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GALECTIN THERAPEUTICS INC Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

11/15/2021 | 07:54am EST
In addition to historical information, the following Management's Discussion and
Analysis of Financial Condition and Results of Operations contains
forward-looking statements as defined under Section 21E of the Securities
Exchange Act of 1934, as amended, and is subject to the safe harbor created
therein for forward-looking statements. Such statements include, but are not
limited to, statements concerning our anticipated operating results, research
and development, clinical trials, regulatory proceedings, and financial
resources, and can be identified by use of words such as, for example,
"anticipate," "estimate," "expect," "project," "intend," "plan," "believe" and
"would," "should," "could" or "may." All statements, other than statements of
historical facts, included herein that address activities, events, or
developments that the Company expects or anticipates will or may occur in the
future, are forward-looking statements, including statements regarding: plans
and expectations regarding clinical trials; plans and expectations regarding
regulatory approvals; our strategy and expectations for clinical development and
commercialization of our products; potential strategic partnerships;
expectations regarding the effectiveness of our products; plans for research and
development and related costs; statements about accounting assumptions and
estimates; expectations regarding liquidity and the sufficiency of cash to fund
currently planned operations through at least September 30, 2022; 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,

• our early stage of development,

• we have incurred significant operating losses since our inception and cannot

assure you that we will generate revenue or profit,

• our dependence on additional outside capital,

• we may be unable to enter into strategic partnerships for the development,

commercialization, manufacturing and distribution of our proposed product


• uncertainties related to any litigation, including shareholder class actions

and derivative lawsuits filed,

• uncertainties related to our technology and clinical trials, including expected

dates of availability of clinical data,

• we may be unable to demonstrate the efficacy and safety of our developmental

product candidates in human trials,

• we may be unable to improve upon, protect and/or enforce our intellectual


• we are subject to extensive and costly regulation by the U.S. Food and Drug

Administration (FDA) and by foreign regulatory authorities, which must approve

   our product candidates in development and could restrict the sales and
   marketing and pricing of such products,

• competition and stock price volatility in the biotechnology industry,

• limited trading volume for our stock, concentration of ownership of our stock,

and other risks detailed herein and from time to time in our SEC reports,

• the impact resulting from the outbreak of COVID-19, which has delayed and may

continue to delay our clinical trial and development efforts, as well as the

   impact that COVID-19 has on the volatility of the capital market and our
   ability to access the capital market and,

• other risks detailed herein and from time to time in our SEC reports, including

our Annual Report on Form 10-K filed with the SEC for the fiscal year ended

December 31, 2020, and our subsequent SEC filings.

The following discussion should be read in conjunction with the accompanying
consolidated financial statements and notes thereto of Galectin Therapeutics
appearing elsewhere herein.    Furthermore, in this Quarterly Report on Form
10-Q, we refer to other sources of information, such as the information posted
on our website or peer reviewed publications. The information from these sources
are not incorporated by reference to this Quarterly Report on Form 10-Q.


We are a clinical stage biopharmaceutical company engaged in drug research and
development to create new therapies for fibrotic disease, cancer and selected
other diseases. Our drug candidates are based on our method of targeting
galectin proteins, which are key mediators of biologic and pathologic functions.
We use naturally occurring, readily-available plant products as starting
material in manufacturing processes to create proprietary, patented complex
carbohydrates with specific molecular weights and other pharmaceutical
properties. These complex carbohydrate molecules are appropriately formulated
into acceptable pharmaceutical formulations. Using these unique
carbohydrate-based candidate compounds that largely bind and inhibit galectin
proteins, particularly galectin-3, we are undertaking the focused pursuit of
therapies for indications where galectin proteins have a demonstrated role in
the pathogenesis of a given disease. We focus on diseases with serious,
life-threatening consequences and those where current treatment options, are
limited specifically in NASH (non-alcoholic steatohepatitis) with cirrhosis and
certain cancer indications. Our strategy is to establish and implement clinical
development programs that add value to our business in the shortest period of
time possible and to seek strategic partners when one of our programs becomes
advanced and requires significant additional resources.




