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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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In addition to historical information, the following Management’s Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements as defined under Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe harbor created therein for forward-looking statements. Such statements include, but are
not limited to, statements concerning our anticipated operating results, research and development, clinical trials, regulatory proceedings, and financial resources, and can be identified by use of words such as, for example, “anticipate,”
“estimate,” “expect,” “project,” “intend,” “plan,” “believe” and “would,” “should,” “could” or “may.” All statements, other than statements of historical facts, included herein that address activities, events, or developments that the Company
expects or anticipates will or may occur in the future, are forward-looking statements, including statements regarding: plans and expectations regarding clinical trials; plans and expectations regarding regulatory approvals; our strategy and
expectations for clinical development and commercialization of our products; potential strategic partnerships; expectations regarding the effectiveness of our products; plans for research and development and related costs; statements about
accounting assumptions and estimates; expectations regarding liquidity and the sufficiency of cash to fund currently planned operations through May 2025; our commitments and contingencies; and our market risk exposure. Forward-looking
statements are based on current expectations, estimates and projections about the industry and markets in which Galectin Therapeutics operates, and management’s beliefs and assumptions. These statements are not guarantees of future performance
and involve certain known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties are related to and include, without limitation,
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our early stage of development,
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we have incurred significant operating losses since our inception and cannot assure you that we will generate revenue or profit,
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our dependence on additional outside capital,
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we may be unable to enter into strategic partnerships for the development, commercialization, manufacturing and distribution of our proposed product candidates,
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uncertainties related to any litigation,
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uncertainties related to our technology and clinical trials, including expected dates of availability of clinical data,
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we may be unable to demonstrate the efficacy and safety of our developmental product candidates in human trials,
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we may be unable to improve upon, protect and/or enforce our intellectual property,
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we are subject to extensive and costly regulation by the U.S. Food and Drug Administration (FDA) and by foreign regulatory authorities, which must approve our product candidates in development and could restrict
the sales and marketing and pricing of such products,
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competition and stock price volatility in the biotechnology industry,
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limited trading volume for our stock, concentration of ownership of our stock, and other risks detailed herein and from time to time in our SEC reports, and
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the impact resulting from a pandemic or the reemergence of COVID-19, which delayed our clinical trial and development efforts, as well as the impact that such a pandemic has on the volatility of the capital
market and our ability to access the capital market and,
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other risks detailed herein and from time to time in our SEC reports, including our Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2023, and our subsequent SEC filings.
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The following discussion should be read in conjunction with the accompanying consolidated financial statements and notes thereto of Galectin Therapeutics appearing elsewhere herein.
Overview
We are a clinical stage biopharmaceutical company engaged in drug research and development to create new therapies for fibrotic disease, cancer and selected other diseases. Our drug candidates are
based on our method of targeting galectin proteins, which are key mediators of biologic and pathologic functions. We use naturally occurring, readily-available plant products as starting material in manufacturing processes to create proprietary,
patented complex carbohydrates with specific molecular weights and other pharmaceutical properties. These complex carbohydrate molecules are appropriately formulated into acceptable pharmaceutical formulations. Using these unique
carbohydrate-based candidate compounds that largely bind and inhibit galectin proteins, particularly galectin-3, we are undertaking the focused pursuit of therapies for indications where galectin proteins have a demonstrated role in the
pathogenesis of a given disease. We focus on diseases with serious, life- threatening consequences and those where current treatment options are limited specifically in MASH (metabolic dysfunction-associated steatohepatitis) (formerly known as
non-alcoholic steatohepatitis or NASH) with cirrhosis and certain cancer indications. Our strategy is to establish and implement clinical development programs that add value to our business in the shortest period of time possible and to seek
strategic partners when one of our programs becomes advanced and requires significant additional resources.
Our lead galectin-3 inhibitor is belapectin (GR-MD-02), which has been demonstrated in preclinical models to reverse liver fibrosis and cirrhosis and in clinical studies to decrease portal
hypertension and prevent its complication: the development of esophageal varices. Belapectin has the potential to treat many diseases due to galectin-3’s involvement in multiple key biological pathways such as fibrosis, immune cell function and
immunity, cell differentiation, cell growth, and apoptosis (cell death). The importance of galectin-3 in the fibrotic process is supported by experimental evidence. Animals with the galectin-3 gene “knocked-out” can no longer develop fibrosis in
response to experimental stimuli compared to animals with an intact galectin-3 gene. We are using our galectin-3 inhibitor to treat advanced liver fibrosis and liver cirrhosis in NASH patients. We have completed two Phase 1 clinical studies, a
Phase 2 clinical study in MASH patients with advanced fibrosis (NASH-FX) and a second Phase 2b clinical trial in NASH patients with compensated cirrhosis and portal hypertension (NASH-CX).
In February 2023, we completed randomizations totaling 357 patients in a large, global clinical trial, the NAVIGATE trial. Our study
protocol was filed with the FDA on April 30, 2020, and originally provided for a seamless adaptively-designed Phase 2b/3 clinical study evaluating the safety and efficacy of our galectin-3 inhibitor, belapectin, for the prevention of esophageal
varices in patients with MASH cirrhosis (Further details are available at www.clinicaltrials.gov under study NCT04365868. In September 2020, the Company received a letter from the FDA providing comments, asking questions and providing guidance on
various aspects of the ongoing NAVIGATE trial. These comments were addressed, and the study proceeded accordingly. Based on more recent FDA feedback, the Company decided to analyze the stage 1 portion of the NAVIGATE study as a stand-alone
clinical trial and currently does not expect to conduct the originally planned stage 2 portion of study as was initially designed.
