☒ | Quarterly 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 |
of Norcross, GA
and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation (§232.05and post such files). ☒ Yes ☐ NoLarge Accelerated Filer ☐ Accelerated Filer ☐☒ ☐ (Do not check if a smaller reporting company) Smaller reporting company ☒ Emerging growth company ☐
57,043,661.
ASSETS Current assets: Cash and cash equivalents Prepaid expenses and other current assets Total current assets Intangible assets, net Total assets LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable Accrued expenses Accrued dividends payable Total current liabilities Total liabilities Commitments and contingencies (Note 8) Series C super dividend convertible preferred stock; 1,000 shares authorized, 176 shares issued and outstanding at September 30, 2017 and December 31, 2016, redemption value: $7,130,000, liquidation value: $1,760,000 at September 30, 2017 Stockholders’ equity: Undesignated stock, $0.01 par value; 20,000,000 shares authorized, 20,000,000 and 14,001,000 designated at September 30, 2017 and December 31, 2016, respectively Series A 12% convertible preferred stock; 1,742,500 shares authorized, 1,377,500 issued and outstanding at September 30, 2017 and December 31, 2016, liquidation value $1,377,500 at September 30, 2017 SeriesB-1 12% convertible preferred stock; 900,000 shares authorized, issued and outstanding at September 30, 2017 and December 31, 2016, liquidation value $1,800,000 at September 30, 2017 SeriesB-2 12% convertible preferred stock; 2,100,000 shares authorized, issued and outstanding at September 30, 2017 and December 31, 2016, liquidation value $4,200,000 at September 30, 2017 SeriesB-3 8% convertible preferred stock; 2,508,000 shares authorized, 2,508,000 issued and outstanding at September 30, 2017 and December 31, 2016, liquidation value $2,508,000 at September 30, 2017 Common stock, $0.001 par value; 50,000,000 shares authorized at September 30, 2017 and December 31, 2016, 35,638,698 and 32,912,942 issued and outstanding at September 30, 2017 and December 31, 2016, respectively Additionalpaid-in capital Retained deficit Total stockholders’ equity Total liabilities, redeemable convertible preferred stock and stockholders’ equity Operating expenses: Research and development General and administrative Total operating expenses Total operating loss Other income (expense): Interest income Total other income (expense) Net loss Preferred stock dividends Preferred stock accretion Net loss applicable to common stockholders Net loss per common share — basic and diluted Weighted average common shares outstanding — basic CASH FLOWS FROM OPERATING ACTIVITIES: Net loss Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization Stock-based compensation expense Issuance of common stock for services Changes in operating assets and liabilities: Prepaid expenses and other assets Accounts payable and accrued expenses Net cash used in operating activities CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of SeriesB-3 preferred stock and warrants Net proceeds from issuance of common stock and warrants Net cash provided by financing activities NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS, END OF PERIOD NONCASH FINANCING ACTIVITIES: Payment of preferred stock dividends in common stock and Liquidity 2019. and Other Legal and accounting fees Accrued compensation Accrued research and development costs and other Total Research and development General and administrative Total stock-based compensation expense Outstanding, December 31, 2016 Granted Exercised Options forfeited/cancelled Outstanding, September 30, 2017 2020: 2020. Outstanding, December 31, 2016 Granted Exercised Forfeited/cancelled Outstanding, September 30, 2017 Dilutive shares which could exist pursuant to the exercise of outstanding stock instruments and which were not included in the calculation because their affect would have been anti-dilutive are as follows: Warrants to purchase shares of common stock Options to purchase shares of common stock Shares of common stock issuable upon conversion of preferred stock Unvested shares of restricted common stock $44,000. dividends on Series A and Series C Preferred Stock. tissues. tolerated. collaterals circulation. Further details on this hepatic impairment study can be found on In September 2018 we announced additional preliminary clinical data from cohort 3 of this investigator-initiated trial. When aggregated with cohorts previously reported, the data shows a 50% objective response rate in advanced melanoma with belapectin in combination with KEYTRUDA, and a significant decrease in the frequency of suppressive myeloid-derived suppressor cells following treatment in the responding patients (on day 85 post-treatment). Fourteen advanced melanoma patients across three dose cohorts now have Objective Response Rate (ORR) and Disease Control Rate (DCR) data. Six patients completed in cohort 3 (8 mg/kg) have now been added to the three patients completed in cohort 2 (4 mg/kg) and five patients completed in cohort 1 (2 mg/kg). Cohorts 1 and 3 each had two patients with an objective response. All three patients in cohort 2 had an objective response. In addition to the fourteen advanced melanoma patients, six patients with head and neck cancer were enrolled in this trial with a 33% ORR and 67% DCR. 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. The expansion cohort will target to include 15 patients and is planned to have continued belapectin dosing as long as pembrolizumab is administered. Currently more than 40% of the patients in the expansion cohort have been enrolled and further information will be reported as it becomes available. Assuming these additional data are positive, the next logical step could be a Phase II trial. process, as discussed previously. 2019 Research and development Direct external expenses: Clinical programs Pre-clinical activities All other research and development expenses March 2020. General and administrative $138,000. us. belapectin.SEPTEMBERJUNE 30, 20172020 3 4 5 6 ITEM 2. 9 1214 2124 2124 2125 2125 2126 2126 2226 2226 2226 2327 September 30,
2017 December 31,
2016 (in thousands) $ 6,958 $ 15,362 53 432 7,011 15,794 — 1 $ 7,011 $ 15,795 $ 166 $ 910 4,175 2,802 — 68 4,341 3,780 4,341 3,780 1,723 1,723 — — 557 557 1,761 1,761 3,697 3,697 1,224 1,224 36 33 172,053 166,721 (178,381 ) (163,701 ) 947 10,292 $ 7,011 $ 15,795 $ 40,768 $ 47,480 352 729 41,120 48,209 197 258 $ 41,317 $ 48,467 $ 206 $ 1,661 4,003 1,093 66 66 4,275 2,820 31 52 4,306 2,872 1,723 1,723 — — 537 537 56 56 260,820 259,673 (226,125 ) (216,394 ) 35,288 43,872 $ 41,317 $ 48,467 Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 (in thousands, except
per share data) (in thousands, except
per share data) $ 3,503 $ 3,289 $ 10,719 $ 11,892 911 1,248 3,155 4,990 4,414 4,537 13,874 16,882 (4,414 ) (4,537 ) (13,874 ) (16,882 ) 6 11 21 37 6 11 21 37 $ (4,408 ) $ (4,526 ) $ (13,853 ) $ (16,845 ) (254 ) (63 ) (827 ) (466 ) — (56 ) — (173 ) $ (4,662 ) $ (4,645 ) $ (14,680 ) $ (17,484 ) $ (0.13 ) $ (0.16 ) $ (0.42 ) $ (0.60 )
and diluted 35,165 29,282 34,600 29,045 $ 4,681 $ 1,522 $ 6,825 $ 2,168 1,421 1,498 2,861 3,219 6,102 3,020 9,686 5,387 (6,102 ) (3,020 ) (9,686 ) (5,387 ) 9 43 59 57 (21 ) (21 ) (43 ) (43 ) (12 ) 22 16 14 $ (6,114 ) $ (2,998 ) $ (9,670 ) $ (5,373 ) (66 ) (67 ) (60 ) (163 ) — — — (6,622 ) $ (6,180 ) $ (3,065 ) $ (9,730 ) $ (12,158 ) $ (0.11 ) $ (0.06 ) $ (0.17 ) $ (0.26 ) 57,035 50,301 56,995 47,653 Nine Months Ended
September 30, 2017 2016 (in thousands) $ (13,853 ) $ (16,845 ) 1 5 829 2,001 27 — 379 501 629 2,794 (11,988 ) (11,544 ) — 1,500 3,584 257 3,584 1,757 (8,404 ) (9,787 ) 15,362 25,846 $ 6,958 $ 16,059 $ 894 $ 534 $ (9,670 ) $ (5,373 ) — (396 ) 824 855 17 18 43 43 377 (277 ) 1,434 (484 ) (6,975 ) (5,614 ) 263 49,404 263 49,404 (6,712 ) 43,790 47,480 8,253 $ 40,768 $ 52,043 $ 60 $ —
Convertible