Our lead galectin-3 inhibitor is belapectin (GR-MD-02), which has been
demonstrated in preclinical models to reverse liver fibrosis and cirrhosis.
Belapectin has the potential to treat many diseases due to galectin-3's
involvement in multiple key biological pathways such as fibrosis, immune cell
function and immunity, cell differentiation, cell growth, and apoptosis (cell
death). The importance of galectin-3 in the fibrotic process is supported by
experimental evidence. Animals with the gene responsible for galectin-3
"knocked-out" can no longer develop fibrosis in response to experimental stimuli
compared to animals with an intact galectin-3 gene. We are using our galectin-3
inhibitor to treat advanced liver fibrosis and liver cirrhosis in NASH patients.
We have completed two Phase 1 clinical studies, a Phase 2 clinical study in NASH
patients with advanced fibrosis (NASH-FX) and a second Phase 2b clinical trial
in NASH patients with well compensated cirrhosis (NASH-CX) meaning the liver is
scarred but still able to perform most of its basic functions.

We are now engaged in a Phase 2b/3 clinical trial. Our study protocol was filed
with the FDA on April 30, 2020 for a seamless adaptively-designed Phase 2b/3
clinical study, the NAVIGATE trial (formerly called NASH-RX), evaluating the
safety and efficacy of its galectin-3 inhibitor, belapectin (GR-MD-02), for the
prevention of esophageal varices in patients with non-alcoholic steatohepatitis
(NASH) cirrhosis (Further details are available at www.clinicaltrials.gov under
study NCT04365868); this study began enrolling patients in Q2-2020. In September
2020, the Company received a letter from the FDA providing comments, asking
questions and providing guidance on various aspects of the ongoing NAVIGATE

Additionally, a study protocol entitled "A Single-dose, Open-label,
Pharmacokinetic Study of Belapectin (GR-MD-02) in Subjects With Normal Hepatic
Function and Subjects With Varying Degrees of Hepatic Impairment" has been filed
with the FDA to examine the effects of the drug in subjects with normal hepatic
function and subjects with varying degrees of hepatic impairment (study details
are listed under study NCT04332432 on www.clinicaltrials.gov); this study is
enrolling patients.

We endeavor to leverage our scientific and product development expertise as well
as established relationships with outside sources to achieve cost-effective and
efficient drug development. These outside sources, amongst others, provide us
with expertise in preclinical models, pharmaceutical development, toxicology,
clinical trial operations, pharmaceutical manufacturing, sophisticated physical
and chemical characterization, and commercial development. We also have
established through our majority-owned joint venture subsidiary, Galectin
Sciences LLC, a discovery program aimed at the targeted development of small
molecules (generally, non-carbohydrate) that bind galectin proteins and may
afford options for alternative means of drug delivery (e.g., oral) and as a
result expand the potential uses of our galectin-3 inhibitor compounds. Three
series of composition of matter patents covering discoveries at Galectin
Sciences have been filed.

We are also pursuing a development pathway to clinical enhancement and
commercialization for our lead compounds in immuno-oncology for cancer therapy
in collaboration with Providence Portland Cancer Center. However, our clinical
development efforts are primarily focused on liver fibrosis and NASH. All of our
proposed products are presently in development, including pre-clinical and
clinical trials.

Our Drug Development Programs

Galectins are a class of proteins that are made by many cells in the body, but
predominantly in cells of the immune system. As a group, these proteins are able
to bind to sugar molecules that are part of other proteins, glycoproteins, in
and on the cells of our body. Galectin proteins act as a kind of molecular glue,
bringing together molecules that have sugars on them. Galectin proteins, in
particular galectin-3, are known to be markedly increased in a number of
important diseases including inflammatory diseases, scarring of organs (e.g.
liver, lung, kidney, and heart) and cancers of many kinds. The increase in
galectin protein promotes the disease and is detrimental to the patient.
Published data substantiating the importance of galectin-3 in the fibrotic
process arises from gene knockout experiments in animal studies. Mice
genetically altered to eliminate the galectin-3 gene, and thus unable to produce
galectin-3, are incapable of developing liver fibrosis in response to toxic
insult to the liver and in fatty liver disease as well as development of
fibrosis in other tissues.

We have one new proprietary chemical entity (NCE) in development, belapectin,
which has shown promise in preclinical and early clinical studies in treatment
of fibrosis, severe skin disease, and in cancer therapy. Currently we are
focusing on development of belapectin intended to be used in the treatment of
liver fibrosis associated with fatty liver disease (NASH) and more specifically
in NASH cirrhosis. We have also leveraged our relationships with well-known
investigators to demonstrate clinical effects of belapectin in treating moderate
to severe plaque psoriasis, severe atopic dermatitis, and in cancer therapy in
combination with immune-system modifying agent(s). 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 galectin-3 proteins. A second NCE, GM-CT-01 is a
proprietary, patented compound that is made from a completely different starting
source plant material and also binds and inhibits galectin proteins. Previously
in clinical development for cancer indications, GM-CT-01 compound has been
explored in limited other preclinical studies.




