Table of Contents
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) | |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
$0.001 par value per share |
OTC Pink Market |
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
| Emerging growth company | ||||||
Table of Contents
Table of Contents
| Page | ||||||
| PART I. |
||||||
| Item 1. |
1 | |||||
| 1 | ||||||
| 2 | ||||||
| 3 | ||||||
| 4 | ||||||
| 5 | ||||||
| Notes to Unaudited Interim Consolidated Financial Statements |
6 | |||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
18 | ||||
| Item 3. |
27 | |||||
| Item 4. |
27 | |||||
| PART II. |
||||||
| Item 1. |
29 | |||||
| Item 1A. |
29 | |||||
| Item 2. |
31 | |||||
| Item 3. |
31 | |||||
| Item 4. |
31 | |||||
| Item 5. |
32 | |||||
| Item 6. |
33 | |||||
| 34 | ||||||
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Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. All statements other than statements of historical fact contained in this Quarterly Report, including without limitation statements regarding our plans and expectations regarding alternatives available for the future of our company in light of our discontinued business activities and lack of resources following the failure to obtain stockholder approval for the Plan of Dissolution (defined herein); the impact of our discontinuation of the development of our product candidates; the amount of proceeds, if any, that might be realized from the sale or other disposition of any of our remaining assets; cash, cash runway and future cash position, including the availability, timing and amount of liquidating distributions, the amounts that will need to be set aside by us, and the adequacy of such reserves to satisfy our obligations; the pursuit of strategic alternatives that are not currently contemplated; and the plans and objectives of management for future operations, capital needs, and capital expenditures are forward-looking statements.
The forward-looking statements in this Quarterly Report are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward-looking statements, including, but not limited to, the following: our limited operating history; anticipating continued losses for the foreseeable future; needing substantial funding and the ability to raise capital; the listing of our common stock on the OTC Pink Market; our dependence on avasopasem manganese (GC4419) and our other product candidates; uncertainties inherent in the conduct of clinical trials; difficulties or delays enrolling patients in clinical trials; the FDA’s acceptance of data from clinical trials outside the United States; undesirable side effects from our product candidates; risks relating to the regulatory approval process; failure to capitalize on more profitable product candidates or indications; ability to receive and/or maintain Breakthrough Therapy Designation or Fast Track Designation for product candidates; failure to obtain regulatory approval of product candidates in the United States or other jurisdictions; risks related to commercialization; risks related to competition; ability to retain key employees; risks related to intellectual property; inability to maintain collaborations or the failure of these collaborations; our reliance on third parties; the possibility of system failures or security breaches; liability related to the privacy of health information obtained from clinical trials and product liability lawsuits; unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives; environmental, health and safety laws and regulations; our ability to receive stockholder approval of the Plan of Dissolution, if we seek such approval in the future; our ability to sell or otherwise dispose of any of our remaining assets or enter into a strategic transaction; our ability to make liquidating distributions and the timing thereof, if we pursue liquidation in the future; the impact of general economic conditions on our business and operations; and those described under the sections in our Annual Report on Form 10-K for the year ended December 31, 2023 and this Quarterly Report entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
ii
Table of Contents
September 30, 2024 |
December 31, 2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Acquired intangible asset |
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Goodwill |
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Right-of-use |
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Other assets |
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Total assets |
$ | $ | ||||||
Liabilities and stockholders’ deficit |
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Current liabilities: |
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Accounts payable |
$ | $ | ||||||
Accrued expenses |
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Lease liabilities |
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Total current liabilities |
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Royalty purchase liability |
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Lease liabilities, net of current portion |
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Deferred tax liability |
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Total liabilities |
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Stockholders’ deficit: |
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Preferred stock, $ issued and outstanding |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
( |
) | ( |
) | ||||
Total stockholders’ deficit |
( |
) | ( |
) | ||||
Total liabilities and stockholders’ deficit |
$ | $ | ||||||
Three months ended September 30, |
Nine months ended September 30, |
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2024 |
2023 |
2024 |
2023 |
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Operating expenses: |
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Research and development |
$ | $ | $ | $ | ||||||||||||
General and administrative |
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Write-off of acquired intangible asset |
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Write-off of goodwill |
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Gain on litigation settlement |
( |
) | ( |
) | ||||||||||||
Restructuring costs |
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Loss from operations |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other income (expenses): |
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Interest income |
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Interest expense |
( |
) | ( |
) | ||||||||||||
Foreign currency loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Loss before income tax benefit |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Income tax benefit |
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Net loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net loss per share of common stock, basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Weighted-average shares of common stock outstanding, basic and diluted |
||||||||||||||||
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Unrealized gain (loss) on short-term investments |
( |
) | ||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Comprehensive loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| |
|
|
|
|
|
|
|
|||||||||
Common stock |
Additional paid-in |
Accumulated other comprehensive |
Accumulated |
Total Stockholders’ |
||||||||||||||||||||
Shares |
Amount |
capital |
gain (loss) |
Deficit |
Deficit |
|||||||||||||||||||
| Balance at January 1, 2024 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||
| Share-based compensation expense |
— | — | — | — | ||||||||||||||||||||
| Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
| |
|
|
|
|
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|
|
|
|
|
|
|||||||||||||
| Balance at March 31, 2024 |
( |
) | ( |
) | ||||||||||||||||||||
| Share-based compensation expense |
— | — | — | — | ||||||||||||||||||||
| Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at June 30, 2024 |
( |
) | ( |
) | ||||||||||||||||||||
| Share-based compensation expense |
— | — | — | — | ||||||||||||||||||||
| Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at September 30, 2024 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Common stock |
Additional paid-in |
Accumulated other comprehensive |
Accumulated |
Total Stockholders’ |
||||||||||||||||||||
Shares |
Amount |
capital |
gain (loss) |
Deficit |
Deficit |
|||||||||||||||||||
| Balance at January 1, 2023 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||
| Share-based compensation expense |
— | — | — | — | ||||||||||||||||||||
| Exercise of stock options |
— | — | ||||||||||||||||||||||
| Sale of common stock and common stock warrants in registered direct offering, net of issuance costs of $ |
— | — | ||||||||||||||||||||||
| Unrealized gain on short-term investments |
— | — | — | — | ||||||||||||||||||||
| Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at March 31, 2023 |
( |
) | ( |
) | ||||||||||||||||||||
| Share-based compensation expense |
— | — | — | — | ||||||||||||||||||||
| Exercise of common stock warrants |
— | — | ||||||||||||||||||||||
| Unrealized loss on short-term investments |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
| Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
| |
|
|
|
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|
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|
|
|
|||||||||||||
| Balance at June 30, 2023 |
( |
) | ( |
) | ||||||||||||||||||||
| Share-based compensation expense |
— | — | — | — | ||||||||||||||||||||
| Exercise of stock options |
— | — | — | |||||||||||||||||||||
| Exercise of common stock warrants |
— | — | — | |||||||||||||||||||||
| Sales of shares under Open Market Sale Agreement, net |
— | — | ||||||||||||||||||||||
| Unrealized loss on short-term investments |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
| Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Balance at September 30, 2023 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||
| |
|
|
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|
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Nine months ended September 30, |
||||||||
2024 |
2023 |
|||||||
| Operating activities: |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
||||||||
| Noncash interest expense |
||||||||
| Share-based compensation expense |
||||||||
| Write-off of acquired intangible asset |
