GALECTIN THERAPEUTICS INC. Forward-Looking Statements
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
• 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 candidates,
• uncertainties related to any litigation,
• 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
property,
• we are subject to extensive and costly regulation by the
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
• 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.
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We caution investors that actual results or business conditions may differ materially from those projected or suggested in forward-looking statements as a result of various factors including, but not limited to, those described above and in the Risk Factors section of this annual report on Form 10-K. We cannot assure you that we have identified all the factors that create uncertainties. Moreover, new risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. Readers should not place undue reliance on forward-looking statements. We undertake no obligation to publicly release the result of any revision of these forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events.
Overview
We are a clinical stage biopharmaceutical company engaged in drug research and development to create new therapies for fibrotic disease, cancer and selected other diseases. Our drug candidates are based on our method of targeting galectin proteins, which are key mediators of biologic and pathologic functions. We use naturally occurring, readily-available plant products as starting material in manufacturing processes to create proprietary, patented complex carbohydrates with specific molecular weights and other pharmaceutical properties. These complex carbohydrate molecules are appropriately formulated into acceptable pharmaceutical formulations. Using these unique carbohydrate-based candidate compounds that largely bind and inhibit galectin proteins, particularly galectin-3, we are undertaking the focused pursuit of therapies for indications where galectin proteins have a demonstrated role in the pathogenesis of a given disease. We focus on diseases with serious, life-threatening consequences and those where current treatment options are limited specifically in 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 (
Results of Operations from the Years Ended
Research and Development Expense
Year ended
December 31, 2022 as Compared to 2021
2022 2021 $Change % Change
(in thousands, except %)
Research and development $ 31,737 $ 23,818 $ 7,919 33 %
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
Our research and development expenses were as follows:
Year Ended
December 31,
2022 2021
(in thousands)
Direct external expenses:
Clinical programs $ 26,748 $ 20,830
Pre-clinical activities 1,262 562
Other research and development expenses:
Payroll and other including stock-based compensation 3,727 2,426
$ 31,737 $ 23,818
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Clinical programs expenses increased in the year ended
General and Administrative Expense
Year ended
December 31, 2022 as Compared to 2021
2022 2021 $ Change % Change
(in thousands, except %)
General and administrative $ 6,615 $ 6,361 $ 254 4 %
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 for the year ended
Other Income and Expense
During the year ended
During the year ended
Results of Operations from the Years Ended
Research and Development Expense
Year ended
December 31, 2021 as Compared to 2020
2021 2020 $Change % Change
(in thousands, except %)
Research and development $ 23,818 $ 17,976 $ 5,842 32 %
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
Our research and development expenses were as follows:
Year Ended
December 31,
2021 2020
(in thousands)
Direct external expenses:
Clinical programs $ 20,830 $ 14,229
Pre-clinical activities 562 532
Other research and development expenses:
Payroll and other including stock-based compensation 2,426 3,215
$ 23,818 $ 17,976
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Clinical programs expenses increased in the year ended
General and Administrative Expense
Year ended
December 31, 2021 as Compared to 2020
2021 2020 $ Change % Change
(in thousands, except %)
General and administrative $ 6,361 $ 5,468 $ 893 16 %
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 for the year ended
Other Income and Expense
During the year ended
Liquidity and Capital Resources
As described above in the Overview and elsewhere in this Annual Report on Form
10-K, we are in the development stage and have not generated any revenues to
date. Since our inception on
2022 compared to 2021
Net cash used in operations increased by
There were no equipment purchases or other investing activities in 2022 or 2021.
Net cash provided by financing activities was
In 2022, we received
2021 compared to 2020
Net cash used in operations increased by
There were no equipment purchases or other investing activities in 2021 or 2020.
Net cash provided by financing activities was
In 2021, we received proceeds of
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Operating leases
Effective
In
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.
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.
Critical Accounting Policies and Estimates
Our significant accounting policies are more fully described in Note 2 to our
consolidated financial statements included elsewhere in this annual report on
Form 10-
Accrued Expenses. As part of the process of preparing our consolidated financial
statements, we are required to estimate accrued expenses. This process involves
identifying services that third parties have performed on our behalf and
estimating the level of service performed and the associated cost incurred on
these services as of each balance sheet date in our consolidated financial
statements. Examples of estimated accrued expenses include professional service
fees, such as those arising from the services of attorneys and accountants and
accrued payroll expenses. In connection with these service fees, our estimates
are most affected by our understanding of the status and timing of services
provided relative to the actual services incurred by the service providers. In
the event that we do not identify certain costs that have been incurred or we
under- or over-estimate the level of services or costs of such services, our
reported expenses for a reporting period could be understated or overstated. The
date on which certain services commence, the level of services performed on or
before a given date, and the cost of services are often subject to our judgment.
We make these judgments based upon the facts and circumstances known to us in
accordance with accounting principles generally accepted in the
Research and Development Expenses. Research and development expenses, including personnel costs, allocated facility costs, lab supplies, outside services, contract laboratory costs related to manufacturing drug product, clinical trials and preclinical studies are charged to research and development expense as incurred. The Company accounts for nonrefundable advance payments for goods and services that will be used in future research and development activities as expense when the service has been performed or when the goods have been received. Our current NAVIGATE clinical trial is being supported by third-party contract research organizations, or CROs, and other vendors. We accrue expenses for clinical trial activities performed by CROs based upon the estimated amount of work completed on each trial. For clinical trial expenses and related expenses associated with the conduct of clinical trials, the significant factors used in estimating accruals include the number of patients enrolled, the number of active clinical sites, and the duration for which the patients have been enrolled in the trial. We monitor patient enrollment levels and related activities to the extent possible through internal reviews, review of contractual terms and correspondence with CROs. We base our estimates on the best information available at the time. We monitor patient enrollment levels and related activities to the extent possible through discussions with CRO personnel and based our estimates of clinical trial costs on the best information available at the time. However, additional information may become available to us which will allow us to make a more accurate estimate in future periods. In that event, we may be required to record adjustments to research and development expenses in future periods when the actual level of activity becomes more certain.
Stock-Based Compensation. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the service period, which generally represents the vesting period. For awards that have performance-based vesting conditions the Company recognizes the expense over the estimated period that the awards are expected to be earned. The Company generally uses the Black-Scholes option-pricing model to calculate the grant date fair value of stock options. The expense recognized over the service period is required to include an estimate of the awards that will be forfeited.
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