Overview
We are a clinical-stage biopharmaceutical company focused on the development of
GP2, an immunotherapy to prevent breast cancer recurrences in patients who have
previously undergone surgery. GP2 is a 9 amino acid transmembrane peptide of the
HER2/neu 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. The combination of
GP2 + GM-CSF is called GLSI-100. In a completed randomized, single-blinded,
placebo-controlled, multi-center Phase IIb clinical trial led by MD Anderson
Cancer Center, no recurrences were observed in patients treated with GLSI-100 in
the HER2/neu 3+ adjuvant setting after median 5 years of follow-up, if the
patients were treated, followed, and remained disease free over the first 6
months, which is the time required to reach peak immunity and thus maximum
efficacy and protection (p = 0.0338). For the 146 patients who have been treated
with GLSI-100 to date over 4 clinical trials, treatment was well tolerated and
no serious adverse events were observed related to the immunotherapy. We have
commenced Flamingo-01, a Phase III clinical trial with Baylor College of
Medicine as the global primary investigator site. Flamingo-01 is designed to
evaluate the safety and efficacy of GLSI-100 in HER2/neu positive patients with
residual disease or high-risk pathologic complete response at surgery and who
have completed both neoadjuvant and postoperative adjuvant trastuzumab based
treatment.
To date, we have not generated any revenue and we have incurred net losses. Our
net losses were approximately $7.8 million and $4.6 million for the years ended
December 31, 2022 and 2021, 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.
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Basis of Presentation
The accompanying financial statements are presented in conformity with
accounting principles generally accepted in the U.S. ("GAAP") and pursuant to
the rules and regulations of the SEC.
Results of Operations For the Years Ended December 31, 2022 and 2021
Research and Development Expenses
Research and development expenses increased by $2,916,153, or approximately 82%,
to $6,475,668 for the year ended December 31, 2022 from $3,559,515 for the year
ended December 31, 2021. The increase was primarily the result of increases in
manufacturing and clinical expenses for the Phase III clinical trial.
General and Administrative Expenses
General and administrative expenses increased by $526,158, or approximately 51%
to $1,564,586 for the year ended December 31, 2022 from $1,038,428 for the year
ended December 31, 2021. The increase was primarily the result of increases in
cash and stock-based compensation expense.
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.
We will require additional capital to meet our long-term operating requirements.
We expect to raise additional capital through the sale of equity and/or debt
securities; however, 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 our
business plan, which may require us to raise additional capital. As of December
31, 2022 and December 31, 2021, our principal source of liquidity was our cash,
which totaled $13,468,026 and $27,204,269, respectively, and additional loans
and accrued unreimbursed expenses from related parties. Historically, our
principal sources of cash have included proceeds from the sale of common stock
and preferred stock and related party loans. Our principal uses of cash have
included cash used in operations. We expect that the principal uses of cash in
the future will be for continuing operations, funding of research and
development, including our clinical trials, and general working capital
requirements.
Cash Flow Activities for the Years Ended December 31, 2022 and 2021
We incurred net losses of $7,825,237 and $4,570,576 during the years ended
December 31, 2022 and 2021, respectively, and the increase was primarily the
result of increases in manufacturing and clinical expenses for the Phase III
clinical trial and increases in cash and stock-based compensation expense. Cash
was $13,468,026 at December 31, 2022 and $27,204,269 at December 31, 2021 and
decreased due to the following reasons:
Operating Activities
Net cash used in operating activities was $6,200,027 for the year ended December
31, 2022 and $4,291,548 for the year ended December 31, 2021. The increase was
primarily the result of increases in manufacturing and clinical expenses for the
Phase III clinical trial and increases in cash compensation expense.
Investing Activities
We did not use or generate cash from investing activities during the year ended
December 31, 2022 and December 31, 2021.
Financing Activities
Net cash used in financing activities was $7,536,216 during the year ended
December 31, 2022, attributable to the repurchase of common stock pursuant to
the Company's stock repurchase program. Net cash provided by financing
activities was $2,835,442 during the year ended December 31, 2021, attributable
to the exercise of the underwriter's over-allotment option from our follow-on
offering and the partial exercise of underwriter warrants.
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Contractual Obligations and Commitments
As of December 31, 2022, we did not have any material contractual obligations,
other than employment and shareholder agreements, license for GP2 from HJF,
manufacturing and clinical trial obligations related to the Phase III clinical
trial.
Off-Balance Sheet Arrangements
As of December 31, 2022, we did not have any off-balance sheet arrangements as
described by Item 303(a)(4) of Regulation S-K.
Critical Accounting Policies and Estimates
Our financial statements are prepared in conformity with U.S. GAAP, which
require the use of estimates, judgments and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent liabilities at
the date of the financial statements, and the reported amounts of expenses in
the periods presented.
On an ongoing basis, we evaluate our estimates and judgments, including those
related to accrued expenses and stock-based compensation. We base our estimates
on historical experience and on various other assumptions that we believe to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities and the
reported amounts of expenses that are not readily apparent from other sources.
Actual results could differ from those estimates, particularly given the
significant social and economic disruptions and uncertainties associated with
the ongoing coronavirus pandemic and the COVID-19 control responses.
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU
2016-02"), which provides guidance requiring lessees to recognize a right-of-use
asset and a lease liability on the balance sheet for substantially all leases,
with the exception of short-term leases. Leases will be classified as either
financing or operating, with classification affecting the pattern of expense
recognition in the statement of income. The Company adopted Topic 842 effective
October 1, 2019 and elected the package of transition practical expedients for
expired or existing contracts, which does not require reassessment of: (1)
whether any of the Company's contracts are or contain leases, (2) lease
classification and (3) initial direct costs. In July 2018, the FASB issued ASU
No. 2018-11, "Targeted Improvements - Leases (Topic 842)." The Company did not
elect the hindsight practical expedient. This update provides an optional
transition method that allows entities to elect to apply the standard using the
modified retrospective approach at its effective date, versus recasting the
prior years presented. If this adoption method is elected, an entity would
recognize a cumulative-effect adjustment to the opening balance of retained
earnings in the year of adoption. The Company elected this adoption method on
October 1, 2019 and the adoption did not result in any cumulative impact to
retained earnings.
Additionally, the Company's adoption of Topic 842 did not have a significant
impact on the recognition, measurement, or presentation of lease expenses within
the statements of operations or the statements of cash flows. The Company's
adoption of Topic 842 did not have a material impact on the timing or amount of
the Company's sublease agreement.
In January 2021, the Company early adopted ASU 2020-06 Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in
Entity's Own Equity (Subtopic 815-40). ASU 2020-06 simplifies the accounting for
convertible debt instruments and convertible preferred stock by reducing the
number of accounting models and limiting the number of embedded conversion
features separately recognized from the primary contract. The guidance also
includes targeted improvements to the disclosures for convertible instruments
and earnings per share. ASU 2020-06 is effective for fiscal years beginning
after December 15, 2021, including interim periods within those fiscal years.
Early adoption is permitted, but no earlier than fiscal years beginning after
December 15, 2020. The adoption of ASU 2020-06 did not have a material impact on
the Company's financial statements.
JOBS Act
On April 5, 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 of 1933, as amended
("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 and (ii) complying with any requirement that may be adopted
by the Public Company Accounting Oversight Board ("PCAOB") 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 the completion 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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