14.6 million) and personnel costs ($10.1 million)[482] Liquidity and Capital Resources As of December 31, 2023, the company held $82.1 million in cash and equivalents, with an accumulated deficit of $780.0 million, and while current capital is sufficient for the next 12 months, additional long-term financing will be required, alongside a $50.0 million outstanding loan with Hercules Capital amended in June 2023 - The company had an accumulated deficit of $780.0 million as of December 31, 2023[494] - A loan agreement with Hercules Capital had $50.0 million outstanding as of December 31, 2023, and was amended in June 2023 to repay $25.0 million of debt and adjust covenants[505] - The company has an effective shelf registration statement (Form S-3) for up to $300.0 million in securities and an "at-the-market" (ATM) offering agreement for up to $100.0 million, with no shares sold to date[497][498][499] Contractual Obligations as of December 31, 2023 | Obligation Type | Total (in thousands) | Less than 1 Year | 1 to 3 Years | 3 to 5 Years | | :--- | :--- | :--- | :--- | :--- | | Operating lease obligations | $6,534 | $1,679 | $3,498 | $1,357 | | Long-term debt obligation (incl. interest) | $69,876 | $9,008 | $60,868 | $0 | | Total | $76,410 | $10,687 | $64,366 | $1,357 | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks stem from interest rate exposure on its cash, equivalents, marketable securities, and a variable-rate loan with Hercules Capital, while foreign currency and inflation risks are currently not considered significant - The company is exposed to interest rate risk on its cash, cash equivalents, and marketable securities, totaling $82.1 million as of December 31, 2023[525] - Market risk exposure exists from the variable interest rate loan with Hercules Capital, with $50.0 million of principal outstanding as of December 31, 2023[526] - Inflation and foreign currency exchange rate risks are not believed to have had a material effect on the business[527] Financial Statements and Supplementary Data Audited financial statements for 2023 show total assets of $121.5 million (down from $188.0 million in 2022), total liabilities of $86.2 million (down from $119.2 million), and total stockholders' equity of $35.4 million, with a net loss of $48.0 million (or $0.93 per share), a significant improvement from 2022 Key Balance Sheet Data (as of Dec 31) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Cash, cash equivalents, and marketable securities | $82,156 | $145,070 | | Total Assets | $121,540 | $187,965 | | Loan Payable | $51,557 | $77,015 | | Total Liabilities | $86,154 | $119,218 | | Total Stockholders' Equity | $35,386 | $68,747 | Key Statement of Operations Data (Year Ended Dec 31) | (in thousands, except per share data) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Total Revenues | $82,511 | $51,301 | $31,476 | | Total Operating Expenses | $122,038 | $187,479 | $173,933 | | Loss from Operations | $(39,527) | $(136,178) | $(142,457) | | Net Loss | $(47,967) | $(147,559) | $(148,352) | | Net Loss Per Share | $(0.93) | $(3.38) | $(3.54) | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure This item is not applicable to the company - Not Applicable[529] Controls and Procedures Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2023, with no material changes during Q4 2023 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2023[531] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2023[533] Other Information No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the fourth quarter of 2023 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the fourth quarter of 2023[534] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable[535] PART III Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Principal Accounting Fees Information for Items 10 through 14, covering directors, executive officers, corporate governance, executive compensation, security ownership, and principal accounting fees, is incorporated by reference from the company's definitive Proxy Statement for the 2024 Annual Meeting of Stockholders - Information for Part III (Items 10-14) is incorporated by reference from the company's Proxy Statement for the 2024 Annual Meeting of Stockholders, to be filed within 120 days of the fiscal year-end[537][538][539] PART IV Exhibits, Financial Statement Schedules This section provides an index to the company's financial statements and a list of all exhibits filed with the Annual Report on Form 10-K, with no separate financial statement schedules provided - This section provides an index to the financial statements and lists all exhibits filed with the 10-K report[540][543] Form 10-K Summary The company has not provided a summary for its Form 10-K - None[547]