☒ | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
☐ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Nevada | 04-3562325 | |
(State or other jurisdictionof incorporation) | (I.R.S. EmployerIdentification No.) |
4960 Peachtree Industrial Blvd., Suite 240, Norcross, GA | 30071 | |
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class Common Stock, $0.001 Par Value Per Share GALT The NASDAQ CapitalStock MarketUnits, each consisting of two shares of Common Stock and one Warrant to purchase one share of Common StockThe NASDAQ Capital MarketCommon Stock Purchase WarrantsThe NASDAQ Capital Market
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☐ |
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Item 1. | Business |
Comments from FDA were received in late October 2019 and have been incorporated into the final version of the clinical trial protocol by the Company in conjunction with its hepatology consultants and medical and other experts at Covance, its chosen CRO Further information is described below under“NASH-RX Trial”. This modified trial design was discussed with FDA in a meeting on November 14, 2019 at which FDA indicated the design was reasonable (subject to a review of the protocol). The Company together with its advisors and Covance has modified the protocol and associated statistical analysis plans in conformance with the feedback received from FDA.In addition, the Company has been working to complete the various additional information requested by FDA. Design aspects of the ongoing NAVIGATE trial. These comments were addressed, and the study were presentedproceeded accordingly.
liver.
Indication | Drug | Status | ||
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| belapectin | IND submitted January 2013. Results from the Phase 1 The Phase
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The Phase 2 NASH CX trial was |
Indication | Drug | Status | ||
NASH |
Following FDA feedback, the | |||
Phase 1 study: hepatic insufficiency | A |
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Melanoma, Head,Neck Squamous Cell Carcinoma (HNSCC) | belapectin | Investigator IND | ||
February 2017 and | ||||
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Fibrosis. GR-MD-02 (belapectin)
pharmacokinetics (PK) of midazolam. The secondary objective was to assess the safety and tolerability ofGR-MD-02 belapectin when administered concomitantly with midazolam. The lack of a drug interaction in this study enabled the Company to expand the number of patients eligible for its Phase 2 clinical trial. In addition, shouldGR-MD-02 be approved for marketing, the success of this study supports a broader patient population for the drug label.
at baseline as demonstrated by a decrease in portal pressure associated with the prevention of development of varices when compared to 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 ofGR-MD-02, belapectin, respectively.
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 theGR-MD-02 belapectin 2 mg/kg LBM group was statistically significant (p<0.01) while that of the 8 mg/kg LBM group was not.
In terms of cirrhosis complications over
efficacy in patients with NASH cirrhosis.
NASH-RX2020;158:1334–1345.
The Company together with itsco-PIs and FDA had a follow up telephone conference on November 14, 2019 seeking clarifications during which the Company proposed a newthis innovative Phase 2b/3 study design to address FDA comments receivedare: i) In patients with NASH cirrhosis and clinical signs of portal hypertension but without esophageal varices at baseline, 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 NASH 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 Agency’s October response. In this teleconference, FDA indicateddevelopment of esophageal varices reflects the new design was more reasonable (subject to reviewprogression of hepatic cirrhosis and thus portends the protocol),development of other cirrhosis complications such as ascites, hepatic encephalopathy, and FDA indicated that they were still supportive ofliver failure, and (iii) During the surrogateend-point concepts originally proposed. The revised study design was disclosed in the Company’s presentation following its Annual Meeting on Decemberfirst 18 months, two belapectin dose levels (2 mg/kg LBM and 4 2019.
Based on updated feedback, the Company has redesigned the trial protocol in conjunction with itsCo-PIs, biostatical experts and other experts at Covance. We will continue to seek approval in a manner consistent with the data derived from the results of the Phase 2bNASH-CX trial. The pathway pursuedmg/kg LBM) will be compared to placebo (phase 2b). Then, at the interim analysis (IA), the best belapectin dose will be selected, based on efficacy and safety, for continued evaluation (Phase 3). The belapectin dose selected for the phase 2b/3 were based on the assessment of that data and in a manner that seeks to address FDA’s comments and suggestions.
Currently, as a resultanalysis of the Agency’s feedbackNASH-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 NASH cirrhosis.
As developed, theNASH-RX adaptively designed study has certain features potentially improving likelihood of showing drug effects. These include, but are not limited to: clarity and reaffirmation of efficacy and safety demonstrated in theNASH-CX Phase 2b trial; inclusion of sample sizere-estimation (SSR) after approximately 50% of the patients have completed one year of treatment; the SSR is designed to assure the rate of varices development is as expected and allowing adjustments in sample size if needed; appropriate selection of dose – e.g., a single dose for the Phase 3 component simplifying the overall trial and allowing adjustment to randomization ratio; Hepatic Impairment study may allow inclusion ofCTP-B patients that are believed to have a much higher rate of varices progression and bleeding and other decompensating events; reduced frequency of EGDs and elimination of biopsies (other than to confirm a definitive diagnosis of NASH cirrhosis at screening), elimination of the HVPG subgroup, and revision to the randomization ratio (e.g., proving a greater chance of a patient being on active drug rather than placebo) may make it easier to enroll the trial and retain patients for the course of the trial. These positive features may be offset by robust sizing (e.g. 126 patients per group completers treated for 18 months) and a difficulty in frequently monitoring patients for varices progression.
The Interim Analysis (IA) for efficacy and safety after all patients have completed 18 months of treatment will be conducted by an Independent Data Monitoring Committee (DMC). This will provide preplanned adaptations and trends relative to interim efficacy and safety and the results of this interim analysis will be
disclosed. Patients will continue on their assigned therapy until the IA is completed. If the IA feedback from the DMC is positive, patients are expected to continue in the trial (at the dose selected from the IA) adding patients with another year exposure to the drug treatment group for the Phase 3 component and increasing the likelihood of showing drug effect as patient cirrhosis progresses for a longer period of time. Adaptation to size and power calculations based on the IA reaffirming efficacy and safety will allow better estimates of Phase 3 cohort sizing and statistical power estimations which could be readjusted following the IA. The IA could also lead the DMC to stop the trial due to lack of sufficient efficacy, and other factors.
hypertension for whom, currently no specific, liver targeted, treatment are available.
Covance has already begun extensive work onCOVID-19 pandemic, site and vendor startup activities. We are also including a NASH-specific site network to accelerate site startuprecruitment and patient enrollment will accelerate and we have experienced increases in enrollment, particularly in the U.S. However, we have not seen the enrollment in Europe that we anticipated, and conditions there remain uncertain. Consequently, we have activated multiple sites in Latin America. At this time, although enrollment completion is targeted for this trial. A startup agreement has been executed with Covance that allowed themJune 30, 2022, it may require an additional quarter to start work on protocol development, statistical analysis plans, support us in addressing some of FDAs questions,complete.
Covance has also identified more than 125activated approximately 138 clinical trial sites in 1114 countries interested infor the NAVIGATE trial.
In advance of commencing the adaptively-designed NASH-RX Phase 2b/3 trial, theon our NAVIGATE website (navigatenash.com).
Data on this combination immunotherapy program was presented on February 7, 2017 at the 9th GTCBio Immunotherapeutics & Immunomonitoring Conference in San Diego, CA by Dr. William L. Redmond, Providence Cancer Center. Preclinical results in mouse models of multiple types of cancers showed important anti-tumor activity and increased survival effects of combiningGR-MD-02 with different types of immune modulators, providing a case for progressing studies into human patients with cancer. Seven patients were treated in theGR-MD-02
measures relevant to galectin biology and pembrolizumabT-cell checkpoint inhibition. Assuming these additional data are positive, the next logical step could be a Phase II trial.
Severe skin diseases.During our Phase 1 NASH fibrosis trial withGR-MD-02, a clinical effect on plaque psoriasis was observed in a NASH patient who also had this disease. This patient had marked improvement in her psoriasis, with improvement beginning after the third infusion. She reported that her psoriasis was “completely gone” and her skin was “normal” after the fourth infusion. Her skin remained normal for 17 months after the final infusion of study drug. The patient is convinced that the improvement in her psoriasis is related to the study drug.
This serendipitous finding, combined withgalectin-3 protein being markedly upregulated in the capillary epithelia (small blood vessels) of the psoriatic dermis (plaque lesions), led to a phase 2a trial in patients with moderate to severe plaque psoriasis.GR-MD-02 inhibition ofgalectin-3 may attenuate capillary changes in the psoriatic dermis and inflammatory recruitment, perhaps explaining the improvements observed in the NASH fibrosis trial patient. In this open-label, unblinded trial (no placebo, all patients knowingly receive active drug), 5 patients with moderate to severe plaque psoriasis were administeredGR-MD-02 every two weeks for 24 weeks. In May 2016, we reported positive results on the first four patients after 12 weeks of therapy. Based on these results, we modified the trial to include 24 weeks of therapy. In August 2016, we reported on four patients after 24 weeks of therapy and one patient after 12 weeks of therapy. The four patients who received 24 weeks of therapy experienced an average of 48% improvement in their plaque psoriasis. At this time, the average response in all five patients remains at 50% with one patient having an 82% improvement. However, there are existing drugs on the market in this disease that produce 75% and higher improvements in60-90% of patients. While we are encouraged that this study has demonstrated clinically meaningful results in a human disease withGR-MD-02, the next steps would entail a controlled, does-ranging clinical trial, which we do not expect to conduct absent a strategic partnership.
We believe the mechanism of action forGR-MD-02 is based upon interaction with, and inhibition of, galectin proteins, particularlygalectin-3, which are expressed at high levels in certain pathological states including inflammation, fibrosis and cancer. WhileGR-MD-02 is capable of binding to multiple galectin proteins, we believe that it has the greatest affinity forgalectin-3, the most prominent galectin implicated in pathological processes. Blocking galectin in cancer and liver fibrosis has specific salutary effects on the disease process, as discussed below.
Liver Fibrosis: New Approach for a Significant Unmet Medical Need
When an internal organ is exposed to chronic disease one of the responses is that scar tissue is laid down in the organ (this process is called fibrosis). The longer the disease affects the organ, the more fibrous tissue is deposited, and this ultimately results in the failure of the organ. This chronic fibrosis of organs may occur in the liver, lung, kidney, and heart, as well as others and, as a result, fibrosis of organs has been estimated to account for as much as 45% of all mortality in the United States. Scientific findings during the last few years indicate that thegalectin-3 protein is critically important in this fibrotic process in multiple organs.
In the liver, fibrosis is the end result of multiple inflammatory conditions and infections. Progressive liver fibrosis leads to cirrhosis, which results in reduction of liver function, multiple medical complications and ultimately death. It is estimated that one to two million patients have cirrhosis in the United States with close to 50,000 losing their lives yearly. Only a fraction of patients’ lives, approximately 6,200 per year, are saved by liver transplantation at a cost of at least $350,000 per transplantation with significant additional costs of care and medications after the transplant. One condition in particular that frequently leads to cirrhosis isnon-alcoholic steatohepatitis, or NASH, a liver disease characterized by the accumulation of fat in the liver with associated inflammation and fibrosis, which can lead toend-stage cirrhosis requiring liver transplantation. The National Institutes of Health estimates that 9 to 15 million Americans are affected by NASH, and other sources suggest it may be as many as 30 million people have NASH, and forecasts that the number of Americans affected by this
disease is growing due to obesity and diabetes, with the potential to become the leading cause of liver cirrhosis and liver transplantation in the future. Liver transplantation is currently the only therapeutic approach to NASH or other forms of liver fibrosis because, to the best of our knowledge, there are no drug therapies on the market. Organ transplantation is a difficult, risky and costly procedure, and organ availability is scarce. There is also the risk of developing cirrhosis in the transplanted liver from the same disease that damaged the patient’s original liver. Therefore, there is a great need for other therapeutic options. All diseases that affect the liver (viral hepatitis, alcoholic liver disease, and fatty liver as examples) lead to the development of scarring of the liver.
The primary focus of the Company is to use galectin inhibitors to blockgalectin-3 and treat organ scarring or fibrosis in the liver. There are no approved therapies for treatment of liver fibrosis. We believe that our drug candidates have the potential to treat NASH and other forms of liver fibrosis. Scientific evidence suggests thatgalectin-3 is essential for the development of liver fibrosis in animals. Published data show that mice lacking thegalectin-3 gene, and thus unable to producegalectin-3, are essentially incapable of developing liver fibrosis in response to toxic insult to the liver and in fatty liver disease. Moreover, mice that do not have thegalectin-3 gene are resistant to lung and kidney fibrosis. These published data show thatgalectin-3 is a critical protein for the development of organ fibrosis. Our drugs, based on experiments in well characterized animal models, are also potentially useful in scarring or fibrosis of other organs such as lung and kidney which expands the possibilities for future therapeutic indications.
We have evaluated the ability ofGR-MD-02 to blockgalectin-3 in animal models of liver fibrosis, the conclusions of which yielded positive results. Ourpre-clinical data show thatGR-MD-02 may have a therapeutic effect on liver fibrosis as shown in several relevant animal models. Therefore, we choseGR-MD-02as the lead candidateindication to pursue for belapectin in acombination 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, program targeted initially at fibrotic liver disease associated with NASH.
and the resulting very high medical need. We evaluatedGR-MD-02 inpre-clinical toxicology and pharmacology studies during 2013, and filedare currently working to compile an IND package with the objective for Galectin Therapeutics to file an IND and are planning a phase 2 trial to be filed with the FDA in January 2013, for initiating human studies in patients with NASH. In February 2013, we entered into an agreement with CTI Clinical Trial Services to assist with the design, development and conduct of one or more clinical research studies, specifically for services with respect to our Phase 1 clinical trials to evaluate safety ofGR-MD-02 in patients with NASH. The FDA notified us in March 2013 that we may proceed with a Phase 1 clinical trial for patients with NASH, and we began enrolling patients in the Phase 1 clinical trial in the third quarter of 2013. In August 2013,GR-MD-02 was granted Fast Track designation by the FDA for NASH with hepatic fibrosis, commonly known as fatty liver disease with advanced fibrosis. In January 2014, we completed the enrollment of the first cohort of patients in the Phase 1 trial with no serious adverse events being reported. We reported initial safety and tolerability results from the first cohort of patients on June 30, 2014. The second cohort of this Phase 1 trial began, and enrollment was completed in April 2014. In July 2014, we reported the results from the second cohort of patients. Enrollment of the third cohort of Phase 1 began in July 2014, with interim results presented in November 2014 with the final report on cohort 3 presented in January 2015. The results of the Phase 1 study demonstrate that(i) GR-MD-02 was safe and well tolerated by patients with advanced NASH liver fibrosis after IV administration of four doses of 2 mg/kg, 4 mg/kg and 8mg/kg lean body weight, (ii) Pharmacokinetics in patients with advanced fibrosis, but not cirrhosis, revealed drug exposure in humans at the 8 mg/kg dose that was equivalent to the upper range of the targeted therapeutic dose determined from effective doses in NASH animal models, (iii) Disease Serum Marker Effect showed there was a statistically significant, dose-dependent reduction in FibroTest® scores due to a statistically significant reduction inalpha-2 macroglobulin (A2M) serum levels, and (iv) Liver Stiffness Effect, as measured by FibroScan® showed that there was a signal of reduced liver stiffness in patients receivingGR-MD-02. The reduction seen in A2M doesnotnecessarily mean fibrosis got better in this short study but does suggest changes in the fibrogenic process that might lead to an improvement in fibrosis with longer-term therapy. These Phase 1 results in NASH patients with advanced fibrosis, in addition to completion of further toxicology and drug-drug interaction studies provided a firm foundation for entry into a Phase 2 development program (described above). Top line results of our Phase 2b in compensated NASH cirrhosis patients was reported in December 2017 and is more fully described above as well in our SEC filings; the Phase 2b study results provide the foundation for entry into an adaptively-designed Phase 3 program which is designed in conjunction with our KOLs and feedback obtained from FDA during 2019.
GR-MD-02 is a proprietary, patented galactoarabino-rhamnogalacturonan polysaccharide polymer that is comprised predominantly of galacturonic acid, galactose, arabinose, rhamnose, and smaller amounts of other sugars. Structural studies have shown thatGR-MD-02 binds togalectin-1 and togalectin-3 with binding affinity togalectin-3 being significantly greater than binding togalectin-1. With respect toGR-MD-02, we currently have, as of December 31, 2019, 22 granted U.S. patents, and 66 foreign granted patents. These patents, which are more fully described below, include a composition of matter patent, and methods of use including manufacture, use patient in patients with NASH, in patients with liver fibrosis, and in patients with diabetic kidney disease. Additional patent applications are pending with respect to, amongst other uses, cancer immunotherapy, lung fibrotic disease, and inflammatory disease associated with increase in inducible nitric oxide synthase. Patents have also been granted with respect to liver fibrosis, NASH, and liver fibrosis in combination with other therapeutic agents. Compounds for subcutaneous administration and oral delivery are currently underpre-clinical development.
Galectin Inhibition in Cancer Therapy
We believe the potential exists for galectin inhibition to play an important role in cancer therapy. Galectin proteins, particularlygalectin-1 andgalectin-3, have been shown to be highly expressed in the majority of cancers and have multiple roles in promoting cancer progression, including tumor cell invasion, metastasis, angiogenesis, and tumor evasion of the immune system.