Preferred Stock (40 ) (40 ) (27 ) (27 ) 10,488,161 10 44,879 44,889 508,706 1 2,511 2,512 443 443 (2,998 ) (2,998 ) (40 ) (40 ) (26 ) (26 ) 14,452 44 44 394 394 (6,114 ) (6,114 )
Convertible
Preferred Stock (80 ) (80 ) (6 ) (6 ) (15 ) (15 ) (9 ) (9 ) (53 ) (53 ) 10,883,394 10 46,744 46,754 (900,000 ) (1,761 ) (2,100,000 ) (3,697 ) (2,508,000 ) (1,224 ) 3,789,346 4 6,678 727,633 1 2,649 2,650 6,622 (6,622 ) 855 855 (5,373 ) (5,373 ) 13,275 26 (26 ) 17,600 34 (35 ) (1 ) 14,452 44 44 84,624 219 219 19,068 824 824 (9,670 ) (9,670 ) skin diseases and cancer. These candidates are based on the Company’s targeting of galectin proteins which are key mediators of biologic and pathologic function. These compounds also may have application for drugs to treat other diseases and chronic health conditions.SeptemberJune 30, 20172020 and the results of its operations for the three and ninesix months ended SeptemberJune 30, 20172020 and 20162019 and its cash flows for the ninesix months ended SeptemberJune 30, 20172020 and 2016.2019. All adjustments made to the interim financial statements include all those of a normal and recurring nature. Amounts presented in the condensed consolidated balance sheet as of December 31, 20162019 are derived from the Company’s audited consolidated financial statements as of that date, but do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date these financial statements are available to be issued. The results for interim periods are not necessarily indicative of results whichthat may be expected for any other interim period or for the full year. The unaudited condensed consolidated financial statements of the Company should be read in conjunction with its Annual Report on Form2016.significant revenues. The Company anticipates that losses will continue for the foreseeable future. At SeptemberJune 30, 2017,2020, the Company had $7.0 million$40,768,000 of unrestricted cash and cash equivalents available to fund future operations. The Company believes that with the cash on hand at September 30, 2017, there is sufficient cash, including availability of the $10 million line of credit (see Note 3), to fund currently planned operations at least through February 2018 which creates uncertainty aboutSeptember 30, 2021. We will require more cash to fund our operations after September 30, 2021 and believe we will be able to obtain additional financing. The currently planned operations include costs related to a planned adaptively designedCompany’s abilitytrial along with drug manufacturing and other scientific support activities and general overhead during the first stage of the trial are currently estimated to continue as a going concern. The Company’s abilitybe approximately $90 million. These costs will require additional funding. 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. If we are unsuccessful in raising additional capital to fund operations after its current cash resources are exhausted depends on its abilitybefore September 30, 2021, we may be required to obtain additional financing or achieve profitable operations, as to which no assurances can be given.cease operations. Accordingly, based on the forecasts and estimates underlying the Company’sour current operating plan, substantial doubt exists about the ability for the Company to continue as a going concern. The financial statements do not currently include any adjustments that might be necessary if the Company iswe are unable to continue as a going concern. September 30,
2017 December 31,
2016 (in thousands) $ 115 $ 14 361 614 3,699 2,174 $ 4,175 $ 2,802 June 30,
2020 December 31,
2019 (in thousands) $ 129 $ 81 861 973 41 39 2,972 — $ 4,003 $ 1,093 Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 $ 109 $ 165 $ 407 $ 598 121 211 422 1,403 $ 230 $ 376 $ 829 $ 2,001 $ 83 $ 83 $ 240 $ 170 311 360 584 685 $ 394 $ 443 $ 824 $ 855 20162019 through SeptemberJune 30, 2017: Shares Weighted Average
Exercise Price 4,656,888 $ 4.30 — — — — — — 4,656,888 $ 4.30 Shares Weighted Average
Exercise Price 3,000,256 $ 4.88 845,000 2.47 (84,624 ) 2.61 (23,057 ) 1.80 3,737,575 $ 4.40 SeptemberJune 30, 2017,2020, there was $366,000$1,361,000 of unrecognized compensation related to 907,489845,000 unvested options, which is expected to be recognized over a weighted-averageweighted–average period of approximately 0.582.09 years. The weighted-average grant date fair value for options granted during the ninesix months ended SeptemberJune 30, 20162020 was $1.05.$1.92. The Company granted 277,500845,000 stock options during the ninesix months ended SeptemberJune 30, 2016, of which 69,375 options vested upon grant with the remaining 208,125 options vesting over 3 years. Approximately $73,000 ofnon-cash, stock-based compensation expense was recorded during the nine months ended September 30, 2016 related to the options granted during the quarter that were vested upon the grant date.NineMonths EndedSeptember 30,2016Risk-free interest rate1.7% Expected life of the options6.0 yearsExpected volatility of the underlying stock94% Expected dividend rate0% The following table summarizes the Six Months Ended
June 30, Six Months Ended
June 30, 2020 2019 1.55 % 2.68 % 6 years 6 years 100 % 104 % 0 % 0 % grant activitygrants in the Company’s equity incentive plans from December 31, 2016 through September 30, 2017:SharesOutstanding, December 31, 2016754,605Granted— Exercised— Options forfeited/cancelled— Outstanding, September 30, 2017754,605On March 12, 2015, the Company granted 81,352lieu of cash retainers for 2019. A total of 19,068 shares of restricted stock tonon-employee directors as a component of their compensation. A total of 77,784 shares were issuedvalued at approximately $90,000 was amortized to seven directors representingnon-cash compensation cost of $280,000 which was recognizedexpense on a straight-line basis from the grant date through December 15, 2016,until January 16, 2020 when the restricted sharesstock vested in full.3,56832,693 shares were issuedof restricted stock valued at approximately $93,500 is being amortized to two directors, who were not nominated for reelection, representingnon-cash compensation cost of $12,845 that was recognizedexpense on a straight-line basis from the grant date through May 21, 2016,until January 9, 2021 when the restricted shares vestedstock vests in full.4.20162019 through SeptemberJune 30, 2017: Shares Weighted Average
Exercise Price 13,488,296 $ 3.44 78,455 5.00 — — (1,317,161 ) 5.63 12,249,590 $ 3.22 5.2020: Shares Weighted Average
Exercise Price 12,538,204 $ 4.22 — — — — — — 12,538,204 $ 4.22 SeptemberJune 30, 20172020 or December 31, 2016.6.2019. September 30, 2017
(shares) September 30, 2016
(shares) 12,249,590 10,452,844 4,656,888 3,499,638 4,312,282 3,415,285 — 337,935 21,218,760 17,705,702 7. June 30, 2020
(shares) June 30, 2019