||||||||
| Write-off of goodwill |
||||||||
| Deferred tax benefit |
( |
) | ||||||
| Loss (gain) on disposal of property and equipment |
( |
) | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Refundable PDUFA fee |
||||||||
| Prepaid expenses and other current assets |
||||||||
| Other assets |
||||||||
| Accounts payable |
( |
) | ||||||
| Accrued expenses |
( |
) | ( |
) | ||||
| Other liabilities |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Cash used in operating activities |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Investing activities: |
||||||||
| Purchases of short-term investments |
( |
) | ||||||
| Proceeds from sales of short-term investments |
||||||||
| Proceeds from sale of property and equipment |
||||||||
| Purchase of property and equipment |
( |
) | ||||||
| |
|
|
|
|||||
| Cash provided by investing activities |
||||||||
| |
|
|
|
|||||
| Financing activities: |
||||||||
| Proceeds from the sale of common stock and common stock warrants in registered direct offering, net of issuance costs |
||||||||
| Proceeds from the sale of common stock under the Open Market Sale Agreement, net of issuance costs |
||||||||
| Proceeds from the exercise of common stock warrants |
||||||||
| Proceeds from exercise of stock options |
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| |
|
|
|
|||||
| Cash provided by financing activities |
||||||||
| |
|
|
|
|||||
| Net increase (decrease) in cash and cash equivalents |
( |
) | ||||||
| Cash and cash equivalents at beginning of period |
||||||||
| |
|
|
|
|||||
| Cash and cash equivalents at end of period |
$ | $ | ||||||
| |
|
|
|
|||||
| Supplemental schedule of non-cash investing and financing activities: |
||||||||
| Derecognition of lease liability and right-of-use |
$ | $ | ||||||
| Right-of-use |
$ | $ | ||||||
| Sale of property and equipment in exchange for prepaid future services |
$ | $ | ||||||
September 30, |
||||||||
2024 |
2023 |
|||||||
Stock options |
||||||||
Common stock warrants |
||||||||
| • | Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. |
| • | Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. |
| • | Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. |
September 30, 2024 |
||||||||||||
(Level 1) |
(Level 2) |
(Level 3) |
||||||||||
Assets |
||||||||||||
Money market funds and U.S. Treasury obligations (included in cash equivalents) |
$ | $ | $ | |||||||||
December 31, 2023 |
||||||||||||
(Level 1) |
(Level 2) |
(Level 3) |
||||||||||
Assets |
||||||||||||
Money market funds and U.S. Treasury obligations (included in cash equivalents) |
$ | $ | $ | |||||||||
September 30, 2024 |
December 31, 2023 |
|||||||
Prepaid clinical expenses |
$ | $ | ||||||
Prepaid insurance |
||||||||
Other prepaid expenses and other current assets |
||||||||
| $ | $ | |||||||
September 30, 2024 |
December 31, 2023 |
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Computer hardware and software |
$ | |
$ | |||||
Leasehold improvements |
||||||||
Furniture and fixtures |
||||||||
Property and equipment, gross |
||||||||
Less: Accumulated depreciation and amortization |
( |
) | ||||||
Property and equipment, net |
$ | |
$ | |||||
September 30, 2024 |
December 31, 2023 |
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Compensation and related benefits |
$ | $ | ||||||
Restructuring costs |
||||||||
Research and development expenses |
||||||||
Professional fees and other expenses |
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| $ | $ | |||||||
Shares |
Exercise Price |
Initial Exercise Date |
Expiration Date |
|||||||||||||
| New Milestone Warrant |
$ | |||||||||||||||
| Fourth Milestone Warrant |
$ | |||||||||||||||
September 30, 2024 |
December 31, 2023 |
|||||||
| Operating Leases |
||||||||
| Right-of-use |
$ | $ | ||||||
| |
|
|
|
|||||
| Lease liabilities, current |
||||||||
| Lease liabilities, net of current portion |
||||||||
| |
|
|
|
|||||
| Total operating lease liabilities |
$ | $ | ||||||
| |
|
|
|
|||||
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
| Operating lease costs |
||||||||||||||||
| Operating lease rental expense |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Total operating lease expense |
$ | $ | $ | $ | ||||||||||||
| |
|
|
|
|
|
|
|
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Nine months ended September 30, |
||||||||
2024 |
2023 |
|||||||
| Cash paid for amounts included in the measurement of lease liabilities |
||||||||
| Operating cash flows for operating leases |
$ | $ | ||||||
| Right-of-use |
||||||||
| Operating leases |
||||||||
| Derecognition of lease liability and right-of-use |
||||||||
| Operating leases |
||||||||
Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
2024 |
2023 |
2024 |
2023 |
|||||||||||||
Research and development |
$ | $ | $ | $ | ||||||||||||
General and administrative |
||||||||||||||||
| $ | $ | $ | |
$ | |
|||||||||||
Shares |
Weighted average exercise price per share |
Weighted- average remaining contractual life (years) |
||||||||||
| Outstanding at January 1, 2024 |
$ | |||||||||||
| Forfeited |
( |
) | ||||||||||
| |
|
|||||||||||
| Outstanding at September 30, 2024 |
$ | |||||||||||
| |
|
|
|
|
|
|||||||
| Vested and exercisable at September 30, 2024 |
$ | |||||||||||
| |
|
|
|
|
|
|||||||
| Vested and expected to vest at September 30, 2024 |
$ | |||||||||||
| |
|
|
|
|
|
|||||||
| • | The expected term of employee stock options with service-based vesting is determined using the “simplified” method, as prescribed in SEC’s Staff Accounting Bulletin (SAB) No. 107, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option due to the Company’s lack of sufficient historical data. The expected term of nonemployee options is equal to the contractual term. |
| • | The expected stock price volatility is based on historical volatilities of comparable public entities within the Company’s industry which were commensurate with the expected term assumption as described in SAB No. 107. |
| • | The risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the expected term. |
| • | The expected dividend yield is |
| • | The Company’s board of directors has determined the per share value of the Company’s common stock based on the closing price as reported by the Nasdaq Global Market on the date of the grant. |
Nine months ended September 30, |
||||
2023 |
||||
| Expected term (in years) |
||||
| Expected stock price volatility |
% | |||
| Risk-free interest rate |
% | |||
| Expected dividend yield |
% | |||
2024 |
||||
| Balance, January 1, 2024 |
$ | |||
| Current year restructuring costs |
||||
| Payment of employee severance and related costs |
( |
) | ||
| |
|
|||
| Balance, September 30, 2024 |
$ | |||
| |
|
|||
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many important factors, including those set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 28, 2024, or the 2023 Form 10-K, and this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in, or implied, by these forward-looking statements.
Overview
Until recently, we have operated as a biopharmaceutical company that has historically focused on developing a pipeline of novel, proprietary therapeutics that have the potential to transform radiotherapy in cancer. Our lead product candidate, avasopasem manganese (avasopasem), is a highly selective small molecule dismutase mimetic that we have been developing for the reduction of severe oral mucositis (SOM) in patients with head and neck cancer (HNC), the reduction of esophagitis in patients with lung cancer, and the reduction of cisplatin-induced kidney damage in patients with cancer. The U.S. Food and Drug Administration (FDA) has granted Fast Track and Breakthrough Therapy designations to avasopasem for the reduction of SOM induced by radiotherapy. Our second product candidate, rucosopasem manganese (rucosopasem), has been in development to augment the anti-cancer efficacy of stereotactic body radiation therapy (SBRT), in patients with non-small cell lung cancer (NSCLC), and locally advanced pancreatic cancer (LAPC). The FDA and European Medicines Agency (EMA) have granted orphan drug designation and orphan medicinal product designation, respectively, to rucosopasem for the treatment of pancreatic cancer.
In August 2023, we announced receipt of a Complete Response Letter (CRL) from the FDA regarding our New Drug Application (NDA) for avasopasem for radiotherapy-induced SOM in patients with HNC undergoing standard-of-care treatment. In the CRL, the FDA communicated that results from an additional clinical trial will be required for resubmission. During the Type A meeting held in September 2023, and in the subsequently received meeting minutes, the FDA reiterated the need for a second Phase 3 trial to support resubmission of the NDA. With our current resources it is not feasible to conduct this additional trial. We may continue to explore appropriate development paths for avasopasem, including in radiotherapy-induced SOM.
In connection with the avasopasem CRL, we wound down our commercial readiness efforts for avasopasem, reduced headcount across several departments and began to pursue strategic alternatives. The reduction in force, which was approved by our Board of Directors, reduced our workforce by 22 employees, or approximately 70%, as of August 9, 2023. The decision was based on cost-reduction initiatives intended to reduce operating expenses. As of September 30, 2024, the Company had 3 employees.
In October 2023, we halted our Phase 2b GRECO-2 trial of rucosopasem in patients with LAPC, following a futility analysis of the trial, which indicated that the trial was unlikely to succeed as designed. At the same time, we also halted our Phase 1/2 GRECO-1 trial of rucosopasem in patients with NCSLC.
In October 2023, we also announced that we had engaged Stifel, Nicolaus & Company, Inc., as our financial advisor, to assist in reviewing strategic alternatives with the goal of maximizing value for our stockholders.
Following the conclusion of our review of strategic alternatives, on August 8, 2024 our board of directors approved our dissolution and liquidation (Dissolution), pursuant to a plan of complete liquidation and dissolution (Plan of Dissolution), subject to stockholder approval. The Plan of Dissolution contemplated an orderly wind down of our business and operations in accordance with the provisions of Delaware law. At the special meeting held on October 17, 2024 the Plan of Dissolution was not approved by the Company’s stockholders.