Our product pipeline is shown below:


Fibrosis                          Drug                       Status

NASH with Advanced Fibrosis: belapectin     IND submitted January 2013. Results from
NASH-CX trial and                           the Phase 1 clinical trial were reported
NASH-FX trial                               in 2014, with final results reported in
                                            January 2015.
                                            The Phase 2 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

                                            The Phase 2 NASH CX trial, was designed
                                            for patients with well compensated
                                            cirrhosis. The NASH CX trial top line
                                            data was reported in December 2017 and
                                            was published in Gastroenterology in

NASH NAVIGATE                               Based on FDA feedback, the NAVIGATE trial
                                            is an adaptive Phase 2b/3 trial for the
                                            prevention of esophageal varices in NASH
                                            patients with compensated cirrhosis. A
                                            Phase 2b interim efficacy analysis will
                                            be incorporated to confirm previous Phase
                                            2 data, select an optimal dose and
                                            reaffirm the risk/benefit of belapectin.
                                            The Phase 3 end of study analysis will
                                            evaluate the development of esophageal
                                            varices as the primary outcome of
                                            efficacy and a composite clinical
                                            endpoint including progression to varices
                                            requiring treatment as a key secondary
                                            outcome of efficacy. See
                                            www.clinicaltrials.gov NCT04365868. The
                                            first patient was randomized in the third
                                            quarter of 2020.

                                            A hepatic impairment is being conducted
                                            in subjects with normal hepatic function
                                            and subjects with varying degrees of
                                            hepatic impairment (CF:
                                            www.clinicaltrials.gov NCT04332432) and
                                            began enrolling patients in the second
                                            quarter of 2020.

Lung Fibrosis                belapectin     In pre-clinical development

Kidney Fibrosis              belapectin     In pre-clinical development

Indication                    Drug                       Status

Cardiac and Vascular     belapectin and In pre-clinical development
Fibrosis                 GM-CT-01

Cancer Immunotherapy

Melanoma, Head, Neck     belapectin     Investigator IND study in process. A
Squamous Cell                           Phase 1B study began in Q-1 2016. Early
Carcinoma (HNSCC)                       data was reported in February 2017 and
                                        additional data were reported in
                                        September 2018. A further expansion
                                        cohort of patients with melanoma and
                                        HNSCC was reported in July 2021.


Moderate to Severe       belapectin     IND submitted March 2015. A Phase 2a
Plaque Psoriasis                        trial in moderate to severe plaque
Severe Atopic Dermatitis                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. Further studies are
                                        dependent on finding a suitable strategic
                                        partner which is unlikely.




Fibrosis. Belapectin is our lead product candidate for treatment of fibrotic
disease. Our preclinical data show that belapectin has a significant therapeutic
effect on liver fibrosis as shown in several relevant animal models. In
addition, in NASH animal models, belapectin has been shown to reduce liver fat,
inflammation, and ballooning degeneration (death of liver cells). Therefore, we
chose belapectin as the lead candidate in a development program targeted
initially at fibrotic liver disease associated with non-alcoholic
steatohepatitis (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 of belapectin
and pharmacodynamics biomarkers of disease. On March 1, 2013, the FDA indicated
we could proceed with a US Phase 1 clinical trial for belapectin with a
development program aimed at obtaining support for a proposed indication of
belapectin for treatment of NASH with advanced fibrosis. The Phase 1 trial was
completed and demonstrated that belapectin up to 8 mg/kg Lean Body Mass (LBM),
i.v. was safe and well tolerated.

Additionally, an open label drug-drug interaction study was completed in healthy
volunteers during the second quarter of 2015 with belapectin and it showed that
with 8 mg/kg LBM dose of belapectin and 2 mg/kg LBM dose of midazolam there was
no drug-drug interaction and no serious adverse events or drug-related adverse
events were observed. The secondary objective was to assess the safety and
tolerability of belapectin when administered concomitantly with midazolam.