(shares) 12,538,204 12,540,679 3,737,575 3,062,338 514,602 514,602 16,790,381 16,117,619 2014March 30, 2014,May 11, 2020, the Company entered into an At Market Issuance Sales Agreement (the “2014“2020 At Market Agreement”) with a sales agent under which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $30.0$40.0 million from time to time through the sales agent. Sales of the Company’s common stock through the sales agent, if any, will be made by any method that is deemed an “at the market” offering as defined by the U.S. Securities and Exchange Commission. The Company will pay to the sales agent a commission rate equal to 3.0% of the gross proceeds from the sale of any shares of common stock sold through the sales agent under the 20142020 At Market Agreement. InDuring the three months ended June 30, 2016,2020, the Company issued 176,95014,452 shares of its common stock under the 2020 At Market Agreement for net proceeds of approximately $257,000 under the 2014 At Market Agreement. In three months ended March 31, 2017, the Company issued 1,496,797 shares of common stock for net proceeds of approximately $1,946,000 under the 2014 At Market Agreement. The 2014 At Market Agreement expired in March 2017.ninesix months ended SeptemberJune 30, 2017,2019, the Company issued 716,563395,233 shares of its common stock under the 2017 At Market Agreement for net proceeds of approximately $1,865,000. There were 0 issuances of common stock under the 2017 At Market Agreement in 2020, and the 2017 At Market Agreement was terminated in May 2020.net proceeds of approximately $1,438,000 under the 2017 At Market Agreement.2017 Private PlacementFebruary 28, 2017,May 23, 2019, the Company closed a transaction with five individual investors through a private placementcompleted an offering of common stock and warrants.warrants to its shareholders of record as of April 29, 2019. In total,the offering, the Company issued 102,368received approximately $44.9 million for the issuance of 10,488,161 shares of common stock and warrants which may be exercised for proceeds of $200,000. The Company also issued, to the five investors, warrants to purchase 76,7762,622,154 shares of common stock at $5.00 per share.stock. The warrants have an expiration datemay be exercised at $7.00 per share of February 28, 2024. The exercise price of each warrant is adjustable in the event of acommon stock split or stock combination, capital reorganization, merger or similar event.and expire on May 23, 2026. The warrants were valued at approximately $101,000$8.2 million as of the issuance, using the closing price of $1.86,$4.01, a life of 7 years, a volatility of 97%101% and a risk-free interest rate of 1.92%2.33%. Based upon the Company’s analysis of the criteria contained in ASC Topic “DerivativesOther2017,connection with the conversion of the Series B Preferred Stock, the Company enteredextended 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 Seriesagreement with a vendoradditional three directors.will issue common stock to vendor in lieu of paying in cash in amount up to $100,000has recognized a charge for the year. Through September 30, 2017,change in fair value of the warrants immediately before and immediately after the modification. In January 2019, the Company has issued 16,793 sharesrecognized acommon stock$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 1,680 warrantsimmediately after the modification: a) immediately before the modification — an expected life range of 0.09 to purchase shares1.33 years, volatility of common stock pursuant98%, risk free interest rate range of 2.4% to this agreement2.59% and 0 dividends and; b) immediately following the valuemodification — an expected life range of such shares has been recorded as research5.09 to 6.33 years, volatility range of 106%, risk free interest rate range of 2.56% to 2.6% and development expense.Through September 30, 2017, the Company has issued a total of 393,235 shares of common stock for dividends on Series A, Series B and Series C Preferred Stock for 2017.8.zero dividends.Shareholder Class Actions and Derivative LawsuitsOn August 1 and 25, 2014, persons claiming to be Galectin shareholders filed putative shareholder derivative complaints in the Nevada District Court, seeking recovery on behalf of the Company against certain of the Company’s directors and officers. On September 10, 2014, the Nevada District Court entered an order consolidating the two cases, relieving the defendants of any obligation to respond to the initial complaints, and providing that defendants may respond to a consolidated complaint to be filed by the plaintiffs. On January 5, 2015, the Nevada District Court granted Defendants’ motion to transfer the consolidated putative derivative litigation to the United States District Court for the Northern District of Georgia (hereinafter referred to as the “Georgia Federal Derivative Action.”). The plaintiffs filed a consolidated complaint on February 27, 2015. On April 6, 2015, the Company and defendants filed motions to dismiss the consolidated complaint. Rather than respond to those motions, the plaintiffs sought and obtained leave to file an amended complaint. Plaintiffs filed their amended complaint (the “Complaint”) on May 26, 2015. The Complaint alleges that certain of the Company’s directors and officers (the “Derivative Action Individual Defendants”) breached their fiduciary duties to the Company’s shareholders by causing or permitting the Company to make allegedly false and misleading public statements concerning the Company’s financial and business prospects. The Complaint also alleges that the Derivative Action Individual Defendants violated the federal securities laws by allegedly making false or misleading statements of material fact in the Company’s proxy filings, committed waste of corporate assets, were unjustly enriched, and that certain defendants breached their fiduciary duties through allegedly improper sales of Galectin stock. In addition, the Complaint alleges that the Derivative Action Individual Defendants and one of the Company’s shareholders aided and abetted the alleged breaches of fiduciary duties. The Complaint seeks unspecified monetary damages on behalf of the Company, corporate governance reforms, disgorgement of profits, benefits and compensation by the defendants, costs, and attorneys’ and experts’ fees. The Company and defendants filed motions to dismiss the Complaint on July 8, 2015. On December 30, 2015, the United States District Court for the Northern District of Georgia dismissed the Georgia Federal Derivative Action with prejudice and entered a final judgment in favor of the defendants. Plaintiffs filed a notice of appeal seeking review of the dismissal order and final judgment. On July 7, 2016, the United States Court of Appeals for the Eleventh Circuit dismissed the appeal as the Plaintiffs failed to timely file their appeal brief. In September 2016, the Board received a demand letter from one of the plaintiffs in the Georgia Federal Derivative Action. The demand letter, among other things, requests that the Board investigate the conduct alleged in the Complaint and implement certain remedial measures purportedly designed to address the alleged conduct. It is expected that the Board will consider the demand letter in due course and in light of the related pending shareholder litigation described herein.On August 29, 2014, another alleged Galectin shareholder filed a putative shareholder derivative complaint in state court in Las Vegas, Nevada, seeking recovery on behalf of the Company against the same Galectin directors and officers who are named as defendants in the derivative litigation pending in the Georgia Federal Derivative Action. The plaintiff in the Nevada action subsequently filed first and second amended complaints. The second amended complaint alleges claims for breach of fiduciary duties, unjust enrichment, and waste of corporate assets, based on allegations that are substantially similar to those asserted in the Georgia Federal Derivative Action (except that the Nevada action does not allege violations of the federal securities laws and does not assert any claim against the Galectin shareholder named as a defendant in the Georgia Federal Derivative Action), and seeks unspecified monetary damages on behalf of the Company, corporate governance reforms, disgorgement of profits, benefits and compensation by the defendants, costs, and attorneys’ and experts’ fees. The Company and defendants filed motions to dismiss the second amended complaint on April 22, 2015. On April 29, 2015, the plaintiffs in the Georgia Federal Derivative Action (the “Intervenor Plaintiffs”) filed a motion to intervene in the Nevada action which, among other things, raised questions regarding the Nevada plaintiff’s standing. Thereafter, the Nevada plaintiff filed a motion to join additional plaintiffs. At a hearing held on June 11, 2015, the Nevada court: (i) granted the Intervenor Plaintiffs’ motion to