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As our stockholders did not approve the Dissolution, our board of directors and management will continue to explore what, if any, other alternatives are available for the future of the Company in light of its discontinued business activities and lack of resources. Such alternatives may include a merger, sale, divestiture of assets, licensing or other strategic transaction. It is also possible that we would seek voluntary dissolution at a later time, potentially with further diminished assets. In addition, we could cease operations, make an assignment for the benefit of creditors, turn the Company over to a third-party management company or liquidator or file for bankruptcy protection.
We caution that trading in the Company’s securities is highly speculative and poses substantial risks. Trading prices for the Company’s securities may bear little or no relationship to the actual value realized, if any, by holders of the Company’s securities. Accordingly, the Company urges extreme caution with respect to existing and future investments in its securities.
Nasdaq Delisting Notification
On May 31, 2024, we received written notice (the Notice) from the Office of General Counsel of The Nasdaq Stock Market (Nasdaq) indicating that the Nasdaq Hearings Panel had determined to delist our shares from Nasdaq due to our failure to meet Nasdaq’s continued listing standards. As previously disclosed, we were in violation of the requirements to maintain a minimum average market value of listed securities, as set forth in Nasdaq Listing Rule 5450(b)(2)(A), the minimum bid price requirement, as set forth in Nasdaq Listing Rule 5450(a)(1), and the minimum market value of publicly held shares, as set forth in Listing Rule 5450(b)(2)(C). The Notice indicated that trading in our shares of common stock (the Common Stock) on Nasdaq was to be suspended effective at the open of trading on June 4, 2024. On September 6, 2024, Nasdaq filed a Form 25 which removed our Common Stock from listing. Our Common Stock is now quoted under its existing symbol “GRTX” on the Pink Market operated by OTC Markets Group Inc.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those described below. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in the 2023 Form 10-K and the notes to the unaudited interim consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q. During the nine months ended September 30, 2024 there were no material changes to our critical accounting policies from those discussed in the 2023 Form 10-K.
Components of Results of Operations
Research and Development Expense
Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates. We expense research and development costs as incurred. These expenses include:
| • | expenses incurred to conduct the necessary preclinical studies and clinical trials required to obtain regulatory approval; |
| • | personnel expenses, including salaries, benefits and share-based compensation expense for employees engaged in research and development functions; |
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| • | costs of funding research performed by third parties, including pursuant to agreements with contract research organizations (CROs), as well as investigative sites and consultants that conduct our preclinical studies and clinical trials; |
| • | expenses incurred under agreements with contract manufacturing organizations (CMOs), including manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical study and clinical trial materials; |
| • | fees paid to consultants who assist with research and development activities; |
| • | expenses related to regulatory activities, including filing fees paid to regulatory agencies; and |
| • | allocated expenses for facility costs, including rent, utilities, depreciation and maintenance. |
We track our external research and development expenses on a program-by-program basis, such as fees paid to CROs, CMOs and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities. However, we do not track our internal research and development expenses on a program-by-program basis as they primarily relate to personnel-related and share-based compensation expense, early-stage research expenses and other costs that are deployed across multiple projects under development.
The following table summarizes our research and development expenses by program for the three and nine months ended September 30, 2024 and 2023 (in thousands):
| Three months ended September 30, |
Nine months ended September 30, |
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| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Avasopasem manganese |
$ | (10 | ) | $ | 1,108 | $ | (159 | ) | $ | 4,491 | ||||||
| Rucosopasem manganese |
27 | 3,417 | 687 | 9,670 | ||||||||||||
| Other research and development expense |
120 | 478 | 567 | 1,830 | ||||||||||||
| Personnel related and share-based compensation expense |
168 | 1,090 | 2,128 | 4,935 | ||||||||||||
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| $ | 305 | $ | 6,093 | $ | 3,223 | $ | 20,926 | |||||||||
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We have ceased all clinical trial activity and have suspended the clinical development of our product candidates.
If we decide to resume product candidate development, the successful development of any future product candidates would be highly uncertain. We are unable to predict when, if ever, material net cash inflows would commence from sales of any future product candidates that we may develop due to the numerous risks and uncertainties associated with clinical development, including:
| • | delays in regulators or institutional review boards authorizing us or our investigators to commence our clinical trials, or in our ability to negotiate agreements with clinical trial sites or CROs; |
| • | our ability to secure adequate supply of our product candidates for our trials; |
| • | the number of clinical sites included in the trials; |
| • | the ability and the length of time required to enroll suitable patients; |
| • | the number of patients that ultimately participate in the trials; |
| • | the number of doses patients receive; |
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| • | any side effects associated with our product candidates; |
| • | the duration of patient follow-up; |
| • | the results of our clinical trials; |
| • | significant and changing government regulations; and |
| • | the impact of unforeseen events on the initiation and completion of our preclinical studies, clinical trials and manufacturing scale-up. |
We may never succeed in achieving regulatory approval for any future product candidates we may develop.
General and Administrative Expense
General and administrative expense consists primarily of personnel expenses, including salaries, benefits and share-based compensation expense for employees in executive, finance, accounting, legal, information technology, commercial, business development and human resource functions. General and administrative expense also includes corporate facility costs, including rent, utilities, depreciation and maintenance, not otherwise included in research and development expense, as well as legal fees related to intellectual property and corporate matters and fees for accounting and consulting services.
We expect to incur additional costs related to the pursuit of any available strategic alternatives, such as legal and advisory fees and expenses and other related charges.
Interest Income
Interest income consists of amounts earned on our cash and cash equivalents held with large institutional banks, U.S. Treasury obligations and a money market mutual fund invested in U.S. Treasury obligations, and our short-term investments in U.S. Treasury and government agency obligations.
Interest Expense
Interest expense consists of non-cash interest on proceeds received under the Royalty Agreement with Blackstone and non-cash interest expense associated with the amortization of the debt discount recorded for the Blackstone warrants.
Foreign Currency Loss
Foreign currency loss consists primarily of exchange rate fluctuations on transactions denominated in a currency other than the U.S. dollar.
Net Operating Loss and Research and Development Tax Credit Carryforwards
As of December 31, 2023, we had federal and state tax net operating loss carryforwards (NOLs) of $191.3 million and $213.8 million, respectively, which will begin to expire in 2032 unless previously utilized. We also had foreign net operating loss carryforwards of $1.7 million which do not expire. As of December 31, 2023, we also had federal, state and foreign research and development tax credit carryforwards of $10.4 million. The federal and state research and development tax credit carryforwards will begin to expire in 2032 and 2037, respectively, unless previously utilized. The foreign research and development tax credit carryforwards do not have an expiration date.
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Utilization of the federal and state net operating losses and credits may be subject to a substantial annual limitation. The annual limitation may result in the expiration of our net operating losses and credits before we can use them. In addition, future changes in our stock ownership, some of which might be beyond our control, could result in an ownership change under Section 382 of the Internal Revenue Code, further limiting our ability to utilize a material portion of the NOLs and credits. We have recorded a valuation allowance on substantially all of our deferred tax assets, including our deferred tax assets related to our NOLs and research and development tax credit carryforwards, given the current uncertainty over our ability to utilize such amounts.
Results of Operations
Comparison of the Three and Nine Months Ended September 30, 2024 and 2023
The following table sets forth our results of operations for the three and nine months ended September 30, 2024 and 2023 (in thousands):
| Three Months Ended September 30, |
Nine months ended September 30, |
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| 2024 | 2023 | Change | 2024 | 2023 | Change | |||||||||||||||||||
| Operating expenses: |
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| Research and development |
$ | 305 | $ | 6,093 | $ | (5,788 | ) | $ | 3,223 | $ | 20,926 | $ | (17,703 | ) | ||||||||||
| General and administrative |
3,439 | 4,994 | (1,555 | ) | 9,307 | 20,849 | (11,542 | ) | ||||||||||||||||
| Write-off of acquired intangible asset |
2,258 | — | 2,258 | 2,258 | — | 2,258 | ||||||||||||||||||
| Write-off of goodwill |
881 | — | 881 | 881 | — | 881 | ||||||||||||||||||
| Gain on litigation settlement |
(975 | ) | — | (975 | ) | (975 | ) | — | (975 | ) | ||||||||||||||
| Restructuring costs |
— | 2,309 | (2,309 | ) | — | 2,309 | (2,309 | ) | ||||||||||||||||
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| Loss from operations |
(5,908 | ) | (13,396 | ) | 7,488 | (14,694 | ) | (44,084 | ) | 29,390 | ||||||||||||||
| Other income (expense): |
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| Interest income |
126 | 411 | (285 | ) | 471 | 1,300 | (829 | ) | ||||||||||||||||
| Interest expense |
— | (2,087 | ) | 2,087 | — | (10,709 | ) | 10,709 | ||||||||||||||||
| Foreign currency loss |
(2 | ) | (1 | ) | (1 | ) | (6 | ) | (2 | ) | (4 | ) | ||||||||||||
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| Loss before income tax benefit |
(5,784 | ) | (15,073 | ) | 9,289 | (14,229 | ) | (53,495 | ) | 39,266 | ||||||||||||||
| Income tax benefit |
203 | — | 203 | 203 | — | 203 | ||||||||||||||||||
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| Net loss |
$ | (5,581 | ) | $ | (15,073 | ) | $ | 9,492 | $ | (14,026 | ) | $ | (53,495 | ) | $ | 39,469 | ||||||||
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Research and Development Expense
Research and development expense decreased by $5.8 million from $6.1 million for the three months ended September 30, 2023 to $0.3 million for the three months ended September 30, 2024. Avasopasem development costs decreased by $1.1 million as the ROMAN trial was completed and manufacturing activities ceased. Rucosopasem development costs decreased $3.4 million as we halted the GRECO-1 and GRECO-2 clinical trials. Personnel related and share-based compensation expense decreased $0.9 million, primarily due to the Workforce Reduction, and other research and development expenses decreased $0.4 million. As noted above, we have ceased all clinical trial activity and have suspended the clinical development of our product candidates.