Additionally, a study protocol entitled “A Single-dose, Open-label, Pharmacokinetic Study of Belapectin (GR-MD-02) in Subjects With Normal Hepatic Function and Subjects With Varying Degrees of Hepatic
Impairment” has been filed with the FDA to examine the effects of the drug in subjects with normal hepatic function and subjects with varying degrees of hepatic impairment (study details are listed under study NCT04332432 on www.clinicaltrials.gov);
this study became fully enrolled in February 2022 and favorable results were reported in 2023.
We endeavor to leverage our scientific and product development expertise as well as established relationships with outside sources to achieve cost-effective and efficient drug development. These
outside sources, amongst others, provide us with expertise in preclinical models, pharmaceutical development, toxicology, clinical trial operations, pharmaceutical manufacturing, including physical and chemical drug characterization, and
commercial development. We also have established through our majority-owned joint venture subsidiary, Galectin Sciences LLC, a discovery program developing small molecules that inhibit galectin-3 and may afford alternative drug delivery (e.g.,
oral) and as a result expand the potential uses of galectin-3 inhibitor beyond belapectin. Three chemical series of composition of matter patents have been filed.
We are also pursuing a development pathway to clinical enhancement and commercialization for our lead compounds in immuno-oncology following our previous successful collaboration with Providence
Portland Cancer Center. In 2022, we filed a new IND with FDA for advanced or metastatic head and neck cancer using belapectin in combination with a checkpoint (PD-1) inhibitor and received a Study May Proceed letter. The proposed phase 2 trial
commencement is dependent on timing of financing.
All of our proposed products are presently in development, including pre-clinical and clinical trials.
Our Drug Development Programs
Galectins are a class of proteins that are made by many cells in the body, but predominantly in cells of the immune system. As a group, these proteins are able to bind to sugar molecules that are
attached to other proteins, called glycoproteins that are responsible for various functions within the body, most notably inflammation and fibrosis. Galectins, in particular galectin-3, act as a molecular glue, bringing together molecules that
have sugars on them. Galectin-3, is known to be markedly increased in a number of significant diseases including inflammatory diseases leading to organs scarring (e.g. liver, lung, kidney, and heart) and cancers. The increase in galectin-3, by
creating the so-called galectin-3 fibrosome, promotes the progression of multiple diseases. Published data substantiating the importance of galectin-3 in the fibrotic process arises from gene knockout experiments in animal studies. For instance,
mice genetically altered to eliminate the galectin-3 gene, and thus unable to produce galectin-3, do not develop liver fibrosis in response to toxic insult to the liver.
We have one new proprietary chemical entity (NCE) in development, belapectin, which has shown promise in preclinical and clinical studies for the treatment of liver fibrosis, severe skin disease, and
cancer (melanoma and head and neck squamous cell carcinoma). Currently, we are focusing on development of belapectin for the treatment of NASH cirrhosis and head and neck cancer. Belapectin is a proprietary, patented compound derived from
natural, plant-based, starting materials, which following chemical processing, exhibits the properties of binding to and inhibiting galectin-3.
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Our product pipeline is shown below:
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Indication
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Drug
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Status
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Prevention of esophageal varices
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in
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NASH cirrhosis
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Phase 1 interaction trial:
NASH-CX trial and
NASH-FX trial
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belapectin
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IND submitted January 2013. Results from the Phase 1 interaction trial were reported in 2014, with final results reported in January 2015.
The Phase 2 NASH FX trial was conducted in patients with advanced fibrosis but not cirrhosis. Its principal purpose was to evaluate various
imaging modalities. The NASH FX trial top line data was reported in September 2016 and published in Alimentary Pharmacology and Therapeutics in 2016.
The Phase 2 NASH CX trial was conducted in patients with compensated cirrhosis and portal hypertension. The NASH CX trial top line data was
reported in December 2017 and was published in Gastroenterology in 2020.
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NASH NAVIGATE
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Following FDA feedback, the NAVIGATE trial is an adaptive Phase 2b/3 trial for the prevention of esophageal varices in MASH patients with
compensated cirrhosis and clinical signs of portal hypertension. A stage 1 interim efficacy analysis originally was planned to confirm previous Phase 2 data, select an optimal dose and reaffirm the risk/benefit of belapectin. If
required, the stage 2 end of study analysis will evaluate the development of esophageal varices as the same primary outcome of efficacy and a composite clinical endpoint including progression to varices requiring treatment as a key
secondary outcome of efficacy (www.clinicaltrials.gov NCT04365868). However, following FDA feedback, the Company decided to analyze the stage 1 portion of the NAVIGATE study as a stand-alone clinical trial and the Company currently
does not expect to conduct the originally planned stage 2 portion of study as was initially designed. The final patient was randomized in February 2023 and the top line efficacy and safety results are expected in December 2024.
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Phase 1 study: hepatic insufficiency
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A hepatic impairment study was conducted in subjects with normal hepatic function and subjects with varying degrees of hepatic impairment
(www.clinicaltrials.gov NCT04332432) and began enrolling patients in the second quarter of 2020. The study completed enrollment in February 2022 and favorable results were presented in 2023.
