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MarketScreener Homepage  >  Equities  >  Nasdaq  >  GlycoMimetics, Inc.    GLYC

GLYCOMIMETICS, INC.

(GLYC)
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GLYCOMIMETICS : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

11/06/2020 | 08:37am EST
Certain statements contained in this Quarterly Report on Form 10-Q may
constitute forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. The words or phrases "would be," "will allow," "intends
to," "will likely result," "are expected to," "will continue," "is anticipated,"
"estimate," "project," or similar expressions, or the negative of such words or
phrases, are intended to identify "forward-looking statements." We have based
these forward-looking statements on our current expectations and projections
about future events. Because such statements include risks and uncertainties,
actual results may differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause or contribute to these
differences include those below and elsewhere in this Quarterly Report on Form
10-Q, our Annual Report on Form 10-K, particularly in Part I - Item 1A, "Risk
Factors," and our other filings with the Securities and Exchange Commission.
Statements made herein are as of the date of the filing of this Form 10-Q with
the Securities and Exchange Commission and should not be relied upon as of any
subsequent date. Unless otherwise required by applicable law, we do not
undertake, and we specifically disclaim, any obligation to update any
forward-looking statements to reflect occurrences, developments, unanticipated
events or circumstances after the date of such statement.



The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited financial statements
and related notes that appear in Item 1 of this Quarterly Report on Form 10-Q
and with our audited financial statements and related notes for the year ended
December 31, 2019, which are included in our Annual Report on Form 10-K filed
with the Securities and Exchange Commission on February 28, 2020.



Overview


We are a clinical-stage biotechnology company focused on the discovery and
development of novel glycomimetic drugs to address unmet medical needs resulting
from diseases in which carbohydrate biology plays a key role. We are developing
a pipeline of glycomimetics, which are molecules that mimic the structure of
carbohydrates involved in important biological processes, to inhibit
disease-related functions of carbohydrates such as the roles they play in
inflammation, cancer and infection. We believe this represents an innovative
approach to drug discovery to treat a wide range of diseases. We are focusing
our efforts on drug candidates for rare diseases that we believe will qualify
for orphan drug designation.



Our proprietary glycomimetics platform is based on our expertise in carbohydrate
chemistry and our understanding of the role carbohydrates play in key biological
processes. Most human proteins are modified by the addition of complex
carbohydrate structures to the surface of such proteins, which affects the
functions of the proteins and their interactions with other molecules. Our
initial research and development efforts have focused on drug candidates
targeting selectins, which are proteins that serve as adhesion molecules and
bind to carbohydrates that are involved in the inflammatory component and
progression of a wide range of diseases, including hematologic disorders, cancer
and cardiovascular disease. For example, we believe that members of the selectin
family play a key role in tumor metastasis and resistance to chemotherapy.
Inhibiting specific carbohydrates from binding to selectins has long been viewed
as a potentially attractive approach for therapeutic intervention. The ability
to successfully develop drug-like compounds that inhibit binding with selectins,
known as selectin antagonists, has historically been limited by the complexities
of carbohydrate chemistry. We believe our expertise in carbohydrate chemistry
enables us to design selectin antagonists and other glycomimetics that may
inhibit the disease-related functions of certain carbohydrates in order to
develop novel drug candidates to address orphan diseases with high unmet medical
need.


Our lead glycomimetic drug candidate, uproleselan, is a specific E-selectin
inhibitor that we are developing to be used in combination with chemotherapy to
treat patients with acute myeloid leukemia, or AML, a life-threatening
hematologic cancer, and potentially other hematologic cancers. We completed an
initial Phase 1 trial in healthy volunteers for uproleselan, and in 2017 we
completed enrollment in a Phase 1/2 clinical trial in patients with either
relapsed/refractory or de novo/secondary AML. In December 2018, at the annual
meeting of the American Society of Hematology, or ASH, we presented clinical
data from this Phase 1/2 clinical trial that showed high remission rates,
improved overall survival and improved event-free survival, all compared to
historical controls derived from third-party clinical trials evaluating
treatment with standard chemotherapy.