intervene; (ii) directed the Intervenor Plaintiffs to file a complaint in intervention; (iii) directed the Nevada plaintiff to file a motion for leave to file a further amended complaint to add additional plaintiffs; (iv) stated that the defendants’ motions to dismiss the second amended complaint were denied “at this point;” (v) ordered the Nevada action stayed until December 11 , 2015; and (vi) directed the parties to submit a status report on December 11, 2015, updating the court on the progress and status of the Georgia Federal Derivative Action. On July 9, 2015, pursuant to the Nevada State Court’s instruction, the Intervenor Plaintiffs filed acomplaint-in-intervention in Nevada State Court, asserting similar claims to the ones they alleged in the Georgia Federal Derivative Action described above. On December 11, 2015, further to the Nevada State Court’s instruction, the parties submitted status reports detailing the status of the Georgia Federal Derivative Action. On January 5, 2016, the Nevada State Court held a status conference during which the dismissal of the Georgia Federal Derivative Action was discussed. Subsequent to that conference, on January 19, 2016, the defendants filed a motion to dismiss the Nevada State Court litigation based on the dismissal of the similar Georgia Federal Derivative Action, among other grounds. Following full briefing and a hearing on March 3, 2016, the Nevada State Court granted dismissal of the Nevada State Court litigation. Notice of Entry of the Nevada State Court’s order dismissing the Nevada State Court litigation was docketed on June 21, 2016. The Nevada plaintiff and Intervenor Plaintiffs (“Appellants”) filed notices of appeal seeking review of the Nevada State Court’s order and judgment dismissing the claims. The appeal is now fully briefed and awaiting a decision from the Nevada Supreme Court.Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult and requires an extensive degree of judgment, particularly where the matters involve indeterminate claims for monetary damages, are in the early stages of the proceedings, and are subject to appeal. In addition, because most legal proceedings are resolved over extended periods of time, potential losses are subject to change due to, among other things, new developments, changes in legal strategy, the outcome of intermediate procedural and substantive rulings and other parties’ settlement posture and their evaluation of the strength or weakness of their case against us. For these reasons, we are currently unable to predict the ultimate timing or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from, the matters described above. Based on information currently available, the Company does not believe that any reasonably possible losses arising from currently pending legal matters will be material to the Company’s results of operations or financial condition. However, in light of the inherent uncertainties involved in such matters, an adverse outcome in one or more of these matters could materially and adversely affect the Company’s financial condition, results of operations or cash flows in any particular reporting period.othersignificant pending legal proceedings exceptproceedings.noted above.9.of June 30, 2020 in thousands: $ 23 48 8 79 7 $ 72 As a result,Since then, the Company has contributed the $73,000 neededa total of $2,260,000, including $309,000 for the fourth quarter of 2014six months ended June 30, 2020, for expenses of the LLC. The CompanySince the end of 2014, SBH has contributed $659,000 and $687,000$158,000 for the LLC expenses in 2016 and 2015, respectively, and SBH contributed $50,000 in 2016. The Company contributed $45,000, $29,000 and $30,000 during the quarters ended March 31, 2017,LLC. As of June 30, 2017, and September 30, 2017, respectively. As of September 30, 2017,2020, the Company’s ownership percentage in the LLC was 81.2%82.6%. The Company accounts for the interest in the LLC as a consolidated, less than wholly owned subsidiary. Because the LLC’s equity is immaterial, the value of theFebruary 2018;at least September 30, 2021; our commitments and contingencies; and our market risk exposure. Forward-looking statements are based on current expectations, estimates and projections about the industry and markets in which Galectin Therapeutics operates, and management’s beliefs and assumptions. These statements are not guarantees of future performance and involve certain known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties are related to and include, without limitation,uncertainties related to any litigation, including shareholder class actions and derivative lawsuits filed,certain severe skin diseases,cancer and cancer.selected other diseases. Our drug candidates are based on our method of targeting galectin proteins, which are key mediators of biologic and pathologic functions. We use naturally occurring, readily-available plant products as starting material in manufacturing processes to create proprietary, patented complex carbohydrates with specific molecular weights and other pharmaceutical properties. These complex carbohydrate molecules are appropriately formulated into acceptable pharmaceutical formulations. Using these unique carbohydrate-based candidate compounds that largely bind and inhibit galectin proteins, particularlyGR-MD-02, belapectinGR-MD-02 Belapectin has the potential to treat many diseases due tothis itsonea Phase 2 clinical study in NASH patients with advanced fibrosishave oneongoinga second Phase 22B clinical studytrial in NASH patients with well compensated cirrhosisNASH-CX latter was confirmed in a Type C meeting with FDA in February 2019. Thereafter, the Company with its external NASH consultants designed a Phase 3 study that was sent to various contract research organizations (CROs) for their input on feasibility, timing costs and other important considerations. At the request of the United States Food and Drug Administration (FDA), the trial patients have completed all infusions/dosingprotocol and final HVPGanswers to questions raised by FDA at the February meeting was submitted as a Type C (Written Response Only) request to FDA on July 17, 2019; this response sought FDA feedback and liver biopsyagreement with regards to the proposed clinical program. Further details on results of theobtainedincorporated 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. This modified trial design was discussed with FDA in a meeting on all patients.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. and filed the protocol and various other documents with FDA on April 30, 2020. The study officially consented its first patient in June 2020. In addition, the Company has been working to some additional information requested by FDA which mostly relate to reporting of completed developmental toxicity studies.is expected to complete with 151 patientsevaluating the safety and to report top line dataefficacy of its December 2017. NASH cirrhosis is a progressive disease, currently not treatable and ultimately may result in liver failure that has poor prognosis and no effective, approved medical therapies other than liver transplant.Galectin-3 expression is highly increased in the liver of patients with liver fibrosis and liver cirrhosis. We believe that ourgalectin-3 inhibitor, by reducinggalectin-3 the extra-cellular level, ultimately showing a strong anti-fibrotic potential may provide a novel treatment for various forms of liver fibrosis.