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Cancer Immunotherapy
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Melanoma, Head, Neck Squamous
Cell
Carcinoma (HNSCC)
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belapectin
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Investigator IND study was completed. A Phase 1B study began in Q-1 2016. Early data was reported in February 2017 and additional data were
reported in September 2018. Data from an extension trial was reported in July 2021 for additional melanoma and HNSCC patients which provided a rational basis for additional trials which the Company is exploring. In the third quarter of
2022, the Company announced its IND application for belapectin in combination with a checkpoint inhibitor for the treatment of HNSCC was filed and a Study May Proceed letter was received from FDA. The Company is reviewing options for
financing this trial which will determine when such trial could commence.
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Liver cirrhosis. Belapectin is our lead product candidate for treatment of compensated MASH cirrhosis in patients with portal hypertension. Our preclinical data show that belapectin has a significant therapeutic effect on liver fibrosis as shown in several relevant animal models. In addition, in MASH animal models, belapectin has been shown to reduce
liver fat, inflammation, portal pressure, and ballooning degeneration (death of liver cells). Therefore, we chose belapectin as the lead candidate in a development program targeted initially at fibrotic liver disease associated with MASH. In
January 2013, an Investigational New Drug (“IND”) was submitted to the FDA with the goal of initiating a Phase 1 study in patients with MASH and advanced liver fibrosis to evaluate the safety of belapectin and pharmacodynamics biomarkers of
disease. On March 1, 2013, the FDA indicated we could proceed with a US Phase 1 clinical trial for belapectin with a development program aimed at obtaining support for a proposed indication of belapectin for treatment of MASH with advanced
fibrosis. The Phase 1 trial was completed and demonstrated that belapectin up to 8 mg/kg Lean Body Mass (LBM), i.v. was safe and well tolerated.
Additionally, an open label drug-drug phase 1 interaction study was completed in healthy volunteers during the second quarter of 2015 with belapectin and it showed that with 8 mg/kg LBM dose of
belapectin and 2 mg/kg LBM dose of midazolam there was no drug-drug interaction, and no serious adverse events or drug-related adverse events were observed. The secondary objective was to assess the safety and tolerability of belapectin when
administered concomitantly with midazolam.
Our Phase 2 program in fibrotic disease consisted of two separate human clinical trials. The main clinical trial was the Phase 2b NASH-CX study for one year for patients with MASH with compensated
cirrhosis and portal hypertension, which began enrolling patients in June 2015. This study was a randomized, placebo-controlled, double-blind, parallel-group Phase 2b trial to evaluate the safety and efficacy of belapectin for treatment of liver
fibrosis and resultant portal hypertension in MASH patients with compensated cirrhosis. A smaller, exploratory NASH-FX trial was conducted to explore potential use of various non-invasive imaging techniques in MASH patients with advanced fibrosis
but not cirrhosis.
NASH-FX Trial: The NASH-FX trial was a Phase 2a pilot trial for patients with MASH and advanced fibrosis that explored use of three non-invasive imaging
technologies. It was a short, single site, four-month trial in 30 NASH patients with advanced fibrosis (F3) randomized 1:1 to either 9 bi-weekly doses of 8 mg/kg LBM of belapectin or placebo. The trial did not meet its primary endpoint as
measured using multi-parametric magnetic resonance imaging (LiverMultiScan®, Perspectum Diagnostics). The trial also did not meet secondary endpoints that measure liver stiffness as a surrogate for fibrosis using, magnetic
resonance-elastography and FibroScan® score. With a four-month treatment period and a small number of patients per arm the study was not powered to demonstrate
efficacy results in established advanced liver fibrosis. In the trial however, belapectin was found to be safe and well tolerated with no serious adverse events and showing evidence of a pharmacodynamic effect. These results provided support for
further development in MASH.
NASH-CX Trial: The NASH-CX trial was a larger multi-center clinical trial that explored the use of belapectin for the treatment of patients with
well-compensated MASH cirrhosis and portal hypertension. Enrollment was completed in September 2016, and a total of 162 patients at 36 sites in the United States were randomized to receive either 2 mg/kg LBM of belapectin, 8 mg/kg LBM of
belapectin or placebo. Approximately 50% of patients at baseline had esophageal varices (a complication of portal hypertension). The primary endpoint was a reduction in hepatic venous pressure gradient (HVPG), a hemodynamic measure that estimates
portal hypertension. Patients received an infusion of belapectin or placebo every other week for one year and were evaluated to determine the change in HVPG as compared with placebo. Secondary or exploratory endpoints included evaluation of
fibrosis on liver biopsy, measurement of liver stiffness (FibroScan) and assessment of liver metabolism (13C-methacetin breath test). Top line data readout was
reported in December 2017. The study demonstrated a favorable safety profile and clinically meaningful efficacy results in patients without esophageal varices at baseline as demonstrated by a decrease in portal pressure associated with the
prevention of development of varices when compared to placebo.
In the total patient population, the primary endpoint HVPG showed a trend toward benefit with belapectin treatment, but the difference from placebo was not statistically
significant. The mean change in HVPG of placebo from baseline to week 54 was 0.3 mm Hg. The mean change in HVPG from baseline was -0.37 and -0.42 for the 2 mg/kg LBM dose and 8 mg/kg LBM dose of belapectin, respectively.
In those MASH cirrhosis patients with portal hypertension who have not yet developed esophageal varices at baseline (about 50% of the total population), there was a statistically significant effect of
the 2 mg/kg LBM dose of belapectin on the absolute change in HVPG (-1.08 mm Hg, p<0.01). The effect of the 8 mg/Kg LBM dose of belapectin on absolute or percent change in HVPG from baseline to week 54 was not significant.