The role of galectins in cancer immunotherapy can be understood through the “Galectin Effect”, a recent discovery of how tumors avoid the body’s own immune system, i.e., the tumors secrete galectin proteins that block the body’s efforts to fight tumors. Our current program to block the “Galectin Effect” is based on the research of Dr. Pierre van der Bruggen (of the Ludwig Institute of Cancer Research in Brussels, Belgium), demonstrating thatgalectin-3, which is produced by the vast majority of human cancers, binds to and blocks the actions of tumor-infiltratingT-lymphocytes, the major immune cell in the body’s defense against cancers. In addition, Dr. William L. Redmond of Providence Portland Medical Center’s Earl A. Chiles Research Institute (EACRI) has shown that our galectin inhibitors can enhance the anti-tumor immunogenic effect of other immunotherapies based on targeting lymphocyte checkpoints such as CTLA4. Based on these results, we believe that the body’s immune cells may be unable to attack and kill tumor cells in the presence of galectins. Using this approach, the mechanism of action for our drugs seeks to block galectins and, in turn, restore the ability of theT-lymphocytes to kill tumor cells.
The preclinical study found thatGR-MD-02 increased tumor shrinkage and enhanced survival in immune competent mice with prostate or breast cancers when combined with one of the immune checkpoint inhibitors,anti-CTLA-4 oranti-PD-1. These findings suggest a role forGR-MD-02 in cancer immunotherapy. These preclinical observations by Dr Redmond provided scientific rationale for proceeding and lead to the filing by Providence Portland Medical Center of an Investigator-sponsored IND to conduct a Phase 1B study to determine ifGR-MD-02 enhances the probability of melanoma response with ipilimumab by inducing proliferation, activation and memory function of CD8+ T cells in human patients. The company has licensed the underlying invention from Providence Portland Medical Center. This study represents a novel approach for patients with metastatic melanoma. The IND was approved by FDA in February 2014. This study is being conducted under the sponsorship of Providence Portland Medical Center’s Earle A. Chiles Research Institute (EACRI) and is being supported by the Company.
The study employs a dose escalation ofGR-MD-02 in conjunction with the standard therapeutic dose of ipilimumab in patients with advanced melanoma for whom ipilimumab would be considered standard of care. In addition to monitoring for toxicity and clinical response by irRECIST criteria on imaging tests, blood samples will be obtained to assess immunologic measures relevant to galectin biology and ipilimumabT-cell check-point inhibition. Galectin Therapeutics is providing its proprietary compoundGR-MD-02 to EACRI researchers, as well as supplying researchers with supporting analysis of the pharmacokinetics ofGR-MD-02 and the right to reference the Company’s open IND onGR-MD-02. To date the first two dosing groups have been completed
without serious adverse events that were determined to be related toGR-MD-02. The third dosing group is no longer enrolling due to the availability of newer agents such as theanti-PD1 agents.
Similar to the agreement set forth for the ipilimumab (Yervoy®) Phase 1B study, Providence Portland Medical Center submitted an IND in September 2015 to conduct a Phase 1B study ofGR-MD-02 and pembrolizumab (Keytruda®) in patients with metastatic melanoma. The combination ofGR-MD-02 and ananti-PD1 (pembrolizumab) has been shown to enhanceT-cell activation, memory, and effector function, and promote better antitumor responses in multiple mouse studies. The study will test the hypothesis thatgalectin-3 antagonism usingGR-MD-02 with enhance the probability of melanoma response using pembrolizumab in patients by inducing proliferation, activation and memory function of CD8+ T cells that recognize melanoma antigens. Similar to the ipilimumab study, the study employs a dose escalation ofGR-MD-02 in conjunction with the standard therapeutic dose of pembrolizumab in patients with metastatic melanoma who have had progression of their melanoma after ipilimumab and/or BRAF targeted therapy when a BRAF mutation is present. In addition to monitoring for toxicity and clinical response, blood and tumor samples will be obtained to assess immunologic measures relevant to galectin biology and pembrolizumabT-cell checkpoint inhibition. Top line results of the combination of the 3 dosing cohorts was reported in September 2018 and is more fully described above as well in our SEC filings and press releases. These data, taken together with the observed favorable safety and tolerability of the combination, in the view of the principal investigator, provide compelling rationale to move forward. Given that all three melanoma patients were responders at the 4 mg/Kg dose, the investigators plan to continue the trial with the expansion of the 4 mg/Kg cohort to include additional advanced melanoma patients and additional head and neck cancer patients. Further details on the study is available at www.clinicaltrials.gov. If these additional results should continue to be encouraging, the next step in development could entail a controlled randomized Phase 2 clinical trial.
Patents and Proprietary Rights
and autoimmune disorders in which galectin proteins are involved, at least in part, in the pathogenesis. Additional specific claims encompass liver fibrosis, kidney fibrosis, lung fibrosis or heart fibrosis. The patent, assigned U.S. Patent No. 8,871,925, was issued October 28, 2014.
disease other than cancer. See “Risk Factors — Risks Related to Our Intellectual Property”. Our competitive position, in part, is contingent upon protection of our intellectual property. Galectin Sciences LLC has 13 granted international patent, 1 international patent allowed, 3 US patent application pending, and 2927 foreign applications pending; 2 PCT International applications are pending.
research and development activities.
In September 2014, the Company established a collaborative research program with Dr. William Redmond’s laboratory located at the Providence Portland Medical Center, Portland, Oregon. This program focuses on combination immunotherapy plus galectin inhibition to augment tumor immunogenicity.
developed and will continue to develop relationships with third-parties that have established pharmaceutical manufacturing capabilities and expertise. We are not a party to any long-term agreement with any of our suppliers and, accordingly, we have our products manufactured on a purchase-order basis from one of two primary well-known and established pharmaceutical suppliers that meet FDA requirements.
Additionally, belapectin is manufactured as a sterile liquid formulation. We have experienced, and may experience in the future, certain delays related to COVID-19 related supply issues with certain components necessary to manufacture belapectin.
1. |
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2. | Submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin, |
3. | Adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug for each indication, |
4. | Submission to the FDA of a NDA, |
5. | Satisfactory completion of an FDA inspection of the manufacturing facility or facilities, at which the drug is produced to assess compliance with current good manufacturing procedures (“cGMP”) established by the FDA, |
6. | FDA review and approval of the NDA, and |
7. | FDA review and approval of a trademark used in connection with a pharmaceutical. |
Employees
Item 1A. | Risk Factors |
operate.
candidates that we mayin-license or acquire in the future. Even if we are able to successfully achieve regulatory approval for these product candidates, we do not know when any of these products will generate revenue from product sales for us, if at all. Our ability to generate revenue from product sales from our current or future product candidates also depends on a number of additional factors, including our ability to:
be obtained from later or more extensive testing. Also, it is possible to suffer significant setbacks in advanced clinical trials, even after obtaining promising results in earlier trials. For example, although there was positive data from ourNASH-CX Phase 2 trial forGR-MD-02, which we believe will allow us to conduct a Phase 3 trial, belapectin, it did not meet its primary endpoint. Similarly, our Phase 2a pilot trialNASH-FX for patients with advanced fibrosis, which explored threenon-invasive imaging technologies, did not meet its primary endpoint. We may engage others to conduct our clinical trials, including clinical research organizations and, possibly, government-sponsored agencies. Additional clinical trials may not start or be completed as we forecast and may not achieve the desired results. The time required to obtain FDA and other approvals is unpredictable but often can take years following the commencement of clinical trials, depending upon the complexity of the drug candidate.
belapectin.
We have limited experience in marketing, sales or distribution, and we do not intend to develop a sales and marketing infrastructure to commercialize our pharmaceutical products. If we develop commercial products, we will need to rely on licensees, collaborators, joint venture partners or independent distributors to market and sell those products. Thus, we expect that we will be required to enter into agreements with commercial partners to engage in sales, marketing and distribution efforts around our products in development. We may be unable to establish or maintain third-party relationships on a commercially reasonable basis, if at all. In addition, these
third parties may have similar or more established relationships with our competitors. If we do not enter into relationships with third parties for the sales and marketing of our proposed products, we will need to develop our own sales and marketing capabilities.
Even if engaged, these distributors may:
fail to satisfy financial or contractual obligations to us;
fail to adequately market our products;
cease operations with little or no notice to us; or
offer, design, manufacture or promote competing formulations or products.
If we fail to develop sales, managed care, marketing and distribution channels, we would experience delays in generating sales and incur increased costs, which would harm our financial results.
We are exposed to product liability,pre-clinical and clinical liability risks which could place a financial burden upon us, should we be sued, because we do not currently have product liability insurance beyond our general insurance coverage.
Because we do not currently have anyFDA-approved products or formulations, we do not currently have any product liability insurance covering commercialized products. We may not be able to obtain or maintain adequate product liability insurance on acceptable terms, if at all, or such insurance may not provide adequate coverage against our potential liabilities. Furthermore, ourOur current and potential partners with whom we have collaborative agreements or our future licensees may not be willing to indemnify us against these types of liabilities and may not, themselves, be sufficiently insured or have sufficient liquidity to satisfy any product liability claims. Claims or losses in excess of any product liability insurance coverage that may be obtained by us could have a material adverse effect on our business, financial condition and results of operations.
As apre-revenue company engaged in the development of drug technologies, our Our resources are limited and we may experience technical challenges inherent in such technologies. Competitors have developed or are in the process of developing technologies that are, or in the future may be, the basis for competition. Some of these technologies may have an entirely different approach or means of accomplishing similar therapeutic effects compared to our proposed products. Our competitors may develop drugs that are safer, more effective and less costly than our proposed products and, therefore, present a serious competitive threat to us.
GR-MD-02 belapectin is performed by third parties on a contract basis and production is ongoing to generate what we believe are sufficient quantities ofGR-MD-02 belapectin for planned Phase 3our NAVIGATE or other clinical trials. Manufacturing could become delayed due to circumstances beyond our control which could delay any planned Phase 3 clinical trials. Further because of limited resources, we have curtailed most of our expenditures in research focused on the development of an oral galectin inhibitor to replace our current drug candidate that is delivered via infusion.
reported after our drug products are made available to patients. This would include results from any post marketing tests or vigilance required as a condition of approval. The manufacturer and manufacturing facilities we use to make any of our drug products will also be subject to periodic review and inspection by the FDA. The discovery of any new or previously unknown problems with the product, manufacturer or facility may result in restrictions on the drug, manufacturer or facility, including withdrawal of the drug from the market. We would continue to be subject to the FDA requirements governing the labeling, packaging, storage, advertising, promotion, recordkeeping, and submission of safety and other post-market information for all of our product candidates, even those that the FDA had approved. If we fail to comply with applicable continuing regulatory requirements, we may be subject to fines, suspension or withdrawal of regulatory approval, product recalls and seizures, operating restrictions and other adverse consequences.
If users of our proposed products are unable to obtain adequate reimbursement from third-party payers, market acceptance of our proposed products may be limited, and we may not achieve revenues or profits.
The continuing efforts of governments, insurance companies, health maintenance organizations and other payers of healthcare costs to contain or reduce costs of health care may affect our future revenues and profitability as well as the future revenues and profitability of our potential customers, suppliers and collaborative partners in addition to the availability of capital. Our ability to commercialize our proposed products will depend in large part on the extent to which appropriate reimbursement levels for the cost of our proposed formulations, products and related treatments are obtained by the health care providers of these products and treatments. It is possible that the adoption new health care reform legislation or legislation to replace the current health care reimbursement system could harm our business, financial condition and results of operations.
regulatory authorities may withdraw their approvals of such product;
We will need to obtain FDA approval of any proposed product brand names, and any failure or delay associated with such approval may adversely impact our business.
A pharmaceutical product cannot be marketed in the U.S. or other countries until it has completed rigorous and extensive regulatory review processes, including approval of a brand name. Any brand names we intend to use for our product candidates will require approval from the FDA regardless of whether we have secured a formal trademark registration from the U.S. Patent and Trademark Office, or the PTO. The FDA typically conducts a review of proposed product brand names, including an evaluation of potential for confusion with other product names. The FDA may also object to a product brand name if it believes the name inappropriately implies medical claims. If the FDA objects to any of our proposed product brand names, we may be required to adopt an alternative brand name for our product candidates. If we adopt an alternative brand name, we would lose the benefit of our existing trademark applications for such product candidate and may be required to expend significant additional resources in an effort to identify a suitable product brand name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA. We may be unable to build a successful brand identity for a new trademark in a timely manner or at all, which would limit our ability to commercialize our product candidates.
Company. Our success depends, in part, on our ability to obtain patent protection for our products or processes in the U.S. and other countries, protect trade secrets and prevent others from infringing on our proprietary rights. We will only be able to protect our product candidates from unauthorized making, using, selling, offering to sell or importation by third parties to the extent that we have rights under valid and enforceable patents or trade secrets that cover these activities. If we do not adequately protect our intellectual property, competitors may be able to practice our technologies.
regulatory or legal developments in the United States and other countries;
prescribe, by resolution and without stockholder approval, a class or series of undesignated shares, including the number of shares in the class or series and the voting powers, designations, rights, preferences, restrictions and the relative rights in each such class or series. Accordingly, wein the event that additional undesignated shares are authorized under our charter documents, our board of directors may designate and issue additional shares or series of preferred stock that would rank senior to the shares of common stock as to dividend rights or rights upon our liquidation,winding-up, or dissolution.
dissolution
could prohibit or delay a merger or other takeover or change in control attempt and, accordingly, may discourage attempts to acquire our Company even though such a transaction may be in our stockholders’ best interest and offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.
At times, our
it could beis considered “thinly-traded.” This situation may be attributable to a number ofseveral factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers,stockbrokers, institutional investors and others in the investment community that generate or influence sales volume, and thatvolume. Furthermore, even if weour stock came to the attention of such persons, they tend to be risk averse and wouldmay be reluctant to follow an unproven company such as oursus or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence,shares. Therefore, there may be periods of several days, weeks or months when trading activity in our shares is minimal, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common stock will be sustained, or that current trading levels will be sustained or not diminish.
Item 1B. | Unresolved Staff Comments |
Item 2. | Properties |
Item 3. | Legal Proceedings |
Item 4. | Mine Safety Disclosures |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
As we
Item 6. |
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Not applicable.
Item 7. |
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our dependence on additional outside capital,
2020
Year ended December 31, | 2019 as Compared to 2018 | |||||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||||
(in thousands, except %) | ||||||||||||||||
Research and development | $ | 7,467 | $ | 6,471 | $ | 996 | 15 | % |
Year ended December 31, | 2021 as Compared to 2020 | |||||||||||||||
2021 | 2020 | $Change | % Change | |||||||||||||
(in thousands, except %) | ||||||||||||||||
Research and development | $ | 23,818 | $ | 17,976 | $ | 5,842 | 32 | % |
Year Ended December 31, | ||||||||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Direct external expenses: | ||||||||
Clinical programs | $ | 4,826 | $ | 2,296 | ||||
Pre-clinical activities | 394 | 208 | ||||||
Other research and development expenses: | ||||||||
Payroll and other including stock-based compensation | 2,247 | 3,967 | ||||||
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$ | 7,467 | $ | 6,471 | |||||
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Year Ended December 31, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Direct external expenses: | ||||||||
Clinical programs | $ | 20,830 | $ | 14,229 | ||||
Pre-clinical activities | 562 | 532 | ||||||
Other research and development expenses: | ||||||||
Payroll and other including stock-based compensation | 2,426 | 3,215 | ||||||
$ | 23,818 | $ | 17,976 |
Year ended December 31, | 2019 as Compared to 2018 | |||||||||||||||
2019 | 2018 | $ Change | % Change | |||||||||||||
(in thousands, except %) | ||||||||||||||||
General and administrative | $ | 5,971 | $ | 7,131 | $ | (1,160 | ) | (16 | )% |
Year ended December 31, | 2021 as Compared to 2020 | |||||||||||||||
2021 | 2020 | $ Change | % Change | |||||||||||||
(in thousands, except %) | ||||||||||||||||
General and administrative | $ | 6,361 | $ | 5,468 | $ | 893 | 16 | % |
$373,000 and increase in insurance expense of $395,000.
expense, and interest expense and amortization of debt discounts on convertible notes payable of $315,000.
2019
Year ended December 31, | 2018 as Compared to 2017 | |||||||||||||||
2018 | 2017 | $ Change | % Change | |||||||||||||
(in thousands, except %) | ||||||||||||||||
Research and development | $ | 6,471 | $ | 11,721 | $ | (5,250 | ) | (45 | )% |
Year ended December 31, | 2020 as Compared to 2019 | |||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||||
(in thousands, except %) | ||||||||||||||||
Research and development | $ | 17,796 | $ | 7,467 | $ | 10,509 | 141 | % |
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 V, 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. We have two product candidates,GR-MD-02 belapectin andGM-CT-01; however onlyGR-MD-02 belapectin is in active development.