Our Phase 2 program in fibrotic disease consisted of two separate human clinical
trials. The primary clinical trial was the Phase 2b NASH-CX study for one year
for patients with NASH with compensated cirrhosis, which began enrolling in June
2015. This study was the primary focus of our program and was a randomized,
placebo-controlled, double-blind, parallel-group Phase 2b trial to evaluate the
safety and efficacy of belapectin for treatment of liver fibrosis and resultant
portal hypertension in NASH patients with compensated cirrhosis. A smaller,
exploratory NASH-FX trial was conducted to explore potential use of various
non-invasive imaging techniques in NASH patients with advanced fibrosis but not

NASH-FX Trial: The NASH-FX trial was a Phase 2a pilot trial for patients with
NASH and advanced fibrosis that explored use of three non-invasive imaging
technologies. It was a short, single site, four-month trial in 30 NASH patients
with advanced fibrosis (F3), but not cirrhosis (F4), randomized 1:1 to either 9
bi-weekly doses of 8 mg/kg LBM of belapectin or placebo. The trial did not meet
its primary 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. We, and
many experts in the field, now believe that a four-month treatment period was
not sufficient to show efficacy results in established advanced liver fibrosis.
This small study was also not adequately powered for the secondary endpoints. In
the trial, belapectin was found to be safe and well tolerated with no serious
adverse events and evidence of a pharmacodynamic effect. These results provided
support for further development in NASH.

NASH-CX Trial: The NASH-CX trial was a larger multi-center clinical trial that
explored the use of belapectin for the treatment of liver fibrosis and resultant
portal hypertension in patients with well-compensated 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 randomized to receive either 2 mg/kg LBM of
belapectin, 8 mg/kg LBM of belapectin or placebo, with 54 patients in each
group. Approximately 50% of patients at baseline had esophageal varices (a
complication of portal hypertension). The primary endpoint was a reduction in
hepatic venous pressure gradient (HVPG). Patients received an infusion of
belapectin or placebo every other week for one year, a total of 26 infusions,
and were evaluated to determine the change in HVPG as compared with placebo.
Secondary or exploratory endpoints included fibrosis on liver biopsy,
measurement of liver stiffness (FibroScan(R)) and assessment of liver metabolism
(13C-methacetin breath test, Exalenz). 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.

In the total patient population, the primary endpoint HVPG showed a trend toward
benefit with belapectin treatment, but the difference from placebo was not
statistically significant. The mean change in HVPG of placebo from baseline to
week 54 was 0.3 mm Hg. The mean change in HVPG from baseline was -0.37 and -0.42
for the 2 mg/kg LBM dose and 8 mg/kg LBM dose of belapectin, respectively.

In those NASH cirrhosis patients without varices at baseline (about 50% of the
total population), there was a statistically significant effect of the 2 mg/kg
LBM dose of belapectin on the absolute change in HVPG (-1.08 mm Hg, p<0.01). The
effect of the 8 mg/Kg LBM dose of belapectin on absolute or percent change in
HVPG from baseline to week 54 was not significant.

Also because of the clinical relevance of this population, a responder analysis
was performed on those patients without varices at baseline. Analysis was
performed looking at two groups: those with an equal to or greater than 2 mm Hg
decrease in HVPG from baseline or those with an equal to or greater than 2 mm Hg
and a greater than or equal to 20% decrease in HVPG from baseline. In both
cases, the change observed in the belapectin 2 mg/kg LBM group was statistically
significant (p<0.01) while that of the 8 mg/kg LBM group was not.

Over the 54-week treatment period, in patients without varices there were
statistically significantly fewer new varices that developed in the belapectin
treatment groups (0% and 4% in the 2 mg/kg LBM and the 8 mg/kg LBM,
respectively) vs placebo (18%). As esophageal varices can lead to hemorrhagic
complication, which can be fatal, we believe the prevention of esophageal
varices may represent a clinically relevant measure of clinical efficacy in
patients with NASH cirrhosis.




The major conclusions from the NASH-CX trial results were that: i) belapectin
had a statistically significant and clinically meaningful effect in improving
HVPG vs placebo in patients with NASH cirrhosis who did not have esophageal
varices at baseline. This effect was seen regardless of the 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
statistically significant reduction (p=0.02) in the development of new
esophageal varices in drug-treated patients compared to placebo. 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 of varices and liver biopsy there was a consistently greater and
statistically significant effect of the 2 mg/kg LBM dose of belapectin, (v)
belapectin appears to be safe and well tolerated in this one year clinical
trial, a feature that is of prime importance for a cirrhotic population and (vi)
We believe this is the first 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

Further information and details on the NASH-CX results summarized above is available in public presentations posted to our website and filed with the SEC and in a peer reviewed publication in Gastroenterology (Gastroenterology 2020;158:1334-1345).

