GREENWICH LIFESCIENC

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GREENWICH LIFESCIENCES : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (form 10-Q)

11/16/2020 | 04:48pm

You should read the following discussion and analysis of our financial condition
and results of operations together with and our financial statements and the
related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In
addition to historical information, this discussion and analysis contains
forward-looking statements that involve risks, uncertainties and assumptions.
Our actual results may differ materially from those discussed below. Factors
that could cause or contribute to such differences include, but are not limited
to, those identified below, and those discussed in the section titled "Risk
Factors" included in this Quarterly Report on Form 10-Q or included in our other
public disclosures or our other periodic reports or other documents or filings
filed with or furnished to the SEC. All amounts in this report are in U.S.
dollars, unless otherwise noted.






Overview




We are a biopharmaceutical company that is developing GP2, an immunotherapy
designed to prevent the recurrence of breast cancer following surgery. GP2 is a
9 amino acid transmembrane peptide of the HER2/neu (human epidermal growth
factor receptor 2) protein, a cell surface receptor protein that is expressed in
a variety of common cancers, including expression in 75% of breast cancers at
low (1+), intermediate (2+), and high (3+ or over-expressor) levels. In a
completed Phase IIb clinical trial led by MD Anderson Cancer Center, no
recurrences were observed in the HER2/neu 3+ adjuvant setting after median 5
years of follow-up, if the patient received 6 primary intradermal injections
over the first 6 months. We are planning to commence a Phase III clinical trial
in 2021.






Substantial Unmet Need




Following breast cancer surgery in the adjuvant setting, a HER2/neu 3+ patient
receives Herceptin in the first year, with the hope that their breast cancer
will not recur, with the odds of recurrence slowly decreasing over the first 5
years after surgery. Herceptin has been shown to reduce recurrence rates from
25% to 12% in the adjuvant setting. In the neoadjuvant setting, a patient
receives treatment before surgery and, based on the results of a biopsy at
surgery, will receive the same or more potent treatment after surgery. Kadcyla
has been shown to reduce recurrence rates from 22% to 11% in the neoadjuvant
setting. Accordingly, we believe that GP2 may be used to address the 50% of
recurring patients who do not respond to either Herceptin or Kadcyla.



GP2 is administered in combination with the immunoadjuvant GM-CSF in years 2-4,
following the first year of treatment with Herceptin, in a series of 11
intradermal injections comprising 6 primary injections over 6 months (1
injection per month) followed by 5 booster injections every 6 months thereafter.
Furthermore, we believe that recently approved drugs such as Perjeta and Nerlynx
do not fully address this unmet need, even in their most efficacious
subpopulations, and that in the initial GP2 indication, approximately 17,000 new
patients may be eligible for GP2 treatment per year, which could save
approximately 1,500 to 2,000 lives per year.



Statistically Significant Phase IIb Clinical Data in HER2/neu 3+ Over-Expressors



In a randomized, single-blinded, placebo-controlled, multi-center (16 sites led
by MD Anderson Cancer Center) Phase IIb clinical trial of HLA-A02 breast cancer
patients, the combination of GP2-GMCSF-Herceptin treatment resulted in no
recurrences in 46 HER2/neu 3+ over-expressor patients who were fully treated
with GP2 versus 50 placebo patients who were treated with GMCSF-Herceptin and
who recurred at a rate similar to historical recurrence rates for patients
treated with Herceptin. After median 5 years of follow-up, there were 0% cancer
recurrences in the HER2/neu 3+ patients treated with GP2-GMCSF-Herceptin, if the
patient received the 6 primary intradermal injections over the first 6 months,
versus an 11% cancer recurrence rate in the placebo arm treated with
GMCSF-Herceptin (p = 0.0338). Thus, sequentially combining Herceptin in year 1
and GP2-GMCSF in years 2-4 may dramatically lower breast cancer recurrences in
this patient population.






Potent Immune Response




In the Phase IIb clinical trial, GP2 immunotherapy elicited a potent immune
response in HLA-A02 patients after they received the 6 primary intradermal
injections over the first 6 months. The immune response was measured by a local
skin test and immunological assays. Further, booster injections given every 6
months thereafter prolonged the immune response, thereby providing longer term
protection.






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Well Tolerated Safety Profile




In the Phase IIb and three Phase I clinical trials where 138 patients received
GP2 immunotherapy, there were no reported serious adverse events related to GP2
treatment.



Upcoming Phase III Clinical Trial



We are planning to launch a Phase III clinical trial using a similar treatment
regime as the Phase IIb clinical trial. The manufacturing plan and the Phase III
trial protocol have been reviewed by the FDA and final revisions to the Phase
III trial protocol are under way, which may include an interim analysis/adaptive
trial design. Furthermore, we have commenced GP2 manufacturing, and we are
currently in the process of finalizing our engagement of contract manufacturing
organizations and contract research organizations for the Phase III clinical
trial.






