What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-30 compared with 2022-03-31 · 122 added, 100 removed, 122 unchanged (65% of the section changed)

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Securities Exchange Act of 1934, as amended, and is subject to the safe harbor created therein for forward-looking statements.

Such statements include, but are not limited to, statements concerning our anticipated operating results, research and

development, clinical trials, regulatory proceedings, and financial resources, and can be identified by use of words such as, for example, “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and “would,” “should,” “could”

or “may.” All statements, other than statements of historical facts, included herein that address activities, events, or developments that the Company expects or anticipates will or may occur in the future, are forward-looking statements,

including statements regarding:

Such statements include, but are not limited to, statements concerning our anticipated operating results, research

and development, clinical trials, regulatory proceedings, and financial resources, and can be identified by use of words such as, for example, “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and “would,” “should,”

“could” or “may.” All statements, other than statements of historical facts, included herein that address activities, events, or developments that the Company expects or anticipates will or may occur in the future, are forward-looking

statements, including statements regarding:

plans and expectations regarding clinical trials;

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our strategy and expectations for clinical development and commercialization of our products;

strategic partnerships;

potential strategic partnerships;

expectations regarding the effectiveness of our products;

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statements about accounting assumptions and estimates;

expectations regarding liquidity and the sufficiency of

cash to fund currently planned operations through at least March 31, 2023;

expectations regarding liquidity and the

sufficiency of cash to fund currently planned operations through at least December 31, 2024;

our commitments and contingencies;

and our market risk exposure.

Forward-looking statements are based on current expectations, estimates and projections about the industry

and markets in which Galectin Therapeutics operates, and management’s beliefs and assumptions.

These statements are not guarantees of future performance and involve certain known and unknown risks and uncertainties that could cause actual results

to differ materially from those expressed or implied by such statements.

Forward-looking statements are based on current expectations, estimates and

projections about the industry and markets in which Galectin Therapeutics operates, and management’s beliefs and assumptions.

These statements are not guarantees of future performance and involve certain known and unknown risks and

uncertainties that could cause actual results to differ materially from those expressed or implied by such statements.

Such risks and uncertainties are related to and include, without limitation,

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

Food and Drug Administration (FDA) and by foreign regulatory authorities, which must approve our product candidates in development and could restrict the sales and marketing

and pricing of such products,

Food and Drug Administration (FDA) and by foreign regulatory authorities, which must approve our product candidates in development and could restrict the sales and

marketing and pricing of such products,

competition and stock price volatility in the biotechnology industry,

limited trading volume for our stock, concentration of ownership of our stock, and other risks detailed herein and from time to time in our SEC reports, and

the impact resulting from the outbreak of COVID-19, which has delayed and may continue to delay our clinical trial and development efforts, as well as the impact that COVID-19 has on the volatility of the capital market and our ability

to access the capital market.

ability to access the capital market.

We caution investors that actual results or business conditions may differ materially from those projected or suggested in forward-looking statements as a result of various factors including, but not limited to,

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We cannot assure you that we have identified all the factors that create uncertainties.

Moreover, new risks emerge from time to time and it is not possible

for our management to predict all risks, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking

Moreover, new risks emerge from time to time and it is not

possible for our management to predict all risks, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking

Readers should not place undue reliance on forward-looking statements.

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they are made or to reflect the occurrence of unanticipated events.

We are a clinical stage biopharmaceutical company engaged in drug research and development to create new therapies for fibrotic disease, cancer and selected other diseases.

Our drug candidates are based on our

method of targeting galectin proteins, which are key mediators of biologic and pathologic functions.

We use naturally occurring, readily-available plant products as starting material in manufacturing processes to create proprietary, patented

complex carbohydrates with specific molecular weights and other pharmaceutical properties.

These complex carbohydrate molecules are appropriately formulated into acceptable pharmaceutical formulations.

Using these unique carbohydrate-based

candidate compounds that largely bind and inhibit galectin proteins, particularly galectin-3, we are undertaking the focused pursuit of therapies for indications where galectin proteins have a demonstrated role in the pathogenesis of a given

We focus on diseases with serious, life-threatening consequences and those where current treatment options are limited specifically in NASH (non-alcoholic steatohepatitis) with cirrhosis and certain cancer indications.