Also because of the clinical relevance of this population, a responder analysis was performed on those patients without esophageal varices at baseline. Analysis was performed looking at two groups:
those with an equal to or greater than 2 mm Hg decrease in HVPG from baseline or those with an equal to or greater than 2 mm Hg and a greater than or equal to 20% decrease in HVPG from baseline. In both cases, the change observed in the
belapectin 2 mg/kg LBM group was statistically significant (p<0.01) while that of the 8 mg/kg LBM group was not.
Over the 54-week treatment period, in patients without varices at baseline there were also a statistically significantly fewer new varices that developed in the belapectin treatment groups (0% and 4%
in the 2 mg/kg LBM and the 8 mg/kg LBM, respectively) vs placebo (18%). This meant that the decrease seen in portal pressure was associated with a decreased incidence of esophageal varices. The results were noticeable in the belapectin 2 mg/Kg
LBM group as statistical significance against placebo was achieved for both parameters. As esophageal varices can lead to hemorrhagic complication, which can be fatal, and are a severe complication of liver cirrhosis, we believe the prevention of
esophageal varices may represent a clinically relevant measure of clinical efficacy in patients with NASH cirrhosis.
The major conclusions from the NASH-CX trial results were that: (i) belapectin had a statistically significant and clinically meaningful effect in improving HVPG vs placebo in patients with MASH
cirrhosis who did not have esophageal varices at baseline, (ii) Belapectin in the total patient population was associated with a statistically significant improvement in hepatocyte ballooning (i.e. cell death), (iii) There was a statistically
significant reduction (p=0.02) in the development of new esophageal varices in drug-treated patients compared to placebo. We believe that the prevention of esophageal varices is a clinically relevant endpoint related to patient outcomes, (iv)
While there was a drug effect in both the 2 mg/kg LBM and 8 mg/kg LBM groups on the development of varices and liver biopsy there was a consistently greater and statistically significant effect of the 2 mg/kg LBM dose of belapectin, (v)
belapectin appears to be safe and well tolerated in this one year clinical trial, a feature that is of prime importance for a cirrhotic population and (vi) This is the first large, randomized clinical trial to demonstrate a clinically meaningful
improvement in portal hypertension in patients with compensated MASH cirrhosis who have not yet developed esophageal varices.
Further information and details on the NASH-CX results is available in public presentations posted to our website and filed with the SEC and in a peer reviewed publication in Gastroenterology 2020;158:1334–1345.
NASH NAVIGATE Trial: Building on the experience of the NASH-CX trial, the NAVIGATE Trial is a seamless adaptively-designed Phase 2b/3 clinical study
evaluating the safety and efficacy of our galectin-3 inhibitor, belapectin, for the prevention of esophageal varices in patient with MASH cirrhosis. The major features of this innovative Phase 2b/3 study design are: i) In patients with NASH
cirrhosis and clinical signs of portal hypertension but without esophageal varices at baseline, evaluated by an esophago-gastro-duodeno endoscopy, this trial will assess the effect of belapectin on the incidence of new varices (the primary
endpoint) – as well as assessing the effect of belapectin on the incidence of additional clinically significant cirrhosis-related outcomes (a key secondary efficacy endpoint), (ii) The study targets MASH patients with a clearly identified unmet
medical need: patients with compensated cirrhosis who have clinical signs of portal hypertension and, thus, are at risk of developing esophageal varices, a potentially life-threatening complication of cirrhosis (bleeding varices are a cause of
death in about one-third of cirrhotic patients). There is currently no approved treatment for preventing varices in these patients. In addition, the development of esophageal varices reflects the progression of hepatic cirrhosis and thus portends
the development of other cirrhosis complications such as ascites, hepatic encephalopathy, and liver failure, and (iii) During the first 18 months, two belapectin dose levels (2 mg/kg LBM and 4 mg/kg LBM) will be compared to placebo (phase 2b).
Then, at the interim analysis (IA), assuming the study continues to the next stage, the best belapectin dose will be selected, based on efficacy and safety, for continued evaluation (Phase 3). The belapectin doses selected for the phase 2b/3 were
based on the analysis of the NASH-CX trial. Prior belapectin clinical studies have also indicated the good tolerance and safety profile of belapectin with doses of up to 8 mg/kg LBM for up to 52 weeks, an important feature to inform the future
risk benefit analysis in patients with MASH cirrhosis.
Originally, an interim analysis (IA) of efficacy and safety data will be conducted after all planned subjects in stage 1 Phase 2b
component have completed at least 78 weeks (18 months) of treatment and a second esophago-gastro-duodeno endoscopic assessment has been performed. The purpose of the IA is to allow potential seamless adaptive modifications of the phase 3 stage of
the study, including: (1) the selection of the optimal dose of belapectin for Phase 3, (2) the re-estimation of the study sample size, (3) the modification of the randomization ratio in favor of the active treatment, (4) and/or termination of the
study for overwhelming efficacy or for futility.
However, following FDA feedback, the Company decided to analyze the stage 1 portion of the NAVIGATE study as a stand-alone clinical
trial and the Company currently does not expect to conduct the originally planned stage 2 portion of study as it was initially designed. The topline efficacy and safety results are expected late in December 2024.
The trial design also included a blinded sample size re-estimation (“SSR”) during the Phase 2b, prior to the IA, to allow for
potential sample size readjustment. The SSR was conducted when 50% of the patients completed 18 months of therapy. The study design also minimizes invasive testing requirements, such as the measurement of HVPG or repeated liver biopsies, which we
believe are particularly risky in patients with portal hypertension and facilitated enrollment of patients and should facilitate their retention. It also originally provided for a seamless transition of patients from the Phase 2b stage into the
phase 3 stage, including the potential addition of new patients. The trial design introduces the notion of esophageal varices prevention as a primary pivotal outcome previously discussed with FDA.