Research and development expense decreased by $17.7 million from $20.9 million for the nine months ended September 30, 2023 to $3.2 million for the nine months ended September 30, 2024. Avasopasem development costs decreased by $4.7 million as the ROMAN trial was completed, manufacturing activities ceased, and we recorded a $0.4 million credit for the release of an accrual for the ROMAN trial. Rucosopasem development costs decreased $9.0 million as we halted the GRECO-1 and GRECO-2 clinical trials. Personnel related and share-based compensation expense decreased $2.8 million, primarily due to the Workforce Reduction, and other research and development expenses decreased $1.3 million. As noted above, we have ceased all clinical trial activity and have suspended the clinical development of our product candidates.
General and Administrative Expense
General and administrative expense decreased by $1.6 million from $5.0 million for the three months ended September 30, 2023 to $3.4 million for the three months ended September 30, 2024, principally due to the cessation of avasopasem commercial preparations and medical affairs activities, and reduced share-based compensation and legal expenses, partially offset by $0.7 million of severance charges recorded in the period.
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General and administrative expense decreased by $11.5 million from $20.8 million for the nine months ended September 30, 2023 to $9.3 million for the nine months ended September 30, 2024, principally due to the cessation of avasopasem commercial preparations and medical affairs activities and reduced personnel related and share-based compensation expenses due to the Workforce Reduction, partially offset by $0.7 million of severance charges recorded in the period.
Write-off of Acquired Intangible Asset and Goodwill
In August 2024, our board of directors approved the Plan of Dissolution, under which future development of our product candidates would no longer continue. In connection with this decision, we concluded that the related IPR&D asset and related goodwill were each impaired in their entirety, and as such recognized non-cash impairment charges of $2.3 million for the IPR&D and $0.9 million for the goodwill during the three and nine months ended September 30, 2024.
Gain on Litigation Settlement
We recognized a $1.0 million gain during the three and nine months ended September 30, 2024 in connection with the settlement of the Litigation, as discussed below, which was recorded in operating expenses.
Restructuring Costs
In connection with the CRL announcement, we restructured our operations and reduced our workforce by 22 employees, or approximately 70%, as of August 9, 2023. As a result of these restructuring initiatives, we incurred total restructuring-related charges of $2.3 million during the three and nine months ended September 30, 2023. No such costs were incurred during the three and nine months ended September 30, 2024.
Interest Income
Interest income decreased from $0.4 million for the three months ended September 30, 2023 to $0.1 million for the three months ended September 30, 2024 and decreased from $1.3 million for the nine months ended September 30, 2023 to $0.5 million for the nine months ended September 30, 2024, primarily due to the reduction in investable cash and securities.
Interest Expense
We recognized $2.1 million and $10.7 million in non-cash interest expense during the three and nine months ended September 30, 2023 in connection with the Royalty Agreement with Blackstone Life Sciences. Given the uncertainty of obtaining future avasopasem revenue based on the FDA reiterating the need for an additional Phase 3 trial for NDA resubmission, our inability to conduct an additional trial with our current resources, and our focus on exploring strategic alternatives for the development of avasopasem, coupled with our decision in October 2023 to discontinue clinical trials of rucosopasem, we suspended accreting interest on the royalty purchase liability at the end of October 2023.
Income Tax Benefit
During the three and nine months ended September 30, 2024, the impairment of our acquired intangible asset and goodwill resulted in an income tax benefit of $0.2 million due to the tax effect of the reduction in the deferred tax liability associated with the asset.
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Liquidity and Capital Resources
We do not currently have any approved products and have never generated any revenue from product sales. Through September 30, 2024, we have funded our operations primarily through the sale and issuance of equity and $117.5 million of proceeds received under the Royalty Agreement with Blackstone Life Sciences, receiving aggregate gross proceeds of $377.0 million. In November 2019, we completed our IPO, which resulted in the issuance and sale of 5,000,000 shares of common stock at a public offering price of $12.00 per share, generating net proceeds of $53.0 million after deducting underwriting discounts and other offering costs. On December 9, 2019, in connection with the partial exercise of the over-allotment option granted to the underwriters of our IPO, 445,690 additional shares of common stock were sold at the IPO price of $12.00 per share, generating net proceeds of approximately $5.0 million after deducting underwriting discounts and other offering costs.
In December 2020, we entered into an Open Market Sale Agreement (Sales Agreement) with Jefferies LLC (Jefferies) as sales agent, pursuant to which we could, from time to time, issue and sell common stock with an aggregate value of up to $50.0 million in “at-the-market” (ATM) offerings under our Registration Statement on Form S-3 (File No. 333-251061) filed with the SEC on December 1, 2020. Sales of common stock pursuant to the Sales Agreement were made in sales deemed to be an “at the market offering” as defined in Rule 415(a) of the Securities Act, including sales made directly through the Nasdaq Global Market or on any other existing trading market for our common stock. The S-3 expired on December 1, 2023, and therefore no further sales are available under the Sales Agreement.
In February 2023, we completed a registered direct offering, which resulted in the issuance and sale of 14,320,000 shares of our common stock and warrants to purchase up to 14,320,000 shares of common stock at a combined offering price of $2.095 per share and accompanying warrant, and received net proceeds of $27.6 million, after deducting placement agent fees and offering expenses. The warrants are equity-classified, have an exercise price of $1.97 per share of common stock, are exercisable immediately following their issuance and will expire five years from the date of issuance. We received net proceeds of approximately $27.6 million from this offering, after deducting placement agent fees and offering expenses.
As of September 30, 2024, we had $8.5 million in cash and cash equivalents and an accumulated deficit of $451.4 million. We expect our existing cash and cash equivalents as of September 30, 2024 will enable us to fund our operating expenses for at least twelve months from the date of filing of this Quarterly Report on Form 10-Q. Future capital requirements will depend on our strategic alternatives, which may include pursuit of a strategic transaction, a voluntary dissolution, or the continued operation of product development. We maintain a portion of our cash and cash equivalents in accounts with major financial institutions, and our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business, financial position and any strategic transaction we pursue.
We have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years.
Cash Flows
The following table shows a summary of our cash flows for the periods indicated (in thousands):
| Nine months ended September 30, |
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| 2024 | 2023 | |||||||
| Net cash used in operating activities |
$ | (9,806 | ) | $ | (34,933 | ) | ||
| Net cash provided by investing activities |
4 | 23,318 | ||||||
| Net cash provided by financing activities |
— | 31,728 | ||||||
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| Net increase (decrease) in cash and cash equivalents |
$ | (9,802 | ) | $ | 20,113 | |||
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Operating Activities
During the nine months ended September 30, 2024, we used $9.8 million of net cash in operating activities. Cash used in operating activities reflected our net loss of $14.0 million and $0.9 million from other changes in operating assets and liabilities, partially offset by non-cash charges of $5.1 million related to the write-off of the acquired intangible asset and goodwill, deferred tax benefit, share-based compensation, depreciation expense, and loss from disposal of property and equipment. The primary use of cash was to fund our operations as we reviewed strategic alternatives.