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In 2018, we commenced a randomized, double-blind, placebo-controlled Phase 3
pivotal clinical trial to evaluate uproleselan in individuals with
relapsed/refractory AML, the design of which was based on guidance received from
the U.S. Food and Drug Administration, or FDA. We intend to enroll approximately
380 adult patients with relapsed or refractory AML at centers in the United
States, Canada, Europe and Australia. The primary efficacy endpoint is overall
survival; importantly, the FDA has advised us that data on overall survival will
not need to be censored for transplant in the primary efficacy analysis, meaning
that patients who proceed to transplant will continue to be included as part of
the survival analysis. All patients are being treated with standard chemotherapy
of either MEC (mitoxantrone, etoposide and cytarabine) or FAI (fludarabine,
cytarabine and idarubicin), with approximately one-half of the patients
randomized to receive uproleselan in addition to chemotherapy. Patients
receiving uproleselan are dosed for one day prior to initiation of chemotherapy,
twice a day through the chemotherapy regimen, and then for two days after the
end of chemotherapy, which was the same regimen as in the Phase 1/2 trial. The
dose level is fixed, rather than weight-based, which we believe will simplify
administration. We are offering up to three cycles of consolidation therapy for
patients who achieve remission. We believe that multiple cycles of treatment in
patients who respond may drive an even deeper response in patients treated with
uproleselan. If this is the case, it could lengthen the duration of remission
and increase the possibility for receiving a stem cell transplant with potential
for additional benefit on survival. Key secondary endpoints of the Phase 3 trial
include the incidence of severe mucositis and remission rate, which will be
assessed in a hierarchical fashion which may provide supportive data.



Uproleselan received orphan drug designation from the FDA in 2015 for the
treatment of patients with AML. In 2016, uproleselan received fast track
designation from the FDA for the treatment of adult patients with relapsed or
refractory AML and elderly patients aged 60 years or older with AML. In 2017,
uproleselan received Breakthrough Therapy designation from the FDA for the
treatment of adult patients with relapsed or refractory AML. In 2017, the
European Commission, based on a favorable recommendation from the EMA Committee
for Orphan Medicinal Products, granted orphan designation for uproleselan for
the treatment of patients with AML. In 2018, we received a response from the EMA
to our request for scientific advice with respect to our Marketing Authorization
Application, or MAA, development plan. We are now conducting a global Phase 3
clinical trial and intend to pursue regulatory approval of uproleselan for
the
treatment of AML.



In 2018, we signed a Cooperative Research and Development Agreement, or CRADA,
with the National Cancer Institute, or NCI, part of the National Institutes of
Health. Under the terms of the CRADA, we are collaborating with both the NCI and
the Alliance for Clinical Trials in Oncology to conduct a Phase 2/3 randomized,
controlled clinical trial testing the addition of uproleselan to a standard
cytarabine/daunorubicin chemotherapy regimen (7&3) in older adults with
previously untreated AML who are suitable for intensive chemotherapy. The
primary endpoint is overall survival, which is defined as the time from the date
of randomization to death from any cause, with a planned interim analysis based
on event-free survival after the first 262 patients have been enrolled in the
trial. The full trial is expected to enroll approximately 670 patients. Under
the terms of the CRADA, the NCI may also fund additional research, including
clinical trials involving pediatric patients with AML as well as preclinical
experiments and clinical trials evaluating alternative populations and
chemotherapy regimens. We will supply uproleselan as well as provide financial
support to augment data analysis and monitoring for the Phase 2/3 program. The
trial opened for enrollment in early 2019 and enrolled the first patient in
April 2019.



As a potential life-cycle extension to uproleselan, we have rationally designed
an innovative antagonist of E-selectin, GMI-1687, that could be suitable for
subcutaneous administration. When given by subcutaneous injection in animal
models, GMI-1687 has been observed to have equivalent activity to uproleselan,
but at an approximately 1,000-fold lower dose. We believe that GMI-1687 could be
developed to broaden the clinical usefulness of an E-selectin antagonist to
conditions where outpatient treatment is preferred or required. In September
2020, at the virtual meeting of the Foundation for Sickle Cell Disease Research,
or FSCDR, we presented an oral presentation on an abstract containing data on
GMI-1687, which included data from a preclinical model showing the drug
candidate's potential as a subcutaneously administered treatment for VOC. We are
currently conducting preclinical studies with GMI-1687 to support our planned
submission of an investigational new drug application, or IND, to the FDA.



We are developing an additional drug candidate, GMI-1359, that simultaneously
targets both E-selectin and a chemokine receptor known as CXCR4. Since
E-selectin and CXCR4 are implicated in the retention of cancer cells in the bone
and bone marrow, we believe that targeting both E-selectin and CXCR4 with a
single compound could improve efficacy in the treatment of cancers that affect
the bone and bone marrow, particularly solid tumors that have a

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propensity to metastasize to bone, such as breast and prostate cancer. We
completed a Phase 1 randomized, double-blind, placebo-controlled, single-dose
escalation trial of GMI-1359 in healthy volunteers. In this trial, volunteer
participants received a single injection of either GMI-1359 or placebo, after
which they were evaluated for safety, tolerability and pharmacokinetics, or PK.
This trial was conducted at a single site in the United States. GMI-1359 was
generally well tolerated in this trial, with no participants experiencing
serious adverse events. In the fourth quarter of 2019, we initiated a Phase 1b
trial of GMI-1359 in hormone receptor positive breast cancer patients whose
tumors have spread to bone, and the first patient was dosed in January 2020. The
trial is being conducted at Duke University and will evaluate dose escalation as
well as safety, PK and pharmacodynamics markers of biologic activity in these
patients. In January 2020, the FDA granted GMI-1359 Orphan Drug designation and
Rare Pediatric Disease designation for the treatment of osteosarcoma, a rare
cancer affecting approximately 900 adolescents each year in the United States.