Our strategy is

to establish and implement clinical development programs that add value to our business in the shortest period of time possible and to seek strategic partners when one of our programs becomes advanced and requires significant additional

Our lead galectin-3 inhibitor is belapectin (GR-MD-02), which has been demonstrated in preclinical models to reverse liver fibrosis and cirrhosis and in clinical studies to decrease portal hypertension and prevent

its complication:

the development of esophageal varices.

Belapectin has the potential to treat many diseases due to galectin-3’s involvement in multiple key biological pathways such as fibrosis, immune cell function and immunity, cell

differentiation, cell growth, and apoptosis (cell death).

The importance of galectin-3 in the fibrotic process is supported by experimental evidence.

Animals with the galectin-3 gene “knocked-out” can no longer develop fibrosis in response to

experimental stimuli compared to animals with an intact galectin-3 gene.

We are using our galectin-3 inhibitor to treat advanced liver fibrosis and liver cirrhosis in NASH patients.

We have completed two Phase 1 clinical studies, a Phase 2

clinical study in NASH patients with advanced fibrosis (NASH-FX) and a second Phase 2b clinical trial in NASH patients with compensated cirrhosis and portal hypertension (NASH-CX).

Results of Operations from the Years Ended December 31, 2022 and 2021

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which time we begin tracking expenditures by the product candidate.

Clinical program expenses comprise payments to vendors related to preparation for, and conduct of, all phases of the clinical trial, including costs for drug manufacture, patient

dosing and monitoring, data collection and management, oversight of the trials and reports of results.

Pre-clinical expenses comprise all research and development amounts incurred before human trials begin and for additional toxicology studies to

support advanced development, including payments to vendors for services related to product experiments and discovery, toxicology, pharmacology, metabolism and efficacy studies, as well as manufacturing process development for a drug candidate.

Clinical program expenses comprise payments to vendors related to preparation for, and conduct of, all phases of the clinical trial, including costs for drug manufacture,

patient dosing and monitoring, data collection and management, oversight of the trials and reports of results.

Pre-clinical expenses comprise all research and development amounts incurred before human trials begin and for additional toxicology

studies to support advanced development, including payments to vendors for services related to product experiments and discovery, toxicology, pharmacology, metabolism and efficacy studies, as well as manufacturing process development for a drug

We have two product candidates, belapectin and GM-CT-01;

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Our research and development expenses were as follows:

(in thousands)

Direct external expenses:

(in thousands)

Clinical programs

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preclinical activities incurred in support of the planned clinical program such as development and reproductive toxicity studies, clinical supplies and other supportive activities.

Payroll and other costs increased primarily due to additional

employees being hired in research and development.

General and Administrative Expense

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General and administrative

General and administrative expenses consist primarily of salaries including stock-based compensation, legal and accounting fees, insurance, investor relations, business development and other office related

The primary reasons for the increase for the year ended December 31, 2021, as compared to the same period for 2020, are due to an increase in non-cash stock-based compensation of $373,000 and increase in insurance expense of $395,000.

General and administrative expenses consist primarily of salaries including stock-based compensation, legal and accounting fees, insurance, investor relations, business development and other

office related expenses.

The primary reasons for the increase for the year ended December 31, 2022, as compared to the same period for 2021 are due to an increase in non-cash stock-based compensation of $399,000 partially offset by decreases in

legal fees and insurance expense of $146,000 and $131,000, respectively.

Other Income and Expense

During the year ended December 31, 2021, other income and expense consisted of $4,000 of interest income offset by amortization of the debt discount associated with warrants issued with a line of credit entered

into in December 2017 of $174,000 which is classified as interest expense, and interest expense and amortization of debt discounts on convertible notes payable of $315,000.

During the year ended December 31, 2022, other income and expense consisted of $52,000 of interest income offset by interest expense and amortization of debt discounts on convertible notes

payable and convertible line of credit of $1,033,000.

During the year ended December 31, 2021, other income and expense consisted of $4,000 of interest income offset by amortization of the debt discount associated with warrants issued with a line

of credit entered into in December 2017 of $174,000 which is classified as interest expense, and interest expense and amortization of debt discounts on convertible notes payable of $315,000.

Results of Operations from the Years Ended December 31, 2021 and 2020

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which time we begin tracking expenditures by the product candidate.