During the nine months ended September 30, 2023, we used $34.9 million of net cash in operating activities. Cash used in operating activities reflected our net loss of $53.5 million, partially offset by non-cash charges of $15.1 million primarily related to share-based compensation, interest expense on our Royalty Agreement with Blackstone Life Sciences and depreciation expense, $3.2 million from the refund of the Prescription Drug User Fee Act (PDUFA) fee that was paid to the FDA in December 2022 in conjunction with the filing of our NDA for avasopasem, and $0.3 million from other changes in operating assets and liabilities. The primary use of cash was to fund our operations related to the development of our product candidates.
Investing Activities
During the nine months ended September 30, 2024, investing activities provided $4,000 in cash proceeds from the sale of property and equipment. During the nine months ended September 30, 2023, investing activities provided $23.3 million in cash proceeds, primarily from the net sales of our short-term investments.
Financing Activities
During the nine months ended September 30, 2023, financing activities provided $31.7 million from the sale of our common stock and common stock warrants in our registered direct offering in February 2023, from the sale of our common stock under the Sales Agreement with Jefferies, and from the exercise of common stock warrants and stock options during the period.
Funding Requirements
Our future capital requirements will depend on the results of any strategic alternative we may pursue and are able to implement. Other strategic alternatives may include pursuit of a strategic transaction, a voluntary dissolution, or the continued operation of product development. In the event we resume product candidate development, our future capital requirements will depend on many factors, including:
| • | the scope, progress, results and costs of any future preclinical studies and clinical trials; |
| • | the scope, prioritization and number of any future research and development programs; |
| • | the costs, timing and outcome of regulatory review of any future product candidates; |
| • | our ability to establish and maintain any future collaborations on favorable terms, if at all; |
| • | the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under any future collaboration agreements, if any; |
| • | the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; |
| • | the extent to which we acquire or in-license other product candidates and technologies; and |
| • | the costs of securing manufacturing arrangements for any future commercial production. |
Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of product candidates, if approved.
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If we are not able to identify and implement a strategic transaction or a dissolution, until such time, if ever, as we can generate substantial product revenues, our options to finance our cash needs in addition to existing cash may include a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders’ ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our existing stockholders’ rights. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our assessment of strategic alternatives.
If we raise funds through additional collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Royalty Agreement with Blackstone Life Sciences (Formerly Known as Clarus Ventures)
In November 2018, we entered into the Royalty Agreement with Blackstone Life Sciences. Pursuant to the Royalty Agreement, Blackstone agreed to pay us, in the aggregate, up to $80.0 million, or the Royalty Purchase Price, in four tranches of $20.0 million each upon the achievement of specified clinical milestones in our ROMAN trial. We agreed to apply the proceeds from such payments primarily to support clinical development and regulatory activities for avasopasem, rucosopasem and any pharmaceutical product comprising or containing avasopasem or rucosopasem, or, collectively, the Products, as well as to satisfy working capital obligations and for general corporate expenses. We received the first tranche of the Royalty Purchase Price in November 2018, the second tranche of the Royalty Purchase Price in April 2019, and the third tranche of the Royalty Purchase Price in February 2020, in each case in connection with the achievement of the first three milestones, respectively, under the Royalty Agreement.
In May 2020, we entered into Amendment No. 1 to the Royalty Agreement (the Amendment), with Clarus IV Galera Royalty AIV, L.P., or the Blackstone Purchaser. The Blackstone Purchaser is affiliated with Blackstone Life Sciences, successor in interest to Clarus Ventures. The Amendment increased the Royalty Purchase Price by $37.5 million to $117.5 million by increasing the fourth tranche from $20.0 million to $37.5 million and adding a new $20.0 million tranche upon the achievement of an additional clinical enrollment milestone. We received the new $20.0 million tranche of the Amendment in June 2021, in connection with the enrollment of the first patient in the GRECO-2 trial. Also in June 2021, we completed enrollment in the ROMAN trial, thereby achieving the milestone associated with the fourth tranche, and received the associated $37.5 million in July 2021.
Pursuant to the amended Royalty Agreement, in connection with the payment of each tranche of the Royalty Purchase Price, we have agreed to sell, convey, transfer and assign to Blackstone all of our right, title and interest in a high single-digit percentage of (i) worldwide net sales of the Products and (ii) all amounts received by us or our affiliates, licensees and sublicensees with respect to Product-related damages (collectively, the Product Payments) during the Royalty Period. The Royalty Period means, on a Product-by-Product and country-by-country basis, the period of time commencing on the commercial launch of such Product in such country and ending on the latest to occur of (i) the 12th anniversary of such commercial launch, (ii) the expiration of all valid claims of our patents covering such Product in such country, and (iii) the expiration of regulatory data protection or market exclusivity or similar regulatory protection afforded by the health authorities in such country, to the extent such protection or exclusivity effectively prevents generic versions of such Product from entering the market in such country.
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The amended Royalty Agreement will remain in effect until the date on which the aggregate amount of the Product Payments paid to Blackstone exceeds a fixed single-digit multiple of the actual amount of the Royalty Purchase Price received by us, unless earlier terminated pursuant to the mutual written agreement of us and Blackstone. If no Products are commercialized, we would not have an obligation to make Product Payments to Blackstone, which is the sole mechanism for repaying the liability. Pursuant to the terms of the Royalty Agreement and the Amendment, the Royalty Agreement and the Amendment remains in effect and any future purchaser or licensor of the Products will be bound by the terms of the Royalty Agreement and the Amendment, unless otherwise agreed by Blackstone.
In May 2020, as partial consideration for the Amendment, we issued two warrants to the Blackstone Purchaser to purchase an aggregate of 550,661 shares of our common stock at an exercise price equal to $13.62 per share, each of which became exercisable upon the receipt by us of the applicable specified milestone payment. The issued warrants expire six years after the initial exercise date of each respective warrant.
JOBS Act Transition Period
In April 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we have chosen to opt out of such extended transition period and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. However, we may take advantage of the other exemptions discussed below.
Subject to certain conditions, as an emerging growth company we may rely on certain exemptions and reduced reporting requirements, including, without limitation, (1) not being required to provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (2) not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an emerging growth company until the earlier to occur of (a) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more, (b) the last day of the fiscal year following the fifth anniversary of the date of the completion of our IPO (December 31, 2024), (c) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years, or (d) the date on which we are deemed to be a large accelerated filer under the rules of the SEC, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item 3.
Item 4. Controls and Procedures.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
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Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2024.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended September 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be involved in claims and proceedings arising in the course of our business. The outcome of any such claim or proceeding, regardless of the merits, is inherently uncertain.
On May 30, 2023, we filed a lawsuit in the Court of Common Pleas in Chester County, Pennsylvania, or the Court, against Alira Health Clinical, LLC and IQVIA Biotech, LLC, or the CROs, seeking damages and alleging breach of contract, professional negligence, and negligence related to an error by the defendants in 2021 in their statistical program for the Phase 3 ROMAN trial of avasopasem for the reduction of severe oral mucositis induced by radiotherapy in patients with locally advanced head and neck cancer (the Phase 3 ROMAN trial), or the Litigation. On August 2, 2024, we and the CROs entered into an agreement to settle the Litigation, pursuant to which, in exchange for mutual releases, the CROs paid to us the amount of $975,000, and the parties terminated the contracts between Galera and the CROs, with no further obligations under the parties’ contracts. On August 8, 2024, we filed a Praecipe to Settle, Discontinue, and End the Litigation.
Item 1A. Risk Factors.
Particularly as a result of the failure to receive stockholder approval of the Dissolution, trading in our securities is highly speculative and poses substantial risks. Trading prices for our securities may bear little or no relationship to the actual value realized, if any, by holders of our securities. Accordingly, we urge extreme caution with respect to existing and future investments in our securities.
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 28, 2024. There have been no material changes to the risk factors described in that report, except as noted below. The occurrence of any of the events or developments described in our Risk Factors could adversely affect our business, financial condition, results of operations and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.
Risks Related to Our Financial Position and Capital Needs
Any financial or strategic option we pursue may not be successful.
