Galera Therapeutics Earnings 2020-09-30

Galera Therapeutics Earnings 2020-09-30

GRTX 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

10-Q 1 grtx-10q_20200930.htm Q3 2020 10-Q grtx-10q_20200930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 001-39114

Galera Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

Delaware	46-1454898
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2 W. Liberty Blvd #100 Malvern, Pennsylvania	19355
(Address of principal executive offices)	(Zip Code)

(610) 725-1500

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock,

$0.001 par value per share

GRTX

The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 5, 2020, the registrant had 24,951,352 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Loss	5
	Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)	6
	Consolidated Statements of Cash Flows	7
	Notes to Unaudited Interim Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31
Signatures		32

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. All statements other than statements of historical fact contained in this Quarterly Report, including without limitation statements regarding our plans to develop and commercialize our product candidates, the timing of our ongoing or planned clinical trials, the timing of and our ability to obtain and maintain regulatory approvals, the anticipated direct and indirect impact of the COVID-19 pandemic on our business and operations, including manufacturing, research and development costs, clinical trials and employees, the clinical utility of our product candidates, our commercialization, marketing and manufacturing capabilities and strategy, our expectations about the willingness of healthcare professionals to use our product candidates, the sufficiency of our cash, cash equivalents and short-term investments, and the plans and objectives of management for future operations and capital expenditures are forward-looking statements.

The forward-looking statements in this Quarterly Report are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward-looking statements, including, but not limited to, the following: our limited operating history; anticipating continued losses for the foreseeable future; needing substantial funding and the ability to raise capital; our dependence on avasopasem manganese (GC4419); uncertainties inherent in the conduct of clinical trials; difficulties or delays enrolling patients in clinical trials; the FDA’s acceptance of data from clinical trials outside the United States; undesirable side effects from our product candidates; risks relating to the regulatory approval process; failure to capitalize on more profitable product candidates or indications; ability to receive Breakthrough Therapy Designation or Fast Track Designation for product candidates; failure to obtain regulatory approval of product candidates in the United States or other jurisdictions; ongoing regulatory obligations and continued regulatory review; risks related to commercialization; risks related to competition; ability to retain key employees and manage growth; risks related to intellectual property; inability to maintain collaborations or the failure of these collaborations; our reliance on third parties; the possibility of system failures or security breaches; liability related to the privacy of health information obtained from clinical trials and product liability lawsuits; unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives; environmental, health and safety laws and regulations; the impact of the COVID-19 pandemic on our business and operations, including preclinical studies and clinical trials, and general economic conditions; risks related to ownership of our common stock; significant costs as a result of operating as a public company; and those described under the sections in our Annual Report on Form 10-K for the year ended December 31, 2019 and this Quarterly Report entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

GALERA THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS EXCEPT SHARE AND PER-SHARE AMOUNTS)

(unaudited)

	September 30, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	15,232		$	18,356
Short-term investments		73,919			93,934
Prepaid expenses and other current assets		3,153			5,280
Total current assets		92,304			117,570
Property and equipment, net		1,073			934
Acquired intangible asset		2,258			2,258
Goodwill		881			881
Right-of-use lease assets		603			815
Other assets		956			918
Total assets	$	98,075		$	123,376
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,013		$	3,945
Accrued expenses		6,240			5,452
Lease liabilities		250			297
Total current liabilities		10,503			9,694
Royalty purchase liability		62,114			43,251
Lease liabilities, net of current portion		356			534
Deferred tax liability		289			289
Other liabilities		118			—
Total liabilities		73,380			53,768
Stockholders’ equity:
Preferred stock, $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, $0.001 par value: 200,000,000 shares authorized; 24,912,516 and 24,811,567 shares issued and outstanding at September 30, 2020 and December 31, 2019		25			25
Additional paid-in capital		240,049			230,895
Accumulated other comprehensive income		123			38
Accumulated deficit		(215,502	)		(161,350	)
Total stockholders’ equity		24,695			69,608
Total liabilities and stockholders’ equity	$	98,075		$	123,376

See accompanying notes to unaudited interim consolidated financial statements.