Financial Summary




To date, we have not generated any revenue and we have incurred net losses. Our
net losses were approximately $3.4 million and $1.7 million for the years ended
December 31, 2019 and 2018, respectively, approximately $0.3 million and $0.3
million
for the three months ended September 30, 2020 and 2019, respectively,
and approximately $0.7 million and $3.1 million for the nine months ended
September 30, 2020 and 2019, respectively.



Our net losses have resulted from costs incurred in developing the drug in our
pipeline, planning and preparing for clinical trials and general and
administrative activities associated with our operations. We expect to continue
to incur significant expenses and corresponding increased operating losses for
the foreseeable future as we continue to develop our pipeline. Our costs may
further increase as we conduct clinical trials and seek regulatory approval for
and prepare to commercialize our product candidate. We expect to incur
significant expenses to continue to build the infrastructure necessary to
support our expanded operations, clinical trials, commercialization, including
manufacturing, marketing, sales and distribution functions. We will also
experience increased costs associated with operating as a public company.






Basis of Presentation




The accompanying interim unaudited financial statements are presented in
conformity with accounting principles generally accepted in the United States of
America
("GAAP") and pursuant to the rules and regulations of the SEC.



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



Research and Development Expenses



Research and development expenses decreased by $126,473, or 44%, to $158,031 for
the three months ended September 30, 2020 from $284,504 for the three months
ended September 30, 2019. The decrease was primarily the result of a decrease in
accrued manufacturing expenses.



General and Administrative Expenses



General and administrative expenses increased by $47,325, or 92% to $98,834 for
the three months ended September 30, 2020 from $51,509 for the three months
ended September 30, 2019. The increase was primarily the result of an increase
in stock compensation.



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



Research and Development Expenses



Research and development expenses decreased by $1,889,020, or 80%, to $458,726
for the nine months ended September 30, 2020 from $2,347,746 for the nine months
ended September 30, 2019. The decrease was primarily the result of a decrease in
related party payables.



General and Administrative Expenses



General and administrative expenses decreased by $487,815, or 66%, to $253,210
for the nine months ended September 30, 2020 from $741,025 for the nine months
ended September 30, 2019. The decrease was primarily the result of a decrease in
related party payables and an increase in stock-based compensation.






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Liquidity and Capital Resources



Since our inception in 2006, we have devoted most of our cash resources to
research and development and general and administrative activities. We have not
yet achieved commercialization of our product and have a cumulative net loss
from our operations. We will continue to incur net losses for the foreseeable
future. Our financial statements have been prepared assuming that we will
continue as a going concern. As of September 30, 2020, our principal source of
liquidity was our cash, which totaled $6,214,337, and additional loans and
accrued unreimbursed expenses from related parties. Following the capital raise
during our third quarter of 2020, which contributed to the improvement in our
cash and working capital positions as of September 30, 2020, we believe that the
substantial doubt about our ability to continue as a going concern has been
alleviated, and that we have sufficient liquidity to continue as a going concern
through the next twelve months.



There is no assurance that we will be successful at raising additional capital
in the future. If our plans are not achieved and/or if significant unanticipated
events occur, we may have to further modify its business plan, which may require
us to raise additional capital.



Cash Flow Activities for the Nine Months Ended September 30, 2020 and 2019



We incurred net losses of $711,936 and $3,088,771 during the nine months ended
September 30, 2020 and 2019, respectively. The decrease was primarily the result
of a decrease in related party payables and accounts payable and an increase in
stock-based compensation.






Operating Activities




Net cash used in operating activities was $0 for the nine months ended September
30, 2020
and $79,100 for the nine months ended September 30, 2019.






Investing Activities




We did not use or generate cash from investing activities during the nine months
ended September 30, 2020 and September 30, 2019.






Financing Activities




We generated $6,207,502 from financing activities during the nine months ended
September 30, 2020 as net proceeds from our initial public offering of common
stock and did not use or generate cash from financing activities during the nine
months ended September 30, 2019.



Off-Balance Sheet Arrangements; Commitments and Contractual Obligations



As of September 30, 2020, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments
or contractual obligations.






JOBS Act




On April 5, 2012, the Jumpstart Our Business Startups Act of 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. In other words, an "emerging growth company" can delay the
adoption of certain accounting standards until those standards would otherwise
apply to private companies.



We have chosen to take advantage of the extended transition periods available to
emerging growth companies under the JOBS Act for complying with new or revised
accounting standards until those standards would otherwise apply to private
companies provided under the JOBS Act. As a result, our financial statements may
not be comparable to those of companies that comply with public company
effective dates for complying with new or revised accounting standards.



Subject to certain conditions set forth in the JOBS Act, as an "emerging growth
company," we intend to rely on certain of these exemptions, including, without
limitation, (i) providing an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404(b) of the
Sarbanes-Oxley Act of 2002, as amended and (ii) complying 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 earliest of (i) the last day of the fiscal year in which we have total
annual gross revenues of $1.07 billion or more; (ii) the last day of our fiscal
year following the fifth anniversary of the date of our initial public offering;
(iii) the date on which we have issued more than $1 billion in nonconvertible
debt during the previous three years; or (iv) the date on which we are deemed to
be a large accelerated filer under the rules of the SEC.



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