In August 2023, in connection with the CRL announcement, we initiated a process to explore potential strategic alternatives. We engaged Stifel, Nicolaus & Company, Inc., as our financial advisor, to assist in reviewing strategic alternatives with the goal of maximizing value for our stockholders. After an extensive review of strategic alternatives, we have been unable to identify and enter into a viable transaction with a merger partner or purchaser of our company or our assets and sought stockholder approval of the Plan of Dissolution. Because our stockholders did not approve the Dissolution, the board of directors will continue to explore what, if any, alternatives are available for the future of the Company in light of its discontinued business activities. Such alternatives may include a merger, sale, divestiture of assets, licensing, or other strategic transaction. In addition, we may seek voluntary dissolution at a later time with potentially diminished assets or seek bankruptcy protection (should our net assets decline to levels that would require such action). It is unlikely that these alternatives would result in greater stockholder value than the proposed Plan of Dissolution and the Dissolution. The process of continuing to evaluate these strategic options may be costly, time-consuming and complex and we may incur significant costs related to this continued evaluation, such as legal, accounting and advisory fees and expenses and other related charges. There can be no assurance of completion of any particular course of action or a defined timeline for completion, and we can provide no assurance that any strategic alternative we pursue will have a positive impact on our results of operations or financial condition.
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We have incurred significant operating losses since our inception and anticipate that we will incur continued losses for the foreseeable future.
We have incurred losses in each year since our inception in 2012, related to expenses for research and development and our ongoing operations, and we anticipate incurring losses for the foreseeable future. Historically, we invested substantially all of our efforts and financial resources in identifying, acquiring, in-licensing and developing our product candidates, including commencing and conducting clinical trials and providing general and administrative support for these operations. Our net losses for the years ended December 31, 2023 and 2022 were $59.1 million and $62.2 million, respectively. As of December 31, 2023, we had an accumulated deficit of $437.4 million.
To become and remain profitable, we would have to succeed in developing and eventually commercializing product candidates that generate significant revenue. Given that we are not currently pursuing and have no plans to pursue the clinical development of our product candidates, we do not expect to succeed in the activities required to generate a profit and we expect to continue to incur losses for the foreseeable future. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital.
Risks Related to Our Common Stock
Our common stock is eligible for quotation on the OTC Pink Market, which may have an unfavorable impact on our stock price and liquidity.
Our common stock is eligible for quotation on the Pink Market operated by OTC Markets Group Inc. The Pink Market is a regulated quotation service that displays real-time quotes, last sale prices and volume information in over-the-counter securities. The Pink Market is not an issuer listing service, market, or exchange. The requirements for quotation on the Pink Market are considerably lower and less regulated than those of an exchange such as The Nasdaq Stock Market LLC, on which we were previously listed. Because of this, it is possible that fewer brokers or dealers will be interested in making a market in our common stock because the market for such securities is more limited, the stocks are more volatile, and the risk to investors is greater, which may impact the liquidity of our common stock. We cannot assure you that an active public market for our common stock will ever develop. Even if an active market begins to develop in our common stock, the quotation of our common stock on the Pink Market may result in a less liquid market available for existing and potential stockholders to trade common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future. If an active market is never developed for our common stock, it will be difficult or impossible for you to sell any common stock you purchase. Until our common stock is listed on a national securities exchange, regarding which we can provide no assurance, we expect that it will continue to be listed on the OTC Pink Market.
General Risk Factors
The price of our common stock is likely to be volatile and fluctuate substantially, which could result in substantial losses for purchasers of our common stock.
Our share price is likely to be volatile. The stock market in general and the market for biopharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, stockholders may not be able to sell their common stock at a price that they consider reasonable. The market price for our common stock may be influenced by many factors, including:
| • | the failure to obtain stockholder approval for our Dissolution; |
| • | any other developments in our exploration of other strategic alternatives for our business; |
| • | the listing of our common stock on the OTC Pink Market; |
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| • | delays in the commencement, enrollment and the ultimate completion of clinical trials; |
| • | discontinuation of clinical trials; |
| • | the results and potential impact of competitive products or technologies; |
| • | our ability to manufacture and successfully produce our product candidates; |
| • | actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; |
| • | variations in our financial results or those of companies that are perceived to be similar to us; |
| • | financing or other corporate transactions, or inability to obtain additional funding; |
| • | failure to meet or exceed expectations of the investment community; |
| • | regulatory or legal developments in the United States and other countries; |
| • | the recruitment or departure of key personnel; |
| • | developments or disputes concerning patent applications, issued patents or other proprietary rights; |
| • | changes in the structure of healthcare payment systems; |
| • | market conditions in the pharmaceutical and biotechnology sectors; |
| • | general economic, industry and market conditions; |
| • | changes in voting control of our executive officers and certain other members of our senior management or affiliates who hold our shares; and |
| • | the other factors described in this “Risk Factors” section and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 28, 2024, and our Quarterly Report on Form 10-Q for the period ended June 30, 2024, filed with the SEC on August 14, 2024. |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
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a) |
Disclosure in lieu of reporting on a Current Report on Form 8-K. |
b) |
Material changes to the procedures by which security holders may recommend nomin ees to the board of directors. |
c) |
Insider trading arrangements and policies. |
Table of Contents
Item 6. Exhibits.
The exhibits listed on the Exhibit Index are either filed or furnished with this report or incorporated herein by reference.
| Exhibit Number |
Description |
Form | File No. | Exhibit | Filing Date |
Filed/ Furnished Herewith | ||||||
| 3.1 | Restated Certificate of Incorporation of Galera Therapeutics, Inc. | 8-K | 001-39114 | 3.1 | 11/12/2019 | |||||||
| 3.2 | Certificate of Designation of the Series A Junior Participating Preferred Stock of the Company, dated May 3, 2024 | 8-A | 001-39114 | 3.1 | 5/3/2024 | |||||||
| 3.3 | Amended and Restated Bylaws of Galera Therapeutics, Inc. | 10-K | 001-39114 | 3.2 | 3/28/2024 | |||||||
| 4.1 | Stockholder Rights Agreement, dated as of May 3, 2024 by and between the Company and Equiniti Trust Company, LLC, as rights agent (which includes the Form of Rights Certificate as Exhibit B thereto) | 8-K | 001-39114 | 4.1 |
5/3/2024 | |||||||
| 10.1 | Separation Agreement and General Release, dated August 31, 2024, between the Company and Chris Degnan | * | ||||||||||
| 31.1 | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | * | ||||||||||
| 31.2 | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | * | ||||||||||
| 32.1 | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ** | ||||||||||
| 32.2 | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ** | ||||||||||
| 101.INS | Inline XBRL Instance Document—the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document | * | ||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents | * | ||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | * | ||||||||||
| * | Filed herewith. |
| ** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Galera Therapeutics, Inc. | ||||||
| Date: December 13, 2024 | By: | /s/ J. Mel Sorensen, M.D. | ||||
| J. Mel Sorensen, M.D. | ||||||
| Chief Executive Officer and President | ||||||
| Date: December 13, 2024 | By: | /s/ Joel Sussman | ||||
| Joel Sussman | ||||||
| Chief Accounting Officer (principal financial officer and principal accounting officer) | ||||||
34
Exhibit 10.1
GALERA THERAPEUTICS, INC.
August 28, 2024
Chris Degnan
Re: Separation Agreement
Dear Chris:
This letter sets forth the terms of the separation agreement (this “Agreement”) that Galera Therapeutics, Inc. (the “Company”) is offering to you to aid in your employment transition from the Company.
1. Separation Date. You agree and acknowledge that your Company employment will terminate by way of mutual agreement on August 31, 2024 (the “Separation Date”). As of and following the Separation Date, (a) you will no longer be employed by the Company, and (b) you will no longer hold any other employment, director, manager, or officer positions with the Company, its direct and indirect parents, and/or its direct and indirect subsidiaries (the Company, along with its direct and indirect parents and subsidiaries, the “Company Group”). Following the Separation Date, the Company will pay you all amounts earned and owing pursuant to the terms and conditions of Sections 4.5(a)(i), (iii), (iv) and (v) of the Employment Agreement (as defined in Section 2 below).
2. Severance Benefits. As consideration for this Agreement, your employment termination will be deemed to be a termination under Section 4.5(b) of your Employment, Confidentiality, Noncompete and Invention Rights Agreement, dated as of October 25, 2019 (the “Employment Agreement”). As such, pursuant to the terms and conditions of the Employment Agreement (as modified and enhanced by this Agreement), if: (i) you remain a Company employee in good standing through and including the Separation Date and your employment terminates on the Separation Date; (ii) on or within twenty-one (21) calendar days following the Separation Date, you sign, date, and return to the Company (without alteration), the General Release of Claims attached hereto as Exhibit A (the “General Release”); (iii) you allow the General Release to become effective in accordance with its terms; and (iv) you comply with the terms of and your obligations under this Agreement and your other Continuing Obligations owed to the Company Group as detailed in Section 5 below (collectively, clauses (i) through (v), the “Obligations”), the Company Group will provide you with the following “Termination Benefits”:
(a) Termination Payments. Termination pay in the form of a lump sum cash payment equal to your final monthly base salary for a period of nine (9) months following the Separation Date (totaling $348,925.50) (the “Termination Payments”). The Termination Payments will be paid to you on September 15, 2024, subject to required payroll deductions and withholdings. For the avoidance of doubt, you acknowledge and agree that you will not receive, and are forfeiting, any additional payments related to the Target Bonus (as defined in the Employment Agreement) subject to Section 3 below.