Clinical program expenses comprise payments to vendors related to preparation for, and conduct of, all phases of the clinical trial, including costs for drug manufacture, patient

dosing and monitoring, data collection and management, oversight of the trials and reports of results.

Pre-clinical expenses comprise all research and development amounts incurred before human trials begin V, including payments to vendors for

services related to product experiments and discovery, toxicology, pharmacology, metabolism and efficacy studies, as well as manufacturing process development for a drug candidate.

Clinical program expenses comprise payments to vendors related to preparation for, and conduct of, all phases of the clinical trial, including costs for drug manufacture,

patient dosing and monitoring, data collection and management, oversight of the trials and reports of results.

Pre-clinical expenses comprise all research and development amounts incurred before human trials begin and for additional toxicology

We have two product candidates, belapectin and GM-CT-01;

only belapectin is in active development.

however only belapectin is in active development.

Our research and development expenses were as follows:

(in thousands)

Direct external expenses:

(in thousands)

Clinical programs

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preclinical activities incurred in support of the planned clinical program such as development and reproductive toxicity studies, clinical supplies and other supportive activities.

Other research and development expense increased in the year

ended December 31, 2020 over the year ended December 31, 2019 primarily due to hiring our Chief Medical Officer in March 2020 and an increase in non-cash stock-based compensation expense.

General and Administrative Expense

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General and administrative

The primary reasons for the decrease for the year ended December 31, 2020, as compared to the same period for 2019, are due to decreases in legal expenses of $339,000, investor relations expenses of $128,000, and non-cash stock-based compensation

of $82,000 partially offset by an increase in insurance expenses of $331,000.

General and administrative expenses consist primarily of salaries including stock-based compensation, legal and accounting fees, insurance, investor relations, business development and other

office related expenses.

expense of $395,000.

Other Income and Expense

During the year ended December 31, 2020, other income and expense consisted of $66,000 of interest income offset by amortization of the debt discount associated with warrants issued with a line of credit entered into

in December 2017 of $87,000 which is classified as interest expense.

During the year ended December 31, 2021, other income and expense consisted of $4,000 of interest income offset by amortization of the debt discount associated with warrants issued with a line

of credit entered into in December 2017 of $174,000 which is classified as interest expense, and interest expense and amortization of debt discounts on convertible notes payable of $315,000.

Liquidity and Capital Resources

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At December 31, 2022, the Company had $18.6 million of unrestricted

cash and cash equivalents available to fund future operations.

The Company believes there is sufficient cash to fund currently planned operations at least through March 31, 2023.

We will require more cash to fund our operations after March 31,

2023 and believe we will be able to obtain additional financing.

The currently planned operations include costs related to our adaptively designed NAVIGATE Phase 2b/3 clinical trial.

Currently, we expect to require an additional approximately

$45-$50 million to cover costs of the trial to reach the planned interim analysis estimated to occur in the first quarter of 2024 along with drug manufacturing and other scientific support activities and general and administrative costs and

further amounts to complete the Phase 3 portion of the trial.

cash and cash equivalents in addition to $50 million available under a line of credit provided by our chairman available to fund future operations.

The Company believes there is sufficient cash to fund currently planned operations at least

through December 31, 2024.

We will require more cash to fund our operations after December 31, 2024 and believe we will be able to obtain additional financing.

The currently planned operations include costs related to our adaptively designed

NAVIGATE Phase 2b/3 clinical trial.

However, there can be no assurance that we will be successful in obtaining such new financing or, if available, that such financing will be on terms favorable to us.

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Net cash used in operations increased by $6,748,000 to $31,056,000 for 2022, as compared to $24,308,000 for 2021.

Cash operating expenses increased principally due to increased research and development activities

primarily related to our NAVIGATE clinical trial and associated activities.

Cash operating expenses increased principally due to increased research and

development activities primarily related to our NAVIGATE clinical trial and associated activities.

There were no equipment purchases or other investing activities in 2022 or 2021.

Net cash provided by financing activities was $10,000,000 during 2022 as compared to $36,814,000 during 2021, due primarily to the transactions described below.

In 2021, we received proceeds of $30,000,000 from three related-party convertible notes payable, $2,950,000 from the exercise of common stock warrants and $3,864,000 in net proceeds from issuance of common shares

under our ATM.

