GALECTIN THERAPEUTICS INC. 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, 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 property,
• 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.
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
12
--------------------------------------------------------------------------------
Table of Contents 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 onApril 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. InSeptember 2020 , the Company received a letter from the FDA providing comments, asking questions and providing guidance on various aspects of the ongoing NAVIGATE trial. 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 withProvidence 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. 13
--------------------------------------------------------------------------------
Table of Contents
Our product pipeline is shown below:
Indication Drug Status
Fibrosis
NASH with Advanced belapectin IND submitted January 2013. Results from
Fibrosis: the Phase 1 clinical trial were reported in
NASH-CX 2014, with final results reported in
trial and January 2015.
NASH-FX The Phase 2 NASH FX trial was designed for
trial 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 2020.
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
Fibrosis GM-CT-01 pre-clinical
development
Cancer Immunotherapy
Melanoma, Head, Neck belapectin Investigator IND study in process. A
Squamous Cell Phase 1B study began in
Carcinoma (HNSCC) Q-1
2016. Early data was reported in February
2017 and additional data were reported in
September 2018. The trial is ongoing to
expand the dataset of melanoma and HNSCC
patients and determine if a Phase 2 trial
is warranted.
Psoriasis
Moderate to Severe belapectin IND submitted March 2015. A Phase 2a trial
Plaque Psoriasis in moderate to severe plaque psoriasis
Severe Atopic patients began in January 2016. Interim
Dermatitis 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
14
--------------------------------------------------------------------------------
Table of Contents belapectin as the lead candidate in a development program targeted initially at fibrotic liver disease associated with non-alcoholic steatohepatitis (NASH). InJanuary 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. OnMarch 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/kgLean 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 inJune 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 cirrhosis. 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 inSeptember 2016 , and a total of 162 patients at 36 sites inthe 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 ( 13 C-methacetin breath test, Exalenz). Top line data readout was reported inDecember 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. 15
--------------------------------------------------------------------------------
Table of Contents 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 varices. Further information and details on the NASH-CX results summarized above is available in public presentations posted to our website and filed with theSEC 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 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, (5) and/or 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 16
--------------------------------------------------------------------------------
Table of Contents 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 despite a recent uptick in screening activities. Many cities inthe United States andEurope have experienced shut-downs, and while some cities have begun to loosen restrictions, they are at risk of experiencing new shut-downs and restrictions. In some countries, shutdown orders have also affected the regulatory process to authorize study starts. Governments and medical facilities are focusing 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 until vaccinations are more readily available and completed. We believe that as more people get vaccinated for COVID-19, site recruitment and patient enrollment will accelerate. At this time, we estimate that enrollment completion will occur by the end of 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 ofProvidence 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. InSeptember 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 17
--------------------------------------------------------------------------------
Table of Contents 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 includes 14 patients and is planned to have continued belapectin dosing to match the recommended duration of pembrolizumab administration. The expansion cohort has been enrolled and further information will be reported as it becomes available. Discussions are ongoing about the planning and feasibility of a multicenter Phase 2 study, assuming the additional expansion cohort data are positive. Results of Operations Three Months EndedMarch 31, 2021 Compared to Three Months EndedMarch 31, 2020 Research and Development Expense. Three Months 2021 as Compared to 2020 Ended March 31, Three Months 2021 2020 $ Change % Change (In thousands, except %) Research and development$ 4,899 $ 2,144 $ 2,755 128 % 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 ofthe 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 March 31, 2021 2020 (in thousands) Direct external expenses: Clinical activities$ 4,283 $ 1,019 Pre-clinical activities 111 243
All other research and development expenses 505 882
$ 4,899 $ 2,144 Clinical programs expenses increased primarily due to costs related to our NAVIGATE trial during the three months endedMarch 31, 2021 . Other research and development expense decreased primarily due to a decrease in non-cash stock-based compensation expense. 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. 18
--------------------------------------------------------------------------------
Table of Contents
General and Administrative Expense.
Three Months 2021 as Compared to 2020
Ended March 31, Three Months
2021 2020 $ Change % Change
(In thousands, except %)
General and administrative $ 1,418 $ 1,440 $ (22 ) (2 )%
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 decrease in general and administrative expenses for the
three-months ended March 31, 2021 as compared to the same period in 2020 are due
to a decrease in investor relations/business development expenses of
approximately $73,000 and a decrease in
non-cash
stock based compensation expenses of approximately $86,000 , partially offset by
an increase in insurance expense of $124,000 .
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 March 31,
2021 , we raised a net total of $197.7 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 March 31,
2021 , the Company had $20.8 million of unrestricted cash and cash equivalents
available to fund future operations. On April 16, 2021 , the Company received
$10 million in proceeds from a convertible promissory note. The Company also has
a $10 million unsecured line of credit facility with stockholder and director,
Richard E. Uihlein . The Company has not drawn under the line of credit. The
Company believes there is sufficient cash, including availability of the line of
credit, to fund currently planned operations at least through September 30,
2022 . We will require more cash to fund our operations after September 30, 2022
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
$35-$40 million
to cover costs of the trial to reach the planned interim analysis estimated to
occur in the second half of 2023 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.
Net cash used in operations increased by $2,011,000 to $6,382,000 for the three
months ended March 31, 2021 , as compared to $4,371,000 for the three months
ended March 31, 2020 . Cash operating expenses increased principally due to the
preparations and expenses related to our NAVIGATE clinical trial with
belapectin.
Net cash provided by financing activities for the three months ended March 31,
2020 , of $219,000 represents proceeds from the exercise of common stock options.
Off-Balance
Sheet Arrangements
We have not created, and are not a party to, any special-purpose or
off-balance
sheet entities for the purpose of raising capital, incurring debt or operating
parts of our business that are not consolidated into our financial statements.
We do not have any arrangements or relationships with entities that are not
consolidated into our financial statements that are reasonably likely to
materially affect our liquidity or the availability of capital resources.
Application of Critical Accounting Policies and Estimates
The preparation of condensed consolidated financial statements requires us to
make estimates and judgments that affect the reported amounts of assets,
liabilities, expenses, and related disclosure of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates, including those
related to accrued expenses, stock-based compensation, contingencies and
litigation. We base our estimates on historical experience, terms of existing
contracts, our observance of trends in the industry, information available from
other outside sources and on various other factors that we believe to be
appropriate under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions.
Critical accounting policies are those policies that affect our more significant
judgments and estimates used in preparation of our consolidated financial
statements. We believe our critical accounting policies include our policies
regarding stock-based compensation, accrued expenses and income taxes. For a
more detailed discussion of our critical accounting policies, please refer to
our 2020 Annual Report on Form
10-K.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Market risk represents the risk of loss that may impact our financial position,
operating results or cash flows due to changes in the U.S. interest rates. The
primary objective of our investment activities is to preserve cash until it is
required to fund operations. To minimize risk, we maintain our portfolio of cash
and cash equivalents in operating bank accounts and money market funds. Since
our investments are short-term in duration, we believe that we are not subject
to any material market risk exposure.
19
--------------------------------------------------------------------------------
Table of Contents
© Edgar Online, source