(b) Continuation Coverage. If you timely elect continuation coverage pursuant to COBRA for you and your eligible dependents, the Company will pay your COBRA group health insurance premiums for you and your eligible dependents (e.g., the full COBRA premium cost in effect at the time of such payment) (the “COBRA Premiums”) until the earlier of (i) a period of nine (9) months from the Separation Date or (ii) the date upon which you and/or your eligible dependents become covered under similar plans (the “COBRA Payment Period”). If you become eligible for health insurance coverage under another employer’s group health plan or through self-employment, or if you otherwise cease to be
eligible for COBRA coverage, you must immediately notify the Company, and the Company’s obligation to pay the COBRA Premiums shall cease. Notwithstanding the foregoing, if the Company determines, in its sole discretion, that it cannot pay the COBRA Premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company instead shall provide you with taxable monthly payments in an amount equal to the COBRA Premium amount for the first month of your COBRA coverage, and such monthly payments shall be made through the remainder of the COBRA Payment Period.
(c) Equity. In accordance with the terms of the Company’s 2019 Incentive Award Plan, you will have ninety (90) days after the Separation Date to exercise any vested options.
(d) Independent Contractor Agreement. Nothing in this Agreement or in the General Release shall release the Company from its obligations under the Independent Contractor Agreement dated August 31, 2024 (the “Independent Contractor Agreement”), between you and the Company.
3. Change in Control. In the event that there is a Change in Control (as defined in the Employment Agreement) between the Separation Date and nine-month anniversary of the Separation Date, (i) you shall receive 1 times your Target Bonus within thirty (30) days of the Change in Control; (ii) “Section 4.5(b) of your Employment, Confidentiality, Noncompete and Invention Rights Agreement, dated as of October 25, 2019” in Section 2 hereof shall be replaced with “Section 4.5(c) of your Employment, Confidentiality, Noncompete and Invention Rights Agreement, dated as of October 25, 2019 (the ‘Employment Agreement’);” (iii) “nine (9) months” in Sections 2(a) and 2(b) hereof shall be replaced with “twelve (12) months;” and (iv) the first two sentences of Section 2(a) hereof shall be replaced with “Termination pay in the form of a lump sum cash payment equal to your final monthly base salary for a period of twelve (12) months following the Separation Date (totaling $465,234.00) (the “Termination Payments”). The Termination Payments will be paid to you upon the closing of the transaction that effects the Change in Control, subject to required payroll deductions and withholdings, less any portion of the Termination Payments paid on September 15, 2024.”
4. No Other Compensation or Benefits. You agree and acknowledge that, except as expressly provided in this Agreement, you have not earned and will not receive from the Company Group any additional compensation (including base salary, bonus, incentive compensation, commissions, severance, or equity) or benefits prior to, on, or after the Separation Date other than any benefits to which you are entitled under broad-based employee benefit plans of the Company Group in which you participate.
5. Continuing Obligations. You acknowledge and reaffirm your continuing obligations owed to the Company Group, including without limitation, pursuant to: (a) the Employment Agreement (including Sections 5 – 22 of the Employment Agreement), and (b) any other similar agreement entered into by you and which benefits or may be enforced by the Company or any other member of the Company Group, each of which agreements and obligations remain in full force and effect in accordance with their terms during the Transition Period and following the Separation Date.
6. Confidentiality. The existence and terms of, and amount paid under, this Agreement will be held in strictest confidence by you, and will not be publicized or disclosed in any manner whatsoever; provided, however, that: (a) you may disclose this Agreement in confidence to your immediate family; (b) you may disclose this Agreement in confidence to your attorneys, accountants, auditors, tax preparers, and financial advisors; and (c) you may disclose this Agreement insofar as such disclosure may be necessary to enforce its terms or as otherwise required by law. In particular, and without limitation, you agree, either directly or indirectly (including through third parties), not to disclose the existence or terms of, or amounts paid under, this Agreement to any current or former Company employee, contractor or consultant.
7. No Admissions. The promises and payments in consideration of this Agreement are not and shall not be construed to be an admission of any liability or obligation by either party to the other party, and neither party makes any such admission.
8. Cooperation. From and after the date of this Agreement, you agree to cooperate fully with the Company Group, or any member thereof, in connection with its or their actual or contemplated defense, prosecution, or investigation of any claims or demands by or against third parties, or in connection with other matters arising from events, acts, or failures to act that occurred during the period of your employment by the Company; provided, that such cooperation will not unreasonably burden you or unreasonably interfere with your subsequent employment or other business or personal affairs. Such cooperation includes making yourself available to the Company Group upon reasonable notice, without subpoena, to provide complete, truthful and accurate information in witness interviews, depositions, and trial testimony. The Company will reimburse you for reasonable and pre-approved out-of-pocket expenses you incur in connection with any such cooperation, excluding forgone wages, salary, or other compensation, and will accommodate your scheduling needs.
9. Choice of Law. This Agreement will be governed and interpreted by and under the laws of the State of Delaware without giving effect to any conflicts of laws principles that require the application of the law of a different state. The parties agree to, and agree not to challenge, the exclusive jurisdiction and exclusive venue of the state and federal courts in Delaware, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, and further irrevocably agree that all claims in any such action or proceeding shall be heard and determined exclusively in the state or federal courts located in Delaware.
10. General. This Agreement, Exhibit A, the Employment Agreement (as modified by this Agreement) and the Continuing Obligations in Section 5 above (which obligations shall remain in full force and effect in accordance with their terms following the Separation Date), constitutes the complete, final and exclusive embodiment of the entire agreement between you and the Company Group with regard to the subject matter hereof. It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes and terminates any other agreements, promises, warranties or representations by and between you, the Company and all other members of the Company Group concerning its subject matter. This Agreement may not be modified or amended except in a writing signed by both you and the Company’s Board of Directors. This Agreement will bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Company, their heirs, successors and assigns. If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination shall not affect any other provision of this Agreement and the provision in question shall be modified so as to be rendered enforceable in a manner consistent with the intent of the parties insofar as possible under applicable law. Any ambiguity in this Agreement shall not be construed against either party as the drafter. Any waiver of a breach of this Agreement, or rights hereunder, shall be in writing and shall not be deemed to be a waiver of any successive breach or rights hereunder. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act or other applicable law) or other transmission method and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.
[Signature Page to Follow]
If this Agreement is acceptable to you, please sign below on or within seven (7) business days from the Separation Date and then promptly return the fully signed original to me. The Company’s offer contained herein will automatically expire if we do not receive the fully signed Agreement from you within this timeframe.
We wish you the best in your future endeavors.
| Sincerely, | ||
| Galera Therapeutics, Inc. | ||
| By: | /s/ Mel Sorensen | |
| Name: Mel Sorensen | ||
| Title: Chief Executive Officer | ||
| Agreed and Acknowledged: |
| /s/ Chris Degnan |
| Chris Degnan |
| Date: August 31, 2024 |
Exhibit A – General Release of Claims
EXHIBIT A
GENERAL RELEASE OF CLAIMS
(TO BE SIGNED ON OR WITHIN 21 CALENDAR DAYS OF THE
SEPARATION DATE)
If I choose to sign and return this General Release of Claims (the “General Release”), and allow it to become effective by its terms, the Company Group will provide me with the Termination Benefits set forth in Section 2 of the Separation Agreement between me and the Company dated August 28, 2024 (the “Agreement”). I understand that I am not entitled to the Termination Benefits unless I sign and return this General Release to the Company on or within twenty-one (21) calendar days following the Separation Date, and allow it to become effective by its terms. Capitalized terms used in this General Release that are not defined herein shall have the meaning as defined in the Agreement.