In 2020, we received proceeds of $44,000 from issuances of common stock through the At the Market issuances and received $219,000 from exercise of common stock options.

In 2022, we received $10,000,000 in proceeds under a convertible line of credit provided by our chairman.

In 2021, we received proceeds of $30,000,000 from three related-party convertible

notes payable, $2,950,000 from the exercise of common stock warrants and $3,864,000 in net proceeds from issuance of common shares under our ATM.

2021 compared to 2020

Net cash used in operations increased by $3,707,000 to $24,308,000 for 2021, as compared to $20,601,000 for 2020.

Cash operating expenses increased principally due to increased research and development activities

primarily related to our NAVIGATE clinical trial and associated activities.

Cash operating expenses increased principally due to increased research and

development activities primarily related to our NAVIGATE clinical trial and associated activities.

There were no equipment purchases or other investing activities in 2021 or 2020.

Net cash provided by financing activities was $36,814,000 during 2021 as compared to $263,000 during 2020, due primarily to the transactions described below.

In 2021, we received proceeds of $30,000,000 from three related-party convertible notes payable, $2,950,000 from the exercise of common stock warrants and $3,864,000 in net proceeds from

issuance of common shares under our ATM.

In 2020, we received proceeds of $44,000 from issuances of common stock through the At the Market issuances and received $219,000 from exercise of common stock options.

In 2019, we completed an issuance of common

stock and warrants in stockholder rights offering generating $44,889,000 in proceeds and additionally, received $2,930,000 from issuances of common stock through the At the Market issuances, and received $2,650,000 from exercise of common stock

options and warrants.

In 2019, we also paid cash dividends of $394,000 on Series A and C preferred stock.

Operating leases

Effective December 31, 2018, the Company entered into an amendment to its operating lease for office space in Norcross, GA for a term of thirty-eight months, beginning on January 1, 2019 and ending February 28,

2022 at a rate of approximately $3,800 per month.

The amended lease provided for free rent for the first two months of the lease and continues the security deposit of $6,000.

In addition to base rental payments included in the contractual

obligations table above, the Company is responsible for our pro-rata share of the operating expenses for the building.

The Company renewed its existing office space lease effective in February 2022 for 38 months at substantially the same terms.

Effective February 28, 2022, the Company entered into an amendment to its operating lease for office space in Norcross, GA for a term of thirty-eight months, beginning on March 1, 2022 and

ending April 30, 2025 at an average rate of approximately $4,250 per month.

The amended lease provided for free rent for the first six months of the lease and continues the security deposit of $6,000.

In addition to base rental payments

included in the contractual obligations table above, the Company is responsible for our pro-rata share of the operating expenses for the building.

In October 2012, the Company entered into an operating lease for office and lab space for research and development activities in Natick, MA.

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This lease was continued on a month-to-month basis from October 1, 2013.

We have engaged outside vendors for certain services associated with our clinical trials.

These services are generally available from several providers and, accordingly, our arrangements are typically

cancellable on 30 days notice.

We have engaged outside vendors for certain

services associated with our clinical trials.

These services are generally available from several providers and, accordingly, our arrangements are typically cancellable on 30 days

Off-Balance Sheet Arrangements

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other outside sources, and on various other factors that we believe to be appropriate under the circumstances.

We believe that the critical accounting policies discussed below involve more complex management judgment due to the sensitivity of the

methods, assumptions and estimates necessary in determining the related asset, liability, revenue and expense amounts.

We believe that the critical accounting policies discussed below involve more complex management judgment due to the sensitivity of

the methods, assumptions and estimates necessary in determining the related asset, liability, revenue and expense amounts.

Accrued Expenses .

As part of the process of

preparing our consolidated financial statements, we are required to estimate accrued expenses.

This process involves identifying services that third parties have performed on our behalf and estimating the level of service performed and the

associated cost incurred on these services as of each balance sheet date in our consolidated financial statements.

Examples of estimated accrued expenses include professional service fees, such as those arising from the services of attorneys

and accountants and accrued payroll expenses.