NASH NAVIGATE Trial: Building on the experience of the NASH-CX trial, the
NAVIGATE Trial is a seamless adaptively-designed Phase 2b/3 clinical study
evaluating the safety and efficacy of our galectin-3 inhibitor, belapectin
(GR-MD-02), for the prevention of esophageal varices in patient with
non-alcoholic steatohepatitis (NASH) cirrhosis. The major features of this
innovative Phase 2b/3 study design are: i) In patients with NASH cirrhosis and
clinical signs of portal hypertension but without esophageal varices at
baseline, this trial will assess the effect of belapectin on the incidence of
new varices (the primary endpoint) - as well as assessing effect on the
incidence of long-term, 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
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 no approved treatment for preventing
varices in these patients. In addition, the development of esophageal varices
reflects the progression of hepatic cirrhosis and thus portends the development
of other cirrhosis complications such as ascites, hepatic encephalopathy, and
liver failure, and (iii) During the first 18 months, two belapectin dose levels
(2 mg/kg LBM and 4 mg/kg LBM) will be compared to placebo (phase 2b). Then, at
the interim analysis (IA), 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 the NASH-CX trial,
including a dose response pharmacokinetic analysis of the hepatic venous
gradient pressure (HVPG, a reflection of portal hypertension). 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 52 weeks (Phase 2b Study
NASH-CX), an important feature of the future risk benefit analysis in patients
with NASH cirrhosis.

The study design provides for a pre-specified interim analysis (IA). The IA of
efficacy and safety data will be conducted after all planned subjects in Phase
2b component have completed at least 78 weeks (18 months) of treatment and an
esophago-gastro-duodeno endoscopic assessment. The purpose of the IA is to allow
potential seamless adaptive modifications of the study, including: (1) the
selection of the optimal dose of belapectin for Phase 3, (2) the re-estimation
of the study sample size for the Phase 3 portion of the trial, (3) the
re-evaluation of the randomization ratio for the Phase 3 portion of the trial,
(4) the refinement of the inclusion and exclusion criteria for the Phase 3
portion of the trial, including the cirrhosis status and, (5) possible
termination of the study for overwhelming efficacy or for futility.

The trial design also includes a blinded sample size re-estimation ("SSR")
during the Phase 2b, prior to the IA, to allow for potential sample size
readjustment. The SSR will be conducted when 50% of the patients have completed
18 months of therapy. This will allow us to confirm the underlying assumption
regarding the rate of varices development, currently estimated from our prior
Phase 2b trial (NASH-CX). The study design also minimizes invasive testing
requirements, such as the measurement of HVPG or repeated liver biopsies, which
we believe will facilitate enrollment and retention of patients. It also
provides for a seamless transition of patients from the Phase 2b component into
the phase 3 stage, including the potential addition of new patients. The trial
design preserves the surrogate end-point concepts (development of new varices
versus variceal hemorrhage) previously discussed with FDA.

We believe that these adaptations taken together are innovative and optimize
conduct of the NAVIGATE trial with a clinically relevant primary outcome giving
belapectin the best opportunity to show a positive therapeutic effect to address
an unmet medical need. If the IA results of the NAVIGATE trial are compelling,
there could be the potential for accelerated FDA approval and/or partnership
opportunity with a pharmaceutical company.

In the Phase 3 component of this trial, as proposed in the protocol, the primary
endpoint remain the development of varices. Secondary endpoints include a
composite clinical outcomes endpoint, including varices requiring treatment
(development of large varices or varices with a red wale), decompensating
events, all-cause mortality, MELD score increase, liver transplant. Also, NASH
non-invasive biomarkers will be evaluated. To target a population at risk of
developing esophageal varices, patient selection will be based on clinical signs
of portal hypertension, including, a low platelet count, an increased spleen
size and/or evidence of collaterals circulation.




The focus and goal of the therapeutic program is to stop the progression of
and/or reverse portal hypertension and thereby prevent the development of
varices, potentially one of the most immediately life-threatening complication
of cirrhosis. Based on the results of the NASH-CX trial and subject to
confirmation in later stage clinical trials, we believe that this goal is
achievable in a significant portion of the NASH cirrhosis patient population
i.e. those NASH cirrhosis patients with clinical signs of portal hypertension.