(non-carbohydrate) (generally,immune enhancementimmuno-oncology for cancer therapy and certain severe skin diseases including moderate to severe plaque psoriasis and severe atopic dermatitis. Ourtherapy. However, our clinical development efforts are primarily focused on both liver fibrosis and fatty liver disease as represented by a Phase 2 clinical trial in NASH-cirrhosis which will report top line data in December 2017.NASH. All of our proposed products are presently in development, includingshow that mice lackingsubstantiating the importance ofdisease; they are also incapabledisease as well as development of developing fibrosis in other tissues such as lung, kidney and cardiac.GR-MD-02, belapectin, which has shown promise in preclinical and early clinical studies in treatment of fibrosis, certain severe skin diseases,disease, and in cancer therapy. Currently we are focusing on development ofGR-MD-02 belapectin intended to be used in the treatment of liver fibrosis associated with fatty liver disease (NASH) and more specifically onin NASH cirrhosis. We have also leveraged our relationships with well-known investigators to demonstrate clinical effects ofGR-MD-02 belapectin in treating moderate to severe plaque psoriasis, severe atopic dermatitis, and in cancer therapy in combination with immune-system modifying agent(s).GR-MD-02 Belapectin is a proprietary, patented compound derived from natural, readily available, plant-based starting materials, which, following chemical processing, exhibits the properties of binding to and inhibiting this continues to behas been explored in limited other preclinical studies. GR-MD-02belapectin End of1 meeting held with FDA in 2014. Two Phase 2 clinical trials were designed. The NASH CX trial, was designed for patients with cirrhosis, and the NASH FX trial was designed for patients with advanced fibrosis but not cirrhosis. Its principal purpose was to evaluate various imaging modalities. The NASH FX trial top line data was reported in September 2016 and theThe Phase 2 NASH CX trial, was designed for patients with well compensated cirrhosis. The NASH CX trial top line data is expectedwas reported in December 2017.2017 and was published inNASH – RX Lung Fibrosis GR-MD-02belapectin In Kidney Fibrosis GR-MD-02belapectin In Cardiac and Vascular Fibrosis GR-MD-02belapectin and In GR-MD-02belapectin Investigator IND submitted in December 2013. Phase 1B study in process. A second Phase 1B study began in February 2017 and studies will continue.February 2017 and studies with the 3 Psoriasis GR-MD-02belapectin IND submitted March 2015. A phase 2a trial in moderate to severe plaque psoriasis patients began in January 2016. Interim data on the first four patients were positive and were reported in May 2016. Further positive data was reported in September 2016. Investigator initiated IND submitted for treatment of three patients with severe atopic dermatitis, with positive preliminary data presented in February 2017. StudiesFurther studies are now completed.dependent on finding a suitable strategic partner. GR-MD-02GR-MD-02 belapectin has a significant therapeutic effect on liver fibrosis as shown in several relevant animal models. In addition, in NASH animal models,GR-MD-02 belapectin has been shown to reduce liver fat, inflammation, and ballooning degeneration or death(death of liver cells.cells). Therefore, we choseGR-MD-02 belapectin as the lead candidate in a development program targeted initially at fibrotic liver disease associated with(NASH, or fatty liver disease)(NASH). In January 2013, an Investigational New Drug (“IND”) was submitted to the FDA with the goal of initiating a Phase 1 study in patients with NASH and advanced liver fibrosis to evaluate the human safety ofGR-MD-02 belapectin and pharmacodynamics biomarkers of disease. On March 1, 2013, the FDA indicated we could proceed with a US Phase 1 clinical trial forGR-MD-02 belapectin with a development program aimed at obtaining support for a proposed indication ofGR-MD-02 belapectin for treatment of NASH with advanced fibrosis. The Phase 1 trial was completed and demonstrated thatGR-MD-02 belapectin up to 8 mg/kg Lean Body Mass (LBM), i.v. was safe and well tolerated and the human pharmacokinetic data defined a drug dose for use in the planned Phase 2 trials. Additionally, there was evidence of a pharmacodynamic effect ofGR-MD-02 at the 8 mg/kg dose with a decrease in alpha 2 macroglobulin, a serum marker of fibrotic activity, and a reduction in liver stiffness as determined by FibroScan®. An “End of Phase 1 Meeting” was held with FDA which, amongst other items, provided guidance on the primary endpoint for the Phase 2 clinical trial.GR-MD-02 belapectin and it showed that with 8 mg/kg LBM dose ofGR-MD-02 belapectin and 2 mg/kg dose of midazolam there was no drug-drug interaction and no serious adverse events or drug-related adverse events were observed. This study was required by the U.S. Food and Drug Administration (FDA) and the primary objective was to determine if single or multiple intravenous (IV) doses ofGR-MD-02 affect the 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 Galectin 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.consistsconsisted of two separate human clinical trials. The firstprimary clinical trial iswas the Phase 2biswas the primary focus of our program and is a randomized, placebo-controlled, double-blind, parallel-group Phase 22b trial to evaluate the safety and efficacy ofGR-MD-02 belapectin for treatment of liver fibrosis and resultant portal hypertension in NASH patients with compensated cirrhosis. A smaller, exploratoryGR-MD-02, belapectin, 8 mg/kg LBM ofGR-MD-02 belapectin or placebo, with approximately 54 patients in each group. Approximately 50% of patients at baseline had esophageal varices (a complication of portal hypertension). The primary endpoint iswas a reduction in change in hepatic venous pressure gradient (HVPG). Patients are receivingreceived an infusion of belapectin or placebo every other week for one year, a total of 26 infusions, and will bewere evaluated to determine the change in HVPG as compared with placebo. HVPG will be correlated with secondarySecondary or exploratory endpoints ofincluded fibrosis on liver biopsy, as well as with measurement of liver stiffness (FibroScan, which arenon-invasive measures. Top line data readout was reported in December 2017. The study demonstrated a favorable safety profile and clinically meaningful efficacy results in patients without esophageal varices at baseline demonstrated by a prevention of development of varices when compared to placebo.liver that may be used in future studies. A late-breaking abstract on screening data results correlating clinicallytotal population), there was a statistically significant portal hypertension and methacetin breath test results was presented at The International Liver Congress™ in Amsterdam on April 20, 2017. The DSMB concluded its third and final revieweffect of the safety and conduct2 mg/kg LBM dose of belapectin on thein-life phase of ourNASH-CX trial and indicated it concurrence with continuation absolute change in HVPGtrial8 mg/Kg LBM dose of belapectin on absolute or percent change in HVPG from baseline to week 54 was not significant.