| 1. | I understand that any payments or benefits paid or granted to me under Section 3 of the Agreement represent, in part, consideration for signing this General Release and are not salary, wages or benefits to which I was already entitled. I understand and agree that I will not receive the payments and benefits specified in Section 3 of the Agreement unless I execute this General Release and do not revoke this General Release within the time period permitted hereafter or breach this General Release. I also acknowledge and represent that I have received all payments and benefits that I am entitled to receive (as of the date hereof) by virtue of my employment with the Company. |
| 2. | Except as provided in Section 4 and Section 5 below and except for the provisions of the Agreement that expressly survive the termination of my employment with the Company, I knowingly and voluntarily (for myself, my heirs, executors, administrators and assigns) release and forever discharge the Company and the other Released Parties from any and all claims, suits, controversies, actions, causes of action, cross-claims, counter-claims, demands, debts, compensatory damages, liquidated damages, punitive or exemplary damages, other damages, claims for costs and attorneys’ fees, or liabilities of any nature whatsoever in law and in equity, both past and present (through the date I execute this General Release) and whether known or unknown, suspected, or claimed against the Company or any of the Released Parties which I, my spouse, or any of my heirs, executors, administrators or assigns, may have, which arise out of or are connected with my employment with, or my separation or termination from, the Company (including, but not limited to, any allegation, claim or violation, arising under: Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (including the Older Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Worker Adjustment Retraining and Notification Act; the Employee Retirement Income Security Act of 1974; any applicable Employee Order Programs; the Fair Labor Standards Act; or their state or local counterparts; the Pennsylvania Human Relations Act; the Pennsylvania Whistleblower Law; the Pennsylvania Public Employee Relations Act; the Philadelphia Fair Practices Ordinance; or under any other federal, state or local civil or human rights law, or under any other local, state, or federal law, regulation or ordinance; or under any public policy, contract or tort, or under common law; or arising under any policies, practices or procedures of the Company; or any claim for wrongful discharge, breach of contract, infliction of emotional distress, defamation; or any claim for costs, fees, or other expenses, including attorneys’ fees incurred in these matters) (all of the foregoing are collectively referred to herein as the “Claims”). |
| 3. | I represent that I have made no assignment or transfer of any right, claim, demand, cause of action or other matter covered by Section 2 above. |
| 4. | This General Release does not release claims that cannot be released as a matter of law, including, but not limited to, my right to report possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation, my right to file a charge with or participate in a charge, investigation or proceeding by the Equal Employment Opportunity Commission, or any other local, state, or federal administrative body or government agency that is authorized to enforce or administer laws related to employment, against the Company (with the understanding that my release of claims herein bars me from recovering monetary or other individual relief from the Company or any Released Parties in connection with any charge, investigation or proceeding, or any related complaint or lawsuit, filed by me or by anyone else on my behalf before the federal Equal Employment Opportunity Commission or a comparable state or local agency), claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law, claims to continued participation in certain of the Company’s group benefit plans pursuant to the terms and conditions of COBRA, claims to exercise rights I may have under Section 7 of the U.S. National Labor Relations Act, such as the right to engage in concerted activity, including collective action or discussion concerning wages or working conditions, claims to any benefit entitlements vested as the date of separation of my employment, pursuant to written terms of any employee benefit plan of the Company or its affiliates, my rights or remedies in connection with my ownership of vested equity securities of the Company, my right to indemnification by the Company or any of its affiliates pursuant to contract or applicable law, and my rights under applicable law. |
| 5. | I further agree that this General Release does not waive or release any rights or claims that I may have under the Age Discrimination in Employment Act of 1967 which arise after the date I execute this General Release. I acknowledge and agree that my separation from employment with the Company in compliance with the terms of the Agreement shall not serve as the basis for any claim or action (including, without limitation, any claim under the Age Discrimination in Employment Act of 1967). |
| 6. | In signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims hereinabove mentioned or implied. I expressly consent that this General Release shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown and unsuspected Claims (notwithstanding any state statute that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove mentioned or implied. I acknowledge and agree that this waiver is an essential and material term of this General Release and that without such waiver the Company would not have agreed to the terms of the Agreement. I further agree that in the event I should bring a Claim seeking damages against the Company, or in the event I should seek to recover against the Company in any Claim brought by a governmental agency on my behalf, this General Release shall serve as a complete defense to such Claims. I further agree that I am not aware of any pending charge or complaint of the type described in Section 2 above as of the execution of this General Release. Notwithstanding the foregoing, although I am releasing claims under the Age Discrimination in Employment Act of 1967, as amended, I may challenge the knowing and voluntary nature of this Agreement under such law before a court, the Equal Employment Opportunity Commission, or other agency; provided, however, nothing herein shall limit the court or agency’s ability to offset any money awarded to me upon such a challenge by the amount of consideration received under this Agreement or from awarding the Company attorney fees or costs that may be authorized under applicable law. |
| 7. | I agree that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or construed at any time to be an admission by the Company, any Released Party or myself of any improper or unlawful conduct. |
| 8. | I agree that I will forfeit all amounts payable by the Company pursuant to Section 3 of the Agreement if I challenge the validity of this General Release; provided that this forfeiture shall not apply with respect to challenges regarding the validity of any waiver or release under the Age Discrimination in Employment Act of 1967. I also agree that if I violate this General Release by suing the Company or the other Released Parties, I will pay all costs and expenses of defending against the suit incurred by the Released Parties, including reasonable attorneys’ fees, and return all payments received by me pursuant to Section 3 of the Agreement. |
| 9. | I agree not to criticize, denigrate or otherwise disparage the Company, its past and present investors, officers, directors or employees or its affiliates, provided, that nothing in this Section 9 shall limit my response to questions on any and all such subjects from the Company’s Chief Executive Officer, members of its board of directors, its legal counsel or my own legal counsel, or as otherwise required by law. I further agree to keep all confidential and proprietary information about the past or present business affairs of the Company and its affiliates confidential unless a prior written release from the Company is obtained. I further agree that as of the date hereof, I have returned to the Company any and all property, tangible or intangible, relating to its business, which I possessed or had control over at any time (including, but not limited to, company-provided credit cards, building or office access cards, keys, computer equipment, manuals, files, documents, records, software, customer data base and other data) and that I shall not retain any copies, compilations, extracts, excerpts, summaries or other notes of any such manuals, files, documents, records, software, customer data base or other data. In addition, the Defend Trade Secrets Act of 2016 provides the following immunity rights: (a) an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made either (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (b) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the employer’s trade secret to the attorney of the individual and use the trade secret information in the court proceeding if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order. |
Notwithstanding anything in this General Release to the contrary, this General Release shall not relinquish, diminish, or in any way affect any rights or claims arising out of any action or inaction by the Company or by any Released Party after the date hereof.
| 10. | I recognize and agree that the restraints contained in the Agreement (both separately and in total) are reasonable and enforceable and I agree to abide by the terms of those sections. |
| 11. | Whenever possible, each provision of this General Release shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this General Release is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or its validity and enforceability in any other jurisdiction, but this General Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. |
| 12. | This General Release does not waive or release any rights or claims that I may have under the Independent Contractor Agreement. |
BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:
| 1. | I HAVE READ IT CAREFULLY; |
| 2. | I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED; |
| 3. | I VOLUNTARILY CONSENT TO EVERYTHING IN IT; |
| 4. | I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION, I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION; |
| 5. | I HAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS GENERAL RELEASE TO CONSIDER IT, AND ANY CHANGES MADE SINCE SUCH DATE WILL NOT RESTART THE REQUIRED 21-DAY PERIOD; |
| 6. | I UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS GENERAL RELEASE TO REVOKE IT AND THAT THIS GENERAL RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED; |
| 7. | I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND |
| 8. | I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME. |
| DATE: August 31, 2024 | ||
| SIGNED: |
/s/ Chris Degnan | |
| Chris Degnan | ||
Exhibit 31.1
CERTIFICATION
I, J. Mel Sorensen, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Galera Therapeutics, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: December 13, 2024 | By: | /s/ J. Mel Sorensen, M.D. | ||||
| J. Mel Sorensen, M.D. Chief Executive Officer and President (principal executive officer) |
Exhibit 31.2
CERTIFICATION
I, Joel Sussman, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Galera Therapeutics, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: December 13, 2024 | By: | /s/ Joel Sussman | ||||
| Joel Sussman Chief Accounting Officer (principal financial officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Galera Therapeutics, Inc. (the “Company”) for the period ended September 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: December 13, 2024 | By: | /s/ J. Mel Sorensen, M.D. | ||||
| J. Mel Sorensen, M.D. Chief Executive Officer and President (principal executive officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Galera Therapeutics, Inc. (the “Company”) for the period ended September 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: December 13, 2024 | By: | /s/ Joel Sussman | ||||
| Joel Sussman Chief Accounting Officer (principal financial officer) |