The COVID-19 pandemic has delayed and may continue to delay our recruitment of
sites and enrollment of patients for our Phase 2b/3 NAVIGATE trial. While there
has been a large decline in cases and hospitalizations in the United States
because of vaccinations, the decline in the rate of vaccinations and the
emergence of variants has extended the pandemic within the United States and has
caused continued concern particularly in medical and hospital settings. While
many cities in the United States and Europe had loosened restrictions, many of
those restrictions are being re-imposed. In some countries, shutdown orders have
also affected the regulatory process to authorize study starts. Governments and
medical facilities continue to focus their resources for battling the COVID-19
pandemic. For several reasons, the pandemic makes enrolling patients for the
NAVIGATE trial more challenging, including because patients eligible for the
NAVIGATE trial have liver cirrhosis and, as such, are at a greater health risk
of complications from COVID-19. Even with vaccinations being more readily
available, we continue to be impacted by COVID-19. We have experienced increases
in the rate of enrollment in the United States but not in Europe, Latin America,
and South Korea. We believe that as more people get vaccinated for COVID-19 in
the United States and in other countries, site recruitment and patient
enrollment will accelerate. At this time, we estimate that enrollment completion
will occur around June 30, 2022.

We have identified more than 130 clinical trial sites in 11 countries for the NAVIGATE trial.

Further details on the NAVIGATE trial can be found on www.clinicaltrials.gov under study NCT04365868.

The Company also has commenced a Hepatic Impairment Study, which will run in
parallel with the phase 2b/3 trial as part of the development program. The
Hepatic Impairment Study is being conducted at three sites and will involve
approximately 40 patients (divided amongst normal healthy volunteers, and
patients with hepatic impairment categorized as Child-Turcotte-Pugh (CTP)
classes A (mild), B (moderate), and C (severe)). Each subject will receive a
single infusion of belapectin (4 mg/kg LBM) and their serum belapectin levels
will be monitored for up to approximately two weeks to define the effects of
various stages of cirrhosis on serum belapectin levels. The tolerance and safety
of belapectin will be evaluated. Based on the results from this hepatic
impairment study, the Company may consider including patients with more advanced
cirrhosis in the Phase 3 portion of its NAVIGATE trial. Until dosing and safety
profile is further informed in CTP Class B and/or Class C patients, the NAVIGATE
trial will enroll only CTP Class A patients. Further details on this hepatic
impairment study can be found on www.clinicaltrials.gov study NCT04332432.

Cancer Immunotherapy. We believe there is potential for galectin inhibition to
play a key role in the burgeoning area of cancer immunotherapy. For example,
there have been several recent approvals of drugs that enhance a patient's
immune system to fight cancer. It is our goal to use a galectin inhibitor to
further enhance the immune system function to fight cancer in a way that
complements other approaches to this type of therapy. This hypothesis is
supported by the fact that galectin-3 is expressed at high levels in multiple
types of tumors, adds to the malignant nature of the tumors, and protects the
tumors from immune system attack. Our drug candidates provide a promising new
therapeutic approach to enhance the activity of the immune system against cancer
cells. Preclinical studies have indicated that belapectin enhances the immune
response to cancer cells, increased tumor shrinkage and enhanced survival in
immune competent mice with prostate, breast, melanoma and sarcoma cancers when
combined with one of the immune checkpoint inhibitors, anti-CTLA-4 or anti-PD-1,
or with the immune cell activator anti-OX40. These preclinical data led to the
filing of two Investigator-sponsored INDs and the initiation of studies of
belapectin in combination with Yervoy® (ipilimumab) and KEYTRUDA (pembrolizumab)
in Phase 1B studies of patients with metastatic melanoma. The KEYTRUDA trial has
also been expanded to include patients with non-small cell lung cancer and head
and neck squamous cell carcinoma. These studies are being conducted under the
sponsorship of Providence Portland Medical Center's Earle A. Chiles Research
Institute (EACRI).