We believe that these adaptations taken together are innovative and optimize conduct of the NAVIGATE trial with a clinically relevant primary outcome giving belapectin the best opportunity to show a
positive therapeutic effect to address an unmet medical need. As a testimony of this innovation, the NAVIGATE trial design was presented to the hepatology community and featured during the meeting of the American Association for the Study of
Liver Diseases, in November 2021. If the IA results of the NAVIGATE trial are compelling, there could be the potential for accelerated FDA approval pathway and/or partnership opportunity with a pharmaceutical company.
In this trial, as proposed in the protocol, secondary endpoints include a composite clinical outcomes endpoint, including varices requiring treatment (development of large varices or varices with a
red wale), decompensating events, all-cause mortality, MELD score increase, liver transplant. Also, MASH non-invasive biomarkers will be evaluated. To target a population at risk of developing esophageal varices, patient selection was based on
clinical signs of portal hypertension, including, but not limited to, a low platelet count, an increased spleen size, an increased liver stiffness, and/or evidence of abdominal collaterals circulation.
The focus and goal of the therapeutic program is to stop the progression of and/or reverse portal hypertension and thereby prevent the development of varices, potentially one of
the most life-threatening complications of cirrhosis. Based on the results of the NASH-CX trial and subject to confirmation in later stage clinical trials, we believe that this goal is achievable in a significant portion of the MASH cirrhosis
patient population i.e. those MASH cirrhosis patients with clinical signs of portal hypertension for whom, currently, apart from a liver transplantation, no specific liver targeted, treatments are available.
We activated more than 150 clinical trial sites in 14 countries for the NAVIGATE trial.
The COVID-19 pandemic delayed our regulatory and ethics approvals, recruitment of sites, and enrollment of patients for our NAVIGATE trial. For several reasons, the pandemic made enrolling patients
for the NAVIGATE trial more challenging, notably because patients eligible for the NAVIGATE trial have liver cirrhosis and, as such, were at a greater health risk of complications from COVID-19 and needed to be vaccinated before taking the risk
of infection associated with a visit to a healthcare facility. As we emerged from the COVID-19 pandemic, site recruitment and patient enrollment accelerated and we experienced increases in the speed of enrollment, particularly in the United
States. However, we did not see the enrollment in Europe that we anticipated. Consequently, we activated multiple sites in Latin America. A resurgence of the COVID pandemic could again delay the regulatory, ethical and clinical milestones that we
need to meet to conduct our NAVIGATE trial. The last patient from the phase 2b stage was randomized in February 2023, and consequently we expect topline results from the IA late in the fourth quarter of 2024.
Further details on the NAVIGATE trial can be found on www.clinicaltrials.gov under study NCT04365868 and on our NAVIGATE website (navigatenash.com).
The Company also has completed a Hepatic Impairment Study, which ran in parallel with the phase 2b/3 trial as part of the development program. The Hepatic Impairment Study was conducted
at three sites and involved approximately 40 patients (divided amongst normal healthy volunteers, and patients with hepatic impairment categorized as Child-Turcotte-Pugh (CTP) classes A (mild), B (moderate), and C (severe). Each subject
received a single infusion of belapectin (4 mg/kg LBM) and their serum belapectin levels were monitored for up to approximately two weeks to define the effects of various stages of cirrhosis on serum belapectin levels. The tolerance and safety
of belapectin was evaluated. Enrollment in this study was completed in February 2022, and the final results were presented at The Liver Meeting™ 2023, hosted by the American Association for the Study of
Liver Diseases. The data indicated that belapectin exposure did not increase with the degree of hepatic insufficiency, a property that is consistent with the observed
distribution of the drug into activated macrophages. Further details on this hepatic impairment study can be found on www.clinicaltrials.gov study NCT04332432.
Cancer Immunotherapy. We believe there is potential for galectin inhibition to play a key role in the innovative area of cancer immunotherapy. For example, there have been several recent approvals of drugs that enhance a patient’s immune system to fight cancer. It is our goal to use ourgalectin-3 inhibitor to further enhance the immune system function
to help the body to fight cancer in a way that complements other approaches to this type of therapy. This hypothesis is supported by the fact that galectin-3 is expressed at high levels in multiple types of tumors and their micro-environment,
where it fosters the malignant nature of the tumors, and protects the tumors from immune attack by the patient’s own defense mechanism. Our drug candidates provide a promising new therapeutic approach to enhance the activity of the immune system
against cancer cells. Preclinical studies have indicated that belapectin enhances the immune response to cancer cells, increased tumor shrinkage and enhanced survival in immune competent mice with prostate, breast, melanoma and sarcoma cancers
when combined with one of the immune checkpoint inhibitors, anti-CTLA-4 or anti-PD-1, or with the immune cell activator anti-OX40. These preclinical data led to the filing of two Investigator-sponsored INDs and the initiation of Phase 1B studies
of belapectin in combination with Yervoy® (ipilimumab) in metastatic melanoma and another phase 1B study in combination with KEYTRUDA (pembrolizumab) in patients
with metastatic melanoma and head and neck squamous cell carcinoma. These studies were conducted under the sponsorship of Providence Portland Medical Center’s Earle A. Chiles Research Institute (EACRI).
The phase IB study in combination with Yervoy was rapidly discontinued after the first patients were recruited because of the availability of new treatment in the selected population.