GALERA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

(unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019
Operating expenses:
Research and development	$	12,133		$	11,040		$	40,225		$	29,057
General and administrative		3,945			1,816			11,384			5,466
Loss from operations		(16,078	)		(12,856	)		(51,609	)		(34,523	)
Other income (expenses):
Interest income		235			426			1,055			1,397
Interest expense		(1,235	)		(918	)		(3,625	)		(2,094	)
Foreign currency gain (loss)		—			(3	)		27			(38	)
Net loss		(17,078	)		(13,351	)		(54,152	)		(35,258	)
Accretion of redeemable convertible preferred stock to redemption value		—			(2,108	)		—			(6,178	)
Net loss attributable to common stockholders	$	(17,078	)	$	(15,459	)	$	(54,152	)	$	(41,436	)
Net loss per share of common stock, basic and diluted	$	(0.69	)	$	(51.43	)	$	(2.18	)	$	(137.85	)
Weighted-average shares of common stock outstanding, basic and diluted		24,874,805			300,597			24,840,822			300,597

See accompanying notes to unaudited interim consolidated financial statements.

GALERA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(IN THOUSANDS)

(unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019
Net loss	$	(17,078	)	$	(13,351	)	$	(54,152	)	$	(35,258	)
Unrealized gain (loss) on short-term investments		(193	)		(26	)		85			52
Comprehensive loss	$	(17,271	)	$	(13,377	)	$	(54,067	)	$	(35,206	)

See accompanying notes to unaudited interim consolidated financial statements.

GALERA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND

STOCKHOLDERS’ EQUITY (DEFICIT)

(IN THOUSANDS EXCEPT SHARE AMOUNTS)

(unaudited)

					Common stock				Additional paid-in			Accumulated other comprehensive			Accumulated			Total Stockholders’
					Shares		Amount		capital			income			Deficit			Equity
Balance at January 1, 2020						24,811,567	$	25	$	230,895		$	38		$	(161,350	)	$	69,608
Share-based compensation expense						—		—		1,210			—			—			1,210
Exercise of stock options						8,503		—		9			—			—			9
Unrealized gain on short-term investments						—		—		—			648			—			648
Net loss						—		—		—			—			(18,417	)		(18,417	)
Balance at March 31, 2020						24,820,070		25		232,114			686			(179,767	)		53,058
Issuance of common stock warrants						—		—		4,712			—			—			4,712
Share-based compensation expense						—		—		1,453			—			—			1,453
Exercise of stock options						25,728		—		41			—			—			41
Unrealized loss on short-term investments						—		—		—			(370	)		—			(370	)
Net loss						—		—		—			—			(18,657	)		(18,657	)
Balance at June 30, 2020						24,845,798		25		238,320			316			(198,424	)		40,237
Share-based compensation expense						—		—		1,505			—			—			1,505
Exercise of stock options						66,718		—		224			—			—			224
Unrealized loss on short-term investments						—		—		—			(193	)		—			(193	)
Net loss						—		—		—			—			(17,078	)		(17,078	)
Balance at September 30, 2020						24,912,516	$	25	$	240,049		$	123		$	(215,502	)	$	24,695


	Redeemable convertible preferred stock				Common stock				Additional paid-in			Accumulated other comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		capital			income			Deficit			Deficit
Balance at January 1, 2019		96,385,795	$	165,902		300,597	$	—	$	—		$	3		$	(104,823	)	$	(104,820	)
Share-based compensation expense		—		—		—		—		499			—			—			499
Accretion of redeemable convertible preferred stock to redemption value		—		2,011		—		—		(499	)		—			(1,512	)		(2,011	)
Unrealized gain on short-term investments		—		—		—		—		—			10			—			10
Net loss		—		—		—		—		—			—			(10,349	)		(10,349	)
Balance at March 31, 2019		96,385,795		167,913		300,597		—		—			13			(116,684	)		(116,671	)
Share-based compensation expense		—		—		—		—		565			—			—			565
Accretion of redeemable convertible preferred stock to redemption value		—		2,060		—		—		(565	)		—			(1,495	)		(2,060	)
Unrealized gain on short-term investments		—		—		—		—		—			68			—			68
Net loss		—		—		—		—		—			—			(11,558	)		(11,558	)
Balance at June 30, 2019		96,385,795		169,973		300,597		—		—			81			(129,737	)		(129,656	)
Share-based compensation expense		—		—		—		—		520			—			—			520
Accretion of redeemable convertible preferred stock to redemption value		—		2,107		—		—		(520	)		—			(1,587	)		(2,107	)
Unrealized gain on short-term investments		—		—		—		—		—			(26	)		—			(26	)
Net loss		—		—		—		—		—			—			(13,351	)		(13,351	)
Balance at September 30, 2019		96,385,795	$	172,080		300,597	$	—	$	—		$	55		$	(144,675	)	$	(144,620	)