In addition to our programs described above, we are also advancing other
preclinical-stage programs. These programs include small-molecule glycomimetic
compounds that inhibit the protein galectin-3, which we believe may have
potential to be used for the treatment of fibrosis, cancer and cardiovascular
disease.


We previously developed another glycomimetic drug candidate, rivipansel, a
pan-selectin antagonist for the potential treatment of vaso-occlusive crisis, or
VOC, a debilitating and painful condition that occurs periodically throughout
the life of a person with sickle cell disease, or SCD. Rivipansel received fast
track designation from the FDA as well as orphan drug designation from the FDA
in the United States and from the European Medicines Agency, or EMA, in the
European Union. We entered into an exclusive license agreement with Pfizer Inc.,
or the Pfizer Agreement, for Pfizer to further develop, obtain regulatory
approval and potentially commercialize rivipansel worldwide. Pfizer conducted a
pivotal Phase 3 clinical trial to evaluate the efficacy and safety of rivipansel
in patients aged six and older with SCD who were hospitalized for VOC and
required treatment with intravenous opioids. The clinical trial did not meet its
primary or key secondary efficacy endpoints. Pfizer terminated the Pfizer
Agreement effective as of April 2020, resulting in the transfer of development
and commercialization rights, including the IND application for rivipansel, back
to us. In October 2020, the FDA granted Rare Pediatric Disease designation for
rivipansel for the treatment of SCD in patients 18 years old and younger. This
designation recognizes the significant needs in pediatric patients.



In June 2020, the FSCDR released an abstract that presented new data from a post
hoc analysis of the Phase 3 clinical trial data set. The abstract showed that
patients experiencing acute VOC requiring hospitalization who were treated with
rivipansel within approximately 26 hours of the onset of pain in their crisis
experienced a statistically significant improvement in the primary efficacy
endpoint of time to readiness for discharge. Specifically, the analysis showed a
median improvement in time to readiness for discharge compared to placebo of
56.3 hours (p=0.03, 0.58 HR). The data were presented at the September 2020
meeting of the FSCDR. We are engaging with the FDA to identify what, if any,
next steps to take, with a focus on determining if there is a potential
streamlined path forward for this product candidate in SCD.



We commenced operations in 2003, and our operations in recent years have been
focused on raising capital, developing our glycomimetics platform, identifying
potential drug candidates, undertaking preclinical studies and conducting, both
alone and in collaboration with third parties, clinical trials of uproleselan,
GMI-1359 and rivipansel. We have financed our operations primarily through
private placements of our securities, up-front and milestone payments under our
license and collaboration agreements and the net proceeds from public offerings
of common stock, including sales of common stock under at-the-market sales
facilities with Cowen and Company LLC, or Cowen. We have no approved drugs
currently available for sale, and substantially all of our revenue to date has
been revenue from up-front and milestone payments under the agreements with
Pfizer and Apollomics.



Since inception, we have incurred significant operating losses. We had an
accumulated deficit of $293.9 million as of September 30, 2020, and we expect to
continue to incur significant expenses and operating losses over at least the
next several years. Our net losses may fluctuate significantly from quarter to
quarter and year to year, depending on the timing of our clinical trials and our
expenditures on other research and development activities. We anticipate that
our expenses will increase substantially as we:

initiate and conduct our planned clinical trials of uproleselan, GMI-1359 and

? GMI-1687, including fulfilling our funding and supply commitments related to

the clinical trial of uproleselan being conducted in collaboration with NCI;


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? conduct NDA-enabling activities related to manufacture, toxicology and clinical

pharmacology for our product candidates;

? manufacture additional uproleselan drug supplies for validation and prepare for

commercialization;

? seek to discover and develop additional drug candidates;

? seek regulatory approvals for any drug candidates that successfully complete

clinical trials;

ultimately establish a sales, marketing and distribution infrastructure and

? scale up external manufacturing capabilities to commercialize any drug

candidates for which we may obtain regulatory approval;

? maintain, expand and protect our intellectual property portfolio;

? hire additional clinical, quality control, regulatory and scientific personnel;

and

add operational, financial and management information systems and personnel,

? including personnel to support our drug development and potential future

commercialization efforts.