Promising results were reported in the Phase 1b trial combining belapectin with
pembrolizumab (KEYTRUDA®). Cohort 1 was completed (n=6, 5 with melanoma, one
with head and neck cancer) with one partial response and one mixed response in
the melanoma patients. There was a rapid and marked tumor response after 3 doses
of combined belapectin and pembrolizumab in the one partial response patient who
had failed high-dose IL-2 and oncolytic virus + ipilimumab. The study is ongoing
and progression to further development will be based on response rate as
compared to historical response rates to pembrolizumab alone. 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
LBM) have now been added to the three patients completed in cohort 2 (4 mg/kg
LBM) and five patients completed in cohort 1 (2 mg/kg LBM). 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 continued 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 enrolled nine melanoma patients and five head and neck
squamous cell carcinoma cancer patients. Compared to the initial phase 1b
patients, reported earlier, the cohort in this extension study was heavily
pretreated with systemic therapy, including chemotherapy, immunotherapy with
checkpoint inhibitors and cytokines, melanoma mutation-directed therapies (BRAF
inhibitors and MEK inhibitors), as well as surgery and radiation therapies
(external and radio-labeled). Patients also had a high burden of metastasis,
with the lungs, soft tissues, and the liver being the most frequently involved
organs. Four of the nine melanoma patients had a choroidal (ocular) tumor as a
primary site of their cancer and had also developed liver metastasis. The
treatment consisted of Belapectin 4 mg/Kg of lean body mass administered every
three weeks by infusion, after the infusion of pembrolizumab. Pembrolizumab was
administered according to its label. Patients' response was evaluated at day 85,
according to the Response Evaluation Criteria in Solid Tumors (RECIST) criteria.
The median number of treatment cycles was four (range 3-15) for melanoma
patients and five (range 4-8) for head and neck cancer patients. Melanoma
patient results included one partial response, four stable disease, and four
progressive disease, providing a disease control rate of 56% (five out of nine
patients). Head and neck cancer patients observed included two stable disease
and three progressive disease, providing a disease control rate of 40% (two out
of five patients). The combination of Belapectin and pembrolizumab was well
tolerated and appeared safe. The most frequent adverse event related to
pembrolizumab, in six patients, was grade 1 (mild) pruritus (itching), a known
and labeled side-effect of pembrolizumab. The second most frequent adverse event
related to pembrolizumab was grade 2 fatigue in three patients. All other
adverse events were mild (grade 1). There were no grade 3 or above adverse
events. Similar to the initial phase 1 study results, the frequency and severity
of toxicities related to pembrolizumab, notably immune-mediated adverse events,
was less than anticipated. No adverse event was deemed related to belapectin.

Discussions are ongoing about the planning and feasibility of a multicenter Phase 2 study.

Results of Operations

Three and Nine Months Ended September 30, 2021 Compared to Three and Nine Months Ended September 30, 2020

Research and Development Expense.

                     Three Months Ended          Nine Months Ended                       2021 as Compared to 2020
                        September 30,              September 30,                Three Months                  Nine Months
                      2021          2020         2021          2020       $ Change       % Change       $ Change       % Change
                                                             (In thousands, except %)
Research and
development        $    6,613      $ 4,780     $  17,962     $ 11,605     $   1,833             38 %   $    6,357             55 %

We generally categorize research and development expenses as either direct
external expenses, comprised of amounts paid to third party vendors for
services, or all other research and development expenses, comprised of employee
payroll and general overhead allocable to research and development. We consider
a clinical program to have begun upon acceptance by the FDA, or similar agency
outside of the United States, to commence a clinical trial in humans, at which
time we begin tracking expenditures by the product candidate. Clinical program
expenses comprise payments to vendors related to preparation for, and conduct
of, all phases of the clinical trial, including costs for drug manufacture,
patient dosing and monitoring, data collection and management, oversight of the
trials and reports of results. Pre-clinical expenses comprise all research and
development amounts incurred before human trials begin, including payments to
vendors for services related to product experiments and discovery, toxicology,
pharmacology, metabolism and efficacy studies, as well as manufacturing process
development for a drug candidate.




Our research and development expenses were as follows:

                                                 Three Months Ended            Nine Months Ended
                                                    September 30,                September 30,
                                                 2021           2020           2021          2020
                                                                  (in thousands)
Direct external expenses:
Clinical programs                             $    5,768      $   3,768     $   15,928     $   8,566
Pre-clinical activities                              237             64            418           427
All other research and development expenses          608            948          1,616         2,612
                                              $    6,613      $   4,780     $   17,962     $  11,605

Clinical programs expenses increased primarily due to costs related to our NAVIGATE trial during the three and nine months ended September 30, 2021.

Both the time required and costs we may incur in order to commercialize a drug
candidate that would result in material net cash inflow are subject to numerous
variables, and therefore we are unable at this stage of our development to
forecast useful estimates. Variables that make estimates difficult include the
number of clinical trials we may undertake, the number of patients needed to
participate in the clinical trial, patient recruitment uncertainties, trial
results as to the safety and efficacy of our product, and uncertainties as to
the regulatory agency response to our trial data prior to receipt of marketing
approval. Moreover, the FDA or other regulatory agencies may suspend clinical
trials if we or an agency believes patients in the trial are subject to
unacceptable risks or find deficiencies in the conduct of the clinical trial.
Delays or rejections may also occur if governmental regulation or policy changes
during our clinical trials or in the course of review of our clinical data. Due
to these uncertainties, accurate and meaningful estimates of the ultimate cost
to bring a product to market, the timing of costs and completion of our program
and the period during which material net cash inflows will commence are
unavailable at this time.