See accompanying notes to unaudited interim consolidated financial statements.

GALERA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(unaudited)

	Nine months ended September 30,
	2020			2019
Operating activities:
Net loss	$	(54,152	)	$	(35,258	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		272			188
Noncash interest expense		3,625			2,094
Share-based compensation expense		4,168			1,584
Reserve for tax incentive receivable		—			241
Deferred rent		—			7
Changes in operating assets and liabilities:
Tax incentive receivable		—			629
Prepaid expenses and other current assets		2,089			(2,732	)
Other assets		212			(31	)
Accounts payable		68			1,131
Accrued expense and other liabilities		631			762
Cash used in operating activities		(43,087	)		(31,385	)
Investing activities:
Purchases of short-term investments		(53,650	)		(63,468	)
Proceeds from sales of short-term investments		73,750			78,000
Purchase of property and equipment		(411	)		(567	)
Cash provided by investing activities		19,689			13,965
Financing activities:
Proceeds from royalty purchase agreement		20,000			20,000
Payment of deferred offering costs		—			(1,672	)
Proceeds from exercise of stock options		274			—
Cash provided by financing activities		20,274			18,328
Net increase (decrease) in cash and cash equivalents		(3,124	)		908
Cash and cash equivalents at beginning of period		18,356			14,811
Cash and cash equivalents at end of period	$	15,232		$	15,719
Supplemental schedule of non-cash financing activities:
Issuance of warrants in conjunction with amendment to the royalty purchase agreement	$	4,712		$	—
Accretion of redeemable convertible preferred stock to redemption value	$	—		$	6,178
Deferred offering costs included in accounts payable and accrued expenses	$	—		$	431
Purchase of property and equipment included in accounts payable and accrued expenses	$	—		$	24
Initial recognition of operating lease right-of-use asset and operating lease liability	$	—		$	1,084

See accompanying notes to unaudited interim consolidated financial statements.

GALERA THERAPEUTICS, INC.

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

1.	Organization and description of business

Galera Therapeutics, Inc. was incorporated as a Delaware corporation on November 19, 2012 (inception) and together with its subsidiaries, (the Company, or Galera) is a clinical stage biopharmaceutical company focused on developing and commercializing a pipeline of novel, proprietary therapeutics that have the potential to transform radiotherapy in cancer. The Company’s lead product candidate, avasopasem manganese (GC4419, also referred to as avasopasem), is a potent and highly selective small molecule dismutase mimetic being developed for the reduction of severe oral mucositis (SOM). In February 2018, the U.S. Food and Drug Administration (FDA) granted Breakthrough Therapy Designation to avasopasem for the reduction of SOM induced by radiotherapy with or without systemic therapy. The Company is currently evaluating avasopasem in a Phase 3 registrational trial (referred to as the ROMAN trial) for its ability to reduce the incidence and severity of SOM induced by radiotherapy in patients with locally advanced head and neck cancer (HNC), its lead indication. It is also being studied in a Phase 2a multi-center trial in Europe assessing the safety of avasopasem in patients with head and neck cancer undergoing standard-of-care radiotherapy and in a Phase 2a trial for its ability to reduce the incidence of esophagitis induced by radiotherapy in patients with lung cancer. In addition to developing avasopasem for the reduction of normal tissue toxicity from radiotherapy, the Company is developing its dismutase mimetics to increase the anti-cancer efficacy of higher daily doses of radiotherapy, including stereotactic body radiation therapy (SBRT). The Company’s second dismutase mimetic product candidate, GC4711, is being developed to increase the anti-cancer efficacy of SBRT and has successfully completed Phase 1 trials of intravenous GC4711 in healthy volunteers. The Company leveraged its observations from the pilot Phase 1/2 safety and anti-cancer efficacy trial of avasopasem in combination with SBRT in patients with locally advanced pancreatic cancer to prepare GC4711 clinical trials in combination with SBRT. The Company is currently evaluating GC4711 in combination with SBRT in a Phase 1/2 safety and anti-cancer efficacy trial in non-small cell lung cancer and plans to initiate a Phase 2b trial of GC4711 in combination with SBRT in patients with pancreatic cancer.