To fund further operations, we will need to raise capital. We may obtain
additional financing in the future through the issuance of our common stock,
through other equity or debt financings, potentially including the use of our
at-the-market sales facility with Cowen, or through collaborations or
partnerships with other companies, such as our recent collaboration with
Apollomics. We may not be able to raise additional capital on terms acceptable
to us, or at all, and any failure to raise capital as and when needed could
compromise our ability to execute on our business plan. For example, the current
global COVID-19 pandemic presents material uncertainty and its disruption of the
capital markets may have a material adverse impact on our ability to raise
additional capital if we decide to do so. Although it is difficult to predict
future liquidity requirements, we believe that our existing cash and cash
equivalents will be sufficient to fund our operations into 2022. However, our
ability to successfully transition to profitability will be dependent upon
achieving a level of revenues adequate to support our cost structure. We cannot
assure you that we will ever be profitable or generate positive cash flow from
operating activities.

Impact of COVID-19 on Our Business


The imposition of "lockdown," "social distancing" and "shelter in place"
directives by state and federal governments in the United States as well as
governments in other regions of the world in response to the COVID-19 pandemic,
including in locations in which our Phase 3 clinical trial of uproleselan is
being conducted, resulted in slowed clinical site initiation, patient
recruitment and enrollment rates early in the pandemic. Enrollment rates have
returned to forecasted rates since the beginning of the lockdowns. However,
COVID-19 infection rates continue to fluctuate, which could negatively affect
enrollment going forward. We cannot at this time fully assess the effect of the
COVID-19 pandemic on our continued enrollment and whether the pandemic would
potentially materially adversely impact the timing of completion of enrollment
of our Phase 3 clinical trial. We continue to closely monitor the COVID-19
situation and any potential impact to our planned activities.

We have also implemented business continuity plans designed to address and
mitigate the impact of the COVID-19 pandemic on our employees and our business.
While to date we have experienced limited impacts beyond the earlier delays in
recruitment in our ongoing uproleselan Phase 3 clinical trial, given the global
economic slowdown, the overall disruption of global healthcare systems and the
other risks and uncertainties associated with the pandemic, our business,
financial condition, results of operations and growth prospects could be
materially adversely affected. We continue to closely monitor the COVID-19
situation as we evolve our business continuity plans and response strategy. In
March 2020, our workforce transitioned to working remotely in accordance with
federal and state declarations. We have partially reopened to allow certain
employees to return to the office based on a phased approach that is consistent
with federal and state guidelines, with a focus on employee safety and optimal
work environment.

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Our Collaboration and License Agreements



Apollomics



In January 2020, we entered into an exclusive collaboration and license
agreement with Apollomics (Hong Kong) Limited, or Apollomics, for the
development and commercialization of uproleselan and GMI-1687 in Mainland China,
Hong Kong, Macau and Taiwan, also known as Greater China. Under the terms of the
agreement, Apollomics will be responsible for clinical development and
commercialization in Greater China. We will also collaborate with Apollomics to
advance the preclinical and clinical development of GMI-1687. We received an
upfront cash payment of $9.0 million and in September 2020 received a $1.0
million development milestone payment. Subject to the terms of the agreement,
will be eligible to receive potential further milestone payments totaling
approximately $179.0 million, as well as tiered royalties ranging from the high
single digits to 15%, as a percentage of net sales. Apollomics will be
responsible for all costs related to development, regulatory approvals, and
commercialization activities for uproleselan and GMI-1687 in Greater China, and
we and Apollomics expect to enter into clinical and commercial supply agreements
with respect to our provision of uproleselan and GMI-1687 to Apollomics. We
retain all rights for both compounds in the rest of the world.



In June 2020, we entered into a clinical supply agreement with Apollomics to
which we will manufacture and supply the Products at agreed upon prices.
Apollomics has the option to begin manufacture of the Products after appropriate
material transfer requirements are met. There were no Products delivered to
Apollomics during the nine months ended September 30, 2020.

Pfizer


In October 2011, we entered into the Pfizer Agreement. In August 2019, Pfizer
announced that its pivotal Phase 3 clinical trial of rivipansel did not meet its
primary or key secondary efficacy endpoints. Pfizer terminated the Pfizer
Agreement, effective as of April 5, 2020, and we now hold all rights to the
potential future development and commercialization of rivipansel and are free to
commercialize any product for treatment or prevention of VOC in sickle cell
disease. We did not earn any revenue or receive any payments from Pfizer during
the nine months ended September 30, 2020 or 2019 and will not be eligible to
receive any future payments from Pfizer following the termination of the Pfizer
Agreement.



In August 2020, we entered into a separate agreement with Pfizer with respect to
certain post-termination commitments, including, among other things, Pfizer's
transfer of certain raw materials and inventory that could potentially be
utilized in subsequent development or commercialization activities.  Pursuant to
the terms of the agreement, Pfizer may be eligible to receive a milestone
payment of $25.0 million upon achievement of specified levels of cumulative net
sales of rivipansel, as well as a low single-digit royalty on net sales of the
product for a period of ten years from first commercial sale.