General and Administrative Expense.

                                                                                   2021 as Compared to 2020
                      Three Months             Nine Months
                          Ended                   Ended
                      September 30,           September 30,               Three Months                    Nine Months
                    2021        2020        2021        2020        $ Change         % Change       $ Change       % Change
                                                           (In thousands, except %)
General and
administrative     $ 1,631     $ 1,146     $ 4,792     $ 4,007     $      485               42 %   $      785             20 %

General and administrative expenses consist primarily of salaries including
stock-based compensation, legal and accounting fees, insurance, investor
relations, business development and other office related expenses. The primary
reasons for the increase in general and administrative expenses for the three
months ended September 30, 2021 as compared to the same period in 2020 are due
to increases in insurance expense of $131,000, and non-cash stock-based
compensation expense of $226,000. The primary reasons for the increase in
general and administrative expenses for the nine months ended September 30, 2021
as compared to the same period in 2020 are due to increases in insurance expense
of $385,000, investor relations/business development expense of $103,000 and
non-cash stock-based compensation expense of $322,000, partially offset by
decrease in legal fees expense of $206,000.

Liquidity and Capital Resources

Since our inception on July 10, 2000, we have financed our operations from
proceeds of public and private offerings of debt and equity. As of September 30,
2021, we raised a net total of $214.5 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 September
30, 2021, the Company had $36,600,000 of unrestricted cash and cash equivalents
available to fund future operations. The Company believes there is sufficient
cash, including a $10,000,000 convertible note payable that will close in
December 2021 (see Note 4), to fund currently planned operations at least
through March 31, 2023. We will require more cash to fund our operations after
March 31, 2023 and believe we will be able to obtain additional financing. The
currently planned operations include costs related to our adaptively designed
NAVIGATE Phase 2b/3 clinical trial. Currently, we expect to require an
additional approximately $30-$35 million to cover costs of the trial to reach
the planned interim analysis estimated to occur around the end of the first
quarter of 2024 along with drug manufacturing and other scientific support
activities and general and administrative costs. 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 before March 31,
2023, we may be required to cease operations. Accordingly, based on the
forecasts and estimates underlying our current operating plan, the financial
statements do not currently include any adjustments that might be necessary if
we are unable to continue as a going concern.




Net cash used in operations increased by $2,170,000 to $17,357,000 for the nine
months ended September 30, 2021, as compared to $15,187,000 for the nine months
ended September 30, 2020. Cash operating expenses increased principally due to
the preparations and expenses related to our NAVIGATE clinical trial with

Net cash provided by financing activities for the nine months ended September
30, 2021, of $26,815,000 represents proceeds of $20,000,000 from two convertible
notes payable, $2,951,000 from the exercise of common stock warrants and
$3,864,000 in net proceeds from issuance of common shares under our ATM. Net
cash provided by financing activities for the nine months ended September 30,
2020, of $263,000 represents proceeds of $219,000 from the exercise of common
stock options and $44,000 in net proceeds from issuance of common shares under
our ATM.

Off-Balance Sheet Arrangements

We have not created, and are not a party to, any special-purpose or off-balance
sheet entities for the purpose of raising capital, incurring debt or operating
parts of our business that are not consolidated into our financial statements.
We do not have any arrangements or relationships with entities that are not
consolidated into our financial statements that are reasonably likely to
materially affect our liquidity or the availability of capital resources.

Application of Critical Accounting Policies and Estimates

The preparation of condensed consolidated financial statements requires us to
make estimates and judgments that affect the reported amounts of assets,
liabilities, expenses, and related disclosure of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates, including those
related to accrued expenses, stock-based compensation, contingencies and
litigation. We base our estimates on historical experience, terms of existing
contracts, our observance of trends in the industry, information available from
other outside sources and on various other factors that we believe to be
appropriate under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions.

Critical accounting policies are those policies that affect our more significant
judgments and estimates used in preparation of our consolidated financial
statements. We believe our critical accounting policies include our policies
regarding stock-based compensation, accrued expenses, derivatives and income
taxes. For a more detailed discussion of our critical accounting policies,
please refer to our 2020 Annual Report on Form 10-K.

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