In connection with these service fees, our estimates are most affected by our understanding of the status and timing of services provided relative to the actual services incurred by the service

In the event that we do not identify certain costs that have been incurred or we under- or over-estimate the level of services or costs of such services, our reported expenses for a reporting period could be understated or

The date on which certain services commence, the level of services performed on or before a given date, and the cost of services are often subject to our judgment.

We make these judgments based upon the facts and circumstances known

to us in accordance with accounting principles generally accepted in the U.S.

As part of the process of preparing our consolidated financial statements, we are required to estimate accrued expenses.

This process involves identifying services that third parties have performed on our behalf and estimating the level of service performed and the associated cost incurred on these services as of each balance sheet date in our

consolidated financial statements.

Examples of estimated accrued expenses include professional service fees, such as those arising from the services of attorneys and accountants and accrued payroll expenses.

In connection with these service

fees, our estimates are most affected by our understanding of the status and timing of services provided relative to the actual services incurred by the service providers.

In the event that we do not identify certain costs that have been

incurred or we under- or over-estimate the level of services or costs of such services, our reported expenses for a reporting period could be understated or overstated.

The date on which certain services commence, the level of services

performed on or before a given date, and the cost of services are often subject to our judgment.

We make these judgments based upon the facts and circumstances known to us in accordance with accounting principles generally accepted in the U.S.

Research and Development Expenses.

development expenses, including personnel costs, allocated facility costs, lab supplies, outside services, contract laboratory costs related to manufacturing drug product, clinical trials and preclinical studies are charged to research and

development expense as incurred.

The Company accounts for nonrefundable advance payments for goods and services that will be used in future research and development activities as expense when the service has been performed or when the goods

have been received.

Our current NAVIGATE clinical trial is being supported by third-party contract research organizations, or CROs, and other vendors.

We accrue expenses for clinical trial activities performed by CROs based upon the estimated

amount of work completed on each trial.

For clinical trial expenses and related expenses associated with the conduct of clinical trials, the significant factors used in estimating accruals include the number of patients enrolled, the number of

active clinical sites, and the duration for which the patients have been enrolled in the trial.

We monitor patient enrollment levels and related activities to the extent possible through internal reviews, review of contractual terms and

correspondence with CROs.

We base our estimates on the best information available at the time.

We monitor patient enrollment levels and related activities to the extent possible through discussions with CRO personnel and based our estimates of

clinical trial costs on the best information available at the time.

Research and development expenses, including personnel costs, allocated facility costs, lab supplies, outside services, contract laboratory costs related to manufacturing drug product, clinical trials and preclinical studies are charged to research and development expense as incurred.

The Company accounts for nonrefundable advance

payments for goods and services that will be used in future research and development activities as expense when the service has been performed or when the goods have been received.

Our current NAVIGATE clinical trial is being supported by

third-party contract research organizations, or CROs, and other vendors.

We accrue expenses for clinical trial activities performed by CROs based upon the estimated amount of work completed on each trial.

For clinical trial expenses and related

expenses associated with the conduct of clinical trials, the significant factors used in estimating accruals include the number of patients enrolled, the number of active clinical sites, and the duration for which the patients have been

enrolled in the trial.

We monitor patient enrollment levels and related activities to the extent possible through internal reviews, review of contractual terms and correspondence with CROs.

We base our estimates on the best information

available at the time.

We monitor patient enrollment levels and related activities to the extent possible through discussions with CRO personnel and based our estimates of clinical trial costs on the best information available at the time.

However, additional information may become available to us which will allow us to make a more accurate estimate in future periods.

In that event, we may be required to record

adjustments to research and development expenses in future periods when the actual level of activity becomes more certain.

In that event, we may be required to record adjustments to research and development expenses in future periods

when the actual level of activity becomes more certain.

Stock-Based Compensation .

compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the service period, which generally represents the vesting period.

For awards that have performance-based vesting conditions

the Company recognizes the expense over the estimated period that the awards are expected to be earned.

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the service period, which generally represents the vesting period.

For awards that have performance-based vesting conditions the Company recognizes the expense over the estimated period that the awards are

expected to be earned.

The Company generally uses the Black-Scholes option-pricing model to calculate the grant date fair value of stock options.

recognized over the service period is required to include an estimate of the awards that will be forfeited.

The expense recognized over the service period is required to include an estimate of the awards

that will be forfeited.

Quantitative and Qualitative Disclosures About Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis