Galera Therapeutics Earnings 2019-09-30

Galera Therapeutics Earnings 2019-09-30

GRTX 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

10-Q 1 grtx-10q_20190930.htm 10-Q grtx-10q_20190930.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, 2019

☐	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 December 9, 2019, the registrant had 24,807,789 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’ 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	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	73
Item 3.	Defaults Upon Senior Securities	73
Item 4.	Mine Safety Disclosures	73
Item 5.	Other Information	74
Item 6.	Exhibits	75
Signatures		76

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. 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 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, including those described under the sections in this Quarterly Report entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report.

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. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. 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. We intend the forward-looking statements contained in this Quarterly Report to be covered by the safe harbor provisions for forward-looking statements contained in 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.

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, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	15,719		$	14,811
Short-term investments		52,226			66,706
Tax incentive receivable		—			870
Prepaid expenses and other current assets		4,197			1,465
Total current assets		72,142			83,852
Property and equipment, net		970			568
Acquired intangible asset		2,258			2,258
Goodwill		881			881
Deferred offering costs		2,103			—
Right-of-use lease asset		876			—
Other assets		528			497
Total assets	$	79,758		$	88,056
Liabilities, redeemable convertible preferred stock and stockholders’ deficit
Current liabilities:
Accounts payable	$	5,218		$	3,867
Accrued expenses		3,574			2,577
Lease liability		291			—
Total current liabilities		9,083			6,444
Royalty purchase liability		42,313			20,220
Deferred rent		—			12
Lease liability, net of current portion		604			—
Deferred tax liability		298			298
Total liabilities		52,298			26,974
Redeemable convertible preferred stock, $0.001 par value: 96,385,795 shares authorized, issued and outstanding at September 30, 2019 and December 31, 2018, respectively (liquidation value of $174,746 at September 30, 2019)		172,080			165,902
Stockholders’ deficit:
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; 300,597 shares issued and outstanding at September 30, 2019 and December 31, 2018		—			—
Accumulated other comprehensive income		55			3
Accumulated deficit		(144,675	)		(104,823	)
Total stockholders’ deficit		(144,620	)		(104,820	)
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit	$	79,758		$	88,056

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,
	2019			2018			2019			2018
Operating expenses:
Research and development	$	11,040		$	4,162		$	29,057		$	11,551
General and administrative		1,816			1,245			5,466			3,846
Loss from operations		(12,856	)		(5,407	)		(34,523	)		(15,397	)
Other income (expenses):
Interest income		426			117			1,397			170
Interest expense		(918	)		—			(2,094	)		—
Foreign currency loss		(3	)		(11	)		(38	)		(27	)
Loss before income tax benefit		(13,351	)		(5,301	)		(35,258	)		(15,254	)
Income tax benefit		—			52			—			141
Net loss		(13,351	)		(5,249	)		(35,258	)		(15,113	)
Accretion of redeemable convertible preferred stock to redemption value		(2,108	)		(1,468	)		(6,178	)		(3,879	)
Net loss attributable to common stockholders	$	(15,459	)	$	(6,717	)	$	(41,436	)	$	(18,992	)
Net loss per share of common stock, basic and diluted	$	(51.43	)	$	(22.35	)	$	(137.85	)	$	(63.18	)
Weighted-average shares of common stock outstanding, basic and diluted		300,597			300,597			300,597			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,
	2019			2018			2019			2018
Net loss	$	(13,351	)	$	(5,249	)	$	(35,258	)	$	(15,113	)
Unrealized gain on short-term investments		(26	)		—			52			3
Comprehensive loss	$	(13,377	)	$	(5,249	)	$	(35,206	)	$	(15,110	)

See accompanying notes to unaudited interim consolidated financial statements.

GALERA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND

STOCKHOLDERS’ DEFICIT

(IN THOUSANDS EXCEPT SHARE AMOUNTS)

(unaudited)

	Redeemable convertible preferred stock				Common stock				Additional paid-in			Accumulated other comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		capital			(loss) income			Deficit			Deficit
Balance at January 1, 2018		64,689,359	$	90,148		300,597	$	—	$	—		$	(3	)	$	(76,102	)	$	(76,105	)
Share-based compensation expense		—		—		—		—		208			—			—			208
Accretion of redeemable convertible preferred stock to redemption value		—		1,205		—		—		(208	)		—			(997	)		(1,205	)
Unrealized gain on short-term investments		—		—		—		—		—			3			—			3
Net loss		—		—		—		—		—			—			(5,533	)		(5,533	)
Balance at March 31, 2018		64,689,359		91,353		300,597		—		—			—			(82,632	)		(82,632	)
Share-based compensation expense		—		—		—		—		226			—			—			226
Accretion of redeemable convertible preferred stock to redemption value		—		1,206		—		—		(226	)		—			(980	)		(1,206	)
Unrealized gain on short-term investments		—		—		—		—		—			—			—			—
Net loss		—		—		—		—		—			—			(4,331	)		(4,331	)
Balance at June 30, 2018		64,689,359		92,559		300,597		—		—			—			(87,943	)		(87,943	)
Sale of Series C redeemable convertible preferred stock, net of issuance costs		31,696,436		69,850		—		—		—			—			—			—
Share-based compensation expense		—		—		—		—		220			—			—			220
Accretion of redeemable convertible preferred stock to redemption value		—		1,468		—		—		(220	)		—			(1,248	)		(1,468	)
Unrealized gain on short-term investments		—		—		—		—		—			—			—			—
Net loss		—		—		—		—		—			—			(5,249	)		(5,249	)
Balance at September 30, 2018		96,385,795	$	163,877		300,597	$	—	$	—		$	—		$	(94,440	)	$	(94,440	)

	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		—		—		—		—		—			—			(9,901	)		(9,901	)
Balance at March 31, 2019		96,385,795		167,913		300,597		—		—			13			(116,236	)		(116,223	)
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		—		—		—		—		—			—			(12,006	)		(12,006	)
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,
	2019			2018
Operating activities:
Net loss	$	(35,258	)	$	(15,113	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		188			86
Noncash interest expense		2,094			—
Share-based compensation expense		1,584			654
Reserve for tax incentive receivable		241			—
Deferred tax liability		—			(141	)
Deferred rent		7			(1	)
Changes in operating assets and liabilities:
Tax incentive receivable		629			(149	)
Prepaid expenses and other current assets		(2,732	)		(168	)
Other assets		(31	)		(255	)
Accounts payable		1,131			(308	)
Accrued expense		762			(153	)
Cash used in operating activities		(31,385	)		(15,548	)
Investing activities:
Purchases of short-term investments		(63,468	)		(16,406	)
Proceeds from sales of short-term investments		78,000			9,000
Purchase of property and equipment		(567	)		(48	)
Cash provided by (used in) investing activities		13,965			(7,454	)
Financing activities:
Proceeds from royalty purchase agreement		20,000			—
Proceeds from the sale of Series C redeemable convertible preferred stock, net of issuance costs		—			69,850
Payment of deferred offering costs		(1,672	)		—
Cash provided by financing activities		18,328			69,850
Net increase in cash and cash equivalents		908			46,848
Cash and cash equivalents at beginning of period		14,811			6,169
Cash and cash equivalents at end of period	$	15,719		$	53,017
Supplemental schedule of non-cash financing activities:
Accretion of redeemable convertible preferred stock to redemption value	$	6,178		$	3,879
Deferred offering costs included in accounts payable and accrued expenses	$	431		$	—
Purchase of property and equipment included in accounts payable and accrued expenses	$	24		$	268
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, GC4419, 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 GC4419 for the reduction of the duration, incidence and severity of SOM induced by radiotherapy with or without systemic therapy. The Company is currently evaluating GC4419 in a Phase 3 registrational trial. In addition to developing GC4419 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 a Phase 1 trial of intravenous GC4711 in healthy volunteers. The Company plans to leverage its observations from the GC4419 SBRT pilot Phase 1b/2a trial in locally advanced pancreatic cancer (LAPC) to prepare a GC4711 SBRT combination Phase 1b/2a trial in non-small cell lung cancer (NSCLC).

Reverse Stock Split

The Company effected a one-for-5.056564 reverse stock split of its common stock on October 25, 2019. The reverse stock split combined each approximately five shares of the Company’s issued and outstanding common stock into one share of common stock and correspondingly adjusted the conversion price of its redeemable convertible preferred stock. No fractional shares were issued in connection with the reverse stock split. Any fractional share resulting from the reverse stock split was rounded down to the nearest whole share, and in lieu of any fractional shares, the Company will pay in cash to the holders of such fractional shares an amount equal to the fair value, as determined by the board of directors, of such fractional shares. All common stock, per share and related information presented in the unaudited interim consolidated financial statements and accompanying notes have been retroactively adjusted to reflect the reverse stock split.

Liquidity

The Company has incurred recurring losses and negative cash flows from operations since inception and has an accumulated deficit of $144.7 million as of September 30, 2019. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidates currently in development.

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 $53.1 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. In addition, upon the closing of the IPO, the Company’s amended and restated certificate of incorporation authorized the Company to issue up to 200,000,000 shares of common stock, $0.001 par value per share, and 10,000,000 shares of preferred stock, $0.001 par value per share, all of which shares of preferred stock will be undesignated.

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, 2018 and 2017 included in the Company’s final prospectus dated November 6, 2019 and filed with the Securities and Exchange Commission (SEC) on November 8, 2019 pursuant to Rule 424(b)(4) have not materially changed, except as set forth below.

Basis o

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	2020-09-09	Regulation FD, Exhibits
8-K	2020-08-10	Earnings, Exhibits
8-K	2020-07-14	Regulation FD, Exhibits
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_9.htm
EX-31.2	grtx-ex312_8.htm
EX-32.1	grtx-ex321_6.htm
EX-32.2	grtx-ex322_7.htm

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company