‘clean’ safety profile.8 mg/kg LBM, respectively) vs placebo (18%). As esophageal varices can lead to hemorrhagic complication, that can be fatal, we believe the prevention of the timeesophageal varices may represent a clinically relevant measure of their evaluation, therapy had been completedclinical efficacy in 68% of subjects in theNASH-CX trial. As of September 30, 2017, 151 patients (100%) have completed all 52 weeks of infusions in this Phase 2b clinical trial. All of the doses have already been administered and end of study HVPG and liver biopsies have been completed. The dropout rate remains at approximately 7%, which is well below expectations, which may increase the power of the trial. We currently expect approximately 151 subjects will complete the trial in November 2017. This trial was designed, and is being conducted, with a primary endpoint that the U.S. Food and Drug Administration views may be a surrogate for outcomes for registration trials in this patient population. After completion of study endpoints and initial analysis of data, the Company remains on track to report top line data from theNASH-CX trial in early December 2017.The second trial, our Phase 2a pilot trialNASH-FX for patients with NASH advanced fibrosis that explored usecirrhosis.threenon-invasive imaging technologies, is now complete. Itthe patient’s baseline portal hypertension. ii) There was an important drug effect of belapectin in the total patient population on liver biopsy with a statistically significant improvement in hepatocyte ballooning (ie cell death), (iii) There was a shorter, single site, four-month trialstatistically significant reduction (p=0.02) in 30 NASHthe development of new esophageal varices in drug-treated patients with advanced fibrosis, but not cirrhosis, randomized 1:1compared to either 9bi-weekly doses ofplacebo. We believe that this is a clinically relevant endpoint related to patient outcomes, (iv) While there was a drug effect in both the 2 mg/kg LBM and 8 mg/kg LBM groups on the development ofGR-MD-02 or placebo. The trial did not meet its primary biomarker endpoint as measured using multi-parametric magnetic resonance imaging (LiverMultiScan(R), Perspectum Diagnostics). The trial also did not meet secondary endpoints that measure varices and liver stiffness asbiopsy there was a surrogate for fibrosis using, magnetic resonance-elastographyconsistently greater and FibroScan score. After analysisstatistically significant effect of the data, we do not believe that a four-month treatment period was likely long enough in the NASH population to show efficacy results. This small study was not powered for the secondary endpoints and thus, not surprisingly did not meet the secondary endpoints. In the trial,GR-MD-02 was found2 mg/kg LBM dose of belapectin, (v) belapectin appears to be safe and well tolerated amongin this one year clinical trial, a feature that is of prime importance for a cirrhotic population and (vi) We believe this is the patient population with no serious adverse events.Although there was no apparentfirst large, randomized clinical trial to demonstrate a clinically meaningful improvement in portal hypertension or liver biopsy in patients with compensated NASH cirrhosis who have not yet developed esophageal varices.threenon-invasive tests SEC and in a peer reviewed publication inassessmentthe prevention of esophageal varices in patient withfibrosisfailure, and (iii) During the first 18 months, two belapectin dose levels (2 mg/kg LBM and 4 mg/kg LBM) will be compared to placebo (phase 2b). Then, at the interim analysis (IA), one belapectin dose will be selected based on efficacy and safety, for continued evaluation (Phase 3). The belapectin dose selected for the phase 2b/3 are based on the analysis of thefour-monthNASH-FX trial,protocol, the principal investigatorprimary endpoint remain the development of theNASH-FX trial has stated that the inhibitionvarices. Secondary endpoints include a composite clinical outcomes endpoint, including varices requiring treatment (development ofgalectin-3 large varices or varices withGR-MD-02 remains promising for the treatment a red wale), decompensating events,NASH fibrosis. Of note is thatGR-MD-02 has demonstrateddeveloping esophageal varices, patient selection will be based on clinical signs of portal hypertension, including, a low platelet count, an improved clinical effect inmoderate-to-severe psoriasis and inmoderate-to-severe atopic dermatitis patients, suggesting the compound has activity in an immune-mediated inflammatory human disease that can occur in association with NASH and in whichgalectin-3 is believed to play a role. We believe our drug candidate provides a promising new approach for the therapyincreased spleen size and/or evidence of fibrotic diseases, and liver fibrosis in particular. Fibrosis is the formation of excess connective tissue (collagen and other proteins plus cellular elements such as myofibroblasts) in response to damage, inflammation or repair. When the fibrotic tissue becomes confluent, it obliterates the cellular architecture, leading to scarring and dysfunction of the underlying organ. Givengalectin-3’s broad biological functionality, it has been demonstrated to be involved in cancer, inflammation and fibrosis, heart disease, and renal disease. We have further demonstrated the broad applicability of the actions of ourgalectin-3 inhibitor’s biological effect in ameliorating fibrosis involving lung, kidney, blood vessels, and cardiac tissues in a variety of animal models.andand/or reverse the fibrosis in the liverportal hypertension and thereby improve liver function and prevent the development of complicationsvarices, potentially one of fibrosis/the most immediately life-threatening complication of cirrhosis. Based on the results of theliver-related mortalityenrollment began in June 2020. This remains subject to potential site delays due to the impact of the globalGR-MD-02 belapectin enhances the immune response to cancer cells, increased tumor shrinkage and enhanced survival in immune competent mice with prostate, breast, melanoma and sarcoma cancers when combined with one of the immune checkpoint inhibitors, andGR-MD-02 belapectin in combination with YervoyGR-MD-02 belapectin 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 belapectin trial in combination with Yervoy trial,ipilimumab (YervoyGR-MD-02 belapectin with pembrolizumab (KEYTRUDA)(KEYTRUDAneck)neck cancer) with one partial response and one mixed response in 5the melanoma patients. There was a rapid and marked tumor response after 3 doses of combinedGR-MD-02 belapectin and pembrolizumab in the one partial response patient who had failed high-dose This Phase 1b clinical trial that combinesGR-MD-02 with pembrolizumab (KEYTRUDA®) continues to enroll patients and recently completed the second cohort, which used 4 mg/kgGR-MD-02. The third cohort, which will start 85 days following the final patient enrollment in the second cohort, will enroll 10 patients at a dose of 8 mg/kgGR-MD-02. There will likely be additional data reported in early 2018. The study is ongoing and progression to further development will be based on response rate as compared to historical response rates to pembrolizumab alone.Psorasis.GR-MD-02, belapectin, 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.GR-MD-02 Belapectin inhibition ofGR-MD-02 belapectin 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 plaqueGR-MD-02, belapectin, the next steps would entail a controlled, does-ranging clinical trial which we do not expect to conduct absent a strategic partnership. The results of this Phase 2a clinical trial was presented at the Maui Derm for Dermatologists meeting in March 2017. The results have been published in the Journal of the American Academy of Dermatology in October 2017.Atopic Dermatitis. Atopic Dermatitis (AD) is a chronic pruritic (itching), immune-mediated, inflammatory skin disease that for some adult patients can be severe and debilitating. There is an important unmet medical need in adults with severe disease who are not adequately treated with topical medicines. Our findings in psoriasis led to an interest in exploring the potential utility of the compound in treatment of AD. A Phase 2a open label trial was initiated in 3 adult patients who were treated withGR-MD-02 at 8 mg/Kg every other week for 12 weeks, and dosage could be increased to 12 mg/Kg for weeks12-24 if an incomplete response was observed. The response was objectively evaluated using two validated scores: the EASI (eczema area and severity index) and SCORAD (severity scoring of atopic dermatitis index). All three patients showed clinical responses as determined by reduction of EASI and SCORAD during the study. but no subject achieved a primary endpoint. Upon completion of the24-week treatment phase subject 1 met both secondary endpoints ofSCORAD-50 andEASI-50, and subject 2 met one secondary endpoint(EASI-50). Subject 3 approached a secondary endpoint with an EASI reduction of 49% at week 24. There were no drug related adverse events during this trial. These initial findings are believed to suggest a clinically relevant effect. Additionally, the 12 mg/Kg dosage was administered safely in this patient population.GR-MD-02 in moderate to severe skin diseases belapectin is based upon interaction with, and inhibition of, galectin proteins, particularlyskin diseases and cancer. WhileGR-MD-02 belapectin is capable of binding to multiple galectin proteins, we believe that it has the greatest affinity forprocess.NineSix Months Ended SeptemberJune 30, 20172020 Compared to Three and Six Months Ended SeptemberJune 30, 2016 Three Months Ended