Year Ended December 31, | ||||||||
2018 | 2017 | |||||||
(in thousands) | ||||||||
Direct external expenses: | ||||||||
Clinical programs | $ | 2,296 | $ | 9,362 | ||||
Pre-clinical activities | 208 | 194 | ||||||
Other research and development expenses: | ||||||||
Payroll and other including stock-based compensation | 3,967 | 2,165 | ||||||
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$ | 6,471 | $ | 11,721 | |||||
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Year Ended December 31, | ||||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Direct external expenses: | ||||||||
Clinical programs | $ | 14,229 | $ | 4,826 | ||||
Pre-clinical activities | 532 | 394 | ||||||
Other research and development expenses: | ||||||||
Payroll and other including stock-based compensation | 3,215 | 2,247 | ||||||
$ | 17,976 | $ | 7,467 |
Year ended December 31, | 2018 as Compared to 2017 | |||||||||||||||
2018 | 2017 | $ Change | % Change | |||||||||||||
(in thousands, except %) | ||||||||||||||||
General and administrative | $ | 7,131 | $ | 4,526 | $ | 2,605 | 58 | % |
Year ended December 31, | 2020 as Compared to 2019 | |||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||||
(in thousands, except %) | ||||||||||||||||
General and administrative | $ | 5,468 | $ | 5,971 | $ | (503 | ) | (8 | )% |
$331,000.
financed our operations from proceeds of public and private offerings of debt and equity. As of December 31, 2019,2021, we raised a net total of $197.4$234.5 million from these offerings. At December 31, 2019,2021, the Company had $47.5$39.6 million of unrestricted cash and cash equivalents available to fund future operations. In December 2018, the Company announced the extension of its $10 million unsecured line of credit facility with stockholder and director, Richard E. Uihlein. The Company has not drawn under the line of credit. The Company believes there is sufficient cash including availability of the line of credit, to fund currently planned operations at least through September 30, 2021.March 31, 2023. We will require more cash to fund our operations after September 30, 2021March 31, 2023 and believe we will be able to obtain additional financing. The currently planned operations include costs related to a plannedour adaptively designed NAVIGATE Phase 2b/3 clinical trial. While theCurrently, we expect to require an additional approximately $45-$50 million to cover costs of the trial to reach the planned interim analysis estimated to occur in the first quarter of 2024 along with drug manufacturing and other scientific support activities and general overhead during the first stage ofand administrative costs and further amounts to complete the Phase 3 trial are currently estimated to be approximately $125 million, the costs and timingportion of such trial are not yet finalized. The Company has not made commitments for such trial that cannot be covered with available cash, but we will require additional funding in order to complete the 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.
2019
2020
trial and associated activities.
2020.
2018 compared to 2017
Net cash used in operations decreased by $5,713,000 to $10,179,000 for 2018, as compared to $15,892,000 for 2017. Cash operating expenses decreased principally due to decreased research and development activities primarily related to our Phase 2 clinical programs.
There were no equipment purchases or other investing activities in 2018 or 2017.
Net cash provided by financing activities was $15,379,000 during 2018 as compared to $3,583,000 during 2017, due primarily to the transactions described below.
In 2018, we completed sales of common stock through At the Market issuances totaling $5,603,000. Additionally, in 2018, we received proceeds totaling $6,003,000 and $3,773,000 from the exercise of common stock warrants and options, respectively. In 2017, we completed a private placement of common stock with warrants totaling $200,000 and sales of common stock through At the Market issuances totaling $3,383,000.
a rate of approximately $3,800 per month. The amended lease provided for free rent for the first two months of the lease and continues the security deposit of $6,000. In addition to base rental payments included in the contractual obligations table above, the Company is responsible for ourpro-rata share of the operating expenses for the building.
The Company renewed its existing office space lease effective in February 2022 for 38 months at substantially the same terms.
Contractual Obligations and Commitments
The following table summarizes contractual obligations and commitments as of December 31, 2019:
Payments due by period (in thousands) | ||||||||||||||||||||
Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Operating Leases | $ | 103 | $ | 47 | $ | 56 | ||||||||||||||
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Total | $ | 103 | $ | 47 | $ | 56 | ||||||||||||||
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payroll expenses. In connection with these service fees, our estimates are most affected by our understanding of the status and timing of services provided relative to the actual services incurred by the service providers. In the event that we do not identify certain costs that have been incurred or we under- or over-estimate the level of services or costs of such services, our reported expenses for a reporting period could be understated or overstated. The date on which certain services commence, the level of services performed on or before a given date, and the cost of services are often subject to our judgment. We make these judgments based upon the facts and circumstances known to us in accordance with accounting principles generally accepted in the U.S.
studies are charged to research and development expense as incurred. The Company accounts for nonrefundable advance payments for goods and services that will be used in future research and development activities as expense when the service has been performed or when the goods have been received. Our current NAVIGATE clinical trial is being supported by third-party contract research organizations, or CROs, and other vendors. We accrue expenses for clinical trial activities performed by CROs based upon the estimated amount of work completed on each trial. For clinical trial expenses and related expenses associated with the conduct of clinical trials, the significant factors used in estimating accruals include the number of patients enrolled, the number of active clinical sites, and the duration for which the patients have been enrolled in the trial. We monitor patient enrollment levels and related activities to the extent possible through internal reviews, review of contractual terms and correspondence with CROs. We base our estimates on the best information available at the time. We monitor patient enrollment levels and related activities to the extent possible through discussions with CRO personnel and based our estimates of clinical trial costs on the best information available at the time. However, additional information may become available to us which will allow us to make a more accurate estimate in future periods. In that event, we may be required to record adjustments to research and development expenses in future periods when the actual level of activity becomes more certain.
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
Item 8. | Financial Statements and Supplementary Data |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
2019.2021. Our management has concluded, based on their evaluation, that our disclosure controls and procedures were effective as of December 31, 20192021 to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
reporting is a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. It includes those policies and procedures that:
2021.
Item 9B. | Other Information |
Item 10. | Directors, Executive Officers and Corporate Governance |
Name | Age | Position | Director Since | |||
Gilbert F. Amelio, Ph.D (2)(3) | 76 | Director | 2009 | |||
James C. Czirr | 66 | Director | 2009 | |||
Kary Eldred (1) | 46 | Director | 2018 | |||
Kevin D. Freeman (1)(3) | 58 | Director | 2011 | |||
Joel Lewis (1) (2) (3) | 50 | Director | 2017 | |||
Gilbert S. Omenn, M.D., Ph.D. (2) | 78 | Director | 2014 | |||
Marc Rubin, M.D. (3) | 65 | Director | 2011 | |||
Harold H. Shlevin, Ph.D. | 70 | Director | 2019 | |||
Richard E. Uihlein, Chairman | 74 | Director | 2017 |
Name | Age | Director Since | ||
Gilbert F. Amelio, Ph.D. (2)(3) | 78 | 2009 | ||
James C. Czirr | 68 | 2009 | ||
Kary Eldred (1) | 47 | 2018 | ||
Kevin D. Freeman (1)(2)(3) | 60 | 2011 | ||
Joel Lewis | 52 | 2017 | ||
Gilbert S. Omenn, M.D., Ph.D. (2) | 80 | 2014 | ||
Marc Rubin, M.D. (3) | 67 | 2011 | ||
Elissa J. Schwartz, Ph.D. (3) | 51 | 2020 | ||
Harold H. Shlevin, Ph.D. | 72 | 2019 | ||
Richard E. Uihlein, Chairman | 76 | 2017 | ||
Richard A. Zordani (1) | 49 | 2020 |
(1) | Member of audit committee |
(2) | Member of compensation committee |
(3) | Member of nominating and |
is being nominated by 10X Fund L.P.,has served as a director pursuant to contractual rights set forth in certain warrants to purchase Common Stock that 10X Fund L.P. holds. Mr. Czirr has served as a directorholds since February 2009, served as Chairman of the Board from February 2009 until January 2016 and Executive Chairman from February 2010 until January 2016, is aco-founder of 10X Fund, L.P. and is a managing member of 10X Capital Management LLC, the general partner of 10X Fund, L.P. Mr. Czirr was aco-founder of Galectin Therapeutics in July 2000. Mr. Czirr was instrumental in the early stageearly-stage development of Safe Science Inc., a developer of anti-cancer drugs; served from 2005 to 2008 as Chief Executive Officer of Minerva Biotechnologies Corporation, a developer of nano particle bio chips to determine the cause of solid tumors;tumors. Mr. Czirr is an early stage investor and wason the board of directors of Gold Express a consultant to Metalline
Mining Company Inc., now known as Silver Bull Resources, Inc., (AMEX: SVBL), a mineralprivate gold mining company with multiple exploration company seeking to become a low cost producer of zinc.properties in the U.S. Mr. Czirr received a B.B.A. degree from the University of Michigan. We believe that Mr. Czirr is best situated to sit on our Board because he is the director who was aco-founder of the Company and is familiar with our business and industry.
2017
.from Harvard Medical School, and Ph.D. in genetics from the University of Washington. We believe Dr. Omenn’s qualifications to sit on our Board of Directors include his extensive executive leadership and management experience in the medical industry and his continuing cutting-edge research.
Harold Shlevin, Ph.D.
company headquartered in Alpharetta, GA. From April 2010 through August 2012, Mr. Callicutt was the Chief Financial Officer of Vystar Corporation, a publicly traded company that holds proprietary technology to remove antigenic proteins from natural rubber latex. Prior to that Mr. Callicutt was Chief Financial Officer of IVOX, Inc., Tikvah Therapeutics and Corautus Genetics, a publicly traded biotechnology company which was developing gene therapy for treatment of cardiovascular disease. Mr. Callicutt previously spent more than fourteen years in public accounting, most recently as a senior manager at Deloitte, where he specialized in technology companies from 1989 to 2003. Mr. Callicutt is a Certified Public Accountant and graduated with honors from Delta State University with a B.B.A. in accounting and computer information systems.
SIGNIFICANT EMPLOYEES
The following employees are not executive officers of the Company but make significant contributions to the Company.
J. Rex Horton, age 50, became the Company’s Executive Director of Regulatory Affairs and Quality Assurance in January 2013. Mr. Horton most recently was Director of Regulatory Affairs at Chelsea Therapeutics, where he successfully led the organization through its first NDA filing and favorable FDA Advisory Committee Meeting. In past leadership roles at Solvay Pharmaceuticals and Abbott Laboratories, he led approval efforts for key products including Androgel® Stickpack, Creon® Capsules and Luvox® CR Capsules. He has also provided chemistry, manufacturing and controls (CMC) regulatory leadership and support of INDs and NDAs, including Estrogel® and Androgel® Pump. Mr. Horton was a member of the executive leadership team that successfully implemented solutions to significant regulatory issues encountered by Solvay in its interactions with the FDA. Mr. Horton earned his Bachelor’s degree in industrial/manufacturing & systems engineering from The Georgia Institute of Technology. He is a member of the Regulatory Affairs Professional Society (RAPS), Drug Information Association (DIA) and American Association of Pharmaceutical Scientists (AAPS).
Eliezer Zomer, Ph.D., age 73, has been our Executive Vice President of Manufacturing and Product Development since the Company’s inception in 2000. Prior to joining our Company, Dr. Zomer had been the founder of Alicon Biological Control, where he served from November 2000 to July 2002. From December 1998 to July 2000, Dr. Zomer served as Vice President of Product Development at SafeScience, Inc. and Vice President of Research and Development at Charm Sciences, Inc. from June 1987 to November 1998. Dr. Zomer received a B. Sc. degree in industrial microbiology from the University of Tel Aviv in 1972, a Ph.D. in biochemistry from the University of Massachusetts in 1978 and undertook a post-doctoral study at the National Institute of Health.
Adam E. Allgood, Pharm.D., R.Ph,age 55, became our Executive Director of Clinical Development on June 29, 2015. Dr. Allgood was most recently associate director of global pharmaceutical regulatory affairs at UCB Inc., a multinational biopharmaceutical company, from October 2011 to May 2015. His prior positions include leadership roles at Abbott Laboratories from February 2009 to September 2011 in regulatory affairs and Solvay Pharmaceuticals from January 1988 to January 2009 in clinical development and medical affairs, spanning a variety of therapeutic areas including gastroenterology, immunology, rheumatology, neurology, and women’s health. Dr. Allgood earned his Doctor of Pharmacy (Pharm.D.) degree summa cum laude from Mercer University College of Pharmacy and Health Sciences in Atlanta and is a Registered Pharmacist (R.Ph.). He is a member of the American Pharmacists Association (APHA), and the Association of the United States Army (AUSA). None of the directors, executive officers and key employees share any familial relationship.
Item 11. | Executive Compensation |
Name | Title | |
| Chief Executive Officer and President | |
Pol F. Boudes, M.D. | Chief Medical Officer | |
Jack W. Callicutt | Chief Financial Officer |
companies within the industry. Barney & Barney LLC reviewed information from industry and other sources, surveys and databases, including publicly-available compensation information of other companies with which we compete, to gauge the competitiveness of our compensation programs. Barney & Barney LLC then reported its findings to the Compensation Committee, with recommendations to bring the Company’s executive compensation closer to the 50th percentile of the total compensation of our competitor companies. These findings continued to inform the Compensation Committee’s decisions on compensation in subsequent years, including 2019.
2021.
NAVIGATE trial.
In June 2018 after the resignation of Dr. Traber from his position as Chief Executive Officer, President and Chief Medical Officer, the Compensation Committee reviewed the base salaries of our NEOs, taking into account the considerations described above. As a result, as a result of his election as Chief Executive Officer and President, Dr. Shlevin’s base salary was adjusted to $500,000 effective June 6, 2018. As a result of his election to Secretary, Mr. Calllicutt’s base salary was adjusted to $285,000.
Name | 2019 Base Salary | 2018 Base Salary | ||||||
Harold H. Shlevin, Ph.D. | $ | 500,000 | $ | 500,000 | ||||
Jack W. Callicutt | $ | 285,000 | $ | 285,000 |
For 2019, the Compensation Committee made no adjustments to the base salaries of our NEO’s.
Name | 2021 Base Salary | 2020 Base Salary | |||||
Joel Lewis | $ | 500,000(3 | ) | $ | 500,000 (1)(3) | ||
Pol F. Boudes, M.D.. | $ | 455,000 | $ | 440,500(2) | |||
Jack W. Callicutt | $ | 302,100 | $ | 302,100 |
(1) | Mr. Lewis became our President and Chief Executive Officer on September 2, 2020. |
(2) | Dr. Boudes became our Chief Medical Officer on March 3, 2020. |
(3) | Pursuant to Mr. Lewis’s Employment Agreement and Deferred Stock Unit Agreement, 20% of Mr. Lewis’ base salary will be paid in cash and 80% will be paid in the form of deferred-stock units in accordance with the terms and subject to the provisions of the DSU Agreement. |
Name | Performance Bonus Amount | Awarded Amount As % of Base Salary | ||||||
Harold H. Shlevin, Ph.D. | $ | 215,625 | 43 | % | ||||
Jack W. Callicutt | $ | 90,950 | 32 | % |
In 2018, the Board approved potential cash incentive bonuses (the “Transaction Bonuses”) applicable onlyFebruary 2022.
Name | Performance Bonus Amount | Awarded Amount As % of Base Salary | ||||||
Joel Lewis | $ | 250,000(1 | ) | 50 | % | |||
Pol F. Boudes, M.D. | $ | 136,500 | 30 | % | ||||
Jack W. Callicutt | $ | 90,630 | 30 | % |
Additionally, the Board also approved retention bonuses payable to certain employees of the Company, including Dr. Shlevin and Mr. Callicutt, equal to 25% of such employee’s base salary (the “Retention Bonuses”) if such employees remained employed by the Company on each of June 30, 2019, December 31, 2019, June 30, 2020 and December 31, 2020 and based upon the annualized salary level in effect on such date.
Name | Retention Bonus Amount | Awarded Amount As % of Base Salary | ||||||
Harold H. Shlevin, Ph.D. | $ | 250,000 | 50 | % | ||||
Jack W. Callicutt | $ | 142,500 | 50 | % |
DSU Agreement
Name | Grant Date | Number of Securities Underlying Options | Exercise Price | |||||||||
Harold H. Shlevin, Ph.D. | 1/16/2019 | 70,000 | $ | 4.72 | ||||||||
Jack W. Callicutt | 1/16/2019 | 50,000 | $ | 4.72 |
The NEOs also were awarded longer term option grants that vest 100% when the Company has received the interim results of the NAVIGATE clinical trial and makes a public announcement that it has received the interim results.
Name | Grant Date | Number of Securities Underlying Options | Exercise Price | |||||||
Joel Lewis | 3/25/2021 | 70,000 | $ | 2.11 | ||||||
Joel Lewis | 3/25/2021 | 140,000 | $ | 2.11 | ||||||
Pol Boudes, M.D. | 3/25/2021 | 50,000 | $ | 2.11 | ||||||
Pol Boudes, M.D. | 3/25/2021 | 100,000 | $ | 2.11 | ||||||
Jack W. Callicutt | 3/25/2021 | 50,000 | $ | 2.11 | ||||||
Jack W. Callicutt | 3/25/2021 | 100,000 | $ | 2.11 |
Harold H. Shlevin, Ph.D.,
We
On June 8, 2018, we entered into a first amendment to the employment agreement with Dr. Shlevin in recognition of his appointment as Chief Executive Officer and Presidentthirty percent (30%) of the Company. In accordance withBase Salary (the “Performance Bonus”). Subject to certain restrictions described in the amendment,Agreement, Dr. ShlevinBoudes will receive a base salary$100,000 signing bonus pursuant to the Agreement. Dr. Boudes will also be granted options to purchase 300,000 shares (the “Options”) of $500,000, was granted 35,000the Company’s common stock optionspursuant to the Company’s 2019 Omnibus Equity Incentive Plan. The Options vest as noted above,follows: twenty percent (20%) of the Options shall vest upon one (1) year of employment, twenty percent (20%) of the Options shall vest upon two (2) years of employment, twenty percent (20%) of the Options shall vest upon three (3) years of employment, and his target bonus opportunity was increased to 50%the remaining forty percent (40%) of his base salary.
the Options shall vest upon four (4) years of employment.
COMPENSATION COMMITTEE REPORT
The following report is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to the SEC’s proxy rules or the liabilities of Section 18 of the Exchange Act, and the report shall not be deemed to be incorporated by reference into any prior or subsequent filing by us under the Securities Act of 1933, as amended, or the Exchange Act.