University of Basel


We entered into a research services agreement, or the Research Agreement, with
the University of Basel, or the University, for biological evaluation of
selectin antagonists. While the scope of work under the Research Agreement ended
in 2017, certain patents covering the rivipansel compound are subject to
provisions of the Research Agreement. Under the terms of the Research Agreement,
we owed the University 10% of any milestone and royalty payments received from
Pfizer with respect to rivipansel. There were no payments due to the University
for the nine months ended September 30, 2020 or 2019, and as a result of the
termination of the Pfizer Agreement, we do not expect to make any future
payments to the University.




Critical Accounting Policies and Significant Judgments and Estimates




Our management's discussion and analysis of our financial condition and results
of operations are based on our financial statements, which have been prepared in
accordance with U.S. generally accepted accounting principles. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of

                                       24



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assets, liabilities, revenues and expenses in our financial statements. On an
ongoing basis, we evaluate our estimates and judgments, including those related
to our revenue recognition, accrued research and development expenses,
stock-based compensation expense and income taxes. We base our estimates on
historical experience, known trends and events and various other factors that we
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other resources. Actual results may differ
from these estimates and judgments under different assumptions or conditions. We
periodically review our estimates in light of changes in circumstances, facts
and experience. The effects of material revisions in estimates are reflected in
our financial statements prospectively from the date of the change in estimate.



We define our critical accounting policies as those accounting principles
generally accepted in the United States that require us to make subjective
estimates and judgments about matters that are uncertain and are likely to have
a material impact on our financial condition and results of operations, as well
as the specific manner in which we apply those principles. For a description of
our critical accounting policies, please see the disclosures in Part II, Item 7
of our Annual Report on Form 10-K for the year ended December 31, 2019. There
have not been any material changes to our critical accounting policies since
December 31, 2019.


Components of Operating Results

Revenue


To date, we have not generated any revenue from the sale of our drug candidates
and do not expect to generate any revenue from the sale of drugs in the near
future. Substantially all of our historical revenue has consisted of upfront and
milestone payments under the agreements with Pfizer and Apollomics.

Research and Development


Research and development expenses consist of expenses incurred in performing
research and development activities, including compensation and benefits for
full-time research and development employees, facilities expenses, overhead
expenses, cost of laboratory supplies, clinical trial and related clinical
manufacturing expenses, fees paid to CROs and other consultants and other
outside expenses. Other preclinical research and platform programs include
activities related to exploratory efforts, target validation, lead optimization
for our earlier programs and our proprietary glycomimetics platform. Our
research and development expenses have related primarily to the development of
rivipansel, uproleselan and our other drug candidates.

We do not currently utilize a formal time allocation system to capture expenses
on a project-by-project basis because we are organized and record expense by
functional department and our employees may allocate time to more than one
development project. Accordingly, we only allocate a portion of our research and
development expenses by functional area and by drug candidate.

Research and development costs are expensed as incurred. Non-refundable advance
payments for goods or services to be received in the future for use in research
and development activities are deferred and capitalized. The capitalized amounts
are expensed as the related goods are delivered or the services are performed.

Research and development activities are central to our business model. Drug
candidates in later stages of clinical development generally have higher
development costs than those in earlier stages of clinical development,
primarily due to the increased size and duration of later stage clinical trials.
We expect our research and development expenses to increase over the next
several years as we seek to progress uproleselan, GMI-1359 and our other drug
candidates into and through clinical development. However, it is difficult to
determine with certainty the duration and completion costs of our current or
future preclinical studies and clinical trials of our drug candidates, or if,
when or to what extent we will generate revenues from the commercialization and
sale of any of our drug candidates that obtain regulatory approval. We may never
succeed in achieving regulatory approval for any of our drug candidates.

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The duration, costs and timing of clinical trials and development of our drug candidates will depend on a variety of factors that include:

? per patient trial costs;

? the number of patients that participate in the trials;

? the number of sites included in the trials;

? the countries in which the trial is conducted;

the length of time required to enroll eligible patients, which could be

? lengthened as a result of the ongoing COVID-19 pandemic; the number of doses

that patients receive;

? the drop-out or discontinuation rates of patients;

? potential additional safety monitoring or other studies requested by regulatory

agencies;

? the duration of patient follow-up; and

? the safety and efficacy profile of the drug candidate.

In addition, the probability of success for each drug candidate will depend on
numerous factors, including competition, manufacturing capability and commercial
viability. We will determine which programs to pursue and how much to fund each
program in response to the scientific and clinical success of each drug
candidate, as well as an assessment of each drug candidate's commercial
potential.

General and Administrative

General and administrative expenses consist primarily of salaries and other
related costs, including stock-based compensation, for personnel in executive,
finance, accounting, business development and human resources functions. Other
significant costs include facility costs not otherwise included in research and
development expenses, legal fees relating to patent and corporate matters and
fees for accounting and consulting services. We anticipate that our general and
administrative expenses will increase in the future to support our continued
research and development activities.