Liquidity

The Company has incurred recurring losses and negative cash flows from operations since inception and has an accumulated deficit of $215.5 million as of September 30, 2020. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidates currently in development. The Company expects its existing cash, cash equivalents and short-term investments, together with the expected payments from Blackstone Life Sciences (formerly known as Clarus Ventures) in the amount of $57.5 million upon the achievement of certain clinical enrollment milestones in the ROMAN trial and the anti-cancer program in combination with SBRT under the Royalty Agreement and the Amendment (each as defined below), will enable the Company to fund its operating expenses and capital expenditure requirements into the second half of 2022. See Note 6.

On November 12, 2019, the Company completed an initial public offering (IPO) of its common stock, which resulted in the issuance and sale of 5,000,000 shares of its common stock at a public offering price of $12.00 per share, generating net proceeds of $53.0 million after deducting underwriting discounts and other offering costs. On December 9, 2019, in connection with the partial exercise of the over-allotment option granted to the underwriters of the Company's IPO, 445,690 additional shares of common stock were sold at the IPO price of $12.00 per share, generating net proceeds of approximately $5.0 million after deducting underwriting discounts and other offering costs. Upon the closing of the IPO, all outstanding shares of the Company’s Series A, Series B and Series C redeemable convertible preferred stock were automatically converted into 19,061,502 shares of the Company’s common stock.

2.	Basis of presentation and significant accounting policies

The summary of significant accounting policies disclosed in the Company’s annual consolidated financial statements for the years ended December 31, 2019 and 2018 included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 10, 2020 have not materially changed, except as set forth below.

Basis of presentation and consolidation

The accompanying unaudited interim consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP) for interim financial information. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) of the Financial Accounting Standards Board (FASB).

GALERA THERAPEUTICS, INC.

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

In the opinion of management, the accompanying interim consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of September 30, 2020 and its results of operations for the three and nine months ended September 30, 2020 and 2019, and statements of changes in redeemable convertible preferred stock and stockholder’s equity (deficit) and cash flows for the nine months ended September 30, 2020 and 2019. Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020, or for any future period. The interim consolidated financial statements, presented herein, do not contain the required disclosures under U.S. GAAP for annual financial statements. Therefore, these interim consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and related notes as of and for the year ended December 31, 2019, included in the Company’s annual report on Form 10-K and filed with the SEC on March 10, 2020.

Use of estimates

The preparation of unaudited interim consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited interim consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

10-Q	2020-09-30	Filed 2020-11-10
10-Q	2020-06-30	Filed 2020-08-10
10-Q	2020-03-31	Filed 2020-05-12
10-K	2019-12-31	Filed 2020-03-10
S-1	2019-10-11	Public Filing
10-Q	2019-09-30	Filed 2019-12-10

8-K	2020-11-10
8-K	2020-09-24
8-K	2020-09-16
8-K	2020-09-09
8-K	2020-08-10
8-K	2020-07-14
8-K	2020-06-09
8-K	2020-05-12
8-K	2020-05-11
8-K	2020-03-31
8-K	2020-03-10
8-K	2019-12-10
8-K	2019-11-12

EX-31.1	grtx-ex311_7.htm
EX-31.2	grtx-ex312_9.htm
EX-32.1	grtx-ex321_6.htm
EX-32.2	grtx-ex322_11.htm

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company