Promising results were reported in the Phase 1b trial combining belapectin with pembrolizumab (KEYTRUDA®). When
aggregated cohorts are combined, in advanced melanoma, a 50% objective response rate with belapectin in combination with KEYTRUDA, was documented. In addition, a 33% response rate was documented in patients with head and neck cancer. The results
have been published in 2021 in a highly rated peer reviewed journal (Curti et al. Journal of Immunotherapy of cancer 2021;9:e002371). There was also a suggestion that the combination of belapectin with pembrolizumab could decrease the auto-immune
side-effect induced by pembrolizumab. These side-effects, which are directly linked to the mechanism of action of pembrolizumab, can be poorly tolerated and even severe enough to lead to treatment interruption, even if the effect on the cancer
was encouraging. This is, a very frustrating situation for patients who have to discontinue an active treatment but have no other options available to them. We believe these data, taken together with the observed favorable safety and tolerability
of the combination, provide a rationale to move the belapectin program in oncology forward.
Late in 2021, we engaged three noted physicians – Dr. Chetan Bettegowda, from Johns Hopkins, and Dr. Nishant Agrawal and Dr. Ari Rosenberg, both from University of Chicago Medical Center – as
consultants to help define the path forward in oncology. In consultation with our oncology experts, we have now selected the treatment of recurrent or metastatic head and neck cancer as the lead indication to pursue for belapectin in combination
with an immune checkpoint inhibitor. The decision is notably based on the lack of available treatments for these patients, the limited number of therapies in development, and the resulting very high medical need. We filed an IND with FDA and are
planning a phase 2 trial to be filed with the FDA oncology division.
Results of Operations
Three and Nine Months Ended September 30, 2024 Compared to Three and Nine Months Ended September 30, 2023
Research and Development Expense.
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Three Months Ended
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Nine Months Ended |
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2024 as Compared to 2023
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September 30,
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September 30,
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Three Months
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|
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Nine Months
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2024 |
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2023 |
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2024 |
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2023 |
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$ Change |
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% Change |
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$ Change |
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% Change |
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|
(In thousands, except %)
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|
Research and development
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$
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7,595
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$
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7,732
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|
$ |
25,462 |
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$
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23,902
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|
$
|
(237
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)
|
|
|
(2 |
)% |
|
$
|
1,560
|
|
|
|
7 |
%
|
We generally categorize research and development expenses as either direct external expenses, comprised of amounts paid to third party vendors for services, or all other research and development
expenses, comprised of employee payroll and general overhead allocable to research and development. We consider a clinical program to have begun upon acceptance by the FDA, or similar agency outside of the United States, to commence a clinical
trial in humans, at which time we begin tracking expenditures by the product candidate. Clinical program expenses comprise payments to vendors related to preparation for, and conduct of, all phases of the clinical trial, including costs for drug
manufacture, patient dosing and monitoring, data collection and management, oversight of the trials and reports of results. Pre-clinical expenses comprise all research and development amounts incurred before human trials begin, including payments
to vendors for services related to product experiments and discovery, toxicology, pharmacology, metabolism, and efficacy studies, as well as manufacturing process development for a drug candidate.
Our research and development expenses were as follows:
| |
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
| |
|
September 30,
|
|
|
September 30,
|
|
| |
|
2024
|
|
|
2023
|
|
|
2024
|
|
|
2023
|
|
|
Direct external expenses:
|
|
(in thousands)
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Clinical programs
|
|
$
|
5,937
|
|
|
$
|
5,353
|
|
|
$
|
19,666
|
|
|
$
|
17,667
|
|
|
Pre-clinical activities
|
|
|
204
|
|
|
|
900
|
|
|
|
947
|
|
|
|
2,449
|
|
|
All other research and development expenses
|
|
|
1,454
|
|
|
|
1,479
|
|
|
|
4,849
|
|
|
|
3,786
|
|
|
|
|
$
|
7,595
|
|
|
$
|
7,732
|
|
|
$
|
25,462
|
|
|
$
|
23,902
|
|
Clinical activities increased primarily due to timing of incurrence of expenditures related to our NAVIGATE clinical trial. Pre-clinical activities decreased primarily due to the timing of certain
projects and activities in support of clinical programs. Other research and development expenses increased primarily due to additional employees hired after the first and second quarters of 2023.
Both the time required and costs we may incur in order to commercialize a drug candidate that would result in material net cash inflow are subject to numerous variables, and therefore we are unable at
this stage of our development to forecast useful estimates. Variables that make estimates difficult include the number of clinical trials we may undertake, the number of patients needed to participate in the clinical trial, patient recruitment
uncertainties, trial results as to the safety and efficacy of our product, and uncertainties as to the regulatory agency response to our trial data prior to receipt of marketing approval. Moreover, the FDA or other regulatory agencies may suspend
clinical trials if we or an agency believes patients in the trial are subject to unacceptable risks or find deficiencies in the conduct of the clinical trial. Delays or rejections may also occur if governmental regulation or policy changes during
our clinical trials or in the course of review of our clinical data. Due to these uncertainties, accurate and meaningful estimates of the ultimate cost to bring a product to market, the timing of costs and completion of our program and the period
during which material net cash inflows will commence are unavailable at this time.