September 30, Nine Months Ended
September 30, 2017 as Compared to 2016 Three Months Nine Months 2017 2016 2017 2016 $ Change % Change $ Change % Change (In thousands, except %) $ 3,503 $ 3,289 $ 10,719 $ 11,892 $ 214 7 % $ (1,173 ) (10 %) Three Months Ended Six Months Ended 2020 as Compared to 2019 June 30, June 30, Three Months Six Months 2020 2019 2020 2019 $ Change % Change $ Change % Change (In thousands, except %) $ 4,681 $ 1,522 $ 6,825 $ 2,168 $ 3,159 208 % $ 4,657 215 % We have two product candidates,GR-MD-02 andGM-CT-01; however onlyGR-MD-02 is in active development. We filed for an IND forGR-MD-02 in January 2013 and in February 2013 we entered into an agreement with CTI to conduct a Phase 1 clinical trial ofGR-MD-02. In March 2013, the FDA indicated we could proceed with a Phase 1 human clinical trial ofGR-MD-02, and we began enrolling patients in the third quarter of 2013. 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 March 31, 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 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 doesnot necessarily 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 provide a firm foundation for entry into a Phase 2 development program.The Company held an “End of Phase 1 meeting” with the FDA and, amongst other things, received guidance on the primary endpoints for a Phase 2 trial. Our Phase 2 program in fibrotic disease consists of two separate human clinical trials. The first clinical trial is the Phase 2bNASH-CX study for patients with NASH with cirrhosis, which began enrolling in June 2015. This study is the primary focus of our program and is a randomized, placebo-controlled, double-blind, parallel-group Phase 2 trial to evaluate the safety and efficacy ofGR-MD-02 for the treatment of liver fibrosis and resultant portal hypertension in patients with NASH cirrhosis. Enrollment in this trial was completed in September 2016, and a total of 162 patients at 36 sites in the United States were be randomized to receive either 2 mg/kg ofGR-MD-02, 8 mg/kg ofGR-MD-02 or placebo, with approximately 54 patients in each group. The primary endpoint is a reduction in change in hepatic venous pressure gradient (HVPG). Patients are receiving an infusion every other week for one year, total of 26 infusions, and will be evaluated to determine the change in HVPG as compared with placebo. HVPG will be correlated with secondary endpoints of fibrosis on liver biopsy as well as with measurement of liver stiffness (FibroScan(R)) and assessment of liver metabolism (13C-methacetin breath test, Exalenz), which arenon-invasive measures of the liver that may be used in future studies. Data readout is expected in early December 2017.The second trial, our Phase 2a pilot trialNASH-FX for patients with NASH advanced fibrosis which explored use of threenon-invasive imaging technologies, is now complete. It was a shorter, four-month trial in 30 NASH patients with advanced fibrosis, but not cirrhosis, randomized 1:1 to either 9bi-weekly doses of 8 mg/kg ofGR-MD-02 or placebo. The trial did not meet its primary biomarker endpoint as measured using multi-parametric magnetic resonance imaging (LiverMultiScan(R), Perspectum Diagnostics). The trial also did not meet secondary endpoints that measure liver stiffness as a surrogate for fibrosis using, magnetic resonance-elastography and FibroScan score. After analysis of the data, we do not believe that a four-month treatment period was likely long enough in the NASH population to show efficacy results. This small study was not powered for the secondary endpoints and thus, not surprisingly did not meet the secondary endpoints. In the trial,GR-MD-02 was found to be safe and well tolerated among the patient population with no serious adverse events.Although there was no apparent improvement in the threenon-invasive tests for assessment of liver fibrosis in the four-monthNASH-FX trial, the principal investigator of theNASH-FX trial has stated that the inhibition ofgalectin-3 withGR-MD-02 remains promising for the treatment of NASH fibrosis. Of note is thatGR-MD-02 has demonstrated an improved clinical effect inmoderate-to-severe psoriasis, suggesting the compound has activity in a human disease that can occur in association with NASH. We believe our drug candidate provides a promising new approach for the therapy of fibrotic diseases, and liver fibrosis in particular. Fibrosis is the formation of excess connective tissue (collagen and other proteins plus cellular elements such as myofibroblasts) in response to damage, inflammation or repair. When the fibrotic tissue becomes confluent, it obliterates the cellular architecture, leading to scarring and dysfunction of the underlying organ. Givengalectin-3’s broad biological functionality, it has been demonstrated to be involved in cancer, inflammation and fibrosis, heart disease, renal disease and stroke. We have further demonstrated the broad applicability of the actions of ourgalectin-3 inhibitor’s biological effect in ameliorating fibrosis involving lung, kidney and cardiac tissues in a variety of animal models.The focus and goal of the therapeutic program is to stop the progression of and reverse the fibrosis in the liver and, thereby improve liver function and prevent the development of complications of fibrosis/cirrhosis and liver-related mortality in patients.Additionally, during the Phase 1 clinical trial, there appeared to be a potential beneficial effect on at least one patient’s moderate to severe psoriasis. 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), 4 patients with moderate to severe plaque psoriasis were administeredGR-MD-02 every two weeks for 12 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. However, there are existing drugs on the market in this disease that produce 75% and higher improvements. While we are encouraged that this study has demonstrated clinically meaningful results in a human disease withGR-MD-02, we do not expect to conduct further trials in this area absent a strategic partnership.An open label drug-drug interaction study was completed withGR-MD-02 and it showed that with 8 mg/kg dose ofGR-MD-02 and 2 mg/kg dose of midazolam there was no drug-drug interaction and no serious adverse events or drug-related adverse events were observed. This study was required by the FDA and the primary objective was to determine if single or multiple intravenous (IV) doses ofGR-MD-02 affect the pharmacokinetics (PK) of midazolam. The secondary objective was to assess the safety and tolerability ofGR-MD-02 when administered concomitantly with midazolam. The lack of a drug interaction in this study enables Galectin 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.Based on guidance from FDA and in furtherance of its understanding of theGR-MD-02 molecule, we continue to enhance its chemistry, manufacturing and control procedures onGR-MD-02 active pharmaceutical ingredient (API) as well as on the finished, sterile, pharmaceutical dosage form. Various state of the art and cutting-edge analytical technologies are being utilized, for example, to characterize and quantify the backbone vs. side-chain constituents and their quantitation, use of sophisticated linkage analysis with2-D NMR to provide both qualitative and quantitative information on the proportion of oligomers, degree of methylation, as well as other monoclonal specific antibody techniques to map GR oligomer integrity and distribution. The Company has also characterized how the GR molecule behaves under conditions of forced degradation. Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 (in thousands) $ 2,945 $ 2,499 $ 8,973 $ 9,272 39 213 105 787 519 577 1,641 1,833 $ 3,503 $ 3,289 $ 10,719 $ 11,892 Three Months Ended