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Name and Principal Position | Year | Salary ($) | Bonus ($) (1) | Option Awards ($) (2) | All Other Compensation ($) | Total ($) | ||||||||||||||||||
Harold H. Shlevin, Ph.D., | 2019 | 500,000 | 465,625 | 268,196 | 72,686 | (3) | 1,306,507 | |||||||||||||||||
Chief Executive Officer & President | 2018 | 395,833 | 375,000 | 891,113 | 68,869 | (4) | 1,730,815 | |||||||||||||||||
2017 | 260,000 | 91,163 | — | 53,992 | (5) | 405,155 | ||||||||||||||||||
Jack W. Callicutt, | 2019 | 285,000 | 233,450 | 191,568 | 68,105 | (6) | 778,123 | |||||||||||||||||
Chief Financial Officer | 2018 | 275,278 | 213,750 | 715,319 | 62,150 | (7) | 1,266,497 | |||||||||||||||||
2017 | 260,000 | 91,163 | — | 54,848 | (8) | 406,011 |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards ($) (1) | All Other Compensation ($) | Total ($) | |||||||||||||||||
Joel Lewis, Chief Executive Officer & President | 2021(2) | 500,000 | 250,000 | 329,177 | 88,444(3 | ) | 1,167,621 | ||||||||||||||||
2020(4) | 164,773 | 75,000 | 486,125 | 27,660(5 | ) | 753,558 | |||||||||||||||||
Pol F. Boudes, M.D., Chief Medical Officer | 2021(6) | 452,583 | 136,500 | 235,126 | 99,474(7 | ) | 923,683 | ||||||||||||||||
2020(8) | 367,083 | 210,000 | 419,460 | 85,938(9 | ) | 1,082,481 | |||||||||||||||||
Jack W. Callicutt, | 2021(10 | ) | 302,100 | 90,630 | 235,126 | 78,062(11 | ) | 705,918 | |||||||||||||||
Chief Financial Officer | 2020(12 | ) | 300,675 | 236,050 | 110,190 | 73,457(13 | ) | 720,372 |
(1) |
|
Represents the aggregate grant date fair value of option awards made during |
value was calculated using the Black-Scholes options pricing model. For a description of the assumptions used to determine these amounts, see Note 7 of the Notes to the Consolidated Financial Statements in our Annual Reports on Form10-K (or Form10-K/A, as applicable) for the fiscal years ended December 31, |
(2) | Mr. Lewis’s performance bonus for 2021 was approved in January 2022. Pursuant to his employment agreement 20% of his salary and bonus are paid in cash and 80% are in deferred stock units. |
(3) | Includes |
(4) | Mr. Lewis became our Chief Executive Officer and President effective September 2, 2020, and his performance bonus was prorated for 2020 and paid in March 2021. Pursuant to his employment agreement, 20% his salary and bonus are paid in cash and 80% are in deferred stock units. |
(5) | Includes |
Dr. Boudes’ performance bonus for 2021 was paid in February 2022. |
(7) | Includes |
Dr. Boudes became our Chief Medical Officer effective March 2, 2020. He was paid a $100,000 bonus upon joining the Company. His performance bonus of $110,000 was prorated for 2020 and paid in March 2021. |
(9) | Includes |
Mr. Callicutt’s performance bonus for 2021 was paid in February 2022. |
(11) | Includes |
(12) | Mr. Callicutt’s bonus amount in 2020 consisted of $75,525 retention bonuses paid in July 2020 and January 2021 and $85,000 performance bonus earned in 2020 which was paid in March 2021. |
(13) | Includes |
GRANTS OF PLAN-BASED AWARDS IN 2019
Name | Grant Date | Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards | |||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||
Harold H. Shlevin, Ph.D. | 01/16/2019 | (1) | 70,000 | $ | 4.72 | $ | 268,196 | (2) | ||||||||||||||||||||||||||||||||||||
Jack W. Callicutt | 01/16/2019 | (1) | 50,000 | $ | 4.72 | $ | 191,568 | (2) |
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2021
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||
Harold H. Shlevin, Ph.D. | 38,000 | (1) | — | 13.38 | 01/21/2024 | — | — | — | — | |||||||||||||||||||||||||||
90,000 | (2) | — | 5.87 | 01/15/2028 | ||||||||||||||||||||||||||||||||
90,000 | (3) | — | 4.16 | 05/22/2028 | ||||||||||||||||||||||||||||||||
35,000 | (3) | — | 6.17 | 06/08/2028 | ||||||||||||||||||||||||||||||||
35,000 | (4) | 35,000 | (4) | 4.72 | 01/16/2029 | |||||||||||||||||||||||||||||||
Jack W. Callicutt | 26,000 | (1) | — | 13.38 | 01/21/2024 | — | — | — | — | |||||||||||||||||||||||||||
8,706 | (5) | — | 1.37 | 01/20/2026 | ||||||||||||||||||||||||||||||||
90,000 | (2) | — | 5.87 | 01/15/2028 | ||||||||||||||||||||||||||||||||
90,000 | (3) | — | 4.16 | 05/22/2028 | ||||||||||||||||||||||||||||||||
25,000 | (4) | 25,000 | (4) | 4.72 | 01/16/2029 |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||
Joel Lewis | 54,250 | (1) | — | 2.39 | 12/14/2027 | — | — | — | — | |||||||||||||||||||||
35,000 | (2) | — | 4.72 | 01/16/2029 | ||||||||||||||||||||||||||
40,000 | (3) | — | 2.86 | 01/09/2030 | ||||||||||||||||||||||||||
104,166 | (4) | 145,834 | (4) | 2.65 | 08/31/2030 | |||||||||||||||||||||||||
17,500 | (5) | 52,500 | (5) | 2.11 | 03/25/2031 | |||||||||||||||||||||||||
— | 140,000 | (6) | 2.11 | 03/25/2031 | ||||||||||||||||||||||||||
Pol F. Boudes, M.D. | 60,000 | (7) | 240,000 | (7) | 1.75 | 03/12/2030 | — | — | — | — | ||||||||||||||||||||
12,500 | (5) | 37,500 | (5) | 2.11 | 03/25/2031 | |||||||||||||||||||||||||
— | 100,000 | (6) | 2.11 | 03/25/2031 | ||||||||||||||||||||||||||
Jack W. Callicutt | 26,000 | (8) | — | 13.38 | 01/21/2024 | — | — | — | — | |||||||||||||||||||||
8,706 | (9) | — | 1.37 | 01/20/2026 | ||||||||||||||||||||||||||
90,000 | (10) | — | 5.87 | 01/15/2028 | ||||||||||||||||||||||||||
90,000 | (11) | — | 4.16 | 05/22/2028 | ||||||||||||||||||||||||||
50,000 | (12) | — | 4.72 | 01/16/2029 | ||||||||||||||||||||||||||
50,000 | (13) | — | 2.86 | 01/09/2030 | ||||||||||||||||||||||||||
12,500 | (5) | 37,500 | (5) | 2.11 | 03/25/2031 | |||||||||||||||||||||||||
— | 100,000 | (6) | 2.11 | 03/25/2031 |
(1) | 100% of the options vested in full on December 14, 2018. |
(2) | 100% of the options vested in full on January 16, 2020. |
(3) | 100% of the options vested in full on December 31, 2020. |
(4) | One-twelfth of the total options vest quarterly from August 31, 2020, which was the grant date. |
(5) | 25% of the options vested on September 30, 2021, 25% vest on March 31, 2022, 25% vest on September 30, 2022, 25% vest on March 31, 2023. |
(6) | 100% of the options vest when the Company has received the interim results of the NAVIGATE clinical trial and makes a public announcement that it has received the interim results. |
(7) | 20% of the options vest on each of March 2, 2021, March 2, 2022, and March 2023 and 40% of the options vest on March 2, 2024. |
(8) | 25% of the options vested on January 21, 2014, the grant date with the remainder vested ratably on a monthly basis over a three-year period. |
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25% of the options vested on January 29, 2015, the grant date with the remainder vested ratably on a monthly basis over a three-year period. |
Option Exercises and Stock Vested Table in 2019
The following table sets forth the number of shares and value realized by the named executive officers during 2019 on the exercise of stock options and the vesting of restricted stock (or restricted stock units).
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (2) | ||||||||||||
Harold H. Shlevin, Ph.D | 8,706 | 22,113 | — | — | ||||||||||||
Jack W. Callicutt | — | — | — | — |
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25% of the |
Pension Benefits
None of our NEOs are covered by a pension plan or similar benefit plan that provides for payment or other benefits at, following, or in connection with retirement.
Nonqualified Deferred Compensation
None of our NEOs are covered by a deferred contribution or other plan that provides for the deferral of compensation on a basis that is nottax-qualified.
Potential Payments Upon Termination or Change in Control
This section describes the limited benefits that would be provided to our NEOs under our executive compensation plans upon a change of control of the Company or following termination of employment (provided, in some cases further described below, the termination must be a “separation from service” as defined in Code Section 409A). We also provide a table below showing the potential benefits payable to each of our NEOs upon a change of control of the Company or following termination of employment as of December 31, 2019.
(11) (12) (13) Under we have granted will become immediately vested and exercisable upon a change of control. Upon termination of employment for cause, all outstanding options immediately terminate. Options remain exercisable for one year following termination due to the executive’s death or disability or retirement, or for twelve months after termination for any other reason other than for cause.(1)
(2) | during any period of three (3) consecutive years, a majority of the Board is no longer comprised of individuals who, as of the beginning of that period, constituted our Board and individuals whose nomination for election was approved by the Board; |
(3) | a reorganization, merger, statutory share exchange or consolidation or similar transaction, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or equity of another entity by the Company, in each case unless (i) substantially all of the owners, respectively, of our outstanding shares of common stock or the combined voting power of our securities immediately before the transaction beneficially own more than 50% of, respectively, the common stock and the combined voting power of the securities of the resulting corporation, in substantially the same proportions as their ownership immediately prior to the transaction, (ii) no person owns 50% of, respectively, the common stock and the combined voting power of the securities of the resulting corporation, unless such ownership existed prior to the transaction and (iii) at least a majority of the members of the board of directors of the resulting entity were members of the Board of Directors of the Company at the time of the execution of the initial agreement or of the action of the Board providing for such transaction ; or |
(4) | approval by the stockholders of a complete liquidation or dissolution of the Company. |
Employment Agreements
Harold H. Shlevin, PhD
Dr. Shlevin’s employment agreement providesor into another corporation or a sale of substantially all of the Company’s stock (a “Corporate Transaction”), and the outstanding awards are not assumed by surviving company (or its parent company) or replaced with economically equivalent awards granted by the surviving company (or its parent company), the Company will cancel any outstanding awards that he shall receive severanceare not vested and nonforfeitable as of the consummation of such Corporate Transaction (unless the Company accelerates the vesting of any such awards) and with respect to any vested and nonforfeitable awards, the Company may either (i) allow all grantees to exercise options and SARs within a reasonable period prior to the consummation of the Corporate Transaction and cancel any outstanding options or SARs that remain unexercised upon consummation of the Corporate Transaction, or (ii) cancel any or all of such outstanding awards (including options and SARs) in exchange for a payment (in cash, or in securities or other property) in an amount equal to nine monthsthe amount that the grantee would have received (net of his then base salary paidthe exercise price with respect to any options or SARs) if the vested awards were settled or distributed or such vested options and SARs were exercised immediately prior to the consummation of the Corporate Transaction. If an exercise price of the option or SAR exceeds the fair market value of our Common Stock and the option or SAR is not assumed or replaced by the surviving company (or its parent company), such options and SARs will be cancelled without any payment to the grantee.
The agreement provides that during its term Dr. Shlevin shall not engage in any business competitive with the Company. Following termination of employment, Dr. Shlevin shall not, for 18 months (i) solicit customers or employeesconditions of the CompanyStock Option Agreement. However, if, in connection with a transaction that technically meets, or (ii) render services to any “competing business”may meet, the definition of Change of Control (as defined in the agreement). TheEmployment Agreement), Mr. Callicutt’s employment by the Company or a successor to the Company is terminated, but Mr. Callicutt is immediately re-hired as an employee of a successor to the Company or surviving company in such a transaction in a comparable position, with the same or greater total annual cash compensation, including bonus potential, and with an employment agreement also containscontaining substantially equivalent provisions binding on Dr. Shlevinas this Agreement with respect to protection of our confidential information.
Jack W. Callicutt
Under the Callicutt Employment Agreement, as amended by the Amendment (as such terms are defined on pg. 24 above), if Mr. Callicutt’s employment is terminated by the Company “without cause,” or by Mr. Callicutt
for “good reason,” (as such terms are defined in the Callicutt Employment Agreement, as amended) he shall receive severance equal to: 3 months’ base salary if such termination occurred within 12 months of July 1, 2013 (the “Commencement Date”); 6 months’ base salary if such termination occurred between 12 and 18 months after the Commencement Date; 9 months’ base salary if such termination occurs after 18 months after the Commencement Date, plus, in each case, a portion of the performance bonus for the then-current year based on the number of days elapsed in the year. If Mr. Callicutt’s employment is terminated “for cause”, subject to “cure rights” in certain instances, he is not entitled to severance. If the Callicutt Employment Agreement, as amended, is terminated within 12 months after a change of control by the Company “without cause,” or by Mr. Callicutt for “good reason,” Mr. Callicuttand severance, no benefits shall receive severance equal to 12 months’ base salary, a portionbe payable under the Change of Control provision of the performance bonus for the then-current year based on the number of days elapsed in the year and immediate vesting of all unvested options.
The Callicutt Employment Agreement, as amended, provides that during its term, Mr. Callicutt shall not engage in any business competitive with the Company. Following termination of employment, Mr. Callicutt shall not, for 18 months (i) solicit customers or employees of the Company or (ii) render services to any “competing business” (as defined in the agreement). The Callicutt Employment Agreement also contains provisions binding on Mr. Callicutt with respect to protection of our confidential information.
The following table sets forth the potential benefits payable to our NEOs pursuant to the arrangements described above, assuming termination of employment or a change of control had occurred on December 31, 2019.
Benefit/Plan/Program | Harold H. Shlevin, Ph.D. | Jack W. Callicutt | ||||||
Options (1) | $ | 0 | $ | 0 | ||||
Employment Agreement Change of Control Severance (2) | $ | 500,000 | $ | 285,000 | ||||
Employment Agreement Termination Severance (3) | $ | 375,000 | $ | 213,750 | ||||
Total value upon a change of control (4) | $ | 500,000 | $ | 285,000 | ||||
Total value upon termination of employment due to death or disability (5) | $ | 0 | $ | 0 |
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Name | Fees Earned or Paid in Cash ($) | Restricted Stock Awards ($) (4) | Option Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) (3) | Total ($) | ||||||||||||||||||
Gilbert F. Amelio, Ph.D. | 47,000 | — | 134,098 | — | — | 181,098 | ||||||||||||||||||
James C. Czirr | 38,500 | — | 95,784 | — | — | 134,284 | ||||||||||||||||||
Kevin D. Freeman | 46,000 | — | 153,255 | — | — | 199,255 | ||||||||||||||||||
Kary Eldred | 42,500 | — | 95,784 | — | — | 138,284 | ||||||||||||||||||
Joel Lewis | — | 55,000 | 134,098 | — | — | 189,098 | ||||||||||||||||||
Gilbert S. Omenn, M.D., Ph.D. | 45,000 | — | 134,098 | — | — | 179,098 | ||||||||||||||||||
Marc Rubin, M.D. | 38,500 | — | 95,784 | — | — | 134,284 | ||||||||||||||||||
Stephen Shulman (1) | 35,675 | — | 95,784 | — | — | 131,459 | ||||||||||||||||||
Richard Uihlein | — | 35,000 | 153,255 | — | — | 188,255 |
Name | Fees Earned or Paid in Cash ($) | Restricted Stock Awards ($) (1) | Option Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) (3) | Total ($) | ||||||||||||||||||
Gilbert F. Amelio, Ph.D. | 47,000 | — | 171,800 | — | — | 218,800 | ||||||||||||||||||
James C. Czirr | 38,500 | — | 171,800 | — | — | 210,300 | ||||||||||||||||||
Kary Eldred | 42,500 | — | 171,800 | — | — | 214,300 | ||||||||||||||||||
Kevin D. Freeman | 51,000 | — | 171,800 | — | — | 222,800 | ||||||||||||||||||
Gilbert S. Omenn, M.D., Ph.D. | 45,000 | — | 171,800 | — | — | 216,800 | ||||||||||||||||||
Marc Rubin, M.D. | 38,500 | — | 171,800 | — | — | 210,300 | ||||||||||||||||||
Elissa J. Schwartz, Ph.D. | 35,000 | — | 171,800 | — | — | 206,800 | ||||||||||||||||||
Harold H. Shlevin, Ph.D. | 35,000 | — | 171,800 | — | — | 206,800 | ||||||||||||||||||
Richard Uihlein | — | 35,000 | 171,800 | — | — | 206,800 | ||||||||||||||||||
Richard A. Zordani | 50,000 | — | 171,800 | — | — | 221,800 |
(1) |
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Mr. Uihlein elected to receive restricted stock in lieu of cash retainer for their service. The restricted shares vested in full on December |
(2) | Represents the grant date fair value of option awards based upon the Black Scholes valuation model made in 2021. Two option grants were made on March 25, 2021. Each non-employee director received one grant of 40,000 options which will vest in full on March 31, 2022. Each non-employee director also received one grant of 70,000 options which will vest 100% when the Company has received the interim results of the NAVIGATE clinical trial and makes a public announcement that it has received the interim results. For a description of the assumptions used to determine these amounts, see Note 9 to the Notes to the Consolidated Financial Statements herein our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. |
(3) | Excludes travel expense reimbursements. |
Name | Number of Shares Subject to Option Awards Held as of December 31, 2021 | |||
Gilbert F. Amelio, Ph.D. | 185,000 | |||
James C. Czirr | 365,125 | |||
Kary Eldred | 211,875 | |||
Kevin D. Freeman | 289,839 | |||
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Gilbert S. Omenn, M.D., Ph.D. | 288,750 | |||
Marc Rubin, M.D. | 214,565 | |||
| 110,000 | |||
| 503,000 | |||
| 176,362 | |||
Richard A. Zordani | 110,000 | |||
TOTAL | 2,454,516 |
Committee Chairman will receive an annual cash retainer of $5,000; and the Audit Committee Chairman will receive an annual cash retainer of $7,500. Additionally, in December 2016, the Board approved cash retainers of $3,500 to be paid to each member of the Board’s investor relation/public relations committee.