Interest Income

Interest income consists of interest income earned on our cash and cash equivalents.

Results of Operations for the Three and Nine Months Ended September 30, 2020 and 2019

The following tables set forth our results of operations for the three and nine months ended September 30, 2020 and 2019:




                                                     Three Months Ended September 30,          Period-to-Period
(in thousands)                                          2020                   2019                 Change
Revenue                                           $           1,000      $               -    $            1,000
Costs and expenses:
Research and development expense                             10,670                 10,724                  (54)
General and administrative expense                            4,058        
         3,381                   677
Total costs and expenses                                     14,728                 14,105                   623
Loss from operations                                       (13,728)               (14,105)                   377
Interest income                                                   5                    853                 (848)
Net loss and comprehensive loss                   $        (13,723)      $ 
      (13,252)    $            (471)










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                                                     Nine Months Ended September 30,        Period-to-Period
(in thousands)                                          2020                  2019               Change
Revenue                                           $         10,000      $              -    $          10,000
Costs and expenses:
Research and development expense                            33,209                35,562              (2,353)
General and administrative expense                          12,732         
      10,492                2,240
Total costs and expenses                                    45,941                46,054                (113)
Loss from operations                                      (35,941)              (46,054)               10,113
Interest income                                                477                 2,888              (2,411)
Net loss and comprehensive loss                   $       (35,464)      $  
    (43,166)    $           7,702




Revenue


During the three and nine months ended September 30, 2020 revenue was $1.0
million and $10.0 million, respectively, all of which was the result of payments
received under the Apollomics Agreement for the development and
commercialization of uproleselan and GMI-1687 in Greater China. In January 2020,
we recognized $9.0 million in revenue from an upfront milestone payment, and in
September 2020, we earned a $1.0 million clinical development milestone payment.
There was no revenue recognized during the three or nine months ended September
30, 2019.


Research and Development Expense




The following tables summarize our research and development expense by
functional area for the three and nine months ended September 30, 2020 and 2019:




                                                      Three Months Ended September 30,         Period-to-Period
(in thousands)                                          2020                    2019                Change
Clinical development                              $           3,885       $           3,085    $             800
Manufacturing and formulation                                 2,160                   3,454              (1,294)
Contract research services, consulting and
other costs                                                     474                     568                 (94)
Laboratory costs                                                563                     576                 (13)
Personnel-related                                             2,825                   2,430                  395
Stock-based compensation                                        763                     611                  152
Research and development expense                  $          10,670       $
         10,724    $            (54)





                                                    Nine Months Ended September 30,       Period-to-Period
(in thousands)                                         2020                 2019               Change
Clinical development                              $        12,486      $         8,204    $           4,282
Manufacturing and formulation                               7,387               14,730              (7,343)
Contract research services, consulting and
other costs                                                 1,480                2,011                (531)
Laboratory costs                                            1,573                1,576                  (3)
Personnel-related                                           8,037                7,344                  693
Stock-based compensation                                    2,246                1,697                  549
Research and development expense                  $        33,209      $   
    35,562    $         (2,353)


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The following tables summarize our research and development expense by drug candidate for the three and nine months ended September 30, 2020 and 2019:




                                                      Three Months Ended September 30,          Period-to-Period
(in thousands)                                          2020                    2019                 Change
Uproleselan                                       $           6,070       $           6,337    $            (267)
GMI-1359                                                         92                      59                    33
Other research and development                                  920                   1,287                 (367)
Personnel-related and stock-based compensation                3,588                   3,041                   547
Research and development expense                  $          10,670       $
         10,724    $             (54)





                                                    Nine Months Ended September 30,       Period-to-Period
(in thousands)                                         2020                 2019               Change
Uproleselan                                                19,939      $        23,081    $         (3,142)
GMI-1359                                                      264                  296                 (32)
Other research and development                              2,723                3,144                (421)
Personnel-related and stock-based compensation             10,283                9,041                1,242
Research and development expense                  $        33,209      $   
    35,562    $         (2,353)



During the three and nine months ended September 30, 2020, our research and
development expense decreased by $54,000, or 1%, and $2.4 million, or 7%,
respectively, compared to the same periods in 2019. Manufacturing and
formulation decreased by $1.3 million and $7.3 million in the three and nine
months ended September 30, 2020, respectively, as compared to the same periods
in 2019, due to lower raw material costs. These decreases were offset by
increases in clinical development expense in the three and nine months ended
September 30, 2020 as compared to prior periods. The higher clinical expenses
were as a result of the increased enrollment in the ongoing global Phase 3
clinical trial of uproleselan in individuals with relapsed/refractory AML and
the Phase 2/3 clinical trial being conducted by the NCI. Contract research
services, consulting and other costs were lower in 2020 as research activities
were affected at outside universities and travel by research and development
personnel was largely eliminated due to the COVID-19 pandemic. However, in the
third quarter of September 30, 2020, the contract research services at outside
universities resumed some activities with the re-opening of laboratories.