June 30, Six Months Ended
June 30, 2020 2019 2020 2019 (in thousands) $ 3,779 $ 944 $ 4,798 �� $ 930 121 17 363 101 781 561 1,664 1,137 $ 4,681 $ 1,522 $ 6,825 $ 2,168 monthsand six month periods ended SeptemberJune 30, 2017 as compared to the prior year and decreased during nine months ended September 30, 20172020 as compared to the same period in 2016 primarily due to timing of costs incurred in theNASH-CX clinical trial. As we continue our Phase 2 trial, we expect our clinical activities costs will increase although they may fluctuate from quarter to quarter as the trials progress. Clinical activities expenses primarily decreased due to reduced expenses associated with drug manufacturing and preparation.Pre-clinical activities decreased primarily because we have completedpre-clinical work directly related to our Phase 2 clinical trial program.periods ended June 30, 2019. Other research and development expense decreased in the nine months ended September 30, 2017 compared to 2016increased primarily due to a decreaseincreased payroll related to the hiring of Dr. Pol Boudes as Chief Medical Officer innon-cash stock-based compensation expense of approximately $191,000. Three Months Ended
September 30, Nine Months Ended
September 30, 2017 as Compared to 2016 Three Months Nine Months 2017 2016 2017 2016 $ Change % Change $ Change % Change (In thousands, except %) $ 911 $ 1,248 $ 3,155 $ 4,990 $ (337 ) (27 %) $ (1,835 ) (37 )% 2020 as Compared to 2019 Three Months
Ended June 30, Six Months
Ended June 30, Three Months Six Months 2020 2019 2020 2019 $ Change % Change $ Change % Change (In thousands, except %) $ 1,421 $ 1,498 $ 2,861 $ 3,219 $ (77) (5 )% $ (358) (11 )% stock basedstock-based compensation, legal and accounting fees, insurance, investor relations, business development and other office related expenses. The primary reasons for the decrease in general and administrative expenses for the three monthsthree-months ended SeptemberJune 30, 20172020 as compared to the same period in 2016 are reduced legal expenses of approximately $163,000 and decreased2019 is due to a decrease in$90,000.$48,000. The primary reasons for the decrease in general and administrative expenses for the nine months SeptemberJune 30, 20172020 as compared to the same period in 20162019 is due to recording of severance of $300,000, acceleration ofa decrease in stock-based$578,000 related to the termination of the Company’s executive chairman in January 2016, a decrease in investor relations expenses of approximately $335,000,$101,000 and a decrease in legal expenses of $248,000, and a decrease$264,000 partially offset by an increase innon-cash stock based compensation insurance expense of $403,000.SeptemberJune 30, 2017,2020, we raised a net total of $132$197.4 million from these offerings. We have operated at a loss since our inception and have had no significant revenues. We anticipate that losses will continue for the foreseeable future. At SeptemberJune 30, 2017, we2020, the Company had $7.0$40.8 million of unrestricted cash and cash equivalents available to fund future operations. We believe thatIn 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 cash on hand at September 30, 2017,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 February 2018 which creates uncertainty about the Company’s ability to continue as a going concern. Our abilitySeptember 30, 2021. We will require more cash to fund our operations after our current cash resources are exhausted depends on our abilitySeptember 30, 2021 and believe we will be able to obtain additional financing. The currently planned operations include costs related to a planned adaptively designed Phase 2b/3 clinical trial. The costs of the trial along with drug manufacturing and scientific support activities and general overhead during the first stage of the Phase 3 trial are currently estimated to be approximately $90 million. 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, achieve profitable operations, asif available, that such financing will be on terms favorable to which no assurances can be given. Accordingly, based on the forecasts and estimates underlying the Company’s current operating plan, substantial doubt exists about the ability for the Company to continue as a going concern. The financial statements do not currently include any adjustments that might be necessary if the Company is unable to continue as a going concern.$444,000$1,361,000 to $11,988,000$6,975,000 for the ninesix months ended SeptemberJune 30, 2017,2020, as compared to $11,544,000$5,614,000 for the ninesix months ended SeptemberJune 30, 2016.2019. Cash operating expenses increased principally just due to timing of payments for research and development activities related to ouractivity withGR-MD-02.ninesix months ended SeptemberJune 30, 20172020, of $263,000 represents proceeds of $219,000 from the exercise of common stock options and 2016, of $3,584,000 and $1,757,000, respectively, represents$44,000 in net proceeds from the saleissuance of common shares under our ATM. Net cash provided by financing activities for the six months ended June 30, 2019, of $49,404,000 represents proceeds from the issuance of common stock from the stockholder rights offering of $44,889,000, from the ATM of $1,865,000 and preferred$2,650,000 from the exercise of common stock options and warrants.Other.We have engaged outside vendors for certain services associated with our clinical trials. These services are generally available from several providers and, accordingly, our arrangements are typically cancellable on 30 days notice. intangible assets, accrued expenses, stock-based compensation, contingencies and litigation. We base our estimates on historical experience, terms of existing contracts, our observance of trends in the industry, information available from other outside sources and on various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.20162019 Annual Report on FormSeptemberJune 30, 2017,2020, our disclosure controls and procedures were effective at a reasonable assurance level. effective.SeptemberJune 30, 2017,2020, no change in our internal control over financial reporting has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.2016,2019, which could materially impact our business, financial condition or future results.Item 6.Exhibits 31.1* Certification Pursuant to Rule13a-14(a) of the Securities Exchange Act of 1934 31.2* Certification Pursuant to Rule13a-14(a) of the Securities Exchange Act of 1934 32.1** Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of theSarbanes-Oxley Act of 2002 32.2** Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of theSarbanes-Oxley Act of 2002 101.INS101.INS* XBRL Instance Document*Document the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH101.SCH* XBRL Taxonomy Extension Schema Document*Document 101.CAL101.CAL* XBRL Taxonomy Calculation Linkbase Document*Document 101.DEF101.DEF* XBRL Taxonomy Extension Definition Linkbase Document*Document 101.LAB101.LAB* XBRL Taxonomy Label Linkbase Document*Document 101.PRE101.PRE* XBRL Taxonomy Presentation Linkbase Document*Document 104* Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document and included in Exhibit 101) * ** November 7, 2017.August 10, 2020.GALECTIN THERAPEUTICS INC. By: Peter G. TraberHarold H. ShlevinName: Peter G. Traber, M.D.Harold H. Shlevin, Ph.D.Title: By: Name: Jack W. Callicutt Title: 23