On January 16, 2019, stock option grants were made tonon-employee directors which vest 100% on January 16, 2020. The Chairman was granted 40,000 stock options, the chairs of the Nominating and Corporate Governance Committee, the Audit Committee and the Compensation Committee were each granted 35,000 stock options and remainingnon-employee directors were each granted 25,000 stock options.
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Name and Address (1) | Shares of Common Stock Beneficially Owned (2) | Percent of Common Stock (3) | Shares of Series A Preferred Stock Beneficially Owned | Percent of Series A Preferred Stock (4) | ||||||||||||
5% Stockholders | ||||||||||||||||
James C. Czirr | 13,617,451 | (5) | 21.4 | % | 100,000 | 7.3 | % | |||||||||
10X Fund, L.P. (8) | 12,108,043 | (6) | 19.3 | % | — | — | ||||||||||
David Smith (9) | — | — | 175,000 | 12.7 | % | |||||||||||
Early Equities LLC (9) | — | — | 100,000 | (7) | 7.3 | % | ||||||||||
Richard E. Uihlein (11) | 11,151,981 | (12) | 18.9 | % | — | — | ||||||||||
Directors and Named Executive Officers | ||||||||||||||||
James C. Czirr | 13,617,451 | (5) | 21.4 | % | 100,000 | 7.3 | % | |||||||||
Gilbert F. Amelio, Ph.D. | 159,614 | * | — | — | ||||||||||||
Kevin Freeman | 886,009 | (10) | 1.5 | % | — | — | ||||||||||
Joel Lewis | 199,566 | * | — | — | ||||||||||||
Gilbert S. Omenn, M.D., Ph.D. | 218,496 | * | 50,000 | 3.6 | % | |||||||||||
Marc Rubin, M.D. | 88,146 | * | — | — | ||||||||||||
Richard E. Uihlein | 11,151,981 | (12) | 18.9 | % | — | — | ||||||||||
Kary Eldred | 881,575 | (13) | 1.5 | % | — | — | ||||||||||
Harold H. Shlevin, Ph.D. | 296,706 | * | — | — | ||||||||||||
Jack W. Callicutt | 243,905 | * | — | — | ||||||||||||
All executive officers and directors as a group (11 persons) | 27,743,449 | (14) | 40.7 | % | 150,000 | 10.9 | % |
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Name and Address (1) | Shares of Common Stock Beneficially Owned (2) | Percent of Common Stock (3) | Shares of Series A Preferred Stock Beneficially Owned | Percent of Series A Preferred Stock (4) | ||||||||||||
5% Stockholders | ||||||||||||||||
James C. Czirr | 12,994,601(5 | ) | 19.9 | % | 100,000 | 7.7 | % | |||||||||
10X Fund, L.P. (8) | 11,911,193(6 | ) | 18.3 | % | — | — | ||||||||||
David Smith (9) | — | — | 175,000 | 13.4 | % | |||||||||||
Early Equities LLC (9) | — | — | 100,000(7 | ) | 7.7 | % | ||||||||||
Richard E. Uihlein (11) | 16,576,495(12 | ) | 24.4 | % | — | — | ||||||||||
Directors and Named Executive Officers | ||||||||||||||||
James C. Czirr | 12,994,601(5 | ) | 19.9 | % | 100,000 | 7.7 | % | |||||||||
Gilbert F. Amelio, Ph.D. | 175,614 | * | — | — | ||||||||||||
Kevin Freeman | 955,734(10 | ) | 1.6 | % | — | — | ||||||||||
Joel Lewis | 757,047 | 1.3 | % | — | — | |||||||||||
Gilbert S. Omenn, M.D., Ph.D. | 300,990 | * | 50,000 | 3.8 | % | |||||||||||
Marc Rubin, M.D. | 158,146 | * | — | — | ||||||||||||
Richard E. Uihlein | 16,576,495(12 | ) | 24.4 | % | — | — | ||||||||||
Richard A. Zordani | 60,353 | * | — | — |
Name and Address (1) | Shares of Common Stock Beneficially Owned (2) | Percent of Common Stock (3) | Shares of Series A Preferred Stock Beneficially Owned | Percent of Series A Preferred Stock (4) | ||||||||||||
Elissa J. Schwartz, Ph.D. | 41,000 | * | — | — | ||||||||||||
Kary Eldred | 951,575 | (13) | 1.6 | % | — | — | ||||||||||
Harold H. Shlevin, Ph.D. | 441,706 | * | — | — | ||||||||||||
Pol F. Boudes | 145,000 | * | — | — | ||||||||||||
Jack W. Callicutt | 343,905 | * | — | — | ||||||||||||
All executive officers and directors as a group (13 persons) | 33,902,166 | (14) | 44.3 | % | 150,000 | 11.0 | % |
(1) | Except as otherwise indicated, the address for each named person is c/o Galectin Therapeutics Inc., 4960 Peachtree Industrial Blvd., Suite 240, Norcross, GA 30071. |
(2) | Includes the following number of shares of our common stock issuable upon exercise of outstanding stock options granted to our named executive officers and directors that are exercisable within 60 days after February |
Directors, Nominees and Named Executive Officers | Options Exercisable Within 60 Days | |||
James C. Czirr | 295,125 | |||
Gilbert F. Amelio, Ph.D. | 115,000 | |||
Marc Rubin, M.D. | 144,565 | |||
Gilbert S. Omenn, M.D., Ph.D | 218,750 | |||
Kevin Freeman | 219,839 | |||
Kary Eldred | 141,875 | |||
Joel | 289,249 | |||
Richard E. Uihlein. | 106,362 | |||
Harold Shlevin, Ph.D. | 433,000 | |||
| 40,000 | |||
Elissa J. Schwartz, Ph.D. | 40,000 | |||
Pol F. Boudes, M.D. | 145,000 | |||
Jack Callicutt | 339,706 | |||
All executive officers and directors as a group | ||||
2,528,471 |
(3) | For each named person and group included in this table, percentage ownership of our common stock is calculated by dividing the number of shares of our common stock beneficially owned by such person or group by the sum of (i) |
(4) | Based on |
(5) | Includes (i) |
(6) | Includes (i) 6,178,940 shares of common shares, and (ii) 5,732,253 common shares issuable upon exercise of |
(7) | Mr. Smith is the manager of Early Equities LLC, a Connecticut limited liability company, and may be deemed to have voting and investment control over, but disclaims beneficial ownership of, the shares of Series A preferred stock. |
(8) | Contact: c/o 10X Capital Management, LLC at Investment Law Group attn: Bob Mottern 545 Dutch Valley Road NE, Suite A, Atlanta, GA 30324. |
(9) | Contact: c/o David Smith 34 Shorehaven Road E., Norwalk, CT 06855. |
(10) | Includes |
(11) | Contact: c/o Uline Corporation, 12575 Uline Drive, Pleasant Prairie, WI 53158 |
(12) | Includes (i) |
(13) | Includes 44,915 shares of common stock, 16,869 common stock purchase warrants, and |
(14) | Includes 5,732,253 common shares issuable upon exercise of warrants and common shares acquired upon exercise of warrants or issued as stock dividends on the Series B preferred stock net of shares sold or distributed to 10X Fund limited partners, as to which Mr. Czirr has voting and investment control but are counted one time for purposes of this total. For additional information about the beneficial ownership of our capital stock by Mr. Czirr, see note 5. |
Plan Category | Number of Securities to be issued upon exercise of outstanding options | Weighted- average exercise price of outstanding options | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
Equity compensation plans approved by security holders | 2,505,256 | $ | 4.45 | 4,000,000 | ||||||||
Equity compensation plans not approved by security holders (1) | 500,000 | $ | 7.02 | — | ||||||||
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Total | 3,005,256 | $ | 4.88 | 4,000,000 |
Plan Category | Number of Securities to be issued upon exercise of outstanding options | Weighted- average exercise price of outstanding options | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
Equity compensation plans approved by security holders | 4,895,561 | $ | 3.14 | 3,266,179 |
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Item 13. | Certain Relationships, Related Transactions and Director Independence |
On December 19, 2017, the2021.
Originally, borrowings may be made by the Company through December 31, 2018. Borrowings bear interest at the Applicable Federal Rate for short term loans published by the Internal Revenue Service (2.7% in January 2019). All borrowings and interest are due on December 31, 2019 but may be prepaid without penalty. In connection with the Line of Credit agreement, the Company issued to Mr. Uihlein warrants to purchase 1 million shares of the Company’s common stock for $5 per share. Half of the warrants vested at closing of the Line of Credit and the other half vest ratably with borrowings under the agreement. As of the date of this Annual Report, there have been no borrowings under the Line of Credit.
On December 20, 2018, the Line of Credit arrangement was extended for one year for both borrowings and maturity. Further, on January 15, 2019, the Line of Credit arrangement was extended for an additional two years for both borrowings and maturity. After the second amendment to the Line of Credit arrangement, borrowings may be made through December 31, 2021 with repayment due on December 31, 2022. There was no additional consideration or benefits provided to Mr. Uihlein for any of the extensions of the Line of Credit.
Item 14. |
|
2021.
Fiscal Year 2019 | Fiscal Year 2018 | |||||||
Audit Fees (1) | $ | 161,000 | $ | 155,000 | ||||
Audit-Related Fees (2) | 22,000 | 23,300 | ||||||
Tax Fees | 16,400 | 16,400 | ||||||
All Other Fees | — | — | ||||||
|
|
|
| |||||
Total Fees | $ | 199,400 | $ | 191,700 | ||||
|
|
|
|
Fiscal Year 2021 | Fiscal Year 2020 | |||||||
Audit Fees (1) | $ | 143,000 | $ | 135,000 | ||||
Audit-Related Fees (2) | 8,500 | 14,323 | ||||||
Tax Fees | 33,275 | 17,000 | ||||||
All Other Fees | — | — | ||||||
Total Fees | $ | 184,775 | $ | 166,323 |
(1) |
|
(2) |
|
Item 15. | Exhibits and Financial Statement Schedules |
10.11*** | ||
| ||
10.12*** | ||
| ||
10.13*** | ||
| ||
10.14 |
| ||
10.15 | ||
10.16 | ||
| ||
10.17 |
Exhibit Number | Description of Document | |
| ||
21.1* | ||
| ||
23.1* | ||
| ||
31.1* | ||
| ||
31.2* | ||
| ||
32.1# | ||
| ||
32.2# | ||
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. | |
101.SCH | ||
Inline XBRL Taxonomy Extension Schema | ||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy | |
104 | The cover page for the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, has been formatted in Inline XBRL | |
* | Filed herewith. |
# | Furnished herewith and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. |
*** | Galectin Therapeutics, Inc. has requested confidential treatment with respect to portions of this exhibit. Those portions have been omitted from the exhibit and filed separately with the U.S. Securities and Exchange Commission. |
† | Executive Compensation Arrangement pursuant to 601(b)(10)(iii)(A) of RegulationS-K |
Item 16. | Form 10–K Summary |
GALECTIN THERAPEUTICS INC. | |||
By: | /S/ | ||
Name: JOEL LEWIS. Title: Chief Executive Officer and President |
Signature | Title | Date | ||
| ||||
/S/ JOEL LEWIS | Chief Executive Officer, President and Director | March 31, 2022 | ||
Joel Lewis | (principal executive officer) | |||
/S/ JACK W. CALLICUTT | Chief Financial Officer | March 31, 2022 | ||
Jack W. Callicutt |
(principal financial and accounting officer) | |||
/S/ RICHARD E. UIHLEIN
| Director and Chairman of the Board | March | ||
Richard E. Uihlein | ||||
/S/ GILBERT F. AMELIO, Ph.D. | Director | March 31, 2022 | ||
Gilbert F. Amelio, Ph.D. | ||||
/S/ JAMES C. CZIRR | Director | March 31, 2022 | ||
James C. Czirr | ||||
/S/ KARY ELDRED | Director | March 31, 2022 | ||
Kary Eldred | ||||
/S/ KEVIN D. FREEMAN | Director | March 31, 2022 | ||
Kevin D. Freeman | ||||
/S/ GILBERT S. OMENN, M.D., Ph.D. | Director | March 31, 2022 | ||
Gilbert S. Omenn, M.D., Ph.D. | ||||
/S/ MARC RUBIN, M.D. | Director | March 31, 2022 | ||
Marc Rubin, M.D. | ||||
/S/ ELISSA J. SCHWARTZ, Ph.D. | Director | March 31, 2022 | ||
Elissa J. Schwartz, Ph.D. | ||||
/S/ HAROLD H. SHLEVIN, Ph.D. | Director | March 31, 2022 | ||
Harold H. Shlevin, Ph.D. | ||||
/S/ RICHARD A. ZORDANI | Director | March | ||
Richard A. Zordani | ||||
| ||||
| ||||
| ||||
| ||||
|
Reports of Independent Registered Public Accounting Firm | (PCAOB ID 677) | F-1 | |||
Consolidated Balance Sheets as of December 31, | F-4 | ||||
Consolidated Statements of Operations for the years ended December 31, | F-5 | ||||
Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the years ended December 31, | F-6 | ||||
Consolidated Statements of Cash Flows for the years ended December 31, | F-8 | ||||
Notes to Consolidated Financial Statements | F-9 |
Opinions
The Company’s management is responsible for these
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Definition and Limitations
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation ofconsolidated financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertainwere communicated or required to be communicated to the maintenance of recordsaudit committee and that: (1) relate to accounts or disclosures that in reasonable detail, accurately and fairly reflectare material to the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation ofconsolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effectany way our opinion on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting maystatements, taken as a whole, and we are not, preventby communicating the critical audit matters below, providing separate opinions on the critical audit matters or detect misstatements. Also, projections of any evaluation of effectivenesson the accounts or disclosures to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
which they relate.