General and Administrative Expense

The following tables summarize the components of our general and administrative expense for the three and nine months ended September 30, 2020 and 2019:




                                                        Three Months Ended September 30,         Period-to-Period
(in thousands)                                             2020                   2019                Change
Personnel-related                                    $          1,578       $          1,146    $              432
Stock-based compensation                                          927                    977                  (50)
Legal, consulting and other professional expenses               1,390                  1,028                   362
Other                                                             163                    230                  (67)
General and administrative expense                   $          4,058      
$          3,381    $              677





                                                       Nine Months Ended September 30,        Period-to-Period
(in thousands)                                            2020                 2019                Change
Personnel-related                                    $         4,788      $         3,395    $            1,393
Stock-based compensation                                       3,028                2,792                   236
Legal, consulting and other professional expenses              4,368                3,653                   715
Other                                                            548                  652                 (104)
General and administrative expense                   $        12,732      $
       10,492    $            2,240



During the three and nine months ended September 30, 2020, our general and
administrative expense increased by $677,000, or 20%, and $2.2 million, or 21%,
respectively, compared to the same periods in 2019. Personnel-related expenses
increased due to additional general and administrative headcount, annual salary
adjustments awarded in the

                                       28



  Table of Contents
first quarter of 2020 and retention bonuses. Patent, legal fees, consulting and
other professional expenses increased by $362,000 and $715,000 in the three and
nine months ended September 30, 2020, respectively, as compared to the same
periods in 2019, due to a significant increase in the annual premium for the
2020 directors and officer's insurance. Other expenses decreased for both the
three and nine months ended September 30, 2020 due to lower travel, meals and
conference registration expenses as a result of travel restrictions due to
the
COVID-19 pandemic.



Interest Income


During the three and nine months ended September 30, 2020 interest income decreased by $848,000, or 99%, and $2.4 million, or 83%, respectively, compared to the same periods in 2019, due to lower average cash balances and lower interest rates on those balances.

Liquidity and Capital Resources



Sources of Liquidity



We have historically financed our operations primarily through public offerings
and private placements of our capital stock, including sales agreements with
Cowen, and upfront and milestone payments from our license and collaboration
agreements. As of September 30, 2020, we had $142.9 million in cash and cash
equivalents.



In September 2017, we entered into an at-the-market sales agreement with Cowen,
or the 2017 Sales Agreement, under which we could offer and sell, from time to
time at our sole discretion, shares of our common stock having an aggregate
offering price of up to $100.0 million through Cowen acting as our sales agent.
The shares were registered under a shelf registration statement filed with the
U.S. Securities and Exchange Commission in September 2017. During the year ended
December 31, 2017, we sold an aggregate of 1,600,000 shares of our common stock
under the 2017 Sales Agreement for net proceeds of $19.3 million. There were no
shares sold under the 2017 Sales Agreement during the years ended December 31,
2018 or 2019. During the nine months ended September 30, 2020, we sold an
additional 4,136,742 shares of common stock under the 2017 Sales Agreement at a
weighted average price per share of $3.52, for aggregate net proceeds of $14.1
million, after deducting commissions and offering expenses. The shelf
registration statement under which the shares that could be sold under the 2017
Sales Agreement were registered expired on October 6, 2020.



In October 2020, we filed a prospectus supplement to a shelf registration
statement that we filed in May 2019 and entered into a new at-the-market sales
agreement, or the 2020 Sales Agreement, with Cowen. Under the 2020 Sales
Agreement, we may sell up to $100.0 million of our common stock registered under
the shelf registration statement that we filed in May 2019. The 2020 Sales
Agreement replaces the 2017 Sales Agreement between us and Cowen, and the $100.0
million that may be sold under the 2020 Sales Agreement excludes any amounts
that were sold under the 2017 Sales Agreement. As of the date of this report,
there have been no shares of our common stock sold under the 2020 Sales
Agreement.



We entered into a collaboration and license agreement with Apollomics in January
2020 and are potentially eligible to earn milestone payments and royalties under
that agreement. In January 2020, Apollomics made an upfront payment to us of
$9.0 million. We also received a non-refundable payment of $1.0 million in
September 2020 as a clinical development milestone payment. Our ability to earn
additional milestone payments and potential royalty payments and their timing
will be dependent upon the outcome of Apollomics' activities and is therefore
uncertain at this time.



Funding Requirements



Our primary uses of capital are, and we expect will continue to be, compensation
and related expenses, third-party clinical research and development services,
laboratory and related supplies, clinical costs, legal and other regulatory
expenses and general overhead costs.



