Galera(US:GRTX)2024-05-13 11:30Financial Performance - The company reported a net loss of $4.4 million for the three months ended March 31, 2024, compared to a net loss of $17.7 million for the same period in 2023, indicating a 75% improvement in losses year-over-year [20]. - The net loss for the three months ended March 31, 2024, was $4.4 million, a decrease of $13.3 million from a net loss of $17.7 million in the same period in 2023 [114]. - The company utilized $4.8 million of net cash in operating activities for the three months ended March 31, 2024, compared to $11.7 million in the same period in 2023 [125]. Assets and Cash Position - As of March 31, 2024, total assets decreased to $19.7 million from $26.1 million as of December 31, 2023, representing a decline of approximately 25% [14]. - Cash and cash equivalents at the end of Q1 2024 were $13.5 million, down from $18.3 million at the end of 2023, reflecting a decrease of about 26% [24]. - As of March 31, 2024, cash and cash equivalents amounted to $13.1 million, a decrease from $18.0 million as of December 31, 2023 [53]. - The company expects its existing cash will fund operations into the third quarter of 2025 [32]. - As of March 31, 2024, the company had $13.5 million in cash and cash equivalents and an accumulated deficit of $441.8 million [123]. Research and Development - Research and development expenses significantly decreased to $1.5 million in Q1 2024 from $7.3 million in Q1 2023, a reduction of approximately 80% [17]. - Research and development expenses for the three months ended March 31, 2024, totaled $549,000, significantly down from $2.7 million in the same period of 2023 [56]. - For the three months ended March 31, 2024, research and development expenses decreased by $5.8 million to $1.5 million from $7.3 million in the same period in 2023 [115]. - The company has ceased all clinical trial activity and suspended the clinical development of its product candidates [102]. - The FDA issued a Complete Response Letter for avasopasem, requiring an additional Phase 3 trial for NDA resubmission, which is currently not feasible for the company [90]. Strategic Alternatives and Workforce - The company is currently exploring strategic alternatives, including potential mergers or asset divestitures, to maximize shareholder value [31]. - A workforce reduction of approximately 70% was implemented in August 2023, resulting in the layoff of 22 employees [29]. - The company is exploring strategic alternatives, including potential mergers or acquisitions, to secure future funding [129]. - The company anticipates that failure to identify strategic alternatives may lead to consideration of dissolution and liquidation [93]. Compliance and Legal Matters - The company received notices from Nasdaq regarding non-compliance with the minimum Market Value of Listed Securities of $50 million and the minimum bid price requirement of $1.00 per share [94]. - The company did not regain compliance with Nasdaq requirements by the specified deadlines and is appealing the delisting decisions [96]. - A lawsuit was filed against Alira Health Clinical, LLC and IQVIA Biotech, LLC for damages related to a breach of contract and negligence in the Phase 3 ROMAN trial [148]. Expenses and Liabilities - General and administrative expenses decreased by $3.5 million to $3.1 million for the three months ended March 31, 2024, compared to $6.6 million in 2023 [116]. - The company incurred total restructuring-related charges of $2.3 million during the year ended December 31, 2023, with $100,000 remaining unpaid as of March 31, 2024 [45]. - The company incurred a restructuring charge of $2.3 million in Q3 2023 due to a workforce reduction of approximately 70% [84]. - The company has recorded a valuation allowance on substantially all deferred tax assets due to uncertainty over the ability to utilize net operating losses and credits [112]. Royalty Agreement - The Royalty Agreement with Blackstone Life Sciences allows for up to $80.0 million in payments upon achieving specified clinical milestones [133]. - The Royalty Purchase Price was increased by $37.5 million to a total of $117.5 million, with a new $20.0 million tranche received in June 2021 upon achieving a clinical enrollment milestone [135]. - The company agreed to sell a high single-digit percentage of worldwide net sales of the Products to Blackstone during the Royalty Period, which lasts until the 12th anniversary of the product's commercial launch or the expiration of patent protections [136]. - The amended Royalty Agreement will remain effective until the total Product Payments exceed a fixed single-digit multiple of the Royalty Purchase Price received [137]. - Two warrants were issued to the Blackstone Purchaser for 550,661 shares at an exercise price of $13.62 per share, exercisable upon receipt of specified milestone payments [138]. Accounting and Reporting - The company is assessing the impact of new accounting standards issued by FASB, effective for future reporting periods [48][51]. - The company opted out of the extended transition period under the JOBS Act, committing to comply with new accounting standards as required for non-emerging growth companies [139]. - The company remains classified as an emerging growth company until total annual gross revenues exceed $1.235 billion or other specified conditions are met [140]. - No changes in internal control over financial reporting were identified that materially affected the company's reporting [144]. Stock Options and Compensation - The company has 5,570,963 stock options outstanding as of March 31, 2024, with a weighted average exercise price of $5.87 [77]. - The company has 1,500,000 shares available for issuance under the 2023 Employment Inducement Award Plan as of March 31, 2024 [76]. - Share-based compensation expense for the three months ended March 31, 2024, was $875,000, a decrease from $1.458 million in the same period of 2023 [77]. - The expected term of employee stock options is 6.2 years, with an expected stock price volatility of 94.9% and a risk-free interest rate of 4.13% [82]. Other Financial Metrics - The company recognized $4.2 million in noncash interest expense during the three months ended March 31, 2023 [61]. - The company suspended recognizing interest expense on the royalty purchase liability after October 2023 due to uncertainty regarding future royalties [65]. - The company completed a registered direct offering in February 2023, resulting in the issuance of 14,320,000 shares and net proceeds of $27.6 million [70]. - The company reported a cash paid for operating leases of $53,000 for the three months ended March 31, 2024, compared to $44,000 in the same period of 2023 [69].