Going Concern | ||
Description of Matter | As described further in Note 1 to the consolidatedfinancial statements, the Company has incurred losses each year from inception through December 31, 2021, and expects to incur additional losses in the foreseeable future. Currently, management’s forecasts and related assumptions illustrate the Company’s ability to sufficiently fund operations and satisfy the Company’s obligations as they come due for at least one year from the financial statement issuance date. Management made judgments to conclude that it is probable that the Company’s plans will be effectively implemented and will provide the necessary cash flows to fund the Company’s obligations as they become due. The judgments with the highest degree of impact and subjectivity in reaching this conclusion included management’s estimates of research and development clinical trial costs and other general and administrative costs. As a result, a high degree of auditor judgment and increased audit effort was required in performing audit procedures to evaluate the reasonableness of management’s estimates. | |
How We Addressed the Matter in Our Audit | Our audit procedures included the following: • Obtained an understanding of the internal controls and processes in place over the Company’s preparation of forecasted information and considerations of the Company’s obligations. •We tested the reasonableness of the forecasted research and development expenses, operating expenses, and uses and sources of cash used in management’s assessment of whether the Company has sufficient liquidity to fund operations for at least one year from the financial statement issuance date. This testing included inquiries with management, comparison of prior period forecasts to actual results, consideration of positive and negative evidence impacting management’s forecasts, the Company’s financing arrangements in place as of the report date, consideration of the Company’s relationships with its financing partners, performance of a sensitivity analysis of accelerated uses of cash, and creation of an independent estimate of expected future cash flows. |
Valuation of Derivative Liabilities | ||
Description of Matter | As discussed in Note 5 to the consolidated financial statements, during the year ended December 31, 2021, the Company and a related party entered into three debt financing arrangements for a total of $30 million loaned to the Company. These arrangements include various conversion and other features, including a contingent interest component that has been bifurcated and recognized as a derivative liability. At December 31, 2021, the Company’s derivative liabilities related to the related party convertible notes payable totaled $1.1 million. As more fully described in Note 6 to the consolidated financial statements, the Company utilizes a Monte Carlo Geometric Brownian Stock Path Model in measuring the fair value of the derivative liabilities, which requires the use of estimates and assumptions. Auditing management’s valuations of the derivative liabilities was challenging due to the complexity of the valuation model and the inputs that are highly sensitive to changes such as the common stock market price, volatility, risk free rates, and yields. | |
How We Addressed the Matter in Our Audit | Our audit procedures included, among others, the following: • Obtained an understanding of the internal controls and processes in place over the Company’s process used in determining the valuation of the derivative liabilities. • Evaluated the Company’s use of the models used and tested the significant assumptions used in the models, as described above. • We evaluated the completeness and accuracy of underlying data used in supporting the assumptions and estimates. • In addition, we involved valuation specialists to assist in assessing the significant assumptions and methodologies used by the Company. | |
Accrued and Prepaid Clinical Trial Expenses | ||
Description of Matter | The Company’s accrued expenses total approximately $7.2 million at December 31, 2021, which included the estimated obligation for clinical trial expenses incurred as of December 31, 2021, but not paid as of that date in the amount of approximately $6.4 million. In addition, the Company’s total prepaid expenses and other current assets totaled $2.2M, which included amounts that were paid in advance of services incurred pursuant to clinical trials in the amount of approximately $1.1 million. As discussed in Note 2 to the consolidated financial statements, when the third-party contract research organization and other vendor billing terms do not coincide with the Company’s period-end, the Company is required to make estimates of its obligations to those vendors, including personnel costs, allocated facility costs, lab supplies, outside services, contract laboratory costs related to manufacturing drug product, clinical trials and preclinical studies costs incurred in a given accounting period and record accruals at the end of the period. The Company bases its estimates on its knowledge of the research and development programs, services performed for the period, past history for related activities, and the expected duration of the vendor service contract, where applicable. Payments for these activities are based on the terms of the individual arrangements and may result in payment terms that differ from the pattern of costs incurred. There may be instances in which payments made to vendors will exceed the level of services provided and result in a prepayment of the clinical expense. Auditing the Company’s accrued and prepaid clinical trial expenses is especially challenging due to the large volume of information received from multiple vendors that perform services on the Company’s behalf. While the Company’s estimates of accrued and prepaid clinical trial expenses are primarily based on information received related to each study from its vendors, the Company may need to make an estimate for additional costs incurred. Additionally, due to the long duration of clinical trials and the timing of invoicing received from vendors, the actual amounts incurred are not typically known at the time the financial statements are issued. | |
How We Addressed the Matter in Our Audit | Our audit procedures included, among others, the following: • Obtained an understanding of the internal controls and processes in place over the Company’s process used in determining the completeness and existence of accrued and prepaid clinical trial expenses. • Tested the accuracy and completeness of the underlying data used in determining the accrued and prepaid clinical trial expenses and evaluating the assumptions and estimates used by management to adjust the actual information received. We corroborated the schedules of the underlying data used in the accrual calculation with the Company’s third-party contract research organization who oversees the clinical trials. To evaluate the completeness of the accrual, we also tested subsequent invoices received to assess the impact to the accrual. |
December 31, | ||||||||
2019 | 2018 | |||||||
(in thousands) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 47,480 | $ | 8,253 | ||||
Prepaid expenses and other current assets | 729 | 579 | ||||||
|
|
|
| |||||
Total current assets | 48,209 | 8,832 | ||||||
|
|
|
| |||||
Property and equipment, net | — | — | ||||||
Other | 258 | 174 | ||||||
|
|
|
| |||||
Total assets | $ | 48,467 | $ | 9,006 | ||||
|
|
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| |||||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,661 | $ | 297 | ||||
Accrued expenses | 1,093 | 1,512 | ||||||
Accrued dividends payable | 66 | 299 | ||||||
|
|
|
| |||||
Total current liabilities | 2,820 | 2,108 | ||||||
|
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|
| |||||
Other liabilities | 52 | — | ||||||
|
|
|
| |||||
Total liabilities | 2,872 | 2,108 | ||||||
|
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|
| |||||
Commitments and contingencies (Note 10) | ||||||||
Series C 6% super dividend redeemable convertible preferred stock; 1,000 shares authorized, 176 issued and outstanding at December 31, 2019 and 2018, redemption value: $8,652,000, liquidation value: $1,786,000 at December 31, 2019 | 1,723 | 1,723 | ||||||
Stockholders’ equity: | ||||||||
Undesignated stock, $0.01 par value; 20,000,000 shares authorized at December 31, 2019 and 2018, 20,000,000 shares designated at December 31, 2019 and 2018, respectively | — | — | ||||||
Series A 12% convertible preferred stock; 1,742,500 shares authorized, 1,327,500 issued and outstanding at December 31, 2019 and 2018, liquidation value $1,327,500 at December 31, 2019 | 537 | 537 | ||||||
SeriesB-1 12% convertible preferred stock; 900,000 shares authorized, 0 and 900,000 shares issued and outstanding at December 31, 2019 and 2018 | — | 1,761 | ||||||
SeriesB-2 12% convertible preferred stock; 2,100,000 shares authorized, 0 and 2,100,000 shares issued and outstanding at December 31, 2019 and 2018, | — | 3,697 | ||||||
SeriesB-3 8% convertible preferred stock; 2,508,000 shares authorized, 0 and 2,508,000 issued and outstanding at December 31, 2019 and 2018 | — | 1,224 | ||||||
Common stock, $0.001 par value; 100,000,000 shares authorized at December 31, 2019 and 2018, 56,894,642 and 41,190,905 issued and outstanding at December 31, 2019 and 2018, respectively | 56 | 41 | ||||||
Additionalpaid-in capital | 259,673 | 194,130 | ||||||
Retained deficit | (216,394 | ) | (196,215 | ) | ||||
|
|
|
| |||||
Total stockholders’ equity | 43,872 | 5,175 | ||||||
|
|
|
| |||||
Total liabilities, redeemable convertible preferred stock and stockholders’ equity | $ | 48,467 | $ | 9,006 | ||||
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|
December 31, | ||||||||
2021 | 2020 | |||||||
(in thousands, except per share amounts) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 39,648 | $ | 27,142 | ||||
Prepaid expenses and other current assets | 2,172 | 2,323 | ||||||
Total current assets | 41,820 | 29,465 | ||||||
Property and equipment, net | 0 | 0 | ||||||
Other | 7 | 135 | ||||||
Total assets | $ | 41,827 | $ | 29,600 | ||||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,805 | $ | 1,292 | ||||
Accrued expenses | 7,163 | 4,042 | ||||||
Accrued dividends payable | 65 | 65 | ||||||
Total current liabilities | 9,033 | 5,399 | ||||||
Convertible notes payable and accrued interest, net of debt discounts – related party (Note 5) | 29,048 | 0 | ||||||
Derivative liabilities (Note 6) | 1,130 | 0 | ||||||
Other liabilities | 0 | 8 | ||||||
Total liabilities | 39,211 | 5,407 | ||||||
Commitments and contingencies (Note 12) | 0 | 0 | ||||||
Series C 6% super dividend redeemable convertible preferred stock; 1,000 shares authorized, 176 issued and outstanding at December 31, 2021 and 2020, redemption value: $8,441,000, liquidation value: $1,786,000 at December 31, 2021 | 1,723 | 1,723 | ||||||
Stockholders’ equity: | ||||||||
Undesignated stock, $0.01 par value; 20,000,000 shares authorized at December 31, 2021 and 2020, 20,000,000 shares designated at December 31, 2021 and 2020, respectively | 0 | 0 | ||||||
Series A 12% convertible preferred stock; 1,742,500 shares authorized, 1,302,500 issued and outstanding at December 31, 2021 and 2020, liquidation value $1,302,500 at December 31, 2021 | 527 | 527 | ||||||
Common stock, $0.001 par value; 150,000,000 and 100,000,000 shares authorized at December 31, 2021 and 2020, respectively, 59,341,305 and 57,077,055 issued and outstanding at December 31, 2021 and 2020, respectively | 59 | 56 | ||||||
Additional paid-in capital | 271,001 | 261,883 | ||||||
Accumulated deficit | (270,694 | ) | (239,996 | ) | ||||
Total stockholders’ equity | 893 | 22,470 | ||||||
Total liabilities, redeemable convertible preferred stock and stockholders’ equity | $ | 41,827 | $ | 29,600 |
Year Ended December 31, | ||||||||
2019 | 2018 | |||||||
(in thousands, except per share amounts) | ||||||||
Operating expenses: | ||||||||
Research and development | $ | 7,467 | $ | 6,471 | ||||
General and administrative | 5,971 | 7,131 | ||||||
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Total operating expenses | 13,438 | 13,602 | ||||||
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| |||||
Total operating loss | (13,438 | ) | (13,602 | ) | ||||
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| |||||
Other income (expense): | ||||||||
Interest income | 231 | 38 | ||||||
Interest expense | (87 | ) | (336 | ) | ||||
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Total other income (expense) | 144 | (298 | ) | |||||
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Net loss | $ | (13,294 | ) | $ | (13,900 | ) | ||
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| |||||
Preferred stock dividends | (263 | ) | (1,147 | ) | ||||
Warrant modification (Note 5) | (6,622 | ) | — | |||||
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| |||||
Net loss applicable to common stockholders | $ | (20,179 | ) | $ | (15,047 | ) | ||
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| |||||
Basic and diluted net loss per share | $ | (0.39 | ) | $ | (0.38 | ) | ||
Shares used in computing basic and diluted net loss per share | 52,238 | 39,414 |
Year Ended December 31, | ||||||||
2021 | 2020 | |||||||
(in thousands, except per share amounts) | ||||||||
Operating expenses: | ||||||||
Research and development | $ | 23,818 | $ | 17,976 | ||||
General and administrative | 6,361 | 5,468 | ||||||
Total operating expenses | 30,179 | 23,444 | ||||||
Total operating loss | (30,179 | ) | (23,444 | ) | ||||
Other income (expense): | ||||||||
Interest income | 3 | 66 | ||||||
Interest expense | (489 | ) | (87 | ) | ||||
Change in fair value of derivatives | 138 | 0 | ||||||
Total other income (expense) | (348 | ) | (21 | ) | ||||
Net loss | $ | (30,527 | ) | $ | (23,465 | ) | ||
Preferred stock dividends | (171 | ) | (137 | ) | ||||
Net loss applicable to common stockholders | $ | (30,698 | ) | $ | (23,602 | ) | ||
Basic and diluted net loss per share | $ | (0.52 | ) | $ | (0.41 | ) | ||
Weighted average common and potential common shares outstanding basic and diluted | 58,527 | 57,029 |
2020
Series C Super Dividend Redeemable Convertible Preferred Stock | ||||||||
Number of Shares | Amount | |||||||
Balance at January 1, 2018 | 176 | $ | 1,723 | |||||
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| |||||
Balance at December 31, 2018 | 176 | $ | 1,723 | |||||
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Balance at December 31, 2019 | 176 | $ | 1,723 | |||||
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Series C Super Dividend Redeemable Convertible Preferred Stock | ||||||||
Number of Shares | Amount | |||||||
Balance at January 1, 2020 | 176 | $ | 1,723 | |||||
Balance at December 31, 2020 | 176 | $ | 1,723 | |||||
Balance at December 31, 2021 | 176 | $ | 1,723 |
2020
Series A 12% Convertible Preferred Stock | SeriesB-1 12% Convertible Preferred Stock | SeriesB-2 12% Convertible Preferred Stock | SeriesB-3 8% Convertible Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||||||||||||||
Number of Shares | Amount | Number of Shares | Amount | Number of Shares | Amount | Number of Shares | Amount | Number of Shares | Amount | Additional Paid-In Capital | Retained Deficit | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2018 | 1,377,500 | $ | 557 | 900,000 | $ | 1,761 | 2,100,000 | $ | 3,697 | 2,508,000 | $ | 1,224 | 35,789,388 | $ | 36 | $ | 173,363 | $ | (181,168 | ) | $ | (530 | ) | |||||||||||||||||||||||||||||
Series A 12% convertible preferred stock dividend | 27,126 | 146 | (146 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
SeriesB-1 12% convertible preferred stock dividend | 27,835 | 155 | (210 | ) | (55 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
SeriesB-2 12% convertible preferred stock dividend | 64,948 | 363 | (490 | ) | (127 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
SeriesB-3 8% convertible preferred stock dividend | 25,769 | 144 | (194 | ) | (50 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Series C super dividend redeemable convertible preferred stock dividend | 20,394 | 107 | (107 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | 669,714 | 1 | 5,602 | 5,603 | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for warrant exercises | 2,455,595 | 2 | 6,001 | 6,003 | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for services | 2,883 | 12 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for stock option exercises | 2,098,829 | 2 | 3,771 | 3,773 | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock from Series A conversion | (50,000 | ) | (20 | ) | 8,424 | 20 | ||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | 4,445 | 4,445 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | (13,900 | ) | (13,900 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
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Balance at December 31, 2018 | 1,327,500 | $ | 537 | 900,000 | $ | 1,761 | 2,100,000 | $ | 3,697 | 2,508,000 | $ | 1,224 | 41,190,905 | $ | 41 | $ | 194,130 | $ | (196,215 | ) | $ | 5,175 | ||||||||||||||||||||||||||||||
Series A 12% convertible preferred stock dividend | 13,275 | 49 | (129 | ) | (80 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
SeriesB-1 12% convertible preferred stock dividend | (6 | ) | (6 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
SeriesB-2 12% convertible preferred stock dividend | (15 | ) | (15 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
SeriesB-3 8% convertible preferred stock dividend | (9 | ) | (9 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Series C super dividend redeemable convertible preferred stock dividend | 14,280 | 53 | (104 | ) | (51 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | 11,150,620 | 10 | 47,809 | 47,819 | ||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series B Convertible Preferred to common | (900,000 | ) | (1,767 | ) | (2,100,000 | ) | (3,697 | ) | (2,508,000 | ) | (1,224 | ) | 3,789,346 | 4 | 6,678 | |||||||||||||||||||||||||||||||||||||
Issuance of common stock for warrant exercises | 585,223 | 1 | 2,499 | 2,500 | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock for stock option exercises | 150,993 | 150 | 150 | |||||||||||||||||||||||||||||||||||||||||||||||||
Warrant modification (Note 5) | 6,622 | (6,622 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | 1,683 | 1,683 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | (13,294 | ) | (13,294 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
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Balance at December 31, 2019 | 1,327,500 | $ | 537 | — | — | — | — | — | — | 56,894,642 | $ | 56 | $ | 259,673 | $ | (216,394 | ) | $ | 43,872 | |||||||||||||||||||||||||||||||||
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Series A 12% Convertible Preferred Stock | Common Stock | |||||||||||||||||||||||||||
Number of Shares | Amount | Number of Shares | Amount | Additional Paid-In Capital | Retained Deficit | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||
Balance at January 1, 2020 | 1,327,500 | $ | 537 | 56,894,642 | $ | 56 | $ | 259,673 | $ | (216,394 | ) | $ | 43,872 | |||||||||||||||
Series A 12% convertible preferred stock dividend | 26.300 | 61 | (61 | ) | ||||||||||||||||||||||||
Series C super dividend redeemable convertible preferred stock dividend | 33,416 | 76 | (76 | ) | ||||||||||||||||||||||||
Issuance of common stock | 14,452 | 44 | 44 | |||||||||||||||||||||||||
Conversion of Series A Convertible Preferred to common | (25,000 | ) | (10 | ) | 4,553 | 11 | 1 | |||||||||||||||||||||
Issuance of common stock for stock option exercises | 84,624 | 219 | 219 | |||||||||||||||||||||||||
Stock-based compensation expense | 19,068 | 1,799 | 1,799 | |||||||||||||||||||||||||
Net loss | (23,465 | ) | (23,465 | ) | ||||||||||||||||||||||||
Balance at December 31, 2020 | 1,302,500 | $ | 527 | 57,077,055 | $ | 56 | $ | 261,883 | $ | (239,996 | ) | $ | 22,470 | |||||||||||||||
Series A 12% convertible preferred stock dividend | 26,050 | 79 | (79 | ) | ||||||||||||||||||||||||
Series C super dividend redeemable convertible preferred stock dividend | 31,112 | 92 | (92 | ) | ||||||||||||||||||||||||
Issuance of common stock | 845,214 | 1 | 3,863 | 3,864 | ||||||||||||||||||||||||
Issuance of common stock for warrant exercises | 1,180,240 | 2 | 2,948 | 2,950 | ||||||||||||||||||||||||
Issuance of common stock for stock option exercises | 148,941 | |||||||||||||||||||||||||||
Stock-based compensation expense | 32,693 | 2,136 | 2,136 | |||||||||||||||||||||||||
Net loss | (30,527 | ) | (30,527 | ) | ||||||||||||||||||||||||
Balance at December 31, 2021 | 1,302,500 | $ | 527 | 59,341,305 | $ | 59 | $ | 271,001 | $ | (270,694 | ) | $ | 893 |
Year Ended December 31, | ||||||||
2019 | 2018 | |||||||
(in thousands) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (13,294 | ) | $ | (13,900 | ) | ||
Adjustments to reconcile net loss to net cash from operating activities: | ||||||||
Amortization of right to use asset | 35 | — | ||||||
Stock-based compensation expense | 1,683 | 4,445 | ||||||
Issuance of common stock for services | — | 12 | ||||||
Non-cash interest expense | 87 | 336 | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses and other assets | (356 | ) | 19 | |||||
Accounts payable and accrued expenses | 997 | (1,091 | ) | |||||
|
|
|
| |||||
Net cash from operating activities | (10,848 | ) | (10,179 | ) | ||||
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CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Net cash from investing activities | — | — | ||||||
|
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|
| |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Net proceeds from issuance of common stock and warrants | 50,469 | 15,379 | ||||||
Payment of preferred stock dividends | (394 | ) | — | |||||
|
|
|
| |||||
Net cash from financing activities | 50,075 | 15,379 | ||||||
|
|
|
| |||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 39,227 | 5,200 | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 8,253 | 3,053 | ||||||
|
|
|
| |||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 47,480 | $ | 8,253 | ||||
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|
| |||||
NONCASH FINANCING ACTIVITIES: | ||||||||
Payment of preferred stock dividends in common stock | $ | 102 | $ | 915 |
Year Ended December 31, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (30,527 | ) | $ | (23,465 | ) | ||
Adjustments to reconcile net loss to net cash from operating activities: | ||||||||
Amortization of right to use asset | 41 | 36 | ||||||
Stock-based compensation expense | 2,076 | 1,799 | ||||||
Non-cash interest expense | 489 | 87 | ||||||
Change in fair value of derivatives | (138 | ) | 0 | |||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses and other assets | 65 | (1,594 | ) | |||||
Accounts payable, accrued expenses and other liabilities | 3,686 | 2,536 | ||||||
Net cash from operating activities | (24,308 | ) | (20,601 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Net cash from investing activities | 0 | 0 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Net proceeds from convertible notes payable – related party | 30,000 | |||||||
Net proceeds from issuance of common stock and warrants | 6,814 | 263 | ||||||
Net cash from financing activities | 36,814 | 263 | ||||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | 12,506 | (20,338 | ) | |||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 27,142 | 47,480 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 39,648 | $ | 27,142 | ||||
NONCASH FINANCING ACTIVITIES: | ||||||||
Payment of preferred stock dividends in common stock | $ | 171 | $ | 137 | ||||
Fair value of derivatives regarding related party convertible notes payable | 1,268 | 0 | ||||||
Reclassification of accrued bonus to additional paid in capital | 60 | 0 |
1. | Nature of Business, |
2. | Summary of Significant Accounting Policies |
2020. See
Footnote 6 for Fair Value of Derivatives related to Convertible Notes Payable at December 31, 2021, which are level 3 liabilities.2020.