General and Administrative Expense.
| |
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
2024 as Compared to 2023
|
|
| |
|
September 30,
|
|
|
September 30
|
|
|
Three Months
|
|
|
Nine Months
|
|
| |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
|
$ Change |
|
|
% Change |
|
| |
|
(In thousands, except %)
|
|
|
General and administrative
|
|
$
|
1,471
|
|
|
$
|
1,433
|
|
|
$
|
4,543
|
|
|
$
|
4,609
|
|
|
$
|
38
|
|
|
|
3 |
%
|
|
$
|
(66
|
)
|
|
|
(1
|
)%
|
General and administrative expenses consist primarily of salaries including stock-based compensation, legal and accounting fees, insurance, investor relations, business development and other office
related expenses. The primary reason for the increase in general and administrative expenses for the three-months ended September 30, 2024 as compared to the same period in 2023 is due to a decrease in investor relations/business development.
The primary reasons for the decrease in general and administrative expenses for the nine-months ended September 30, 2024 as compared to the same period in 2023 is due to a decrease in legal expense and investor relations/business development
expense.
Liquidity and Capital Resources
Since our inception on July 10, 2000, we have financed our operations from proceeds of public and private offerings of debt and
equity. As of September 30, 2024, we raised a net total of $314.5 million from these offerings. At September 30, 2024, the Company had $27.1 million of unrestricted cash and cash equivalents. In addition, on November 14, 2024, the Company
entered into a second supplemental unsecured $6 million line of credit financing with its chairman, Richard E. Uihlein (see note 9). The Company believes there is sufficient cash to fund currently planned operations approximately through May,
2025. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of 12 months from the issuance date of this Form 10-Q. The ability of the Company to continue as a going concern is likely
dependent on the top line results of the Company’s NAVIGATE clinical trial expected in December 2024 and its ability to raise capital; however, the Company’s cash position may not be sufficient to support its daily operations after May 2025. We
will require more cash to fund our operations after May, 2025 and believe we will be able to obtain additional financing. The currently planned operations include costs related to our NAVIGATE clinical trial. However, there can be no assurance that we will be successful in obtaining such new financing or, if available, that such financing will be on terms favorable to us.
Net cash used in operations increased by $713,000 to $28,976,000 for the nine months ended September 30, 2024, as compared to $28,263,000 for the nine months ended September 30,
2023. Cash operating expenses increased principally due to timing of payment of expenses related to our NAVIGATE clinical trial with belapectin.
Off-Balance Sheet Arrangements
We have not created, and are not a party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating parts of our business that are not
consolidated into our financial statements. We do not have any arrangements or relationships with entities that are not consolidated into our financial statements that are reasonably likely to materially affect our liquidity or the availability
of capital resources.
Application of Critical Accounting Policies and Estimates
The preparation of condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, expenses, and related disclosure of
contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to accrued expenses, stock-based compensation, contingencies and litigation. We base our estimates on historical experience, terms of
existing contracts, our observance of trends in the industry, information available from other outside sources and on various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates
under different assumptions or conditions.
Critical accounting policies are those policies that affect our more significant judgments and estimates used in preparation of our consolidated financial statements. We believe our critical
accounting policies include our policies regarding stock-based compensation, accrued expenses and income taxes. For a more detailed discussion of our critical accounting policies, please refer to our 2023 Annual Report on Form 10-K.
| Item 3. |
Quantitative and Qualitative Disclosures about Market Risk
|
Market risk represents the risk of loss that may impact our financial position, operating results or cash flows due to changes in the U.S. interest rates. The primary objective of our investment
activities is to preserve cash until it is required to fund operations. To minimize risk, we maintain our portfolio of cash and cash equivalents in operating bank accounts and money market funds. Since our investments are short-term in duration,
we believe that we are not subject to any material market risk exposure.
| Item 4. |
Controls and Procedures
|
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of
our disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934) and concluded that, as of September 30, 2024, our disclosure controls and procedures were effective.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all
fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there
are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and
instances of fraud, if any, within the Company have been detected.
Changes in Internal Control Over Financial Reporting
During the quarter ended September 30, 2024, no change in our internal control over financial reporting has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting.
PART II — OTHER INFORMATION
| Item 1. |
Legal Proceedings
|
None.
The information set forth in this report should be read in conjunction with the risk factors set forth in Item 1A, “Risk Factors,” of Part I of our Annual Report on Form 10-K for the year ended
December 31, 2023, which could materially impact our business, financial condition or future results.
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
On September 30, 2024, the Company executed a $10 million Promissory Note under the Supplemental Line of Credit. The interest rate on this draw is 6.13% (Applicable Federal Rate for short term loans
on date of draw of 5.01% plus 2%). The effective interest rate is approximately 6.4%. The principal and accrued interest is convertible at the option of the Lender at $3.00 per share. In accordance with the Credit Agreement, the Company issued
the Lender a Warrant to purchase up to 200,000 shares of Company’s Common Stock at an exercise price of $4.13 per share, which Warrant is exercisable upon issuance.
The fair value of the 200,000 warrants vested at closing on September 30, 2024, was $307,780 at the date of issuance based on the following assumptions: an expected life of 4.83 years, volatility of
78%, risk free interest rate of 3.58% and zero dividends. The proceeds were allocated between the Promissory Note and the warrants issued, and the amount allocated to the warrants was recorded as a debt discount netted against principal
amortized on a straight-line basis, which is not materially different than the effective interest method, from October 1, 2024 through January 31, 2026.
| Item 3. |
Defaults Upon Senior Securities
|
None
| Item 4. |
Mine Safety Disclosures
|
Not Applicable
| Item 5. |
Other Information
|
Supplemental Line of Credit
On November 14, 2024, the Company and Richard E. Uihlein (the “Lender”) entered into a Supplemental Line of Credit Letter Agreement
(the “November 2024 Supplemental Credit Agreement”), pursuant to which the Lender shall provide the Company a line of credit of up to $6.0 million (the “November 2024 Supplemental Line of Credit”) to finance the Company’s working capital needs.