The successful development of any of our drug candidates is highly uncertain. As
such, at this time, we cannot reasonably estimate or know the nature, timing and
costs of the efforts that will be necessary to complete the remainder

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  Table of Contents
of the development of uproleselan or our other drug candidates. We are also
unable to predict when, if ever, material net cash inflows will commence from
uproleselan or our other drug candidates. This is due to the numerous risks and
uncertainties associated with developing drugs, including the uncertainty of:



? successful enrollment in, and completion of, clinical trials;

 ? receipt of marketing approvals from applicable regulatory authorities;

? establishing commercial manufacturing capabilities or making arrangements with

   third-party manufacturers;




? obtaining and maintaining patent and trade secret protection and regulatory

exclusivity for drug candidates;

? launching commercial sales of drugs, if and when approved, whether alone or in

collaboration with others; and

? obtaining and maintaining healthcare coverage and adequate reimbursement.





A change in the outcome of any of these variables with respect to the
development of any of our drug candidates would significantly change the costs
and timing associated with the development of that drug candidate. Because our
drug candidates are in various stages of clinical and preclinical development
and the outcome of these efforts is uncertain, we cannot estimate the actual
amounts necessary to successfully complete the development and commercialization
of our drug candidates or whether, or when, we may achieve profitability. Until
such time, if ever, as we can generate substantial product revenues, we expect
to finance our cash needs through a combination of equity or debt financings and
collaboration arrangements, including our existing license agreement with
Apollomics. Except for Apollomics' conditional obligations to make milestone and
royalty payments to us under our license agreement, we do not have any committed
external source of liquidity.



To the extent that we raise additional capital through the future sale of equity
or debt, the ownership interest of our stockholders will be diluted, and the
terms of these securities may include liquidation or other preferences that
adversely affect the rights of our existing common stockholders. If we raise
additional funds through the issuance of convertible debt securities, these
securities could contain covenants that would restrict our operations.



We may require additional capital beyond our currently anticipated amounts.
Additional capital may not be available on reasonable terms, or at all. If we
raise additional funds through collaboration arrangements in the future, we may
have to relinquish valuable rights to our drug candidates or grant licenses on
terms that may not be favorable to us. If we are unable to raise additional
funds through equity or debt financings when needed, we may be required to
delay, limit, reduce or terminate our drug development or future
commercialization efforts or grant rights to develop and market drug candidates
that we would otherwise prefer to develop and market ourselves.



Outlook



Based on our research and development plans and our timing expectations related
to the progress of our programs, we expect that our existing cash and cash
equivalents will enable us to fund our operating expenses and capital
expenditure requirements into 2022. We have based this estimate on assumptions
that may prove to be wrong, and we could use our capital resources sooner than
we expect. Additionally, the process of testing drug candidates in clinical
trials is costly, and the timing of progress in these trials is uncertain. As
discussed above, at this time we can not accurately predict changes in our cash
used in operating activities or the timing of completion of enrollment in our
Phase 3 clinical trial of uproleselan due to the COVID-19 pandemic. We are
continuing to assess and monitor the COVID-19 situation and the potential impact
to our clinical trial plans and expectations as a result of delayed site
initiations and patient recruitment and enrollment. As we continue to gather
data regarding our clinical trial activities, we expect to be in a position to
assess the need, if any, to change our previous guidance.



                                       30



  Table of Contents

Cash Flows


The following is a summary of our cash flows for the nine months ended September 30, 2020 and 2019:




                                              Nine Months Ended September 30,
(in thousands)                                   2020                  2019
Net cash provided by (used in):
Operating activities                       $       (29,556)$       (39,191)
Investing activities                                   (30)                 (133)
Financing activities                                 14,255                   293

Net change in cash and cash equivalents $ (15,331)$ (39,031)





Operating Activities



Net cash used in operating activities for the nine months ended September 30,
2020 and 2019 was primarily the result of ongoing costs associated with our
uproleselan clinical development programs which includes significant costs for
project support, investigator site start-up costs and patient enrollment fees as
well as clinical manufacturing costs. These cash expenses were offset by
non-cash expenses for stock-based compensation, lease expense and depreciation,
and for the nine months ended September 30, 2020, the upfront and clinical
development milestone payments of $10.0 million received from Apollomics.



Investing Activities


Net cash used in investing activities for the nine months ended September 30, 2020 and 2019 was for computer, office and laboratory equipment.

Financing Activities

Net cash provided by financing activities of $14.3 million during the nine
months ended September 30, 2020 consisted of the net proceeds received from our
from our at-the-market facility with Cowen of $14.1 million and $136,000 in
proceeds from stock option exercises. Net cash provided by financing activities
for the nine months ended September 30, 2019 consisted solely of proceeds from
stock option exercises.


Off-Balance Sheet Arrangements

During the nine months ended September 30, 2020, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

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Rachel K. King President, Chief Executive Officer & Director
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