There were 0 impairments of long-lived assets at December 31, 2021 or 2020.
2020.
Recently Adopted Accounting Standards. The Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)No. 2016-02,Leases (Topic 842),amended by ASU2018-11,Leases(Topic 842): Targeted Improvements. The new guidance requires a lessee to recognize assets and liabilities for all leases with lease terms of more than 12 months and provide additional disclosures. The ASU requires adoption using a modified retrospective transition approach with either 1) periods prior to the adoption date being recast or 2) a cumulative-effect adjustment recognized to the opening balance of retained earnings on the adoption date with prior periods not recast. We adopted this standard using a modified retrospective transition approach on January 1, 2019 however we only have one lease related to our office space and it was amended effective January 1, 2019. Therefore, no cumulative-effect adjustment approach was required. See Note 10 for the financial position impact and additional disclosures.
3. | Property and Equipment |
2019 | 2018 | |||||||
(in thousands) | ||||||||
Leasehold improvements | $ | 2 | $ | 2 | ||||
Computer and office equipment | 13 | 13 | ||||||
Furniture and fixtures | 59 | 59 | ||||||
|
|
|
| |||||
Total | 74 | 74 | ||||||
Less accumulated depreciation and amortization | (74 | ) | (74 | ) | ||||
|
|
|
| |||||
Property and equipment — net | $ | — | $ | — | ||||
|
|
|
|
2021 | 2020 | |||||||
(in thousands) | ||||||||
Leasehold improvements | $ | 2 | $ | 2 | ||||
Computer and office equipment | 13 | 13 | ||||||
Furniture and fixtures | 59 | 59 | ||||||
Total | 74 | 74 | ||||||
Less accumulated depreciation and amortization | (74 | ) | (74 | ) | ||||
Property and equipment — net | $ | 0 | $ | 0 |
4. | Accrued Expenses |
2019 | 2018 | |||||||
(in thousands) | ||||||||
Legal and accounting fees | $ | 81 | $ | 45 | ||||
Accrued compensation | 973 | 1,294 | ||||||
Lease liability | 39 | — | ||||||
Accrued research and development costs and other | — | 173 | ||||||
|
|
|
| |||||
Total | $ | 1,093 | $ | 1,512 | ||||
|
|
|
|
2021 | 2020 | |||||||
(in thousands) | ||||||||
Legal and accounting fees | $ | 68 | $ | 122 | ||||
Accrued compensation | 728 | 789 | ||||||
Lease liability | 8 | 44 | ||||||
Accrued research and development costs and other | 6,359 | 3,087 | ||||||
Total | $ | 7,163 | $ | 4,042 |
5. | Convertible Notes Payable – Related Party |
6. | Fair Value of Financial Instruments |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Derivative Liability – Contingent Interest April Note | 0 | 0 | $ | 495,000 | $ | 495,000 | ||||||||||
Derivative Liability – Contingent Interest September Note | 0 | 0 | $ | 250,000 | $ | 250,000 | ||||||||||
Derivative Liability – Contingent Interest December Note | 0 | 0 | $ | 385,000 | $ | 385,000 |
Inception | December 31, 2021 | |||||||
Stock Price | $ | 2.19 | $ | 2.07 | ||||
Conversion Price of conversion feature | $ | 5.00 | $ | 5.00 | ||||
Term | 4 years | 3.29 years | ||||||
Risk Free Interest Rate | 0.59 | % | 0.97 | % | ||||
Credit Adjusted Discount Rate | 7.60 | % | 8.43 | % | ||||
Volatility | 88 | % | 80 | % | ||||
Dividend Rate | 0 | % | 0 |
Balance – December 31, 2020 | $ | 0 | ||
Issuance of April convertible note payable – related party | 420,000 | |||
Fair Value Adjustment | 75,000 | |||
Balance – December 31, 2021 | $ | 495,000 |
Inception | December 31, 2021 | |||||||
Stock Price | $ | 4.06 | $ | 2.07 | ||||
Conversion Price of conversion feature | $ | 8.64 | $ | 8.64 | ||||
Term | 4 years | 3.72 years | ||||||
Risk Free Interest Rate | 0.68 | % | 1.12 | % | ||||
Credit Adjusted Discount Rate | 7.59 | % | 8.42 | % | ||||
Volatility | 91 | % | 82 | % | ||||
Dividend Rate | 0 | % | 0 |
Balance – December 31, 2020 | $ | 0 | ||
Issuance of September convertible note payable – related party | 433,000 | |||
Fair Value Adjustment | (183,000 | ) | ||
Balance – December 31, 2021 | $ | 250,000 |
Inception | December 31, 2021 | |||||||
Stock Price | $ | 2.32 | $ | 2.07 | ||||
Conversion Price of conversion feature | $ | 5.43 | $ | 5.43 | ||||
Term | 4 years | 3.97 years | ||||||
Risk Free Interest Rate | 1.04 | % | 1.12 | % | ||||
Credit Adjusted Discount Rate | 8.54 | % | 8.42 | % | ||||
Volatility | 86 | % | 84 | % | ||||
Dividend Rate | 0 | % | 0 |
Balance – December 31, 2020 | $ | 0 | ||
Issuance of September convertible note payable – related party | 415,000 | |||
Fair Value Adjustment | (30,000 | ) | ||
Balance – December 31, 2021 | $ | 385,000 |
7. | Stockholders’ Equity |
All issued and outstanding shares of Series B-1, Series B-2 and Series B-3 Preferred Stock were converted into Common Stock on January 19, 2019.
$44,000.
Other
In 2017, the Company entered an agreement with a vendor whereby the Company will issue common stock to the vendor in lieu of paying in cash in amount up to $100,000 for the year. In 2018, the Company issued 2,883 shares of common stock and 290 warrants to purchase shares of common stock at $5.00 per share pursuant to this agreement and the value of such shares and warrants, totaling approximately $12,000, respectively, has been recorded as research and development expense.
Series B Convertible Preferred Stock
On February 12, 2009, the Company entered into a securities purchase agreement (the “10X Agreement”) pursuant to which it agreed to issue and sell to 10X Fund LP, at two or more closings, up to: (i) 3,000,000 shares its SeriesB-1 andB-2 convertible preferred stock with an aggregate stated value of $6.0 million and convertible into 2,000,000 shares of common stock at December 31, 2011 and (ii) warrants to purchase 6,000,000 shares of common stock.
Through a series of closings from February 2009 through May 2010, the Company issued and sold, pursuant to the 10X Agreement, a total of (i) 900,000 shares of SeriesB-1 convertible preferred stock (“SeriesB-1 convertible preferred stock” or “SeriesB-1”) and related common stock warrants for 1,800,000 shares of common stock and (ii) 2,100,000 shares of SeriesB-2 convertible preferred stock (“SeriesB-2 convertible preferred stock” or “SeriesB-2”) and related warrants for 4,200,000 shares of common stock for total net proceeds of $5,483,000.
On September 22, 2016, the Company entered into a securities purchase agreement (the“B-3 Agreement”) pursuant to which it agreed to issue and sell to 10X Fund LP: (i) 1,500,000 shares its SeriesB-3 convertible preferred stock (“SeriesB-3 preferred stock” or“Series B-3”) with an aggregate stated value and proceeds of $1.5 million and convertible into 892,349 shares of common stock, and (ii) warrants to purchase up to 669,262 shares of common stock. Also, pursuant to agreements signed on September 22, 2016 with 10X Fund LP, the Company issued 875,000 warrants to purchase common stock in exchange in exchange for the 10X Fund LP agreeing not to sell any shares of common or preferred stock in the Company for 18 months, except in limited circumstances. Additionally, as previously agreed to by the 10X Fund LP, the sole holder of the Company’s SeriesB-1, SeriesB-2 and SeriesB-3 preferred stock (collectively, with the SeriesB-1 and SeriesB-2, the “Series B”), in the Second Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series B preferred stock we removed the ability of the holders of the Series B to cause a redemption of their shares of Series B. Accordingly, the Company accounted for the removal of this redemption feature as a modification and reclassified the SeriesB-1 and SeriesB-2 preferred stock into permanent equity at September 30, 2016 and forward.
On December 23, 2016, the Company and 10X Fund LP amended theB-3 Agreement whereby the Company agreed to issue and sell to 10X Fund LP an additional (i) 1,008,000 shares of itsB-3 preferred stock with an aggregate stated value and proceeds of $1.0 million and convertible into 896,997 shares of common stock, and (ii) warrants to purchase up to 924,780 shares of common stock.
On January 11, 2019, 10X Fund L.P., converted all of its Series B Convertible Preferred Stock into Common Stock of Galectin Therapeutics. Pursuant to the terms of the conversion, as of January 11, 2019, 10X Fund L.P. converted 5,508,000 shares of its SeriesB-1,B-2 andB-3 Convertible Preferred Stock into 3,789,346 shares of Common Stock of Galectin Therapeutics. All special voting rights and protective provisions that previously benefited the Series B Preferred Stock were extinguished by the conversion to Common Stock.
In connection with the conversion of the Series B Preferred Stock, the Company extended by five years the exercise date of warrants for 3,579,642 shares of Common Stock issued by the Company in connection with sale of the SeriesB-1 and SeriesB-2 Preferred Stock. Before the extension, the warrants had various expiration dates in 2019 and 2020. The warrant amendments give 10X Fund the right to nominate one director to the Company’s board of directors. Previously, under the now extinguished voting rights of the Series B Preferred, 10X Fund had the right to name two directors and nominate an additional three directors.
The Company has accounted for the modified terms of the warrants pursuant to ASC 718, Stock Compensation, whereby the Company has recognized a charge for the change in fair value of the warrants immediately before and immediately after the modification. In January 2019, the Company recognized aone-timenon-cash charge of $6,622,000 related to the extension of the 3,579,642 warrants. The following assumptions were used to value the extension of the warrants immediately before and immediately after the modification: a) immediately before the modification — an expected life range of 0.09 to 1.33 years, volatility of 98%, risk free interest rate range of 2.4% to 2.59% and zero dividends and; b) immediately following the modification — an expected life range of 5.09 to 6.33 years, volatility range of 106%, risk free interest rate range of 2.56% to 2.6% and zero dividends.
Certain terms of the Series B prior to the conversion into common stock on January 11, 2019 were as follows:
Dividends. Holders of the Series B were entitled to receive cumulative dividends at the rate of 12% for SeriesB-1 andB-2 and 8% for SeriesB-3 per annum (compounding monthly) payable quarterly which may, at the Company’s option, be paid in cash or common stock. Pursuant to an agreement with the holder of all shares of Series B, on January 26, 2011, the Company amended and restated the Certificate of Designation of Preferences, Rights and Limitations for the SeriesB-1 and SeriesB-2, to provide that dividends are payable in cash or shares of Common Stock valued at 100% of the volume weighted average price of the Common Stock for the 20 consecutive trading days prior to the dividend payment date on and after September 30, 2011. If the Company did not pay any dividend on the Series B, dividends would accrue at the rate of 15% per annum (compounding monthly).
Other Restrictions. So long as any shares of the Series B remain outstanding, the Company may not, without the approval of the holders of a majority of the shares of Series B outstanding, among other things, (i) change the size of the Company’s Board of Directors; (ii) amend or repeal the Company’s Articles of Incorporation or Bylaws or file any articles of amendment designating the preferences, limitations and relative rights of any series of preferred stock, that would alter or change the preferences, rights, privileges or powers of, or restriction provided for the benefit of the Series B; (iii) create or increase the authorized amount of any additional class or series of shares of stock that is equal to or senior to Series B; (iv) increase or decrease the authorized number of shares of the Series B; (v) purchase, redeem or otherwise acquire for value any shares of any class of capital stock; (vi) merge or consolidate the Company into or with any other corporation or sell, assign, lease, pledge, encumber or otherwise dispose of all or substantially all of the Company’s assets or those of any subsidiary; (vii) voluntarily or involuntarily liquidate, dissolve or wind up the Company or the Company’s business; (viii) pay or declare dividends on any capital stock other than the Preferred Stock, unless the Series B share ratably in such dividend and all accrued dividends payable with
respect to the Series B have been paid prior to the payment or declaration of such dividend; (ix) acquire an equitable interest in, or the assets or business of any other entity in any form of transaction; (x) create or commit us to enter into a joint venture, licensing agreement or exclusive marketing or other distribution agreement with respect to the Company’s products, other than in the ordinary course of business; (xi) permit the Company or any subsidiary to sell or issue any security of such subsidiary to any person or entity other than the Company; (xii) enter into, create, incur, assume or guarantee any indebtedness for borrowed money of any kind (other than indebtedness existing on the initial closing date and approved by Series B shareholders); (xiii) enter into, create, incur or assume any liens of any kind (other than certain permitted liens); (xiv) issue any common stock or common stock equivalents; (xv) increase the number of shares of the Company’s common stock that may be issued pursuant to options, warrants or rights to employees, directors, officers, consultants or advisors above the number of shares that were authorized for issuance under our 2001 Stock Incentive Plan, 2003Non-Employee Director Stock Incentive Plan and 2009 Incentive Compensation Plan as of September 9, 2016.
Series C 6% Super Dividend Redeemable Convertible Preferred Stock
200% | before the second anniversary of the date of issuance; | |
250% | on or after the second anniversary of the date of issuance, but before the third anniversary of the date of issuance; |
300% | on or after the third anniversary of the date of issuance, but before the fourth anniversary of the date of issuance; | |
350% | on or after the fourth anniversary of the date of issuance, but before the fifth anniversary of the date of issuance; | |
400% | on or after the fifth anniversary of the date of issuance, but before the sixth anniversary of the date of issuance; | |
450% | on or after the sixth anniversary of the date of issuance, but before the seventh anniversary of the date of issuance; | |
500% | on or after the seventh anniversary of the date of issuance, but before the eighth anniversary of the date of issuance; and | |
550% | on or after the eighth anniversary of the date of issuance, but before the ninth anniversary of the date of issuance. |
$8,546,000.