The Company may draw upon the Supplemental Line of Credit through March 31, 2025. The November 2024 Supplemental Line of Credit is in addition to $60.0 million the line of credit made available by the Lender in July 2022 and the $10.0 million
supplemental line of credit made available by the Lender in March 2024.
Each advance made pursuant to the November 2024 Supplemental Credit Agreement shall be evidenced by an unsecured, convertible
promissory note (individually, a “Promissory Note,” and collectively, the “Promissory Notes”), and bear interest at the Applicable Federal Rate for short term loans, plus two (2%) percent. Principal and interest on the Promissory Notes are due
on or before March 31, 2026.
Only with the consent of the Lender, may the Promissory Notes be prepaid, in whole or in part, at any time without premium or
penalty, but with interest on the amount or amounts prepaid. At the election of Lender, the principal and accrued interest on Promissory Note(s) may be converted into the number of shares of the Company’s Common Stock equal to the amount of
principal and accrued interest on such Promissory Note divided by the price equal to the closing price of the Common Stock on the date of such Promissory Note, but in no event less than $3.00 per share.
In connection with the November 2024 Supplemental Credit Agreement, the Company agreed to issue the Lender warrants to purchase up
to an aggregate of 120,000 shares of the Company’s common stock, par value $0.001 per share (collectively, the “Warrants”). The Company shall issue to the Lender Warrants ratably, upon borrowings under the November 2024 Supplemental Line of
Credit, with exercise prices equal to 150% of the closing price of the Company’s common Stock on the date of the Promissory Note evidencing such draw, but in no event more than $10.00 per share nor less than $3.00 per share. The Warrants expire
on July 31, 2029.
The securities referred to in this Item 9B are being issued by the Company to the Lender in reliance upon the exemption from the
registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) thereof and Regulation D thereunder. The Company relied, in part, upon representations from the Lender that the Lender is an
accredited investor as defined in Regulation D under the Securities Act.
Securities Trading Plans of Directors and Executive Officers
During the fiscal quarter ended September 30 2024, Joel Lewis, Jack Callicutt, and Khurram Jamil, the
Company’s CEO, CFO and
CMO, respectively, each adopted
a Rule 10b5-1 trading plan, as disclosed below. Other than as disclosed, no officers or directors, as defined in Rule 16a-1(f),
adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as defined in Regulation S-K Item 408, during the fiscal quarter ended September 30, 2024.
On July 25, 2024, Joel Lewis adopted a Rule 10b5-1 trading plan with a trading plan
effective date of December 1, 2024, that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 185,250
shares of the Company’s common stock until December 31, 2025. This trading plan was entered into during an open insider trading window
and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, and the Company’s policies regarding transactions in Company securities.
On July 18, 2024, Jack Callicutt adopted a Rule 10b5-1 trading plan with a trading plan
effective date of December 1, 2024, that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 627,456
shares of the Company’s common stock until December 31, 2025. This trading plan was entered into during an open insider trading window
and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, and the Company’s policies regarding transactions in Company securities.
On August 20, 2024, Khurram Jamil adopted a Rule 10b5-1 trading plan with a trading plan
effective date of December 1, 2024, that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to an amount
of shares needed to cover taxes with respect to the vesting of an RSU grant of 30,000 shares, plus up to 60% of such remaining shares, plus the sale of up to another 25,000 shares pursuant to exercise of stock options. Sales under the plan may
occur until December 31, 2025. This trading plan was entered into during an open insider trading window and is intended to satisfy the
affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, and the Company’s policies regarding transactions in Company securities.
|
Exhibit
Number
|
|
Description of Document
|
|
Note
Reference
|
10.1*
|
|
Supplemental Line of Credit Agreement, dated as of November 14, 2024, by and between Richard E. Uihlein and the Company.
|
|
|
| |
|
|
|
|
| 31.1* |
|
Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
|
|
|
| |
|
|
|
|
|
|
|
Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
|
|
|
|
|
|
|
|
|
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
101.INS
|
|
Inline XBRL Instance Document** (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
|
|
|
Exhibit
Number
|
|
Description of Document
|
|
Note
Reference
|
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document**
|
|
|
| |
|
|
|
|
|
101.CAL
|
|
Inline XBRL Taxonomy Calculation Linkbase Document**
|
|
|
|
|
|
|
|
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document**
|
|
|
|
|
|
|
|
|
101.LAB
|
|
Inline XBRL Taxonomy Label Linkbase Document**
|
|
|
|
|
|
|
|
|
101.PRE
|
|
Inline XBRL Taxonomy Presentation Linkbase Document**
|
|
|
|
|
|
|
|
|
104*
|
|
Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document and included in Exhibit 101)
|
|
|
| ** |
Furnished herewith and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November
14, 2024.
| |
GALECTIN THERAPEUTICS INC.
|
| |
|
|
| |
By:
|
/s/ Joel Lewis
|
| |
Name:
|
Joel Lewis
|
| |
Title:
|
Chief Executive Officer and President
|
| |
|
(principal executive officer)
|
| |
|
|
| |
By:
|
/s/ Jack W. Callicutt
|
| |
Name:
|
Jack W. Callicutt
|
| |
Title:
|
Chief Financial Officer
|
| |
|
(principal financial and accounting officer)
|