Warrants |
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| ||||
Warrants | Weighted average exercise price | |||||||
Outstanding at December 31, 2019 | 12,538,204 | $ | 4.22 | |||||
Issued | 0 | |||||||
Exercised | 0 | |||||||
Canceled | 0 | |||||||
Outstanding at December 31, 2020 | 12,538,204 | $ | 4.22 | |||||
Issued | 0 | |||||||
Exercised | (1,180,240 | ) | $ | 2.50 | ||||
Canceled | (500,000 | ) | $ | 5.00 | ||||
Outstanding at December 31, 2021 | 10,857,964 | $ | 4.37 |
Issued in Connection With | Number Issued | Exercise Price | Exercisable Date | Expiration Date | ||||||||||||
February 12, 2009 SeriesB-1 Transaction $3.00 Investor Warrants — Class B | 1,200,000 | $ | 3.00 | February 12, 2009 | February 12, 2024 | |||||||||||
May 13, 2009 SeriesB-2 Transaction $3.00 Investor Warrants — Class B | 600,000 | $ | 3.00 | May 13, 2009 | May 13, 2024 | |||||||||||
June 30, 2009 SeriesB-2 Transaction $3.00 Investor Warrants — Class B | 333,333 | $ | 3.00 | June 30, 2009 | June 30, 2024 | |||||||||||
August 12, 2009 SeriesB-2 Transaction $3.00 Investor Warrants — Class B | 200,000 | $ | 3.00 | August 12, 2009 | August 12, 2024 | |||||||||||
September 30, 2009 SeriesB-2 Transaction $3.00 Investor Warrants — Class B | 216,666 | $ | 3.00 | September 30, 2009 | September 30, 2024 |
Issued in Connection With | Number Issued | Exercise Price | Exercisable Date | Expiration Date | ||||||||||||
November 4, 2009 SeriesB-2 Transaction $3.00 Investor Warrants — Class B | 106,666 | $ | 3.00 | November 4, 2009 | November 4, 2024 | |||||||||||
December 8, 2009 SeriesB-2 Transaction $3.00 Investor Warrants — Class B | 133,143 | $ | 3.00 | December 8, 2009 | December 8, 2024 | |||||||||||
January 29, 2010 SeriesB-2 Transaction $3.00 Investor Warrants — Class B | 216,667 | $ | 3.00 | January 29, 2010 | January 29, 2025 | |||||||||||
March 8, 2010 SeriesB-2 Transaction $3.00 Investor Warrants — Class B | 223,334 | $ | 3.00 | March 8, 2010 | March 8, 2025 | |||||||||||
April 30, 2010 SeriesB-2 Transaction $3.00 Investor Warrants — Class B | 204,192 | $ | 3.00 | April 30, 2010 | April 30, 2025 | |||||||||||
May 10, 2010 SeriesB-2 Transaction $3.00 Investor Warrants — Class B | 143,166 | $ | 3.00 | May 10, 2010 | May 10, 2025 | |||||||||||
November 25, 2015 Offering Warrants | 1,180,240 | $ | 2.50 | May 25, 2016 | May 25, 2021 | |||||||||||
September 22, 2016 SeriesB-3 Transaction $3.00 Investor Warrants | 698,158 | $ | 3.00 | September 22, 2016 | September 22, 2023 | |||||||||||
September 29, 2016 SeriesB-3 Transaction $3.00 Investor Warrants | 846,100 | $ | 3.00 | September 29, 2016 | September 29, 2023 | |||||||||||
December 22, 2016 Private placement warrants | 1,466,204 | $ | 5.00 | December 22, 2016 | December 23, 2023 | |||||||||||
December 23, 2016 SeriesB-3 Transaction $3.00 Investor Warrants | 924,780 | $ | 3.00 | December 23, 2016 | December 23, 2023 | |||||||||||
December 28, 2016 Private placement warrants | 644,468 | $ | 5.00 | December 28, 2016 | December 28, 2023 | |||||||||||
February 27, 2017 Private placement warrants | 76,776 | $ | 5.00 | February 27, 2017 | February 27, 2024 | |||||||||||
2018 and 2017 Warrants issued for services | 2,157 | $ | 5.00 | | Various dates in 2018 and 2017 | | | Various dates in 2025 and 2024 | | |||||||
December 19, 2017 Line of credit warrants | 500,000 | $ | 5.00 | December 19, 2017 | December 19, 2024 | |||||||||||
May 23, 2019 Rights offering warrants | 2,622,154 | $ | 7.00 | May 23, 2019 | May 23, 2026 | |||||||||||
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| |||||||||||||||
Total outstanding warrants | 12,538,204 | |||||||||||||||
|
|
Issued in Connection With | Number Issued | Exercise Price | Exercisable Date | Expiration Date | |||||||
February 12, 2009 Series B-1 Transaction $3.00 Investor Warrants — Class B | 1,200,000 | $ | 3.00 | February 12, 2009 | February 12, 2024 | ||||||
May 13, 2009 Series B-2 Transaction $3.00 Investor Warrants — Class B | 600,000 | $ | 3.00 | May 13, 2009 | May 13, 2024 | ||||||
June 30, 2009 Series B-2 Transaction $3.00 Investor Warrants — Class B | 333,333 | $ | 3.00 | June 30, 2009 | June 30, 2024 | ||||||
August 12, 2009 Series B-2 Transaction $3.00 Investor Warrants — Class B | 200,000 | $ | 3.00 | August 12, 2009 | August 12, 2024 | ||||||
September 30, 2009 Series B-2 Transaction $3.00 Investor Warrants — Class B | 216,666 | $ | 3.00 | September 30, 2009 | September 30, 2024 | ||||||
November 4, 2009 Series B-2 Transaction $3.00 Investor Warrants — Class B | 106,666 | $ | 3.00 | November 4, 2009 | November 4, 2024 | ||||||
December 8, 2009 Series B-2 Transaction $3.00 Investor Warrants — Class B | 133,143 | $ | 3.00 | December 8, 2009 | December 8, 2024 | ||||||
January 29, 2010 Series B-2 Transaction $3.00 Investor Warrants — Class B | 216,667 | $ | 3.00 | January 29, 2010 | January 29, 2025 | ||||||
March 8, 2010 Series B-2 Transaction $3.00 Investor Warrants — Class B | 223,334 | $ | 3.00 | March 8, 2010 | March 8, 2025 | ||||||
April 30, 2010 Series B-2 Transaction $3.00 Investor Warrants — Class B | 204,192 | $ | 3.00 | April 30, 2010 | April 30, 2025 | ||||||
May 10, 2010 Series B-2 Transaction $3.00 Investor Warrants — Class B | 143,166 | $ | 3.00 | May 10, 2010 | May 10, 2025 | ||||||
September 22, 2016 Series B-3 Transaction $3.00 Investor Warrants | 698,158 | $ | 3.00 | September 22, 2016 | September 22, 2023 | ||||||
September 29, 2016 Series B-3 Transaction $3.00 Investor Warrants | 846,100 | $ | 3.00 | September 29, 2016 | September 29, 2023 | ||||||
December 22, 2016 Private placement warrants | 1,466,204 | $ | 5.00 | December 22, 2016 | December 23, 2023 | ||||||
December 23, 2016 Series B-3 Transaction $3.00 Investor Warrants | 924,780 | $ | 3.00 | December 23, 2016 | December 23, 2023 | ||||||
December 28, 2016 Private placement warrants | 644,468 | $ | 5.00 | December 28, 2016 | December 28, 2023 | ||||||
February 27, 2017 Private placement warrants | 76,776 | $ | 5.00 | February 27, 2017 | February 27, 2024 | ||||||
2018 and 2017 Warrants issued for services | 2,157 | $ | 5.00 | Various dates in 2018 and 2017 | Various dates in 2025 and 2024 | ||||||
May 23, 2019 Rights offering warrants | 2,622,154 | $ | 7.00 | May 23, 2019 | May 23, 2026 | ||||||
Total outstanding warrants | 10,857,964 |
Stock-Based Compensation |
2019,2021, the Company has a stock-based compensation plan where the Company’s common stock has been made available for equity-based incentive grants as part of the Company’s compensation programs. In December 2019, the Company adopted the 2019 Omnibus Equity Incentive Plan (the “2019 Plan”) which provided originally for the issuance of up to 4,000,000 shares of the Company’s common stock, subsequently increased to 7,000,000 in December 2021, in the
form of options, stock appreciation rights, restricted stock and other stock-based awards to employees, officers, directors, consultants and other eligible persons. At December 31, 2019, 4,000,0002021, 3,266,179 shares were available for future grant under the 2019 Plan. Also, the Company previously had the 2009 Incentive Compensation Plan (the “2009 Plan”) which, after amendments, provided for issuance of up to 6,733,334 shares of the Company’s common stock in the form of options, stock appreciation rights, restricted stock and other stock-based awards to employees, officers, directors, consultants and other eligible persons. Provisions of the 2009 Plan stipulated that no grants could be made after February 2019; however, grants made prior to that date remain outstanding for their legal term.
Year Ended December 31, | ||||||||
2019 | 2018 | |||||||
Research and development | $ | 318 | $ | 1,944 | ||||
General and administrative | 1,365 | 2,501 | ||||||
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Total stock-based compensation expense | $ | 1,683 | $ | 4,445 | ||||
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warrants and deferred stock units:
Year Ended December 31, | ||||||||
2021 | 2020 | |||||||
Research and development | $ | 420 | $ | 516 | ||||
General and administrative | 1,656 | 1,283 | ||||||
Total stock-based compensation expense | $ | 2,076 | $ | 1,799 |
2019 | 2018 | |||||||
Risk-free interest rate | 2.68 | % | 2.47 | % | ||||
Expected life of the options | 6.0 years | 5.7 years | ||||||
Expected volatility of the underlying stock | 103.7 | % | 103.5 | % | ||||
Expected dividend rate | 0 | % | 0 | % |
2021 | 2020 | |||||||
Risk-free interest rate | 0.66 | % | 1.26 | % | ||||
Expected life of the options | 6.0 years | 6.0 years | ||||||
Expected volatility of the underlying stock | 91.7 | % | 97.9 | % | ||||
Expected dividend rate | 0 | % | 0 | % |
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||
Outstanding, December 31, 2017 | 5,155,263 | $ | 4.11 | |||||||||||||
Granted | 1,011,875 | 5.01 | ||||||||||||||
Forfeited/Cancelled | (1,354,330 | ) | 7.31 | |||||||||||||
Exercised | (2,098,829 | ) | 2.00 | |||||||||||||
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Outstanding, December 31, 2018 | 2,713,979 | $ | 4.67 | |||||||||||||
Granted | 530,000 | 4.72 | ||||||||||||||
Forfeited/Cancelled | (92,730 | ) | 2.91 | |||||||||||||
Exercised | (150,993 | ) | 1.83 | |||||||||||||
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Outstanding, December 31, 2019 | 3,000,256 | $ | 4.88 | 6.22 | $ | 705 | ||||||||||
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Exercisable, December 31, 2019 | 2,592,756 | $ | 4.90 | 5.78 | $ | 705 |
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||
Outstanding, December 31, 2019 | 3,000,256 | $ | 4.88 | |||||||||||||
Granted | 1,095,000 | 2.51 | ||||||||||||||
Forfeited/Cancelled | (23,057 | ) | 1.80 | |||||||||||||
Exercised | (84,624 | ) | 2.61 | |||||||||||||
Outstanding, December 31, 2020 | 3,987,575 | $ | 4.29 | |||||||||||||
Granted | 2,660,000 | 2.39 | ||||||||||||||
Forfeited/Cancelled | (1,603,073 | ) | 5.31 | |||||||||||||
Exercised | (148,941 | ) | 2.35 | |||||||||||||
Outstanding, December 31, 2021 | 4,895,561 | $ | 3.14 | 7.94 | $ | 246 | ||||||||||
Exercisable, December 31, 2021 | 2,158,477 | $ | 4.09 | 6.29 | $ | 169 |
Options Outstanding | Options Exercisable | |||||||||||||||||||
Exercise Price (Range) | Number of Shares | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | Number of Shares | Weighted Average Exercise Price | |||||||||||||||
(in years) | ||||||||||||||||||||
$0.87 – 1.00 | 190,500 | 6.95 | $ | 0.88 | 190,500 | $ | 0.88 | |||||||||||||
$1.01 – 3.00 | 677,103 | 6.02 | 2.37 | 677,103 | 2.37 | |||||||||||||||
$3.01 – 5.00 | 1,071,678 | 8.19 | 4.36 | 664,178 | 4.13 | |||||||||||||||
$5.01 – 8.00 | 878,475 | 4.27 | 6.55 | 878,475 | 6.55 | |||||||||||||||
$8.01 – 13.38 | 182,500 | 4.06 | 13.38 | 182,500 | 13.38 | |||||||||||||||
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3,000,256 | 6.22 | $ | 4.88 | 2,592,756 | $ | 4.90 | ||||||||||||||
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Options Outstanding | Options Exercisable | ||||||||||||||||||||
Exercise Price (Range) | Number of Shares | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | Number of Shares | Weighted Average Exercise Price | ||||||||||||||||
(in years) | |||||||||||||||||||||
$0.87 – 1.00 | 120,500 | 4.96 | $ | 0.89 | 120,500 | $ | 0.89 | ||||||||||||||
$1.01 – 3.00 | 3,404,521 | 8.65 | 2.32 | 962,437 | 2.54 | ||||||||||||||||
$3.01 – 5.00 | 1,013,040 | 7.12 | 4.14 | 718,040 | 4.36 | ||||||||||||||||
$5.01 – 8.00 | 220,000 | 6.11 | 5.92 | 220,000 | 5.92 | ||||||||||||||||
$8.01 – 13.38 | 137,500 | 2.06 | 13.38 | 137,500 | 13.38 | ||||||||||||||||
4,895,561 | 7.94 | $ | 3.14 | 2,158,477 | $ | 4.09 |
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On December 19, 2017,September 2020, the Company entered into an employment agreement with its new Chief Executive Officer whereby 20% of his base salary and performance bonuses will be paid in cash, and 80% will be paid in the form of deferred stock units (“DSUs”) in accordance with the terms and subject to the provisions set forth in the DSU Agreement. DSUs credited to Mr. Lewis as of any date shall be fully vested and nonforfeitable at all times. The Company shall issue the shares underlying the outstanding whole number of DSUs credited to Mr. Lewis as follows: 25percent shall be issued on March 1, 2023, 25percent shall be issued on September 1, 2023 and 50percent shall be issued on March 1, 2024.
10. | Line of Credit – Related Party |
On December 20, 2018, the Line of Credit arrangement was extended for one year for both borrowings and maturity. At the time of the conversion of the Series B Convertible Preferred stock into common stock (See Note 5), on January 11, 2019, the Line of Credit arrangement was extended for an additional two years for both borrowings and maturity. After the second amendment to the Line of Credit arrangement, borrowings may be made through December 31, 2021 with repayment due on December 31, 2022. There was no additional consideration or benefits provided to Mr. Uihlein for any of the extensions of the Line of Credit.
2021.
Loss Per Share |
net loss per share does not assume the issuance of common shares thatstock as they would have had an anti-dilutive effect on net loss per share.
Year Ended December 31, | ||||||||
(in thousands, except per share amounts) | ||||||||
2019 | 2018 | |||||||
Net loss | $ | (13,294 | ) | $ | (13,900 | ) | ||
Preferred stock dividends | (263 | ) | (1,147 | ) | ||||
Warrant modification | (6,622 | ) | — | |||||
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Net loss applicable to common stockholders | $ | (20,179 | ) | $ | (15,047 | ) | ||
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Basic and diluted net loss per share | $ | (0.39 | ) | $ | (0.38 | ) | ||
Shares used in computing basic and diluted net loss per share | 52,238 | 39,414 |
Dilutive
Year Ended December 31, | ||||||||
2019 (Shares) | 2018 (Shares) | |||||||
Warrants to purchase shares of common stock | 12,538,204 | 10,647,026 | ||||||
Options to purchase shares of common stock | 3,000,256 | 2,713,979 | ||||||
Shares of common stock issuable upon conversion preferred stock | 514,590 | 4,303,948 | ||||||
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16,053,050 | 17,664,953 | |||||||
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Year Ended December 31, | ||||||||
2021 (Shares) | 2020 (Shares) | |||||||
Warrants to purchase shares of common stock | 10,857,964 | 12,538,204 | ||||||
Options to purchase shares of common stock | 4,895,561 | 3,987,575 | ||||||
Shares of common stock issuable upon conversion of convertible notes payable | 5,214,806 | 0 | ||||||
Shares of common stock issuable upon conversion preferred stock | 510,424 | 510,424 | ||||||
21,478,755 | 17,036,203 |
Commitments and Contingencies |
February 2022 for 38 months at substantially the same terms. 2020 2021 2022 Total Less imputed interest Present value of lease liability one1 operating lease for its office space which was amended effective January 1, 2019 for a term of 38 months with no residual value guarantees or material restrictive covenants. The amended lease provided for free rent for the first two months of the lease and continues the security deposit of $6,000. In addition to base rental payments included in the contractual obligations table below, the Company is responsible for ourpro-rata share of the operating expenses for the building. Our lease cost for the yearyears ended December 31, 20192021 and 2020 was $44,000 and $44,000 and is included in general and administrative expenses. As of December 31, 2019,2021, the right to use lease asset consisted of $84,000$7,000 and is included in other assets.assets. Also, at December 31, 2019,2021, current lease liability of $39,000$8,000 is included in accrued expenses and other and noncurrent. The Company renewed its existing office space lease liability of $52,000 iseffective in other noncurrent liabilities.20192021 in thousands: $ 47 48 8 103 13 $ 90 2022 Total Less imputed interest Present value of lease liability
Galectin Sciences LLC |
Income Taxes |
On December 22, 2017, the Tax Cuts and Jobs Act (2017 Tax Act) was enacted. The 2017 Tax Act includes a number of changes to existing U.S. tax laws that impact the Company, most notably a reduction of the U.S. corporate tax rate from 34% to 21%, for tax years beginning after December 31, 2017. The 2017 Tax Act also provides for the implementation of a territorial tax system, aone-time transition tax on certain foreign earnings, the acceleration of depreciation for certain assets placed into service after September 27, 2017 and other prospective changes beginning in 2018, including repeal of the domestic manufacturing deduction, acceleration of tax revenue recognition, capitalization of research and development expenditures, additional limitations on executive compensation and limitations on the deductibility of interest.
Pursuant to the SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, the Company has calculated as final itsre-measurement of deferred taxes and has no uncertain tax positions. This includes a provisional amount related to there-measurement of deferred tax assets based on the rates at which they are expected to reverse in the future, which is generally 21% plus the applicable state tax rate, with a corresponding change to the valuation allowance as of December 31, 2017. No further adjustments were recorded in the years ended December 31, 2019 or 2018.
The components of the net deferred tax assets are as follows at December 31:
2019 | 2018 | |||||||
(in thousands) | ||||||||
Operating loss carryforwards | $ | 39,982 | $ | 36,417 | ||||
Tax credit carryforwards | 910 | 1,195 | ||||||
Other temporary differences | 5,278 | 4,678 | ||||||
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46,170 | 42,290 | |||||||
Less valuation allowance | (46,170 | ) | (42,290 | ) | ||||
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Net deferred tax asset | $ | — | $ | — | ||||
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2021 | 2020 | |||||||
(in thousands) | ||||||||
Operating loss carryforwards | $ | 54,949 | $ | 46,203 | ||||
Tax credit carryforwards | 3,720 | 910 | ||||||
Other temporary differences | 1,652 | 5,438 | ||||||
60,321 | 52,551 | |||||||
Less valuation allowance | (60,321 | ) | (52,551 | ) | ||||
Net deferred tax asset | $ | 0 | $ | 0 |
2019 | 2018 | |||||||
Tax benefit at U.S. statutory rates | (21 | %) | (21 | %) | ||||
State tax benefit | (4.7 | %) | (4.7 | %) | ||||
Permanent differences | 0.8 | % | 4.0 | % | ||||
Impact of the 2017 Tax Act | — | — | ||||||
Other | (4.2 | %) | 1.1 | % | ||||
Expiring state NOL’s | — | — | ||||||
Changes in valuation allowance | 29.1 | % | 20.6 | % | ||||
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0 | % | 0 | % | |||||
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2021 | 2020 | |||||||
Tax benefit at U.S. statutory rates | (21 | %) | (21 | %) | ||||
State tax benefit | (4.7 | %) | (4.7 | %) | ||||
Permanent differences | 0.5 | % | 0.8 | % | ||||
Other | (0.1 | %) | (2.2 | %) | ||||
Changes in valuation allowance | 25.3 | % | 27.1 | % | ||||
0 | % | 0 | % |
F-23